South Africa’s CEOs have more concerns than global counterparts

Worldwide, the majority of CEOs are optimistic about the economic environment despite geopolitical uncertainty, corporate misconduct and the impact of artificial intelligence on the future job market. However, CEOs of South African companies are less confident than their global counterparts regarding their growth prospects in 2018, according to PwC’s 21st survey of 1,293 CEOs around the world. Some 57% of global business leaders said they believe global economic growth will improve in the next 12 months. This percentage is almost twice the level of last year (29%) and the largest ever increase since PwC began asking about global growth in 2012. However, only 22% of CEOs of South African companies are “very confident” of their company’s own growth in the next 12 months – 20 points below the global average (42%). South Africa CEOs – 37%, compared to 45% globally – are slightly more confident about their own company’s prospects for revenue growth in the next three years. In addition, 37% of South Africa CEOs also expect global economic growth to improve in the next 12 months – 20 points below the global average. Dion Shango, CEO of PwC Southern Africa, said: “CEOs’ optimism in South Africa is more tempered than that of the developed economies, especially regarding their own organisations’ prospects for revenue growth. The state of the economy, unemployment and political uncertainty, among other issues, are casting a shadow over business expectations.” South Africa CEOs named the US (32%), the UK (27%), and China (24%) as the three most important countries for their organisation’s overall growth prospects during the next 12 months. CEOs are “extremely concerned” about social instability (South Africa: 98%; global: 73%); overregulation (South Africa: 93%; global: 83%); unemployment (South Africa: 93%; global: 50%); uncertain economic growth (South Africa: 93%; global 74%); exchange rate volatility (South Africa: 90%; global: 70%); and populism (South Africa: 88%; global: 77%). Of business threats, 37% of South Africa CEOs (compared to 38% globally) said they are “extremely concerned” about the availability of key skills, 41% (compared to 40% globally) cited cyber threats, and 32% (compared to 38% globally) stated the speed of technological change as concerns. It is notable that 22% of South Africa CEOs (compared to 14% globally) stated that they are “extremely concerned” about potential ethical scandals. This comes in the wake of a growing number of firms that have suffered reputational damage in the past year because of ethical lapses. In addition, 39% of South Africa CEOs (global: 32%) believe that changes in core technologies of production or service provision, such as artificial intelligence, will be very disruptive for their business during the next five years. A fifth of South Africa CEOs (20%), compared to 23% globally, think that changes in industry regulation will also be very disruptive to businesses over the next five years. CEOs’ concern about the threat of climate change and environmental damage to growth prospects has now doubled to 31% of global CEOs (South Africa: 24%). This year, 80% of South Africa CEOs (compared to 79% globally), plan to expand by way of organic growth in the next 12 months. In addition, 56% of CEOs (compared to 47% globally) plan to enter into a new strategic alliance or joint venture, and only 44% (compared to 42% globally) propose a new M&A. Some 59% of local CEOs (compared to 62% globally) plan to implement a cost-reduction initiative. It is notable that 37% of South Africa CEOs – compared to 58% in 2016 – plan to increase their headcount in 2018, while 54% of global CEOs plan to increase their headcount. In addition, only 18% of CEOs globally, compared to 22% of CEOs of South African companies, expect to reduce their headcount. Two thirds of South Africa CEOs say this is mainly due to automation and other technologies. On digital skills specifically, 28% of CEOs are extremely concerned about their availability within the country they are based, rising to 49% being “extremely concerned” in South Africa. While recent research by PwC found that workers were optimistic about technology improving their job prospects, CEOs admit that helping employees retrain, and increasing transparency on how automation and artificial intelligence could impact jobs is becoming a more important issue for them. Two thirds of CEOs globally, compared to 67% of CEOs of South African companies, believe they have a responsibility to retrain employees whose roles are replaced by technology. To prepare for the digital age, the majority of CEOs (91%), compared to 90% of CEOs of South African companies, strongly agree that they need to strengthen soft skills, such as teamwork and communication, alongside digital skills.

South Africa’s CEOs have more concerns than global counterparts

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