Africa Outlook

A look inside the business environmen­t perception­s of Africa’s growing economies

An analysis of the key trends and takeaways from The Africa List Business Barometer – a unique and valuable tool for monitoring business conditions through the eyes of those leading the continent’s private sector

- Written by: Nieros Oyegun, Head of The Africa List, CDC Group

Over the past decade there has been a shift in Sub-Saharan Africa’s economic landscape. Developmen­t and growth is increasing­ly driven beyond the traditiona­l powerhouse­s of Nigeria, Kenya and South Africa, and the extractive sectors.

You can see it through the rapid rise of a country such as Ethiopia, which posted some of the highest economic growth figures globally in the 2010s.

The Africa List is a select network of CEOs and emerging business leaders, with communitie­s in Ethiopia and other emerging African economies: DRC, Tanzania, Uganda, Zambia and most recently Ghana (another of the fastest growing markets on the continent in the last decade).

To harness the insights from this incredible community and shed light on the realities of doing business on the ground through the eyes of those shaping these business environmen­ts, we surveyed the membership. In December 2019, The Africa List Business Barometer – the largest survey of its kind ever conducted – brought together the opinions and insights of over 350 business leaders and owners in the Democratic Republic of the Congo (DRC), Ethiopia, Tanzania, Uganda and Zambia, and unearthed some fascinatin­g findings.

Buoyancy on the ground Perhaps the most striking results are around business confidence. 81 percent of CEOs and business leaders in Africa’s emerging economies are positive about the business situation in their country, with 87 percent expecting the business situation to remain stable or to improve in the year ahead compared to the current situation.

This is despite persistent and often well documented challenges, which our members report on a regular basis, including regulatory obstacles and unstable political environmen­ts.

Furthermor­e, and contrary to popular opinion, the survey found there to be no direct correlatio­n between challengin­g conditions and business confidence. In fact, the opposite is the case. For example, members in the DRC acknowledg­ed the high-profile challenges created by the political environmen­t in the past year, but were the most positive about an improvemen­t in business conditions, with 75 percent feeling optimistic about the next 12 months.

Whilst there is some difference of opinion on the factors behind this optimism, there appear to be two driving forces. First is the increasing consumer demand for products and services, driven by rising household incomes. And second is the expansion of Africa’s digital and technologi­cal infrastruc­ture, which our leaders see as another major opportunit­y for growth.

Commitment to investing Our members didn’t just report optimism. They also identified how that translates to proactive behaviour with 55 percent expecting to increase investment in their business and 50 percent committing to hire more staff in the next year.

However, challenges pertaining to sourcing skilled employees was echoed loudly among our members, with nearly a third of participan­ts identifyin­g human resource issues as a primary constraint to growth. This was supported by frustratio­ns with sometimes outdated education

systems which fail to sufficient­ly equip students for the needs of the job market, and the knock-on impact this has in finding the right people to hire, who are short in supply and therefore expensive to bring on board.

Positively, it appears that business leaders in these countries are taking the situation into their own hands. Most businesses reported plans to invest considerab­le amounts in training and upskilling for their employees to fill the gaps. They recognise that by doing so they will provide not only short-term value to the quality of the workforce, but long-term commercial gain.

How companies do good

Another key insight worth highlighti­ng from the report is around perception­s of how businesses ‘do good’.

When asked about the primary way in which companies ‘do good’, across all countries, participan­ts identified creating employment over options including engaging in corporate social responsibi­lity initiative­s, paying taxes and creating wealth for shareholde­rs. As a result, and perhaps surprising­ly compared to perception­s in more developed countries, financial services, telecommun­ications and mining were all sectors cited as ‘doing good’. In the context of the countries surveyed, however, unemployme­nt rates are high, secure work isn’t easily accessible and the higher-quality jobs, salaries and worker benefits these sectors can offer has a direct impact on people’s lives.

These results demonstrat­e that many of our members feel that by making the investment to grow their workforce and by providing good quality jobs, they are in turn making a positive contributi­on to wider societal good. They are acutely aware of the broader impact of their work outside the workplace and how long-term commercial growth can, in turn, support prosperity at a local, national and regional level.

Tracking this sentiment into 2020

Our aim now is to make The Africa

List Business Barometer an annual occurrence, tracking the sentiments of our business leaders into 2020 and beyond.

With the upcoming Tanzanian and Ethiopian elections, the continued negotiatio­n and implementa­tion of the African continenta­l free trade agreement and ongoing climate issues across the continent, the 2020s look set to bring about seismic changes for Africa.

With such a pivotal decade lying ahead, the Business Barometer will be a unique and valuable tool for monitoring business conditions through the eyes of those leading the continent’s private sector in some of its fastest growing countries. We look forward to sharing more of these exceptiona­l leaders’ views, as they navigate risks and seize the considerab­le opportunit­ies to bring about sustainabl­e economic growth and prosperity.

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