Acumen Edition 13

BEN MAGARA . . . CAN HE TURN LONMIN?. P.26

BIG DATA CUTTING THROUGH THE HYPE P.46 RWANDA IS THERE A FUTURE AFTER KAGAME? P.64

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Issue 13 • Third Quarter, 2015

SUSIE SQUIRE FROM NO.10 TO WOOLIES P.71

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contents Issue 13 • Third Quarter, 2015

Issue 13 • Third Quarter, 2015

features

P.26 BEN MAGARA

Lonmin CEO Ben Magara explains how he is dealing with the challenges facing his company.

. . . CAN HE TURN LONMIN?. P.26

BIG DATA CUTTING THROUGH THE HYPE P.46

P.46

DO YOU NEED BIG DATA?

P.64

DOING BUSINESS IN RWANDA

P.71

FROM WESTMINSTER TO WOOLIES

RWANDA IS THERE A FUTURE AFTER KAGAME? P.64

R39.95 incl vat

Issue 13 • Third Quarter, 2015

SUSIE SQUIRE FROM NO.10 TO WOOLIES P.71

ON THE COVER Photo: Gareth Jacobs

GORDON INSTITUTE OF BUSINESS SCIENCE

A NEW DAY WILL DAWN...

ACUMEN IS ALSO AVAILABLE AS AN APP for your iPad or iPhone in the Apple App Store, as well as in the GooglePlay store for your android device.

GIBS Senior Lecturer Kerry Chipp provides a guide to one of the hottest topics in business.

Rwanda's economic success is down to its President, Paul Kagame. But Dianna Games explores what happens next?

Woolworth's Head of PR Suzie Squire tells Cara Bouwer about the pillars of great communication.

P.26

et cetera

p.35 How fit for the future are South

Africa’s cities?

P.02 Contents P.04 Contributors P.08 From the Editor P.10 Network

Professor Wayne Visser says that

tomorrow's successful cities will require

both vision and resilience. p.38 Meet the 'Tinder'

opinion

P.14

GIBS Dean Professor Nicola Kleyn says it's time to stop talking the country down and start focusing on the opportunities.

Time To Go Beyond Dialogue

p.40 The Cinderella Port

Photographer Patrick King and writer

Colleen Jacka take a look at the potential

of the Port of Cape Town.

p.17 Beyond Red Tape

Economist Trudi Makhaya suggests that

big business is also a vital enabler of start-ups.

of Tenders

Cara Bouwer meets three entrepreneurs whose aim is to make procurement social.

general management

p.50 Making Friends in the

p.19 The Young Guns of the Opposition

Fourth Estate

SABC TV anchor and GIBS alumna Francis Herd reveals what journalists really want from a CEO.

p.21 Take a Stand, Business

Journalist & TV presenter Dan Moyane

calls on big business to get involved in

the fight against corruption.

dynamic markets

Ranjeni Munusamy looks at new leadership emerging on the Opposition benches.

p.22 Out of Africa Richard Dowden says emigration is often

about ambition.

dialogue

p.24 How South Africa Works

Policy analyst and author Dr Greg Mills

talks to Chris Gibbons about his

new book.

South Africa

p.30 Is SABMiller Still South African?

GIBS Research Director Professor Helena Barnard delves into the importance of nationality for emerging market multinationals.

p.32 Challenge and Opportunity in

the Gauteng City-Region

James Sey looks at what the future holds for South Africa's economic heartland.

P.64

P.40

p.52 Do Not Overlook Aviation

African business expert Victor

Kgomoeswana believes airlines will be a

major component of Africa's success story. p.54 Africa is not a Country

Cara Bouwer examines a new way of

segmenting Africa's consumer markets. p.58 Dark Gold of the Amazon

Kate Whitehead visits Ecuador, home to

some of the world's finest gourmet chocolate. p.68 Top Six Things to Do

and See in Rwanda

From Mountain Gorillas and Lake Kivu to the tragic drama of Genocide Memorials, Rwanda has much to offer the tourist.

entrepreneurship

p.74 Towers Across Africa

Cell phone tower-builder Mohamad

Darwish tells Chris Gibbons the secret is

in the engineering.

future

p.76 New Business Model or Slick

Costume Change?

James van den Heever lifts the lid on the so-called Collaborative Economy.

p.80 I want it, and I want it NOW!

Top trend-spotter Dion Chang says the

on-demand economy is accelerating.

renew

p.82 Terrific Torres

Caroline Hurry visits Torres in Brazil… p.83 San Francisco Surprise

…and then heads over to the

USA’s West Coast. p.84 The Finer Things

Acumen's fashionista Cheska Stark points

us towards summer. p.86 Forward Motion

New trail running shoes, a fishing kayak

and the Mercedes-Benz S65 AMG Coupé. p.88 Techno

Aki Anastasiou tests a top smartphone

and an app to find the cheapest airfares

between Johannesburg and Cape Town. p.90 Books

Chris Gibbons reads about China, cyber

espionage and Islamic finance. p.91 Investing

Professor Adrian Saville gives investors

the inside track. p.92 Why Art as an alternative

investment now?

Mandy Walker reveals why contemporary

art might be a smart alternative investment. p.94 Wine

John Maytham's picks, including winners

from the Old Mutual Trophy Wine Show. p.95 Bheki Khoza’s Sound Of

Surprise

Victor Dlamini listens to guitar great Bheki Khoza.

Looking Backwards p.96 Consultants or Insultants?

Mike Wills takes a dim view of

the advice merchants.

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contributors

5

DION CHANG is an

innovator, creative thinker and visionary. He is a sought-after trend analyst and, while his feet remain firmly planted on African soil, he uses a global perspective to source new ideas, gauge the zeitgeist and identify cutting-edge trends.

He contributes to various print publications and online portals as a freelance journalist and social commentator.

PATRICK KING

RICHARD DOWDEN

is the director of the Royal African Society and a former Africa editor of The Economist and Independent.

He is also author of the bestselling Africa: Altered States, Ordinary Miracles and has been writing about the continent since his first visit in 1971.

JAMES SEY is a strategic communications specialist and writer with a focus on the industrial, infrastructure and supply chain management sectors, within which he has written several books and many research reports.

He is also an art writer and academic, and is currently a Research Associate in the Fine Art Faculty of the University of Johannesburg.

Commercial-Industiral photographer Patrick King photographs people and places the world over, Guatemala to Senegal and this time near his home in Cape Town, South Africa. His recent work can be viewed at patrickwking.com

DAN MOYANE is a seasoned broadcaster with 35 years of experience under his belt, having worked as a news reporter, editor and presenter. His broadcasting credentials include Radio Mozambique’s English Service, BBC, Talk Radio 702, SABC and eNCA. Currently he anchors Morning News Today on eNCA on weekdays from 6 to 9am.

He has been responsible for corporate communication and corporate social investment at MMI Holdings since 2009.

DIANNA GAMES is chief

TRUDI MAKHAYA is

CEO of Makhaya Advisory; an economic and competition policy consultancy. She also writes regularly for Business Day, was previously Deputy Competition Commissioner and a Rhodes Scholar at Oxford where she earned an MBA and a masters degree in development economics.

executive of Africa @ Work, an African business advisory and consulting firm. She is a leading commentator on business issues, trends and developments and has travelled extensively around the continent over the past two decades, tracking business developments in Africa’s key markets. Dianna is also the Africa columnist at Business Day and Honorary CEO of the SA-Nigeria Chamber of Commerce.

PROF WAYNE VISSER

is the Transnet Chair of Sustainable Business at the Gordon Institute for Business Science and Director of the think tank Kaleidoscope Futures.

6

contributors

editor Chris Gibbons Gibbonsc@gibs.co.za

VICTOR KGOMOESWANA is

cover photography Gareth Jacobs

author of Africa is Open for Business; anchor of Africa Business News – a weekly programme on CNBC Africa and anchor of PowerHour, Monday to Thursday, on PowerFM.

layout and production Contact Media and Communications ( Pty) Ltd designers Sudene Braun Quinten Tolken proofreader Angie Snyman publisher Sean Press Pressman@contactmedia.co.za

CARA BOUWER is a

JAMES VAN DEN HEEVER writes for a

GORDON INSTITUTE OF BUSINESS SCIENCE

range of clients, including the Institute of Directors in Southern Africa, the Ethics Institute of South Africa, the South African Institute of Professional Accountants and Ernst & Young. He was formerly editor-in-chief of Systems Relationship Marketing, a custom publisher with blue-chip clients and editor of Computerweek. He also worked as a media liaison in the corporate world.

freelance journalist and editor.

She’s been published in a variety of local titles including Business Day, Private Life, Destiny and Sawubona.

She cut her teeth at Penta Publications in the early 1990s before moving on to Business Day where she made history by becoming the newspaper’s youngest sports editor and the first woman to hold this title on a national daily in South Africa. She later became the paper’s chief subeditor.

Contact Media and Communications (Pty) Ltd 011 789 6339 advertising sales Damian Murphy Damian@contactmedia.co.za 082 888 1137

contributors Aki Anastasiou Cara Bouwer Dion Chang Kerry Chipp Victor Dlamini Richard Dowden Dianna Games Francis Herd Caroline Hurry Colleen Jacka Victor Kgomoeswana Patrick King Professor Nicola Kleyn Trudi Makhaya Jacques Marais Greg Marinovich John Maytham Dan Moyane Ranjeni Munusamy Professor Adrian Saville James Sey Stephen Smith Cheska Stark James van den Heever Professor Wayne Visser Mandy Walker Kate Whitehead Mike Wills marketing director Howard Fox Foxh@gibs.co.za contact Acumen 26 Melville Road, Illovo, Johannesburg P O Box 787602, Sandton, South Africa, 2146 011 771 4000 Acumen@gibs.co.za

Brought to you by:

Disclaimer: Acumen is the official publication of the University of Pretoria’s Gordon Institute of Business Science (GIBS). All material is strictly copyright and all rights are reserved. No portion of this magazine may be reproduced externally, wholly or in part, in any form without the written consent of GIBS. The views and opinions expressed by the contributors to this publication are

GREG MARINOVICH

is a Pulitzer Prize-winning photographer, author and film-maker currently teaching at Boston University. He is writing a book on Marikana.)

not necessarily the views and opinions of the publishers, GIBS or its associates.

