Middle East CEOs: In tech we trust

A vast majority of CEOs in the Middle East are upbeat and confident about their company's prospects for revenue growth. - Picture used for illustrative purposes alone

A vast majority of CEOs in the Middle East, who took part in a survey, are upbeat and confident about their company's prospects for revenue growth, while their counterparts across the world feel they have plenty to worry about in the year ahead.
However, CEOs in the region, though confident, are playing a cautious hand when it comes to growth strategies. They are avoiding more speculative new ventures and refocusing on core capabilities and securing growth with tried and tested partners and exit strategies, PwC said in a survey report.
In 2017 Annual Global CEO Survey, PwC canvassed the views of over 1,300 international CEOs including over 50 in the Middle East. While 38 per cent of CEOs worldwide (2016: 35 per cent) are very confident about their company's growth prospects in the next 12 months, while 29 per cent (2016: 27 per cent) believe global economic growth will pick up in 2017.
The survey's Middle East findings paint an even more positive, albeit guarded, picture about growth in the region.
In fact, 38 per cent of Middle East respondents are very confident about their company's prospects over the next 12 months (2016: 34 per cent) and as many as 60 per cent have the same degree of confidence over the next three years - by far the highest of any region. This confidence also resonates into plans for workforce: 56 per cent of the region's respondents expect to increase their headcount over the next year.
Hani Ashkar, PwC Middle East Senior Partner, said that despite a tumultuous 2016, the survey findings paint an encouraging picture for the year ahead and beyond. CEOs in the region are stepping up to the challenge of digital technology: seizing the possibilities it offers and addressing the risks it can pose, he said.
"Despite uncertain times, Middle East businesses are as ambitious as ever; they have proved resilient in times of change and our survey shows that though treading with caution, they are certainly confident about the direction their businesses will take in the years to come," said Ashkar.
According to the Association of Chartered Certified Accountants and the Institute of Management Accountants, the fall in oil prices continues to hit business confidence in the Middle East hard, creating sharp declines in export and fiscal revenues.
"This is particularly noticeable in Saudi Arabia, where the weakness of the government spending index has been the main driver of falling confidence. By contrast, the UAE's ability to adjust quickly to changing oil revenues means that there are signs of gradual recovery," said Lindsay Degouve de Nuncques, head of ACCA Middle East.
Credit rating agencies Moody's and Standard & Poor's expect further weakening of credit strengths of GCC countries in 2017 with overall negative outlook for sovereign ratings.
"Our outlook for sovereign creditworthiness in 2017 among GCC countries is negative overall, reflecting our expectation for the fundamental credit conditions that will drive sovereign credit over the next 12-18 months," said Mathias Angonin, analyst at Moody's.
PwC findings reveal that although organic growth is high on CEOs' agendas business leaders in the region are more likely to be looking for strategic partnerships. They are more likely to plan cost reduction activities and less likely to explore collaborating with entrepreneurs.
The survey also reveals that digital tops the list of strategic priorities for CEOs in the region (22 per cent), followed by innovation (14 per cent), human capital (12 per cent) and funding for growth (10 per cent).
Thirty per cent of the region's CEOs believe that technology has completely reshaped competition in their industry in the last five years - the highest of any region, and well ahead of the global average of 20 per cent.
CEOs in the region identified cyber security, data privacy breaches and IT disruptions as the top three technology threats to stakeholder trust. In the Middle East, these concerns are in fact the highest of all regions: 74 per cent view risk in breaches and data privacy as their biggest threat (vs a global average of 55 per cent). Similarly, the region shows the highest level of concern about cyber security breaches (66 per cent vs average of 53 per cent), IT disruptions (62 per cent vs average of 47 per cent) and risks from social media (46 per cent vs 38 per cent average).
Middle East CEOs are equally if not more digitally savvy than their global peers: 76 per cent are consumers of digital media, 66 per cent believe to have strong digital skills, 56 per cent are active on social media and 22 per cent are even active gamers.
"An increasingly digitally-enabled landscape is emerging in the region, and CEOs have an array of concerns and opportunities when it comes to addressing these," said Ashkar.
- issacjohn@khaleejtimes.com