Editorial: Listen to the rating agencies (for a change?)
Most CFOs have a healthy antipathy towards rating agencies, but sometimes we have to acknowledge they play an important role. I recently spoke to Eskom CFO Tsholofelo Molefe, who indicated that it is not necessarily a bad thing that the agencies scrutinize the power utility, as it keeps the management focused on establishing “a long term price-path for sustainability of the electricity industry”. You can read the insightful interview with Molefe here.
Just like Eskom, the South African government as a whole would be well-advised to listen to the agencies. His week it was Fitch that called the current public wage negotiations "an early and important test" of the government's capacity to keep spending under control. Felicity Duncan earlier explained on this website why South Africa should care about Fitch, S&P, & Moody's outlook for the country.
In his recent medium-term budget policy statement, the new Finance Minister Nhlanhla Nene promised government spending cuts and more efficient use of resources. He also didn't rule out possible tax increases. Some public unions are demanding as much as a 15 percent increase for their members, while a double-digit figure is currently unacceptable for the government. No wonder Fitch is nervous?
The efficient use of resources, as mentioned my Minister Nene, would also go a long way towards saving money AND restoring some faith in the ability of the government to stimulate the economy. I really recommend reading our recent interview with Rofhiwa Irene Singo, CFO at the Department at the Department of Mineral Resources, to fully appreciate the need for clean accounting within the government. Read it here!
While no major CFO replacements were reported locally in the previous week, Deutsche Bank announced the replacement of CFO Stefan Krause, with top Goldman Sachs banker Marcus Schenck in May next year. The latter is familiar with African affairs, as he is currently the head of investment banking services in London for Goldman's Europe, Middle East and Africa business. In Australia, Sydney Airport promoted Hugh Wehby to the CFO-position from within the organisation.
Warner Music UK also appointed a CFO from within the company. Peter will take over the position from Simon Robson, who is leaving to take the role of president, Warner Music Asia Pacific. Breeden joined Warner Music in 2001 and rose to FD in 2012. He will be responsible for financial planning, budgeting and reporting for Warner Music UK and Ireland.
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