Economy
Business Growth High on African Boardroom Agenda
By Dipo Olowookere
Africa’s CEOs are confident that the outlook for business on the continent remains positive notwithstanding the unpredictable economic and socio-political climate.
PwC’s Africa Business Agenda report shows that 85 percent of African CEOs (Global: 85%) are confident in their own company’s prospects for revenue growth over the next 12 months.
Despite the fact that only 30% of CEOs in Africa (Global: 29%) believe the global economy will improve in the next year, no less than 97% (Global: 91%) are confident about the prospects for their own company’s growth in the medium term.
Hein Boegman, CEO for PwC Africa, says: “This level of optimism is the highest recorded since we started our research on Africa CEOs in 2012. However, in the past year we have seen a change in the outlook for some countries as external developments impact many of the drivers of Africa’s growth.
“As countries around the globe try to make sense of the increased levels of risk and uncertainty that have gripped the world, Africa needs to continue rising by capitalising on all the opportunities that lie ahead.”
The report suggests that one of the reasons for such optimism on the Africa continent is that CEOs have learned to look for the upside and seize on opportunities that may arise in the face of uncertainty. In the wake of climate of muted growth, CEOs have also acknowledged that while they focus on organic growth and cost reductions, they also need to prioritise investment in new strategic alliances and joint ventures to expand their markets and grow their customer bases. According to the survey, organic growth (Africa: 80%; Global: 79%) and new alliances (Africa: 69%; Global: 48%) are the top activities CEOs are planning in order to drive corporate growth or profitability.
The Agenda compiles results from 80 interviews with CEOs across 11 countries in Africa and includes insights from business. The results are benchmarked against the findings of PwC’s 20th Annual Global CEO survey of 1 379 CEOs in 79 countries conducted during the 4th quarter of 2016. The Agenda provides an in-depth analysis and insights into how businesses are adopting to meet the challenges of operating in Africa.
Notwithstanding the current climate and challenges, it is notable that there remains a significant amount of potential to unlock more growth on the continent. African CEOs are looking to international markets for opportunities, with the US (31%), China (28%) and the UK (24%) considered the top three countries for growth. Johannesburg (36%), Lagos (16%) and Cape Town (14%) are considered the top three African cities for growth opportunities.
Main risks to doing business in Africa
Although the returns for doing business on the continent can be high, so too can the risks. Africa’s CEOs are working in difficult times – finding the right talent for their business, dealing with hurdles that come with working with governments, and managing expansion plans across the continent.
In addition, infrastructure remains a challenge as it lags well behind that of the rest of the world. More than two-thirds of African CEOs (69%) are concerned about inadequate basic infrastructure (Global: 54%) and a stronger focus on expanding power supply is required to solve one of the biggest challenges in the business environment.
Other clouds on the business horizon include exchange rate volatility (Africa: 90%; Global: 70%); social instability (Africa: 85%; Global: 68%); geopolitical instability (Africa: 79%; Global: 74%); unemployment (Africa: 79%; Global: 45%); and climate change and environmental damage (Africa: 64%; Global: 50%). For most of these factors, the level of concern among African CEOs is higher than the global average. In addition, over-regulation features on the list of concerns this year, with almost half (46%) (Global: 42%) of African CEOs saying they are “extremely concerned”.
CEOs also believe social instability resulting from inequality, an increasing tax burden, a lack of economic diversity with an overdependence on natural resources, and corruption remain problems in many countries.
Globalisation
Overall, globalisation has benefitted connectivity, trade and mobility. However, just over half of African business leaders say globalisation has done nothing to promote equality, in particular in closing the gap between rich and poor – in fact, this gap may well be widening.
A number of CEOs think it is vital to address social challenges. CEOs believe the corporate community can assist in spreading the benefits of globalisation more widely. The majority say the best way is to collaborate, particularly with government. “While Africa’s potential is undoubted, its achievement remains in question. Business, government and civil society will need to work harder to turn potential into tangible gains against the backdrop of a rapidly changing world,” Dion Shango, CEO of PwC Southern Africa adds.
Talent and technology
The forces of globalisation and technology are increasingly transforming the workplace. Over half of African CEOs (53%) are exploring the benefits of humans and machines working together in the workplace. Over a third of African CEOs (36%) are considering the impact of artificial intelligence on future skills needs.
