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Just how attractive is Africa's high-risk, high reward proposition?

Just how attractive is Africa's high-risk, high reward proposition?

Despite the many challenges impacting on businesses in Africa, CEOs across the continent remain confident and 41% believe the global economic outlook will remain the same, while 34% believe it will improve. While exchange rate volatility, government response to fiscal deficit and debt burden, skills availability and social instability remain top concerns, 52% of CEOs expect to increase their headcount over the next 12 months, and 56% are confident about their company's prospects for revenue growth over the next three years.

This is according to PwC's Africa Business Agenda survey, analysis taken from 153 interviews with CEOs across 15 African countries.

Hein Boegman, CEO for PwC Africa, says: "CEOs in Africa are ramping up their efforts to innovate and find new ways to do business on the continent in a move to stimulate growth in a challenging and uncertain global business environment.

"The global financial and economic crisis has revealed Africa's vulnerability to a number of external economic shocks. These include the decline in commodity prices fuelled by the economic slowdown in China; a marked decline in the demand for commodities; and the collapse in value of the emerging market currencies against the US-dollar in anticipation of an interest rate hike.

"Notwithstanding a multitude of challenges, many of which are cyclical, we remain confident that Africa's prospects remain positive. Africa's business leaders have the opportunity to pursue new business opportunities on the continent, more particularly in the light of rapid innovative and technological advances that have the potential to transform and shape industries."

In a presentation of the research, Boegman reiterated a central theme which is that prospects in Africa remain positive and CEOs realise that given the continent's high-risk, high-reward proposition, opportunities exist for those willing to invest time to understand the African market.

"Success depends on stamina, flexibility and resourcefulness.... You cannot look at Africa in short cycles, it is not for the faint-hearted," he said.

However issues like skills availability and education have to be considered priorities, said Boegman.

"'The talent trends that we are seeing suggest that the market is becoming more and more competitive. As a result companies are having to review their talent management strategies. Around half plan to invest more in their leadership pipeline and focus on developing their institutional culture," he continued.

Target markets

In a list of countries considered most important to growth over the next 12 months, Kenya came in at second position with 22%, Uganda in third with 20%, then South Africa with 18%, followed by Zambia in 7th position with 14%, DRC in 8th position with 12% and Nigeria in 10th place with 11%.

Unsurprisingly IT was identified as a chief catalyst for growth.

According to PwC increasingly, organisations are using technology to challenge business models and disrupt competitors in markets.

The 26th Annual World Economic Forum on Africa 2016, hosted recently in Kigali, Rwanda, demonstrated the successful application of technology to leapfrog generations and bolster capacities, the company affirmed.

Based on feedback from the research technology was seen by CEOs in the survey as the best way of assessing and delivering on customer expectations by implementing customer relationship management systems (69%), interpreting the complex and evolving needs of customers through data and analytics (56%), and improving communication and engagement by means of social media (58%).

Not far behind influences such as shifting demographics, rapid urbanisation and shift in global economic power, the issue of trust is also emerging as an important differentiator in the business community.

"Building trust helps organisations to attract investment and build stakeholder loyalty. It is concerning to note that 65% of Africa CEOs are somewhat or extremely concerned about the lack of trust in business," said PwC.

"Corruption is also seen as a major threat by businesses (86%). The private sector has taken the initiative to fight corruption by calling on government and regulators to enforce legislation and codes of business practice," it added.

The survey also indicated that Africa CEOs are increasingly recognising the importance of reporting on non-financial matters.

Most CEOs surveyed not only believe that success is dependent on more than just making money, they also believe that their organisations should do more to report on the broader impact of their activities and how these activities create value for stakeholders.

Dion Shango, CEO for PwC Southern Africa, said,"Africa and South African CEOs have built on the experience of the past few years and are better prepared to deal with the host of challenges and uncertainties. CEOs have and also continue to reshape their business strategies to take advantage of new opportunities for growth, both in existing and new markets."

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