While every effort has been taken to ensure the completeness or accuracy of the published information, errors and omissions may occur. The publishers, GIBS and its associates cannot accept responsibility for any loss, damage or inconvenience that may arise from the unauthorised use of this publication.

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8

editor’s note

FROM THE EDITOR Words Chris Gibbons

Hard cases make the best reading and hold the important lessons.

When writing about business and business leaders, it is almost too easy to seek out success. After all, everyone wants to read about success and to emulate it, right?

What’s the magic bullet or the golden key or the billion dollar answer? If we just look hard enough, we’re sure to find it.

GORDON INSTITUTE OF BUSINESS SCIENCE

With the benefit of hindsight, it is also clear that quite a few analyses were either misguided or just plain wrong. Reach down your old copy of Tom Peters and Robert Waterman’s In Search of Excellence to remind yourself of just how quickly cool and fashionable companies can fade to dust. Or re-read Prahalad and Hamel on The Core Competence of the Corporation1 and then read Michael Enright’s case study on the two companies involved, NEC and GTE2.

There’s also a fair degree of post hoc, ergo propter hoc: “Jack Welch got up early every weekday morning. Under Jack Welch, GE was hugely successful.

Therefore getting up early Monday to Friday is the key to extreme business success.”

All of which is why I think this edition’s Cover Story on Ben Magara and Lonmin is such an interesting and important one. We know the challenges Magara and his team face, including the legacy of the Marikana shootings and the five-month long platinum strike. We also know the tenuous nature of South Africa’s economy and its fraught labour relations. We understand

that global demand for Lonmin’s platinum is depressed. And Magara shares with us what he’s doing to turn this mighty ship around. But we don’t know how the story ends.

Lonmin is an important company in a key area of the mining sector and it employs some fine people, Magara among them, so we all hope that it turns out well. The actions Magara describes to Acumen look right and seem fruitful. But there’s a long way to go. More dips in demand for platinum, a re-run of some or other global financial crisis, a major clash with the unions or even – heaven forbid! – a Black Swan like the discovery of a replacement for platinum in motor car engines and it could all end in very bitter tears.

I repeat: we simply don’t know. So here’s a challenge to you as students and practitioners of general management and business. Read about Ben Magara and Lonmin and when you have done so, write down what you would be doing if you were in his shoes. It might be the same, it might be different, but do not forget to conclude by stating how you think it will end. Have a look back two or three years from now and compare what actually transpired with your forecast.

I’ll bet most of us, myself included, will be wrong. But isn’t this what general management is all about? Setting a course of action based on the information you have to hand and sticking to it. When

1 Prahalad, CK and Hamel, G (1990). “The Core Competence of the Corporation”. Harvard Business Review. Vol 68. No 3. pp 79-90 2 Enright, ME (2002). “Core Competence at NEC and GTE. Case Study.” Centre for Asian Business Cases. No. HRU213.

I REPEAT: WE SIMPLY DON’T KNOW. SO HERE’S A CHALLENGE TO YOU . . .” the information changes, you change the course. We can’t know the future, so we do the best we can with the tools at hand.

In one sense, that’s also what Professor Nicola Kleyn is calling for in her Dean’s Note. As a nation, South Africa’s ship appears to be badly off course right now.

But what are you personally doing to turn things around? What contribution is your business or your industry making to bring it back into line? She argues that this task is not solely the responsibility of government but down to each and every individual and company.

.

Ben Magara’s got his sleeves rolled up at Lonmin and is hard at work. Now what about you?

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10

network

NETWORK Words Acumen Staffers

THE SWEET SOUNDS OF GOOD BUSINESS

There were no screaming fans or guitars to welcome superstar musicians Zakes Bantwini, Danny K, and J'Something of Mi Casa to GIBS at the end of May. Instead an equally rapt audience heard an exposition on the business of music in South Africa. Along with record company exec Sean Watson and music publisher David Alexander, the conversation ranged from the impact of the Internet and streaming through to the lack of real business smarts among the creative community. That’s something Bantwini wants to set right and he’s leading by personal example, having studied social entrepreneurship at GIBS.

GORDON INSTITUTE OF BUSINESS SCIENCE

Danny K, professional musician, producer, songwriter and record company owner: “Streaming is a product of scale, so we hope that the more people that pay for streaming services, the more spins there are, it grows exponentially, but at the moment, especially in South Africa, it’s so small that an artist like J or myself or Zakes would rather sell one album than have 100 000 streams. The economics don’t add up yet … This business is all about passion. Any of us that have stood on a stage – J, Zakes – will tell you. I may have worked at Investec Bank before I joined the music business and I would have maybe had a far easier life financially, but nothing gives you that feeling like standing on a stage and entertaining people.”

J’Something (Joao da Fonseca), lead singer of Mi Casa: “When Zakes moved to Sony.

I thought, wow, now artists that go there actually have a musician to represent their opinions and thoughts, which I hope he does … What up-and-coming artists don’t realise is that you don’t need a massive investment to possibly make a success. You need R20-R30 grand for a music video and you need to try and create cool samples and hustle, man! This is Africa, after all, we’ve got a different kind of strategy to America. America – you want your stuff played, you’ve got to pay the big stations big bucks to get your stuff played. Here, you bump into Zakes, and say, hey, Zakes, don’t you have a contact, and he says, sure, and you hustle!”

David Alexander, founder, owner and MD, Sheer Publishing: “We can see from the data – and it’s really robust data – who’s buying music, where, why, what’s influencing… we’ve got heat maps, so we can actually see spikes in consumer behaviour around our marketing, around artist activity.”

Zakes Bantwini, platinum-selling artist and producer, Executive Head, A&R, Sony Music Africa: “I understand what we need from big record companies. It’s the recognition that artists, publishers, producers and song writers need to sit down and engage. What is it that needs to be done to enable us all to benefit? … The way we sign artists has changed. When I’m in the A&R meeting on a Wednesday, presenting the new artists, I’ve got to have a story. The music’s got to be so good, so good, that no-one wants to deny it, but if the music is just OK and I don’t have no story, I can’t sign you.”

Sean Watson, MD, Sony Music Entertainment Africa: “Streaming works where the physical and download business happens up front. Streaming kicks in later but it’s an annuity because it lasts forever, because the difference here is this: when you buy music as a download, you take money off the consumer and that’s it, right? The annuity in streaming is that forever and a day – as long as people are listening to your music – you’re earning.

It is about scale, but it’s about building repertoire, scaling up your business.”

network

11

FUTURE OF ENERGY: NEW MODEL NEEDED

GIBS report finds energy supply chain requires a vastly different model and partnership approach to accommodate future energy needs.

The report, entitled The Future of Energy in SA and SADC: Current Trends & Alternative Scenarios given Key Policy & Strategic Choices, stresses that South Africa’s energy supply chain will require a revised model to accommodate future energy needs. This could include a regional approach, an exploration of renewable energy alternatives and a range of public-private partnerships.

The report advocates an integrated regional approach to allow increased access to affordable energy services and to take advantage of opportunities that exist through new partnerships and investments.

Marius Oosthuizen, programme manager, Future of Business Project at GIBS says: “A regional approach offers opportunities to leverage diverse national resource assets for crossbenefits between countries. South Africa’s energy challenges require a regional perspective rather than a singular or insular approach.

“Given the right investment and research, South Africa could position itself to assist the rest of the SADC to leapfrog other regions in exploiting

GIBS TOP SCHOOL IN AFRICA

GIBS remains in its top spot as the No.1 African and South African Business School for Executive Education.

GIBS has once again come out tops as the only African and South African business school to be ranked in the Top 50 providers of executive education programmes – this is according to the prestigious annual UK Financial Times (FT) Executive Education rankings announced today.

Ranked 44 , this puts GIBS in the esteemed company of some of the world’s most prominent business schools such as Harvard Business School, University of Oxford: Saïd and MIT: Sloan. th

As a global benchmark for executive education, the rankings rate the top

renewable energy for instance, socio-economic and environmental purposes,” Oosthuizen adds.

A failure to address underlying energy sustainability issues has resulted in the current instability in the country’s energy sector. Growing household demand, energy-intensive industries, such as mining and manufacturing, the challenges caused by ageing and collapsing power stations and a limited energy grid have left the South African economy reeling from supply shortages.

The report proposes two alternative scenarios for energy sustainability.

The first emphasises the utilisation of private sector expertise to alleviate institutional capacity issues. Under this scenario, government stabilises the sector through inviting private partnership participation in largescale infrastructure projects, while harnessing clean alternatives and semidecentralisation of transmission. The second scenario draws on technological advances to overcome infrastructure constraints and the mismatch between demand and intermittent supply, especially from renewables.

Source: 1,000 Gr. 11 & 12 learners @ 2015 GIBS CareerExpo/Spirit of Youth Leadership Programme, GIBS Centre for Leadership and Dialogue.

business schools globally by combining delegates’ and companies’ views of open and custom programmes. Business schools provide the details of a number of top clients who are then asked to complete an online survey. For GIBS, clients comprising not only leading South African corporates but also top multinationals operating across Africa and abroad participated in the survey.

The ranking relies on several criteria including preparation, programme design, teaching methods and materials, faculty diversity, future use, new skills and learning, facilities and food, and women participants.

“The rankings once again provide an affirmation that our efforts are recognised on a global stage. To be ranked among the top business schools in the world is a

Shaun Rozyn

great achievement and speaks volumes as to the quality of education that we offer.

