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S African CEOs not confident of company growth in near term – survey

21st January 2016

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

  

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In light of South Africa’s pressing macro concerns, including social instability, government’s response to the fiscal deficit and debt burden, overregulation and unemployment, only 37% of local CEOs are very confident of growth in their own companies over the short to medium term, the latest PwC Global CEO Survey reveals.

The survey, conducted between September and November 2015, interviewed 30 CEOs from South Africa and further highlighted that local CEOs believed government had failed in achieving key outcomes, which further impacted growth.

Just under half of the South African CEOs – 47% – thought government had been effective in achieving a clearly understood, stable and effective tax system. Only 20% believed this should be a greater government priority, compared with a global average of 56%.

Speaking at a media briefing on Thursday, PwC Southern Africa CEO Dion Shango noted that the gap between the local and global average could indicate that the country had a sophisticated, well-run, well-scrutinised tax system compared with other jurisdictions.

“This is quite an interesting response,” he said.

Meanwhile, 100% of local CEOs felt the government had been ineffective in achieving high levels of employment, while 87% believed government should prioritise a skilled, educated and adaptable workforce.

The survey, subtitled ‘Redefining business success in a changing world’ also outlined that skills remained the most significant business threat, with 90% agreeing that this was a major concern, compared with a global average of 72%.

Eighty per cent of local CEOs were also worried about increasing bribery and corruption.

However, business recognised that it had a role to play in delivering better economic growth, with 80% of local CEOs believing they could help deliver a skilled workforce and 60% prioritising workforce diversity and inclusiveness. This was compared with the global average of 75% and 35%, respectively.

Meanwhile, 40% of local CEOs believed adequate physical and digital infrastructure was a national priority to society, while 43% believed it should also be a government priority.

Sixty per cent felt government had failed in rolling out adequate physical and digital infrastructure to date, but only 27% of CEOs believed business could play a role in improving this.

Only 20% of South African CEOs anticipated global economic growth to improve in the year ahead, down from 29% last year. This was close to the global average of 27%.

The survey found that China’s economic rebalancing, the drop in the crude oil price and geopolitical security concerns were the biggest factors impacting on the overall increase in uncertainty.

Significantly, only 35% of global CEOs were very confident of their own companies’ growth in the coming year.

On a positive note, 57% of South African CEOs expected to see an increase in headcount in the next 12 months, while 20% were planning to cut their workforce this year, as 67% of local CEOs planned to implement a cost-reduction initiative. Further, 67% were planning to enter into a new strategic alliance or joint venture.

“It is also positive to note that 60% of local CEOs plan to focus on building a pipeline of leaders for tomorrow, suggesting business leaders’ recognition of the wider skills the next generation of CEOs will need to tackle a more complex environment encompassing technology, wider threats and expectations of stakeholders for their organisations,” Shango added.

Perhaps reflecting local CEOs’ wider views on rising stakeholder expectations and business trust issues, 47% said they were focusing more on workplace culture and behaviours.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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