East African CEOs most optimistic about economic growth globally

The chief executive officers (CEOs) of top corporates in East Africa are the most optimistic about economic progression in the short and medium term, a global survey by consultancy firm PricewaterhouseCoopers (PwC) shows.

The poll said 60 percent of executives in East Africa are confident of growth in the 12 months—the highest level of confidence among those surveyed in 105 territories.

“East Africa CEOs are optimistic about the future. They foresee good economic growth in both the short and medium term for the region” PWC said.

The East African CEOs are, however, cautious about threats of inflation and target to implement cost-cutting measures to mitigate the situation.

Inflation is a key concern for these CEOs, as 49 percent of them indicated that they believe their companies will be highly exposed to this global challenge in the next 12 months.

“Even so, the majority of these CEOs believe that their businesses will be economically viable in the next decade. This may be because of the trust they place in their mitigating actions,” said the survey.

The survey shows that 66 percent of the surveyed CEOs are already implementing cut-cutting measures while 26 percent say they are considering putting the measures in place over the next 12 months.

Some 52 percent of the CEOs that took part in the survey also cited that they would diversify their products or service offering to mitigate the economic challenges and volatility over the coming months.

Finding alternative suppliers and re-evaluation of ongoing projects were cited by 44 percent and 36 percent of the respondents respectively, while 25 percent and 24 percent said they would implement hiring freezes and slow down on investments respectively.

“As plans to mitigate against potential economical volatilities, 71 percent are not looking to reduce their workforce whilst 51 percent are not planning to implement hiring freezes in the same period. These CEOs emphasise keeping their workforce as the foundation to building their businesses, as such 82 percent are not even planning on reducing compensation for their employees,” said the survey.

This comes at a time a separate survey shows business activities shrank for the first time in six months in February as businesses recorded weaker sales volumes owing to high commodity prices that kept consumers away.

Stanbic Bank’s most recent monthly Purchasing Managers’ Index (PMI) showed the index fell below the 50 neutral mark to 46.6 last month – the first time it has fallen below the neutral point since August last year.

Four of the five monitored sectors in the survey saw new orders decrease, with particularly sharp falls seen in manufacturing and wholesale, and retail, while agriculture was the only sector where sales increased.

Firms indicated that they had recorded a sharp decline in orders and frequently noted that their customers had pared back spending due to high inflation and a lack of money in circulation.

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