Despite the risks, there is a clear road to renewal theme emerging this year.
- KPMG, in partnership with Business Leadership SA, surveyed 50 South African CEOs in ten industries to determine their view on economic growth prospects.
- The survey found confidence levels are back to pre-pandemic levels which existed in January and February 2020.
- The main threats to business identified by the CEOs include supply chain risks, operational concerns, cyber security, climate change, regulatory and disruptive technology risks.
The business confidence levels of South African CEOs are back to the pre-pandemic levels of early 2020.
About 70% of the 50 CEOs in ten industries surveyed surveyed for KPMG South Africa’s 2021 CEO Outlook are confident about the local economy’s growth prospects over the next three years if the right growth mandate is pursued. This is despite continued uncertainty due to the Covid-19 pandemic.
The survey was compiled in partnership with Business Leadership South Africa (BLSA) and is an extension of a 2021 Global survey.
The main threats to business identified by the CEOs include supply chain risks, operational concerns, cyber security, climate change, regulatory and disruptive technology risks.
“That reflects the extent of the trauma that recent events have inflicted on our economy. Both because of Covid-19 and unrests, many businesses had to shut their operations for certain periods and far too many were unable to reopen. South Africa’s socioeconomic challenges are formidable by global standards,” BLSA CEO Busi Mavuso says in the survey report.
CEOs indicated that they continue to focus on stabilising business operations through digital transformation strategies. Furthermore, greater environmental, social and governance (ESG) transparency and reporting is in significant demand by institutional investors and regulators to assist organisations in “building back better”. Workforce management is also seen as integral to sustainability in terms of upskilling and agility.
“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. The Economic Reconstruction and Recovery Plan, approved by all social partners at Nedlac [National Economic Development and Labour Council] and adopted by Cabinet, is integral to this,” states Mavuso.
“Growth is the only way we can sustainably address our deep social challenges. It will come with the implementation of reforms which will open opportunities for business and ensure our domestic confidence rises to that we are seeing in the rest of the world.”
About 80% of the CEOs surveyed recognise that large corporations have the resources to help governments find solutions to pressing global challenges.
“The overall positive tone of South African CEOs is refreshing. They are not only ready to shift to new ways of working and empowering their employees, but are leveraging digital and environmental, social, and corporate governance opportunities to move business forward,” says Mavuso.
“In fact, 100% of annual bonuses are linked to ESG performance, with a core focus on stabilising business and creating a diverse workforce.”
The survey revealed that 62% of senior executives are identifying inorganic methods like joint ventures, mergers and acquisitions and strategic alliances as their organisation’s main strategy to support growth. At the same time, they indicated that, since 2020, two key risks have moved up the agenda, including supply chain risk and tax risks.
“Despite the risks, there is a clear road to renewal theme emerging this year and no doubt, South African CEOs are both optimistic about growth. We are seeing a major shift in digital agility, where CEOs are strengthening their organisations’ digital advantage by building a more flexible workforce,” says KPMG South Africa CEO Ignatius Sehoole.
“No doubt, this shift will positively impact not only the business, but certainly the workforces of the future.”