David Ngobeni - CFO Shanduka: `Pulling in a Chinese shareholder`

“South Africa would be better off facing the challenges of the current economic situation with greater productivity and lesser restrictions.” David Ngobeni, CFO of an investment holding company, Shanduka Group, has a very clear vision on how laws in South Africa limit the country in its development. Supported by his great negotiation skills he hopes to bring his company to the top. After just (1,5) years as CFO, he seems to be heading that way steadily.

Shanduka Group was founded in 2001 by Cyril Ramaphosa as a black owned investment holding company, and invests in a diverse portfolio of listed and unlisted assets. Most investments are in the resources sector but the company also has exposure to financial services, food & beverages, telecoms, property, energy, and industrial sectors. The company employs 8700 people (including subsidiaries).

Shanduka means 'change' in TshiVenda, a name befitting to a company founded on the principle of investing in change. The company's investment philosophy is to partner with companies that have a history of delivering profitable earnings and have capable management teams who embrace transformation.

David (34) joined Shanduka late 2008 as Group Financial Manager. Prior to that he had been working at Standard Bank's Corporate and Investment Banking Division, where he held a senior technical financial manager position in Structured Debt Finance. In 2006 he received a managerial award upon being voted one of the best managers in the Corporate and Investment Banking Divisions. He was officially appointed CFO at Shanduka in September 2010.

David qualified as a CA (SA) in 2003, completed coursework towards MCom Tax and has successfully completed CFA Level II. He is a director of a number of Shanduka Group investee companies including, Alexander Forbes, Coca-Cola Shanduka Beverages, McDonald's South Africa and Fever Tree Consulting.

1) What do you enjoy most about your job?

What I find most interesting being the CFO of this company, is that you get to see everything, all that is involved in transactions and finance. As CFO I am involved in all processes as well, including structuring of the transactions, implementing them, as well as the negotiations and recording. No other position offers that wide range of activities in your day to day job. Next to that, I provide oversight to all subsidiary CFOs within the Shanduka Group, which I also find very fulfilling and interesting. As a person you get to learn so much more by being involved in all these processes. It means one has to work harder, but at the same time learn so much more.

2) How do you perceive the role of the CFO has changed in the last five to ten years?

For me personally, I feel I myself have really changed the role of the CFO within my company. From my perspective, I feel I have brought change herein because of my skills. Coming from investment bank set up, I brought my experience and structuring abilities to the company, and changed my own role to be more involved in all aspects.

I think therefore that the change of the role depends on the incumbent CFO, who fulfills the role according to his skills and vision. With regards to the role of the CFO within the finance industry in general, I think one has to make a clear distinction between different types of companies. The type of company normally defines the role of the CFO. Operational companies such as McDonalds and Coca Cola differ greatly from investment holding companies and Private Equity Companies. CFOs of these companies and their roles also differ. For operational companies I feel that although the responsibility of the CFO has stayed the same, the strategic nature of their projections is what has changed. It takes a strategic CFO to forecast and analyze variances in pursuance of operational efficiency that will help improve the company's bottom line. In this regard the role has become far more pro-active than reactive. CFO of operational companies over the last few years have become much more involved in the introduction of processes that improve operational efficiency than just reporting on historical performance which has made them strategic partners to the CEOs.

For investment holding companies such as Shanduka as well as Private Equity companies, the CFO helps to make decisions on investments, capital, when to invest and when to divest. I personally have found myself to be exposed to both types of companies, given that we have operational subsidiaries within our portfolio. The environment a company is in therefore plays a huge part in forming the (changed) role of the CFO.

3) How do you see the role of the CFO evolving in the next decade?

The CFO will maintain being much more involved in operations, than being the historic reporting kind of person as it was before. Also, the CFO will continuously have to take a more pro-active role, in which he is involved in all events happening in the company, instead of waiting for the events to happen around him. The all-round involvement will also help improve the reporting. For me personally, I think that in the future my skills will keep helping me to raise funding, to negotiate and structure transactions even better. I feel that I as a person can do much more than just what is expected of the CFO. It is for a great part my negotiation skills that I thank for that.

