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We South Africans are sometimes are own harshest critics. We get angry when Nigeria surpasses us in economic power. And are irked at falling further THAN Mauritius in the WEF’s Global Competitive Table. But as this interview with Dennis Nally, global CEO of financial services firm PWC emphasised, stats only tell part of the story. You need to see the place, smell it and feel it, to know the truth. And 100 times out of 100, when a global corporate leader visits South Africa, they realise despite an impression given by the bald numbers, the country is still miles ahead of its African counterparts in what really matters. That’s not the surprise in this interview. Rather, it’s that PWC chose Johannesburg over the more usual destination of Cape Town – and left suitably impressed. – AH
ALEC HOGG: Well, from insights gained in Africa, PwC’s Chief Executive plays a big part in Davos. Every year I go along to the preview in Davos, which is the report that PricewaterhouseCoopers puts together. Dennis Nally is the gentleman who stands up there and tells the world’s media how CEOs are feeling about it. I asked him when he was in South Africa last week, about giving us some insight into PwC’s involvement on the Continent. He brought his top team here. It’s a fascinating interview. Stay with us and let’s just have a look.
DENNIS NALLY: We’ve been tracking the CEO’s comments now for 19 years. Last year was the 19th survey that we’ve done and the nice thing about it is you can actually track the progress. The way things have been trending and, of course, to a point the points of view coming around, and the opportunities here across the whole Continent of Africa, are just phenomenal. That’s one of the reasons why we wanted to have our Global Leadership Team here over the last couple of days; just to see, feel, and experience a little bit on the ground, of what’s really happening here.
ALEC HOGG: And in Johannesburg, and not Cape Town, where most people go?
DENNIS NALLY: That’s correct. No, we’re in Johannesburg and it was a good experience for all.
ALEC HOGG: More African in Johannesburg, than in, perhaps Cape Town. Well certainly, we think so, anyway.
DENNIS NALLY: Yes, absolutely.
ALEC HOGG: Very interesting though, the WEF’S Competitiveness Report has just come out, and South Africa, would you believe or I hope you do believe, ranks number one in the world, on the strength of auditing and reporting standards.
DENNIS NALLY: Yes, right.
ALEC HOGG: That’s got to say something to the operation that you have in this country.
DENNIS NALLY: Well, I think it says a lot about, and not just what the profession is doing but, more importantly, the seriousness for which Government, the standard setters, and the regulators, are placing on the whole standard setting process. Of course, as we all know, when investors are looking at places to invest – the opportunities – the whole issue around governance, standards, transparency, etcetera is a factor that investors are going to be looking at, so kudos to what was accomplished here. I think it’s a tremendous accomplishment to be number one in the world and it just shows the strength and emphasis that they place on that particular priority here.
ALEC HOGG: Chartered Accountants are also held with great esteem in this country, perhaps more so than other parts of the world.
DENNIS NALLY: Well, you know, it will sound self-serving but I actually believe the accountants auditing profession has a big role to play in ensuring the integrity of the capital markets. Particularly in the developing markets where governance mechanisms are just beginning to mature to say the least, our profession has a big role to play, to provide that confidence to the investor community, in terms of the reliability, the financial information, or statements that they’re going to be looking at, to make some pretty important and serious decisions.
ALEC HOGG: So we might be ahead of the curve here, putting our accountants on a pedestal, but the reason we asked you to come into our studio, was just to tell us a little bit more about your drive into Africa. Why is it, first of all, such a big priority to you?
DENNIS NALLY: Well, we started with some of the mega trends that are out there. We all know the significant shift in the economic environment, going from the developed world to the developing world that’s a fact. It’s huge. You look at the opportunities around the creation of significant of the middle class. The number of cities that will be developed across Africa, a million plus population over the next 25 years is phenomenal, so the urbanisation mega trend is huge, and that calls for a lot of the services, the types of things that we can really help our clients deal with, as they sort of navigate that growth agenda.
ALEC HOGG: How big are you here?
DENNIS NALLY: About 10.000 people across the whole of the Continent.
ALEC HOGG: How many professionals would be in that?
DENNIS NALLY: Mostly professionals.
