Revealed on Sunday, the 25th edition of PwC’s global CEO survey finds that 82% of Middle East business leaders expect global growth to improve in 2022 – the survey reports the current sense of optimism is tempered by an awareness of familiar and emerging threats and risks.
A year ago, as the first COVID-19 wave subsided, Middle East CEOs felt able to look ahead with cautious confidence. Over the course of 2021, their positive short-term outlook strengthened as a result of the strong health response, commodity prices, rising consumer demand and strengthening fiscal positions. Consequently, 64% of the Middle East CEOs are now extremely or very confident about their company’s revenue growth prospects in 2022, markedly higher than the global figure of 56%. The survey also found that the top two markets for revenue growth are Egypt at 37% and KSA at 27% as well as US and China outside of the region.
Hani Ashkar, PwC Middle East Senior Partner, said: “Middle East CEOs are looking forward, not back. We are pleased to see that regional business leaders share our confidence that renewed growth lies ahead. CEOs who have built trust with their clients, people and wider stakeholders through the pandemic are in a very strong position. These business leaders are now looking beyond COVID-19 with a focus on delivering sustained outcomes.”
Bassam Hajhamad, Country Senior Partner at PwC Qatar said, “Qatar has shown resilience and is today emerging from the COVID-19 crisis in a strong position, showing signs of a robust recovery. While this has reflected positively on CEOs and industry leaders who have regained optimism and are starting to look out for strong opportunities for sustainable growth, CEOs are yet to face many pressing issues on the ESG front.” He added: “Focusing efforts on building the right skills to deliver solutions that are human-led and tech powered is pivotal during this transformative phase and we are confident that 2022 will witness economic growth which will be reflected across different markets in the Middle East. PwC Qatar will be invested in creating new jobs in the Middle East with a focus on digital, emerging technologies and ESG aligned with its commitment to the Qatar 2030 National Vision.”
Investing in digital and talent: like their global peers, Middle East CEOs continue to digitalise business operations, from supply chains to sales channels, as governments across the Middle East carry on with ambitious modernisation agendas. In total, 52% of Middle East CEOs plan double-digit investments in digital transformation over the next 3 years. This year’s survey indicates that a growing proportion of Middle East business leaders have grasped that success in the digital age requires skilled people as well as the latest technologies — 46% of regional respondents plan double-digit investments in leadership and talent development over the next three years.
Stephen Anderson, Middle East Strategy and Markets Leader, said: “Armed with new optimism, CEOs are fashioning a growth agenda that channels energies towards new business models, customer experiences and organisational efficiencies facilitated by the cloud and digital tools. Meanwhile, they are upskilling their workforces and developing tomorrow’s leaders. Indeed the CEO mindset has evolved greatly since PwC’s first global survey back in 1998, when one in five CEOs believed e-commerce would reshape competition.”
Cyber risks viewed as a leading threat: 57% of Middle East respondents say that cyber risks will have a negative impact on their company in 2022, higher than the global average of 49%. Middle Eastern companies appear to be more targeted than companies in other geographies due to reasons including a strong link with local governments and increasing regional geopolitical tensions.
As a result, 65% of regional business leaders believe cyber risks will limit their organisation’s ability to innovate in 2022 and 59% say these threats will undermine sales of products and services. The pandemic is also still a concern, with 48% of regional CEOs indicating that they are extremely or very concerned about health risks.
Climate change and equality: Middle East business leaders also trail their international peers in setting net-zero commitments, with 5% willing to commit to a target (22% globally). Meanwhile 29% of Middle East CEOs say gender representation rates are included in their long-term corporate strategies, compared to the global figure of 38%, and 14% include race and ethnicity representation rates. The overwhelming majority of Middle East CEOs have no personal financial motive to pursue climate change and equality goals. The bonus or incentive packages for 5% include greenhouse-gas reduction targets (vs. 13% globally) and for 4% include gender representation rates (compared with 11% globally).
Stephen Anderson added: “Given how essential ESG topics are to the region – for example the global strategic role that we will play in the energy transition, the imperative from a social perspective to drive employment and inclusion, and the importance of strengthening governance as we attract FDI and privatise swathes of the economy, governments are making bold plans and commitments to reimagine our region. It is clear from our survey that CEOs and businesses need to catch up and focus to both play their part and, perhaps as importantly, start to capture some of the enormous opportunities.”
These issues are becoming more prominent, given the commitment by governments across the region to ambitious carbon reduction goals and to building modern societies. Appointing a boardroom level executive with company-wide responsibility for setting and meeting climate change and equality goals as well as linking CEO’s bonus and incentive packages to achieving net-zero target are some of the recommendations PwC has outlined in their report as actions to begin making companies fit for a fast-approaching future where demonstrable commitment to CO2 reduction and equality will be critical to business success.