4) Would you say that accurate forecasting and budgeting is still feasible for a financial department in today's tumultuous financial markets?

I want to highlight budgeting is still very, very relevant. Why? Well, because if you aim for nothing, you will accomplish nothing in return! True, the current market environment is volatile which makes things more challenging, but there certainly are other ways of mitigating the effects of that volatility. There are still hedging instruments one can use to deal with the volatility and maintain control on how it will affect you. Finance professionals can nullify the volatility to a more predictable outcome in a budget, for instance for exchange rates and interest rates.

Unfortunately there are some particular situations in which budgeting is indeed hard, for instance in the mining industry in which Shanduka is very active, like when a strike occurs. In these situations pro-active management - not just the CFO - will try to come up with other incentives to tackle and resolve differences, as to achieve a win-win situation for both employees and companies. Yes, in those cases it's very difficult to budget, I am afraid.

5) What do you see as the greatest challenge for South African companies in the global economic situation?

In my opinion there are a few things that need to happen, I cannot pin it down to just one thing, or one law that needs to be changed. I strongly feel South Africa should try to enhance its productivity, by educating the people better and therewith making them more efficient. Another crucial element in this regard are the current, labour laws we have in this country that need to be made much more flexible - they need to favour the employer more. The position and power of the Unions must be weakened a bit more. Certainty in the regulatory environment is key, the market is waiting for it and the economy requires it.

6) Which skill(s) do you think a finance professional should master to be most successful in his work?

In terms of technical skills and education - one needs to complete the Chartered Accountant (CA) course - the ultimate piece of paper to prove that you are good at all essential disciplines in the field. For me becoming a CA meant mastering all the needed skills in accounting, auditing, taxation and managerial accounting. Once you have become a CA, you are technically equipped. The rest of the technical and non-technical stuff you pick up along the way.

From a personal point of view, one definitely needs to be good with people. People skills are essential in so many aspects of the job, of which negotiation is just one. One needs to be both soft and strong when needed, must avoid overheating and be a good leader in order to manage people the right way. Also one has to be capable of presenting yourself the right way, to get your point across at all times.

7) Which achievement or project in your business career are you most proud of?

Last year Shanduka managed to pull in a Chinese shareholder - China Investment Corporation, CIC - while many other international companies were and still are very eager to team up with them. I am extremely proud to have been able to achieve that, alongside the CEO of our company. Surely the brand we represented definitely helped, but I would like to think that management involvement was quite crucial in closing the deal

Also, since I was appointed CFO, I managed to reduce the cost of funding at Shanduka from 30% to 9,6% within 1,5 year, while at the same time raising capital within Shanduka from R475 million to R2 billion. All was done with the same team as before, so I like to think my personal negotiation skills were of crucial importance.

8) What three things must you do every single day to feel fulfilled in your work?

My day feels fulfilling when I have managed to:
- do things more efficient every time
- motivate my staff
- do more than what is expected of me; I always try to exceed expectations.
I just love getting things done right, I hate making mistakes.

9) Who is your role model in life and why?

I greatly admire the chairman of Shanduka, Cyril Ramaphosa. His leadership skills are extremely good. He works with a lot of intelligent people, all with diverse backgrounds - and yet he gets them to work together and achieve the group's goals, which is brilliant. There are so many leaders within the Group and just as many ideas on how to do things right- but to bring it together and make it work takes a really good leader. Cyril is that kind of person. A good leader is not necessarily a yes-person, or one that wants to make everyone happy, but moreover it is somebody who knows when to make decisions that are good for the company.

In that regard, I also would like to mention the CEO of Shanduka - Phuti Mahanyele. She is a very decisive person, an aspect from which I am learning quite a lot.

10) What vital piece of advice would you give young ambitious finance professionals?

Be patient. The money, the fancy sports car and that posh big house you have in mind, they will come in time. First you have to earn respect with the things you do - then the rest will follow. Don't be too arrogant, be patient instead. Prove your worth and earn the respect instead of demanding it.

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category: Interviewing the CFO