Chief executives are increasingly optimistic about the outlook for their own business, and despite the delta variant of Covid-19 slowing down the ‘return to normal’, their confidence in both the global and local economy has returned to levels not seen since the start of the pandemic.
KPMG South Africa’s 2021 CEO Outlook, in partnership with Business Leadership South Africa (BLSA), is an extension of the 2021 Global survey and draws on the perspectives of 50 CEOs across ten industries. Reflecting on their strategies and outlook over a three-year horizon, it highlighted that 70% of leaders are confident about the local economy’s growth prospects over the next three years.
The data shows that 82% of CEOs are confident about growth prospects for the country, and overall confidence has returned to pre-pandemic levels of early 2020. Notably, 90% of local bosses are optimistic about the growth prospects of their own companies, compared to 87% of chief executives internationally.
The local economy is forecast to grow at around 2% in 2022, and with the prospect of a more robust global economy, CEOs are looking to invest in expansion and business transformation.
The survey shows that 62% of senior executives are identifying inorganic methods – such as joint ventures, M&As and strategic alliances – as their organisation’s primary strategy to support growth.
Most local leaders (88%) also stated that they expect aggressive growth and are looking to make acquisitions in the next three years to facilitate this and transform their businesses, closely aligned to the global average of 87%.
Asked which risks posed the greatest threat to their organisation’s growth, around a quarter (24%) of local CEOs selected supply chain risk against 18% for the CEOs of benchmark countries.
Similarly, 16% of South African CEOs cited operational risk, with the benchmark countries at only 8%. That reflects the extent of the trauma that recent events have inflicted on our economy, said Busi Mavuso, chief executive of Business Leadership South Africa.
“Both because of Covid and unrests, many businesses had to shut their operations for certain periods and far too many were unable to reopen. South Africa’s socio-economic challenges are formidable by global standards. But while the terrain ahead is difficult, we have already charted a path for a future economy that is more resilient and has potential for sustainable growth.”
Mavuso said that the Economic Reconstruction and Recovery Plan, approved by all social partners at Nedlacand adopted by Cabinet, is integral to this.
Numerous difficulties face the successful implementation of this plan, including opposition from some political quarters and those with vested interests, Mavuso said.
“Progress has certainly been too slow, but there have been important breakthroughs, particularly in reforming the energy market. It was a bold move to lift the cap on self-generation electricity licence exemptions to 100MW when business was hoping for 50MW and 10MW was initially tabled.
“The change increased business and investor confidence in the government’s reform agenda. We need more bold moves like that to ensure each of the plan’s elements are speedily and successfully implemented.”
To deliver this growth, organisations need to make sure they have the right talent with the right skills to bring their growth plans to life. The research found that 82% plan to increase headcount over the next three years, with 32% planning increase of more than 6%.