CFO Survey- Part 3

Access to capital and African Growth

 

Given the current low repo rate, capital and funding has become significantly cheaper. This trend appears to be consistent across industry sectors and business size, although the construction industry and the financial sector still view capital as being too expensive. Only 36% of the CFOs feel that the cost of capital is too high with 45% being of the opinion that the cost is fair.

In addition to becoming cheaper it appears that capital has become a little easier to access for some, most notably large mining and retailing companies, with 77% of CFOs now believing that capital is readily available to their organisations. The construction sector is, however, still finding funding to be a real constraint to expansion and new projects, in spite of the overall better conditions reported by CFOs.

 

At the micro-economic level, concerns centred on industry regulation (46%), competitiveness (39%) and the skills shortage (50%). Larger companies (in excess of R20bn) find industry regulation consuming. The financial sector is overwhelmingly absorbed by the intensification of regulation which is threating to stymie the industry and could aggravate the rising the cost of doing business. For the mining industry, regulation is also a huge concern. This risk is supported by continuous discussion conducted mainly through the press on the subject of nationalisation with key stakeholders adopting seemingly different standpoints.

 

Expansion into Africa is seen as a key source of growth with 73% of companies indicating a move northwards and most of them planning to do so imminently. With its large, youthful population and forecast above-average growth rates, Africa is seen as the last frontier, particularly in the consumer sectors as well as infrastructure development. For some companies this is about achieving economies of scale and for others it means a dramatic extension to their markets. Within this trend there is a clear shift in attention to East and West Africa.

To download the full report, click here

Filed under: Executive Leadership, Finance, Capital, CFO, CFO Survey, expansion into Africa, Funding, regulation