Policy uncertainty and ballooning government debt keeping business leaders up at night.
PwC Africa CEO Dion Shango (pictured) is encouraging businesses to invest locally for the economy to recover. He was addressing participants at the virtual Africa Business Agenda this week. Dion said South African CEOs are looking to invest outside our borders.
“It was quite disappointing to note that most South African CEOs place more value on investing in other parts of the world and not Africa, with countries such as the US, China, and others as the most desired or favoured investment locations,” he said.
A recent survey of 1,779 interviews in 100 countries, including 50 CEOs from 14 African countries, revealed that most business leaders are more optimistic about the global economy than they were a year ago. But that confidence stops short at the continent itself. Instead, they’re anxious about how policy uncertainty, tax policy, cyber threats, and over-regulation are hampering growth on the continent post-Covid-19.
At least 74 percent of CEOs are concerned about supply chain disruption, having to contend with issues of moving goods across the continent and getting monies they’ve invested out of the continent. It is also notable that many CEOs in Africa are not looking beyond their borders for growth. Twenty-six percent of CEOs cited the US, and 16 percent cited China as necessary for their companies’ growth prospects in the next year. Almost a quarter (22 percent) of African CEOs either don’t know or don’t believe any other country will be important to their growth prospects.
At least 56 percent of CEOs are concerned about tax policy changes and the impact on their organisations. PwC’s economist Lullu Krugel says South Africa entered the pandemic with significantly higher debt levels than other African countries. “If you look at the tax revenue collection, there is a pretty big hole left by the contraction that we’ve seen in the last year,” said Lullu. CEOs are concerned that government will raise taxes in future to pay down its debt.
A year after the World Health Organisation declared Covid-19 a pandemic, countries that have rebounded are well into their vaccination drives, while Africa remains behind. To date, only two percent of Africans have been vaccinated. “So, while CEOs in many countries contemplate vaccine rollouts and look forward to the resumption of some form of ‘business as usual’, those in Africa are a lot more guarded,” said Dion.
The pandemic accelerated digital adoption as social distancing measures forced people to remain confined to their home for most of 2020. “We can expect to see a continuation of accelerated digitalisation brought to the fore by the pandemic, which promises productivity, data-driven insights and other business benefits.”
Despite the benefits of going digital, CEOs are worried about increases in cyberattacks and the spread of misinformation. At least 54 percent of African CEOs say they are highly concerned about cybersecurity, up significantly from 38 percent last year.
Shirley Machaba, CEO for PwC Southern Africa, noted that business leaders are also focusing heavily on risk management on the back of the black swan event that was Covid-19. “Some of those focus areas include preparing for higher systemic risk, digitising risk management functions, collaborating with supply chain partners to manage risk, and taking on aspects of risk traditionally managed by governments and multilateral organisations,” said Shirley.
