revor Hoole, the CEO of auditing giant KPMG in South Africa, says he was taken aback and “absolutely miffed” when he discovered that the entire African continent had been left out of a global outlook survey of chief executives by KPMG International.
His dismay was mollified somewhat when he saw that other emerging economy arenas – eastern Europe and South America – were also left out.
“At first, I was indignant because I thought it was because we were not regarded as being important enough, and I thought that couldn’t be right,” says Hoole.
The study looks at the confidence levels of almost 1 278 chief executives in the US, western Europe, China, India and Australia, with 347 of them coming from companies with revenues of more than $500 million (R6.3 billion).
“Then the reality sets in. I thought that it was another sign of what is happening. The emerging markets, and South Africa in particular, are so discounted in everyone’s minds that they are focused on their own issues. The negative sentiment becomes the reality.”
Hoole says the most striking finding of the survey is that chief executives of global businesses are confident about their companies’ growth and expect to hire more staff in the next three years.
“The level of confidence expressed by global CEOs is less likely to be echoed in South Africa,” says Hoole.
He points to the recent SA Chamber of Commerce and Industry business confidence index (BCI), which says South African CEOs are less optimistic about the prospects of doing business in South Africa than they were a year ago. In fact, the average BCI of 88.8 over the first six months of 2015 was the lowest it has been in 16 years. In the first half of 1999, the BCI measured 86.2. According to the KPMG study, 69% of CEOs in Europe, 66% in Asia Pacific and 52% in the US are more confident than they were last year about growth and the global economy in the next three years.
In assessing their own company’s growth prospects, 70% of European CEOs, 68% of Asia Pacific CEOs and 19% of US CEOs indicated they were more confident than they were a year ago.
Most importantly, CEOs globally are set to hire, with 78% of respondents indicating they are expecting to be in hiring mode until mid-2018.
“Whereas global entities say that headcounts will increase, we believe this will not necessarily be the case in South Africa,” says Hoole.
“An improvement in the economy is what is needed to increase headcount in South African companies.”
Based on figures from Stats SA, the unemployment rate increased to 26.40% in the first quarter of 2015 from 24.30% in the fourth quarter of 2014.
“We are not as badly off as countries that are experiencing defaults on a large scale, but people abroad can see that there is a lack of leadership here,” says Hoole.
“We are drifting towards becoming a more socialist welfare state, and that is not conducive to attracting the investment dollars that we need.
“If this country is going to reverse this trend, government must become more supportive of entrepreneurs by improving access to incentives and decreasing the amount of red tape required to do business in South Africa,” says Hoole.