Earlier this month, KPMG in Africa published the 2025 KPMG Africa CEO Outlook, offering valuable perspectives from Africa’s CEOs on the economic landscape, advancements in technology and artificial intelligence (AI), talent management, and environmental, social, and governance (ESG) matters.
The report highlighted the remarkable resilience of Africa’s CEOs as they navigate an ever-changing business environment, underscoring their determination to guide their organisations towards sustained growth.
Africa’s CEOs are prioritising AI, with a quarter planning to invest over 20 per cent of their annual budgets in AI initiatives in the coming year. While they see significant potential for efficiency and returns, they are also aware of the ethical concerns and regulatory uncertainties that accompany AI adoption.
Similar to ESG, the adoption of AI places organisations in a globally connected environment where clear and consistent regulations benefit all stakeholders.
With geopolitics increasingly influencing how countries and businesses interact and compete, establishing robust AI regulation is now essential-not only to keep pace with technological change, but also to address the shifting global landscape.
According to the World Economic Forum’s Blueprint for Intelligent Economies, which was jointly developed with KPMG and released in January 2025, perspectives on AI vary from country to country.
The report outlines a framework designed to enable collaboration on AI issues among a range of stakeholders, including the private sector.
External audit plays a fundamental role in how organisations are perceived and in maintaining confidence in a country’s capital markets.
As AI becomes more prevalent, the nature of external audits is evolving to include assessments of AI-driven processes that impact financial reporting.
Auditors are increasingly requiring management to provide evidence of robust governance over AI systems, including thorough documentation of data sources, model architecture, validation procedures, and regular reviews.
With the introduction of AI-specific regulations, auditors will regard non-compliance with these laws as a significant regulatory and reputational risk. In instances where regulation is lacking or inconsistent, auditors may flag this as an environmental uncertainty, necessitating enhanced disclosures within the financial statements.
As nations recognise AI as a strategic asset, competition for AI infrastructure is intensifying, with those holding greater influence likely to set global standards, potentially leaving other countries exposed and disadvantaged.
Deploying AI at scale hinges on access to high-quality, well-governed data. The impact of AI extends to every stakeholder-including customers, regulators, employees, and investors-shaping how data is managed, fairness is upheld, and decisions are made.
Consequently, regulations that clarify data ownership, privacy, and cross-border data transfers have a direct effect on how organisations gather, store, and utilise information.
Where regulation is weak or inconsistent, this can result in fragmented systems, heightened compliance risks, and diminished confidence in AI-driven outcomes.
The EU, US, and China are rapidly advancing their own approaches to AI regulation. Should Africa remain on the sidelines during this process, the continent may be left with no choice but to follow externally imposed rules.
As a result, African businesses would be subject to standards that fail to account for the unique local context, leading to increased compliance expenses and stifling home-grown innovation under frameworks intended for more developed markets.
This scenario could also prompt investors to perceive Africa as a higher-risk, inadequately regulated region.
Although the responsibility for regulation ultimately lies with governments, the private sector moves at a pace much faster than governments, and their innovations outpace government’s understanding. It is therefore essential for business leaders to actively contribute to the development of AI regulations that facilitate cross-border activities and minimise compliance challenges.
If the private sector adopts a passive stance, it risks encountering difficulties in scaling AI solutions across different jurisdictions.
Robust, collaboratively developed regulation fosters public confidence in how companies deploy AI, safeguarding corporate reputation and strengthening enduring relationships with stakeholders.
In the absence of such regulation, organisations may find themselves vulnerable to cyber threats motivated by political interests, manipulation of AI models, and targeted influence campaigns.
For African organisations, AI is no longer a distant prospect but a pressing reality-driving operational improvements, workforce evolution, and sustainability initiatives. However, the effectiveness of AI adoption will rely heavily on the availability of quality data, reliable infrastructure, skilled personnel, robust governance, and strong regulatory frameworks.