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Amid challenges including energy shortages, logistical issues and global inflation, CEOs in South Africa are cautiously optimistic about the local economy's potential growth prospects over the next 12 months.
About 40% of them have pinpointed inflation as a leading threat to their value creation and delivery, closely followed by macroeconomic volatility (also at 40%).
That’s according to the findings of PwC’s 27th Annual Global CEO Survey released this week, which saw 48 CEOs in South Africa participate in the survey. The firm also released its 2024 Africa Business Agenda: South African Perspective report, which draws on the insights of 380 CEOs in Sub-Saharan Africa.
READ: Sarb's Monetary Policy Review notes government’s balancing act on energy crisis, fiscal strain
The report assesses CEOs’ sentiments under four key themes: growth sentiment, threats and opportunities, Generative AI (GenAI) and climate action, all in the context of confronting megatrends such as climate change, technological disruptions, demographic changes, social instability and global fragmentation.
Growth sentiment, threats and opportunities
CEOs in South Africa, as per the report and survey, are cautiously optimistic about potential growth prospects over the next 12 months. This includes confidence in the sustainability of their organisations and their long-term revenue prospects, a sentiment that outpaces their global peers.
According to the PwC's survey, 60% of CEOs in South Africa believe the global economy will grow in the next 12 months, compared to 38% globally.
The various factors affecting these negative sentiments included growing social inequality and the operational consequences of new technologies, as well as inflation and policy changes, which may affect how they create and deliver value.
Social inequality
CEOs also pinpointed social inequality (29%) as a pressing concern for their businesses. The report noted that according to the International Monetary Fund, inequality in South Africa remains stubbornly high, and although government has made efforts to address the issues, the private sector is yet to fully adopt initiatives directed at addressing inequality.
It also noted that while South Africa's economic growth forecasts remain conservative, with the African Development Bank projecting marginal growth of 1.5% in 2024, a great deal of uncertainty lies in the outcome of the country's general elections later this month and the subsequent economic policy direction.
READ: South Africa’s economy is going nowhere slowly
In 2023, the South African economy experienced modest growth of 0.6%, largely attributed to challenges such as insufficient energy supply, logistical shortcomings and waning confidence among businesses and households.
The report stated:
Considering the potential of international countries for revenue growth, CEOs in South Africa indicated that China (31%), the UK (25%) and the US (21%) were key markets for business opportunities.
"Given the Chinese economy's size and influence on global trade, China's future growth prospects will play a significant role in how local companies perform," the report said.
Generative AI
Looking ahead, 60% of surveyed CEOs anticipate technology to significantly influence their businesses' performance in the coming three years.
READ: Artificial intelligence: the rise of ChatGPT and deepfakes
On the uptake of Gen AI among South African companies, a majority (65%) of local CEOs said they have not yet adopted it, while 63% say GenAI has not yet impacted their business strategy.
However, these CEOs do recognise the positive impact that GenAI can have on their operations, with 54% agreeing that it will improve the quality of their products and services in the next 12 months.
"In the next three years, CEOs agree, GenAI will have a more significant impact on their businesses, with 63% expecting that GenAI will affect how their company delivers value. CEOs also believe that GenAI will require their workforce to develop new skills, and they agree that GenAI will increase competition in their industries," the report stated.
