The Dual Edge of Generative AI: Opportunities and Risks for African Businesses

In the rapidly evolving landscape of technology, generative artificial intelligence (GenAI) stands out as both a beacon of opportunity and a source of concern for businesses across Africa. This duality is underscored in the inaugural KPMG Africa CEO Outlook, which reveals that while many African CEOs recognize the potential of GenAI to enhance business operations, they are equally aware of the accompanying risks.

Embracing the GenAI Revolution

According to the KPMG report, a significant 61% of companies acknowledge the benefits associated with generative AI. This technology is viewed as a powerful tool that can streamline operations, enhance customer experiences, and drive innovation. Ignatius Sehoole, chairman and CEO of KPMG in Africa, emphasizes that “this train has left the station,” urging companies to adapt and integrate AI into their business models.

However, the enthusiasm for GenAI is tempered by caution. A notable 39% of CEOs have yet to determine how to leverage this technology effectively. The challenge lies not only in understanding how GenAI can complement human workers but also in addressing the potential for talent displacement. As businesses increasingly rely on AI, the question of how to maintain a balanced workforce becomes paramount.

Cybersecurity Concerns

One of the most pressing risks associated with the adoption of generative AI is cybersecurity. While CEOs are aware of the threats posed by cyberattacks, only 21% express confidence in their ability to safeguard their organizations against these risks. The report highlights that the landscape of cybersecurity is evolving, and as AI technologies become more prevalent, so too do the vulnerabilities associated with them.

The need for robust cybersecurity measures is underscored by the fact that 43% of African CEOs believe they have adequate access to cybersecurity talent and solutions to combat AI-specific threats. This figure is lower than the global average of 50%, indicating a pressing need for investment in cybersecurity infrastructure and talent development.

Regional Economic Outlooks

Despite the backdrop of global economic uncertainties, African CEOs remain optimistic about the growth potential of their organizations. The report outlines varying economic landscapes across the continent:

• East Africa: Projected growth of 5.1% in 2024, with CEOs adopting a cautious approach to mergers and acquisitions (M&A) due to economic volatility.
• West Africa: A decline in confidence, with only 60% of CEOs optimistic about their country’s economic growth, down from 73% the previous year. Key risks include trade regulations and rising cybercrime.
• Southern Africa: CEOs express confidence in business growth, although concerns about economic decoupling and cybersecurity persist.

This regional analysis highlights the diverse challenges and opportunities faced by CEOs across Africa, emphasizing the need for tailored strategies that address local economic conditions.

Navigating Geopolitical Complexities

The KPMG report also delves into the geopolitical landscape, noting that African CEOs are increasingly aware of the complexities arising from global tensions. While 42% of African CEOs recognize the need to tackle geopolitical challenges, this figure is lower than the global average of 47%. This resilience may stem from the continent’s historical adaptability to change.

Stefano Moritsch, KPMG’s global geopolitics lead, points out that geopolitical risks can also present opportunities for growth. As global dynamics shift, African businesses have the potential to position themselves as pivotal players in the geopolitical arena, leveraging their unique strengths to navigate challenges.

The Role of Innovation and Technology

As generative AI continues to evolve, African CEOs are keen to explore its potential to enhance competitiveness. Martin Kimani, associate director at KPMG in Africa, notes that 73% of CEOs believe their leadership teams understand how GenAI will disrupt existing business models. However, ethical considerations remain a priority, with 77% of CEOs highlighting the ethical dilemmas associated with AI adoption.

The report indicates that 81% of African CEOs do not view generative AI as a major threat to headcount but rather as a catalyst for upskilling and resource allocation. This perspective reflects a growing recognition that technology can complement human capabilities rather than replace them.

Talent Development and Workforce Dynamics

Talent acquisition and retention remain critical concerns for African CEOs. Dr. Candice Hartley, head of people at KPMG in Africa, emphasizes that while technology investments are prioritized, the development of skills through peer learning is essential for organizational success. The impact of an aging workforce is also a pressing issue, with 89% of African CEOs acknowledging the need to nurture younger talent to ensure sustainability.

Interestingly, the report reveals a shift in attitudes towards remote work, with 86% of CEOs advocating for a return to the office. This reflects a broader trend where flexibility in the workplace is becoming a key factor in attracting and retaining talent.

Environmental, Social, and Governance (ESG) Strategies

The KPMG report highlights a growing awareness of the importance of environmental, social, and governance (ESG) compliance among African CEOs. However, there remains a gap in recognition compared to their global counterparts. While ESG is seen as a potential value creator, many African CEOs express concerns about the risks associated with misinformation and reputational damage.

The report underscores the need for African businesses to integrate ESG strategies into their digital transformations to enhance brand value and customer relationships. Despite the challenges, there is a consensus that effective ESG integration will be crucial for long-term success.

Conclusion

The KPMG Africa CEO Outlook paints a complex picture of the opportunities and risks associated with generative AI and other emerging technologies in the African business landscape. As CEOs navigate the dual challenges of leveraging AI for growth while addressing cybersecurity and talent concerns, the emphasis on collaboration, innovation, and strategic foresight will be essential.

In this transformative era, African businesses have the potential to not only adapt to global changes but also to lead in the development of homegrown solutions that address local challenges. As Ignatius Sehoole aptly puts it, “The whole is very much the sum of the parts,” highlighting the importance of collective efforts in driving sustainable growth across the continent.