SA’s business leaders aren’t very optimistic, new survey shows

CEOs are cautiously optimistic. Picture: iStock
CEOs are cautiously optimistic. Picture: iStock

The state of the economy, unemployment and political uncertainty, among other issues, are casting a shadow over business expectations in South Africa.

This is according to Dion Shango, chief executive of PwC Southern Africa, who was commenting on the results of the company’s 21st survey of 1293 chief executives around the world.

The latest survey revealed that business leaders in South Africa were less confident than their global counterparts regarding their growth prospects in 2018. Only 22% of chief executives in South Africa were “very confident” of their company’s own growth in the next 12 months – 20 points below the global average (42%).

However, South African chief executives – 37%, compared with 45% globally – were slightly more confident about their own company’s prospects for revenue growth over the next three years.

In addition, 37% of South African chief executives also expect global economic growth to improve in the next 12 months – 20 points below the global average.

“Chief executives’ 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,” Shango said.

The global survey results, based on interviews with almost 1300 chief executives from 85 countries, were released at the World Economic Forum’s annual meeting in Davos this week.

Top countries for growth

Chief executive confidence in the US market extends overseas, with non-US based chief executives once again voting it the top market for growth in the next 12 months. This year, the US reinforces its lead on China (46% US vs 33% China, with the US lead over China up 2% compared with 2017).

Germany (20%) remains in third place, followed by the UK (15%) in fourth place, while India bumps Japan as the fifth most attractive market in 2018.

South African chief executives named the US (32%), the UK (27%), and China (24%) as the three most important countries for their organisation’s overall growth prospects over the next 12 months.

In South Africa 41 chief executives from a broad spectrum of listed and privately owned companies participated in the online survey.

Of business threats:

37% of South African chief executives (compared with 38% globally) said they were “extremely concerned” about the availability of key skills;

41% (compared with 40% globally) cited cyber threats; and

32% (compared with 38% globally) stated the speed of technological change as concerns.

It is notable that 22% of South African chief executives (compared with 14% globally) stated that they were “somewhat 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.

Global perspective

Looking at the results by country, it’s a mixed bag.

Chief executives’ outlook improved in several key markets, including in Australia (up 4% to 46%) and China (up 4% to 40%), where the share of chief executives say they are “very confident” in their own organisation’s 12-month growth prospects.

In the US, chief executives’ confidence has recovered. After the US general election last year, the early focus on regulation and tax reform by the new administration has seen confidence in business growth prospects for the year ahead rising significantly – from 39% in 2017 to 52% in 2018. North America is the only region where a majority of chief executives are “very confident” about their own 12-month prospects.

In the UK, with Brexit negotiations only recently reaching a significant milestone, business leaders’ drop in short-term confidence is unsurprising (2018: 34% vs 2017: 41%).

In addition, 39% of South African chief executives (globally 32%) believe that changes in core technologies of production or service provision, such as artificial intelligence, will be very disruptive for their business over the next five years. A fifth of South African chief executives (20%), compared with 23% globally, think that changes in industry regulation will also be very disruptive to businesses over the next five years.

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