The feedback received from such surveys is invaluable as it allows us to benchmark our programmes against global standards,” says Shaun Rozyn, executive director of Executive Education at GIBS.

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13

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14

dean's note

TIME TO GO BEYOND DIALOGUE Words Professor Nicola Kleyn

At a recent GIBS dinner a well-known economist shared his views about how, in some countries, a level of corruption led to a better functioning system, provided that payments were “reasonably small and paid to front-line officials rather than fat cats at the top.” You might not agree. For me, what’s important is that we have places and spaces where we can debate these issues with a view to making choices about where to focus our energy and action. As we mark 21 years of democracy, it’s time to move beyond adolescent pontifications that sweep the world in broad brushstrokes and take up the rights and responsibilities that unavoidably accompany adulthood.

There is little debate that we are located in a growing quadrangle of unacceptably high poverty, inequality, unemployment and corruption, both locally, and (with a few exceptions) across the continent. We know that South Africa needs to generate growth to reduce the quadrangle and that a plan alone is just that – a plan. It’s time for action. And whilst some may be disconsolately mulling over what could be done, I’m refreshed by the number of individuals I meet who are not waiting at a station for a gravy train to arrive but are engaging in action to contribute to the economy and simultaneously tackle our plagues.

Consider the young man who recently approached a colleague of mine about wanting to do an MBA at GIBS. He has engaged with a corporate sponsor who pays him to supply branded bicycles to schoolchildren in rural communities so that they can reduce transport time and spend more time in the classroom.

His revenue model is enabling him to scale his venture rapidly. And with his balance sheet looking healthier by the month, increased awareness in the community of the sponsor’s products than they were previously achieving via traditional outdoor media, not to mention significantly improved school attendance – we’re convinced this gentleman could bring valuable insights and energy to our MBA classroom!

The MBA has traditionally represented a turning point in the lives of those wanting to climb the corporate ladder.

Measures like the renowned Financial Times rankings even measure the success of schools by allocating a relatively large portion of the ranking to increases in student earnings post the MBA. Whilst our tracking shows that our students’ salaries do increase, we’ve noticed that the level of entrepreneurial activity with a strong social bent is on the up – across all races and genders. It’s not always good for the rankings, but creating cohorts of graduates who want to use their newfound knowledge and passion to build businesses that contribute to growth and reduce the quadrangle is what we need. In today’s world, business schools can’t just be about increasing the balance sheets of the individuals and organisations who study there. They have to be catalysts for change to build more robust economies and societies.

The power of individuals to effect change is indisputable. But when it comes to determining what’s needed to build a competitive, healthy economy, I worry that business is quietly leaving the room in pursuit of greener fields. It’s increasingly rare for me to be told by a CEO that his (and yes the bulk of them are male) organisation’s focus is primarily on opportunities in South Africa. And so whilst we waste valuable time and

energy focusing on relative trivia (like the defining characteristics of a fire pool relative to a swimming pool), corporate energy that has significant power to mobilise ideas, people and capital is being directed elsewhere.

As dean of a business school that is committed to supporting corporates to create their growth paths, it’s our job to enable our clients to build healthy, sustainable businesses wherever they so choose. And we will do that. But we also believe that a significant part of our energies must go to enabling people, organisations and ultimately our country to perform. There’s too much at stake to lose the social and economic gains that have been made in the short life of our democracy. We cannot just be a school for business alone – our role must be to create the opportunities for business, government and civil society to work together to identify specific opportunities and constraints to reducing the quadrangle and creating growth. As a university, our role in this process is not new. The origins of the word “university” stem from the Latin universitas or the “whole”. Although we work predominately with business, business alone cannot solve the problems we face. Alternatively, if they are not codeterminants in how to shift the status quo, the economic growth required to fuel a healthy democracy will not occur.

Learning how to build, lead and manage business sits at our core. Surrounding this is a philosophy that emphasises the creation of a balance of safety and stretch in our classrooms. We’re increasingly using this ethos to also offer opportunities for stakeholders to gather to constructively explore why we should be working together, how to do this, what to focus on and how to translate choices into actions. As members of the academic community it’s incumbent on us to be considering not only how to effect transformation and relevance in our own sector, but also to play a catalytic role that fosters engagement with an intent to behave differently. Unlike the University of Chicago economists who deliberated to form a new freshwater view of economics that drove economic policy in the US for decades, we don’t believe that we can propose solutions as an academic community alone. Solving today’s problems calls for collaborative efforts.

But we must go beyond dialogue and recognise that the change starts with us.

It starts by asking what difference we can make to contribute to the economy beyond paying our taxes and making our contributions to building efficient and effective work environments. We must commit to doing more. Whether it’s to engage about whether and when corruption should be tolerated, and how to manage this scourge in our own organisations. Or to contribute to sustainable job creation and productivity by creating innovative business models that foster social and economic wellbeing. Or just to stop talking the country down and start focusing on the opportunities we face, we all have an important role to play in effecting positive social and economic change

.

opinion

17

BEYOND RED TAPE Words Trudi Makhaya

As an economist, some of my work and research examines competition, barriers to entry into the economy and entrepreneurship. This line of work gets me reviewing a lot of literature and data on the formidable challenges facing new businesses in South Africa – access to finance, red tape and market structure, amongst many others. This does not put one in the frame of mind to start a business. Yet despite all this, I have decided to enter into the world of serial entrepreneurship. “They stumble that run fast”, we are told, and so my first venture is a consultancy.

The most frequent explanation given for the sorry state of new business development in South Africa is that there is too much regulation. This is backed up by solid research. The Small Business Project reports that the regulatory burden on business remains quite significant. In a recent research note, it points out that a labour dispute can take up to 11 days to be handled at the CCMA and the time to open a business can take as long as 90 days.

South Africa comes in at 43 in the World Bank’s Ease of Doing Business ranking (out of 189 countries), down from 37 in 2014.

On average, it takes 46 days to go through the official procedures to open a business,

WHEN YOU START A BUSINESS YOU MUST BE PREPARED TO ENTER A SMALL HELL.” compared to 28 days on the rest of the continent and 9 days in OECD countries.

Yet has the focus on ‘red tape’ to explain what ails new businesses obscured other equally important factors that should also be tackled with vigour?

In an interview, anti-apartheid business icon Habakuk Shikwane once said, “When you start a business you must be prepared to enter a small hell.” In his time, he says, the challenge was to gain credit and credibility as a black businessman.

But for Shikwane, the real challenge was also about creating something from nothing. Even if government were to get out of the way, in a society that does not rate entrepreneurship highly, as the Global Entrepreneurship Monitor suggests about South Africa, outcomes might not be very different.

was open within two hours. I can’t think of a comparable experience with public sector processes required to set up a business.

The bank consultant also took the opportunity to try to interest me in a loan, but not for the business. He informed me that it would be too risky to lend money to such a new business. But as for the nonsalaried owner, he was happy to advise me that I should take a little debt in my personal capacity, even if I didn't need it, because this would help to build a credit profile. This is bad advice. But perhaps it should not be surprising coming from a financial services sector that, on the whole, has been more enthusiastic about consumer lending than small business financing.

The ecosystem for business creation is only partly influenced by government and its actions. How established businesses treat the self-employed is also an important determinant of the business climate. As analysts and researchers, we pore over statistics of how government treats new businesses, but forget that most of the services that new businesses need, such as bank accounts, office space and legal services come from other, usually older, businesses.

In the industrial sphere, the input costs into manufacturing are a key driver of competitiveness. The pricing and availability of electricity is a public issue.

But the pricing of inputs such as steel, telecommunications and construction materials and services is the outcome of both private and public decisions. In the case of collusion in cement, steel and construction services to name a few instances of anti-competitive behaviour, it is the behaviour of private companies that raises the cost of doing business for other companies.

Financial services is a case in point. In some ways, my bank rolled out the red carpet for me. After initial enquiries over the phone, I made the five-minute drive to the nearest branch and the bank account

In a country that sorely needs job creators, what should be a comprehensive conversation around entrepreneurship should not be reduced to a single-issue, finger-pointing exercise

.

Owning a business is not child’s play.

Sometimes it is.

GET IN THE GAME

Own a sports coaching franchise. Everyone wins.

Economic Empowerment | Child Development | Youth Employment SOCIAL FRANCHISING SINCE 2005

www.sportforall.co.za

opinion

19

THE YOUNG GUNS OF THE OPPOSTION Words Ranjeni Munusamy

When Julius Malema launched the Economic Freedom Fighters (EFF) in June 2013, it appeared to be an act of anger. He had fought hard to get back into the ANC fold after he and other members of the ANC Youth League were expelled. He even went as far as writing a letter to the ANC’s 53rd national conference in Mangaung in December 2012, begging for his expulsion to be reversed and pledging to behave appropriately from then on. But the ANC had had enough of Malema causing constant turbulence and refused to consider his appeal.

That might have been one of the ANC’s biggest mistakes.

The party’s leaders assumed that Malema would fade into irrelevance in the wilderness, unable to survive without the ANC’s business by political networks. But campaigning on the imprecise promise of economic freedom through radical policies such as nationalisation and land redistribution without compensation, the EFF found a niche in a growing constituency of people fed up with failed promises of the ANC government. The EFF is now firmly ensconced in the political milieu, having redefined parliamentary politics by demanding executive accountability through aggression and commotion.

Speaking recently in Johannesburg, Malema, 34, said building a political party based on anger was not sustainable. He said this was the reason the Congress of the People petered out once the anger over Thabo Mbeki’s recall had subsided. He added that he would never return to the ANC, even if there was a change in its leadership.

And so the guard is changing in South African politics, moving from being the preserve of an ageing generation of former liberation fighters to snappy trendsetters and neo-revolutionaries.

The decision of Western Cape Premier Helen Zille to step down as leader of the

Democratic Alliance (DA) saw a rapid transition in South Africa’s biggest opposition party to its first black leader.

