Exclusive: FirstRand's retiring CEO Sizwe Nxasana on CFOs, SAICA, BEE and the economy

Business power house, Chartered Accountant and Fort Hare graduate Sizwe Nxasana (57) started KwaZulu-Natal’s first black audit firm in 1989, listed Telkom at the JSE in 2003 and more than doubled FirstRand’s market cap to R295 billion in 2015, after becoming CEO in 2010. Last week he announced he will step down as CEO in September. In an exclusive interview with CFO South Africa, Nxasana chats about the role of CFOs, SAICA, the economy and BEE. He also has some tips for ambitious CAs.

  • Have you ever - at any point of your career - considered becoming a CFO?
    "I was CFO at SA Sugar Distributors before I qualified as a CA and before I started the accounting firm Sizwe & Co. It was a very important period for me, providing me with a foundation in the accounting and the technical financial environment".

    During your career, how have you seen the role of CFOs change?
    "The role has certainly changed. Initially, the responsibility was mainly the financial, but the role has morphed into that of strategic partner to the CEO. The basics and the technical competence are a given, but CFOs also need to be able to provide business insights, for example when a company has expansion plans."
  • "The CFO is not a watchdog, but a partner to the CEO who guides the business."
  • "My most important role at FirstRand is custodian of the group culture."
  • "SAICA's new Assessment of Professional Competence (APC) exams are great as they help develop broader understanding of business. However the practical training through the training offices needs to be enhanced in line with the APC. Business and labour need to get into conversations of a strategic nature."
  • "It is too early to stop BEE; it will take generations to get a representative workforce."
  • "The CA designation is a ticket to the gate. Success depends on what you do with it."

Should a CFO be a friend or a watchdog of a CEO? How do you see that relationship?
"The CFO has to be a partner. Other people, like the internal auditor and the risk management functions, should play the watchdog role. Although the CFO needs to be sensitive to risk, I don't see the position as a watchdog, even when a CFO works with a very entrepreneurial CEO. The CFO needs to play a guiding role, because he or she is close to the purse strings and knows the capacity and capabilities of the company. At the end of the day the CFO needs to help the company balance growth, earnings and risk, especially during an expansion phase."

You are known as a modest man, but you are also regarded as a very successful CEO. Acknowledging that a company's success is a team effort, what do believe has been your personal contribution to FirstRand's success?
"I am the custodian of the culture of the group. The way we operate and do things has to fit in our culture. I play an important role in shaping the strategy and making sure the leadership walks the talk, but my role as the culture custodian is the most crucial. That includes inducting new people and reminding people that have been in the group for a long time what our values are. Our culture is informed by an owner-manager approach. We empower our people and hold them accountable."

"Of course there is always some bureaucracy. We have an organisation of 37,000 people and we do have regulations, processes and systems. But we try to make sure that people are recruited for what they bring to the party. We encourage them to do things differently, if they think that is better, and be innovative. It is their ideas that matter."

You attended SAICA's APC results event last month. Do you feel SAICA has kept up with the times and what could they do more of or differently to aid South African businesses?
"SAICA has really done very well compared to other accountancy bodies in the world. They have a good understanding of the evolving role of accountants and also of the role that they play as an institute. They are supporting government in a drive to be more accountable and are providing skills to the market. And they keep enhancing the profession."

"The methodology of the new APC [Assessment of Professional Competence] now focuses on the right things, the things that are important for the 21st century. We require accountants and employees that can work in groups, can be analytical and can be critical."

"What needs to follow is an improvement in terms of how accountants are trained in the training offices. That needs some adjustment. For example, we have a training office at FirstRand and we make a point of rotating the trainees through the group. We don't only expose them to accounting, tax and auditing, but also to the other aspects of the business. CAs are expected to do much more than audit, accounting and tax. SAICA plays an important role in adjusting the training to become broader and business focused. There needs to be a conversation about this with the firms which have training offices. Maybe this is already taking place, but I am not aware of it."

What is your view on economic growth in South Africa?
"We have some challenges in this country, but we are not unique in this regard. You can look at countries in Europe, but fellow BRICS countries like Brazil and Russia are also facing challenges and so is China. Only India is a different story."

"Clearly we have our own issues, whether it is the power shortages we face or the pressure to improve the level of our skills. But the recent decline of the oil price should give us some benefits. As business, we need to continue to work with government and be positive in spite of the challenges. Government has a responsibility for providing a good business climate, but business also has to play its part."

"An example of this is labour. Government has created a legislative environment. That is in place. Business needs to do a lot more to improve relationships with organised labour. You see it starting to take place now, where business and labour get involved in conversations of a strategic nature."

What did you think of Finance minister Nene's budget speech?
"The budget is very balanced in a difficult environment. The government needs to provide resources to spur on growth while facing a budget deficit and at the same time continue to provide a safety net for people who need it and address income inequality. I feel that this budget manages to strike that balance. The increase in taxation is largely seen as very moderate."

Many businesses fear the direction BEE is going. They feel they have just come to grips with how to address the current pillars, but now things are changing again. What is your take on this?
"The changes are important. We have made a lot of progress in the last 21 years, but we need a much more broad-based black economic empowerment, where more benefits are flowing to more people. The new emphasis on enterprise development and preferential procurement is good. We need growth in the number of black entrepreneurial businesses and to move away from BEE companies taking minority shares in companies as the way to address the situation."

As founder of the first black accounting firm and the first black CEO of a big bank, what is your view on transformation at your level? You could argue that even FirstRand is still part of a white old boy's network?
"We made a lot of progress with transformation, but we are not where we need to be, within FirstRand or elsewhere. There is a lot more that needs to be done. There is certainly an improvement in the pipeline of black managers rising through the ranks, but we still have a long way to go, especially when it comes to African women. It is way too early to stop with BEE. It takes generations for a country with our history to have a representative workforce. In countries like the United States and Malaysia they have been dealing with this for much longer than us, but they are also still not where they need to be."

How are black accountants doing? Are they coming through fast enough?
"The Thuthuka Bursary Fund has been very successful and has increased the number of black accountants significantly. When I look at the APC results, the number and quality of black accountants is encouraging. But we can't kid ourselves and rest on our laurels. I have been involved in Thuthuka since its inception and have also been there since the foundation of ABASA [the Association for the Advancement of Black Accountants of Southern Africa]. I want the opportunities that I have had as a CA to flow to a lot more people."

What advice would you give to a young CA who one day wants to be a CFO or even a CEO of a financial institution?
"Go for it! They are all capable of being CFOs, but they need to continue to educate and improve themselves, even when they are qualified. The CA designation is a ticket to the gate. You still need to go and play the game, realise your goals and dreams and help move the country forward."