According to a recent PwC report, the leaders of private businesses in Africa are ahead of their counterparts in Europe in their embrace of digital change.

Four in five (81%) of respondents to a PwC survey of private businesses (across nine key economies on the continent) said they see digitalisation as “highly relevant” to their future, compared with 65% in Europe. And a greater proportion in Africa say they want to allocate more than 5% of their overall planned investment into digital, compared with peers elsewhere.

Added to this, more than half of respondents said they would diversify into new business ventures outside their normal operations. Taken together with enthusiasm for digitalisation, what emerges is a compelling picture of potentially transformative change for many private businesses in the region.

Key technologies such as the Internet of Things (IoT), blockchain and artificial intelligence (AI) are already on the radar for African businesses, and the relevance of these technologies is rated much higher than in more economically developed EU economies. Three-quarters of respondents surveyed by PwC see IoT technologies as relevant for their business, and nearly 50% also rate blockchain highly. AI, 3D printing, and augmented reality (AR) are also considered relevant by around one-third of respondents.

Gert Allen, Entrepreneurial and Private Business Leader at PwC Africa, said: “Leaders of private businesses in Africa may grapple with greater challenges than their counterparts in Europe in certain ways – less developed infrastructure and financial systems, to name two – but they are ahead of them in one key respect: their embrace of digital change.

“At a time of uncertainty in the economic outlook for Africa, thanks in part to global headwinds, this picture provides significant encouragement, because the right approach to digital is sure to yield dividends in the longer term.”

Further encouragement comes from PwC’s finding that, in spite of official downgrades for growth in key sub-Saharan African economies this year, private businesses are nonetheless relatively optimistic about their prospects. 83% of African private business leaders predict revenues overall will grow over the 12 months following our survey, while only 7% expect declines.

Peter Englisch, EMEA entrepreneurial and private business leader at PwC, said: “The optimism that we found among Africa’s private business leaders contrasts with our findings in Europe, where fewer than two-thirds of private business leaders expect revenue growth in the next 12 months. These findings represent a drop in confidence from 2018 – and just half of leaders surveyed in the Middle East predict sales growth.”

In certain respects, African private business leaders face greater challenges than their European counterparts: structural problems including corruption, a lack of infrastructure (including digital infrastructure such as broadband), high unemployment and inadequate education systems continue to undermine growth in Africa. The entrepreneurs surveyed by PwC expressed concerns about talent and skills shortages. Despite high unemployment rates across Africa, 79% of those surveyed say they expect losses on turnover due to skills shortages.

Gert Allen, comments: “Despite significant unemployment in countries such as South Africa, Namibia and Botswana, the overwhelming majority of private businesses in the region (nearly 80%) say a lack of suitably skilled staff undercuts revenue, while 15% estimate significant losses of more than 10%. Losses are especially high in East and West Africa, where 82% of the companies report losses, compared with 78% in southern Africa.”

African private business leaders appreciate the far-reaching significance of digitalisation for the future of their companies. They see how embracing technologies is critical to avoid falling behind in an ever-more competitive global landscape. But leaders must go further and take action by preparing their companies for digital change. For governments, too, it is time to take a more active stance. Private businesses, which contribute hugely to economic growth and the region’s prosperity, should get more government support.

Gert Allen, concludes: “Getting digital implementation right requires preparation and onboarding different perspectives through diversity and inclusion. This starts at the top, with boards whose members represent different gender, ethnicity and generations needing to understand all challenges and opportunities deriving from technological transformation; skilled staff who are open to change; and the availability of adequate funding.

“The stakes are significant, as Africa has massive and still largely untapped commercial potential – especially its domestic businesses. But, if owners and managers don’t think strategically now about how to transform their companies – and manage the trade-off between rising cost constraints and investment needs – they risk being unprepared for whatever future lies ahead.

“Whichever strategies are employed, using digitalisation to drive growth is especially important now, as competition grows and business models change. African private businesses have the opportunity to thrive – and indeed, potentially leapfrog others – when it comes to digital transformation. They just have to take that first leap. The time to act is now.”