African CEOs confident about business prospects – PwC

Nadine Tinen, Territory Senior Partner, PwC Sub Saharan Francophone Africa. Courtesy.

PWC, a multinational professional services network, is this week convening partners, board members and staff of PwC Sub Saharan Francophone Africa. At a conference which opens on Wednesday this week, delegates will be seeking innovative ways of growing their business and providing quality services to their clients and governments.

The summit comes at a time the organisation has just launched the Annual Global CEO survey, which among other things, showed that large proportion of African CEOs are ‘somewhat confident’ or ‘very confident’ about their organisation’s prospects for revenue growth over the next three years.

The New Times’ Collins Mwai interviewed with Nadine Tinen, Territory Senior Partner, PwC Sub Saharan Francophone Africa, for insights into the report as well as the agenda of the conference.

Below are excerpts:

What aspects are covered in the PwC CEO Survey?

PwC has been conducting research on CEOs in our Annual Global CEO survey since 1997.  PwC launched the 7th edition of its Africa Business Agenda 2019 report at the biannual World Economic Forum on Africa in Cape Town on September 4, 2019.

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. Seventy percent of the CEOs were in businesses with at least $100 million revenue and 43 per cent employ more than 1,000 people. The survey was conducted in September and October of 2018 by telephone, face-to-face and online.

Nineteen countries where CEOs were interviewed include Cameroon, Côte d’Ivoire, DR Congo, Senegal, Algeria, Tunisia, Madagascar, Kenya, Uganda, Tanzania, Rwanda, Zambia, Mauritius, Botswana, Malawi, Namibia, South Africa, Zimbabwe, Nigeria. We are very proud that Rwanda participated in the survey and an interview with Diane Karusisi, the Bank of Kigali chief executive, is featured in the survey report.

The survey covered questions on the global economy, company prospects for revenue growth over the next 12 months and link to headcount, potential economic, policy, social, environmental, and business threats to growth prospects, expansion plans outside their home markets, activities planned for the next 12 months in order to drive revenue growth, and the top global trends that have transformed their businesses, including technological advances such as data analytics and artificial intelligence.

The use of a common set of questions in the survey 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.

What are your broad takeaways from the survey findings?

The key take away was that a large proportion of African CEOs (93 per cent) are ‘somewhat confident’ or ‘very confident’ about their organisation’s prospects for revenue growth over the next three years – higher than the global average of 85 per cent.

However, faced with some uncertainty around current markets, CEOs are turning inward to drive revenue growth. African CEOs identified operational efficiencies (80 per cent), organic growth (76 per cent) and the launch of new products and services (58 per cent) as their primary drivers of revenue growth.

There is optimism in the medium term, what are the projected drivers for growth?

It’s time for a reality check – last year saw a record jump in optimism regarding global growth prospects, and this exuberance translated across regions – although to a lesser extent in Africa. The optimism that fuelled last year’s results has clearly begun to evaporate. This year, we saw a record decline in optimism, with nearly 30 per cent of Global CEOs and 25 per cent of African CEOs expecting a decline in global economic growth.

Overall, 93 per cent of African CEOs expressed confidence about their companies’ medium-term prospects.

But only 39 per cent said they are ‘very confident’, the lowest level we have seen in the survey. While we might surmise that African CEOs are optimistic, they are also increasingly cautious. The state of their economies, political uncertainty – these and other factors are casting a shadow over business expectations.

There is also reduced optimism about expansion beyond the home of the respective firms, which is unfortunate, given ambitions such as CFTA, intra-Africa trade growth, home-grown solutions and curbing trade deficit. What could alleviate this?

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

Ten years ago, many Global and African companies were looking at the continent as the ticket to exponential growth. Banks, retailers, FMCG 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 slower than expected growth rates partly explain this change in approach, we are also seeing trade conflicts, and protectionism coming to the fore on the global stage. Many organisations are therefore adopting a wait-and-see approach and there are several countries that stand to gain from trade tensions elsewhere.

While these developments introduce new obstacles to business and trade, there are also fresh prospects for revenue growth emerging due to new trade arrangements such as the Africa Continental Free Trade Agreement (AfCFTA). As a result, 36 per cent of African CEOs interviewed indicated they plan to enter a new market over the next 12 months as a growth strategy.

Nonetheless, the top 3 activities planned over the next 12 months included internally focused initiatives such as operational efficiencies (80 per cent), organic growth (76 per cent) and launching a new product or service (58 per cent) to drive revenue growth over the next 12 months. In a tough and uncertain operating environment, it is logical for business leaders to focus on factors they can control.

There are concerns about the regulatory environment across Africa, what are the best avenues to address this?

The threats that African CEOs considered most pressing are related to the ease of doing business. Issues like policy uncertainty, the availability of key skills and over-regulation are their top challenges. Hence, African governments should continue to invest in their business environment in order to address challenges noted in the regulatory environment.

We would like to commend Rwanda which was ranked 29 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. It is due to this consistent outstanding performance that PwC Sub Saharan Francophone Africa is in Kigali this week for its annual conference to learn from the country and draw inspiration. The annual conference will take place from 9 to 12 September 2019. This is the first time the conference has been held in Rwanda.

What is the composition of the PwC Sub Saharan Francophone Africa who are convening in Kigali?

PwC Sub Saharan Francophone Africa has over 30 partners and 650 staff and serves over 3,000 clients. It has 10 country hubs to address our regional market in Sub Saharan Francophone Africa. The 10 country hubs are based in Senegal, Guinea, Ivory Coast, Equitorial Guinea, Gabon, Chad, Cameroon, Republic of Congo, Democratic Republic of Congo and Madagascar.

PwC Sub Saharan Francophone Africa is part of the PwC Global network of firms in 158 countries with over 250,000 people who are committed to delivering quality in assurance, advisory and tax services. In Africa we’re the largest provider of professional services with close to 400 partners and over 9,000 people in 34 countries. In Rwanda, PwC has 80 staff offering professional services to both the private and public sector. At PwC, our purpose is to build trust in society and solve important problems.

What is the profile of the participants?

The participants include partners, board members and staff of PwC Sub Saharan Francophone Africa. The conference is the annual planning and strategy meeting for the 10 countries that constitute PwC Sub Saharan Francophone Africa.

The theme of the conference is ‘Reimagining the Possible’. In line with this theme, we want to challenge ourselves during this conference, to think of innovative ways of growing our business and providing quality services to our clients and governments, hence making a difference in our communities through solving important problems.

Why was Kigali selected to host the meeting?

Given the theme, there is no better location for the conference than Rwanda, which has risen against all odds to rebuild itself to the economic miracle it is today in just 25 years after the Genocide against the Tutsi. Rwanda has become a role model for Africa, and the rest of the world.

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