In some sectors, automation has already replaced some jobs entirely. “As automation takes deeper root in the workplace, companies in Africa will have to increasingly focus on achieving the right cognitive re-apportionment between man and machine,” Shango adds.
However, as CEOs develop their services, they are finding that human interaction in the workplace is still important and place the investment in talent as a top business priority. Just over half of African CEOs (51%) plan to increase their headcount in the next 12 months. Conversely, 23% plan to cut their company’s headcount over the coming year, with more than two-thirds of expected reductions being attributed to automation and other technologies.
According to the survey results, no less than 80% of African CEOs (Global: 77%) see the availability of key skills as the biggest threat to growth (ahead of volatile energy costs and cyber threats). They are finding it particularly difficult to source soft skills – adaptability, problem solving, creativity and leadership.
Technology & trust
Technology has brought about a number of advancements in efficiency and the ease of doing business in Africa. No less than 91% of African respondents (Global: 90%) believe technology has changed competition in their industry in the past five years.
While the digital era offers a host of opportunities, it also creates significant challenges and constraints in the arena of privacy and security. Organisations are holding increasingly large volumes of personal data about their customers, suppliers and employees. According to the survey results, 71% of African CEOs (Global: 61%) say they are concerned about cyber threats. Furthermore, the vast majority of African CEOs (93%) (Global: 91%) believe that cybersecurity breaches affecting personal information or critical systems will negatively impact stakeholder trust levels in their organisations in the next five years. A high 96% of business leaders are also concerned that IT outages and disruptions could impair trust in their respective industries over the next five years.
As disruptions gain more speed, the ability to ensure trust, security and privacy across all interactions will become critical to businesses’ competitiveness. But almost two-thirds of African CEOs (61%) (Global: 59%) are concerned that they are not prepared to respond to a crisis in their business, should one arise.
“In the face of economic and socio-political uncertainty, we remain confident that the outlook for business in Africa remains positive. But to succeed, businesses need to adapt swiftly to change,” Shango concludes.
By Adedapo Adesanya
Seplat Energy Plc will revive hundreds of Nigerian oil wells laying fallow after completing the acquisition of Mobil Producing Nigeria Unlimited (MPNU) from ExxonMobil.
The company said it aims to lift oil output to about 200,000 barrels a day, a move that will help boost Nigeria’s oil production levels, as it aims to reach 2 million barrels per day next year.
The transaction, according to Seplat, “is transformative for Seplat Energy, more than doubling production and positioning the company to drive growth and profitability, whilst contributing significantly to Nigeria’s future prosperity.”
The completion of the Seplat-ExxonMobil deal has created Nigeria’s leading independent energy company, with the enlarged company having equity in 11 blocks (onshore and shallow water Nigeria); 48 producing oil and gas fields; 5 gas processing facilities; and 3 export terminals.
Recall that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in October approved the deal as part of a series of approvals, while it blocked Shell’s asset sale of up to $2.4 billion to the Renaissance consortium.
The acquisition of the entire issued share capital of MPNU adds the following assets to the Seplat Group: 40 per cent operated interest in OML 67, 68, 70 and 104; 40 per cent operated interest in the Qua Iboe export terminal and the Yoho FSO; 51 per cent operated interest in the Bonny River Terminal (‘BRT’) NGL recovery plant; 9.6 per cent participating interest in the Aneman-Kpono field; and approximately 1,000 staff and 500 contractors will transition to the Seplat Group.
MPNU adds substantial reserves and production to Seplat Energy; 409 million barrels of oil equivalent (MMboe) 2P reserves and 670 MMboe 2P + 2C reserves and resources as at 30 June 2024 and 6M 2024 average daily production of 71.4 kboepd (thousand barrels of oil equivalent).
Business Post reports that Seplat will be part of the payment this year, and will defer some to next year,
Speaking on the transaction, the Chairman of Seplat Energy, Mr Udoma Udo Udoma commended President Bola Tinubu for supporting this transaction and appreciated the support and diligence of the various ministries and regulators for all the work to reach a successful conclusion.
“We are delighted to welcome the MPNU employees to Seplat Energy. We are excited to begin our journey in a new region of the country, and we look forward to replicating the positive impacts we have achieved within our communities in our current areas of operations.
