A majority of CEOs in South Africa are anticipating a decline in economic growth over the next 12 months. This presents challenges for businesses, the government and individuals, necessitating cautious and adaptable strategies.
These are insights from South African respondents to PwC’s 26th Global CEO Survey. In its new publication, entitled Africa Business Agenda: South African Perspective 2023, PwC highlights the challenges and opportunities that South Africa faces in terms of economic growth, company profitability and talent development.
The report delves into factors impacting company profitability, including the transition to new energy sources, technological disruptors, supply chain disruption, labour shortages and regulatory changes. Companies are urged to embrace renewable energy, adapt to new technology, fortify their supply chains and upskill their workers to ensure adaptability in a rapidly changing landscape.
South Africa’s economy
In terms of the global economic trend, only 18% of local CEOs anticipate improved economic growth, while a significant majority of 73% expect a decline. This indicates a prevailing sense of pessimism among CEOs in South Africa regarding the global economic landscape.
Christie Viljoen, PwC South Africa senior economist, says: “CEOs in South Africa are slightly less pessimistic about the global economic outlook, with 24% anticipating improvement compared to the global average of 18%. However, respondents from South Africa and the rest of the globe share a similar level of concern about their respective territory’s economic trends, with 59% of CEOs from both groups expecting a decline in economic growth this year.”
When it comes to slowing investments, delaying deals and reducing operating costs to adapt to a weaker economic environment, CEOs in South Africa are in line with their global counterparts, showing similar considerations or actions.
From a supply chain perspective, CEOs in South Africa are similarly inclined to find alternative suppliers, with 32% considering this compared to the global average of 33%. This may reflect a desire to diversify supply chains in an effort to mitigate risks.
South African workforce
Employee retention and upskilling are critical issues for companies in South Africa. According to our survey, many companies are expecting no change or an increase in employee resignation or retirement rates in the next 12 months.
In South Africa, the highest percentage of CEOs (53%) believe that there will be no change in employee resignation/retirement rates, while only 12% believe that rates will increase. Depending on the company, “no change” could mean an ongoing challenge with regard to resignation and early/unplanned retirement, but in any case it is a good idea to focus on employee engagement and satisfaction to retain top talent.
“We are living through a fundamental transformation in the way we work. We might not be able to predict what the workforce of the future will look like, but we do know for certain that the intersection of technology and talent will play an integral role in shaping it”, says Marthle du Plessis, PwC Africa workforce of the future platform leader.
“As digital becomes a core foundation to all business models – not a function or team of technologists – companies will need to shift their mindset on skills. Managers will need to become comfortable to manage new team compositions: teams of three – bot, human and augmented teams”, she adds.
South African societal purpose
The PwC survey reveals that unemployment remains one of the most pressing issues in South Africa affecting both the workforce and the economy. To drive workforce development and job creation, collaboration is crucial. To build a network with the right skills, companies can collaborate with different stakeholders to create the necessary skills at an industry level.
Shirley Machaba, PwC South Africa CEO, says: “Collaboration should not only exist within the private sector but should extend to other institutions such as universities to address the education challenges facing the country. CEOs in South Africa recognise this need, including the importance of collaboration with educational institutions.”
Echoing these sentiments Raj Dhanlall, PwC South Africa enterprise and supplier development (ESD) programme leader, says: “There is a lack of collaboration between companies and sub-Saharan African governments, which is a cause for concern.”
The survey data shows that NGOs (18%) are the group that companies in South Africa collaborate with the most to address societal issues, while academic institutions (12%) and entrepreneurs/start-ups (12%) are the groups that companies are least likely to collaborate with.
“Successful infrastructure development is only possible when there is trust between the government and its social partners. South Africans must work together to build successful, intra-Africa infrastructure that facilitates trade and investment,” Dhanlall concludes.