Prof Nkuhlu: CFOs need courage and competence
“CFOs need to be role models,” says Professor Lumkile Wiseman Nkuhlu, South Africa’s first black chartered accountant, current chancellor of the University of Pretoria and an often-cited inspiration for members of our CFO community. CFO South Africa had the pleasure of an exclusive interview with the 72-year-old finance elder, who will be the guest of honour during the 2016 CFO Awards on 12 May.
- CFO South Africa is honoured to have Prof Wiseman Nkuhlu as keynote speaker at the upcoming CFO Awards, which will be held on 12 May at Summer Place. Don't miss out. Register here for what is sure to be a most memorable evening.
Prof Nkuhlu's father was forced to give his son a western name for the teachers to use at school in the Eastern Cape, but refused to invent something new and simply translated Lumkile into English to get Wiseman - and a wise man his son proved to be. After graduating as the country's first ever black CA, Prof Nkuhlu went on to start the first black accountancy firm and then lead the University of the Transkei, where he felt he could "positively influence many more youngsters than at a small accountancy firm with one or two trainees a year".
During his career, Prof Nkuhlu has filled many influential positions in business and even in politics. We chatted to him about the responsibility of being a role model for all black CAs that came after him - and the fact that not only he, but CFOs as well, are continuously under a magnifying glass. He also gives some great tips for effective leadership and talks about his passion for education - including compulsory retraining for incompetent teachers
"We need to tackle mediocrity and embrace excellence, allocating more budget for science and technology. To be an innovative country, we need more PhD graduates."
What does it mean to be a role model?
"It is extremely humbling and flattering, but you also feel the pressure, as any mistake on my part would affect a lot of people who look up to me. It influences my decision-making, for example when sitting in a board meeting. It makes me think very hard about everything. I really have to put my thinking cap on, as I have to be courageous with the decisions I make."
Is it like being under a magnifying glass?
"All of us should feel like we are under a magnifying glass, whether we are CFOs or chartered accountants in other positions. Society has great expectations of us and its trust in corporates is dependent on people like me. I don't only have a fiduciary duty; as chartered accountants we also need to ensure we conduct ourselves in an ethical way. Situations might come up that are on the border line of ethical behaviour. As board members we might have to decide that we recognise impairment, even if it results in a loss to the company. That is when our courage is most needed."
You still occupy many influential roles. How do you divide your time?
"My interest has always been in three things: education, accountancy and development. On the education side, my time is now occupied as chancellor of the University of Pretoria, which means functioning as a sounding board for the vice-chancellor."
"With regards to accounting, I am a trustee of the IFRS Foundation in London, which looks after the development of the International Financial Reporting Standards. I am very proud of that role, but it once again also brings pressure, because I am the only representative from Africa. That means I cannot miss a meeting. I need to read and be able to make a contribution and speak for the needs of Africa."
"I have served on the boards of Old Mutual and Standard Bank and am currently chairman of Rothschild in South Africa. I serve as a non-executive director on the board of AngloGold Ashanti, where I used to be chairman of the audit committee, and am now just a member. I also sit on the board and the audit committee of Datatec. All this exposure requires a combination of competence and courage."
"In terms of my interest in development, I was economic advisor to president Thabo Mbeki from 2000 until 2005 and also served as chief executive of NEPAD, The New Partnership for Africa's Development. Currently, I am still one of the directors in the NEPAD Business Foundation."
Does that mean you are just as busy as always?
"No, luckily not. I have time to read now. My interest is in civilisations. Throughout the centuries China, Japan, Europe, African kingdoms and other civilisations have all risen to power, they have been at their peak and they have fallen. I read about how they evolved, how the leadership changed. The question is, as with the Roman empire, China and the Ottomans, what are the factors for growth and what caused the collapse? As South Africa, what can we learn from it?"
What are the lessons for us?
"My reading has convinced me that advances in science and technology, the rule of law, private property and work ethic are the determining factors for success."
"After 1994, South Africa should have not only focused on improving access to education, but also on the quality of it. We never really tackled the lack of discipline in schools - and by that I mean the discipline by teachers. Many of them don't have adequate knowledge of the content they are teaching. That has become one of our greatest handicaps now. Our education is poor, even compared to countries like Uganda or Malawi."
"We should be retraining teachers, but there is no political courage to tackle the problem. They may protest, but we have to bite the bullet and the ones that don't want to be trained and assessed cannot be teachers. With courage and a deep belief, you can overcome any adversity. We can get out of it through discipline and hard work."
"We need to foster a culture of recognising and rewarding excellence. Blacks have been subjected to a system that was made to make us feel inadequate. We need to kill that kind of doubting. We should have competitions all over the country, in every village. We need to tackle mediocrity and embrace excellence, allocating more budget for science and technology, which are invariably critical factors for success. We need to increase our number of masters and doctors. To be an innovative country, we need more PhD graduates."
"We also need a partnership of trust between government and business, like they had in Germany and Japan when they were ascending. When they were threatened by invasion and colonisation by the Western powers Britain, France, USA and also Russia, the Japanese asked themselves, why do western countries have better weapons and why are they beating us? This lead to the focus on education and a partnership with business, just like later in South Korea. Government and business need to sit down and formulate the way forward: what research will we prioritise? What infrastructure is needed? What policies are required? There are great opportunities around minerals that are not beneficiated, for example, and there are large swaths of fertile land still available."
"The most frustrating thing is listening to politicians who claim education is priority, but are doing nothing about it. I cannot fault the policies of the ANC. We talk the same language, but what is lacking is implementation and effective leadership."
What does effective leadership mean for you?
"In leadership there are those difficult decisions to take, for example when colleagues try to accommodate something they know to be wrong. I would not be able to be at peace with myself if I just went along. That pressure actually strengthens my resolve. I speak to a lot of young people who ask me how I overcame my poor background and reached the top. I always tell them that I strive very hard to be true and honest."
How can CFOs be effective?
"These are challenging times for CFOs, with a lot of volatility in the markets, rising interest rates and uncertainty. It is tough to plan for the future. Valuation of assets can be hard, for example in mining, which works with the projected price of a commodity. Again, what is required is a combination of competence and courage. As CFOs and chartered accountants on the board we sometimes come under pressure from CEOs, but we are to be the ones who stand firm and uphold fair presentation."
"In my mind, there are two important attributes you should have as a modern CFO. Firstly, you have to know your business, your operations, your products and the key drivers for their performance. You need to physically travel to where the operations are to understand them. Secondly, knowledge is crucial. You need to always make sure you keep up-to-date with new developments, whether they are regulatory issues or industry-related developments."
"Just like me, CFOs need to be role models around compliance, especially with the upsurge of white-collar crime. You should be the embodiment of ethics and competence and make sure there is ethics education in your organisation. You can't say there is a compliance officer or company secretary, as a CFO you are the one responsible."