Despite the global fall in business confidence, Mena (Middle East and North Africa) business leaders are optimistic having identified business opportunities for 2009, according to a report by international legal practice Norton Rose Group.
The report, CEO Briefing 2009, is based on a survey of 925 CEOs and C-level executives worldwide conducted by the Economist Intelligence Unit in November 2008 following the financial turmoil that unfolded in September 2008.
The aggregate annual turnover of respondents' businesses is in excess
of $2,000bn (Dh7.34trn). Twenty-four per cent of respondents were from the Mena region. The results make comparisons with the last CEO Briefing study conducted in 2007.
Chief executives in the higher growth Mena region are among the most confident in the world, with nearly three-quarters (73 per cent) of the surveyed companies believing their business will do well in this financial year.
Just 10 per cent have a negative outlook. These optimistic figures compare with 55 per cent for the rest of the world and 45 per cent for Western Europe.
Fifty per cent of Mena respondents plan to do at least one deal in 2009, signalling that a number of companies are planning to take advantage of the market environment to expand their business.
The survey results highlight that liquidity in the Mena region is a factor paving the way for M&A in the region. Twenty-three per cent said they would fund these acquisitions through stocks and shares, 14 per cent through private equity and 13 per cent by cash. Only eight per cent were expecting to make an acquisition with secured debt and five per cent with unsecured debt.
At least 60 per cent of CEOs based in the Mena region see the region as having the greatest opportunities for them in terms of investment growth in the next 12 months.
Asia-Pacific was viewed as the next most attractive region. However, Mena executives also believe the region holds the greatest operational risk (35 per cent) and the second highest financial risk (21 per cent) after North America (42 per cent) for their business.
When M&A activity does restart, the survey indicates a considerably greater degree of responsibility attached to the process –with a greater focus on risk management and governance than has previously been the case – 35 per cent of respondents indicating risk management as their greatest challenge for running a successful company for 2009.
Raising capital and the search for talent also feature highly throughout the findings for Mena-based CEOs, with 27 per cent believing the difficulty of attracting and retaining talent is the greatest risk their company will face over the next 12 months.
Mena CEOs say a focus on costs rather than top line growth is their focus for 2009. Over half of Mena companies expect to conserve cash by streamlining internal processes.
Twenty-seven per cent have indicated they will be looking to outsource as a way of conserving cash.