CFO Survey- Part 3

Access to capital and African Growth

 

Given the current low repo rate, capital and funding has become significantly cheaper. This trend appears to be consistent across industry sectors and business size, although the construction industry and the financial sector still view capital as being too expensive. Only 36% of the CFOs feel that the cost of capital is too high with 45% being of the opinion that the cost is fair.

In addition to becoming cheaper it appears that capital has become a little easier to access for some, most notably large mining and retailing companies, with 77% of CFOs now believing that capital is readily available to their organisations. The construction sector is, however, still finding funding to be a real constraint to expansion and new projects, in spite of the overall better conditions reported by CFOs.

 

At the micro-economic level, concerns centred on industry regulation (46%), competitiveness (39%) and the skills shortage (50%). Larger companies (in excess of R20bn) find industry regulation consuming. The financial sector is overwhelmingly absorbed by the intensification of regulation which is threating to stymie the industry and could aggravate the rising the cost of doing business. For the mining industry, regulation is also a huge concern. This risk is supported by continuous discussion conducted mainly through the press on the subject of nationalisation with key stakeholders adopting seemingly different standpoints.

 

Expansion into Africa is seen as a key source of growth with 73% of companies indicating a move northwards and most of them planning to do so imminently. With its large, youthful population and forecast above-average growth rates, Africa is seen as the last frontier, particularly in the consumer sectors as well as infrastructure development. For some companies this is about achieving economies of scale and for others it means a dramatic extension to their markets. Within this trend there is a clear shift in attention to East and West Africa.

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Filed under: Executive Leadership, Finance, Capital, CFO, CFO Survey, expansion into Africa, Funding, regulation

Deloitte Human Capital Trends 2011 – Leading in a Regulated World

This is the sixth article in the Deloitte Human Capital Trends 2011 series, titled Leading in a Regulated World, All Risk, All the Time

Dodd-Frank, Basel II, IFRS, the Patient Protection and Affordable Care Act (PPACA). No matter what industry you’re in, regulation is an increasing part of the operating environment. And it’s only the tip of a broader risk iceberg. To be business advisors today, HR leaders have to understand this reality. Risk and regulatory issues are ultimately people issues.

Managing risk requires critical involvement from across the executive suite, and HR has a central role orchestrating these activities. Senior leadership is responsible for setting the tone at the top. IT is responsible for data privacy and information security. Finance is on the hook for financial controls. Business units are responsible for establishing controls to prevent fraud and money laundering. And HR is increasingly responsible for pulling together all of the people components. This integration is crucial. It involves making sure that the training, skills, knowledge, processes, controls, capabilities, and tools all come together in meaningful ways for employees across the enterprise.

HR leaders are especially well-positioned for this role, having long operated in a risk-aware environment. They understand the fundamentals of regulatory compliance and know how to help their organizations make the transformation from a reactive and siloed view of managing risk to a comprehensive and coordinated view in which every employee plays a role. This transformation requires significant cultural change, often including organizational redesign, new types of training, and a redefining of people’s roles, responsibilities, and goals. It means getting to the root causes of the challenges organizations face in meeting regulatory requirements. More importantly, it requires understanding the inherent risks facing the organization as well.

Businesses must get more aggressive and proactive about operating in an increasingly regulated environment. If you have any doubts, just ask your board. Perhaps more telling, ask your employees how confident they feel about understanding and following new rules. You might be surprised by the answers you receive.

Read the full article . . . . Leading in a Regulated World, All Risk, All the Time

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Filed under: Executive Leadership, Risk Management, Talent & Human Capital, Deloitte, managing risk, regulation, regulatory compliance, risk

Taking Control : Regulation, Governance, and Controls

Regaining the upper hand in the new world of regulation, governance, and controls. It’s hard to imagine a more challenging environment when it comes to regulation, governance, and controls than the one most organisations face today.

The dawn of the extended enterprise has resulted in a control environment that is increasingly complex, hard to understand, and difficult to manage. Acquisitions, disposals, restructuring. Today, anything is possible. At the same time, control-related projects are losing support as companies tighten their belts.

Read full article . . . . Taking Control – Regulation, Governance and Controls

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Filed under: Risk Management, controls, Deloitte, governance, regulation, risk