Essential CFO Skills and Competencies

By Renew Capital Marketing and Communications Team | Wed Dec 27 2023

There’s concern that the necessary skills and competencies to be an effective executive are lacking across Africa. PwC's 22nd Annual Global CEO Survey found that 87% of African business leaders reported concern about their skills. And almost half noted that they were “extremely concerned” about their executive’s abilities.

Helping people learn how to be a successful CFO is critical to developing an effective leadership team. For market building in Africa, these skills couldn't be more vital. Let’s explore what makes a good CFO and highlight competencies that can help them become more effective in their roles.

Why A Strong Management Team Is Essential for Business Growth

It's easy to think that a great idea and ample resources are enough to launch a successful business. In reality, a reliable and competent management team is just as important as having access to capital. For example, a study in Nigeria found that 80% of new businesses failed within their first five years – often due to management issues and a lack of leadership skills.

A solid executive team can effectively allocate resources, make informed decisions and create an environment of growth to help African businesses stay competitive and profitable.

What Is a CFO?

A chief financial officer (CFO) is a key member of the executive team responsible for the performance, operations and financial management of a company. They develop, analyze and interpret financial information to help leadership make strategic decisions that will improve the company's bottom line.

Key CFO goals include:

Developing financial plans, including budgets and forecasts
Analyzing the current and past performance of the organization
Ensuring that finance department operations comply with laws and regulations
Monitoring cash flow and other financial resources
Leading the selection, implementation and maintenance of financial software and related systems
Enhancing existing internal controls to ensure established procedures manage organizational assets
Providing leadership to the financial team by coaching, setting goals and assigning tasks or projects

Identifying and connecting with potential investors are among the most valuable CFO goals. When investors consider injecting capital into a venture, they look for the financial health of an organization. And they’ll often start that process by meeting with and evaluating the strength of the company's CFO.

What Makes a Good CFO? Core CFO Skills and Competencies

While the right CFO may vary from organization to organization, companies can look for certain qualities of a CFO that can help make someone successful in that role. Here are some of the key CFO traits an effective executive should have.

Ample Work Experience

What makes a good CFO? A CFO should have a significant amount of work experience to understand the complexities that accompany their role. Ideally, CFOs should have about 10 years of financial management experience and a track record of success in their field.

Strong Understanding of Industry Trends and Insights

A CFO handles the day-to-day operations of the finance and accounting departments, so they need a thorough understanding of their industry’s dynamics. They should be aware of market trends, customer demands, financial regulations and other external factors that could affect their organization’s performance.

For instance, a CFO in Africa should understand market building in Africa and how they can use current trends to reduce risk and increase profitability.

Forward-looking Strategic Thinking

The most effective CFOs understand their organization’s potential and use that knowledge to create long-term strategies. To do that, they should have a well-rounded approach to decision-making, weigh all options before committing, stay up-to-date on the latest financial trends and develop solutions for complex financial problems.

Extensive Professional Network

Someone who wants to know how to be a successful CFO will likely have a vast network of other financial professionals. This will allow them to gain insights into the latest developments in the industry, find potential partners and investors and create new growth opportunities.

Advisory Capabilities

CFOs advise the executive team, helping them make sound business decisions. They should be able to provide strategic guidance, assess risk versus reward scenarios and offer solutions for complex financial challenges.

Financial Forecasting Abilities

Having an eye for the future is essential for any CFO. They should be able to forecast financial metrics and create plans to help their organization reach its objectives. This skill set includes making accurate assumptions about potential risks, predicting sales cycles and analyzing budgets.

Excellent Leadership Skills

Finally, no team is served well by a CFO who doesn't inspire leadership. A great CFO should be able to motivate and direct the finance team, provide effective guidance when needed, delegate tasks effectively and foster collaboration across departments.

How to Be a Successful CFO

Finding someone with all the necessary CFO traits might seem like a tall order. But with focus and dedication, a good candidate can enhance their skills and gain the necessary qualities of a CFO. Here are various ways someone can increase their CFO skills and competencies.

Mentorship and Network Building

Building relationships with accomplished CFOs and finance professionals is a great way to gain new insights and develop desirable CFO traits. Attending conferences, joining professional networks and seeking mentorships can give someone an inside look at what it means to be a successful CFO.

Hands-on Experience

Experience is one of the best ways to learn and develop CFO skills and competencies. Investing time in taking on new responsibilities, mastering existing roles and researching market trends can help aspiring CFOs build a strong foundation.

Professional Development Programs

Professional development programs are a great way to sharpen skills. Online courses, certificate programs and in-person seminars provide invaluable resources and guidance that can take a CFO’s career to the next level.

Partner With Renew Capital to Support the Next Generation of African CFOs

CFO training and market building in Africa go hand in hand. Training is essential, but it's not enough on its own. It needs to be combined with ongoing market-building efforts to ensure that CFOs are prepared and able to tackle the challenges they‘ll face in Africa’s emerging markets.

At Renew Capital, our CFO100 program is supporting e CFO and finance managers across Africa. By participating in the CFO100 program, finance professionals can learn CFO skills and competencies that will prepare African companies to manage investment capital.