Some of SA's top CFOs explored the challenges facing the country, and then shared solutions.
On the evening of 20 August, a number of CFOs gathered for the weekly online CFO Community Conversations, to hear Business Leadership South Africa CEO Busi Mavuso, renowned for speaking truth to power, delivering a talk on the challenges South Africa is facing, and what she believes that businesses need to do in the current climate.
She says that the economic contraction in some of the developed nations in the wake of the Covid-19 pandemic and resulting lockdowns will pale by comparison to the ground South Africa has lost. South Africa was already facing a basket of economic and political challenges, and Covid-19 could not have come at a worse time for this beleaguered nation.
“We are in a situation where everything that could go wrong has gone wrong. We were not supposed to be one of those countries that goes to the IMF to seek for assistance. South Africa shouldn’t be at this point. None of us expected that when we achieved democracy 25 years ago – that today we would have lost our position as the most attractive investment destination in Africa.”
Busi then highlighted three challenges that South Africa is currently facing:
Our economic outlook
“The economic outlook for 2020 was already bleak. We had a projected 0.3 percent growth, and then in five months, Covid-19 has unravelled much of the progress that we’ve achieved in the last 25 years. It certainly exacerbated the weaknesses we’ve experienced in the last ten years as a result of the state capture project.”
She says that established market economies are already reporting significant economic contractions, but that these will pale in comparison to what South Africa is going to experience. Along with this will be significant job losses, again in an economy that could ill afford such an impact.
The social challenge
“Because we live on top of each other, and don’t have the luxury of social distancing, we had to lock down our economy for the first five weeks, so we could set up quarantine facilities. We need to address the social inequality in our country, and seriously redress. We have to address the fundamentally flawed structure of our economy, once and for all,” said Busi.
She added that the countries that are going to get out of the economic depression the fastest are those that are adequately structured. “Unless we as South Africa carefully look at this social challenge we face, social instability is going to continue to be a problem.”
Towards Economy Recovery
Busi said that what the country needs right now are rational and pragmatic choices to guide our actions. “It is really of paramount importance that we prioritise ruthlessly as a country. We need to deploy our energiesy on interventions that move us forward. Government has been presented with numerous policy proposals, but there has been no implementation. Let us address the issue of policy reform, at promoting the ease of doing business, of releasing the spectrum. Instead we have municipalities looting the Covid relief fund, without any meaningful interventions to rein in corruption. We need a government-backed plan that we can all get behind with a common vision.”
Solving South Africa
After Busi’s impassioned presentations, the CFOs in attendance split into breakaway rooms to work out how to navigate the country out of the perfect storm in which it finds itself.
Many CFOs expresssed similar concerns to Busi’s about corruption, and agreed that it’s time to start standing up for what’s right. Siphiwe Hlongwane, the FD of Tate & Lyle commented:
“One of the things we learnt through lockdown is the cost of corruption. It’s been an eye-opening period. We’ve lost billions that could have been invested in infrastructure. It could have created a solid health system, or a strong education system, but money has gone down the drain. We need cash to drive all those things. I think we need to start challenging the government’s departmental plans to stimulate growth within the country. But first we need to stop the rot, because without that we can’t drive economic growth.”
Craig Henery, the CFO of DHL Express, expressed the importance of focusing on the areas in which you have the most influence.
“To have real impact, the activities which are our main focus in the short term, need to remain in the sphere of influence closest us in order to yield a positive impact,” he said. “Our immediate focus remains on supporting our people and our clients. Control the things that you can control and manage that which is your hands.”
Andri Bezuidenhout, the group FD at GWK, echoed this sentiment, saying: “You have to be relevant where you are. Our roles also involve the developing and supporting of emerging farmers. In order to obtain workable and sustainable solutions, you need to work closely with institutions that you partner with."
CJ Kujenga, ex-CFO of Adcorp, added that transformation is critical to the turnaround of South Africa, but that the complex B-BBEE codes are preventing rather than promoting this ideal.
“We need to start lobbying for the simplification of the B-BBEE codes. They are so complicated that all people do is tick a box. You don’t get genuine transformation and don’t try to change the poverty cycle. So how can we introduce codes that genuinely changes the lot of our people.”
V&A Waterfront CFO Narriman Taliep said that transformation is a South African problem. "If we’re not going to drive it under procurement legislation, then we’re failing in our duties as CFOs and big spenders. We should very responsibly and diplomatically try to raise the agenda and drive it in the right direction."
Looking to the future
After the breakaway sessions, the finance executives reconvened in the main room, and some of them shared their responses. Busi listened to their feedback and then concluded by saying:
“Thank you very much for the conversation, and for the platform. I really believe that the change is not created by the big things I’ve been talking about. I believe that all of us have the opportunity to influence change in our small corners. The burden for those of us in leadership is to identify those opportunities – what can I do in my own little corner to make sure we take small incremental shifts towards removing some of the barriers. I don’t believe everything needs to wait for government. I believe that there are things we can do outside of the government framework, in our own companies and in our own homes, and we should be deliberate and intentional in ensuring that we do that.”
