Are you ready to diversify your SA Sovereign Risk? Let The CFO Centre help

I bet you noticed a renewed surge of South Africans looking to emigrate, just as Covid hit. It was early 2020. In response, the hashtag #Iamstaying started trending but it would be another five months before Jarette Petzer saw the need to change the slogan and start the Move1Million movement. As it happened #everyonewasstaying, whether they wanted to or not.

It’s ironic then, that with all the disruption and loss caused by the virus, one unintended positive consequence of lock down would be the stemming of the brain-drain tide, the staunching of the exodus of skills and investment abroad. Who knows if the next wave of ‘Perth Packings’ has been averted for good or merely delayed. What we do know is that the uncertainty surrounding the easing of restrictions or the opening of borders, has not abated. Most have discarded their hopes for 2020 as a productive year and are aiming their expectant but weary sights toward 2021.

 

So! Green shoots and silver linings. In another optimistic development born out of the chaos, it has dawned on some of us, with gradual awareness, that Covid has given South Africans innovative new tools and fresh motivation to expand their horizons, develop multi-jurisdictional strategies to manage risk, protect existing revenue streams and develop sustainable new markets abroad. Who would have thought – out of quarantine comes emancipation – sans frontiers.

 

Back in the present, The CFO Centre continues to field a steady stream of enquiries around exit strategies for mid-sized businesses. The reasons for these divestments are many and varied – several owners are feeling the liquidity crunch caused by Covid and are bending under a heavy debt burden. Selling has become the easiest and least painful option.  Others are wanting to finally implement that BEE deal they have been putting off, and in so doing realise a portion of their hard earned retained income; a welcome distribution to shareholders that can be siphoned offshore to keep options firmly open. Still others simply can no longer continue to resist the easy comforts of a steady job and a regular pay cheque.

Entrepreneurs are smart – they did not fail to notice the effortless confidence of the corporate yuppies who eagerly swapped their suits and briefcases for sweats and webcams. Sitting at home for months on end in perpetual paid leave bliss, like suspended politicians. We jealously watched them making pillow forts with their kids and occasionally chatting pantlessly on zoom. By contrast, the stressed out business owners desperately tried to pivot their businesses, dive, survive, submit UIF relief claims for their employees, arrange debt relief and payment deferrals and watch helplessly as their bank balance imitated an hourglass. It’s rough in Africa, for some.

 

Well, reasons may vary, but the one constant for all these businesses remains a certain line item in their Annual Directors Report or SWOT analysis. It sits there like the proverbial sore thumb in both the Weaknesses and Threats sections. It goes by different names such as Political Risk or Economic Downturn. It stems from systemic underinvestment, structurally high unemployment, growing income disparity, corruption and crime. It is the South African economy in spreading, seeping decline. These businesspeople didn’t put it there, they are not to blame, and they can’t fix it. It is insidious and beyond the control of the average citizen but they are forced to listen for it constantly, like a baby monitor for a fevered prem.

We have found that increasingly, this malaise provokes the entrepreneur into action, often rash action, that can lead to poorly devised and executed corporate activity or ambitious emigration pathways.  Impulsive and emotional decision-making has been known to decimate long held investments and collective wealth, leaving individuals without sustainable income streams and families stranded and separated from their loved ones.

 

But it doesn’t have to be that way and help is at hand. The good news is that Covid has taught us new, useful and relevant skills. It has given us the webinar and the live event, the online conference and the virtual interview. It has shown us all how to reach out electronically, how to engage with experts on different continents and in different time zones. It has helped us understand how to build networks for common interests and solutions to common problems, how to create virtual support systems, express our concerns, allay our fears.

And so, it was that the pandemic helped The CFO Centre to see what was right in front of us all along. We came to realise that we have a unique set of strengths and capabilities – our global footprint, that allows us to provide distinctive advice and meaningful facilitation to those clients particularly interested in diversifying their product offerings or services into other countries. It has given us a ‘virtual toolbox’ for South Africans to work on their concentration risk problem. And it is good.

 

How does it Work? Thanks for asking, it’s a Treasure Map. The CFO Centre Group has offices in 92 locations, across 18 countries and 5 continents. There are over 600 of us worldwide, mostly CA’s, with a wide range of leading-edge sector experience and specialist knowledge. We have a mature presence in all the countries that South Africans traditionally expand into such as the UK, US, Europe, Australia, Canada, New Zealand, China, India and many more. The South African chapter of The CFO Centre has recently opened satellite offices in Ghana, Uganda and Mozambique and is looking to develop its capacity across the continent. It is a formidable team of business professionals in all corners of the globe and that’s not to mention our extension distribution partner network in each country. We might not have quite the same reach as the big four audit firms, but we are embedded in your business, we know the practical steps required to implement a global strategy and we have the business model to make the journey manageable and affordable, honestly.

 

Why now? Many countries on our radar have invigorated their investment and business incentives to attract foreign investment in an effort to stimulate their economies since Covid. For example, Mauritius has halved its minimum investment required to acquire an occupation permit as an investor from $100,000 to $50,000.

Australia is also focused on attracting migrants able to stimulate their economy and have seven streams available to emigrate as an investor or entrepreneur, with the lowest minimum investment for Permanent Residency of $595,000. It is also rumoured that the country is drawing up plans to shake up their investor visa requirements even further.

Canada, another popular destination, is widely believed to be one of the ten easiest countries to start a business in and has a Start Up Visa Program requiring you to provide investment and support from as little as $275,000.

In short, there has never been a better time to begin your journey to establishing a new operation of your business in a foreign jurisdiction.

Perhaps you would like us to arrange for one of our Part Time CFO’s in Auckland to set up a Zoom call with some of his agri processing clients in the dairy sector. Maybe you are interested in Hedge Fund investors in Singapore or Hong Kong. Perhaps you have a small but growing leather accessory business in Cape Town and would like to explore distribution channels in Milan.

Or maybe you are interested in acquiring a fast-food franchise in Mumbai and don’t know who to speak to…

Well, now you do.

 

Written by Walter Staffetius, Regional Director of Gauteng East at The CFO Centre.