Author: Bongani Coka, Chief Executive of the South African Institute of Professional Accountants (SAIPA)
 
With the Chinese economy slowing, commodity prices falling and the global economy stagnating, worldwide investment opportunities are scarce. But the last decade has seen a rising wave of optimism over Africa’s growth potential, and global investors are keen to uncover its riches. To realise its prosperity, Africa must first confront the obstacles that prevent investors from committing themselves.
 
Accountants have a central role to play in confronting these obstacles and ensuring the development of Africa.
 
The International Monetary Fund (IMF) suggests that although medium term growth prospects in Africa remains favourable, substantial improvement is required in the recalibration of fiscal policy (including the efficient use of national budgets), better domestic revenue mobilisation, and improving and prioritising the quality and efficiency of public investment.
 
South Africa is in the green because our fiscal policy is sound. We just need to keep our budget in check to ensure government debt remains a low percentage of GDP. Our revenue is also being judiciously invested in infrastructure, with the top five government priorities being healthcare for all, better education, enhanced crime prevention, rural development, and job creation. In South Africa, public investment is lively, with the government spending a fair amount of its budget on social services and public infrastructure.
 
However, we also face growth challenges.
 
Corruption – real or perceived – is a threat to the continent’s development. Additionally, in South Africa, unemployment continues to be unacceptably high, not for lack of jobs but rather a skills shortage in specific sectors from which the field of accounting is not exempt.
 
As for poverty and inequality, financial and human resources must be effectively deployed to address the following challenges, intimately linked to both conditions: optimising Africa’s natural resources, tackling illicit financial flows, increasing effectiveness of public expenditure, and attracting private funding. This is a daunting task if a country lacks the requisite skills to mobilise its resources.
 
In spite of this, South Africa is well positioned to spearhead growth in Africa as envisioned by the IMF.
 
Good resource management is one of the most effective ways to alleviate poverty. But it requires that those charged with the responsibility have the following core skills: good understanding of ethics and governance, good financial management, and transparency and accountability.
 
A true accountant must have all these competencies. If even one is missing, they cannot prudently manage scarce resources, and poverty alleviation initiatives will suffer. In addition, as the people responsible for preparing information, auditing, consulting and advising, accountants are essential to the success of both the public and private sector in Africa. Weighty decisions are taken on their advice or the management information they prepare.
 
It’s in the context of these opportunities and challenges that the accountant becomes a growth enabler. At the South African Institute of Professional Accountants (SAIPA), we try to counter these challenges by emphasising competency-based training, so that after students pass our professional evaluation exam, they are employable. They possess not just theoretical understanding but also the capability to solve real world problems as a practitioner, and so become go-to business advisers.
 
Skills gaps exist in both the private sector and in government, particularly at the local government level. It is for this reason that SAIPA places a special focus on equipping the big metros to train students so they can do their articles in the public sector. For municipalities to be awarded a clean audit by the Auditor General’s office, they need highly skilled professional accountants who perform their duties without fear or favour. It’s encouraging that in the future, all municipal managers will have to earn a special qualification before being appointed to that position. Clean government starts with top-level leaders.
 
Accountants are the champions of right record and should be beyond reproach. To continually earn this trust accountants must work tirelessly to maintain a faultless reputation and root out bad elements.
 
Solutions such as the reversal of illicit financial flows, attraction of foreign direct investment, growth and development of the SME sector, and enhancement of the effectiveness of foreign aid, all depend on suitably qualified and regulated accountants.
 
The main challenge facing the accountancy profession on the African continent and in South Africa is capacity building. Not only increasing the amount of available accountants, but elevating professionals to hold accountability, transparency, and good governance in highest regard.
 
Strengthening the accounting profession and the public financial management capability are critical to this end. It takes strong, ongoing collaborative effort between all the stakeholders – academics, business, government, students and parents, accountants, and professional bodies that emphasise continuous professional growth, research and development, and compliance with best practice.
 
Currently, more than 46% of African countries do not have a professional accounting organisation. Those that do are not yet functioning according to best practice.
 
