Carl Bates | Founding Partner | Sirdar | mail me |
Herewith the results of Africa’s non-executive and independent directors’ fees, performance and diversity survey for privately-held and family businesses for 2020.
The survey (formally titled Africa’s Non-Executive and Independent Directors’ Fees, Performance and Diversity Survey for Privately-Held and Family Businesses) yields data and insights for business directors across Africa, providing a framework against which boards can reference their performance and fees.
Noting that there is little other research available for businesses in Africa, we are committed to sharing these insights to enable improving board performance across the continent.
Director remuneration
The online survey yielded responses from businesses across 12 African countries: South Africa, Ghana, Kenya, Mauritius, Nigeria, Zimbabwe, Namibia, Tanzania, Egypt, Libya, Uganda and Zambia. The majority (78 percent) of these companies were privately-held; the remaining 22 percent were family businesses.
The report reveals pertinent insights. For example, director remuneration (driven by turnover and company size) increased from US$14,074 in 2019, to an average of US$16,008 in 2020, with directors in Southern Africa earning more than those in East or West Africa.
Interestingly, independent directors only make up 24 percent of boards. Yet when compared to executive directors, independent directors are perceived to add greater value to the business.
Female board members continue to be under-represented with only 23 percent of board members being female, even though those with at least one female director reported a significantly larger increase in earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) when compared to boards composed only of males.
While the data shows a small year-on-year reduction in the representation of females in the boardroom, it also shows a correlation between boards with female directors and an increase of 10 percent or more in EBITDA.
Board diversity
We think that as this understanding grows in the private sector and in family businesses, we will see an increase in female representation on boards across Africa.
Ethnic diversity, too, remains a pertinent factor. Only 15 percent of boards had three or more ethnicities, with the majority of boards (51 percent) having only one ethnicity. This is a concern for us, as Africa’s population is diverse.
If boards are lacking ethnic diversity, it fundamentally means that they are also lacking a diversity of thought relative to the markets in which they operate. We expect that board diversity will increase over time as business owners better understand the potential benefits it offers.
Pertinently, we note that boards are aging, with 55 percent of board members aged between 45 and 59 years of age. This is an increase of 10 percent compared with the 2019 survey results, where this age range accounted for 45 percent of board members.
An aging board is often one that has not implemented succession planning or considered the value in guiding the next generation into the boardroom, which threatens business sustainability.
We believe that boards should look for younger directors who bring along diversity of thought to the table. Businesses and educational institutions have a role to play in supporting the training and development of young directors.
In conclusion
The survey data has direct benefit for the business sector throughout Africa. It enables those who might not understand the value of a board, to recognise its tangible benefits.
This report lends those businesses that already have a board, an understanding of the remuneration that attracts and retains exceptional directors. It also provides a map for the successful management of their board.