Mmusi Maimane has had a meteoric rise in the DA and now, at the age of 35, has the colossal task of growing the party’s base and transforming its complexion, all while preparing for a highly contested local government election in 2016.

Maimane took over the DA’s leadership at a time when South African politics is in a state of upheaval, with the ANC steeped in scandal and controversy, its labour ally fragmenting and the first signs of its next succession battle stirring.

. . . BUILDING A POLITICAL PARTY BASED ON ANGER WAS NOT SUSTAINABLE.” It is a lot for a novice politician to contend with. Also speaking recently in Johannesburg, Maimane said what the DA was trying to do was hard. “We’re trying to build a strong centre. We’re trying to unite people around shared values, instead of trying to merely hold on to what we have by categorising and dividing people.”

But race remains a big issue in South African society and how Maimane deals with it will be key to his performance appraisal. “If anyone holds polarising views, they are not welcome in the DA. If anyone holds racists views, they must join another party,” he said.

However, that hardly addresses the complexities of race politics or perceptions about political parties.

When it comes to race, the ANC is able to trade on its liberation history without much effort at advancing current debates about societal struggles and economic inequalities. But the ANC lags behind in getting young, dynamic leaders into senior positions. ANC convention prohibits open contestation for leadership posts and has kept the lid on debate about a generational mix in its top ranks. At the last ANC elective conference, Sports Minister Fikile Mbalula, who was 41 at the time, made a bid for the post of secretary general.

His campaign bombed spectacularly, and he could not even get a seat on the 80-member national executive committee.

With the young guns holding the reigns in the opposition, the ruling party will have to snap out of the mode of only considering liberation leaders past their sell-by date for the top posts.

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It might also help to break the mould of Africa’s “big men” constantly running the show

GORDON INSTITUTE OF BUSINESS SCIENCE

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opinion

Here’s something every company should consider during these turbulent times: insurance cover against civil unrest.

And there’s one insurance company that all South African short-term insurance companies trust to handle this specialised field: Sasria.

In all, we offer cover against riots, strikes, terrorism, civil commotion and public disorder to corporate

and commercial clients, as well as to individual policyholders.

Our classes of insurance business - Material Damage, Business Interruption, Money, Goods in Transit, Motor and Construction Risk - means that we have you covered, even in the most extraordinary instances.

So, to rest assured during these times of unrest, speak to your broker today.

opinion

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TAKE A STAND, BUSINESS Words Dan Moyane

As Acumen went to press, thousands of supporters of a campaign by a group of civil organisations, including labour unions, were due to march against corruption. The campaign was a response to what organisers termed “corruption denialism” by the ANC, along with President Zuma's reaction to the Nkandla debacle. They said their “dream” was to get “hundreds of thousands of people representing the full spectrum of SA society” to protest against corruption.

By definition, “the full spectrum of SA society” includes business. The role of business in the fight against corruption is vital. For example, business leaders can no longer be content with raising uncomfortable questions with government behind closed doors for fear of losing public sector contracts. This also presumes that there are regular substantive and robust discussions between government and business about matters of national interest. But all indications are that sadly this is not the case despite the fact that government has a number of panels and forums that can be used for appropriate engagement.

Business leaders would be among those sections of society who agree that corruption undermines the values enshrined in our constitution. Corruption destroys value. If we agree, as we are frequently told, that business is about creating value, then surely the voice of business against corruption must be heard loud and clear?

However, if we examine how business and government have related in recent years, we find a glaring gap in trust. The trust account between the two sides is in the red, having sunk to record levels. No matter whose fault it is, business should grab the proverbial bull by the horns and lead the way into restoring mutual trust by reaching out to government. How many CEOs of top SA companies regularly meet government leaders as part of their stakeholder relations management to discuss important issues? Occasional meetings and engagements may happen at Davos or in Cape Town during World

Economic Forum sessions. But there is more value in constant and direct one-onone or face-to-face dialogue.

We are the nation that successfully negotiated a way out of apartheid’s wilderness into democracy. Yet our business leaders seem unwilling to use that experience to establish honest and open channels of communication and viable partnerships with the public sector.

The apparent reluctance by business is baffling because many companies have defined accountability, integrity and honesty as key values and say they subscribe to ethical behaviour. In fact many spend time, energy and money to embed appropriate behaviour to support these values in internal employee campaigns.

BUSINESS LEADERS MUST WALK THEIR COMPANY’S TALK OF VALUES . . .”

However, when it comes to speaking openly against public sector corruption, business leaders tend to be scared and prefer quiet diplomacy. Chasing government business and turning a blind-eye to destructive corruption is unwise: ultimately, we will all be swirling

in the cesspool of eroded value. That is neither ideal nor sustainable. Business is under pressure from shareholders to perform, produce results and deliver reasonable returns to investors but should this be achieved at the expense of values that we desperately need for building a prosperous society for all?

Nor do our corporates tolerate corruption within their own ranks. Many have clearly articulated codes of ethics and conduct, and other resources like anonymous tip-off lines. When such companies discover corruption or fraud, they take strong action to root out malpractice, mismanagement or wrong-doing.

Some companies have even reportedly walked away from corrupt tender processes. Laud them for their actions and use them as examples. But we need more similar behaviour that should be shared openly in our country.

Business leaders should muster more courage to stand up and speak up against public sector corruption if they want to sustain the success and growth of their companies. It is not up to others, like civil society or law enforcers, to deal with corruption. It is up to business – each and every one of us, in fact – to blow the whistle and expose corruption wherever it rears its ugly head.

Business leaders must walk their company’s talk of values and rightfully demand and expect the highest kind of values-based behaviour from all their stakeholders, including government and related public sector entities

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opinion

OUT OF AFRICA Words Richard Dowden, London

The continent is leaking people at both ends. There have always been refugees fleeing war and disruption but the new phenomenon is of young people simply seeking a new life. Elsewhere it would be called “ambition.”

GORDON INSTITUTE OF BUSINESS SCIENCE

In many cases it is but many young Africans are deprived of a future by war or dictatorship or corruption. “I was the wrong tribe,” “I had no family connections,” “My family is not rich.”

These are the words you often hear from young Africans who cannot get a job. So they abandon family and home and use their meagre savings to risk all to reach the same dream: get to America or Europe or South Africa.

Their stories are an astounding mixture of horror and the triumph of the human spirit. A couple of months ago, two men hid in the wheel wells of a British Airways plane that took off from Johannesburg and endured a nearly 13 000km, 10hour flight to London during which air temperatures plunged to minus 50°C. One of them survived. The other fell from the aircraft as the wheels were let down and was found dead on the roof of a house near the airport.

Most emigrants try the horrendous land route across the Sahara to reach the Mediterranean and then find small boats to take them to Europe. In 2014 about 218 000 Africans crossed. Some 3 500 died in the attempt. This year already

232 500 have arrived in Italy and the death toll is rising – 900 in a single day in April. Many of these become victims of traffickers and mafia gangs who make promises to get them to Europe, take their money and put them on unseaworthy vessels to cross the Mediterranean.

Sometimes the traffickers simply steal their money and disappear or kidnap them – especially women – and force them into slavery in Middle East countries. But I suspect many are simply poor fishermen on the North African coast who realise they can make more money carrying people than fish.

The reaction in Britain and southern Europe is to attack the traffickers which they dub “organised criminal gangs”. That may be, although European governments somehow believe that if they can prosecute the traffickers and smash their boats, young Africans will stop leaving the continent or getting to South Africa.

Again I suspect that if they do that many impoverished fishermen along the North African coast will join those trying to get to Europe.

overwhelmed by the numbers, they have been humanitarian in approach.

Britain however – the ultimate hoped-for destination for Anglophone Africans – has responded with an uncharacteristically robust, almost military, reaction. It voted to close down the overwhelmed Mediterranean rescue services which help migrants out of the small rickety boats or pull them out of the water. Britain wants a system which returns illegal migrants to north Africa and cracks down on the “ruthless criminals who are playing so callously with human lives.” It wants drones to patrol the Mediterranean and spot the migrants’ boats. It hasn’t said whether they will be armed or not. And it has been exceptionally mean in accepting refugees. In 2014 the UK took 143 Syrians and 750 other migrants. The rest of the European Union took in 40 000 Syrians in 2014. It may be breaking its commitment to the UNHCR in refusing to take these refugees. But when a group of exhausted and bedraggled Africans arrive on a beach in Greece or Italy, who is to decide who is a refugee fleeing persecution and who is an economic migrant looking for work?

Italy and Greece are the main countries the migrants reach and, although

Britain has a great tradition of taking in both refugees and economic migrants.

. . . THE SAME TYPE OF PEOPLE, AMBITIOUS AND ADVENTUROUS, HEAD TO SOUTH AFRICA.”

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THEIR AMBITION IS NOT FOR THEMSELVES BUT FOR THEIR CHILDREN . . .”

In the 17th century, it was a refuge for French Protestants, the Huguenots. In the 1930s, hundreds of thousands of Jews were given refuge from Nazi Germany and in 1972, 30 000 Ugandan Asians were given a home in Britain. They have become one of the most economically dynamic communities in Britain. That humanitarian tradition however has been rejected by David Cameron’s government.

They seem to think that millions of Africans want to come to Britain to enjoy free healthcare and education. The government seems to feel that, having hit the 0.7% aid target, it is saving Africa. The attitude seems to be “We have done our bit for Africa. So don’t try to come to Britain and live on social security.”

In southern Africa the same type of people, ambitious and adventurous, head to South Africa. The biggest proportion is undoubtedly Zimbabwean but there are also Mozambicans, Zambians, Congolese, Somali and a large proportion of Burundians. If you want to get a flavour of what drives this, read A Man of Good Hope

by Jonny Steinberg. It tells the story of Aden, from Somalia, who as a child loses his family during a battle in Mogadishu and vows to go to America. He gets picked up and dropped by strangers, walks away from people who help him or exploit him

and gradually makes his way through Africa to South Africa where he builds a small business in a township. During antiforeigner riots the store is razed and his partner killed. But he never gives up. He rebuilds and eventually he gets his green card for the US. He finds it a dull place.

