Subscribe

AI adoption sees African CEOs increase revenue streams

Sibahle Malinga
By Sibahle Malinga
Johannesburg, 03 Jun 2024
The limitations of GenAI, such as biased outputs, underscore the need for a careful and considered approach to adoption.
The limitations of GenAI, such as biased outputs, underscore the need for a careful and considered approach to adoption.

The adoption of emerging technologies, such as artificial intelligence (AI), is significantly impacting how CEOs in Sub-Saharan Africa (SSA) are capturing tangible value – with an associated positive impact of 1.4% on business profit margin.

This is one of the key findings of PwC’s Africa Business Agenda: Tech-enabled digital transformation report, based on the insights of 380 CEOs in SSA, including SA.

The report takes a closer look at how emerging technologies, such as generative AI (GenAI), is transforming industries and creating value for organisations, navigating the risks and challenges of AI to remain ethical, the role AI plays in the future of work, and how cloud transformation can empower innovation and operational efficiency.

It shows that 52% of the region’s CEOs – more than the global average of 46% – are capitalising on opportunities presented by emerging technologies to drive profitability, efficiency and innovation – the uptake of which is proving to have a material impact on profit margins.

The adoption of GenAI across companies in SSA remains in its early stages, with only 27% of CEOs reporting organisation-wide implementation, compared to 32% globally, notes the report.

However, as this ground-breaking technology gathers momentum, CEOs in the region are increasingly recognising its potential to fuel growth and competitiveness, it says.

Dion Shango, PwC Africa CEO, comments: “CEOs in Sub-Saharan Africa reported an impressive 15% revenue growth in the most recent fiscal year, surpassing their global peers, who reported an average of 12% revenue growth during the same period.

“The past year’s performance has boosted forward-looking sentiments, with 52% of Africa’s CEOs reporting growth prospects in their territories over the next 12 months. Our analysis also highlights that adopting new technologies to enhance capabilities is significantly impacting how CEOs in Sub-Saharan Africa are capturing tangible value – with an associated positive impact on profit margin of 1.4%.”

Despite being in the early stages of adoption, the report finds, the speed and scale at which GenAI is evolving is nothing short of astounding, with new AI models being adopted across various business sectors and redefining the way African companies conduct business.

Similarly, a new global study by Tata Consultancy Services reveals that 86% of surveyed senior business leaders say they have already deployed AI across their organisations to enhance existing revenue streams or create new ones.

Over half (55%) of the respondents noted they were actively making changes to their business or operating models, or to their products and services, due to the potential benefits and risks of AI, according to the survey.

Evolving job functions

On the workforce front, the PwC report highlights the increasing adoption of AI technologies as significantly reshaping job roles, altering skill requirements and creating new opportunities for workforce development.

Businesses need to adapt to the changing nature of jobs, with AI poised to have a negative and positive impact on employment, it says.

Dr Dayalan Govender, PwC Africa people and organisation leader, points out: “Twenty-one percent of Africa’s CEOs told us they anticipate headcount reductions due to GenAI, compared to 25% globally.

“Here, a human-centric approach to AI implementation, involving employees in the design and deployment of solutions, will foster the trust, transparency and collaboration needed to deploy these technologies in the workplace. Doing so effectively will likely unlock new opportunities for innovation and create a more resilient and adaptive workforce.”

Femi Madariola, PwC Nigeria technology consulting partner, adds: “As more organisations in Africa begin to recognise the transformative potential of GenAI, it is crucial for leaders to approach its adoption with a strategic mind-set, focusing not only on short-term gains, but also on building the necessary skills, infrastructure and governance frameworks to ensure long-term success.”

The current limitations of GenAI, such as hallucinations, biased outputs and lack of consistent logical reasoning, underscore the need for a careful and considered approach to adoption, warns PwC.

In SSA, 48% of CEOs agree that AI may increase legal liabilities and reputational risk, compared to 46% globally; therefore, companies must establish clear policies and procedures to mitigate potential legal risks and protect their brand reputation.

“While GenAI does present immense opportunities for value creation and business transformation in Africa, it is also crucial for organisations to be cognisant of the capabilities, limitations and risks associated with this emerging technology,” states Christiaan Nel, PwC Africa AI leader.

“Understanding and mitigating these risks will be essential to ensure the responsible and sustainable deployment of AI solutions.”