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ECONOMY: Government Must Provide Stable and Lasting Economic Recovery

 





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Globally CEOs are extremely concerned about uncertain or volatile South African economic growth in capital markets with the sovereign debt crisis weighing heavily on businessesÂ’ minds, according to a report issued today by Professional Services Firm PwC. This places the onus on governments to provide political leadership to help lay the foundation for a stable and lasting global recovery.

Drawing on the results of the 15th Annual CEO Survey, and adding to it with valuable insights from senior government decision-makers, PwC’s Public Sector Research Centre has published its latest report in the Government and Global CEO series entitled ‘Taking responsibility: Government and the Global CEO’. The aim of the study is to understand better the views of CEOs regarding the implications for government policy and in the process contribute to mutual and productive relationships between the public and private sectors. The study took into account the views of 23 government officials.

Stanley Subramoney, Deputy CEO of PwC Southern Africa says: “Africa is increasingly becoming an attractive market, particularly South Africa, in which to do business.” More than half of CEOs (59%) that took part in the study see the emerging markets as more important to their company’s future than the developed economies. “Foreign investors are looking at South Africa and Africa with keen interest for growth opportunities,” says Subramoney, pointing out that a number of mega deals had been successfully concluded in the retail and telecommunications sectors in the past year.

South African Economic Growth Markets


African CEOs are “very confident” about the prospects for revenue growth over the next three years. Almost half (49%) of African CEOs expect the global economy to stay the same in the next 12 months and one third (35%) expect a decline. However, this is not due to their governments’ action. Only a third of CEOs (33%) think that the government in the country in which they are based has handled the implications of the global economic crisis effectively.

Subramoney says: “Governments have a major responsibility to create the right conditions for growth which is financially, economic and environmentally sustainable, that is good growth.” A new scorecard that focuses on measurement beyond traditional financial metrics is needed to provide a holistic view for government leaders as well as taxpayers. Three key features for enabling growth include: Cities, which are a key engine sustainable growth; clusters of economic activity, and a balanced, integrated infrastructure programme.

Economic and policy threats
The top economic and policy threats seen by CEOs in Africa are uncertain or volatile economic growth followed by bribery and corruption, over-regulation and fluctuations in exchange rates. Despite for the first time in many years, over-regulation not being a top three economic and policy threat globally, it is still seen as a top concern in Africa.

Threats to South African Business Growth


African CEOs say that the main threats to growth prospects include the availability of skills (80%) and energy costs (73%) followed by the inadequacy of infrastructure (68%) and onerous tax laws (67%). Furthermore, the ongoing economic uncertainty in Europe has directly affected almost half of African CEOÂ’s companies financially and strategically.

Priorities for business investment and for government
Organisations both within the public and private sectors are still finding it a challenge to attract and utilise talent. Subramoney says: “The availability of key skills is a complex and frustrating challenge for business leaders; and tops the CEO agenda: the number one investment focus for CEOs globally is on creating and fostering a skilled workforce.”

The results of the 3rd PwC Annual South African CEO Survey disclose that a significant percentage of CEOs (84%) believe that it should be the GovernmentÂ’s top priority to take steps to create and foster a skilled workforce. This contrasts with the global picture, in which CEOs believe that the stability of the financial sector is the most significant issue.

Subramoney says: “Collaboration between the public and private sectors is critical to the recruitment and retention efforts facing companies. Governments can do more to create an environment to overcome market skills and talent shortages.” For instance, by creating programmes that will equip people with a range of ‘employability skills’ and tackling untapped and under-used talent pools which could boost productive potential.

CEOs in Africa would also like to see the Government take initiatives to improve the infrastructure in which they are based and also reduce poverty and inequality. They would also like to spend more time with policy-makers and regulators in the next 12 months.

Subramoney says: ‘Governments face different priorities and will need different approaches according to different national and local circumstances, However, there is no doubt that the future of the global economy depends on governments and businesses making the right decisions and taking responsibility to deliver on this monumental agenda.”

 
 
 
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