Deloitte’s Survey for Sub-Saharan Africa underscores CFO responses to tough economic challenges

Roger George, Director at Deloitte.

• 61 % of South African respondents cited the country’s political landscape a significant risk • 60% of South African CFOs view the impact of continuing electricity price increases as a significant risk • In East and West Africa, currency volatility is the greatest concern for 74% of respondents

Deloitte, the global professional services firm, has released its eighth annual CFO Survey for Sub-Saharan Africa (SSA), providing a window into how Africa’s financial stewards view the current business climate as well as the strategies they have adopted to weather the volatile global market.

This year’s SSA CFO Survey includes responses from West Africa for the first time, giving readers insight into the perceptions of CFOs in this rapidly growing region. Respondents from Southern Africa include CFOs in South Africa, Namibia, Botswana, Zimbabwe, Zambia, Mozambique and Malawi. East African respondents hail from Kenya, Uganda, Tanzania and Ethiopia and in West Africa from Nigeria and Ghana.

“With the multiple roles they are expected to play, CFOs fulfil one of the most demanding roles in business today, says Roger George, Director at Deloitte. “This year’s report shows how they are adopting agile strategies to improve company performance and create shareholder value in particularly challenging times.”

The SSA CFO report reveals that CFOs in South and Southern Africa are anxious about the future and anticipate subdued economic growth over the next three years.
This is in contrast to East and West Africa where CFOs are far more positive about their growth prospects.

The pressure placed on currencies worldwide due to the anticipated rate hike in the United States is reflected in the CFOs’ responses, which show they expect downward pressure on their currencies with a region-wide decrease of more than 8% for 2015.

Notably, domestic factors are high on the list of business risks for South African respondents. The country’s political landscape is cited by 61% of respondents as a significant risk, up from 33% in 2014. In addition, 60% of CFOs view the impact of continuing electricity price increases as another significant risk, up from 36% in 2014.

Respondents in Southern Africa are most concerned about the fragile state of the global economic recovery and electricity price increase, while East and West African CFOs cited currency volatility as their most pressing risk factor. The threat of terrorism and its impact on the economy is second on East Africa’s list of risk factors and third on West Africa’s.

A closer look at political concerns reveals that corruption and its impact on doing business is the greatest source of anxiety for South African CFOs. Government spending priorities and delivery on infrastructure projects are also amongst their top concerns. The picture for the rest of Southern African as well as East and West Africa looks similar, with CFOs in all regions highlighting corruption as their main concern.

The strategic focus for many CFOs in South Africa and its neighbouring countries this year is on increasing investor confidence and improving operational efficiency and process optimisation. This differs significantly from 2014 when the focus for CFOs in South Africa was on growing revenue from developed markets.

A more positive economic outlook means CFOs in East and West Africa are less concerned about improving investor confidence. In East Africa CFOs are more focused on growing brand equity and in West Africa on acquiring and retaining customers.

Respondents to Deloitte’s SSA CFO Report were polled over the course of eight weeks in June and July 2015. 260 CFOs and financial directors participated in the survey. More than 50% of South African respondents hailed from companies with annual turnovers of more than R3 billion. In Southern Africa 19.4% of CFOs represented companies with turnovers of US$250 million or more while in East Africa 18.4% worked at companies with annual turnover of more than US$250 million and in West Africa the figure was 25%. The number of respondents from global companies increased from 77 to 79 this year.

George says while there are common issues that CFOs throughout Africa are dealing with, respondents from the different regions are also addressing their own unique sets of challenges. “Wherever they are on the continent, Africa’s CFOs are expected to be nimble-footed in their multi-faceted roles as operators, stewards, strategists and catalysts.”

CFO_SA _Infographic PDF.

CFO Report PDF.