KPMG's Ahmed Jaffer: The best finance leaders have an external outlook
"I am a firm believer that more CFOs should go outside of the finance department to see what is going on in the rest of the business and outside of it," says Ahmed Jaffer, long-time Partner and Chairman of the Board at KPMG in South Africa.
"If you want to be a CFO, you need to do more than just look at your data and analytics. A 'tick box' approach will leave you exposed and you'll risk your reputation. That is why the best finance leaders have an external outlook."
Ahmed is not only one of the country's foremost business leaders, an energy sector expert and an authority on Islamic banking, he is also a great example of how dogged perseverance and intelligence are the tickets to success. Ahmed joined KPMG in 1980 as one of the firm's first non-white hires. He fought against negative stereotypes and became KPMG's first 'black' partner in 1996.
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One of the most important factors driving Ahmed from a young age was losing his father, who he calls his role model and mentor, at the age of 16. Three years later his mother also passed away and he became the legal guardian of his 10 siblings. "I was working in a clothing factory and the accountant there saw some potential in me, so I started studying accounting through Unisa. When I was at school, I had never thought of becoming an accountant."
Today Ahmed chairs a Big Four Company Board and heads its Power and Utilities, and Islamic Banking divisions - for most people those would be three full-time jobs. "I am a workaholic and I prioritise what needs to be done," he says, lightly adding that he is also one of the three members of the South African Reserve Bank's review panel. "When banks or consumers are unhappy with a decision by the Reserve Bank, they come to us."
How did you manage to achieve success as a non-white accountant at a top firm during Apartheid?
"I started at KPMG in 1980 and I was one of the first non-whites to join the firm. There were not even any non-white clerks at the time. I was successful because I believe in hard work and perseverance. I knew that if I delivered quality work and understood my clients that someone within the firm will have enough confidence in me to give me big assignments, and they did. But it was not easy. It was the worst time, actually. My ethics helped and to some extent it is quite nice to be the underdog, because it encouraged me to focus on succeeding."
"However, I couldn't go to any major corporate clients, unless the client gave explicit permission that non-whites could be on the job. KPMG itself wasn't hostile, but at clients we were often called derogatory names. I remember at least three incidents at major clients where I had to go to our CEO and say 'this is it'. Our CEO backed me every time. I didn't do diplomacy 101 and that irritated some people, but it worked. If you want to be successful you must be determined, with an end goal in mind. If you keep allowing people in your space, you won't get there."
"I made partner in 1996. My portfolio was big and included Absa and Eskom, major players in the market. It helped that people could see that I could handle it. I was quite tough in questioning any board member or executive."
Given that background, what is your view on transformation in 2016?
"There have been notable strides to transforming corporate South Africa, but there's still a lot of work to be done. As businesses we have a responsibility to look after the country and not be selfish. At KPMG and at many other corporates, we train our people. Just imagine if we could supply our municipalities, where transformation has taken place, with the right people and with the right training. That would make a huge difference for the country. There are lots of good black people out there. If they've had good schooling, the same university as anyone else, the same experience, they would do well."
What is Islamic banking and what role does it play in South Africa?
"The best way to describe Islamic banking is that it's non-interest banking. Instead of charging interest, the bank adds a fee to the loan repayment that doesn't fluctuate with the interest rate. Banks cannot finance without an asset, which is why it works well for property, vehicles and also infrastructure. Besides banking, there are also unit trusts with Sharia compliance; ethical unit trusts. These can have no investment in alcohol companies, high interest funds, ammunition and other non-ethical businesses."
"The Muslim community in South Africa makes up between 1 million and 1.5 million people and most of them are traders. There is no complete Islamic solution for them. There are no overdraft facilities, for example, so they continue to bank with commercial banks in parallel."
"I first got involved in Islamic banking when the Registrar of Banks wanted me to help investigate a bankruptcy many years ago. The first bank offering Islamic services in South Africa was Al Baraka Islamic Bank, which was formed in 1989. They now have a balance sheet of between R4 billion and R5 billion. Next came FNB Islamic Finance in 2002 with vehicle finance and then property finance. Absa came in 2006 with a bigger Islamic window, offering a suite of products. I estimate the deposits in total at R10 billion."
What needs to happen in your view to bring a halt to the power crisis?
"I have worked with Eskom since 1990. We all know Eskom went to the government in 2008 to ask for money to build power stations and government said no. The last time a plant was built was in 1980. Now old plants that need to be retired have to carry on, with ever-increasing maintenance costs."
"On the upside, the industry is emerging. The mining sector is becoming more energy efficient. Consumers go off grid and independent power producers are adding to the grid as long as the wind blows and the sun shines, but unfortunately we don't have long-term battery storage facilities yet. "
"I am sure Anoj Singh [formerly at Transnet, recently appointed CFO at Eskom] will make a difference. There is stability now and the period of caretaker executives is behind us. But Eskom alone cannot solve the situation. All stakeholders involved need to add their contribution so that Eskom can thrive."