Ultimately, the role of the accountant is to provide indisputable financial structure and processes, unquestionable record of transaction, and incontestable strategic intelligence. When we can do this at scale, we will pave the way for investor confidence.
 
Accountants therefore control the floodgates of prosperity in Africa, but it is by our integrity and effort that we earn the right to open them.
 
PHOTO CAPTION: Bongani Coka, Chief Executive of the South African Institute of Professional Accountants (SAIPA)

ENDS

MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za  
 
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Africa cannot rise as a continent without women playing a stronger role in the accountancy profession

The African Congress of Accountants 2015 (ACOA) saw more than 850 participants from across the African continent discuss and analyse the challenges impacting the industry today. One of the key sessions focused on the gender divide and the belief that Africa cannot rise as a continent without women playing a stronger role in the accountancy space. Some of the key takeaways included the value of women in the workplace, the importance of finding balance and the need to engage across gender to find solutions.

“The role of women in the corporate environment cannot be underestimated. Not only is it socially fair to ensure a greater gender balance in the business, but studies have shown that organisations with more women are more successful," says Shahied Daniels, Chief Executive at the South African Institute of Professional Accountants (SAIPA). “The opening of a discussion of this nature at an event as preeminent as ACOA is indicative of a trend towards a more inclusive industry.”

Examining the insight
Entitled Bridging the Gender Divide, the session was chaired by Asmâa Resmouki, President of the Pan African Federation of Accounting (PAFA), and examined how Africa requires action plans to address this gap and to change the mind-sets of both men and women. One of the key takeaways was that women need to become more confident in their abilities and capabilities within this sector.

The panel of speakers participating in the discussion – Bridging the Gender Divide – included Olivia Kirtley, President of the International Federation of Accountants (IFAC), Elizabeth Adegite, ex-President of the Association of Accountancy Bodies in West Africa (ABWA) and Institute of Chartered Accountants of Nigeria, Professor May Ifeoma Nwoye of Nigeria and LY Taher Drave, Partner and Principal at Mali Consulting Group.

A study undertaken by McKinsey Consulting found that women represented a steady 52% of graduates, but that only 11% of executives in listed companies were women. In addition, statistics from the SAIPA showed that there is a significant difference between trainees and members – 60% trainees against only 41% members.

“The questions that need to be asked are: why women leave the profession and how we can make it more attractive to them so they are inclined to stay,” says Daniels. “We must increase voice around this topic, to make it a louder conversation that can potentially ignite further investigation into these issues. This would potentially then find the answers that the industry is looking for.”

Glass ceilings: Good reasons
The nature of the business is one that demands long hours, tight deadlines, fast paces and high pressure. These are a standard facet of the gem that is accountancy, but not necessarily causes for women to be less inclined to remain within the profession.

“Stereotypes about role and women may be playing a part here, especially when many consider those stress factors to be a mitigating factor,” says Daniels. “Gender does not dictate capability in coping with late nights and high pressure, but managing a family life and a highly demanding professional life simultaneously could be.”

Ultimately, women and men both have to step forward and build the bridge over the gender gap. Women cannot be victims and should not be expected to fit into a ‘male model’, there needs to be cognisance of the value in developing a new model that adapts to the new workplace. PAFA was unable to persuade any men to take part in the panel – this in itself suggesting that there needs to be a stronger male participation in addressing the challenges.

ENDS
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MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za  

For more information on SAIPA please visit:
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The South African Institute of Professional Accountants (SAIPA) condemns the recent spate of xenophobic violence. Shahied Daniels, CE of SAIPA, says that the violence not only damages the democratic society we are so painstakingly trying to build, but severely tarnishes South Africa’s international image at a time when we are in desperate need of direct foreign investment and entrepreneurial skills to alleviate chronic unemployment.

“These xenophobic attacks and the criminality associated with them are not only destroying the lives of foreign nationals who are merely seeking to make a living by providing services to communities. They are also impacting the economy’s ability to produce the jobs South Africa needs so desperately,” Daniels says. “SAIPA members who provide accounting and consulting services to businesses in affected areas are also being hard hit. Furthermore, SAIPA members who are building businesses outside our borders stand to lose credibility in those markets simply because they are South African.”

