Edson Magondo (KPMG): diplomatically discuss inconvenient truths in public sector
Proteas grow in tough terrain and a lot of patience is required before seeds can be harvested and sown again. There are surprising parallels with the growth of black accountants in South Africa – and with Edson Magondo’s own rise to prominence, as we discover during an exclusive interview with the man who heads the KPMG service offering for government, infrastructure and healthcare.
Once the smallest boy in a Venda village, Edson's can-do attitude saw him rise to prominence as co-founder of the country's biggest black audit firm, KMMT. After its merger with KPMG the self-professed 'delivery guy' headed-up the Pretoria office, the audit practice and - since 31 August - KPMG's public sector offering. We spoke to Edson about transformation, sustainable client relations and professional fear. "You have to be a little frightened of your job to keep yourself true."
Edson Magondo plans to cultivate king proteas on a piece of land he owns in the mountains of Venda, in the far north of South Africa. "My neighbour is already growing them, so he is giving me lessons," says Edson. Eventually he wants to make money off the sale of the flowers, but for now he needs to be patient. "I need to wait for the flowers to dry on the plant, so I can harvest the seeds and sow them." His interest in growing South Africa's national flower is telling; proteas - like Edson - prosper in difficult terrain.
Venda is where it all began for Edson. He reluctantly admits that he "always had firsts for everything" in his village. "For some reason I was tinier than most people in my class at Thengwe High School," he recalls, but this didn't hamper his performance. He went to Khwevha High School for grades 11 and 12. He continued to excel and fondly remembers Mrs Ludolf, "a missionary-type educator" and her accounting lessons. Her lessons and motivational talks set him firmly on the route to become a chartered accountant, he says.
"You need to be very transparent, because public sector auditing, with its expanded focus, is always a sensitive relationship and you need to diplomatically discuss inconvenient truths."
Edson studied at the University of the North, now the University of Limpopo. When he was a student, it was the university reserved by the apartheid regime for Sotho, Venda and Tsonga people, and was also known as "Sovenga". Student leaders like Tito Mboweni, later Reserve Bank governor, and many others led anti-apartheid protests, but Edson laid low. "The campus was a nucleus of everybody from everywhere," he explains. "Besides," he chuckles , "the guys from Soweto and other urban areas were more connected and streetwise so I just stayed in the background."
- This interview was first published in CFO Magazine. Click here to advertise!
- Read our complete coverage about CFO South Africa's principal partner KPMG
"The few graduates that I knew went to do articles at Deloitte Haskins & Sells (now Deloitte) at the time (which is testament to how long ago they saw transformation as a business imperative), so I wanted to go to a different firm," he says. After half a year of trying with no success, Edson gave up, applied to Deloitte, was interviewed by Dr Hennie Van Greuning, and articled with them, subsequently working for Eskom and South African Breweries. "Then 1994 happened. We were already thinking about starting our own practice. Our first attempt in 1990 failed but in 1995 we didn't falter. We got bank loans and got going."
With partners Moses Kgosana, Tshidi Mokgabudi, Themba Tshikovhi and Edson, KMMT instantly became the biggest black audit firm by number of partners. Gill Marcus - who went on to become another Reserve Bank governor - spoke at the KMMT launch event. The courting by big firms started. "Our first job was with Nedbank Property Group. I still remember their largest project at the time, a multi-use complex next to Fourways in Johannesburg. We went in with all four partners to do the work. It was such good work."
The Auditor-General also provided the company with "wonderful opportunities" to do audits on their behalf and Edson's long relationship with the public sector started. "I was the audit delivery guy and Moses was our front man. I am not very outspoken, but I build good relationships with clients and ended up doing audits like Denel Aviation and the City of Johannesburg."
"My strength is working with people, listening to them and then trying my utmost to deliver. You need to be very transparent, because public sector auditing, with its expanded focus, is always a sensitive relationship and you need to diplomatically discuss inconvenient truths. It needs to be clear that my work is never personal or about what I think, it is about the information put in front of the audit team."
