The factors behind many African businesses’ struggle to find their ideal finance officer
At almost any stage of a company’s growth, a key leader is the chief finance officer. Unfortunately, many East African companies struggle to find the right candidate for this position.
Businesses across the world are experiencing the same challenge. The 2008 global financial crisis, during which many major corporations collapsed, prompted business leaders to significantly broaden the scope of the CFO role.
While CFOs used to focus almost exclusively on managing the company’s finances, their responsibilities are now far more strategic. Deloitte Consulting recently reported that up to 75 percent of CFOs play a major role in steering the overall direction of the company. As a result, the ideal CFO candidate must bring a hugely diverse range of skills: detail-oriented but also strategic; systematic but also innovative; technically exceptional but also people-savvy.
Qahir Neky, investment manager at our client Catalyst Principal Partners, summarizes it this way: “For us, the ideal CFO candidate has three key attributes. First, versatility. He or she needs to think strategically but also be willing to roll up their sleeves and be hands on. Second is breadth of experience, including deep technical skills and knowledge of various topics including tax, financing, and systems. Finally, a CFO must be results-oriented, as the ability to deliver results within the finance function is often a key factor in the value creation process.”
Given that the expansion in CFO responsibilities has only happened recently, few have had time to earn the training and experience now expected. Even in Silicon Valley, there are only about 25 top-tier CFO candidates that every large or fast-growing high-tech company wants to hire, according to American recruitment firm Calibre One.
One Nairobi CEO told Kenyans Come Home that he had interviewed more than 30 CFO candidates from four continents before hiring someone. He found that candidates with a financial controller background were strong in compliance but weak in strategic management; candidates with an investment banking background were strong in dealmaking but lacked sufficient knowledge of systems and processes.
Unsurprisingly, the broad job scope and limited supply of strong candidates have pushed CFO salaries higher. Nowadays CFOs often receive the second-highest compensation in a company, behind only the CEO. According to research firm PayScale, the median annual salary for a CFO in Nairobi is about KES 5.9 million, though it can reach as high as KES 15.5 million.
Excellent CFO candidates, then, can be unaffordable for early-stage or small to medium enterprises. Start-ups may rely on equity packages to lure executives, but they may not always value stock options.
Despite this, the CFO remains an essential position to fill. According to Mbwana Alliy, managing partner of East Africa-based Savannah Fund, “If you need that talent now, you need that talent now.” He advises companies who are looking for a CFO to “engage a recruiting firm, have a clear job spec, and vet and screen.”
Since the average tenure of a CFO is around four years, Calibre One encourages businesses to hire the finance officer needed for the current stage of the company, someone who can get your venture to the next level of growth but not necessarily beyond that. This may make it easier to find someone whose incentives and ambitions align with that of the business.
Though they may be difficult to find, strong CFO candidates do exist in East Africa, and they’re certainly worth the effort. At Kenyans Come Home, we encourage companies to be persistent and to use the networks and resources available to them. If they do, they will, in time, find someone who is a great fit.