Perceptions of the business climate by sector leaders often can be a good indicator of the health of the economy. It can foretell the direction economic trends are likely to take.
This has spawned an entire industry captured in reports such as the PWC Annual Global CEO Survey.
The 26th edition of the survey finds East Africa CEOs optimistic that the economic situation in their countries will improve. Most of the CEOs are also confident that their companies will remain economically viable more than 10 years from now.
This picture is only marred by inflation as one of their main concerns. And while global CEOs consider changing customer preferences more of a disruptor to industry profitability in the next 10 years, East Africa CEOs rank technological advancement highest.
Of the 138 CEOs in the region surveyed, a significant 68 per cent of them see technological disruptors as potentially affecting the industry in which they operate.
A glimpse of how this may play out was witnessed during the Covid-19 pandemic, which saw accelerated digital adoption and transformation both for consumers and companies in Africa. The transformation continues to have a direct impact on demand and supply.
The PWC report explains that of the types of investments CEOs will be making in the next 12 months, nearly 8 out of ten East Africa CEOs said they will prioritise investing in upskilling their company’s workforce in the coming.
And, specifically about technology, a majority of them plan on investing towards automating processes and systems and deploying technology that will include cloud, artificial intelligence and other advanced technologies.
Over a third of the CEOs polled indicated that they are already collaborating with competitors and industry peers to a large and very large extent to create new sources of value. Among their collaborators are start-ups.
The collaboration and the planned deployment of advanced technologies should make for good news for start-ups in the region, who have not had it easy lately.
Another survey titled ‘A Deep Dive into East Africa’s Start-up Ecosystem: Challenges & Opportunities’ released last month indicates that, although investment levels have remained at a stable level in the last year, there remain barriers that hinder the region’s growth trajectory.
According to a majority of the hundreds of start-ups surveyed, barriers include a lack of access to investors, reliance on international venture capital, and global recession trends.
While the period during the pandemic may have seen accelerated digital adoption by consumers and companies alike, 28 per cent of respondents indicated that investment slowed across the East African start-up landscape due to the pandemic.
54 per cent of seed businesses said they rely on family and friends to provide funding, while 74 per cent of respondents needed to meet up to five investors before securing funds.
Things are however not all bad. Some of the positive developments noted by the majority of the start-ups include an increase of networks to support incubators, a widening of the pool of industries receiving funds, as well as the rise of local venture capital or funding opportunities, all of which represent excellent prospects for growth for East African tech start-ups.
It can only be a good thing that the CEOs are optimistic about prospects both for their companies and the regional economy in the short and medium term.
And with the fast pace artificial intelligence is evolving, as evidenced by the phenomenal ChatGPT and its many iterations, it is a matter of business survival that local companies must adapt or be overrun by foreign multinationals.
Local startups are not only attuned to our unique needs in the region to develop relevant technologies both for the consumer and the companies but it may be argued they are relatively cheaper to invest in.
But there is the matter of sustainability. 74 per cent of start-ups in the survey identify it as very relevant for their business mission.
Some estimates put start-up failure rate in Africa very high, up to 75 per cent because of any number of reasons that lately include the impact of the pandemic and dried-up venture capital.
As one sector insider who suffered bitter failure not long ago told Business Daily, "Most start-ups and entrepreneurs are emotional and over-optimistic about their business ideas. They start these ideas without proper planning and they are disillusioned by the success of Silicon Valley.”
Finally, among other concerns, are risks such as cyber security breaches which the CEOs highlight as one of the main threats their businesses and economy are exposed to.
With criminals always finding ways to breach security, it presents yet another opportunity to keep relevant local start-ups in the business of churning out innovative solutions and counter and anticipate the breaches.