Middle East CFOs remain positive for a quick recovery following COVID-19

16 April 2020 Consultancy-me.com

Finance leaders in the Middle East are expecting a sizeable impact from the global coronavirus pandemic according to a new survey by PwC, but the longer-term outlook remains buoyant.

PwC has conducted the first of a new bi-weekly series engaging with Chief Finance Officers and finance leaders in the Middle East to gauge how the region is reacting to the global coronavirus pandemic.  According to the inaugural ‘COVID-19 CFO Pulse Survey’, conducted during the second week of April, more than two thirds of those surveyed believe that the pandemic has the potential to significantly impact their business.

This figure however rises to almost nine out of ten stating expectations of a revenue hit or loss of profits due to the global outbreak among CFOs and finance leaders of the UAE, with over half again worried about the potential for a global recession. As a response, almost all of the CFOs surveyed in the Emirates (92 percent) are looking at cost-containment measures, with a close focus on cash-flow in the coming weeks and months.

The most common overall cost-cutting measures being considered region-wide are cost containment, as well as the deferral or cancelation of investments, especially as to capital expenditure. On the flip-side, in what PwC considers a clear indication of the likely post-COVID focus in the Middle East, investments in digital transformation, customer experience, ESG, and cybersecurity are the most cited areas which will be protected.

Middle East CFOs remain positive for a quick recovery following COVID-19

“Having access to real time quality information is one of the main challenges facing CFOs as they look to make informed decisions in unprecedented business disruption,” commented PwC Middle East’s Business Restructuring Leader Mo Farzadi on the survey results. “Having a view on short term liquidity will inform the CFO of what measures to take around cost control and cash conservation, and when to take them."

Over half of all regional businesses also expect to makes changes to their supply-chain (rising to more than two thirds in the KSA), with the pandemic also having an impact on the appetite for mergers & acquisitions in the region. Some 39 percent of CFOs in Saudi Arabia have lost interest in M&A as a result of the crisis, compared to 27 percent internationally, while only 9 percent have grown in hunger against a 13 percent global rate.

And while generally more positive than their UAE counterparts in terms of overall prognosis and expectations of a quick recovery (one fifth think it will be business as usual within a month of the end of the crisis), the CFOs of Saudi Arabia appear to be making heavier immediate adjustments.  For example, over half are expecting layoffs over the coming months, compared to just 29 percent in the UAE and a 28 percent rate at internationally.

With investments being paused or delayed rather than cancelled outright, altogether the majority of regional businesses remain reasonably optimistic of a quick recovery for the time being. When posed the question of how long their businesses would take to return to ‘business as usual’ should COVID-19 end today, 18 percent of regional respondents believed it would be less than a month, with a 37 percent indicating between one and three months.