SA Inc. needs more CFO

Earlier this year, financial journalist and entrepreneur Alec Hogg and the BizNews team once again hosted their annual conference. While much of the focus was on the upcoming elections, there were still some great discussions around entrepreneurship, investment and – indirectly – the role that CFOs will play in re-building the country.

For me, I particularly enjoyed the presentation from Dr. Frans Cronje, the head of the Social Research Foundation (SRF) – and arguably South Africa’s leading political analyst – and the subsequent rebuttal from Gabriel Crouse from the Institute of Race Relations (IRR).

The debate intrigued me as it captured the blend of the open-minded optimism of an entrepreneur (Cronje) and the metric-driven response from Crouse – which appealed to me as a CFO.

In short, Cronje was arguing that the outlook post the elections had the potential to be more positive than many people expected. He pointed out that the private sector interventions – particularly in electricity – had made a significant change to the South African energy mix. This was further supported by corporates sitting on hundreds of billions of Rands in cash and that South Africa enjoyed many economic advantages from a geographic perspective. It was refreshing to hear some good news coming through.

Crouse responded saying he wanted to see more than platitudes – show him the hard data and Key Performance Indicators (KPIs) – particularly for the period from 2018 to now where President Ramaphosa began his Presidency.

The reality is that South Africa needs both these mentalities to survive and thrive and this is where I believe that CFOs have such a key role to play.

Listening to the various presentations at the BizNews conference reiterated to me the importance of financial controls and fiscal discipline. Whether you are running a business or a country, if you cannot control these elements, it is very difficult to get the rest of the machine working.

One has only to look at the situations around the State Owned Entities to understand how easy it is to lose control of your budgets and resources and how this has a knock-on impact to other stakeholders. Financial controls, Delegations of Authority, delivery of financial results and corporate governance – these are all areas where CFOs should be well-versed and able to contribute. If outcomes are backed up by KPIs and other measurable metrics, we can not only inhibit those with corrupt mindsets, we can reduce bureaucracy and put in place more sophisticated controls.

When disciplines get lax, this is where businesses – and governments – get themselves into trouble.

The South African elections are around the corner and these are expected to be one of the most closely contested in the democratic history of the country. Political analysts are divided around the outcome and what a post-election government will look like. This uncertainty is influencing strategic decision-making from businesses who are assessing whether to expand their workforces or make capital investments.

We recommend that organisations use this time to reinforce their controls and interrogate important questions like:

• How do we run things?
• What are the authority levels required for a decision to be taken?
• Why are decisions being taken?
• Who makes the big decisions?

There is a practice that we use in our business called: “Entrepreneurial Operating Systems” which we based on the book “Get A Grip” by Mike Paton and Gino Wickman. It is not an easy read but we believe it provides an excellent foundation for organisational structure and decision-making.

We are encouraging our clients to utilise this period of consolidation to look at their businesses and work out how you can structure your business. Get your house in order and work on your relationships.

If we do experience the economic uptick predicted by Dr. Frans Cronje post the elections, your business will be able to push money through disciplined, rigorous business processes.

Cronje has painted an optimistic and positive outlook for South Africa at a time when many others have been far more circumspect. There’s over a Trillion Rand on the balance sheets of corporate South Africa and if we can unlock this potential, it will be a game-changer for the local economy.

We just need to get the basics right and this is where, I believe, CFOs can play their part in strengthening our democracy.

Rowan De Klerk is a seasoned CEO and CFO with a strong commercial and strategic background and over 35 years of experience working with both large corporations and mid-sized entrepreneurial businesses. He is the founder and CEO of The CFO Centre South Africa which is part of a Global Financial Leadership Practice