Growth on African continent is shaping the business agenda for CEOs
Africa has always been regarded as a continent that has the potential to offer significant growth opportunities. However, this comes with a certain amount of risk as the country is still largely regarded as an unknown. This is driven by issues such as bribery, corruption and onerous regulation.
However, this growth cannot be ignored. In an effort to highlight the challenges that Africa poses auditing giant Price Waterhouse Coopers (PwC) has released a report called The Agenda, which serves as a truthful guideline to African investment.
According to the report, CEOs in Africa are optimistic about the prospects for revenue growth over the next year. According to a recent report issued by PwC, CEOs in Ghana (94%), South Africa (90%), Zimbabwe (90%) and Rwanda (87%), show the highest level of optimism, while CEOs in Gabon (30%), Tunisia (20%) and Côte d'Ivoire (17%) were the least confident.
Risk management is a major concern
The greatest risks to confidence and growth are bribery, corruption and government not delivering on its promises, this is according to PwC's Africa Business Agenda publication, released. These and other risks to growth prospects are not new to business and include inadequate infrastructure and a shortage of skills.
Suresh Kana, PwC Senior Partner for Africa, says that agility in response to change, challenge and opportunity is the deciding factor between companies that thrive in Africa, and those that are merely doing business.
The Agenda compiles survey results from 301 CEOs in Africa and includes insights from business and public sector business leaders from 22 countries. The publication shows that most CEOs in Africa feel confident about their approach to managing risk, despite some volatility and uncertainty.
To manage change and grow their companies, CEOs in Africa say that they need to employ the right people. Talent management strategies are helping them to recruit the best and the brightest from their home markets, imported skills and specifically from within Africa.
Confidence, change in strategy and growth
Anne Eriksson, PwC Regional Senior Partner for the East Market Region in Africa, says that confidence is very strong among Africa's CEOs. "Confidence is inspired by growth potential across every industry sector. There is a great deal of variation among companies that wish to harness this potential. In Africa, and beyond, agility is the main underlying factor allowing companies to realise their full potential,” she says.
Agility is being implemented through specific strategy changes. The report adds that most CEOs anticipate some change to their company's strategy within the next year. Growing customer bases, enhancing customer services and implementing new technology are considered the top three investment priorities over this period.
Main risks to doing business in Africa
Infrastructure is considered an important driver of economic growth. However, 45% of CEOs in Africa do not believe governments are doing enough to improve infrastructure. "While the importance of infrastructure as a driver of development cannot be overemphasised, African CEOs also identified financial sector stability (56%) and reducing poverty and inequality (56%) as areas in which governments should be taking more decisive action.”
At least half of CEOs in every country surveyed are concerned about the threat which uncertain or volatile growth poses to their businesses. However, the average level of concern for the continent (77%) is still slightly lower than the global average (81%).
Kana adds that managing risk is just one of the many responsibilities facing CEOs in Africa, with 74% anticipating changes in the approach to managing risk in their organisation in the next year. "In South Africa, the King III Report in Corporate Governance acknowledges that strategy, risk performance and sustainability are inseparable. As such, companies in Africa need to take these interrelationships even further and link them to overall company performance,” says Kana.
Ken Igbokwe, PwC Regional Senior Partner for the West Market Region in Africa, says that companies may have some exposure to risk in Africa, but they can design their responses, procedures and safeguards effectively. "The Agenda shows they are implementing deliberate growth strategies based on an evolving understanding of the places where they operate, their customers and supply lines. And they employ the best and the brightest to achieve their objectives. Not only that, but their high potential talent tends to stick around,” he says.
Looking past the risks
It is undeniable that Africa does present many challenges. But for companies who are brave enough to look past these challenges, the continent can offer a plethora of opportunities.
A company which has a significant challenge in Africa is Liberty. Through its strategic partnership with Standard Bank, the company has established a presence in 14 countries. Steven Braudo, CEO of Liberty Retail points out that while the profits from these markets are not as significant as the profits from the local market, the potential growth from African markets is significant.
Liberty's expansion into Africa can also be seen as somewhat of a success story. In 2006, the company had no investments outside of Africa. Seven years down the line, the company has a presence in 14 countries. That's a growth of two countries a year. And although CEO of Liberty Holdings, Bruce Hemphill, adds that the company does not offer its full bouquet of services in all of those markets, it is a foot in the door and creates a platform to introduce the full bouquet at a later stage.
Editor's Thoughts:
The secret into increasing your African footprint is to work off strategic partnerships. The advantage that Liberty has is its association with Standard Bank which is Africa's largest bank. Wherever Standard Bank is, Liberty has a calling card and a platform to expand. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.
