In 2024, African CEOs are focusing on AI and the AfCFTA to fuel growth, despite facing rising geopolitical tensions and talent shortages.
The focus on AI comes from its potential to drive innovation and efficiency, while the AfCFTA is set to unlock new markets across the continent. However, CEOs must navigate the challenges posed by geopolitical instability and a shrinking talent pool to fully capitalize on these opportunities.
According to the 2024 Africa CEO Outlook Report by KPMG, it was pointed out that while CEOs are optimistic about leveraging emerging technologies and the continent’s potential for regional growth, they remain very cautious as they navigate an increasingly complex and uncertain environment.
Geopolitical risks remain a significant concern for African CEOs, as global tensions and political uncertainty continue to impact business growth. These risks are closely linked to other critical issues, such as supply chain disruptions and economic decoupling between countries. Geopolitical competition is driving inflationary pressures, forcing businesses to shift their focus from efficiency to resilience, reshaping long-term planning and operational strategies.
The AfCFTA, however, stands out as a beacon of opportunity. It has the potential to lift millions out of poverty by 2035, but its success will hinge on the execution of substantial policy reforms and trade facilitation measures. CEOs are looking to capitalize on AfCFTA to boost regional and global growth.
The economic outlook varies by region. In Southern Africa, confidence in the global economy has dropped from 70% in 2023 to 52% in 2024, with CEOs focusing on inflation-proofing, organic growth, and strengthening supply chains.
In East Africa, despite global uncertainties, CEOs remain optimistic, expecting a 5.1% economic expansion, largely driven by infrastructure and energy investments. Meanwhile, in West Africa, confidence in both global and local economies has declined, prompting CEOs to shift priorities towards managing operational risks, improving supply chain resilience, and exploring AI to drive growth.
The adoption of generative AI is seen as a critical tool for business advancement, with 54% of African CEOs making significant investments in the technology. However, a striking 77% of CEOs view ethical concerns—such as data privacy and bias in AI systems—as the biggest barriers to adopting AI, a sharp increase from 57% in 2023. Additionally, 78% of African CEOs are uncertain whether their workforce has the skills to fully leverage AI, and 75% are concerned about data security surrounding AI integration. This highlights the urgent need for upskilling the workforce to keep pace with technological advancements.
AI’s impact is already being felt across various business functions. For example, 78% of CEOs see AI as a game-changer for information and communication technology, while 66% recognize its ability to personalize sales campaigns and enhance customer engagement. Additionally, 63% are optimistic about the role AI can play in improving financial processes. However, cybersecurity risks linked to AI are a growing concern, with only 21% of African CEOs feeling confident in their current cybersecurity measures.
Talent shortages present a significant risk, with 39% of African CEOs worried about losing skilled workers to migration, particularly in East Africa. The challenge of retaining talent is exacerbated by the need for workforce skills development, as only 63% of African CEOs are investing in lifelong learning, compared to 80% globally. Despite a younger workforce, African CEOs must address the transfer of knowledge between generations and succession planning. Additionally, 86% of African CEOs are pushing for a full return to office, but only 45% are offering incentives for this, reflecting a growing challenge in managing hybrid work dynamics.
ESG is becoming a critical part of corporate strategy for African CEOs, though many acknowledge that they lag behind global counterparts. Only 37% believe they have successfully embedded ESG into their operations, compared to 65% of global CEOs.
Moreover, only 32% are confident their companies will meet their 2030 Net Zero commitments. Several barriers to ESG integration remain, including the complexity of decarbonizing supply chains, lack of appropriate technology for ESG data gathering, and skills shortages in managing ESG initiatives. Regulatory complexities also pose a significant hurdle, with only 41% of African CEOs confident in their organization’s capacity to handle ESG reporting requirements.
Regional disparities also exist, with East African CEOs less convinced about the value of ESG integration (26%) compared to their Southern and West African counterparts (43%). Climate adaptation is viewed as less critical in Africa than globally, with 34% of African CEOs disagreeing that adverse climate events will affect their businesses, compared to 16% globally.
In terms of operational strategies, African CEOs are prioritizing inflation-proofing capital and input costs, while also focusing on organic growth. Supply chain resilience remains a key focus, with 15% of CEOs aiming to reconfigure supply chains for greater transparency and reliability.
Interestingly, mergers and acquisitions (M&A) are less of a priority, with only 27% of West African CEOs planning significant acquisitions. Instead, organic growth and strategic alliances are seen as the primary drivers of future expansion. AI remains a central focus, as CEOs look to leverage its potential for streamlining operations and enhancing customer experiences. However, clear AI strategies are necessary to mitigate risks and ensure workforce adaptation.
While there are significant gaps particularly in terms of skills development, cybersecurity, and ESG readiness, CEOs remain focused on building resilience, leveraging AI, and driving growth through regional opportunities like AfCFTA.
