Generative AI is double-edged sword, say Southern Africa CEOs
Cyber security threats have shot up as one of the top three risks facing chief executive officers (CEOs) in Southern Africa.
This is one of the key findings in the third edition of the KPMG 2023 CEO Outlook Survey – Southern Africa.
Compiled in partnership with Business Leadership South Africa (BLSA), the KPMG study draws on the perspectives of 60 CEOs across various sectors, surveyed in August and September, mostly from South Africa and six other countries within Africa.
The Southern Africa edition of the CEO outlook follows the global KPMG CEO Outlook Survey conducted among 1 325 CEOs across 11 markets.
This year’s survey reviews the economic outlook, with a focus on technology and talent, as well as environmental, social and governance issues, and how these pillars will shape growth and progress over the next three years.
According to the survey,84% of Southern Africa’s CEOs view generative artificial intelligence (AI) as a double-edged sword, saying it can enhance cyber security but may potentially introduce an increased risk of new attack methods.
It further notes that 16% of CEOs across Southern Africa do not believe their organisation is well-prepared in the event of a future cyber attack.
CEOs in Zimbabwe, Mauritius and South Africa highlight that under-preparedness may be a result of low investment in cyber defences, or cyber security not being regarded as a business priority, it states.
Ignatius Sehoole, CEO of KPMG in Southern Africa, says a lot of disruptive technology will impact what happens in business, adding that generative AI is one example.
However, the more one goes into digitisation, the more the crooks look at your company, he warns. “Cyber security has shot up and it’s expected given what…AI brings in terms of technology. Unfortunately, not all of our businesses are ready to deal successfully with cyber attacks.”
Sehoole notes there is a lot of activity with regards to cyber threats; for example, in the last six months, he’s spoken to three local CEOs that have had to deal with cyber criminals trying to take over their systems.
He points out that large companies have been under attack, with some asked to pay ransom. “It’s a real thing happening right now in our economy. Therefore, CEOs have no option but to put a lot of investment in cyber defences. These are not only CEOs of companies that have been attacked. Even those that already had cyber plans and controls in place are now doubling up on investments.
“Everybody in the marketplace is paying attention to the potential cyber attacks out there. It is on top of the agenda for those charged with governance, those that sit on boards, risk and audit committees because they know the damage it causes.”
According to Sehoole, last year’s report showed a lot of uncertainty, including on policy, but it appears there are more worries year-on-year.
Business has always faced uncertainty and it doesn’t look like this is something that will go away anytime soon, he adds.
The survey found that while CEOs remain confident in the future of the global economy, there is significant consideration for escalating uncertainty and rising global crises – which has forced a reset in strategic thinking.
BLSA CEO Busisiwe Mavuso says in South Africa, business confidence remains stubbornly pessimistic.
South Africa’s population now sits at 62 million, with 19 million citizens dependent on government grants at an annual cost of R200 billion to the fiscus, according to Mavuso.
Provision of essential services remains a challenge, and poverty and unemployment remain rife, increasing the fragility of the system and its susceptibility to the effects of global crises, she comments.
“According to the survey, an approach that CEOs are adopting to tackle the confluence of global emergencies is to concentrate on micro decision-making and the factors under their control, and to prioritise internal and external collaboration to improve resilience.
“Business leaders, alongside their civil society and governmental counterparts, will have to continue to navigate difficult waters, and be on the lookout for opportunities, not only to find pockets of growth but to help address the challenges we collectively face,” says Mavuso.
Global CEOs’ confidence in the growth prospects of their own companies over the next three years hit a three-year low at 77%, down from 85% in 2020, according to the KPMG CEO Outlook Survey 2023.
However, Southern African CEOs are far more optimistic, with 90% of respondents indicating confidence in their company’s growth prospects.
In addition, 96% of South African CEOs see their earnings increasing over the next three years, with 20% of CEOs forecasting earnings growth of between 0% and 2.5%; 63% of South African CEOs forecasting earnings growth of between 2.5% and 5%; and 3% of CEOs forecasting growth of between 10% and 25%.
“What we are seeing coming out of this report is that CEOs are placing an increased emphasis on organic growth opportunities in lieu of deal-making opportunities, as global uncertainty continues,” comments Frank Blackmore, lead economist, KPMG in South Africa.
“The top three operational priorities for Southern African CEOs to achieve their growth objectives over the next three years include advancing digitisation and connectivity of all functional areas (35%), the improvement of customer experience (28%), and improving their employee value proposition to attract and retain the necessary talent (28%).”