The QCTO CFO says CFOs need to take on the role of trauma surgeons and growth navigators.
On Wednesday 24 June, Finance Minister Tito Mboweni presented a supplementary budget that was eagerly awaited by all sectors of the economy, which have been dealt a devastating blow by the effects of the economic shutdown due to Covid-19.
Quality Council for Trades and Occupations (QTCO) CFO and 2020 CFO Awards nominee Innocent Gumbochuma says that the minister had a mammoth task in spearheading the economy and all eyes have been on the government to discover their plans. “As difficult as the months ahead are set to be, we have to consider how Africa’s most industrialised nation emerges from what may prove to be the most transformational crisis that has faced the world since World War II.”
South Africa was hit by the pandemic when the economy was already battered and ratings agencies had downgraded the country. “It has been a near-impossible task to balance the needs of the economy,” Innocent says. “It has also been nothing short of a Houdini act for the Minister to find money from already depleted and near barren national coffers.”
Did Mboweni deliver on this? Innocent says the public’s expectations were too high and, as always, knives are out for the minister. “But it is much easier to criticise than to offer solutions and most people are armchair critics with nothing tangible as advice.”
He adds that, personally, he believes it is far-fetched to have expected so much when the odds are heavily tipped against the country. “A key example is that the country is heavily dependent on social grants and unemployment has soared to 30 percent.”
Calling on the public sector
South Africa is among the countries with high tax regimes and the number of taxpayers is diminishing by the day due to the pandemic. “Clearly the Minister felt like he can no longer squeeze this revenue source and, rightfully, did not touch on this subject,” Innocent says. “However, this could have been left deliberately not to attract the fury of the taxpayers and this might be implemented silently through SARS, where extra scrutiny will be put on tax returns to avoid any refunds at all costs.”
He adds that the shortfall expected in this year (R300 billion) is too big to fathom and the receiver of revenue will have to perform miracles to reduce this deficit.
“I think the minister has targeted the right culprits in trying to raise funds for Covid-19. A total of R21.5 billion will be set aside from government departments and public entities,” Innocent says. “There have been a lot of inefficiencies in most government departments and their respective public entities, which over the years have been unjustly accumulating some surpluses. Also, most of the reported corruption has been widely unearthed in government-wide entities involving billions of rands. I think the private sector and taxpayers need a break and the government must rein in on its rogue departments, which have been bleeding the economy dry.”
Innocent says that the minister was “spot-on” in the areas of goods and services where budget cuts have been effected to cover for Covid-19. “The public sector will also have to revise their strategic plans and annual performance plans to ensure that only high-impact indicators can be prioritised in this difficult period. This is the time where principled leadership of all the public institutions will be tested, this is the time to demonstrate that the public sector can and should be efficient like the private sector.”
The role of the CFO
To adapt to the unprecedented challenges amid Covid-19, every organisation needs to articulate its purpose and maintain resilient by employing evidence-based decision-making, reconfiguring supply chains, repurposing assets and rethinking capital allocations, says Innocent.
“As an organisation aligns itself with its purpose, it is the CFO who takes centre stage in enabling the organisation to fulfil its purpose,” he adds. “The economic effects of Covid-19 have rendered many organisations illiquid and some insolvent. The CFO must also take on the role of trauma surgeon to ensure that immediate needs are addressed, like doubling on collections, setting new payment terms and instituting aggressive spend management.”
In addition to taking on the role of trauma surgeon, Innocent says a CFO must be the growth navigator who provides finance teams and directors with access to real-time information about key performance indicators in order to support decision-making among key stakeholders.