SAIPA believes that fellow-Africans working in South Africa should be welcomed for the skills and entrepreneurialism that they bring, and afford them the same dignity and protection that South Africans enjoy elsewhere on the continent.

“At the same time, of course, people working here illegally need to be returned to their countries of origin safely and respectfully,” says Daniels. “These attacks do point to the fact that many communities feel that our border-control mechanisms are not functioning well. The authorities need to demonstrate that they are in control of the borders and that work permits are being issued fairly. In turn, this will demonstrate that housing, medical care and job are not being ‘stolen’ by an uncontrolled flood of illegal emigrants.”

SAIPA calls on all other professional accountancy bodies to condemn collectively and unreservedly all forms of xenophobia and associated criminality. “As a collective, we must insist that state immediately deploys all the means at its disposal to rid our country of this scourge. Perpetrators should be brought to book, and educational programs developed and implemented to urgently root out this anti-democratic and criminal behaviour,” Daniels says. “As law-abiding citizens of a genuine democracy, we should never allow evil to prosper by not speaking out.”

ENDS
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MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za  

For more information on SAIPA please visit:
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With the SACCI business confidence index reaching its lowest level in 14 years in July, the South African Institute of Professional Accountants (SAIPA) recommends that South African businesses look beyond our borders for opportunities that could provide a sustainable boost to the local economy. But, those that hope for success would do well to do thorough research first and consult with accountancy professionals who are able to provide some much-needed expertise.

“With Sub-Saharan African economies outstripping the local and many global economies in terms of growth, the result is that many promising opportunities are opening up for doing business in Sub-Saharan Africa in a variety of sectors,” says Dr Thomas Höppli, Economic Research Analyst for SAIPA. “All we need to do is look beyond our backyard.”

According to Höppli’s report entitled Doing Business in Sub-Saharan Africa, there are challenges to doing business in Sub-Saharan African countries, but the opportunities are also abundant and well worth investigating by companies wishing to grow on the continent.

Cross-border trade
According to Höppli’s report, many of the challenges to doing business – like bureaucratic red tape, corruption and infrastructure issues such as poor roads and unstable power supplies – are far more apparent to those physically establishing businesses in-country. 

“However, another way of tapping into the growth markets in Sub-Saharan Africa – instead of physically establishing a business in-country – is through trade. The high growth in many of these countries, spurred by export activities and related investment, suggests that demand for imported products as well as purchasing power is increasing rapidly and that they could thus be interesting export markets and foreign direct investment destinations.”
 
“Exporting to begin with may be the wisest entry option for SMEs as setting up a branch in any other country may be beyond their reach,” Höppli adds. However, he takes care to emphasise the fact that trading across borders in Sub-Saharan Africa is not as easy as in other parts of the world. In the “Trading Across Borders” sub-index of the Ease of Doing Business Index, only five Sub-Saharan countries feature in the top 100 of the 189 economies analysed by the World Bank / IFC (2014). South Africa is ranked 106th.

Also, as he cautions, without a physical presence in a market, marketing becomes even more important in order to make potential clients outside aware of the offerings of the SME.  “To this end, social media may be very useful as well as other digital marketing opportunities, which tend to be comparatively cheaper,” says Höppli. “Also, collaboration with a marketing agency in the identified export markets may help to create demand.”

For SMEs that wish to establish a physical presence in-country, Höppli says it’s vital to study the market thoroughly before venturing into it. “Businesses should take great care to identify the best markets, considering factors such as market potential, competitor activities and feasibility of doing business.” 

To this end, he recommends referring to the World Bank / IFC’s Doing Business reports, which rank almost 200 economies on their ease of doing business and highlight specific challenges in the individual countries. Of the 47 Sub-Saharan countries included in the 2014 index, just eight are ranked among the top 100, while the remaining 39 countries are ranked between 121 and 189.

Talk to your accounting professional
With these challenges in mind, Höppli says it’s wise for SMEs to consult with accountancy professionals who know their business and are able to help them navigate the challenges of internationalising.