The book is a gripping and monumental tale of persistent optimism in the face of terrible odds.

that he was used to it. The educational standards of such men may be lower than most Africans who come to Europe but their ambition is the same. Every one I have spoken to sends money home for school fees and food. Here they fight to get their children into good schools. Their ambition is not for themselves but for their children although they often go to evening classes themselves.

I travel a lot in Africa and meet Adens frequently. I am continually asked – especially in troubled times – “Take me with you. Help me get to Britain.” What do they see there, I ask? The answer is not free medical care or free education – most are unaware that schools are free in the UK. It is usually an opportunity to learn English, study and work. Which is exactly what most Africans already in Britain do.

Traditionally they go for professional jobs but in the 1990s large numbers of Nigerians were recruited to become traffic wardens in London. Their education levels were not high but they were willing to do tough, poorly paid jobs that no-one else wanted. I once saw one stick a parking fine on a car just as the owner was returning.

He received a torrent of disgusting racial abuse and the threat of violence. I offered him sympathy. “It’s OK,” he said, smiling, “I’m from Lagos.” The implication was

But why is the continent leaking such admirably ambitious people? The problem lies primarily in the failure of African leaders to create a good education system and jobs in their countries. Instead they have chosen the easier option of deals with big extractive companies which give governments easy money in the short term but do not build a skilled valueadding workforce. Secondly they have not provided good schools. While the numbers of children in school have risen dramatically, the levels of education in Africa have gone down. Thirdly, even when young people have been through school, they leave because there are few value-adding, manufacturing jobs in Africa. And lastly, again and again I hear the same story in Africa from young Africans from poor families who have qualifications but can’t get work: “The job went to a relative”

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dialogue

HOW SOUTH AFRICA WORKS Words Dr Greg Mills, in conversation with Chris Gibbons

Brenthurst Foundation Executive Director Dr Greg Mills and Colgate University President Jeffrey Herbst have just released their new book How South Africa Works – and Must Do Better. It’s a ‘state-of-the-nation’ analysis of why the country finds itself at such a difficult pass and it also sets out a number of solutions.

ISN’T THE BOOK’S TITLE MISLEADING? AFTER READING IT, I CAME TO THE CONCLUSION THAT LARGE PARTS OF SOUTH AFRICA DON’T WORK AT ALL.

GORDON INSTITUTE OF BUSINESS SCIENCE

That’s why there’s a subtitle! Things work for a reason and they also don’t work for a reason. What we have tried to do is to understand those reasons and then try and see if we can put together an agenda which might mean it could work better for the vast majority of people. There is much to be celebrated over the last 21 years and we often forget about the journey that we’ve travelled, about the inheritance of 1994. Think of it in terms of a company merger: in 1994, we had to integrate seven armies and five different administrations, while at the same time try to make the system fairer, more equitable, and meet very high expectations. Simultaneously, we had to end isolation from the global economy and democratise. It was never going to be an easy task.

But we argue that for all of that difficult inheritance, things have not gone as well as they could have. The foundations of the improvements that we have experienced are shaky, including the reductions in poverty, which are notable. Poverty has been reduced through the extension of the welfare system to 16 million South Africans, up from just two million beneficiaries in 1994. And the rise of the black middle class has fundamentally relied on the expansion of the civil service and the inflation of those salaries. The number of civil servants has risen nearly threefold to 3.1 million people in just 21 years. Hence we argue that the foundations are shaky, because it’s pushing public debt ratios towards unsustainable margins, just under 50% of GDP, for example. As Pravin Gordhan himself has warned, this puts huge pressure on the economy, puts huge pressure on interest rates, and over the long term, undermines the economy’s growth prospects.

SO WHAT IS THE KEY ISSUE?

The fundamental issue, which the book confronts, is joblessness.

It threatens to be the new apartheid, where life chances are determined largely by access to formal employment. And if the employment crisis is not addressed, it’s not going to be possible to lift millions of people out of poverty. Consider the

Arab Spring, which was fuelled in part by youths who believed they had no future. South Africa’s stability cannot be assured with nearly 70% youth unemployment. So the book focuses on the sustainability of the current approach, on the one hand, and the jobs/employment crisis on the other. The core question: what more can be done to create jobs, or what can be done differently?

YOUR ANSWERS?

We look to a variety of means to increase employment and need to have a shared mission between the public and private sector to be able to do this. This has been very difficult to achieve in the past because of a range of issues. One is apparently irreconcilable ideological differences between business and government. A core group within government clearly has difficulty in accepting the profit motive in business, yet at the same time prefers to lay the blame for the failure to create jobs at the door of business.

Business, on the other hand, has a responsibility to keep growing and employing by making a profit. And its principal constituency is not the unemployed, but obviously those who are employed within its ranks and those who invest in such companies.

A second problem has been the way business has structured globally, with a shift towards greater capital and technological investment, and economies of scale. The drive for greater efficiency in production has essentially meant fewer employed people. Government’s instinct, on the other hand, has been to intervene and increasingly regulate business. Yet, given this environment, government’s response should have been to deregulate the labour market, or at least to improve skills levels to enable people to compete further up the value chain. In other words, we can’t have it both ways – we can’t look for the higher value addition parts of the economy and not have the skills to be able to compete in that. And we don’t have enough skills at the right price, which is the critical part, to be able to compete in the global marketplace.

WHERE DOES COSATU FIT INTO THIS?

COSATU is a key constituency within the tripartite alliance and government has modified its policies to manage that key constituency. Yet the volatility of labour over the past 10 years

dialogue

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. . . THE COST OF NOT ENGAGING ON THESE ISSUES WOULD BE MASSIVE.” drifting in the opposite direction. We are losing our competitive advantage in the midst of labour volatility and cost, a shortage of suitable skills, the chronic failure of the education system, unreliable services including electricity, and, now, real concerns and questions about the rule of law. Yet to create jobs on the scale required we have to attract those businesses who can invest anywhere in the world, and who are not only interested in what we have under the ground in the form of commodities.

Dr Greg Mills

in particular, but even over the last 20 years, should have led to the utility of that relationship being questioned. We have more strikes now than we had during the era of rolling mass action in the early 90s. You would have to question the value of the alliance as a means of moderating union behaviour in the circumstances.

COSATU is also something of a labour aristocracy. It’s much older than it was back in 1994 and the majority of its members are employed in the public sector, which was not the case in 1994. So it’s essentially dealing with the privileged labour class who are interested in protecting that privilege – not the focus which is required to create jobs in the private sector.

It is in the ANC’s best interest to reform and to adopt what we see as the solution, which is this agenda for competitiveness, and to focus government, business and labour attention on this agenda.

And it’s in the ANC’s best interest to do this for two reasons.

One is sentimental in a sense – to address the liberation from poverty, an historic mission of the ANC. But second, and more pragmatically, at the last election the ANC received fewer votes than it did in 1994. The party will need to keep an eye on voter apathy, otherwise it may find itself marginalised by a combination of this apathy and challenges from both left and right. The government, and the ruling party, requires both a vision and a plan to execute that vision.

IS IT DO-ABLE? CAN WE SAVE THE NATION?

SO WHAT NEEDS TO CHANGE?

It most definitely is, and the cost of not engaging on these issues would be massive. In particular, we are now creating more unemployed than employed. The sweet spot, where maybe we can get some traction, is in a shared competitiveness agenda.

Which is to say, hang on, guys, we’re actually all in this together: redistribution by itself is not a long-term strategy for South Africa. We need to have redistribution alongside growth. We need to have growth strategies based on competitiveness. Government, business and labour have to make that growth agenda a reality and – most important – see each other as partners in this national endeavour.

The ANC’s preference has been to attempt an à la carte policy selection rather than adopting the full range of measures needed to compete globally. Take, for example, the promulgation of special economic zones in the bid to become more competitive.

In fact the entire country needs to become an SEZ per se.

We shouldn’t be looking for small zones in which to become competitive. We should be looking to become competitive as a nation within the tracts of policy regime for investors across the country, not just within geographic or sectoral chunks of the country. I would argue that rather than seeing ourselves as a kind of special-super-attractive investment zone, we’re

There is a better way to do this, a more inclusive formula, but it demands government making some difficult choices; after all, that’s what government is about. And certainly since 2008, since the double whammy of Polokwane and the fall of Mbeki, we’ve been unwilling to make these difficult strategic governance and policy decisions. We are suffering the consequences as a result.

But dealing with the new apartheid, the difference in the life chances for those with or without a job, is an issue worth fighting for. It will be impossible to build an inclusive society and deal with social problems including crime without creating more jobs

Amidst all this industrial unrest, it’s very hard to improve prospects in manufacturing and other labour intensive sectors where we should be creating jobs. People want to lose employees, rather than take them on. We conducted several hundred interviews across the country and across business sectors, and the drive to reduce employee numbers rather than take more people on was a virtually universal tendency amongst employers.

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south africa

. . . NO-ONE HAS A RIGHT TO TAKE ANOTHER’S LIFE.”

GORDON INSTITUTE OF BUSINESS SCIENCE

Striking Lonmin miners on Thaba, the koppie that was their redoubt during the 2012 strike for better wages. Two days after this image, 34 of the men were shot dead by police and 76 wounded in what came to be known as the “Marikana Massacre”.

Lonmin miner cooking, Wonderkop hostels, (2013).

Rock driller at work, 31 level, Lonmin’s Rowland Shaft, Marikana, (2013).

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A NEW DAY WILL DAWN...

