East Africa CEOs optimistic about growth this year – survey

About six in ten chief executive officers across East Africa believe that the economic situation in their countries will improve this year resulting in strong growth even as elevated inflation remains one of their primary concerns.

Even with the high level of optimism, the CEOs are looking out for potential disruptors in their respective industries and technological advancements/changes rank highest.

Further, over a third of the CEOs believe that the rate of the resignation of employees will not change in their companies in the next 12 months, advisory company PwC’s 26th Annual Global CEO survey says.

The study received views from a total of 4,410 CEOs across 105 countries globally between October and November 2022, with 138 CEOs from East Africa participating.

East African CEOs expressed confidence in their respective company’s prospects for revenue growth both in the next 12 months (55 percent) and the next three years (62 percent).

The optimism is in sync with the outlook published by the African Development Bank’s (AfDB) January Macroeconomic Performance and Outlook report.

It is estimated that growth in East Africa will moderate to 4.2 percent last year from 5.1 percent in 2021, and then rise to 5.0 percent in 2023 and 5.4 percent in 2024.

“The optimism presented by CEOs in the region is a testament to the efforts being made to recover and mitigate expected and unexpected headwinds, alongside confidence in opportunities for growth into the future,” noted Peter Ngahu, Regional Senior Partner, PwC Eastern Africa.

The captains of the industry from the region are, however, most concerned about their exposure to rising inflation in East Africa, macroeconomic volatility, adverse impacts of climate change on business as well as cyber risk in the next 12 months and five years.

Inflation remains is a key concern for industry bosses, as 49 percent of them indicated that they believe their companies will be highly exposed to this global challenge in the current year.

Although the region experienced strong economic growth in 2021 largely bouncing back from Covid-19 industry slumber, inflation remained at the highest level in the region’s recent history.

According to the Africa Development Bank’s East Africa Economic outlook 2022, the region’s inflation was averaging 40.6 percent in 2021 and was the highest among all African regions.

To overcome economic challenges and volatility, 37 percent of the CEOs surveyed indicated that they are partnering with the government at the national or local level to create new sources of value.

Over a third of the CEOs believe that employee resignation will not change in their companies in the next one year. In addition, as plans to mitigate against potential economical volatilities, 71 percent are not looking to roll out job culls whilst 51 percent are not planning to freeze hiring in the period under focus.

Instead, they place an emphasis on keeping their workforce as the foundation for building their businesses, as such 82 percent are not even planning on reducing compensation for their employees.

Read also: Tech companies record highest job culls in January

In the current year, the majority of CEOs see climate risk impacting their cost profiles and supply chains more than their physical assets.

More than half of the CEOs surveyed have indicated that they either plan to or are in the process of developing a data-driven, enterprise-level strategy for reducing emissions and mitigating climate risk.

The same proportion of CEOs also stated that they have planned to or are in the process of implementing initiatives to protect their company’s physical assets and/or workforce from the physical impact of climate change.

While CEOs don’t expect their supply chains to be impacted, 66 percent said that they plan to or are in the process of creating innovative, climate-friendly products or processes.

Only 18 percent of the CEOs surveyed indicated that they had completed initiatives to reduce their company’s emissions, indicating that while the plans exist there are still barriers to progression and completion.

Peter Ngahu, noted that the “survey shows that the CEOs who have more exposure to climate change are more likely to take action to address it. But combating climate change requires a coordinated, long-term plan to address the risk fully. The public and private sectors must work together to achieve this.”

On cyber and technology, almost a third of the respondents said that their company will be highly and extremely exposed to cyber risks in the next five years.

Cyber security breaches have increased across the East African Community due in large part to the rapid adoption of technology in the Covid-19 years.

The majority of the CEOs indicated that they will be investing in automating processes and systems, upskilling the workforce in priority areas and deploying technology in the next 12 months.

Disruptors to profitability

Although more than half of the surveyed CEOs believe that their companies will remain economically viable even more than 10 years from now, they do take note of potential disruptors that might affect that trajectory.

The CEOs surveyed rank technological disruptors highest (68 percent) with the potential to disrupt the industry in which they operate. This is followed by changes in regulations (64 percent) and changing customer demands/ preferences (64 percent).

“CEOs must continue to collaborate with a wide range of public and private sector stakeholders to effectively mitigate those risks, build trust and generate long term value-for their businesses, society and the planet,” said Peter Ngahu.

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