Steven Firer
IFRS Specialist Consultant for Kreston SA, South Africa
Steven is Research Fellow at the University of the Free State in the School of Accountancy. Steven is the author of several accredited journal articles. His research interests are audit fees, mandatory audit firm rotation and audit reform. Steven has five degrees and qualified as a Chartered Accountant in 1987 after serving 2 years in the South African Air Force. Steven played 7 test matches for the South African indoor soccer team. He was previously a professor at Rhodes University, University of the Witwatersrand and Monash University. He obtained his doctorate in business administration from the University of Kwazulu Natal in 2003.
Risk management in South Africa: A tool for sustainable growth
May 1, 2024
Risk management in South Africa is the ideal tool for sustainable growth in the region, says IFRS Specialist Consultant for Kreston SA Steven Firer.
South Africa has its own unique challenges to growth and if businesses want to thrive, they need to stop following the latest trends and focus on what it takes to survive in South Africa.
South African economic outlook
South Africa, despite all its resources, is continuing to be a difficult business environment. The latest fears are that if the South African Reserve Bank (SARB) maintains its high-interest rates, the country could experience a recession. South Africa’s economy is grappling with low economic growth and a weakening rand. Investment is slowing – the Johannesburg Stock Exchange has seen a decline in foreign participation over the past five years.
While it is tempting to look at what firms are doing in other countries, Steven Firer (job title) of Kreston SA, warns that local firms need to focus on the trading conditions of South Africa and divert the bulk of their resources to managing them.
‘South Africa’s economy is not slowing down, it is barely surviving,’ said Firer. ‘We have corruption, no electricity, and incompetence. South Africa compared to the rest of the world has different priorities. We have to rid ourselves of corruption, fraud, and incompetency. We have too many reporting rules and regulations in a country that has very few skills.’
Mitigating risk
Many of the growth areas that accounting and consultancy firms are looking to capitalise on in other parts of the world simply do not apply to South Africa. For instance, Firer pointed out that local companies are delisting from the Stock Exchange as there are simply too many rules and regulations to keep abreast of.
‘For South African companies navigating the landscape of 2024, several key considerations should be at the forefront of their strategic planning, especially given the challenges posed by corruption and competency issues within the country,’ said Firer. ‘These considerations can help companies mitigate risks, capitalise on opportunities, and foster sustainable growth in a complex environment.’
Top of the list should be robust governance and compliance frameworks. ‘Implementing strong governance and compliance structures is paramount,’ said Firer. ‘This involves establishing clear policies and procedures that comply with local and international standards to prevent corrupt practices and ensure ethical business operations.’
Risk management
In terms of risk management, developing a comprehensive risk management strategy that specifically addresses corruption and operational risks is essential for South African firms. This involves regular risk assessments, the establishment of internal controls, and the adoption of best practices in risk mitigation.
A priority for any firm looking to make a wise investment for its funds over the coming year is in its own staff. ‘Addressing competency issues by investing in employee development, training, and retention strategies is crucial,’ said Firer. ‘Building a skilled and motivated workforce can enhance efficiency, innovation, and resilience against external challenges.’
Employee relations
Improving communication and building relationships with stakeholders and outside organisations is the best thing South African companies can do if they want to build a reputation of trust and credibility in such a difficult environment.
Firer advises companies to prioritise transparency in their operations and decision-making processes. This includes open communication with stakeholders and the implementation of transparent reporting practices to build trust and credibility.
‘Embracing technological solutions can help mitigate the impact of corruption and incompetencies,’ he said. ‘Technologies such as blockchain can offer greater transparency in transactions, while automation and AI can improve operational efficiencies and reduce human error.’
Regulatory bodies
As previously mentioned, South Africa has a lot of rules and regulations and a shortage of professionals who can keep up with them all. Maintaining a proactive relationship with regulatory bodies and staying abreast of changes in legislation and compliance requirements is vital. This includes engaging in dialogue with regulators to understand expectations and to influence policy development positively.
CSR critical in differentiation
If companies want to stand out from the crowd, they cannot afford to neglect their corporate social responsibility (CSR). ‘Adopting a strong CSR approach and demonstrating ethical leadership can differentiate a company in a challenging market,’ said Firer. ‘This involves committing to social and environmental responsibility, which can improve reputation and stakeholder relations.’
Collaboration, communication and focusing strongly on their own market is the only way South African companies are going to thrive in a very difficult environment.
If you would like to speak to one of our risk management experts in South Africa, please get in touch.