Words Chris Gibbons

Two years have passed since Ben Magara was appointed CEO of platinum miner Lonmin. When he took the job in July 2013, he knew that he would have to deal with the legacy of the Marikana shootings. But what he didn’t know was that just around the corner lurked a long, violent and hugely costly platinum sector strike. Singly, either event would have felled most executives, but read together, Lonmin’s very future was in doubt.

Asked how he assessed what had happened at Marikana and what he, as the new CEO, needed to do to move the company forward, Magara is frank: “The tragedy at Marikana changed our lives, not only for Lonmin, but for the mining industry as a whole and indeed the country and it shook the world. It marked a watershed moment in post-democracy South Africa. Everyone was a victim and no-one has a right to take another’s life.”

He adds that “Nothing could ‘make things right’ for the families of those who died, or for their friends and colleagues at Lonmin. What we could do – and have done – is to set about reducing the pain of loss.”

He explains that this includes “ways of assisting the families of the deceased, including funding and supporting an Education Trust.”

In his first few weeks at the company he set about meeting as many of the employees as he could, asking them what needed to change and what was right and wrong with the company. This included recognising AMCU, the new trade union: “ … it was clear to me that, whatever the means, I could not put our heads in the sand and that the employees had chosen a different union to represent them.”

ALL IMAGES: GREG MARINOVICH/THE STAND

“With my colleagues, I spent my first 100 days at Lonmin simply listening to employees. We were there at 4am to greet the morning shift and then again at 10pm to talk to the night shift. We spoke to miners, managers, supervisors and heads of department – in small informal groups and structured workshops – and our question to all of them was what do we need to stop, start and stay doing in order to make Lonmin a profitable, sustainable company? And an exciting place to work?”

One realisation was that to solve the key challenges of poverty and poor living conditions for employees and the surrounding communities, “we needed a thriving business whose profits could then be applied to solve or alleviate the social ills that bedevilled our local mining and labour communities.” Linked to this is what he calls “the heavy, unjustifiable indebtedness of our employees – an issue I am convinced drove them to demand higher wages, even though they are even better paid than most skilled employees of our company.”

He confirms that the role of management versus the role of the trade unions became blurred but says “Lonmin alone cannot fix these ills.” Government also has a role to play, he explains, and to that end, Lonmin has donated 50 hectares of serviced land to the North West Provincial Government. In turn, the province has committed R462 million to develop the land into an integrated human settlement for the broader community.

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“Lastly, we needed to re-energise our mining communities – we re-introduced soccer, rugby, netball, etc. Along with this goes our commitment to education and training, providing first-class healthcare facilities and ensuring the environment is conducive for healthy family life,” says Magara.

THE SECOND BLOW

And then, in January 2014, came the strike, which brought the entire platinum sector to a standstill. It was to run for five months, making it the longest and most expensive in South African mining history.

“It was unprecedented,” Magara states. “Its impact was felt not only by the tens of thousands of employees, but by families, communities, businesses and even street vendors in the surrounding areas, and in rural areas across South Africa.” He believes that the strike’s impact “is still being felt today.”

From the outset, the platinum producers were clear that AMCU’s demands were impossible to meet, if the companies were to remain viable. “We were also clear that the platinum sector was the highest paying sector in the country and acceding to these demands would have debilitating consequences to the whole economy,” Magara recalls. “We engaged with our peers and, at times, negotiated and communicated collectively. That was the right thing to do, but it did not stop us working independently towards building a better relationship with AMCU and our employees.”

An important realisation, according to Magara, was “the need to reclaim our relationships and communication with employees …

We opened a call centre, we provided social support and ensured that our employees had access to medical care, especially those on antiretroviral medication.”

GORDON INSTITUTE OF BUSINESS SCIENCE

Finally, a settlement was reached at the end of June, 2014 – helped by the active intervention of government in the form of then-newly appointed mineral resources minister Ngoako Ramatlhodi, to whom Magara remains grateful.

“The facts speak for themselves: through proper planning and responsible behaviour, lessons had indeed been learned from 2012. While there were a number of incidents of violence and reports of intimidation, this was nowhere near the levels that we had seen in 2012,” says Magara, noting that “since the settlement, we have continued to work on our relationships.”

GETTING BACK

Something Lonmin and Magara got spectacularly right was the planning to turn production back on, as soon as the strike ended.

“We took early, decisive action during the strike to protect our business and made important operational decisions early. We resumed our processing operations in May, based on a judgement call that the strike was close to an end. Fortunately, we called it correctly,” he says.

One critical decision in the re-start was to prioritise those shafts which generated cash early, “even though they may have been amongst our smaller and older shafts, before moving to our newer and bigger shafts, some of which are higher cost assets,” Magara explains. “Without the strike we might have chosen

to prioritise differently, but we were clear we needed to be generating cash as early as possible.”

The planning, combined with “hard work on relationships” paid off: “85% of employees returned to work on day one – June 25. The huge logistics operation we put in place around key areas such as health, strike-related poverty and transport proved invaluable,” according to Magara, who points to “an industry-leading ramp up, achieving full production safely within two months.” Production tonnages were impressive but so too were the safety figures: “Shortly after achieving full production, we reported to the market the first fatality-free year in Lonmin’s history,” he says proudly.

Both the shootings at Marikana and the strike still cast a long shadow across not only Lonmin, but also the platinum industry.

So how does Magara plan to ensure that neither happens again?

“I don’t think we can say ‘never’, but we can certainly say that we have had a long period of introspection and are working very hard with all stakeholders to address those challenges that we at Lonmin have control over,” he replies. “A social compact is vital here – the alignment of a common vision with an understanding of sharing value.”

Central to this is the relationship with the unions. “We are hard at work with the unions to address the process issues raised in the last wage agreement. Task teams have been established consisting of both union and management representatives and regular discussions and workshops are held. We held workshops with AMCU which culminated in a Relationship Charter. This set the tone for our future interactions and created a platform upon which to engage,” says Magara, emphasising that “more importantly, it was an acknowledgement that our futures are intertwined and that one cannot survive without the other.”

He returns to the issue of indebtedness: “We recognise that one of the main issues that gave rise to the events at Marikana and the strike was a significant burden of indebtedness among the employees. An ongoing financial literacy programme is offered to employees to assist them in dealing with financial problems.

This has allowed them to take more control of their financial situations, and provides them with tools to better manage their income.”

Management is also becoming more hands-on: “Apart from our maturing relationships with unions, management has also started to have more direct engagement with our employees and not abdicate this role to unions. They are our employees first and union members second,” declares Magara.

PLATINUM'S PROSPECTS

It’s a daunting challenge, and made doubly difficult by a much weaker global market for platinum. Magara’s view is that “low PGM prices have persisted for longer and we are now planning on that basis and taking tough decisions and action on what we can control – costs, capital and productivity.” He doesn’t believe that prices will stay at this level indefinitely, “given market drivers” but it’s about “navigating choppy waters for now and keeping our costs under control.”

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People watch striking Lonmin mineworkers, outside cash loan services, which have proved to be one of the main causes of financial stress for low-paid workers at Marikana and in the platinum mining industry generally.

Lonmin has, however, told the markets that it believes weak platinum prices will last for two more years, and it plans to cut as many as 3 500 jobs in a voluntary separation programme – about one in ten of its full-time employees. Capex has also been scaled back from $185m to $160m, following very poor figures for the first six months of this financial year.

South Africa’s broader economic problems are not helping, either. “I certainly don’t have to tell you about the challenges facing our industry,” says Magara. “We are all too painfully aware of the structural pressures being brought to bear by rising costs, low returns, lack of capital growth, low mining equities, the global economic recession, the weak global economy, market sentiments and Eskom.” He notes that “the recent spate of unbundlings, delistings and rationalisations are not greeted as logical responses to a crisis but instead are viewed as unpatriotic and anti-South African. These reactions in turn cause many global investors to lose patience with South African mining in general – and with platinum mines specifically,” he warns.

PEOPLE, PEOPLE, PEOPLE

Despite the uphill nature of the task that lies ahead of him, Zimbabwe-born Magara, an alumnus of both GIBS and the London Business School, as well as the University of Zimbabawe, remains upbeat. Asked about his personal business philosophy, he replies that “I am passionate about mining and I can’t think of another industry more exciting. It is an industry where technical skills are as hugely called for as people skills. An organisation’s biggest competitive advantage is its people.”

“It starts with people and it starts with conversations,” he says.

“This may sound obvious but these can be very painful and very trying if battle lines have already been drawn. And, frankly, miners would prefer to view spreadsheets and operate machinery than deal with what have been traditionally regarded as soft issues. This, after all, is why we abdicated our responsibility to engage with our employees to the unions in the first place – and the legacy of that practice continues to haunt us.”

The conversations, including those from Magara’s early days at Lonmin, have resulted in a new operating model which has been called “The Way We Work”.

“It took many hours of intensive work,” says Magara, “mostly in the face of apathy and cynicism – and very many cases, deep trauma, given that everybody is a victim. And the temptation to allow these exercises to be eclipsed by operational demands was enormous. But at the end of the day – 18 months later – I believe we have the start of an integrative strategy to drive sustainable growth at Lonmin.

“In short, we are focusing on the type of organisation we are becoming and the behaviours required to shape our future. We are very clear that this starts at the top and is driven by managers. I am excited that our managers have demanded more responsibility, more accountability, more ownership and more empowerment.

Managers and supervisors are now driving direct engagements with employees, and the early wins from unleashing the Lonmin human potential are pleasing,” he concludes

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IS SABMILLER STILL SOUTH AFRICAN? Words Chris Gibbons

GORDON INSTITUTE OF BUSINESS SCIENCE

Companies almost always start in a single place, a specific country. But as they grow bigger and globalise, roots go down in many different places. Do they lose their national identity as a result? And if so, is that important?

