MENA execs upbeat on growth in EY capital confidence survey

MENA executives appear upbeat on immediate economic prospects, according to the latest edition of the EY Global Capital Confidence Barometer (CCB). The CCB said 81% of MENA business executives expect the Middle East to be a preferred investment destination, which will generate the most growth and opportunities for their company in the next three years.

Nine out of 10 respondents experienced a fall in revenue due to COVID-19, but most companies were satisfied with their performance during the pandemic.

In addition, 71% expect to see revenues return to pre-pandemic levels by 2022 or earlier.

Prompted by the pandemic, the survey says an overwhelming 98% of executives conducted a strategy and portfolio review and plan to focus on investing in customer-centric digital and technology capabilities.

M&A will be the preferred strategic option as companies look to accelerate growth, with 37% of MENA companies planning to acquire in the next 12 months.

“The reduced travel, social-distancing, remote-working, and low oil prices of the past year have had a disproportionate impact on corporate earnings,” said Matthew Benson, EY MENA Strategy and Transactions Leader.

“Yet MENA corporates remain nimble and resilient with executives finding that the current circumstances present a unique time for M&A, with several sectors ripe for consolidation.

“In 2020, M&A activity was largely led by government related entities and the transformation of national oil companies ARAMCO [Saudi Arabia] and ADNOC [UAE]. This is in line with the general trend toward increased privatisation related to key infrastructure assets such as electricity, aviation, and housing. However, there is also a strong pipeline of interesting mid-market opportunities, largely driven by sellers’ needs to raise capital.”

Corporate focus on resilience and digital transformation

The report found 87% of MENA companies are undertaking substantial business and technology transformations to stay relevant and accelerate growth. The application of technology on workplace protocols has made MENA corporates more productive, triggering the beginning of a widespread digital makeover.

MENA respondents are looking for digital solutions that can help them increase customer interactions, and technology and automation that can reduce labour costs and increase scalability to drive profit margins.

To support their transformations, 76% of MENA companies plan to increase investments in technology and digital, with 64% focusing more on innovation.

The Global Capital Confidence Barometer, now on its 23rd edition, gauges corporate confidence in the economic outlook.