Key findings from the 2014 Africa CFO Survey
Our recent 2014 KPMG African and Global CFO surveys revealed some telling differences between operations and challenges in Africa and those in the rest of the world. For example, African firms differ significantly from their global counterparts with respect to centralised versus decentralised operations of their chief financial officers (CFOs).
The Africa survey results reflect responses from 264 CFOs or finance executives of medium to large companies (25% with revenue of $1billion or more). The companies covered all major industries including manufacturing, financial Services, chemicals, consumer goods, utilities and energy, and came from 17 countries across the continent.
Strength: African respondents are aligned with the global trend, where over 50% are generally satisfied with the performance of their finance function. On average only 10% of respondents rated any finance process as a weakness. Processes for general accounting, statutory reporting and month- or year-end closing are generally seen as the profession’s greatest strengths.
Focus shift: Africa’s senior finance executives want to increase the efforts on “Decision Support” and reduce the efforts on “Transaction Processing” in the next two years from current levels.
Lean finance: 75% of Africa’s survey respondents recognise the importance of lean finance, and identified finance staff talent, skills and expertise, underlying finance IT systems applications and highly optimised finance business processes as the most important enablers of the lean finance function.
In addition, 21% of Global respondents and 35% of African respondents feel that their organisation is insufficiently skilled at embodying “lean finance” principles and capabilities. CIBM respondents feel much more capable at embodying lean finance, 77% of respondents feel that their organisation is somewhat skilled and very skilled. This is in contrast to Africa organisations where 60% of respondents feel that their organisation is unskilled or neutral in this area.
Risk management: 49% of global respondents versus 56% of African respondents feel that financial risk management policies are not significantly aligned to cover market risks.
CIBM respondents in the global survey reflected a higher focus and to a certain extent a higher maturity in risk management practices with 63% having shown significant or fully integrated risk management policies aligned across market risks. This compares to 45% for Africa with a further 23% of African respondents having not aligned to such risks at all.
Talent management: Talent management is the most important factor to the value-adding success and competitiveness of the finance function, but also very difficult to master with just 16% percent of Africa’s respondents stating their organisation is “very skilled/strong” at talent management. Both African and global respondents feel that attracting and retaining talent are the most difficult processes to improve.
The level of importance placed on talent management is recognisably different within CIBM, where 62% of respondents feel that talent management is the most important factor for success of their organisation’s finance function.
Commercial support: 33% of respondents from Africa feel that “Process for Commercial support capabilities around Profitability analysis” is the second most difficult process to improve. A further reflection of the focus of risk management practices within CIBM is that 37% of CIBM respondents still see risk management activities as a process difficult to improve. This is comparative to 30% in Africa.
People agenda: Africa’s respondents cite “Investments in talent, talent management, acquisition and retention” as the most important enabler to improving the finance function and over 63% of respondents expect to invest in the area of “Retaining staff” and “Increasing technical knowledge” within the finance function.
Investment: Major investments in the area of ‘People Management and Decision support’ capabilities are needed in the next few years to support the transformation of Africa’s finance function.
Global participants feel they will be investing majorly in talent management in next two years. For African respondents major area of investment would be in talent management and decision support tools and capabilities in the next two years. The trend toward an emphasis on decision support is visible in the focus of investments towards decision support tools, skills and methods. That being said the focus of investments by African organisations is still heavily focused on investments in talent.
Centralised operations: The findings of our Africa survey are that African firms differ significantly from their global counterparts in respect of centralised versus decentralised operations. Global respondents are managing only 0-20% of activities centrally however firms in Africa are managing 91-100% of their activities centrally. The activity which is mostly decentralised in Africa is transactional processing.