Personal finance lessons from Nopasika Lila, Barloworld CFO

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Personal finance lessons from Nopasika Lila, Barloworld CFO

Jan 1, 2024 | Interviews

As a high school student, Nopasika Lila remembers being told that accounting was a difficult field and that those who were studying to become CAs were part of an elite class of special individuals.

“Initially I was overwhelmed with the task at hand, but over time I succeeded. My confidence grew and I’ve learned to be a lot more decisive, deliberate and immediate in my actions. After completing articles, I joined Old Mutual in 2001 and moved to the Public Investment Corporation (PIC) four years later where I served as the Head of Compliance and Corporate Governance.”

Managing the assets of others

In 2010, Nopasika joined the Eskom Pension and Provident Fund (EPPF) – one of the largest retirement funds in South Africa – as CFO. The fund has over R145 billion assets under management and a membership base in excess of 95 000 members. She was promoted to CEO of the Fund in April 2018.

Managing the assets of others is a common theme in great parts of Nopasika’s career. I ask her why she appears to have an interest in this aspect of financial management.

“The pension and asset management space is quite powerful. Most listed companies are owned by pension contributors and many of these people do not have an understanding of how retirement funding works. It fascinated me and I wanted to understand that world. The guiding principle is that fund managers are entrusted by people to make the best of their hard-earned money to safeguard their livelihoods; that is quite a profound responsibility.”

She goes on to say that managers intentionally have to live up to this position of trust because for many, their pension is all they have when they retire. “Because you need to safeguard the assets entrusted to you, your investment strategy and philosophy has to be very targeted towards sustainable returns. It is a serious matter to provide a guarantee to people that their money will be safe and that it will sustain them in retirement.”

Personal finance

From a personal finance point of view, Nopasika advises people to understand their payslips.

“You need to understand how much you are paying for immediate gratification and how much you are investing for later. Look at such things as your medical aid; are you taking the highest package that you are not using or can you downgrade and invest that money elsewhere? Furthermore, the less you save, the higher tax you pay, so consider investing more in your retirement beyond just the minimum your employer is deducting for your pension.”

She laments the fact that people are not taught to start investing early enough.

“The sooner you invest, the more you will have later. I find people even make the mistake of cashing in their pensions when they move from one employer to another. This results in them getting taxed now and that portion that goes to tax could have remained in the fund to give them a much bigger return later. People only start thinking about saving later in life when they realise they need to put away something for their retirement yet if they started saving small amounts at the beginning of their career, they would have made so much over time.”

She is right. According to Allan Gray’s online investment calculator, an individual would have an investment worth R4,4 million if they saved only R500 a month over 40 years in a fund that promises 6% yearly growth.

“It is amazing what power starting to save early can have, but unfortunately most people seem to be too nonchalant and don’t take it seriously. Some people think ‘what if I save so much and get hit by a bus tomorrow before enjoying my money’? But by not saving you are losing money to tax, anyway, so why take the chance? In any case, you can use your annuity as security to buy the things you want today like a house for example.”

Move to Barloworld

“I like to take a sabbatical every five years. When I took over the CEO role at EPPF, I had not taken my customary break and after a while in the role, I felt that I needed it, so I resigned in March 2019. I was thinking I would be off work for about a year but the CEO of Barloworld convinced me to take up the role in August.”

Nopasika says while she now has a more complete picture of the business world, even if the move has not always been easy. “It is very very challenging! Operations are demanding on a daily basis. The level of managing the balance sheet, including cash movement between divisions, requires you to be on your toes. Cash is king and your stakeholders increase so much more. You have to make friends with bankers and asset managers who are the providers of finance because your needs are so much more on this side of the table.”

With more stakeholders to engage, there is a clear need for excellent communication skills in order to engage them accordingly. “You need to have good negotiation skills when engaging banks in order to get finance on terms that are beneficial to the company. Moreover, you need to effectively sell your strategy to investors.”

This article is an extract from the book Masters of Money – Strategies for Success from the CFOs of South Africa’s Biggest Companies available here – https://www.takealot.com/masters-of-money/PLID90121297?gad_source=1&gclid=CjwKCAiAyp-sBhBSEiwAWWzTnmLGsW3EWthrsEzrN69lcPhFqkxkQjPsxSF6CHoP2oj6-XRBtDB5gBoCfA8QAvD_BwE&gclsrc=aw.ds

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