South African CEOs believe that AI will displace more jobs than it creates

More than a third (35%) of CEOs in South Africa believe that global economic growth will decline over the next 12 months, as caution prevails.

This is one of the finding of PwC’s 22nd annual survey of 1,300 plus CEOs, launched at the World Economic Forum annual meeting in Davos this week.

Globally, 29% of business leaders believe that economic growth will decline in the next 12 months – a record jump in pessimism.

This is in vivid contrast to last year’s record jump, 29% to 57%, in optimism about global economic growth prospects, PwC said.

Only 30% of CEOs in South Africa (global 42%) believe that global economic growth will improve moderately during the course of the year.

Overall, CEOs’ views on global economic growth are more polarised this year, trending downward.

Dion Shango CEO for PwC Southern Africa, said: “The prevailing sentiment this year is one of caution in the face of increasing uncertainty. CEOs all around the world are less optimistic than they were a year ago about the strength of the global economy and their organisations’ ability to grow revenues in both the short and medium term.

“In South Africa, economic and policy uncertainty, among other issues, have cast doubt upon business leaders’ prospects for future growth.”

The unease about global economic growth is lowering CEOs’ confidence about their own companies’ outlook in the short term.

35% of global CEOs said they are ‘very confident’ in their own organisation’s growth prospects over the next 12 months, down from 42% last year.

In South Africa, only 18% (compared to 22% in 2018) of CEOs are ‘very confident’ about their own company’s prospects for revenue growth over the next 12 months.

In addition, 30% of local business leaders (Global 36%) are ‘very confident’ about their business’s prospects for growth over the next three years.

South African CEOs named the US (25%) followed by China, the UK and Kenya (20%) as the most important countries for their organisation’s overall growth prospects over the next 12 months.

“As CEOs plan the future of their organisations this year, chief executives clearly feel the impact. While most still believe in globalisation, they appear to be less interested in expansion plans outside their home markets,” said Shango.

“Instead, organisations are narrowing their focus of staying local in the search for revenue growth.”

Threats to growth

As indicators predict an imminent global economic slowdown, CEOs have turned their focus to navigating the surge in populism in the markets where they operate.

Trade conflicts, policy uncertainty, and protectionism have replaced terrorism, climate change, and an increasing tax burden in the top ten lists of threats to growth.

South African CEOs’ concerns around a broad range of business, societal and economic threats continue to increase.

CEOs are ‘extremely concerned’ about social instability (South Africa 68%; global 18%), uncertain economic growth (South Africa: 68%; global: 24%), populism (South Africa: 55%; global: 28%), exchange rate volatility (South Africa: 49%; global 26%), and trade conflict between the US and China (South Africa: 100%; global: 88%).

Of business threats, 33% of South African CEOs (compared to 34% globally) said they were ‘extremely concerned’ about the availability of key skills, 38% (compared to 30% globally) cited cyber threats, and 38% (compared to 28%) stated the speed of technological change as concerns.

Data & Analytics

This year’s survey took a deep dive into Data & Analytics and Artificial Intelligence (AI), two key areas on leaders’ radars, to get CEOs’ insights on the challenges and opportunities.

This year’s survey revisited questions about data adequacy first asked in 2009. It was found that CEOs continue to face issues with their own data capabilities, resulting in a significant information gap that remains ten years on.

Despite billions of dollars of investments made in IT infrastructure over this time period, CEOs report still not receiving comprehensive data needed to make key decisions about the long-term success and durability of their business.

Leaders’ expectations have risen as technology advances, but CEOs are keenly aware that their analysis capabilities have not kept pace with the volume of data which has expanded exponentially over the past decade.

When asked why they do not receive comprehensive data, CEOs point to the ‘lack of analytical talent’ (global 54%; South Africa: 50%), followed by ‘data siloing’ (global: 51%; South Africa: 63%), and ‘poor data reliability’ (global: 50%; South Africa: 41%).

When it comes to closing the skills gap in their respective organisations, CEOs agree that there is no quick fix.

46% globally, compared to 38% of South African CEOs, see significant retraining and upskilling as the answer, with 17% (South Africa 20%) also citing establishing a strong pipeline directly from education as an option.

Artificial intelligence (AI)

85% of CEOs globally (South Africa 90%) agree that AI will dramatically change their business over the next five years. Nearly two-thirds globally view it as something that will have a larger impact than the internet revolution.

Despite the bullish view on AI, 23% of CEOs globally (South Africa 28%) have ‘no current plan’ to pursue AI, the report said.

In addition, 33% globally (South Africa 32.5%) have taken a ‘very limited approach’.

When it comes to the impact AI will have on jobs, 55% of South Africa’s CEOs believe that AI will displace more jobs than it creates.

“To help unlock internal growth potential in their organisations, chief executives are paying close attention to emerging digital technologies such as AI,” said Shango.

Almost $15.7 trillion in global GDP gains is expected from AI by 2030, according to PwC estimates.

“As CEOs focus more on execution, search for revenue growth, work to address data and talent issues, implement emerging technologies, and seek to capture related benefits and value, we urge them not to retreat from the broader conversation on establishing new societal frameworks needed to meet evolving human needs and foster sustainable prosperity,” Shango said.

Read: New banks will drive down the cost of banking for everyone in South Africa: PwC

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South African CEOs believe that AI will displace more jobs than it creates