Doha: As many as 67 percent of chief financial officers (CFOs) in the Middle East believe that the COVID-19 pandemic has the potential to significantly impact their business. With financial impact as the primary concern of most CFOs in the region, about 78 percent are also expecting a decrease in revenue as a result of the pandemic, according to PwC’s Middle East edition of the COVID-19 CFO Pulse Survey.
The survey is the first in a biweekly series that shows how Middle East CFOs and finance executives in the region plan to react to the COVID-19 outbreak, and what business and economic impacts they anticipate in the coming weeks and months.
The survey also found that CFOs now looking to cut costs are most likely to consider cost containment and deferral or cancelation of investments particularly on capital expenditure.
Investments in digital transformation, customer experience and cybersecurity are most likely to be protected and, as a result of COVID-19, 55 percent of CFOs expect to make changes to their supply chain.
These results provide a clear indication of the likely focus areas post COVID-19.
Over half of Middle East CFOs plan to take advantage of government support programmes, but this varies greatly by country. Despite their concerns, a majority of CFOs in the Middle East believe that if COVID-19 were to end immediately, their company could get back to “business as usual” within three months.
CFOs are concerned about the impact of COVID-19 on business operations and revenue. Highly affected sectors such as travel, tourism, hospitality and retail make up a material proportion of the economy, so these findings are perhaps unsurprising.
Cybersecurity and privacy concerns are surprisingly low across the board, perhaps indicating that many organisations are still in the initial ‘mobilise’ phase of response, dealing with the immediate concerns around the availability of cash.
Business implications of COVID-19 include cost cutting where Middle East CFOs will focus on cash flows in the weeks and months ahead and are most likely to consider cost containment measures to protect the future of their business.
The survey also revealed that 83 percent of CFOs across the region are deferring investments by firstly reviewing their capital expenditure, followed closely by business operations and workforce. Such measures will free up some reserves, giving CFOs some breathing space as the situation continues to develop.
Bassam Hajhamad, Country Senior Partner at PwC Qatar, said: “Since COVID-19 first emerged, global supply chains have been tested as the pandemic grows. As one of their top three areas of concern, finance leaders in the Middle East appear to be more likely than their global counterparts to consider changing their supply chains. Meanwhile, with In-Country Value programmes already in place to localise spending across a number of countries in the region, there is already widespread focus on reassessing supply chains, and this looks set to continue in the current circumstances.”
Looking at government support, Middle East CFOs compared to other territories, are more likely to avail of government stimulus packages available in their country. The survey found that more than half of the CFOs are now considering accessing such programmes in the region.
Despite their concerns, CFOs in the Middle East are expecting to get back to normal sooner rather than later; pausing or delaying investments instead of cancelling them altogether. In fact, the majority expect their business to return to business as usual within three months if COVID-19 were to end today.
Stephen Anderson, Middle East Markets and Strategy Leader, said: “Businesses all around the world are adjusting to working remotely, and although they are prioritising financial security in the short term, CFOs still have an eye on the likely acceleration of transformation in areas such as customer experience, digital and cyber security in the post COVID-19 era.”
The survey will repeat every two weeks to track changing sentiment and priorities for finance leaders in the Middle East.
