PwC’s 23rd Annual CEO Survey – Middle East reveals that regional CEOs, despite recognising an increase in geopolitical and economic uncertainty, remain confident in their own growth prospects and are focused on driving efficiencies, upskilling their people and seeking new markets for opportunities. The survey found that nine out of ten Middle East CEOs are worried about geopolitical uncertainty.
Yet despite this uncertainty, 66% of the CEOs in the region are confident about their company’s revenue growth in the next year, with 74% more confident about the next three years. With guarded optimism, Middle East CEOs continue to navigate uncertainty and seize the opportunities for the near future.
Hani Ashkar, PwC Middle East Territory Senior Partner said, “CEOs in the Middle East are surrounded by uncertainty. Whether it’s geopolitical, economic or technological; business leaders are navigating this instability and overcoming obstacles through efficiency, talent, and technology, making way for new opportunities for growth. Uncertainty can be a segue for reduced headcount, decreased investment and overall timidness when it comes to growth opportunities. But CEOs in the Middle East do not shy away, looking instead to adapt to create sustainability and growth for the future.”
Uncertainty drives CEOs to seek efficiencies and new opportunities
77% of Middle East CEOs plan to make operational efficiencies over the next 12 months to improve performance. 75% of CEOs, however, expect headcount to increase or stay the same. This nuanced picture suggests that the drive for efficiency is as much about getting in shape to seize future opportunities as surviving current difficult market conditions. Corporate sustainability is the focus, not rash cost-cutting. Despite the uncertainty, however, 47% expect their companies to enter new markets in 2020 with Saudi Arabia and Egypt the most cited markets for growth.
There is an urgent need for upskilling
80% of our respondents this year said a shortage of skills in the workforce was a potential threat to their organisation’s growth prospects, up from 70% last year. CEOs increasingly recognise that they must maximise the potential of their existing staff through upskilling programmes (70%). Our ‘GCC Hopes and Fears’ survey further demonstrates that there is also great demand for upskilling from employees in the region.
Digital transformation must be balanced by security
The response of our CEOs to technological change reflects both increasing global awareness of the need to manage the privacy and cybersecurity risks of technology and regional background in which the requirement to cope with geopolitical instability features prominently in business planning. Understandably, therefore, the proportion of Middle East CEOs who identify rising tensions as a key factor in shaping their cybersecurity strategy is almost double the global survey average.
Companies work on getting leaner but not greener – yet
Companies throughout the region are steadily adapting to the realities of a lower rate of economic growth. In this context, corporate sustainability in the region is focused on building leaner, more efficient and nimble businesses to withstand a downturn and be ready to exploit any opportunities on the horizon. Yet mention sustainability in the context of climate change and our CEOs appear underprepared.
Stephen Anderson, Middle East Strategy and Markets Leader, ended, “Middle East CEOs continue to make the transition to a lower growth environment, in increasingly uncertain market conditions. They are consequently focused on operational efficiencies to enable long-term, profitable sustainable growth. Our CEOs’ justified anxiety about the immediate term is balanced by a more positive outlook when they look further towards the future. It is pleasing to note that there is a region-wide focus on upskilling to drive digital transformation, which in turn will enable better products and services and improve job prospects for the local workforce, including young people and women.”