Guest Contributor | Sep 22, 2020 | 0
Africa is the new business frontier
Johannesburg — Africa remains one of the preferred frontiers for investment opportunities and doing business, according to a report released by PwC Africa earlier this month. Growth and foreign direct investment has continued in Africa amid the recent global economic uncertainty.
This is confirmed by PwC’s Africa Business Agenda survey, which shows that Africa and the emerging markets remain a vital growth opportunity for CEOs. The Africa Business Agenda compiles results from 153 CEOs and includes insights from business and public sector leaders from across Africa.
Hein Boegman, CEO for PwC Africa, says: “CEOs in Africa are ramping up their efforts to innovate and find new ways to do business on the continent in a move to stimulate growth in a challenging and uncertain global business environment.
“The global financial and economic crisis has revealed Africa’s vulnerability to a number of external economic shocks. These include the decline in commodity prices fueled by the economic slowdown in China; a marked decline in the demand for commodities; and the collapse in value of the emerging market currencies against the US-dollar in anticipation of an interest rate hike.
“Notwithstanding a multitude of challenges, many of which are cyclical, we remain confident that Africa’s prospects remain positive. Africa’s business leaders have the opportunity to pursue new business opportunities on the continent, more particularly in the light of rapid innovative and technological advances that have the potential to transform and shape industries.”
Across the continent, shifting demographics, rapid urbanisation, rising disposable income and technological change are all influencing growth opportunities and strategies. Africa’s CEOs rank technological advances (75%), demographic shifts (52%) and a shift in global economic power (58%) as the top three defining trends that will transform their businesses over the next five years. In addition, new advancements and breakthroughs in frontiers of R&D are opening up more opportunities for businesses.
“Our survey of CEOs reveals four common priorities among Africa’s business leaders: diversification and innovation; addressing greater stakeholder expectations; effectively leveraging growth catalysts like technology, innovation and talent; and measuring and communicating shared prosperity” said Boegman.
Catalysts for growth
In Africa, the environment is constantly changing and the growth opportunities are unparalleled. After more than a decade of urbanisation, Africa is poised for a digital revolution. Increasingly, organisations are using technology to challenge business models and disrupt competitors in markets. Technology was seen by CEOs in the survey as the best way of assessing and delivering on customer expectations by implementing customer relationship management systems (69%), interpreting the complex and evolving needs of customers through data and analytics (56%), and improving communication and engagement by means of social media (58%).
Across Africa boardroom agendas are changing, with many additional focus areas being brought to the table. The corporate landscape continues to undergo constant change, with companies being confronted by shareholders and other institutional investors who demand explanations around financial reporting and performance. In the process business is encountering a range of challenges in responding to wider stakeholder expectations. These include: additional costs to doing business (62%), unclear or inconsistent standards or regulations (45%), and customers’ unwillingness to pay (35%). Dion Shango, CEO for PwC Southern Africa, says: “More successful companies tend to be collaborative and collective in their engagement with stakeholders. Business leaders need to have a business rationale for engaging and collaborating with stakeholders, while being acutely aware of the risks posed by not engaging with all relevant stakeholders.
“One of the most significant benefits of engaging and collaborating with stakeholders is that an organisation may be able to engage new markets in Africa and speed up the introduction of new products and services.”
Trust is also emerging as an important differentiator in the business community. Building trust helps organisations to attract investment and build stakeholder loyalty. It is concerning to note that 65% of Africa CEOs are somewhat or extremely concerned about the lack of trust in business. Corruption is also seen as a major threat by businesses (86%). The private sector has taken the initiative to fight corruption by calling on government and regulators to enforce legislation and codes of business practice.
Communicating shared prosperity
“It is positive to note that Africa CEOs are increasingly recognising the importance of reporting on non-financial matters. In addition, most Africa CEOs surveyed not only believe that success is dependent on more than just making money, they also believe that their organisations should do more to report on the broader impact of their activities and how these activities create value for stakeholders” concluded Shango.