“Seplat’s mission is to deliver value to all our stakeholders, and we treasure the good relationships we have developed with the government, regulators, communities and our staff.”
On his part, the chief executive of Seplat Energy, Mr Roger Brown, described the acquisition as a major milestone, adding, “I extend my thanks to the entire Seplat team for their hard work and perseverance to complete this transaction.
“MPNU’s employees and contractors have a strong reputation for safety and operational excellence, and I welcome them to the Seplat Energy Group.
“We have acquired a company with one of the best portfolios of assets and related infrastructure in a world-class basin, providing enormous potential for the Seplat Group. Our commitment is to invest to increase oil and gas production while reducing costs and emissions, maximising value for all our stakeholders.
“MPNU is a perfect fit with our strategy to build a sustainable business that can deliver affordable, accessible and reliable energy for Nigeria alongside attractive returns to our shareholders”.
By Adedapo Adesanya
The National Pension Commission (PenCom) is projected to close the year with over N22 trillion in pension assets impacted by challenges like inflation and monetary policies.
This is according to PenCom Director-General, Mrs Omolola Oloworaran, at a press conference in Abuja on Thursday.
She said as of October 2024, the Contributory Pension Scheme (CPS) had 10.53 million registered contributors and pension fund assets worth N21.92 trillion.
Speaking at the conference-themed Tech-driven Transformation Shaping the Pension Landscape, which showcased PenCom’s strategic commitment to innovation, she said that the numbers reflected the agency’s unwavering commitment to fund safety, prudent management, and sustainable growth.
She explained that the pension environment was impacted by the wider economic challenges facing the country, noting that the sector battled multi-year high inflation, Naira devaluation, and the lingering effects of unorthodox monetary policies by the Central Bank of Nigeria (CBN).
Business Post reports that the apex bank hiked interest rates by 875 basis points this year alone to tackle persistent inflation which peaked at 33.8 per cent as of October.
She said that these challenges eroded the real value of pension funds and impacted contributors’ purchasing power.
“To address these issues, the commission has initiated a comprehensive review of its investment regulations.
“It is focusing on diversifying pension fund investments into inflation-protected instruments, alternative assets, and foreign currency-denominated investments.
“The goal is to safeguard contributor savings and ensure resilience against future economic volatility,” she said.
She restated the commission’s commitment to expanding pension coverage, particularly through the advanced micro-pension plan designed to encourage participation from the informal sector using technology.
“This initiative will make it easier for everyday Nigerians to save for retirement, aligning with our vision of inclusive growth and financial stability for all.
“The backlog in retirement benefits for retirees of the Federal Government’s Ministries, Departments, and Agencies (MDAs) will soon be settled.
“The federal government recently disbursed N44 billion under the 2024 budget to settle approved pension rights.
“We are collaborating with the Federal Government to institutionalise a sustainable solution to ensure retirees receive their benefits promptly, eliminating delays,” Mrs Oloworaran said.
She said that PenCom’s technology-driven transformation aimed to make the CPS more accessible, reliable, and sustainable.
“From data management to seamless contributions and regulatory supervision, we are paving the way for a future where the pension industry serves all Nigerians effectively,” she said,
Mrs Oloworaran also said that the e-application portal for pension clearance certificates has replaced the manual processes and enhanced the ease of doing business in the sector.
“Since its deployment, 38,528 pension clearance certificates have been issued. This initiative ensures compliance and secures the future of Nigerians working in organisations that interact with the government,” she said.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Thursday, December 12 after it ended the trading session with no single price gainer or loser.
As a result, the market capitalisation remained unchanged at N1.055 trillion as the NASD Unlisted Security Index (NSI) followed the same route, remaining at 3,012.50 points like the previous trading session.
However, the activity chart witnessed changes as the volume of securities traded at the bourse went down by 92.5 per cent to 447,905 units from the 5.9 million units transacted a day earlier.
In the same vein, the value of securities bought and sold by investors declined by 86.6 per cent to N3.02 million from the N22.5 million recorded in the preceding trading day.
But the number of deals carried out during the session remained unchanged at 21 deals, according to data obtained by Business Post.
When trading activities ended for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third place with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
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