Having a commercial and strategy background enabled Peter Ndegwa to be a different finance leader than a typical CFO. Being in a number of functions before becoming head of Safaricom was also very useful in his transition to CEO.
Peter Ndegwa has been Group CEO of East Africa’s biggest company Safaricom since 1 April 2020. Prior to that, he was responsible for Diageo's operations in 50 countries in Western and Eastern Europe, Russia, the Middle East, and North Africa regions.
Peter also served for eight years across a range of senior executive director roles at East Africa Breweries Limited including CFO, group strategy director and sales director.
"I am an alumnus of the CFOs group and you should therefore invite me to future CFO East Africa events!" he jokes.
Having a commercial and strategy background enabled Peter to be a different finance leader than a typical CFO. Being in a number of functions before becoming head of Safaricom was also very useful in his transition to CEO.
"When I ran Guinness Ghana, I was advised not to become a functional head. Recruit people to head functions and let them do the jobs they are hired to do. I will therefore always recruit a great CFO and likewise CFOs need to place a special focus on recruiting great finance managers," he advises.
Time to think differently
As a CEO, Peter finds that the CFO role is the role that he relies on the most. It is the one that enables him to sleep better. He believes that the role is evolving from a finance role to a more strategic role.
"The world is changing with the war in Ukraine and in the Middle East. Prior to that, there was COVID and for those of us in technology, it is disrupting value chains and how we interact as people. When COVID was declared, we were not comfortable with Zoom and now it is a way of life. At Safaricom, our M-Pesa agents have doubled since the pandemic and merchants using M-Pesa have almost quadrupled," he reveals.
Peter observes that everyone is starting to utilise the internet a lot more so CFOs have to think differently. If the way customers are interacting with the business has changed, then finance heads need to alter their thinking from a time when there was a lot more predictability. CFOs need to think about what skills they need to be effective in this new age.
"At Safaricom, we are using big data to do credit scoring and this now sits under the CFO's role. Customer demands are evolving making pricing difficult because you cannot pass all the costs down to your customers which was previously the natural thing for CFOs to recommend to the business. Customers are resisting price increases so CFOs need to be creative when making suggestions about absorbing cost increases," he explains.
Finance leaders need to think global and act local. The issues affecting East Africans are global, but Peter asserts that the execution and strategy has to be local which requires agility.
At Safaricom, they have responded to this by combining their commercial and technical arms together instead of having different departments
Cybersecurity and ESG
"Cybersecurity and ESG are issues affecting CEOs and if the CEO is worrying about an issue, the first person they will go to is the CFO and the CFOs better have answers. Given that the CEO role is much more difficult, there is an expectation for functional heads, including CFOs, to step up and support them," he says.
"A CFO is a strategic and trusted advisor. The CEO will often ask the CFO for advice and the CFO likewise needs to express his discomfort about certain decisions. The CFO position is not the one to be in if you want to win a popularity contest. You have to tell the CEO the truth because CFOs are still the brakes when the vehicle is speeding too fast," he adds.
As a CEO, Peter wants his CFO to hold the organisation to account but still have some commercial flair. They need to learn to be comfortable with taking risk and swinging out because innovation is no longer the preserve of the marketing department.
CFOs need to be comfortable about being business leaders and not just heads of finance.
That said, Peter cautions that the CFO should still be comfortable with their core focus, which is financial and risk management. There are multiple risks in East Africa today and the CFO needs to be much more dynamic in how they contribute to the leadership of the business.
They should remain calm heads but avoid slowing down the business.
Pragmatism and flair
"I challenge CFOs to have a good team below them so that they can be freed up to think. Be pragmatic, use your flair side more than your technical side because you can always hire technicians. When I see CFOs doing the finance job, then I know they don’t have the right talent underneath. Your team needs to comprise dynamic, technologically-savvy and commercially-minded people. Consider moving your team to both supply and sales roles in order to teach them about the business," he advises.
Peter observes that when the CEO is away, the CFO acts as interim CEO, which indicates the level of trust that there is in the CFO position. CFOs should therefore not underestimate transitioning to new roles. This helps train them to listen and learn new crafts because "when you are in an area you don’t know like sales, you listen a lot more than when you are in your finance stronghold".
Finally, Peter states that CFOs have the authority to expand their spaces as much as they want. "When they notice an area of the business is not being run properly, they can bring it under their wing," he concludes.