Overall, Africa’s economic performance is expected to improve this year and next. The World Bank predicts the continent will grow by 2.8 percent in 2019, from an estimated 2.3 percent in 2018 despite some countries continuing to face challenges with infrastructure and financial systems, for example and global headwinds, which may be slowing overall growth, according to The World Bank. There is also some uncertainty in the economic outlook for Africa, thanks in part to global headwinds. Overall, Africa’s economic performance is expected to improve this year and next, with the World Bank predicting the continent growing by 2.8 percent in 2019, from an estimated 2.3 percent in 2018.
PwC surveyed 200 private business leaders in nine sub-Saharan countries to find out their views on the future. The findings of the survey were encouraging – the private businesses surveyed are optimistic about their prospects. Eighty-three percent of these respondents expect their revenues to grow, while only 7 percent expect declines.
Digitalisation is key
But optimism may not be enough. Business leaders should act. A key is digitalisation and the time to embrace it is now.
Many of the survey respondents agree – 81 percent told us that they see digitalisation as highly relevant for the long-term viability of their business, compared to 65 percent in EU countries. The survey results show that African respondents also rate the relevance of some of the most significant digital technologies, like blockchain, Artificial Intelligence (AI), 3D printing and augmented reality (AR) more highly than do respondents in the EU countries surveyed. And more than half of respondents say their organisations already have a digital strategy.
How can African private businesses make digital transformation happen?
The time is now to move from strategy to implementation. There are several actions that private businesses can take to prepare their organisations. The stakes are significant: While there is untapped commercial potential in Africa, owners and managers who don’t act risk being unprepared for whatever future lies ahead.
The majority of African private business leaders surveyed believe their supervisory boards are suitably composed to support their digital strategies. In general, private businesses are encouraged to take a second look at whether they have the right people in place to address the next level of digital change. One possible question to ask: is there a member of the next generation (so-called “next gen”) in the family on the board, one who is digitally native? Indeed, if there are next gens in the line of succession with digital expertise, now may be a good time to bring them on board, and also ensure the longevity of the company.
Staffing: the right skills
A majority of the African private businesses surveyed (nearly 80 percent) say a lack of suitably skilled staff undercuts the ability to provide products and services, thereby causing a loss of revenue or unrealised revenue potential. More than half of survey respondents are seeking to make up for deficits in their in-house talent by obtaining external advice.
Private business leaders should clearly distinguish between short-term and long-term hiring needs. It may be worth thinking afresh about how to satisfy short-term transformation needs. An option for quickly finding technical expertise may be to collaborate with start-ups to fill the gaps, much like many publicly-listed companies do. Interestingly, the survey found that a far greater percentage of companies appear to employ this strategy in Africa than do private businesses in Europe. While 48 percent of respondents across Africa say they will collaborate with start-ups to get access to digital skills, just 30 percent of respondents in the European Union said the same.
Whichever strategies are employed, using digitalisation to drive growth is especially important now as competition grows and business models change, world over.
Financing: funding the transformation
One quarter of the African private businesses surveyed are planning to allocate more than 5 percent of their overall investments to digitalisation. Internal cash flow is the most popular source of funding for digital transformation efforts, followed by bank lending, in both Africa and across EMEA as a whole.
Despite the vital role private businesses play in Africa, many could face financing shortfalls in the future that would inhibit their ability to make needed investments in innovation. One encouraging sign: Nearly a quarter of those surveyed say they would consider private equity or venture capital. Turning to private equity can provide funding, as well
as management support and expertise.
Whichever strategies are employed, using digitalisation to drive growth is especially important now as competition grows and business models change, in Africa and all around the world. African private businesses have the opportunity to build on their awareness of the opportunities digitalisation offers and take the next steps towards achieving a true digital transformation. The time to act is now. (