Woolworths’ shareholders latched on to two of the most controversial issues in corporate governance when substantial numbers voted against the reappointment of the auditors and also against the remuneration policy at Wednesday’s annual general meeting.
Woolworths was one of the companies highlighted in the recent report by the Independent Regulatory Board for Auditors (Irba) addressing the need for auditor rotation. According to the report, EY has been auditing Woolworths for 84 years.
The regulator is calling for change and has recommended mandatory rotation of audit firms every 10 years.
The reappointment of auditors happens through an ordinary resolution requiring support from at least 50% of shareholders — the 18.6% is far off achieving any change. But it marks a significant departure from previous years when the resolution was guaranteed support from 99% of shareholders.
Irba CEO Bernard Agulhas said on Thursday the greater public discussion around auditor rotation has raised awareness around independence of auditors “and will go a long way in ensuring that auditor independence is strengthened”.
EY is one of the big four global audit firms which together audit 95% of the world’s 500 largest companies. The others are PwC, Deloitte and KPMG.
The Irba, which revealed that EY audits 14% of JSE-listed companies, is concerned about a perceived lack of independence. It found that with 25% of listed companies the chairmen of the audit committees had previously worked for the external auditors. At Woolworths only one of the board members had had a relationship with EY. Zarina Bassa, who is a member of the audit committee, was a partner at EY up to 2002.
On the remuneration front, a hefty 30.1% of shareholders voted against the remuneration policy. This is a record level of opposition from Woolworths’ shareholders and reflects concerns about the steady upward movement in executive remuneration at a time when the share price performance has been weak.
For financial 2016, CEO Ian Moir received total remuneration of R53.7m, up from R49.2m in 2015. The share price has been on a downward trajectory for most of 2016 and is at levels last seen in early 2014.
The remuneration levels also look inappropriately generous in the context of the grim trading update released recently. It showed that no section of the group — food, clothing, Australia, SA — had escaped the effects of the weak trading conditions.
Following the update, few shareholders are expecting to see any real growth in sales or earnings in the interim period.
The weak performance of the Australian operation was particularly disappointing given the steep price paid for it just two years ago.
At Woolworths’ 2013 AGM the remuneration policy got a 25.8% negative vote. In the following two years support surged to more than 90%.
The remuneration vote is nonbinding, but this year’s result could see Woolworths formally engaging with its shareholders to determine the reasons for their dissent and then disclosing details of that engagement.
Such dialogue is a requirement of King IV, which states if 25% or more of shareholders vote against remuneration policy an engagement process must be undertaken.
A Woolworths spokesman said the board supported King IV’s recommendations, and there was dialogue with shareholders. It would “continue to engage with them to understand their concerns and objections”.
Exploring a new model for cooperation between business and society- Nonny Ugboma
Nonny Ugboma is the Executive Secretary of the MTN Foundation (Image source: Nonny Ugboma)
The hand-me-down capitalism models Africa inherited from her colonial masters have failed to yield a prosperous continent despite its vast resources. Therefore, Africa is in desperate need of something different that takes into consideration its unique history, qualities, and context.
Experts have mostly seen the interdependence of businesses and society as transactional, with the society needing business for products and services, for jobs, for government taxes revenues. In turn, business needs the society for the market, sales and profits and public infrastructure, security and the rule of law! According to Amaeshi (2019) businesses, though sympathetic to societal challenges, are reluctant to act positively through their companies as they sometimes see such requests as irrelevant to their objectives.
However, due to the interdependency and interconnectedness of business and society, companies must work collaboratively with the government for a common purpose. That purpose is to build local resources.
There have been calls for western economies to rethink their capitalism model (Jacobs & Mazzucato, 2016). There have also been calls for Africa to develop its model of capitalism, with theorists and entrepreneurs exploring ideas like Africapitalism (Amaeshi, 2015). Africapitalism, coined by Nigerian entrepreneur Tony Elumelu, focuses on the role of business leaders, investors, and entrepreneurs on the continent’s development to create economic prosperity and social wealth. It rests on the following four pillars: a sense of progress and prosperity; the sense of parity and inclusion; a sense of peace and harmony; and a sense of place and belongingness.
Africa does need its model. However, I would argue that this model should be spearheaded by the state in collaboration with willing stakeholders in the private sector and third sector, unlike Africapitalism. A government-led push is especially relevant now that a few 21st century economists are reassessing and rethinking capitalism in its present form. One of such critics is UCL’s Mazzucato (2018) The Entrepreneurial State: Debunking Public vs Private Sector Myths who debunks the mainstream neo-classical narrative that the private sector alone drives innovation but takes the position that the state is the driver of innovation.
Mission-Oriented Innovation Approach (MOIA) could help address some of the identified gaps to ensure state and business work jointly to solve grand challenges, to co-create public value and co-shape a robust and sustainable society that it can bequeath to future generations.
There is, therefore, a need for an alternative model of collaboration for business, society and government. A suggested way forward for Nigeria, and indeed Africa, is to embrace a mission-oriented innovation approach. The concept of the mission-oriented approach that involves government co-creating and co-shaping the market with the private and third sectors has enormous potential for Africa. The four pillars of ROAR, developed by Mariana Mazzucato (2016), is a useful tool-set to anchor MOIA in Africa:
1. Routes and directions– Government and Public institutions and agencies to set
missions. Also, private sector leaders can nudge government agencies to agree to
work collaboratively on national priority areas.
