JSE company directors, CEOs and CFOs still white and male

OCTOBER 16, 2014

A survey of all 475 JSE-listed companies has revealed that South African company directors, CEOs and CFOs are still predominantly white and male – but indicates hopeful signs of transformation within the younger generation.

Specifically, this is as a result of young black CAs(SA) being appointed as directors below the age of 40.

Research into the qualifications and diversity of directors, CEOs and CFOs of JSE-listed companies was conducted by the South African Institute of Chartered Accountants (SAICA) earlier this year – for the first time encompassing all 475 companies listed on the JSE, rather than the Top 200 companies (by market capitalisation) surveyed in previous years.

Although this broadening of the sample base means that no meaningful comparisons between this and previous years’ results can be made, this year’s data on its own reveals a trend in racial and gender transformation that should boost optimism and business confidence.

CEO of SAICA Dr Terence Nombembe says “We surveyed all the companies listed on the JSE, there were 4 035 directorships in all, of which 1 025 – 23.8%– are held by Chartered Accountants South Africa [CAs(SA)].

That’s almost a quarter of the total; the CA(SA) is the most predominant business qualification represented. When we look at CFOs or financial directors, CAs(SA) constitute 74.3% – and 21% of CEOs or managing directors are CAs(SA). Almost two-thirds of the companies run by CAs(SA) are in fact in the Top 200, which to me implies that CAs(SA) are better than average at running companies.”

“Through the TBF, we now have hundreds of potential black CAs(SA) in the educational pipeline,” says Nombembe.

“If we analyse the racial split of directorships by age, we see that for directors under 40, white and black are almost at parity; whites predominate by barely a tenth of a per cent. For ages 41-50, whites outnumber blacks by a factor of two-and-a-half. But over the age of 51, there are five times as many white directors as black ones, and ten times as many in the over-61 age group. There’s a similar trend if you consider age and gender. Women – and black women in particular – fill a higher percentage of directorships in the under-50 age groups than they do among the over-50s. This is understandable – 20 years ago, there were very few black and/or female CAs(SA), so if we are rectifying that, we would expect it to start the improvement in the measures in the younger groups first.”

As gratified as he is that the statistics reflect the solid reputation of the CA(SA) designation, Nombembe is as interested in highlighting another trend revealed in the data.

“75% of directorships are still held by whites at present, and 87 percent by males – so obviously a lot of work still has to be done on transformation.”

“But if you look at gender and race together, it can be noted that 71% of these directorships are held by white males compared to 5% by white females – while 17% are held by black males versus 8% by black females, which are a lot closer. Clearly the gender gap is closing amongst black directors. And while on average CAs(SA) make up 23.8%of the directors, there is a higher percentage of CAs(SA) among female directors (28%) than among males (22%).”

Nombembe sees this as evidence that SAICA’s commitment to gender transformation of the profession, which was rolled out ten years ago, is beginning to bear fruit.

“We actually produce slightly more female than male CAs(SA) every year already. We’ve broken the back of the gender transformation issue at that level; it’s just a matter of time before these numbers reflect at the directorship, CFO and CEO levels” 

“It takes seven years to educate and train a CA(SA),” he says.

“We launched the Thuthuka Bursary Fund (TBF) in 2004 specifically to find disadvantaged African and Coloured learners with an aptitude for mathematics – we do tend to find more girls than boys – and support them on the path to studying a B.Comm. and qualifying as a CA(SA). The TBF does more than just pay for tuition, accommodation and books – we’ve realised that an urban university environment itself can be overwhelming for students from disadvantaged backgrounds; especially rural students. We have a system of mentoring and peer-support in place, so TBF students have this whole network to help them cope with the demands of university.”

The TBF is funded by donations from big business and government, with the later matching business donors rand for rand.

Dr Nombembe has no illusions – racial and gender inclusivity may be “better” when considering the percentage of younger directors, but it is nowhere near a reflection of the actual make-up of our population yet. But he believes the indications are encouraging, and believes that with the continued support of business and government, initiatives like the TBF can successfully transform the CA(SA) profession – and the JSE.

“There’s no point in discarding skills that people have spent 30 or 40 years mastering – purely because those people are white and male – until you have successors with the experience to replace them. As the growing number of black and/or female CAs(SA) mature, we expect to see the racial and gender mix of older directors – and CEOs and CFOs – change to reflect the country’s true demographics. It’s clear the CA(SA) profession is having an effect, and that we need to continue our efforts to create more black and female business leaders.”