Sizwe Nxasana: CEOs shouldn’t be in position for more than 10 years

2015-03-15 16:00

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Sizwe Nxasana, outgoing chief executive officer of financial services group FirstRand, is not planning to linger in the “retirement life” for very long.

During an interview with City Press in Cape Town, Nxasana says he plans to move into new office premises the week after he steps down from his post.

“My wife is moving her office premises from Melrose Arch and I plan to move in there when she leaves,” he says.

His wife is Dr Judy Dlamini, a success in her own right, who has a proven track record in business with investment company Mbekani Group and is currently chairperson of pharmaceutical company Aspen.

Since Nxasana announced that he would let go of the reins at FirstRand, there has been speculation about the reason behind his planned exit.

“I’ve always believed it’s not a good idea for CEOs to spend time in positions for more than 10 years.

“Whether you like it or not, the organisation ends up doing things based on you and it’s important for companies to reinvent themselves. [Also] for my own personal growth and development, and to challenge myself, I need to move out of my comfort zone,” Nxasana explains.

His dynamic professional life could be seen as a testament to this philosophy.

After qualifying as a chartered accountant (CA), a profession he says he found by luck after meeting Wiseman Nkuhlu (the first black African to become a CA) at Fort Hare University, he eventually ended up as chief financial officer at SA Sugar Distributors.

He was very comfortable there until he noticed that the emerging black professionals of the day were underserved by predominantly white accounting firms.And that’s when he decided to leave the comfort of a secure job and start his own accounting firm called Sizwe & Co in 1989 to fill that gap.

Around 1996, his company merged with two other black accounting firms, Nkonki and Ntsaluba.

“We all studied together, and we saw an opportunity to merge and it made a lot of business sense to have scale,” he says.But he was managing partner at the firm for about three years before restlessness set in.

“We were doing well. We had more than 350 professionals and it was really good and [we were] starting to get work from the private sector.“But all I could think about was: What’s next for me? And so I had a meeting with the partners, talked to my wife and I decided to leave.

I had no idea where I was going to go,” he adds.After leaving the firm and while deciding on his next move, Nxasana happened to see an advert in a Sunday newspaper for a CEO position at fixed-line and telecommunications operator Telkom.

“At first I didn’t pay much attention to it, but then I ran into a friend on a flight to Durban and he also happened to mention it and said I should apply.”

Nxasana decided to apply and got the job in 1998. Even though he knew very little about the telecommunications industry, he was at the helm of what was arguably Telkom’s golden era.

“It was very fulfilling and we had just taken Telkom from the Post Office and government had a plan. Preparing the company for the listing was also quite exciting,” he recalls. After eight years at Telkom, he decided to leave – with every intention of making a go of starting his own business venture.

But he was then approached by management at FirstRand to become a nonexecutive director at the bank.

“I knew the founders of FirstRand, Paul Harris and them from my Sizwe & Co days, and they invited me to serve as a nonexecutive director of the board.”

And when Harris stepped down as CEO of FirstRand, Nxasana took over. It was hailed as a great step for transformation at the time.

Nxasana dismisses comments that his exit from FirstRand now is a step back for transformation. Johan Burger, his deputy, will take over from him.

“The appointment of Burger as CEO is right for the bank and he has the right skills. He was my deputy for many years.

“We have made significant progress in driving transformation in the group – 47% of top leadership is black, with a significant number of women.

“We have quite a few women who are heads of divisions. At FNB, 50% of the executive committee is black. At WesBank 40% of top executives are black,” Nxasana says.

He says it is important to look at transformation not just at CEO level. The pipeline is equally important.

“If we increase the pipeline, then transformation will happen. We are not where we should be and have a long way to go before we transform the economy.”

He is confident that FirstRand will continue its transformation drive, even after his departure.

Nxasana is leaving the bank onahigh, having grown the company both in terms of market capitalisation on the JSE and also in earnings.

When Harris, the previous CEO of FirstRand left in 2009, the company’s normalised earnings were R5.7?billion.

In 2014, the full-year normalised earnings were about R18.6?billion. Unaudited interim results released this week by the company show a continuation of FirstRand’s growth streak, reporting a 15% increase in half-year normalised earnings to R9.9?billion.

Nxasana says FirstRand is looking to grow its life insurance arm.

It lost some capacity when it unbundled Momentum Insurance in 2010. The company recently received a life insurance licence and Nxasana is not fazed by the competition in that industry – believing that the most innovative will be the winner.

“There are many opportunities in the life insurance industry.

We already generate R1?billion from insurance. And there is space for us, given the way we serve our customers,” he says.

Despite FirstRand receiving regulatory approvals to expand to India, Nxasana says the bank is not seeking to be a global company yet.

“There is still space for a regional bank in Africa.“India is a very important trade partner and the focus is on creating a trade corridor between India and the sub-Saharan [part of the] continent.

We are aiming for the middle and bottom end of the strata, as part of driving financial inclusion. “We’ve taken lessons we learnt in India and used them in how we approached other areas like Zambia, for example.”

FirstRand hasn’t been excluded from the effects of a poor economic climate, high unemployment and consumers who are finding it increasingly difficult to keep up with debt payments.“There has been an increase in people battling to pay their loans.

We certainly see that in our nonperforming loans, and the loans we are writing off are starting to increase, but we are still below where we were in 2009 and 2010.

“We are careful in how we grant loans. Interest rates have remained low for much longer than we expected and with the benefit that has come from the fall in petrol, diesel and paraffin prices, it may allow people to pay off their debts.”

Nxasana says he will miss the people he worked with the most, after he leaves.He is looking forward to growing his family foundation and charities he is involved with, including the Thuthuka Bursary Fund and the National Education Collaboration Trust.

On a more personal level, he is also looking forward to his daughter’s wedding later in the year.

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