CEOs in Nigeria confident of growth over the next three years

28 August 2018 4 min. read

Operational and talent risks – not digital disruption – appear to be the top concerns for senior executives in Nigeria at the moment, according to the latest CEO survey conducted by Big Four professional services firm KPMG. General optimism levels are high, however, with nearly 80% of the CEOs expecting growth over the next three years.

Nigeria is the largest economy in Africa, and given that the continent is poised to become an increasingly participative market in the global economy, the sentiment in the upper echelons of Nigeria’s business environment is crucial to the continent’s prosperity going forth.

The findings from KPMG’s latest CEO survey will, therefore, be encouraging for businesses across the country. The responses brought to light a generally optimistic environment and, crucially, a positive attitude towards phenomena such as digital disruption, which are currently a cause of anxiety for chief executives across the globe.

CEO confidence levels over the next three years

Nearly two-thirds (64%) of CEOs in Nigeria are ‘very confident’ about the growth prospects of their own companies over the next three years, while the remaining 36% are just ‘confident’ of the same, meaning that not a single CEO amongst those surveyed is concerned that their company might not grow at all.

A hint of pessimism crept in when CEOs were asked about the growth prospects of the industry in which they operate, perhaps due to the fact that it lies just beyond the realm of their control. 16% of those surveyed said that they were not very confident about their industry’s progress over the next three years. An identical 16% are ‘very confident’ about growth in their sector, while the remaining 64% preferred to remain cautiously optimistic, responding with just ‘confident.’

Naturally, responses were most cautious when concerning the fate of the global economy over the next three years, given its volatile state and the increasingly tense trade relations between key economic centres, namely the US, China and the European Union.

Risks to growth over the next three years

A third (32%) of the CEOs, therefore, preferred to remain ‘neutral’ about growth in the global economy, while 8% are not very confident about the same. Amongst the more optimistic, 56% said that they are ‘confident’ of global growth, while just 4% expressed strong faith with a ‘very confident’ response.

Lastly on the subject of growth, executives were asked about their position on the economy of Nigeria itself, which has been on a steady growth trajectory over the last decades, although not in the most equitable manner. The overall impression was optimistic once again, with 72% stating that they were ‘confident’ and an additional 4% stretching to ‘very confident.’ 20%, on the other hand, are not very confident, while 4% chose to remain neutral on the matter.

Despite being confident about growth in their own organisation, CEOs are naturally prone to worry about the risks that exist to their prospects in the near future. An overwhelming 86% of those surveyed appear to be in agreement that ‘operational risk’ is a major threat to their operations going forth.

Expected return on investment in technology

Nearly half (48%) of the CEOs cited talent risk as a threat, while the risk from cybersecurity  was on the list for 36%. Naturally, the risk from technological disruption was among the threats cited, but surprisingly only made it to the list for 32% of the CEOs surveyed. On the other hand, 28% of those who did put tech disruption on their list placed it as the top threat, which is a higher proportion than any other risks mentioned.

Nevertheless, companies appear to have adopted the right approach to digital disruption, viewing it as an opportunity more than a threat. Investment in the various industry 4.0 domains has ballooned, and most are confident that it will provide quick returns, although digital transformation and artificial intelligence systems appear to inspire a lot more confidence than robotic process automation.

Commenting on the report, KPMG Nigeria Chairman & Senior Partner Kunle Elebute said, “No matter which industry they are in, businesses in Nigeria must operate in the wake of persistent and shifting local and international forces. With so much change in the Nigerian business landscape in the last couple of years, it is valuable to know what the leaders of today’s leading companies in Nigeria are anticipating for the next few years ahead.”