Edson doesn't consider the acquisition of KMMT by KPMG in 2002 as the end of an adventurous dream. "We always wanted to make a difference. The number of black accountants in the country was low and is still low, so we wanted to play a part in increasing these numbers. We also wanted deep skills and could not scale-up quickly enough. We wanted transformation to be even more impactful - so we ended up joining KPMG. The merger added real impetus to transformation at KPMG and the appointment of Moses Kgosana as the first black African CEO of a big four firm was a highlight, which accelerated transformation in ways that we have not fully comprehended! Moses led from the front, identifying and promoting many black partners. In the last few years enormous transformation strides have been made across the accounting profession."
Can we call KPMG the biggest black audit firm now, since it has more black partners and staff than SizweNtsalubaGobodo or SekelaXabiso? "It is not only size that matters. It is about sustainable change, where enough black partners are standing in front of key clients. In that sense, even as one recognises the progress being made, the need for transformation in South Africa is far from over," says Edson, who values the independence of 'Sizwe' and 'Sekela'. "The emerging firms have been change leaders in transformation and are keeping the pressure on the profession by demonstrating their capability - and they are continuing the articulation of new ways to transform faster and sustainably. Collaborating through the Association for the Advancement of Black Accountants of Southern Africa (ABASA) and other forums have put the accounting profession ahead on many levels."
"It is not only size that matters. It is about sustainable change, where enough black partners are standing in front of key clients."
After the merger Edson went to Pretoria, where he ended up heading the KPMG practice with considerable success. "We pitched, we won and we delivered," he recalls. He was then asked to head up KPMG's audit practice. "I was scared," he admits, adding that fear is a good thing. "If I am not scared, I am not able to deliver optimally. You have to be frightened of your job a little to keep yourself true. Once you think you can do it with your eyes closed, you are in trouble."
While long-time pal Moses Kgosana stepped down as KPMG's CEO earlier in 2015, Edson has stepped up - from 31 August - into the "toughest job" around, heading up the KPMG service offering for government, infrastructure and healthcare. "My approach is firstly about the quality of work, including the time and cost an audit or project involves," Edson says. "Secondly, we need to link our work to the top outcomes of the client, because then we add real value. What do the clients worry about? If it is youth unemployment, what can we do beyond our annual intake of trainees?"
The third thing KPMG will focus on in its public sector work is sustainability, says Edson. "As a consultant, I get worried when I see a consultant working on the same problem at the same client for very long periods - years and years. That gives consultants a bad name. If a project starts at day one and the end date is day 365, you try to finalise by day 340 or so. Every project should have a finite date and needs to create a positive story. KPMG is known for good audits, financial services, clean audit projects, internal audits and forensic investigations. Our public sector advisory work in a more sustainable way to ensure that each project we undertake adds credibility and social acceptance for our clients."
"There is a lot of giving back to do, when I retire."
Breaking the consultant curse will be music to the ears of public sector CFOs, who are struggling to do a lot with little. Edson says he'll go out of his way to get to know CFOs, DGs and the supply chain professionals. "When we have a meeting with a CFO, I need to know what is bugging him or her. My team needs to know 'it is this time of year, the public sector CFO is busy with this aspect of his work'. When I meet a municipal CFO I need to know - confidently - what things should be going on in his or her working life at that point in time."
Although Edson is now a big man instead of a tiny boy, he hasn't become a massive celebrity in Venda, "although people know about me," he admits. The chance that he'll ever retire to his nascent protea plot or his ancestral village on the other side of Thohoyandou is slim though. "I can't be that far out in the beautiful woods, because when I leave KPMG I want to get back into the public sector on the other side and sit on audit committees (having previously chaired the audit committee of the department of Correctional Services when Mr Linda Mti was DG). There is a lot of giving back to do, when I retire."