The Africa Business Agenda 2019

Playing it safe

Africa CEOs and PwC leaders share their perspectives on the realities and rewards of doing business on the continent. #AfricaAgenda

What's on Africa's business agenda

PwC has been conducting research on CEOs in our Annual Global CEO Survey since 1997 and we’ve been specifically analysing the views of participants from Africa in this publication for the better part of a decade.

Our previous survey saw a record jump in optimism regarding global growth prospects. This year, by contrast, saw a record increase in pessimism, with 29% of global CEOs (Africa: 25%) projecting a decline in global economic growth, up from a mere 5% last year.

Looking inward

Given the decline in optimism about global economic growth, our survey findings also indicate that CEOs are less anxious about the broad existential threats that dominated the rankings in previous years (like climate change and terrorism), and are more concerned about the factors that impact the ease of doing business in the markets where they operate, and those that impact their overall confidence and willingness to invest and/or take risk.

CEOs are less optimistic about the strength of the global economy than they were a year ago.

Figure 1: CEOs are less optimistic about the strength of the global economy than they were a year ago.

The Africa Business Agenda draws on the results of PwC’s 22nd Annual Global CEO Survey of 1 378 interviews in 91 countries, including 83 CEOs from 19 African countries. The use of a common set of survey questions allows us to benchmark the views of CEOs in Africa against global results, enabling us to identify and explore some of the distinctive features of doing business in Africa.

 

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What AfCFTA means for Africa

Trade: A new horizon for growth in Africa

The results of PwC’s latest Annual Global CEO Survey suggest that business leaders, particularly those in Africa, are less certain about expansion outside of their current markets, with CEOs more focused on achieving operational efficiencies and organic growth within existing operations.

Ten years ago, many global and African companies were looking at Africa as the ticket to exponential growth. Banks, retailers, FMCGs, manufacturers and many others set out to make their fortunes on the African frontier. These days, business leaders are a lot more cautious when it comes to expansion and growth.

While slow growth and global trade conflicts have introduced new obstacles to business and trade, there are also fresh prospects for revenue growth emerging due to new trade arrangements. In Africa, we find countries looking to opening their markets and the African Continental Free Trade Agreement Area (AfCFTA) agreement is at the centre of this activity. The agreement establishes the Continental Free Trade Area (CFTA) – the largest in the world in terms of participating countries since the formation of the World Trade Organisation (WTO) in 1992.

The main objective of the AfCFTA is to create a single continental market for goods and services, with free movement of business persons and investments, paving the way for accelerating the establishment of a continental customs union.

 

Playing it safe means concentrating on things that you can control. For many CEOs in Africa that means knuckling down on issues like improving operational efficiency, pursuing organic growth and launching new products and services.

More topics covered in this publication

Leadership, risk and technology

Ongoing economic, social and political uncertainty is a perennial worry for CEOs globally, not least for those in Africa. Concerns over policy uncertainty, skills shortages, over-regulation and exchange rate volatility lead the long list of risks causing CEOs anxiety in the latest Global CEO Survey.

Technology: Threat and opportunity

Business risk is everywhere – internal and external, interconnected and constantly changing. Advances in technology and innovation only add to this and continuing to disrupt business operations. But innovations such as artificial intelligence (AI) and data analytics are also delivering operational efficiencies that may help offset many of these challenges.

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Adapting to lower growth in Africa markets

A few weeks before Christmas 2011, The Economist provided a gift to companies searching for the next frontier of expansion and revenue growth: “After decades of slow growth, Africa has a real chance to follow in the footsteps of Asia”, announced the magazine. At about the same time, the International Monetary Fund (IMF) was forecasting average real economic growth of nearly 5.4% per annum in the sub-Saharan African region over the 2012-2016 period. 

In 2019, we know that the ‘Africa rising’ narrative has not turned out to be quite as sunny as initially imagined. The slower growth scenario has been a challenge to companies that are already committed to the continent with human, financial and physical capital.

Transforming organisations to be fit for growth

In the face of headwinds, renovating the business model from within to enable growth can be a viable option, but it requires cost cutting, restructuring and human renewal. Companies that are fit for growth focus on a few differentiating capabilities, align their cost structure to these capabilities, and organise their people to create growth within challenging market conditions – like those posed by a low-growth scenario in African economies.

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How Africa can grow its innovative companies

When considering economic growth today, two factors can contribute to its increase: capital and labour (inputs), and ideas and new technologies (innovation).

Inputs play a minor role in driving economic growth. Innovation growth – and with it productivity improvements – account for the majority of long-term economic growth. The importance of using innovation as a driver of economic growth is proven throughout the history of the first three industrial revolutions.

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Making Africa work

While the emerging technologies of the Fourth Industrial Revolution sweep the globe with threats of replacing the current workforce with robots and promises of transforming Africa’s economic development, the only clear conclusion is that no one really knows where these developments are ultimately going to take us.

Global trends meet African realities

At the same time, Africa will also be experiencing unprecedented demographic changes. From now until 2030, the continent is projected to expand the size of its workforce by more than the rest of the world combined, as its young population enters the world of work.

For today’s young people to realise their future potential, including those in Africa, the power of new technologies will need to be matched by the wisdom and sound judgement of those charged with managing the perils and promise they introduce. Only then will we be able to make Africa work like we know it can.

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Contact us

Dion Shango

Africa Territory Senior Partner, PwC South Africa

Tel: +27 (0) 11 797 4166

Shirley Machaba

Regional Senior Partner South Market Area, PwC South Africa

Tel: +27 (0) 11 797 5851

Uyi Akpata

Regional Senior Partner West Market Area, PwC Nigeria

Tel: +234 1 271 1700

Peter Ngahu

Regional Senior Partner East Market Area, PwC Kenya

Tel: +254 (0) 20 285 5090

Nadine Laure Tinen Tchangoum

Sub-Saharan Francophone Africa Regional Senior Partner, PwC Cameroon

Tel: +237 33 43 24 43

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