Mr. Dikobe Ben Martins, Deputy Minister of Public Enterprises,
Mr. Tshediso Matona, Director-General,
Ms Raisibe Lepule, Deputy Director-General,
Mr Mafika Mkhwanazi, Chairperson of Transnet,
Mr. Peter Moyo, Chairsperson of the Audit Committee of the board of Transnet,
Mr. Brian Molefe, Transnet Group Chief Executive,
Mr. Victor Sekese and Ms. Nonkululeko Gobodo of Sizwe Ntsaluba Gobodo Inc.,
Mr. Andile Khumalo, President of the Association for the Advancement of Black Accountants in Southern Africa (ABASA),
Ladies and Gentlemen:
Thank you all for joining us this morning.
Last year the Association for the Advancement of Black Accountants of Southern Africa (ABASA) celebrated 25 years and I had the privilege to attend one of its receptions.
I must applaud the work that ABASA has done in the promotion of the interest of black accountants in general and assisting them to break down the barriers to entry.
I also had the privilege to deliberate with the accounting and auditing firms owned by previously disadvantaged individuals on the challenges faced by black professionals. I commend the courage and the frank nature in which the leaders of these firms addressed the issues facing them as a sector and commonly as black owned firms.
I learned that the firms faced significant barriers to entry in attracting work both from the private and public sector and yet I was pleased to learn that, this notwithstanding, they have maintained their resolve to enter the market, contribute their skills and grow into significant players in the accounting and auditing sector.
Our interactions with the auditing profession raised key issues on the role that the government, its companies and agencies can play in the transformation of professional services.
It is quite evident that we must take bold steps in implementing the transformation agenda.
The late Ms Stella Sigcau had pioneered the procurement of auditing services from black owned firms twinned with established international firms as early as the dawn of our freedom. Her model became the norm and provided fertile ground from which local, particularly black owned firms could germinate.
We must build from this.
As we approached the Annual General Meetings of the past Financial Year, I requested all the Boards of Directors of the State-Owned Companies (SOC) under the Portfolio overseen by the Department of Public Enterprises to review the progress we have made and to graduate the pace and level of transformation.
I asked that where firms were to be rotated, such rotation should be predicated on the government's transformation agenda.
I was glad to learn from Transnet, as one of our major SOCs in the country, that, after a rigorous process, it found Sizwe Ntsaluba Gobodo Inc to measure to the task. I am informed that the process was thorough and highly competitive and Sizwe Ntsaluba made the grade.
It is therefore my pleasure to announce that on 14 February 2012, in my capacity as the shareholder of Transnet SOC Limited, I accepted the recommendation of the Board of Directors of Transnet and appointed Sizwe Ntsaluba Gobodo Inc as the new external auditors for a period of 5 years at a value of more than R60 Million annually.
We wish them success in the execution of their mandate.
It is indeed a significant milestone in the history of the accounting and auditing profession as much as it is for the transformation of our procurement patterns. We encourage all our State-Owned Companies to implement and enforce with vigour the government's transformation legislation such as the Employment Equity Act, the Broad-Based Black Economic Empowerment Act in their procurement, particularly for professional services.
State-Owned Companies need to play an active and catalysing role in promoting transformation not only in the audit profession but also in law, engineering and management consultancies. They need to break down the barriers to entry to ensure that firms owned by previously disadvantaged individuals can have a platform to showcase their skills and that the white and international firms transform genuinely. Black professionals should be able to ply their trade in any historically white or international firm without any glass ceilings or limited development.
The transformation of the accounting industry remains a sore point in our democracy and society at large, as this sector is still dominated by whites (80.9%), with under-representation by Africans (3.7%) in particular. These statistics bear testimony to the fact that this is a sector that is struggling fully to transform, and it remains aloof to the dynamics of our social organisation as a country.Today’s announcement is a contribution towards changing the landscape of the sector.
Accountants add considerable value to business by driving down costs and identifying drivers of value and profitability. They are instrumental in obtaining access to finance and strengthening the balance sheet, and are the lifeblood to financial transparency.
In the next 5 to 10years, the demand for qualified accountants will increase in South Africa largely due to growth of industrial activities. The tougher trading climate will require financial insights that accountants can provide as well as tighter controls on spending that needs to be matched with greater creativity in generating income streams. Transnet is not immune to this and will draw from the valuable experience and expertise of Sizwe Ntsaluba Gobodo to be able to improve its balance sheet and meet its national obligations.
The appointment of Sizwe Ntsaluba Gobodo takes place during a critical time for Transnet when it is rolling out a Capital Expenditure (CAPEX) Programme worth R300bn to the economy, linking communities, towns, cities and provinces and creating sustainable economic development. We hope that the accounting firm will not only be focusing on number crunching for Transnet but will become a strategic business advisor and support Transnet in meeting their national objectives.
The type of portfolio that I manage is so diverse to an extent that the SOCs have a footprint in almost all the economic activities in South Africa touching lives of people in different ways –SOC’s are the lifeblood to this economy. This allows the Department to hold views in all aspects of this country’s economic life.
With the above narrative, I will not be making justice to the cause of social transformation and the need for the accounting sector to ensure its relevancy to the South African community if I did not make the following remarks that:
- The vision of the accounting sector code of growing the number of black people in the CA profession to reflect the country’s population demographics and to empower and enable them meaningfully to participate in and sustain the growth of the economy, in the process advancing equal opportunity and equitable income distribution will not be realised if young Africans in particular are not granted an opportunities at a schooling level to access good quality education in Maths, Accounting and Auditing;
- Transformation is not a linear process; it cannot be left to economic forces, because it builds the fibre of the nation and contributes to social stability. The demographic composition of the accounting sector does not reflect the population of South Africa. This has to change; and
- We are aware of the current initiatives at University level which seek to address the financial underinvestment in accounting studies in previously disadvantaged Universities and specific programmes in school located in peri-urban and rural schools is not sufficient given the demand in the market.
We also call on sector bodies to undertake an introspection on why there is such a high failure rate amongst black-owned start-ups firms in the market is discrimination and develop a response plan.
It would be amiss of me if I did not present a transformation programme to Sizwe NtsalubaGobodo so that they reciprocate what Transnet as done. We would like to invite you to adopt accounting departments in previously disadvantage universities, including students from rural schools, and implement hand-holding programmes for upcoming black accounting firms so that you offer them a lifeline and hope in the sector.
In conclusion, I wish to challenge and call upon corporate South Africa to join hands with the government and promote the companies and firms owned by previously disadvantaged individuals in their procurement of professional services. In that way, we shall deracialise the apartheid patterns of professional development and build a truly non-racial professional service in our society.
Again, I wish to congratulate Transnet on the bold and exemplary step. I wish Sizwe Ntsaluba Gobodo Inc all the success.
Thank you
