Notwithstanding the optimism Chief Executive Officers of large companies on the African continent express about the global economic outlook, they remain trepid about challenges of policy and tax uncertainty, over-regulation and cyber threats in the countries in which they operate.
This is according to PwC’s Africa Business Agenda report for 2021, which contains the results of a survey of 1 779 interviews in 100 countries, including 50 CEOs in 14 African countries.
Indeed, the report seeks to gauge the sentiments of CEOs working in Africa compared to those working elsewhere on the globe.
Africa has faced a unique set of challenges during Covid-19, where cases surged much later than they did elsewhere, but the rate of vaccinations has been a key weakness.
The PwC report said 30% of African CEOs were “very confident” about their company’s growth prospects in the next 12 months, compared to 36% of global CEOs. It said 60% of CEOs in Africa are concerned about uncertainty compared to 38% of CEOs globally.
Still, there were bright spots, with more African CEOs expressing the intention to hire in the short term.
According to the report, the discrepancy in results could be due to African countries seeing the pandemic surge later on.
“The reasons for this confidence gap from African countries still being at an earlier stage of the pandemic life cycle to uncertainty about governments’ Covid-19 response and policy direction in its aftermath,” the report said.
However, it also flagged regulatory environments as a potential problem area.
The report added that 56% of CEOs in Africa are concerned about tax uncertainty compared to 31% globally while 48% of African CEOs were worried about overregulation, compared to 42% of CEOs globally. Concerns about cyber threats were more even, with 54% of Africa’s CEOs and 47% of CEOs globally citing this as a concern.
“Although CEOs’ confidence in their own company’s revenue prospects has rebounded, they are anxious, too, about policy uncertainty, tax policy uncertainty, cyber threats and overregulation,” the report stated.
Commenting on insights from the CEO survey, Uyi Akpata, Regional Senior Partner PwC West Africa, stated: “In the light of the concerns that Africa’s CEOs have on policy uncertainty, tax policy uncertainty, cyber threats, and over-regulation, this is an opportunity for African business leaders to reimagine every aspect of their operating model.
“Further, companies and countries in West Africa should take advantage of the Africa Continental Free Trade Area (AfCFTA) Agreement, which came into force on 1 January 2021, to drive growth and bolster their economies through increased continental trade.
“In the wake of the pandemic and its impact on government revenues in African economies, it is no surprise that tax policy uncertainty made a notable rise on the list of threats. In Africa, it is ranked third, up from seventh last year.”
Fiscal Policy Partner & PwC Africa Tax Leader, Taiwo Oyedele, stated: “Plummeting government revenues and fragile economic growth are fueling an increase in government debt across Africa. This could result in tax aggression by the government, increases in tax rates or the introduction of new taxes. These could include, for example, digital taxes on platform-based companies that have profited during the pandemic.
“Solving the government revenue challenge will require making tough but informed decisions, which should include stopping wastage in government spending, rationalisation of incentives and subsidies, and boosting tax morale through accountability and transparency. Undue aggression against businesses and new or higher taxes will harm the economic recovery and discourage investments.”
On Workforce strategy, people and productivity, Partner & People Leader, PwC West Market Area, Omobolanle Adekoya, explained that the pandemic has highlighted the importance of people to organisational success.