According to futurist Karl Schroeder, foresight is not about predicting the future, it is about minimising surprise, and this will be a cardinal aspect in planning for the year in order for South African businesses to not only survive but thrive. ASA spoke to four major players in the South African landscape about their sentiments and strategies for the year ahead.
AUTHOR │ Marteli Brewis
Disclaimer: Please note that these are the opinions of the authors and not necessarily SAICA views. SAICA will, therefore, not be held liable for the views and opinions expressed by the various authors who have contributed to this feature.
Is 2021 the year to thrive?
A lot of people are almost anxiously curious about what the future holds, especially in these uncertain times in which the whole world must constantly redefine itself, its priorities and its plans. Unfortunately, prediction about the future is exceedingly difficult …
Amid exceptional uncertainty, the International Monetary Fund (IMF) forecasts that the global economy is projected to grow 5,5% in 2021 and 4,2% in 2022.
In a recent report, they stated that ‘the projected growth recovery this year follows a severe collapse in 2020 that has had acute adverse impacts on women, youth, the poor, the informally employed, and those who work in contact-intensive sectors’. The report continues that the global growth contraction for 2020 is estimated at -3,5%, 0,9 percentage point higher than projected in the previous forecast (reflecting stronger-than-expected momentum in the second half of 2020).
The strength of the recovery, according to the report, is projected to vary significantly across countries depending on access to medical interventions, the effectiveness of policy support, exposure to cross-country spillovers, and structural characteristics entering the crisis.
PwC Global tends to agree. According to their Global economy watch: predictions for 2021, the global economy will ‘expand by around 5% in market exchange rates, which is the fastest rate recorded in the 21st century’. This is conditional on a successful deployment and spread of effective COVID-19 vaccines and continued accommodative fiscal, financial, and monetary conditions. They go so far as to say they expect the global economy to revert to its pre-pandemic level of output by the end of 2021 or early 2022, albeit in an uneven pattern.
According to Investec’s forecast in February, South Africa is likely to see economic growth of 2,9% year on year in 2021 as it rebounds from the -7,3% year-on-year collapse of 2020. ‘This muted recovery has been accompanied by an unsustainable expansion in government borrowings and a widening fiscal deficit. Planned government borrowings for 2021/22 sit at R4,6 trillion (86% of GDP) and are forecast to reach R5,5 trillion by 2023/24 (93% of GDP) and 95% of GDP by 2025/26. As these ratios deteriorate and SA sinks deeper into a debt trap, lower credit ratings are all but guaranteed.’
Investec expands on this by saying that ‘on a more basic level, a key factor in South Africa’s failure to achieve sustainable economic growth is the alarming fact that doing business in South Africa is becoming more difficult, not easier. With the pace of regulatory reform lagging other economies in the developed and developing world, SA is becoming less competitive as a destination to set up shop or commit fixed investment. The result is lower employment, lower tax revenues and a negative growth spiral.’
Fortunately, Arthur M Schlesinger Jr once said that economists are about as useful as astrologers in predicting the future (and, like astrologers, they never let failure on one occasion diminish certitude on the next).
With 2020 vision, 2021 is sure to deliver an interesting and challenging ride. According to futurist Karl Schroeder, foresight is not about predicting the future, it is about minimising surprise, and this will be a cardinal aspect in planning for the year in order for South African businesses to not only survive but thrive. ASA spoke to four major players in the South African landscape about their sentiments and strategies for the year ahead.
Yusuf Dukander CA(SA) CFO CSBO Platform, Alexander Forbes
According to Alexander Forbes, partnering with clients and securing the financial wellbeing of corporates, pension funds and members inform everything that the organisation does.
As an experienced finance director, Yusuf is adept at creating robust financial management, governance and financial oversight, and finance business partnering to protect cash flow and profitability. He believes in the importance of diversification and the value of every single member of a team.
‘Accounting is not just numbering; it is a tool and a philosophy to support growth with innovation to the benefit of all stakeholders. Business performance is reached in synergy with all the departments working in concert; analysis of the environment, identification of core micro and macro trends – all information that must be made available to the team to provide direction and an objective point of view with predictable results.’ In general, Yusuf is optimistic about 2021. ‘Don’t let a crisis go to waste! Be very deliberate on your organisation’s execution and channels to deliver to and partner with your clients.’
For him, retaining and growing talent in the new working reality should be top of mind for the company. Alexander Forbes has been deliberate in their efforts to drive operational excellence as a principal organisation-wide culture shift. Yusuf adds: ‘A key focus area has been around ensuring that we have the right skills and capacity to meet our service level commitments and improve the overall client experience.’ They have actively sought the desired skills from the market and continue to enhance recruitment and retention programmes, to ensure that they attract and retain top talent. The pandemic also accelerated people policies for flexible work conditions and fostering a culture of ‘One Alexander Forbes’ through its integrated advice-led strategy. ‘Our people are more supported in their quest for more balance and fulfilment.’
