This is according to a new study that was released by PwC Africa earlier this week, a copy of which was emailed to fabpulse
The Details: Focus on the Revenue crisis
About 89% of the respondents also believed that their companies’ revenues and profits would decline by 10% and 9%, respectively.
These findings are coming just about the same time business leaders across the continent and beyond are beginning to adjust to the new normal caused by the pandemic.
At the moment, company executives (including the CFOs), would have to make some tough decisions that will determine how they emerge from this difficult economic time. A part of the report said:
“As they manage their process, business leaders — including the CFOs we’ve interviewed — will be faced with a series of decisions that will have a wide-reaching impact: on their own financial future; on the well-being of their employees, customers and other stakeholders; and on the wellbeing of the society at large.”
It should be recalled that the International Monetary Fund (IMF) had earlier projected that economic activities in Sub-Saharan Africa would decline by 1.6% in 2020.
For crude oil-dependent countries like Nigeria, the IMF projected that the economy would contract by an average of 2.8%.
Will things get back to normal?
According to the report, African CFOs who responded to the survey believed that their companies would eventually get back to normal.
In precise terms, 38% of the respondents said their companies would bounce back within three months of the post-COVID-19 era.
Unfortunately, nobody knows with certainty when the pandemic would end. This is because there is no cure/vaccine in the meantime, even as the virus continues to spread in parts of Africa.
In the meantime…
CFOs are helping their companies to adopt very strict cost containment strategies. At least, 85% of them said they are effecting cost containment strategies, even as 60% admitted that they are either deferring or completely canceling already planned investments. Others (49%) also noted that their companies are changing their financing plans.
Focus on CAPEX
The PwC report went further to note that the CFOs, who typically favour cost containment strategies, disclosed that their companies are focusing on slashing most of their costs on capital expenditure (82%).
Similarly, they are also cutting costs by reducing their workforce (52%) and operations (36%).
CFOs clearly favour a strategy of cost containment and of the 33 African respondents who said their company is pursuing this course of action, the majority are focusing on facilities and general capital expenditure (82%) followed by investment in the workforce (52%) and operations (36%).”
In the meantime, CFOs said their companies are prioritising the following needs;
- CFOs are focused on meeting stakeholders’ needs
- Ensuring proper financial disclosures, especially bearing in mind that measures taken by companies to contain the pandemic have distorted economic activities, a situation that has implications for financial reporting
- Community focus and social engagement also remain top priorities for many African companies. Recall that many companies in Nigeria rallied (under the aegis of CACOVID) to donate billions to FG in order to facilitate the fight against the virus
- CFOs are also focusing on devising new supply chain options for their companies, bearing the disruptions that the pandemic had already caused in this regard
- CFOs are also prioritising strategies aimed at protecting/keeping their customers and clients safe
- Most importantly, they plan to make the best of the current situation by adopting various necessary strategies
You may download and read the full report by clicking here.