2. Organisational Capacity– Building of dynamic Capabilities within the Public sector through advocacy, capacity building, conferences and training.
3. Assessment and evaluation– Agencies, academia and organisations to determine new
dynamic tools to assess public policies to create new models and markets.
4. Risks and rewards– Government and private organisations need to engage on the
best risks and rewards sharing formats from initiatives to ensure smart, inclusive and
In conclusion, as Western Economies are reviewing and rethinking capitalism and their operating models, Africa must ensure she does the same. The reason is that the future of the development of the continent depends on the economic model that it chooses to adopt, in the future, especially with the growing youthful population.
Aurthor: Nonny Ugboma is the Executive Secretary of the MTN Foundation and has recently returned from one-year Sabbatical studying for a master’s degree in Public Administration from the University of London Institute for innovation and Public Purpose.
SAVCA Appoints Lelo Rantloane As It’s New Board Chairman
SAVCA Chairman (2020-2021) and CEO of At Capital, Lelo Rantloane ( Image credit: SAVCA).
The board of directors of the Southern African Venture Capital and Private Equity Association (SAVCA) is pleased to announce the appointment of Lelo Rantloane as its new chairman.
Rantloane, who is the founding CEO of Ata Capital, takes up the position after serving on the SAVCA board for 5 years. He has significant investment banking and private equity experience. Rantloane replaces Craig Dreyer, the former Chief Financial Officer at Ethos Private Equity, who stepped down as Chair in September 2020.
“It is an honour to serve the Southern African private equity community through a strong, established platform such as SAVCA. As an industry body, it has been successful in promoting the asset class and investment opportunities in the Southern African region among local and foreign investors and the business community. There is, however, still substantial work to do, particularly during the post-Covid era and I look forward to the challenge,” says Rantloane.
Rantloane was the former Head of Debt Capital Markets at Deutsche Bank AG’s Johannesburg Branch. Starting off his career with Rand Merchant Bank (RMB) as a Transactor in Debt Capital Markets, he later became a Transactor in Acquisition and Leveraged Finance where he focused specifically on private equity firms, providing debt and quasi-equity structuring and financing solutions for their acquisitions. He also served as Executive Assistant to the CEO of the FirstRand group and worked for Morgan Stanley’s Securitised Product Group in London. Rantloane holds an honours degree in Civil Engineering from the University of Cape Town and the designation of Financial Risk Manager from the Global Association of Risk Professionals.
“Rantloane is a seasoned practitioner in our industry and SAVCA is privileged to benefit from his leadership skills and investment experience,” says Tanya van Lill, CEO of SAVCA.
Issued by: SAVCA
World Food Day: Jumia Launches the Africa Food Index 2020
Ahead of World Food Day on 16th October, Jumia has published its 1st Africa Food Index showing the impact of COVID-19 on food trends in Africa. Online food delivery is changing habits in unexpected ways for businesses and consumers due to the pandemic. The growing popularity of fast food, coupled with the growing trends for convenience and value for money, have opened up opportunities for the food market in Africa.
According to the Africa Development Bank, the continent’s US$ 313 billion food and beverage market is projected to reach US$ 1 trillion by 2030. This projection offers the prospect of increased jobs, greater prosperity, reduced hunger and improved opportunities for African farmers and entrepreneurs to participate in the global economy.
Over the last three years, Africa’s growing online audience has seen an increase in international brands setting up shop to tap into the growing middle-income segment. Direct investment from players such as KFC, McDonalds, Burger King have been achieved. Online food delivery players such as Jumia have also played a key role in shaping supply chains and opening up the markets to new entrants. Local producers and restaurants have embraced this evolution and reached new consumers as well as grown their businesses in spite of these challenging times.
“This pandemic crisis has shown the world that online food delivery is not just a commodity, but a necessity. The food business adapted quickly to the new normal, by availing contactless and cashless deliveries » said Shreenal Ruparelia Chief Commercial Officer, Jumia Food. « We also started to provide support to local food vendors to keep their businesses running during this difficult time.” With our food partners, we will continue to deploy capabilities across the food value chain to ensure consumers buy food online safely and at the right price, in line with the theme of this year’s World Food Day celebration of Grow, Nourish, Sustain Together” added Shreenal.
The report highlighted two major drivers of the growth observed in 2020: demography and the Covid19 lockdowns. With a growing population averaging 18 years old, a new generation of African middle class consumers are spending more money online on food and grocery services, while the lockdowns induced by the Covid19 pandemic also contributed to this evolution in habits.
Overall, grocery retailing continues to expand, as consumers seek comfort and convenience when shopping for food. The report shows that while Quick Service Restaurants (QSR) are popular, Lagos and Nairobi lead as the largest cities with the volume of online food orders.
International institutions like the United Nations Development Program (UNDP), International Quick Service Restaurants such as KFC and local brands like Tunisian Al Jazeera Olive Oils have contributed to the Africa Food Index, based on Jumia data and external data from different institutions.
Please find the report here
Source: Jumia Food