KPMG Africa CEO Outlook Report 2024 – Economic Outlook
Introduction
For the past decade, KPMG International has diligently conducted the KPMG Global CEO Outlook, surveying over 1,300 CEOs annually. Throughout these years, CEOs have demonstrated remarkable resilience amidst numerous disruptions that have shaped the decade, including the tumultuous periods brought on by the COVID-19 pandemic, inflation, and geopolitical tensions. We launched the inaugural edition of the Africa CEO Outlook. KPMG engaged over 130 CEOs and business executives from East, Southern, and West Africa to obtain insights into the region’s evolving business landscape.
At KPMG, our commitment to Africa remains strong as the continent presents numerous growth opportunities in the business environment. Insights from our CEOs highlight both the opportunities and challenges their organisations face. These insights explore important areas such as how businesses have evolved to navigate the shifting landscape while managing complex economic and geopolitical challenges.
The CEO Outlook primarily focuses on four thematic areas: Economic Outlook, Talent, Technology and Generative AI, and ESG. While CEOs remain confident in the future of the global economy, there is a significant consideration for escalating uncertainty and rising global crises – which has forced a reset in strategic thinking, a consolidation of talent, a renewed focus on collaborative approaches as well as an eye on upcoming technology and geopolitics.
KPMG is proud to collaborate with the leading voices of business in different sectors to share these insights with you. Over the coming weeks, we will do an in-depth exploration of the 4 key thematic areas. This week, we will take a closer look at the Economic Outlook, with highlights on East and Southern Africa and a particular focus on West Africa.
East Africa CEO Economic Outlook Summary
Shifting confidence in growth
East Africa CEOs are confident about the growth of their industries at 76 percent, but moderately about their countries’ economies at 60 percent compared to 82 percent last year. They are less confident about the growth prospects of the global economy (48 percent) and that of their companies (56 percent). This is a huge contrast compared with their global counterparts whose confidence in the growth prospects of the global economy stands at 72 percent and their companies at 76 percent.
Balancing act for CEOs
Trade barriers, regulatory demands, talent, public health crises and cyber insecurity are some of the trends CEOs agree will negatively impact their organizations’ prosperity over the next three years. Economic uncertainty is a top challenge for half of the CEOs – global 53 percent, Africa 52 percent and East Africa 54 percent. Despite this, East Africa CEOs are prioritizing organic growth and alliances in addition to the execution of their ESG initiatives and improving the customer experience to achieve their growth objectives over the next three years. They are also betting on AI by prioritizing investments to reap its benefits. With numerous convergence issues, 72% of East Africa CEOs feel pressured to ensure long-term growth for their organizations.
South Africa CEO Outlook Economy Summary
Economy
In South Africa’s dynamic economic landscape, CEOs are increasingly challenged to manage heightened complexities as they guide their organizations through economic headwinds. Confidence in the global economy has waned, with only 52 percent of South African CEOs expressing optimism about global growth prospects in 2024—down from 70 percent in 2023. As pressures mount, 77 percent of CEOs report feeling a greater responsibility to ensure the long-term success of their businesses amid an evolving list of economic challenges.
Evolving Risks
This year, South African CEOs identify economic decoupling between countries as the top risk for their organizations, a shift from last year’s primary concerns over geopolitical and political uncertainties. Other prominent risks include cyber security threats and disruptive technologies, with the combined pressures of these risks expected to influence pricing and operational stability over the next three years.
Resilience and Strategic Cost Management
To navigate these challenges, South African CEOs are prioritizing resilience and stability. Key strategies include inflation-proofing capital and input costs (22%), focusing on organic growth (15%), and strengthening supply chains to ensure consistent and transparent access to essential resources (15%). Through these targeted efforts, CEOs aim to not only address immediate operational needs, but also build the foundation for sustainable, long-term growth in a complex and competitive economic environment.
