African CFOs expect their firms' revenues to decline due to the impact of Covid-19

PwC's Dion Shango: CFOs are beginning to shift their focus to a more prolonged recovery period.

According to the PwC Covid-19 CFO Pulse Survey: Africa report, nearly two-thirds of African CFOs expect their firms’ revenue to decline significantly this year due to the impact of Covid-19. Only nine percent of the CFOs polled expect an increase in revenue. 

The report shows that 85 percent of CFOs are implementing cost-containment measures and 60 percent are either deferring or cancelling planned investments. “Businesses are actively dealing with the effects of a sharp decline in economic activity and even temporary closure of their operations. IN this environment it’s no surprise that African CFOs are taking decisive action to safeguard their financial positions,” the report read. 

Many African countries have implemented containment measures to reduce the rate of infection due to concerns about the capacity and preparedness of their healthcare systems. However, according to the report, these measures precipitated a rapid decrease in economic activity, which may place greater pressure on businesses to generate revenue and profits in the immediate future. 

If Covid-19 were to end today, 38 percent of African CFOs believe their companies could return to “business as usual” within three months. Forty-two percent of African CFOs expect it to take more than six months, while nine percent expect it will take more than a year to restore their businesses. 

Nearly 45 percent of African CFOs expect productivity loss due to lack of remote work capabilities. 35 percent of African CFOs expect changes in staffing due to low demand and are considering temporary leave or furloughs. Eighteen percent of African CFOs also expect to conduct lay-offs in the next month. 

According to the report, CFOs favour a strategy of cost containment and of the 33 respondents who said their company is pursuing this course of action, the majority (82 percent) are focusing on facilities and general capital expenditure followed by investments in the workforce (52 percent) and operations (36 percent). Sixty two percent of African CFOs say they will be accelerating automation and new ways of working once they transition back to ‘normal’. Sixty percent are considering making remote work a permanent option where feasible, and 91 percent of African CFOs are also considering workplace safety measures and requirements, such as masks and testing.

PwC CEO Dion Shango says: 

“As finance leaders adapt to the changes and challenges that have emerged as a result of the Covid-19 pandemic, they are beginning to shift their focus to a more prolonged recovery period. Ensuring a safe workplace is taking precedence as economies reopen, and stabilising the supply chain remains critical to ongoing business continuity.”

As they manage this process, Dion says business leaders will be faced with a series of decisions that will have a far-reaching impact on their own financial future, the wellbeing of their employees, customers and other stakeholders, and on society at large.