He believes the key to leading effectively with most employees working remotely is the regular virtual sessions with their CEO and senior leaders. Strategy refresh is cascaded right down to all staff as they augment the group’s direction on operational excellence, consistent client experiences and digital adoption. It is also important that clear key performance indicators are linked to the strategies. There should be an emphasis on role clarity. Furthermore, it is important to focus on productivity, on output, rather than on working hours. It is also imperative that management show genuine care and empathy for staff and clients during this difficult period. During the current COVID-19 pandemic, Alexander Forbes has responded to clients’ needs proactively and prioritised the safety and wellbeing of staff and clients while balancing business growth and sound capital management.
Secondly, the organisation should firmly establish its purpose – in other words, ‘why do we exist?’ − and invest in differentiation. From there, the organisation should plan strategically for prosperity and growth aspirations through capturing untapped markets, client bases, corporate buyouts and so forth.
Yusuf’s plan for 2021 in his business platform is to oversee finance change initiatives, manage the finance IT portfolio (including accelerating data analytics, robotic process automation and so forth). ‘It’s important to manage talent efficiently and invest in the right technology that is scalable, sustainable and creates open access for consumers and clients, which will in turn enhance the brand promise of financial wellbeing,’ he explains.
Miriam Cassim, CA(SA) CFO, Vodacom Group
Through the execution of a six-point plan, Vodacom Group remains committed to assisting governments to curb the spread of the pandemic while at the same time focusing on the economic recovery in each of the markets where they operate, according to Miriam Cassim. ‘This plan includes expanding network coverage and resilience, accelerating support to governments, enhancing digital accessibility and digital adoption, supporting the strategies of our customers as they adapt to the “new normal” and promoting financial inclusion.’
Vodacom Group has taken quite a few steps to ensure effective leadership, even with so many employees working from home.
Under Level 1, with the easing of some restrictions, Vodacom Group gave staff the option to return to work, albeit with a maximum of only 25% occupancy across all of their offices. ‘Vodacom Group remains extremely cautious in our approach as the wellbeing of our staff is paramount. We have also found that, as a team, we have been incredibly effective whilst working from home. Vodacom will continue to build on the success of our work-from-home programme for as long as necessary, which means for many employees working from home has become the “new normal”.’
During this time they have also made every effort to ensure the wellbeing of their staff by ensuring that they are sufficiently supported during the pandemic. ‘Many have contracted the virus, and many have lost loved ones – so emotionally it has been difficult for our employees while still trying to adjust to the new normal. We have also found that regular connect sessions between the CEO and senior leadership with all Vodacom employees have played a very positive role. It’s important for our staff to understand that even though we are not together physically, we are all still part of the larger Vodacom family.’
According to Miriam, Vodacom Financial Services have always put the customer at the heart of their product and service offerings. ‘This, together with a strong focus on financial inclusion, has been our mantra and continuous to be a key focus during the pandemic. Therefore, what we view as important has not changed; however how we solve some of the challenges during COVID-19 has changed. In the last year, we have had to accelerate the digitisation of some of the products and services which has informed our priorities. So, overall, while there is still much work to be done in the economy, I believe that if we all play our role either in our capacity as a business or even in a personal capacity, be it big or small, we can all still make a difference together as a nation,’ says Miriam.
‘We believe that a recipe for success for any business in this uncertain economy is the speed and agility to respond to change and continuing to remain relevant, especially as the world moves quicker to adopting digital solutions. We continue to focus on four of our business segments – insurance, payments, lending and trade.’
Miriam knows with adversity comes opportunity. ‘I believe that businesses who understand customer needs and create innovative solutions to meet these needs are well positioned to thrive in this environment. As we are living in a world where the demand for digital solutions is increasing, companies that embrace online solutions will be well poised for success if they are able to adapt their offerings to the digital world. As a business, we have also been very proactive in identifying potential risks during the pandemic and have been diligent in finding alternative controls to mitigate such risk. This is an important principle to future proof your business and ensure sustainability.’
Wikus Lategan CA(SA) CEO Calgro M3
Wikus believes that 2021 will be another very difficult year. ‘Aside from the pandemic, at Calgro M3 we have learnt from the past how to deal with challenges and adapt quickly. In our previous interim results, we indicated that when looking back over the past six months, we couldn’t help but think about the 1966 film The Good, The Bad and The Ugly: “COVID-19 has been referred to as ‘The Ugly’ by many companies in South Africa, but in the case of Calgro M3, the past three years have been ‘The Ugly’ with COVID-19 being ‘The Bad’, hampering the progress of ‘The Good’.” This remains valid even today.’
In terms of the economy, it is quite difficult for Wikus to say where the South African economy will find itself this year. ‘As everyone knows, the country has been in recession since around 2018 and given the severe impact of COVID-19, the local economy is unlikely to recover any time in the near future.’
