If Kenya is to fulfil its undoubted potential, the public and private sectors must make fuller use of the core skills of professional accountants, says an ACCA report
This article was first published in the October 2018 Africa edition of Accounting and Business magazine.
Kenya, the largest economy in East Africa, is one of the continent’s success stories. GDP in 2016 hit US$70.5bn and is growing at a rate of 5.8% a year. The World Bank, while acknowledging that the country has major challenges to address around poverty, inequality and governance, is bullish on Kenya’s prospects, citing ‘a growing youthful population, a dynamic private sector, highly skilled workforce, improved infrastructure, a new constitution and its pivotal role in East Africa’.
Yet a new report from ACCA and the Institute of Certified Public Accountants of Kenya (ICPAK), Drivers of change and future skills in Kenya, suggests that the country is being held back by its failure to explore fully the skills and experience of professional accountants.
The report suggests that the country’s potential could be realised faster and more fully if the skills of professional accountants were more widely deployed in central government and in private companies.
‘Too often,’ says the report, ‘Kenya’s public and private sectors are failing to take advantage of the core competencies of professional accountants: these include financial management, reporting and planning; effective use of resources; revenue generation; data analysis; and high standards of corporate governance.’
Based on surveys and roundtable discussions, the report points out that the accountancy profession has played a big role in supporting Kenya’s growth. But the challenges the country faces – notably poor corporate governance in public and private sectors alike, which contributes to the widespread perception and reality of corruption – could be effectively addressed if the skills of professional accountants were more widely appreciated and deployed.
A survey by ICPAK, for example, found that only 16 of the 47 county governments in Kenya currently employ qualified accountants. It’s a similar situation in the private sector. ‘Weak corporate governance sits behind many of the failures in financial reporting,’ says the report, ‘which have seen some of Kenya’s largest companies, such as CMC Holdings, experience financial difficulty. A contributory factor in this… crisis has been the use of poorly skilled bookkeepers and unqualified “accountants” in roles that should be reserved for professional accountants.’
The risk, as one participant at the roundtables pointed out, is that the entire accountancy profession in Kenya is being undermined by the perception of a lack of integrity in parts of financial management. Qualified, regulated accountants, with relevant skills and ethics, must be at the heart of Kenya’s corporations and government, the report argues, ‘to prevent wrongdoing and ensure transparent and accurate financial reporting’.
Maggie McGhee, executive director – governance at ACCA, adds that the issues extend to the small and medium-sized businesses that dominate the Kenyan economy. ‘Most SMEs choose not to employ the services of an accountant, often opting for individuals that have a very broad spread of skills instead,’ she says. ‘The greater use of qualified accountants would improve the quality of financial management in SMEs and help them in achieving much higher rates of growth.’
So what is the solution? One roundtable participant felt accountants have been detached from the process of decision-making and policy formation, and argued that the profession should be more actively involved in making its voice heard. Employers also have a role to play, says the report: ‘There is a great opportunity for employers to support the development of personal and corporate ethics by providing more on-the-job training and guidance, helping individual professional accountants learn to bridge the gap between ethics theories and their practical application.’
Those contributing to the report through roundtable discussions were strongly supportive of the steps taken by ACCA to update its qualification, with more emphasis on practical problem-solving and integrated thinking. Further progress could be achieved, they added, if the alumni networks of ICPAK and ACCA in Kenya and the rest of the continent were strengthened to advance the public good. The title of ‘accountant’ also needs to be properly regulated and controlled, with backing from the financial regulators.
The report identifies the immediate challenges that need to be addressed but also makes the point that the demands placed on professional accountants are changing across the world, and Kenya is no exception. The report highlights a series of short, medium and long-term drivers of change that will affect professional accountants and finance professionals, including strengthening regulation, the impact of climate and demographic change, and the automation of key processes.
Accountants themselves bear responsibility for making sure their skills continue to meet the needs of businesses. Technical expertise and ethics will remain vital, the report says, but over time some skills will increase in value, while others will decrease and new skills will be added to the mix. ‘Accountants need to use social media; be proficient in e-procurement; and develop expertise related to new business models and finance raising, including dealing with cryptocurrencies, crowdfunding, Islamic finance and the greater use of asset financing,’ it adds. Some of these skills are universal, others are specific to Kenya: ‘Kenya needs to make more effective use of data; accountants in Kenya must ensure they have the skills to assist with sophisticated data analysis.’
The report concludes by declaring: ‘If professional accountants are to thrive and add value in the future, they will need to develop the skills and competencies that economies and organisations demand. Those in and around the accountancy profession must plan for the expected, the unexpected, the predictable and the unpredictable.’
Liz Fisher, journalist
"A factor in Kenya’s corporate governance crisis has been the use of poorly skilled bookkeepers and unqualified “accountants” in professionals’ roles"