Good CFOs know their strengths, says Damain Matroos, SacOil CFO
“We need to be careful that we don’t make the mistake when going into the rest of Africa of thinking that we have better skills and expertise than others on the continent. This superiority complex will set us up for failure. The fundamental thing is, if you try to exploit the other African jurisdictions to the benefit of South Africa, you’ll come unstuck,” says Damain Matroos, CFO of SacOil, a South African-based independent African oil and gas company. We chatted to Damain about the challenges he faces as a CFO in the oil and gas sector, what opportunities exist, and what it’s like to do business in Africa.
How did you come to be in the oil and gas industry?
"During my time in the UK, where I worked for Atkins plc and prior to that, for PwC and Moore Stephens Chartered Accountants, I focused on gaining experience in corporate finance and strategy. One of the things we focussed on was how to expand the respective companies' services offering in the oil and gas industry. In 2008, I returned to South Africa and applied for various positions - the one that I was fortunate to secure was the GM of Corporate Finance at Sasol. Sasol provided me with the opportunity to expand my knowledge and skills in the industry and also allowed me to be involved in the global oil and gas industry."
How have things changed in the sector over time?
"The oil and gas industry is driven by the price of oil and the availability of additional resources. The oil price has become extremely unpredictable as a result of global macro-economic and socio-political issues. The increased awareness of the impact of fossil fuels on the global climate also negatively influenced the demand side for oil over the last decade. So we are operating in an environment where uncertainties have increased significantly. It is the job of management teams to focus on de-risking uncertainties under their control, in terms of geological and financial; however, the bigger macro uncertainties are not within our control."
What are some of the challenges facing this sector?
"Uncertainty around the long-term oil price is a key challenge. Trying to find resources and reserves that have low input costs and which can withstand the volatility in the sector has also proven to be difficult. Everybody is looking for these, but there are only a few of them in existence and will come at high prices. The ability to raise funding becomes more difficult because of this, and funding is a key component of the industry to support growth. Given the challenges around revenue and funding, companies tend to spend less on long-term projects because these will not generate income in the short-term."
"There are also challenges around skills and expertise. South Africa's oil and gas sector is quite small and do not have the extensive oil and gas expertise to drive the sector forward in the short to medium term. This means we have to compete with global players to attract the necessary and appropriate skills."
What are some of the opportunities presented by the sector?
"The challenges faced by the industry in the last couple of years have certainly created opportunities for those companies with stronger balance sheets and an appetite to acquire distressed assets and corporates. We have been fortunate to have the backing of a significant financial shareholder, however, the disconnect between buyers and sellers has made it very difficult to secure growth opportunities on valuations that make sense to the company and our shareholders. The industry still offers significant potential to secure good opportunities but it takes much longer to secure."
"We are focussed on securing cash generative growth opportunities to move the company forward and create a fully integrated Pan-African energy business. Our recent acquisition of controlling interest in Afric Oil is very much in line with this strategy."
Tell us about your experience of doing business in Africa.
"We are Africa-focussed and we have a good position because we are part of Africa. It's important not to think of the rest of Africa as this great unknown as this would make it difficult for us to operate on the continent. Having amassed a diverse portfolio across the continent, we have the experience and expertise to understand the rest of Africa much better than many others, such as our European counterparts. That gives us unique advantage. We are part of Africa, and as fellow Africans we have to be committed to contribute towards the upliftment of the continent."
"South African businesses have made the mistake before going into the rest of Africa thinking we had better skills and expertise than others, that could be perceived as a superiority complex, but that is not necessarily the case. I think that when going into the rest of Africa this is a fundamental thing one has to get over. The business people in the rest of Africa are likeminded and approach business the same as we do."
"The fundamental thing is, if you try to exploit the other African jurisdictions to the benefit of South Africa, you'll come unstuck. If you go into rest of Africa with the mentality that there are good opportunities and good people to work with, you have a chance to succeed. This is definitely the approach that we adopt and it has been successful for us thus far."
How did you come to pursue a career in the finance industry?