According to an article on the International Federation of Accountants (IFAC) website (ifac.org, 2013), perhaps the greatest challenge SMEs face is the lack of human capital, including managerial expertise and financial resources to take advantage of opportunities. “With a wealth of financial and business knowledge, accounting professionals such as SAIPA members are in an excellent position to help fill the resource gap,” he says. 

According to Höppli, accounting professionals with knowledge of and experience in working internationally are able to provide assistance in identifying the most attractive, fast-growing markets. “They can also help businesses access appropriate sources of funding and use their relationships with banks and other key financiers of international investment and trade to facilitate introductions between these funding sources and SME clients.”

Höppli says they are also able to assist with value-adding advice in areas such as managing foreign exchange risks and forecasting currency needs.

“We advise SMEs to increasingly become integrated into the global business community. But, in order for them to maximise the opportunities of doing business in other countries, they need good advice,” he concludes. “Accounting professionals are well placed to provide this assistance as they know the SME and its strengths and weaknesses.”

ENDS
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MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za  

For more information on SAIPA please visit:
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Tapping into the growth markets of Sub-Saharan Africa appears to be a promising way of expanding business but a closer look reveals that doing business in these countries comes with a few challenges. 

According to the World Economic Forum (WEF) Global Competitiveness Report, Sub-Saharan economies continued to register impressive growth rates of close to 5% in 2013 and the forecasts over the next two years are even better. The latest research report by Dr. Thomas Höppli, Economic Research Analyst for the South African Institute of Professional Accountants (SAIPA) confirms these findings and also highlights the challenges in these Sub-Saharan African countries.

“Much of the growth is due to natural resources such as oil and gas. The increase in oil and gas production has caused other related sectors to grow too but consistent high growth has not yet trickled down to all segments of the population,” says Höppli. “As the WEF highlights, most economic activity in Sub-Saharan Africa still happens in the informal sector, which accounts for more than 50% of GDP and employs more than 80% of the population. The main challenge in the years to come will be to turn growth into inclusive growth,” Höppli adds.  

Consumer purchasing power
Despite this challenge, the growth has resulted in increased spending, particularly on consumer goods such as mobile telephony, soft drinks and other small luxuries as consumer purchasing power increases. “There has been a marked upswing in growth of businesses in the consumer goods, communication, and construction and supply chain sectors,” Höppli remarks. “One could therefore consider investing in these types of businesses or establishing your own in these markets.” 

Import and export markets
Furthermore, Höppli notes: “Another way for South African businesses of tapping into these growth markets – instead of physically establishing a business in one of these countries – is through trade. The high economic growth, which has been spurred by export activities and related investment, suggests that demand for imported products as well as purchasing power is increasing rapidly and that they could thus be interesting export markets and foreign direct investment destinations.”

Ease of doing business 
“The major challenges facing the ease of doing business in Sub-Saharan Africa include bureaucratic red tape, infrastructure issues like poor roads and unstable power supplies, a low availability of skilled and suitably trained staff, cultural differences, language barriers and corruption. These problems, although not insurmountable, add to the cost and effort needed to do business,” Höppli warns.

The ease of doing business index implies that the majority of the Sub-Saharan countries are among the more difficult countries in the world to do business in. While countries in which doing business is easier have not seen higher average growth rates since 2008, there is a correlation between how easy it is to do business and the income level achieved in these countries.  GDP per capita, based on purchasing-power-parity (PPP) per capita GDP, tends to be higher the better the country is ranked in the Ease of Doing Business Index.

The higher GPD per capita in countries where it is easier to do business suggests that over time, a more conducive business environment has contributed to achieving a higher level of GDP per capita.  For South African companies it is also an indication that potential customers in these ‘easier-to-do-business’ countries tend to have a higher purchasing power.

Business in Africa not for the fainthearted
“Doing business in Sub-Saharan Africa is a challenge, but those who are undeterred by a business environment that may not be as easy as it may be in other countries could reap high rewards,” Höppli concludes.


ENDS
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MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za  

For more information on SAIPA please visit:
Website: www.saipa.co.za 
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants