Deloitte 2012 CFO Survey

What financial gurus foresee is a balancing act

Lead survey consulting director at Deloitte, Rodger George
Rodger George
Chief financial officers (CFOs) in major South African corporations see 2012 as the year of ‘balancing acts’. 

The Reserve Bank will be occupied with attempting to counteract inflation and stimulate growth in monetary policy, while major companies operate in survival mode and will simultaneously attempt to target growth, a Deloitte survey of South African CFOs has found.

The consensus of opinion, however, is that the economy will mark time during 2012 and begin ‘perking up’ next year. At the base of the balancing act for 2012, says Deloitte, are political and economic climates that are preventing management from making bold decisions.

  CFOs of the companies surveyed mirrored this through concerns about the regulatory environment, competitiveness, and liquidity within their companies, skills and the major political risks.

 “These concerns and the balancing acts raised in the survey should be seen against the background of a local economy that is showing reasonable growth, but which is conscious that Europe could slide back into recession as a result of the continuing sovereign debt crisis.

  “South African businesses are anxious that having survived the recession of 2009, they may shortly need to endure another,” says Rodger George, the lead survey consulting director at Deloitte.

Business concerns for 2012, as expressed by CFOs, are:

• Coping with the major business risks presented by the fragile global economy, which has exacerbated margin pressures being caused by cost squeezes and pricing inflexibility. 

“The global economic malaise is perceived as the most significant risk factor for the next 12 months. 

In South Africa, while the economy has recovered from the 2009 downturn, businesses are anxious that a second recessionary wave would eliminate recent gains and plunge the country back into recession.

 Having survived one crisis, the potential to survive a second is enfeebled,” says George. 

Shortage of skills

The shortage of appropriate skills remains one of the ‘top three’ concerns facing business, say CFOs. 

Talent retention, an indication of a supply-driven jobs market in 2012, has become less of a concern. 

The lack of skills in the future skills pipeline, seen as a function of a weak education system, is seen as perpetuating this shortage

Political concerns 

Surveyed CFOs viewed corruption as their greatest political concern, with 45% listing it as one of their top-three political concerns. 

Reserve Bank’s balancing act 

Turning to the dilemmas facing the South African Reserve Bank, the main economic drivers during 2011 had been the financial industry, the trade and hospitality sectors and government services. 

Outlook 

Although the expectations of CFOs for 2012 are subdued, with 75% anticipating gross domestic product growth to be at, or below, the expected 3.8% for the year, beyond 2012 optimism bounces back, with 83% seeing a far healthier economic performance by 2014.
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