"During the late eighties, South Africa was characterised by increased levels of protest and demand from the people to dismantle the apartheid system. As a teenager during that period, I was in standard 7, it was all about changing the system. Everyone believed that to challenge and change the system you needed to become a lawyer. In my view at that time, I believed that the most important contribution I could make to change society was to change the business environment for our people and afford them the opportunities they deserve. At that time, my dad worked for Nampak and he used to bring their financial statements, and those of Barlow Rand, home, due to his role as part of the union. I would look at the financials and, based on the principles of changing business to change society, I looked at the Board of Directors and management teams and looked at the qualifications of each of them. The majority were CAs at that time. This made it clear to me that the majority of key business decision-makers in South African were CAs, which provided me with an answer on what business qualification I should strive to attain to enable me to contribute to the transformation of our country."
What are your strengths as a CFO?
"My thinking previously was that my key strength was my qualification but I have realised that my key strength is to be an effective team player, with a strong focus on being solutions-driven and being able to make difficult decisions to move the business forward. I don't over-complicate issues and don't stress about the challenges being faced but rather focus on the key issues that need to be resolved to make the most appropriate decision at that time. I don't get stressed about the magnitude of the decision but ensure that I keep focussed on what is in the best interest of the organisation."
"The CFO also needs to be assertive and ensure that he contributes to the overall business decision. If you do not agree on the potential solution being discussed in the meetings then express your views so that it is taken into account in the decision. I also believe that my background has provided me with a different view of the issues faced in business and how to address this effectively. Being a good CFO is about knowing what your key strengths are and using that to contribute to the business."
What do you most enjoy about the CFO role? What do you find most frustrating or challenging about it?
"It is a misconception to think of a CFO as merely an accountant. I enjoy that the CFO is a senior decision-maker for the organisation, focussing on various business issues to drive the organisation forward. The CFO needs to interrogate other issues and devise effective solutions. CFOs should not only understand all aspects of the business but be able to solve problems, whether relevant to accounting or otherwise. Being able to translate your accounting issues into simple terms so that others can understand you is a core competency."
"In my opinion, the biggest frustration is the failure to delegate to the rest of the team because we cannot deliver it on our own. We must work effectively as a team to deliver our objectives. As is the case in most businesses, organisational politics can sometimes prevent an organisation from making the most appropriate decision. I believe that one has to make a decision, rather than decisions being made for you by the passing of time or changing of the environment."
What are your thoughts on transformation in finance?
"I believe that transformation in business and finance in particular has fallen well short of the original intentions of affirmative action policies and legislation. It has become a numbers game rather than empowering people to be effective contributors to the business environment that would improve the well-being of all South Africans."
"I realised while in the UK that affirmative action was failing to address the overall principle of providing people with the skills and capabilities to take up the required senior management positions over time. I also realised that irrespective of who you are and where you come from, you have the ability to make a meaningful contribution to the South African society and can take up your place in business."
"I get upset and disappointed when people believe that they should get a position through affirmative action when they are not ready for it, because that was not the aim and that is detrimental to their own career development."
"I never rushed to be a CFO. I always believed I would take the position when I had the necessary capabilities, skills and expertise to perform the function well."
What is the most difficult business decision you've ever had to make?
"The most difficult business decisions I've had to make are those which affected people's livelihoods, i.e. decisions around retrenchments or closing of operations. My dad was retrenched a few times in his career due to tough economic conditions, so I experienced first-hand the impact that those decisions have on the employee and also the whole family and everyone who is dependent on that individual. I will still make the difficult decision because it is part of business, but I will explore all avenues to ensure that the most appropriate solution is found that minimises the impact on employees and their families."
What do you do outside of work?
"The majority of my time is taken up by work and all the free time I have is spent with my family. I used to watch lots of sport, but lately I have spent less time watching sport to ensure that I have more time for my family, who are the most important part of my life. For me, work-life balance means you have to work when you have deadlines and you have to make time to spend with your family for the important issues, like watching your daughters' ballet or other school activities."