Professor Helena Barnard is not only GIBS’ director of research, but also an expert on international business. She’s just written a chapter1 for a new book about companies that do business in many parts of the world2 – multinationals – and she opens it with a remarkable, if delightful, tale: “In August 2012, a 24-year-old South African adventurer, Davey du Plessis, was almost killed in attack in a remote Peruvian part of the Amazon. He dragged himself through the jungle until, heavily wounded and vomiting blood, he stumbled upon a village from which he was taken to Pucallpa, four hours by boat. There du Plessis managed to call his mother in South Africa, who started lobbying for help. Soon thereafter, employees of the local subsidiary of SABMiller helped du Plessis to get onto a chartered flight to the well-appointed Anglo American hospital in Lima.”

Barnard reminds her readers that both Anglo American and SABMiller were “founded in Johannesburg … and have long been 1 Migrating EMNCs and the theory of the multinational, Helena Barnard, Chapter 10 (below).

2 Understanding Multinationals From Emerging Markets, Ed A Cuerto-Cazurra, R Ramamurti

important employers in South Africa.” She adds that “There is little doubt that both … rushed to the aid of du Plessis because he was South African.”

Yet neither of these companies have primary listings any longer on the Johannesburg Stock Exchange, nor headquarters in Johannesburg. So can they be classed as South African in any way – and should this be important?

Barnard explains that she had started out trying to do research on emerging market multinationals and noticed that companies like Anglo American, SABMiller and Old Mutual, all with strong South African roots, “had just disappeared out of the databases.”

Yet, to her way of thinking, “these are real big companies and they’re South African.” She explains that “researchers use various heuristics to decide what the nationality of a company is: the country of primary stock exchange listing, the country of legal incorporation, the country where most of your sales take place,

PHOTO: GETTY IMAGES / GALLO IMAGES

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. . . THE BEST INDICATOR IS THE NATIONALITY OF THE SENIOR MANAGEMENT TEAM.” but arguably the best indicator is the nationality of the senior management team.”

She notes that SABMiller is “an excellent example because it has a very, very South African cadre of managers running their global operation.” This adds a human element to the question of a company’s nationality: “It matters where people are from!

It would suit them very well if the company HQ were in South Africa, because it would give them an excuse to come visit Mum, who might be getting on.”

Shareholder nationality is another factor, says Barnard. “If your shareholders are mainly South African, but you have changed your primary listing, the nationality of your shareholders will become more diffused over time. It might take a few decades but then you would have shareholders who do not have a vested interested in keeping some or other facility in South Africa. Then the decisions can be expected to be purely about where the best place to position a facility might be.”

In terms of shifting nationality, a lot is to be discovered from a company’s approach to its name, says Barnard: “If you come economically from the wrong side of the tracks – and Africa is not known to the rest of the world for being an economic powerhouse – and you’re a firm with global reach and ambitions, how do you handle that tension?” She notes that when South African Breweries took over America’s second biggest brewer, Miller, “it’s very telling that they actually kept the Miller part and changed the South African Breweries bit into an acronym that could mean anything.” If you need to play the game globally, you want it to be seen that you are playing with the big boys, she says with a smile.

As evidence to back this assertion, Barnard reminds us that shortly after the Miller transaction went through, bitter US rival Anheuser-Busch launched a smear campaign in liquor stores, stating that “Miller is South African-owned”. SABMiller fought and largely won this in court , based on the fact that its primary listing and HQ were both now in London.

Distancing yourself from a problematic home country is a form of what’s known as ‘symbolic management’, explains Barnard.

“We’ve for example seen this in studies of entrepreneurship,

where a young entrepreneurial firm whose ambitions exceed its capabilities will play the image game. They’ll make sure their offices are in the right neighbourhood, they’ll make sure that they have a business card with the right types of addresses and contact details and they’ll make sure they’ve gone to the right schools. You’re actually sending a signal around the symbols and you’re actively managing those symbols. I think that the same can be said about emerging market multinationals needing to play a global game.”

There’s another factor which also changes a company’s nationality over time. “We know that South Africans use placement within a globalising company as a way of actually emigrating. They’re not too keen to start climbing the ladder as a total newbie in another country, but if you can get a placement inside a Standard Bank or whoever else is setting up offices elsewhere, then you have a very easy way of transitioning.”

Barnard explains that for individuals, this route creates options: “If that job ends at some point, you can say, ‘Oh, it was OK to be in the States, but it wasn’t all it was cracked up to be and I’m happy to come back,’ or you can say, ‘You know what, my family is settled here, the kids are at school, I’m sorry. I need to say good-bye’.”

It’s not the typical expatriate relationship, she says: “Inside this migrating multinational are South African managers who are migrating themselves out of South Africa and whose alliances are partly South African but partly to the new country. It really calls into question the usefulness of nationality in the global era.”

Which brings us to the crux of the question. If SABMiller or any other migrating multinational is no longer firmly rooted in its home country, does it matter?

Says Barnard, “I think it matters hugely from the perspective of a country and it matters very little from the perspective of a firm. It used to be that you had strong firms in strong locations, because the quality of the firm’s competitiveness was a function of the competitiveness of the people and the markets to which it could get access. Now you can cherry pick from across the globe where you want to be. Therefore, unless South Africa is a preferred location – where the cherry picking happens – it is at risk of losing its high value-added activities.”

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CHALLENGE AND OPPORTUNITY IN THE GAUTENG CITY-REGION Words James Sey

Part 2 of a two-part series examining megacities

GORDON INSTITUTE OF BUSINESS SCIENCE

The discovery of gold in the late 1800s kick-started the rapid growth of the Gauteng region. Today it has come a long way from those origins as a mining shanty town. It is South Africa’s most significant economic space, its wealthiest province, and by many estimates the largest urban economy on the continent. It plays a vital hub function. Road networks, railways, electricity transmission and distribution lines, and a host of other infrastructural networks, connect the city-region not only to the rest of South Africa, but to the Southern African region and the rest of the world.

Gauteng is dominated by its most recognisable cities of Johannesburg and Pretoria/Tshwane, but there are also a number of other significant urban centres. Most of these are inside the provincial boundary, but others are outside the administrative space of the Gauteng province. Nevertheless, these other areas are connected to Gauteng through flows of people, resources, information, services and infrastructure, which define the area as a functionally integrated city-region. This extended Gauteng City-Region (GCR) contains some 13 million people within 175km of central Johannesburg – over a quarter of South Africa’s total population. In various ways the region is also an international economic force, and is registered by international agencies as a ‘global' city-region. Johannesburg alone was estimated by the OECD to have the 40th largest urban economy in the world in 2009 when measured on a purchasing power parity basis.

The GCR contributes just under 50% of South Africa’s economic output, with different areas focused variously on mining, manufacturing, financial and business services, innovation or trade; ideally working together to constitute a functionally integrated urban economy and single labour market. This region is the country’s centre of trade with Southern Africa and beyond, especially in terms of financial services, telecommunications and manufacturing and logistics flows, and also generates 50% of the country’s patents. Its relative economic weight in the country and the subcontinent means that the GCR has advantages over other parts of the country. There is a widespread perception that better work and education opportunities are available here. In

comparative perspective, the GCR seems to offer higher levels of access to good housing and essential household infrastructures, greater proximity to urban amenities, and generally better standards of living.

As such, the area is a growing attraction for migrants from South Africa’s rural areas and other urban centres, as well as immigrants from the continent, giving it an increasingly cosmopolitan character and vibrant social and economic life. The GCR’s population is estimated to represent approximately 45% of South Africa’s internal migrant workers – many of whom partake in ‘circular migration’ from areas designated as “home”, to places of work. The ripple effects of their economic activity across the nation are evident, with the GCR acting as the origin of flows of money to elsewhere in the country and other African countries.

THE FUTURE: OPPORTUNITIES

The Gauteng provincial government has recently announced plans to further ‘densify’ the GCR by building three new cities in the region – the first such settlements to be built from scratch after apartheid – which are intended, according to Premier David Makhura, to “direct investments in bulk infrastructure and shape public transport and economic development plans”. Plans are afoot to move away from smaller locations to creating ‘mega human settlements’ – numbering 20 000, 30 000 and 50 000 units per settlement. These settlements, planned for undisclosed locations on the West Rand, form part of larger plans to close the spatial gaps between Johannesburg, Tshwane and Ekurhuleni – along the M1 and N1 as well as the R21 passing OR Tambo International Airport. These spatial corridors would be filled up by development – building more settlements and businesses.

The expected population growth of the GCR at current rates will be around 2.2% annually, including current rates of internal migration and immigration. On the plus side, this continues to concentrate resources, skills, labour and economic opportunity in the region.

To take advantage of that, major developing economies like South Africa need an efficient and effective infrastructure in order to function and compete on the global stage. This is

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even more so in the case of the GCR, which is at the same time the economic heartbeat of the country and landlocked, which makes supply chain and logistics infrastructure costly and complex. Government has focused on investment in key aspects of infrastructure to try to facilitate investment and economic development. One major focus area presenting opportunity for the depressed and shrinking SA manufacturing sector is the Aerotropolis project around the OR Tambo international airport.

An aerotropolis is a type of urban form comprising aviationintense business and related enterprises. It is similar in form and function to a traditional metropolis, where there is a central city core and its commuter-linked suburbs, but has an airport city as its core and is surrounded by clusters of aviation-related enterprise like logistics and manufacturing beneficiation. With government investment in it, the GCR’s airport city is already in development and has begun attracting private sector investment in supply chain, construction, manufacturing and related industries.

Understanding the opportunities in the GCR also means understanding the macroeconomic shift away from Europe and towards Asian markets, which began as early as 2007. This shift is not only about changes in export demand. It has also had a fundamental impact on the structure and capacity of industry, as well as on the quality and types of output in line with the demands of the new markets. The GCR has a large and diverse set of industry sectors, with a wide range of employment categories.

The main employment sectors in the GCR are all in services, in an ongoing movement away from primary industry and resource extraction. The concentration of human resources, skills and a critical mass of infrastructure means that the services sector has developed as, in some instances, a world-class economic offering with much opportunity for development and global competitiveness, especially in the private sector.