West Africa CEO Outlook Economy
In the constantly evolving economic landscape of West Africa, CEOs are navigating a delicate balance between cautious optimism and mounting challenges as they steer their companies through uncertain times in their business and economic environment. 63% of West African CEOs in 2024 are optimistic about global economic growth over the next three years, a decrease from 73% last year.
Confidence in their own country’s economic outlook has also taken a hit, with 60% of West African CEOs feeling positive, compared to 73% in 2023. These have impacted the confidence of the CEOs in the growth prospects for their companies. 60% remain confident about their organization’s prospects, down from 73% last year.
While West African CEOs maintain a level of optimism about the growth prospects for their companies and the economy, they see significant challenges and risks to growth coming from all directions. Economic uncertainty continues to impact strategy and dominates the minds of West African CEOs, with 57% identifying it as their top concern. Disruptive technology including navigating technological shifts – particularly the integration of generative AI (43%), geopolitical complexities (40%), and competition for talent (33%) are adding to the volatility and challenges of navigating long term structural change. These challenges are putting added pressure on West African leaders, with 77% admitting they feel the weight of responsibility to ensure the long-term survival and prosperity of their organizations. This percentage is higher than that of CEOs globally (75%) and from an African perspective (72%) who reported feeling similar pressure in their role.
The increased pressure on West African CEOs may be linked to a shifting range of threats to the growth of their companies growth.
Operational risks are cited by 33% of West African CEOs as the biggest threat to the growth of their organizations over the next three years, marking a shift from 2023 where geopolitical risks were the top concern.
Operational risks are cited by 33% of West African CEOs as the biggest threat to the growth of their organizations over the next three years, marking a shift from 2023 where geopolitical risks were the top concern. It is crucial to identify these operational risks, which may arise from an organization’s people, systems and processes to ensure they can be effectively managed. Cybersecurity also remains a significant concern as businesses become more digitally connected and vulnerable to attacks, partly due to the growing threats presented by AI. West African CEOs also recognize political uncertainty, regulatory challenges, economic decoupling, and inflationary pressures across markets as other key threats to their organization’s growth.
Despite these challenges and threats, many West African CEOs have raised their expectations for earnings growth. A majority (53%) now anticipate earnings to grow between 2.5% to 4.99% over the next three years, up from 33% in 2023. However, due to these same challenges and threats, headcount growth is projected to be modest in the next three years, with 53% of CEOs planning to increase their workforce by up to 5%, a significant drop from 73% in 2023.
Furthermore, these challenges have led to a decline in interest in mergers and acquisitions (M&A). Only 57% of West African CEOs now express interest in pursuing acquisitions with a moderate impact to their organizations, and 27% foresee undertaking acquisitions that will make a significant impact to their organizations, down from 60% and 37%, respectively, last year.
In response to these interrelated challenges, seven out of ten West African CEOs have already adapted their growth strategies to mitigate effects of any likely challenges and threats such as economic uncertainty, AI and operational risks. Compared to their African and global counterparts, West African CEOs display a cautious interest in mergers and acquisitions (M&A), seeing them as part of a broader strategy but not a primary focus for driving growth.
Instead, their primary strategy over the next three years will focus on organic growth complemented by forming strategic alliances with third parties as key drivers for growth. This emphasis on organic growth suggests West African leaders are exploring ways to optimize processes, allocate resources efficiently and introduce new products to the market. Additionally, Generative AI is increasingly viewed as a transformative tool for business advancement.
Conclusion:
This year’s survey shows that economic uncertainty, disruptive technologies and operational risks are of top concern to CEOs in the region. As the landscape evolves rapidly, CEOs need to adopt a more strategic approach to navigate these challenges. Successful West African CEOs will be those who embrace strategies like scenario-based planning, staying agile and flexible, and building resilience through diversification. West African CEOs should consider adopting a more deliberate approach to technology investments, particularly in generative AI, alongside organic growth strategies. Additionally, CEOs need to focus on mitigating operational risks while addressing the fierce competition for talent. Prioritizing staff retention through incentives and fostering a culture that values agility will be crucial for sustained success in this challenging environment.
Read more about the report here