While the economic environment is identified as an opportunity in all countries, 57% also perceive it as a risk.
Those surveyed were frank about obstacles to growth. Specifically, regulation, government policies and the political environment were all acknowledged as potential threats to future success.Those working in the consumer services, diversified financials, healthcare, food, beverage and tobacco industries believed access to capital was the greatest threat to their business.
Creating jobs, developing talent
When asked about hiring intentions for the year ahead, optimism among business leaders was once again evident, with 84% expecting to increase or at least maintain their staff numbers. Ethiopian bosses are the most confident about growing their headcount – three out of four leaders anticipate hiring more staff over the coming year.
Skills shortages are a common concern. Almost a third of those surveyed said a lack of skilled workers was a barrier to growth. A repeated gripe was lack of skills at middle management level – more than six out of ten leaders complained of this, while 56% said finding skilled workers in general was a challenge. Smaller businesses of all sizes and across all sectors lament middle managers’ poor skills.
A paucity of adequately skilled candidates for top, senior management positions was also an issue for 46% of respondents overall, with those operating in the banking, diversified financials and telecoms sectors most likely to regard this as a barrier.
Notably, those running large organisations with more than USD $100 million (£76.8 million) of in-country revenue were more likely to complain of a lack of skilled workers than those leading smaller enterprises. The blame for this is largely directed at in-country education systems.
Djo Moupondo, Chairman of La Clique Music Group in DRC, says: “A lot of countries in Africa have the same problem. In DRC, the curriculum is over 60 years old and was implemented by the Belgians with only small changes since. The gap between education and real life has become huge and is growing.”
When asked which areas of expertise proved lacking, certain skills gaps were evident across all countries:
- Those with good knowledge of research and development were first or second in demand everywhere except DRC.
- Production workers were most needed in DRC, while production skills were wanted by 39% of leaders overall.
- Marketing was the next most in-demand skill, needed by 38%.
- Human resources, accounting and finance expertise were also commonly in demand, with smaller firms with fewer than 250 employees and less than USD $10 million in revenue more likely to lack accounting and finance ability. Larger companies more often complained of a lack of human resources know-how.
Finding unskilled labour does not appear to be a problem. Just 2% of respondents identified shortages at this level.
Doing good business
The idea of business being a potential force for good has gained momentum in recent years. However, rather than focusing on good citizenship, paying taxes or engaging in corporate social responsibility, business leaders across all five African countries said creating jobs was the most significant way in which they improved society.
The provision of products and services that are in demand was also a commonly reported way of doing good, specifically among energy and healthcare leaders.
Creating wealth for shareholders barely registered – just one in 10 leaders thought this a way for businesses to make their country a better place. In contrast to the poor perceptions of financial service companies in developed countries, the Business Barometer respondents cited financial services companies as doing the most good for society, while financial inclusion initiatives by telecoms firms such as MTN and Airtel were also seen as having a positive impact. Many leaders mentioned brewing as a force for good, possibly because of the sheer number of jobs the industry creates.
View by country:
The DRC is one of the largest African countries by land area. While the country is blessed with vast natural resources, a history of exploitive colonisation and civil war makes it one of the poorest countries in the world.
- DRC business leaders are pessimistic about the current business situation, but are hopeful of improvements and the shift in outlook in the central African country is the most pronounced of all the five countries surveyed.
- More than a third of DRC respondents rate the current situation as bad, but three-quarters believe things will improve significantly in the year ahead.
- Almost half of leaders say access to credit is difficult and almost a third saw investment shrink between 2017 and 2018. However, 62% expect an investment boost in the year ahead.
Ethiopia is second only to Nigeria in population terms in Africa. It has been the fastest-growing African economy over the past decade.
- Business leaders in Ethiopia are notably more optimistic than their peers in this study, with 87% saying the present business situation is good or satisfactory. Half expect things to improve over the next 12 months, while 92% think things will be the same or better.
- Eight out of 10 Ethiopian leaders expect to increase investment in the next year, the highest number across The Africa List respondents. This may reflect recent measures taken by the government to reduce regulatory obstacles to investment.
Tanzania with a population of 56 million has been growing fast over the past decade (GDP growth of about 6% to 7% a year).
- Optimism is more prevalent among Tanzanian business leaders than some of their country peers. More than half – 54% – plan to increase investment over the next 12 months. Nine out of ten say the business situation is likely to improve or remain the same.
- Just one in 10 expects to cut investment, about the same proportion that predicts the business situation will deteriorate in the year ahead.
- Businesses in Tanzania regard developments in digital and technology infrastructure to be a great opportunity – more than half point to this as a potential boost to their operations.
- Skills shortages at top-level and senior-management levels are a problem for 56% of business leaders, a higher proportion than reported in other countries surveyed.
Recent reforms and economic growth underpin an optimistic business outlook in this landlocked East African country. But rapid population growth, paired with an influx of refugees and widespread malnutrition present challenges.
- Four out of 10 Ugandan business leaders say the current business situation is good, the highest proportion of any country surveyed. Just 11% say the situation is bad.
- Fewer than one in three leaders report difficulty in gaining access to credit, the lowest proportion found in this study. Uganda was also one of the countries with the highest number of companies (72%) reporting increased investment in 2018. Three out of four respondents plan further investment in the year ahead.
- Ugandans see more opportunities for growth than their peers in the survey. Customer demand was cited as a growth opportunity by 60% and 44% pointed to digital and technology infrastructure. One third felt that access to capital would bring potential rewards.
- Corruption and human resources challenges were cited more often as risks to business growth by Ugandan leaders. Almost half also blamed regulation.
Zambia is Africa’s second largest copper producer and has a strong services sector. However, it still struggles with high levels of poverty.
- Despite more than a third of Zambian business leaders expecting the business situation to improve over the next 12 months, roughly the same number (36%) believe the situation will deteriorate. Notably, the proportion reporting negative business sentiment is almost three times greater than in other countries surveyed.
When asked to identify opportunities for growth, almost a third of Zambian leaders highlighted the shortage of management skills. Fewer Zambian firms appear to feel constrained by skills shortages at the most senior levels – just 38% versus 46% across all five countries surveyed.
The report is available for download. Please register your interest and we will send you the online report shortly.