In basic treasury trading, we learned that there are two key players: the price setter and price taker. Price takers often have no choice and therefore must accept the price setter’s price if they want to deal.
Suppose we apply this analogy to Gambia’s finance and accounting industry. In that case, we can ask: Is Gambia’s finance and accountancy industry a standard maker or a standard taker? Well, many of us can guess the answer without going to the mighty Google.
The Gambia is predominantly a standard taker. It means our finance and accounting industry does not set most of the standards we are following today. The standards are set by bodies outside the country, including regional and international bodies like the IFRS Foundation, World bank, IFAC, IPSASB or Parent company’s guidelines.
The Gambia is a standard taker; what does that have to do with the future finance leaders?
Yes, it does matter. It means Gambians who want to play a crucial role in the future of the finance and accounting industry must watch out for what is happening beyond the shores of our smiling coast. This observation is even more critical for those who aim to pursue international jobs or relocate and practice finance in the developed countries.
About fifteen years ago, most Gambian companies prepare their financial statements under the Generally Accepted Accounting Principles (GAAP) copied from the UK. Today our banks are using the International Financial Reporting Standard (IFRS), also from the UK. Similarly, corporate governance was not on the agenda for most Gambian companies, but today Gambians have started discussing corporate governance. All these developments began in the countries and regions that set the standard we follow. Therefore, future finance leaders must learn and understand how the industry and profession are evolving worldwide.
In this article, I have discussed three key areas that must be on the learning agenda of any finance professional in the Gambia or Sub-Saharan Africa in the next 3 to 5 years.
Three Subjects Future Finance Leaders must Understand
As the global industries undergo never-ending fast changes, finance professionals must learn the skills and abilities to help organizations sustain growth and compete in the relevant market.
1. Digital innovation
You should probably appreciate that the digitalization of finance functions is more of a science than fiction. Starting with robotic process automation (RPA), artificial intelligence (AI) to machine learning (ML), all the traditional finance functions can be possibly automated in the next 3 to 10 years horizon.
Therefore, we must plan to appreciate what these innovations bring for us and how we can grow with them. For instance, predictive analytics through machine learning can help us forecast revenue with more accuracy. Today, many companies in the Gambia prepare their budgets based on internal metrics and less consideration to the external data. However, with data analytics, we can learn the influence of many external factors like social media trends, airport traffics, the exchange rates on our revenue or cost numbers. We do not have to spend months preparing a budget that will probably be based on outdated assumptions. Similarly, blockchain technology will soon prepare and audit the financial statements, again with much more accuracy than humans.
The question for you is, do you have any idea how these innovations might impact your job?
2. Sustainability reporting or ESG.
ESG is an acronym for Environmental, Social and Governance. It is also called sustainability in many cases. In a business context, sustainability is about how the company’s products and services contribute to sustainable development.
Environmental factors refer to the company’s stewardship of the environment and focus on waste and pollution, resource depletion, greenhouse gas (GHG) emissions, deforestation, and climate change. Social factors focus on employee relations and diversity, working conditions, local communities, health and safety, conflict and people topics. Governance factors look at corporate policies and how a company is governed, including, executive remuneration, donations and political lobbying, corruption and bribery, and board diversity and structure.
Although, ESG reports are not commonly part of mandatory financial reporting in most countries. However, investors, academic and advocacy groups have asked businesses to think beyond profit for the management and shareholders. Investors are increasingly applying these non-financial performance indicators to identify material risks and growth opportunities as part of their analysis process.
Therefore, the global leaders and standard setters are pushing for more transparent reporting on ESG in the annual financial statements. In the past, most companies take simple donations as Corporate Social Responsibility (CSR). The Communication or PR department will write few statements in the annual report on CSR. The narrative has changed. Increasingly, regulators have asked some aspects of ESG to be reported and reviewed by external auditors.
In the UK, regulators have mandates reporting on ESG through the S172 report, Strategic Report, and Climate-related disclosures. Similarly, other international standards like the Global Reporting Initiative (GRI), Triple Bottom Line framework, TCFD and Integrated Reporting (IR), to name a few, have recommended more disclosure.
However, the IFRS Foundation, the big brother of international reporting, has joined the discussion and is moving at a fast pace. In April 2021, the IFRS Foundation published documents in relation to their project on sustainability-related reporting. One of the Exposure Drafts outlined the proposed targeted amendments to the IFRS Foundation Constitution to accommodate an International Sustainability Standards Board (ISSB) to set IFRS sustainability standards.
Whether you are prepared or not, ESG will soon be another task given to CFO and Finance heads.
3. Globalization and One Africa
We have often heard that the world is a global village as technology removes barriers and connect us more than ever before in human history. For Africa, we are also becoming more legally connected with the 2018 African Continental Free Trade Agreement (AfCFTA). Yes, this is one real movement that will impact all professions in Africa.
Again, my question is: what are the opportunities for finance and accounting professionals in the AfCFTA? Cross-border partnerships and collaborations with other firms to form joint ventures with other professionals in Africa are possibilities.
There will be easy mobility of labour and professional skills. Therefore, you can easily work in any country, and the other nationals can easily work in the Gambia. We will compete for the same jobs, contracts and bids.
Speaking multiple languages, understanding different cultures, and working as part of and managing diverse teams will eventually become as important as technical skills in recruitment decisions.
4. Other areas
The above three areas are not the only emerging topics Gambian finance professionals need to follow. Other areas include leadership with the changing demography, business partnering, commercial acumen, risk management, and ethics with AI leadership.
Finance professionals are expected to look beyond the numbers. We need to collaborate and partner with people in and outside the business; provide insight and information to help organisations achieve short-term goals and longer-term objectives. We cannot achieve such goals without thinking and behaving more strategically and become more involved in decision-making than before.
The global economic and business landscape is changing at an unprecedented speed. The factors reshaping these changes include digital innovation, climate change, resource scarcity, geopolitical conflict, demographical changes – to name but a few.
The complexity and interconnectedness of these factors make it impossible to anticipate precisely how these trends will evolve. However, finance professionals will always be expected to add value. Suppose you want to thrive and add value in the future. In that case, you must develop skills and competencies in areas the economies and organizations demand.
Those in and around the finance and accounting profession must be prepared to learn, unlearn, and learn again.
By Ebrima Sawaneh
President of FLF
Ebrima is an author, blogger and CFO.