CEOs in Africa are optimistic about opportunities for business growth on the continent and expect their operations to grow within the next 12 months despite the recent economic uncertainty, according to the findings of a report released by professional services firm PwC.

The vast majority of CEOs in Africa (95%) are confident long-term about growing their businesses on the continent in the next three years. Overall, the report shows that optimism about Africa’s growth trajectory is well-founded in fact and experience.

“Even though the economic climate remains challenging, CEOs in Africa are more upbeat about prospects for economic growth than their international counterparts. Almost all of the CEOs in Africa expect their business to grow in the next 12 months, whereas PwC’s Global CEO Survey is showing us that only 75% of global business leaders expect their organisations to do the same. The optimism among African CEO’s is being fuelled by the current and anticipated growth prevalent across all markets, industries and geographic regions, which are being experienced across the continent,” says Suresh Kana, CEO of PwC Southern Africa.

Kana says it is also encouraging to note that confidence among South African CEOs remains positive. In the mid-term South African CEOs are as confident about growth as CEOs in the emerging economies, believing that it will gain momentum in the next three years.

PwC’s study shows that the top priorities for CEOs in Africa are talent management, the risks of doing business on the continent and strategies that CEOs plan to implement in order to change their businesses.

Where is growth?

In Africa, the environment is constantly changing and the growth opportunities are unparalleled. A high percentage of CEOs (79%) in Africa plan to change their business strategies over the next 12 months, compared with a significant 88% of South African CEOs who anticipate changing their companies’ strategy in the next 12 months, and the global average of 70%. The reasons they give for changing their business strategies are closely aligned to the challenges they currently face. These include the recent economic uncertainty, competition, risk, talent and the evolving regulatory environment.

African CEOs say the best strategic growth opportunities in the next 12 months will come from new products or service developments (27%); an increased share in existing markets (27%); new geographic markets (24%); new joint ventures or strategic alliances (13%); and mergers and acquisitions (7%).

At the same time, priorities such as technological investment, research and development and innovation capacity, organisational structure and capital investment decisions feature at the top of their strategy agendas.

Kana says that the emerging markets remain a vital growth opportunity for CEOs. “Foreign investors are looking at South Africa and Africa with keen interest for growth opportunities.”

Main risks to doing business in Africa

The majority of CEOs in Africa (79%) are concerned about economic risks and it is considered the major driving force for changing 62% of CEO’s business strategies.

CEOs are also concerned about other policy risks such as uncertain or volatile economic growth, fluctuations in the exchange rates, inflation and over-regulation. Other challenges, which include the availability of key skills, energy costs and an increasing tax burden, are also worrisome.

Kana says that CEOs in South Africa share many of the same concerns as their counterparts on the continent, with the report showing that there is uncertainty about economic growth, instability in the capital markets and in increase in debt.

Bribery and corruption are considered a major risk to economic growth by 69% of African CEOs and 66% of South African CEOs. Many CEOs believe that corruption is an outcome of poor governance.

Managing risk is just one of many responsibilities for CEOs in Africa, but more than half of them (54%) wish they had more time to spend on it. A significant percentage of CEOs (81%) anticipate changes to their approach in managing risk this year. “This could be an indication that business risks have a complex and expensive effect on business operations,” says Kana.

The skills challenge

The availability of key skills stands out as a key concern for CEOs both in Africa and South Africa. “An inability to find and keep the right people is a massive issue, with CEOs saying that the lack of talent is stifling expansion within their organisations,” Kana says. He says that the competition for talent is increasing significantly as recruitment activity picks up in some sectors and there are difficulties in finding staff with the right skills and experience.

On a daily basis, many CEOs are making time for the development of talent and 74% wish they had greater capacity to develop leadership and their talent pipeline. An overwhelming majority of CEOs in Africa (87%) plan to make direct investments in workforce development this year. Businesses are making these investments to help cultivate a future supply of potential employees and to improve overall working and living conditions where they operate, states the report.

CEOs are also increasingly finding it difficult to hire workers within their industry, with high-potential middle managers and senior managers being the two most difficult groups of employees to recruit and retain. At the same time, the need for high-potential managers has placed a premium on their worth. Over half of CEOs in Africa (54%) say that talent-related expenses rose more than expected over the last 12 months and many complain anecdotally about poaching and poorly-trained and inexperienced managers.

Tom Winterboer, financial services leader for PwC Southern Africa and Africa, says: “African and South African CEOs have built on the experience of the past few years and are better prepared to deal with the host of challenges and uncertainties. CEOs have and also continue to reshape their business strategies to take advantage of new opportunities for growth, both in existing and new markets.”