NAIROBI, Kenya, Jul 14 – Sixty two percent of African CEOs say they have confidence in the future revenue prospects in the continent, while 93 percent see growth potential, according to a new report released on Thursday.
The Africa Business Agenda by PricewaterhouseCoopers (PwC) surveyed over 200 CEOs from 10 African countries in the areas of investment decisions, risk and talent management and shared development priorities with government.
Seventy-one percent of CEOs surveyed in Kenya expressed confidence in future business growth in the country.
PwC Africa Central CEO Philip Kinisu said factors such as steady GDP growth amongst African countries, convergence in political stability and economic reforms have spurred high levels of optimism in most African chief executives.
“For the African CEO, three priorities emerged. The first was around investment. The second was about managing their talent pool. The third priority was to do with risk management,” he said.
When it came to investment, 31 percent of CEOs said they plan to increase their share in their existing markets, while 54 percent expressed that they would enter a new strategic alliance or joint venture to forward growth.
Apart from seeking to deepen market penetration, 30 percent of CEOs said they would invest in new products or service development. As far as venturing into new geographical markets 22 percent said they would invest in cross-border prospects.
According to the report, exchange rate volatility, uncertain economic growth, high energy costs, inadequate infrastructure and an increasing tax burden scored high as major concerns in risk management for majority of African CEOs.
Mr Kinisu said despite the fact that in every African country over 80 percent of CEOs acknowledged risk is a top priority many of them were less responsive in mitigating risk factors.
“An overwhelming three quarters of CEOs say they are aware of the five risk factors. When we asked them about a response to the risk, around about half or less of the CEOs have actually got active processes responding to the risk,” he said.
Most CEOs cited a high degree of return from the business market and the fact that the risks they face are inevitable when operating in Africa, as reasons for being less reactive to risk factors.
Despite over 60 percent of African CEOs expressing concerns about the availability of key skills, home-grown talent ranked high among them when it came to filling the talent gap.
Developing talent in-house and improving productivity and efficiency was much more important to CEOs than recruiting new employees.
The report also showed more CEOs now shifting away from cost reductions, which was a norm in the last 12 months with the global economic recession.
“Now cost reductions are not as prominent as a strategy. Instead people are looking at mergers and acquisitions. They’re looking at building strategic alliances cross-border. They’re looking at business process outsourcing to gain more efficiencies and exploit synergies that they can find between different businesses,” he said.
Mr Kinisu said African CEOs are not alone in their favourable view of the continent’s economic future citing recent interest by foreign delegates and global companies.
“An almost new scramble for Africa is beginning to emerge. Only recently the German Chancellor was here. You see heads of government from the emerging markets. They are all coming against the backdrop of this new perception of high potential on the continent. The outlook may well be that Africa could be joining the emerging markets or tigers of tomorrow.”