When organisations publish critically required year-end financial and company reports, particularly for listed companies, the main go-to person is the Accountant and/or the Finance person; as ultimately it all boils down to the numbers.
If a company collapses one of the first questions is, ‘Where was the Accountant?’ The choice to downsize or restructure is placed on the Accountant’s shoulders. International and local reports and surveys allude to terms such as ‘Business Confidence’ they are, in gist, talking about the environment these custodians of business entities are responsible for.
In March this year the Business Expectations Survey (Bank of Botswana) concluded that, “Business confidence deteriorated from 52% in September 2014 to 44% in March 2015.
While the survey shows increased optimism in periods ahead, this could be fragile, with continued uncertainty regarding the strength of the global recovery, modest domestic economic growth and increasing challenges in the supply of key inputs (water and electricity) posing threats to business confidence.”
Despite the external but immediate challenges and threats to business confidence such as the regular supply of water and electricity and global recessions the above survey statement usually affects directly the accounts and finance offices who are tasked with turning the bottom lines from red into black. Since the economic downturn observers believe that accountants have had to adapt and transform and not only focus on meeting reporting deadlines or attaining clean audits.
Michael Kampani, Managing Director of G4S, who is also an accountant by profession explains that, “As Accountants at the heart of organisations we have a duty to drive business recoveries or turnarounds during this period of economic downturn and pessimism. The current economic downturn calls for more from Accountants as key members of the business leadership,” he adds.
Speaking at the CIMA Botswana dinner dance recently, Kampani who has previously served for five years as Finance Director for G4S explains that an Accountant on company level is the, ‘financial advisor to the company’. “Accountants should be able to move the company forward, to steer the direction of the company by advising on the consequences of taking any route. Everything translates into money,” adds Kampani.
“There is pressure on revenue growth, pressure on margins, and ultimately pressure on profitability. If you cannot force the top line to grow, where else do you have to look?” Kampani’s observation is that effective management for accountants mean being forward looking and entails looking beyond retrenchments.
Although he emphasises that revenue growth is the heartbeat of any commercial entity he encourages an eye to be kept on other areas of business to increase profitability. One of the aspects he identifies as needing to be considered is; risk management and governance.
“In these times of economic downturn, when business is hard to come by, the last thing you want is to be faced with a huge financial or reputation risk,” he advises. Another area an accountant needs to show character in is ‘guarding against extreme short termism’. “Yes you can cut costs, you can freeze investments but that should be well measured, or else we risk adversely impacting sustainability.”
He observes that in regards to other accounting related functions such as procurement and sourcing the question should be, “How much are we saving with each procurement decision? Are we getting the best deal,” adds Kampani.
The CIMA Botswana Country Manager, Letus Chinyepi states that CIMA has geared itself to prepare the accountant to adapt to this changing work environment. The qualification now offers additional to its standard accounting courses subjects such as, ‘Risk Management and Internal control’, ‘Business planning’, ‘Change and Process Management,’ and ‘market environment’.
“The mentioned Competency Framework forms the base of the new 2015 syllabus that came about as survey results from major companies worldwide on a complete Finance Practitioner of choice who can turn-around the fortunes of an ailing company,” adds Chinyepi.
Above all the training and education levels, one essential component of a Finance Practitioner is integrity, a high level of integrity. When people handle money they are faced with the temptation to mismanage it.
“The best bet is that accountants affiliate with professional bodies such as BICA, ACCA and CIMA. These bodies have strict codes of ethics and their members need to abide by their rules. Should a member be accused of misconduct they will face sanctions. The bodies ensure your professionalism and integrity,” concludes Kampani.
‘Manufacturing holds key to economic growth’
Barclays bank’s economist Naledi Madala has urged the country to consider manufacturing, as a key tailwind to drive the economy and reduce inequality.
She was speaking at a gathering organised by the bank which focused on economic outlook for 2019. “We should not make a mistake of leapfrogging without manufacturing,” said Madala, lamenting that the country’s diversification remains a pipeline dream, as the diamond is still the economy’s mainstay. She bemoaned that mining activities in the country could not spring forward diversification, though non-mining GDP has been steady over the years.
“Extractive industries are not good stepping stones for diversification, the sector does not prepare us for the next step,” said Madala at the Barclays’ Economic Outlook Forum Review 2019. The economist further noted that government should confront head-on challenges of productivity and competitiveness to attract the much needed Foreign Direct Investment (FDI). Though diversification efforts continue to hit a brick wall, Madala said the country should expect increased activities in the mining sector hinged to ramp up in coal production in the year ahead.
She also implored government to consider a welcoming attitude towards foreign investors and generous tax incentives to businesses that set up in the country. Madala is also upbeat that the use of public private partnership model could also help diversify the economy coupled with privitisation. “Privitisation will offer opportunities for growth, through the renewed optimism from government, as business confidence has improved,” said Madala.
She implored the government and the business community to access what is going to drive and hinder growth highlighting that key headwinds to growth are income inequality, diversification challenge and productivity, among others. “The pace of poverty reduction has slowed down, while income inequality goes up,” said Madala
MINISTER BEWAILS BAD REPAYMENT BY YOUTH
Minister of Youth Empowerment, Sports and Culture Development, Tshekedi Khama has told parliament his ministry continues to face challenges on the repayment of Youth Development Fund (YDF) loans.
Recently presenting the budget to Parliament, Khama said this financial year the ministry has received a total of 2582 YDF applications and approved 983of them to the value of P98 million. He said the programme attracts a high level of interest from youth but the ministry is only limited to funding a maximum of 1200 youth projects annually due to budget limitations.
“However the greatest challenge for the Fund is the repayment of the loan component by the majority of the youth businesses. The youth have advanced number of challenges for this including high rentals for operating spaces, low market access owing to tight competition and limited production capacities,” said Tshekedi, adding that they continue to pursue beneficiaries to repay the loans.
Out of the 919 businesses funded 1058 jobs have been created. The minister highlighted that disbursements of funds will continue to be undertaken until the end of the financial year. “The YDF is currently under review in line with the pronouncement made by the President, Dr Mokgweetsi Masisi in the State of the Nation Address, to improve beneficiaries through training, and encourage consortia and cooperatives,” said Tshekedi.
The ministry assists YDF beneficiaries in marketing their products and services through fairs and exhibitions. The ministry also runs entrepreneurship-training seminars for youth and in the past year 3692 young people were trained. Over 600 youth businesses attended fairs and exhibitions to market their products and services. Currently the ministry is collaborating with Local Enterprise Authority (LEA), First National Bank Botswana and Citizen Entrepreneurial Development Agency (CEDA) on training in entrepreneurship development and mentorship of YDF beneficiaries.
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