56% of CEOs In Africa Are Extremely Concerned About Tax Policy Uncertainty

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Monday, June 14, 2021 / 8:28 PM / PwC /Header Image Credit: PwC

 


CEOs in Africa are more confident in their own company's revenue prospects and the strength of the global economy than they were in 2020. However, they have concerns about government policy, cybersecurity, technology, and people. These are some of the insights shared at the virtual media launch of the 8th edition of PwC's Africa Business Agenda 2021 report.

 

Commenting on insights from the CEO survey, Uyi Akpata, Regional Senior Partner PwC West Africa, noted that:

 

"In the light of the concerns that Africa's CEOs have on policy uncertainty, tax policy uncertainty, cyber threats, and over-regulation, this is an opportunity for African business leaders to reimagine every aspect of their operating model.


Further, companies and countries in West Africa should take advantage of the Africa Continental Free Trade Area (AfCFTA) Agreement, which came into force on 1 January 2021, to drive growth and bolster their economies through increased continental trade."



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Tax Issues are A Significant Concern for African CEOs

In the wake of the pandemic and its impact on government revenues in African economies, it is no surprise that tax policy uncertainty made a notable rise on the list of threats. In Africa, it is ranked third, up from seventh last year.

CEOs are undoubtedly watching debts accumulate as governments intervene with stimulus packages, and realise that the public will expect businesses to pay their fair share. In Africa, 56% of CEOs are already factoring increasing tax obligations into their strategic risk management activities.

While sharing insights during the media briefing, Taiwo Oyedele, Fiscal Policy Partner & PwC Africa Tax Leader, noted that:

"Plummeting government revenues and fragile economic growth are fueling an increase in government debt across Africa. This could result in tax aggression by government, increases in tax rates or introduction of new taxes. These could include, for example, digital taxes on platform-based companies that have profited during the pandemic."

"Solving the government revenue challenge will require making tough but informed decisions, which should include stopping wastage in government spending, rationalisation of incentives and subsidies, and boosting tax morale through accountability and transparency. Undue aggression against businesses and new or higher taxes will harm economic recovery and discourage investments."


Workforce Strategy, People and Productivity

Omobolanle Adekoya, Partner & People Leader, PwC West Market Area, noted that the pandemic has highlighted the importance of people to organisational success. This explains why 44% of CEOs in Africa, relative to their peers globally (21%), are changing their approach to performance management.


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Mixed Blessings of Technology

Automation and technology are great drivers when considering how to improve organisations' competitiveness. Femi Osinubi, Partner & Technology Leader, PwC West Market Area, noted that while the pandemic has brought about a significant increase in digital adoption and transactions, it has also increased the associated risks.

This is evident in cybersecurity being among the top three concerns for CEOs in Africa, with 54% of CEOs on the continent saying they are extremely concerned about cybersecurity, up significantly from 38% last year.


Climate Change Poses a Major Risk to Africa

The INFORM Risk Index, which measures the risk of humanitarian crises and disasters globally, shows Africa to be the continent most vulnerable to climate change.

But given the rising anxiety due to the pandemic, climate change declined in importance, with 22% of African CEOs ranking climate change 22nd on a list of 31 potential threats.

 

Uyi Akpata concludes "With companies facing growing demands from investors and other stakeholders, there is certainly a case for climate change because corporate action still trails global decarbonisation targets. Environmental, Social, and (Corporate) Governance (ESG) has moved from being a niche to the mainstream in investment decisions. African CEOs need to prioritise ESG, to contribute to building a healthier planet."


Africa Business Agenda 2021

The Africa Business Agenda draws on the results of PwC's 24th Annual Global CEO Survey.

PwC surveyed 5,050 CEOs in 100 countries and territories in January and February of 2021. The global and regional figures in this report are based on a sub-sample of 1,779 CEOs, proportionate to country nominal GDP to ensure that CEOs' views are representative across all major regions. The results for Africa are based on a sub-sample of 50 CEOs from 14 countries.


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