While it is understood that Africa is not a homogeneous entity and that each country has its own dynamics, there are overarching challenges and developments facing the continent. As Chief Financial Officer for a multinational organisation that operates in Africa, it is important to understand the diverse cultures, languages and expectations of the different regional markets. The CFO's mission remains to drive sustainable and profitable business growth regardless of markets or country dynamics. While regulations, language and culture may be different in Africa's diverse market of 54 countries, the CFO's doing or planning to do businesses in Africa all face similar challenges including performing effective working capital, having an efficient workforce and good customer relations. Other challenges facing CFO's in driving profitable business in Africa includes political, fiscal risks, state of private sector and high costs associated with doing business in Africa.
Regardless of these challenges that remain high on many CFO's agenda, Africa still has the potential for businesses to thrive.
It is evident that research, development and innovation hold the key to unlock Africa's hidden potential that will enable CFO's to drive successful businesses that are profitable and sustainable, the question is how CFO's should engage in these markets to ensure that businesses remain profitable and compliant? It is imperative to understand the values, needs and behaviour patterns of local consumer markets before attempting to address the specific business challenges. Therefore engaging reputable and legitimate business partners on the ground will help accelerate the process and ensure that the business and shareholders' interests are protected at all times.
The mode of doing business in Africa has changed and so has the role of the CFO for obvious reasons. Cash payments may still be preferable in some market environments, however more and more countries are adopting innovative financial approaches for making business transactions, paying suppliers and financial reporting. Other markets such as China and Asia have embraced innovation as a method of improving existing processes for driving better business value that fuels their economies, I believe that the African financial environment is also ready to embrace innovation to drive profitable businesses.
According to a study report published by the CFO Research in 2013, for many CFO's to realise this profitable growth, the finance functions will need to be reinvented to prominent roles in business leadership, both pursuing strategic goals and overcoming strategic challenges. Survey results show that finance organisations expect broad, external pressures to pose the greatest challenge to their organisations over the next years. These pressures include economic uncertainty, a combination of intense competition and increasing inflation (which together are creating increasing pressure on margins), and greater risk exposure. As a result, strategic planning, budgeting, forecasting and analytical support, in addition to traditional cost management, will play a critical role in shaping the future CFO, and finance teams will need to find ways to redirect resources from low-value manual activities to high-value analytical activities.
Doing business and driving profit across borders requires a different and new thinking approach that is flexible. The only way for CFO's to be in control is by monitoring and analysing market data to help understand the financial activities and find ways to create profitable business transactions. The use of innovative technologies such as data analytics and cloud computing solutions are used to transform traditional CAPEX model of buying to innovative OPEX model, where a shared cloud infrastructure is used across borders regardless of time or location on a "pay as you go" basis. With these new technologies, CFO's are able to drive business value for the organisations because of the effectiveness of shared resources, no upfront infrastructure costs and profits are guaranteed.
The challenges facing today's CFO's present a totally new financial environment which requires intelligence and flexibility in managing costs while innovatively remaining profitable. This means taking up a strategic leadership role that is accountable and willing to adapt to other markets conditions. It is this thinking that will help CFO's develop sustainable business opportunities with sound financial records. The new environment puts pressure on today's CFO's to constantly seek new ways to contribute to the organisations financial growth objectives and improve profits while ensuring effective management of costs.
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