For Wikus and Calgro M3, 2020 acted to cement a view they have always held, which is to ‘always expect the unexpected’. ‘While we have tried to plan for the unforeseen as best we can, sometimes one just has to jump in and deal with the obstacles facing you here and now in the best way possible. This also provides lessons for the future.’
With this pandemic, businesses and individuals have had no other choice but to adapt. This is true of Calgro M3 too. ‘Our first mission was (and continues to be) to ensure that our employees, suppliers and stakeholders were safe and understood the parameters we had to work within. COVID-19 taught everyone that things go wrong when you least expect them to. In a way, it also provided an environment in which businesses had to re-think every aspect of doing business and adapt and progress within this framework.’
Pandemic aside, the business environment is evolving rapidly. ‘In 2000 companies like Uber, Airbnb and Facebook weren’t even around and yet today are among the world’s leading organisations. In the next five to ten years there will probably be another dramatic shift – although who knows what that will be!’ says Wikus.
However, he feels it is likely that the pandemic forced all kinds of businesses to evolve more rapidly than they had planned, particularly in the adoption of online communications and workplace adaptations.
‘The greatest lesson I learnt is that as leaders we have to set the example and we have to trust. We had to demonstrate to our employees that the business remained sound and was able to move forward, and we needed to set an example of being responsible in all that do. We also had to demonstrate confidence. People need love and a sense of belonging. We reached out to employees on a much more regular basis, shared important information as well as more personal anecdotes, and became more compassionate.’ For Wikus and Calgro M3, it was important that employees felt respected and needed.
‘This has instilled a sense of belonging and although it does take a lot of dedication and thought to ensure momentum is not lost, it is important.’
Wikus explains that his priorities and what he views as important have not changed since the start of the pandemic. ‘Calgro M3 has always been staff- and family-oriented. These principles have long been part of our business. We have always allowed flexitime and work from home options. The only thing that changed is that we now have even more people working on this basis. We learnt over the past three to five years to be adaptable and this has always been our strength. This in turn has allowed us to be quick and flexible in decision-making.’
Mahomed Sader CA(SA) CFO Supertech Group
Mahomed is very positive about the outlook for 2021, ‘particularly with the vaccine rollouts that are underway which I believe will make a huge difference to business and consumer sentiment by showing there is definitely “light at the end of the tunnel” coming soon’.
Supertech is a group that originated in the motor industry and has now moved towards lifestyle, understanding the very intricacies of a luxury experience.
For Mahomed, 2020 was an eye-opener in many ways and forced both him and Supertech Group to take a long, hard look at their organograms, service-level agreements, suppliers and full cost structures from a survival point of view. ‘I believe that many companies (the Supertech Group included) have worked hard to get this right and our debt and cost structures now are as low and lean as they have ever been, but unfortunately hard decisions had to be made to get to where we are now. Ultimately, however, we are now much better geared to ride out any current and future storms with much lower operating risks.’
He explains the pandemic has forced Supertech Group to review its priorities radically. ‘We are now much more focused on our core business and revenue-generating activities and extremely particular with minimising costs and identifying minimum breakeven levels for every department, business and even individual sub-activity. We have brought much more previously outsourced work in-house as well. We also make sure we keep our staff secure and motivated and informed during these uncertain and trying times as good mental health is of extreme importance.’
For businesses to cope or even thrive during these perilous times, it is all about zero-based budgeting for Mahomed. ‘It’s about being honest with yourself about your core business and core (strictly necessary) costs and going into full survival mode in terms of mindset. You have to think with your head and not your heart in order to keep your business sustainable. Otherwise, you will have to face possible closure. But if you can do this you will be stronger than ever and much stronger as a business. Succession planning is also key now more than ever which is a long-term and ongoing process in and of itself.’
When it comes to leading staff effectively during the pandemic, Supertech Group did not have to adapt as much as a lot of other companies. Fortunately, due to the size and floor space of their group’s dealerships and administration areas, social distancing is not a problem. There is also no need real for too much remote work, except during the hard lockdown in April and into May 2020.
‘We have, however, become much savvier with using Microsoft Teams, Zoom and so forth and are now a lot more comfortable using virtual meetings instead of physically travelling for meetings. In many instances this is also a significant cost saving, particularly for us with nine physical dealership and panel shop locations all over KZN and the Eastern Cape,’ says Mahomed.
Mahomed believes a strong and positive mindset is key at all levels of the organisation during these times. ‘Being sensitive and understanding of this is very important to foresee and prevent problems before they happen. This starts at the top and has a strong, pervasive effect on the entire business.’
All these leaders in South African business seem to have a few key things in common. They know 2021 is going to be a difficult year, especially financially. They realise the importance of taking care of their employees – not only at work but also how vital it is to have compassion and to support wherever they can. They know that with adversity comes opportunity – how there is a way to make this downturn work for business and lastly, in the words of Abraham Lincoln: ‘The most reliable way to predict the future is to create it …’