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African businesses embrace digitalisation ahead of EU peers

African businesses embrace digitalisation ahead of EU peers

Private businesses in Africa are leading their European counterparts in regards to embracing digital change.

This is according to a new report by consulting firm PwC, which provides a glimpse of how the majority of African businesses view the impact digital changes on their operations.

The Africa bi-annual Private Business Survey 2019 reveals the attitudes of private business leaders in Africa when it comes to digital change.

PwC says this year's survey is the largest and most comprehensive by the firm. It sampled over 200 companies and 2 900 senior executives from private businesses in 53 countries in Africa, the Middle East and Europe.

Of these, nine sub-Saharan African countries were surveyed – SA, Botswana, Ghana, Kenya, Mauritius, Namibia, Nigeria, Tanzania and Uganda.

For this report, private businesses refers to unlisted and family-run entities, which PwC says make up 90% of companies on the continent.

The survey zoomed its lenses on retail, manufacturing and industrial, as most of these businesses are concentrated in the three sectors.

Four in five (81%) of the respondents of private businesses (across nine key economies in Africa) say they see digitalisation as "highly relevant" to their future, compared with 65% in Europe.

Gert Allen, entrepreneurial and private business leader at PwC Africa, says: "Leaders of private businesses in Africa may grapple with greater challenges than their counterparts in Europe in certain ways – less developed infrastructure and financial systems, to name two – but they are ahead of them in one key respect: their embrace of digital change."

He adds: "At a time of uncertainty in the economic outlook for Africa, thanks in part to global headwinds, this picture provides significant encouragement because the right approach to digital is sure to yield dividends in the longer term."

Further, the report says a greater proportion of business entities in Africa say they want to allocate more than 5% of their overall planned investment into digital, compared with peers elsewhere.

According to PwC, key technologies such as the Internet of things (IOT), blockchain and artificial intelligence (AI) are already on the radar for African businesses, and the relevance of these technologies is rated much higher than in more economically developed EU economies.

Additionally, the report says three quarters of respondents surveyed see IOT technologies as relevant for their business, and nearly 50% also rate blockchain highly. AI, 3D printing, and augmented reality (AR) are also considered relevant by around one third of respondents.

"The optimism that we found among Africa's private business leaders contrasts with our findings in Europe, where fewer than two thirds of private business leaders expect revenue growth in the next 12 months – representing a drop in confidence from 2018 – and just half of leaders surveyed in the Middle East predict sales growth," explains Peter Englisch, EMEA entrepreneurial and private business Leader at PwC.

The report adds that in certain respects, African private business leaders face greater challenges than their European counterparts: structural problems including corruption, a lack of infrastructure (including digital infrastructure such as broadband), high unemployment and inadequate education systems continue to undermine growth in Africa.

The entrepreneurs surveyed by PwC expressed concerns about talent and skills shortages. Despite high unemployment rates across Africa, 79% of those surveyed say they expect losses on turnover due to skills shortages.

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