Growth for African businesses means overcoming infrastructure challenges – and focusing on sustainability issues.
The prospects for growth in Africa are enormous and confidence is generally high, reveals a recent PwC Global CEO survey, with African CEOs feeling far more optimistic about opportunities for growth than their South African counterparts. Compared to their global peers, whose confidence was more significantly undermined by the global economic crisis, African business leaders are demonstrating pragmatism and optimism, spurred on by the immense growth potential of the continent. In the shorter term, they see most of the promise coming from better penetration of their existing markets as well as new product development.
Despite this optimism, PwC Southern Africa CEO, Suresh Kana says there are various continental challenges that will require them to be much more resourceful, flexible and responsive to change than their global counterparts who are fortunate to operate in more predictable business environments with advanced market research and skills levels.
Kana highlights that the infrastructure challenge has long been a stumbling block for African businesses, with some sectors affected more than others. “The high cost and lack of reliable electricity poses a serious challenge for many miners and manufacturers in Africa, forcing them to rely upon expensive alternatives such as diesel fuel generators.”
Innovative actions
The infrastructural lack in Africa has meant businesses have had to respond in innovative ways, with companies in developed markets even learning from these examples. “Notable achievements have been in communications. With little to no landline telephony infrastructure, the roll out of mobile telephony in Africa has been significant and acted as a major catalyst of economic and social development. Mobile telecommunications in Africa is helping customers surmount physical infrastructure limitations and geographic remoteness; for example, it is no longer necessary to physically enter a bank branch to transfer money.”
Kana says that the best businesses in Africa are those that are realising that their traditional models of production, distribution, supply and demand can be positively transformed by modern technology. “The move from analogue to digital (bricks-and-mortar to virtual reality) ways of doing business is having a profound impact on how Africans live and do business with each other.”
Infrastructure is probably the most critical factor influencing Africa’s growth prospects and poverty alleviation, but its rollout comes with some difficulties. Kana says infrastructural projects across Africa are generally lacking in strong conceptualisation, staffing, procurement processes and management skills.
Maximising growth potential
To maximise growth potential and overcome lack of infrastructure, the African business community need to embrace social development and corporate citizenship. The publicly-accountable organisations which follow global governance standards are those most committed to these issues, with some closely aligning their corporate citizenship with their core businesses – for example, a bank may promote financial literacy in the communities where it operates.
African CEOs have mixed perceptions on corporate citizenship with regard to sustainability and climate change. The majority acknowledge that investing in green initiatives can improve their reputations among key stakeholders - but they do not see the benefits of investing in these types of projects for commercial product and service development. While 64 per cent of global CEOs believe that consumers will start to make purchase decisions based on a company’s environmental and corporate responsibility practices, only 47 per cent of African CEOs think these considerations will be relevant to customers.