ALEC HOGG: 10.000 professionals?
DENNIS NALLY: Exactly right.
ALEC HOGG: Trained in Africa, or elsewhere?
DENNIS NALLY: All over but a large percentage right here, in Africa, auditors, accountants, tax advisors, consultants, and across the board. The business here, across Africa, over the last three years, has grown about 40 percent in local currency, so it’s a big part of PwC and we would say, as we look at our firm, at our network, about 25 percent of our revenue today comes from the developing markets. Over the next five-years, we expect that to increase to about 40 percent. That shows you the shift that’s really taking place because that’s where the opportunities are. That’s where our clients are really experiencing growth, in their opportunities.
ALEC HOGG: Has the focus shifted a little from China and India, which was always right up front, to bringing Africa an opportunity now?
DENNIS NALLY: Well, I think it’s interesting. When we used to talk about the old Bricks, the traditional Bricks, you could typically talk about them in the context they’d all be moving in the same direction. Today, as we all know, when we look at Russia, we look at India, we look at Brazil, and China all are on very different growth trajectories, in terms of what’s going on with those economies. So as those economies begin to mature we expect to see differences, as they deal with some of the challenges, of continuing to expand the growth of their economies. Whereas if you look at Africa, and sure they’re going to have ups and downs, as we all know, but the long-term potential for sustained growth, across the Continent, is very, very significant and that’s what’s driving the growth, certainly at PwC anyway.
ALEC HOGG: You’re a global firm. You’ve got people that you can move around to different parts of the world, do you do that? Did you parachute in some of your top team to this Continent?
DENNIS NALLY: Absolutely, in fact that is one of the things that many of our clients are really looking for. They’re not as concerned about where the town is, or the location of that town, what they want is access. The best and brightest, to deal with some of their most important, strategic business challenges, so the mobility side of what we do is very important. Therefore, one of the challenges that we have to deal with, as you know, there’s different rules, regulations country by country, sometimes impede our ability to really move those kind of resources. That is one of the challenges but, quite frankly, we see it as an opportunity as well, as you can use more and more technology to deliver our services, interact with different people from different parts of the world. That at least helps deal with some of those regulatory challenges about mobility.
ALEC HOGG: In South Africa, we are seeing corporates moving more aggressively into other parts of the Continent, and it’s really started to accelerate in the last year to 18 months. Are you following them, say from the South African into other parts, or are you creating beachheads, no matter what the flow is from other sectors?
DENNIS NALLY: It would be both, quite frankly. When we look at our business here in Africa, we look at it as one, so we certainly manage it across the whole of the Continent and the reason for that is quite simple. As our clients move from one country to another country, we want to be able to service them in a very seamless way, so being able to move resources, making sure that we’re focused on the best opportunities, is really critical, so we actually look at all of our practice here, in the Continent, as one practice. It helps us deliver that seamless experience to our clients.
ALEC HOGG: Dennis, you said you brought your top team from all over the world to Johannesburg, for this past week to get together. What did they think?
DENNIS NALLY: Yes, well this is such a dynamic part of the world. One of the reasons we do this is really to allow the senior leaders from across the network, to experience firsthand, what actually is happening on the ground. You can read reports. You can watch the news. The dynamism of what is really happening on the ground, just gives you a totally new view of what the real opportunities are, and it’s exciting. The team left here last evening, feeling pretty energised about, not only the opportunities but also the need to continue to invest, in a very significant way to meet the needs of this marketplace and the needs of our clients.
ALEC HOGG: That was Dennis Nally. He’s the Global Chief Executive of PwC and he brought his whole top team here to South Africa, in fact, to Johannesburg last week where they came to see the attractions of the Golden City and to see firsthand, as he was telling us there, what’s going on in Africa.
You might have picked up this morning that the Woolworth’s share price is down by seven-point-three percent, quite a knock for a stock that has been very popular amongst investors recently. About a quarter of that is due to it going ex-dividend. It paid a dividend of R1.50. That goes ex-dividend today, so that’s knocked off the price but R6.00 down in all. We’re not quite sure what the reason is for that yet, but I’m sure that during the course of the day here on CNBC Africa, we will be able to find some insight into it for you.
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