But CEOs warn that a lack of skills development and a huge youth unemployment challenge will hamper the continent’s competitive ability in the fourth industrial revolution.
Despite the lack of key technological skills in Africa – resulting in growth and preparation for the technological revolution being hampered – CEOs on the continent have a greater sense of optimism about the future than their global counterparts.
This was one of the broad findings presented at the 28th World Economic Forum on Africa (WEF Africa), held in Cape Town this week.
The event was themed Shaping Inclusive Growth and Shared Futures in the Fourth Industrial Revolution.
Delegates – comprising entrepreneurs and business and political leaders – sought to find solutions to a continent grappling with the rampant looting of government resources, inequality and unemployment.
Four key areas were covered: innovation, sustainable development, digitisation and governance.
Discussions on the Africa Skills Initiative – which proposes innovative approaches to improve the prospects of Africa’s youth – provided insights into how to address skills development.
Talks also focused on the need for the fundamental reform of education systems and labour policies to prepare workforces for a digitised future.
PwC Africa’s chief executive Dion Shango said African CEOs had acknowledged the effect that technological advances were having on businesses operating in Africa, along with the increasing influence of artificial intelligence – and that this was expected to accelerate.
Yet, he said, surprisingly few CEOs had strategies in place to prepare for an uncertain digital future.
“So, how CEOs plan for changes resulting from these advancements is something quite serious,” he added.
Shango said that of the 1 400 global business leaders canvassed in PwC’s annual CEO Survey for 2018, 171 were based in Africa.
According to Shango, the survey revealed a marked rise in pessimism globally, but when asked for their views on the global economy and GDP growth over the next 12 months, “Africa-based CEOs tend to agree with the view of the rise in pessimism, but this is not quite as pronounced as what it is for their global counterparts”.
Shango said that Africa-based CEOs also showed considerably more optimism when it came to the possibility of generating good revenue over the next 12 months – which was slightly “out of sync with what they say about the global economy”.
“Typically, what we see are CEOs highly confident in their own abilities. So, despite the worsening outlook and the challenging environment, they think they have what it takes by following their way of strategising, using their teams and plans, to still achieve growth within their companies,” said Shango.
He said another key finding of the survey was the difficulty in identifying geographic growth when the world was beset by trade conflicts, protectionism and a rise in populism and nationalism.
“It is becoming increasingly difficult for business leaders to find new markets, where they can invest in confidence and ensure that they can achieve a good rate of return,” he said.
Many CEOs simply said they did not know where to look for new markets, added Shango. He pointed to a sharp decline – by 10% – in African CEOs doing business with markets such as the US, China and large parts of Europe, which were previously their favoured investment destinations.
On the subject of skills, Shango likened the availability of key skills to an African tragedy, “in the sense that we have what is widely acknowledged as being the largest young population of all the continents – unlike many parts of the world, which grapple with the problem of an ageing population. Yet all these young people we have in Africa do not appear to have the right or appropriate skills that CEOs are looking for.
“CEOs say the lack of these skills means that their businesses cannot achieve their growth targets. Hence, they cannot be as efficient as they would like, nor can they generate the data required to help them formulate clearly defined long-term strategies.
“The lack of key and relevant skills is a serious issue. Something concrete needs to be done by both the private sector and governments throughout the continent to upskill, train and develop the youthful populations that we have across the African continent,” he said.
PwC CEO Shirley Machaba echoed Shango’s thoughts, saying that the fourth industrial revolution (4IR) was a huge challenge in that it would bring more efficiencies to the workplace but could result in a huge loss of employment.
“CEOs, particularly in South Africa, believe that the data they currently have does not facilitate their decision-making ability because they lack skilled people to interpret the data. CEOs therefore have to reskill their unskilled workforce,” said Machaba.
She said South Africans felt confident about realising economic growth even while they were concerned about “threats relating to policy uncertainty and the rebuilding of state-owned enterprises not yet being finalised”.
“Doing business in South Africa is a bit problematic, especially since most of the jobs to be created in South Africa are meant to come from small business – and, according to one research report, it takes 40 days on average to open a business in South Africa, compared to the 0.5 days it takes to do so in other countries,” she said.
Shango said companies would have to train and develop their own skills pipeline if they were unable to hire those with the requisite skills.
“The private sector must go down the value chain to capture talented people at school or university level, and get involved that early on. It means that significant investment needs to go into upscaling within companies to prepare Africa’s workforce for a digital future.
“It also means that companies have to invest in people skills, which are not easily teachable. I am referring to emotional intelligence skills, which are rare in any organisation,” he said.
RISING DEBT AND MACROECONOMIC CHALLENGES REMAIN AS RISKS TO AFRICA’S FRAGILE ECONOMIES
The economic outlook for Africa for this year and 2020 will continue to grow faster than the world average. That’s the good news. But, says Reserve Bank governor Lesetja Kganyago, there are still risks associated with rising debt levels.
He made this comment during a panel discussion on the topic, Africa’s Economic Update, which took place at WEF Africa this week.
“Some of the countries which received debt relief have piled up debt again. The difference this time, though, is that the debt is not official debt; it is held in the private sector. This poses a challenge,” he said. “But for as long as you have improving growth prospects and you are able to contain deficits, the debt situation can be contained.”
According to Kganyago, sub-Saharan Africa is growing by more than 5% annually.
Standard Bank Group Africa’s chief executive, Olusola David-Borha, agrees with Kganyago, saying she has seen ongoing economic growth on the continent.
“The convergence of technological innovation in various sectors is enabling us to find financing solutions to address our clients’ problems. These are helping to drive growth on the continent,” said David-Borha.
But Albert Zeufack, the World Bank’s chief economist for Africa, said recovery on the continent would remain fragile. “We still have, in the year ahead, five of the 10 fastest growing economies – Ethiopia, Senegal, Ghana, Ivory Coast and Rwanda. These economies continue to power ahead.
“But the macro outlook warns of risks, which include the growing trade tensions across the world that are threatening to lower global growth; volatility in commodity prices that will continue to undermine growth in our largest economies; and challenges of inclusion, job opportunities and sound fiscal policies,” said Zeufack. – Peter Luhanga
INVESTMENT IN THE FUTURE
Shango said the time was ripe for CEOs conducting business in Africa to realise a greater purpose than posting profits: they had the opportunity to make a real difference in the communities in which they operated by upskilling their employees.
“It is an investment in the future. Granted, this will not always come with a financial rate of return, but certainly it will reap socioeconomic benefits over the long term. To this end, governments throughout the continent need to create an enabling environment to make it easier for companies to invest in such initiatives, even if it means creating incentives that encourage companies to invest in a way that is consistent with that government’s goals.”
Shango said that in terms of food production, 60% of the world’s unused arable land was in Africa, yet Africa imports most of its food.
“So, the opportunity to feed the world is here. This begs the following questions: Do we have the willpower to seize upon this opportunity? Do we have what it takes to create an enabling environment to attract investors in the agricultural sector to come and build farms here and grow whatever they can in order to feed us Africans and the entire world?”
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