Given that the GCR is landlocked, the development of such sectors as financial services, the world-class banking sector, telecommunications and retail trade makes economic sense.

After the impact of the global recession hit SA in 2009, employment in all major service sectors dropped, especially in the largest sector of the wholesale and retail trade, but also in financial services and the manufacturing sector. Employment in all of these sectors had risen by 2012, indicating some measure of economic recovery for the GCR. Another attraction for the many international businesses with a regional or wider African presence, who are headquartered in the GCR, is the somewhat surprising finding that of 72 major cities across the world when last surveyed in 2012, Johannesburg was among the 16 least expensive. As a result, residents and business people in Johannesburg and the GCR at large were then much better off than their counterparts elsewhere in the world, contrary to popular perception that the cost of living and doing business in Johannesburg is unaffordable. Of course, this situation has changed more recently with labour unrest, service delivery cost escalations, and power generation challenges.

Despite these challenges, the famous Rough Guide tourist guide has just voted Johannesburg its World City of the Year for 2015,

The Innovation Hub in the GCR – the region produces 50% of the country's patents.

primarily for the city’s investment in arts, cultural and tourist services hubs.

THE FUTURE: CHALLENGES INEQUALITY

Despite its importance and its potential, the GCR faces many challenges. These include high levels of poverty, unemployment, social exclusion and crime. South Africa is one of the most unequal societies in the world, and this stark reality is particularly evident in Gauteng cities and towns. Like many other emerging economy megacity-regions, Gauteng has spatial concentrations of huge wealth alongside large informal settlements. And although there is gradual integration the concentration of different population groups in specific areas previously designated for them by apartheid remains to this day.

One of the consequences of this apartheid spatiality is the difficulty it represents in providing impoverished communities

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with the opportunities available to more privileged residents.

Middle and upper-class citizens in the GCR live a lifestyle that would not be out of place in any of the great cities of the world.

City-regions around the world facilitate high-quality and hightech lifestyles as well as employment in globally competitive companies. They attract entrepreneurs, bright minds, and ambitious individuals. They offer exposure to art and culture, safety and security, and green and public spaces. The GCR does this for many.

patterned by assumptions and interactions inherited from the apartheid era that often limit the opportunities for new market entrants, especially young work-seekers. The result is high levels of frustration and marginalisation for many job-seekers. In turn, dynamism and cosmopolitanism have flipsides in simmering resentment of those who have succeeded, and antipathy to newcomers, especially foreign migrants, as has been seen in recent xenophobic attacks on foreign nationals, and specifically on their small businesses.

However, city-regions around the world are also often areas of conflict and exclusion, as the poor battle to find a foothold in the economy and broader society. The GCR is no different, and has a post-apartheid spatial configuration to overcome. As thinktank, the Gauteng City-Region Observatory puts it, “The new black middle class is able to afford to live in suburbia, which was formally the preserve of white residents only, but the poor are locked into the townships previously zoned for other race groups by apartheid, or in informal settlements wherever space can be found. Meagre incomes are spent on basic needs and on transport from the distant periphery to the region’s three economic centres where true opportunity remains.” A consequence of this inequality for those in need of access to services and better quality of life is political and labour unrest. This is especially urgent in the provision of basic services and infrastructure.

Already, in some city-regions around the world, such as São Paolo in Brazil, water shortages and rationing because of continued rapid and unregulated population growth have led to civil unrest.

INFRASTRUCTURE AND SERVICE DELIVERY

UNEMPLOYMENT

THE GCR – QUO VADIS?

Given its prominent position in the national economy, the economy of the GCR is highly sensitive and vulnerable to global economic shocks such as the recent global recession as well as the on-going Eurozone crisis. For Gauteng the shift away from Europe and towards Asian markets may present opportunities for job creation, but there is also a danger of job losses in sectors where production is declining or volatile,like manufacturing.

GORDON INSTITUTE OF BUSINESS SCIENCE

Although the absolute number of people employed in South Africa has increased in the last 10 to 15 years, its unemployment rate remains dismally high by international standards. For example, in the second quarter of 2013, the national official unemployment rate was 25.6% and that of the GCR was 25%.

Apart from a generally low rate of economic growth, the prominence of organised labour in SA has also been blamed for continuing high rates of unemployment. The conflict between big business and organised trade unions has dominated government policy-making around the labour market.

Employment creation remains a key priority for the GCR. Given that Gauteng exerts a strong attraction for migrant populations both local and foreign, thus ensuring that population influx and additional strain on resources and infrastructure will continue, employment creation assumes an even greater urgency.

While the GCR has a diverse and fast-growing economy in comparison with the rest of the country therefore, the labour market is not yet dynamic enough to accommodate the aspirations of all prospective workers. Economic activity is still

The provincial government’s recent plans to build new settlements and densify the GCR population even further will require a significant increase in the province's electricity generation capacity. Public statements by the provincial government about adding more than 300MW of electricity to the grid this year, making municipal-owned power entities such as City Power responsible for ensuring the province's energy security, have been proved somewhat fanciful by the welldocumented national power crisis.

Effective and affordable power provision is clearly more urgent in the most populous and globally connected part of the country.

Just as vital to the success of the GCR is the guaranteed and efficient expansion of the provision of other basic services, such as transport networks, water provision and properly regulated urban planning.

The GCR’s significant, urban and centralised economy places a major burden on those in power both locally and provincially, given its massive impact not just on South Africa but also southern Africa. A conundrum facing the GCR is how to manage infrastructure already under pressure – in ways that allow for inclusive and equitable service delivery. For the people living there and businesses operating there, many opportunities exist – primarily that the GCR, as with other megacity regions around the world, acts as a catalyst for business growth, regional and global networking. Population growth follows the growth of resources, skills and investment in a virtuous circle. As we have seen, this is especially true for the GCR as a regional African hub, and as a services industry ‘centre of excellence’.

That growth and potential, however, is only possible given the right balance of infrastructure and services provision in the GCR. And the balancing act of providing services and infrastructure equitably to all of the GCR’s population is equally important. The recent xenophobic attacks, coupled with welldocumented national power constraints and citizen opposition to infrastructure funding through e-tolls, for example, point to a disconnection between public policy and the private sector’s needs. Further strain on the support sectors – municipal and metropolitan administration, infrastructure project implementation, etc. – and a slowing national growth rate, make for a dangerous bend in the road for the GCR’s development, towards the megacity as a declining slum. The GCR is, on the whole, at an economic crossroads for development. We must hope for the country’s sake that it makes the right turn

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HOW FIT FOR THE FUTURE ARE SOUTH AFRICA’S CITIES? Words Professor Wayne Visser

What do we need to do to shape the future of our cities in this country? Acumen put this question to Professor Wayne Visser, who holds the Transnet Chair of Sustainable Business at GIBS. The problem with the future – as fellow fox and co-author1, Clem Sunter, likes to say – is that it is uncertain and only happens once.

But that doesn’t stop us from being interested – and often worried – about the future. At the heart of our concern is basically whether things will be better or worse – especially for us personally, living in this city and in this country.

How we grapple with this fundamental conundrum – as individuals, communities, businesses or governments – depends less on the actual city or country we live in and more on our attitude to change.

If we are an optimist – and therefore believe we can shape the future – we will tend towards visioning strategies. If we are fatalistic – believing that the future happens to us in ways we cannot predict or mould – then resilience strategies are likely to be more appealing.

In practice, however, being fit for the future – which I also teach to MBAs at GIBS – requires both approaches. In other words, fitting into a changing future, like a piece of a puzzle, and being agile enough to respond to the unexpected. Resilience strategies will help us to survive turbulent times ahead, while visioning strategies will make us more likely to thrive, to surf the waves of change, rather than be drowned by them.

The hi-tech JSE building

Let’s see how this dual logic applies to cities and countries. According to policy adviser, Simon Anholt, most of us want to live in a country that is “good” – not necessarily wealthy or happy or competitive, but 1

We co-authored the book Beyond Reasonable Greed: Why Sustainable Business is a Much Better Deal

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ALL OF OUR CITIES – AND INDEED THE SECTORS LIKE ENERGY AND MINING AND THE NATION AS A WHOLE – CAN BENEFIT FROM APPLYING THESE PRINCIPLES IN THEIR STRATEGIC PLANNING.” a country that contributes more to the common good of humanity than it takes away.

The Good Country Index[ii], launched in June 2014, sets out to measure that very thing, using a range of indicators like science and technology, peace and security, planet and climate, and health and well-being. Ireland tops the table of 125 countries and Libya props it up. South Africa ranks 44th, with strong performance in international peace and security (15th) and poor performance in prosperity and equality (121st).

The Good Country Index follows in the footsteps of other measures like the UN Human Development Index (South Africa ranks 118th), Quality of Life Index (South Africa 53rd) and Happy Planet Index (South Africa 156th).

GORDON INSTITUTE OF BUSINESS SCIENCE

There are similar measures at a city level. For example, the City Prosperity Index rates productivity, equity, infrastructure, quality of life and environment and finds Vienna performs the best at 0.925. For South Africa’s cities, Cape Town scores higher at 0.590 than Johannesburg (0.479). Both perform relatively well on infrastructure (0.933 and 0.880 respectively) and environment (0.875 and 0.816) but shockingly badly on equity (0.217 and 0.083).

In a similar measure, The Economist Intelligence Unit’s Liveability Index, Johannesburg places 40th out of 70 countries analysed, just ahead of Mexico City (41), Rio de Janeiro (42) and New Delhi (46), but lagging behind other emerging cities like Buenos Aires (26), Beijing (30) and Lima (35). In this case, Johannesburg scores relatively well on green space, natural assets and connectivity, but poorly on urban sprawl and pollution.

This new generation of league tables is important, because whether cities realise it or not, they are in competition for the best global talent. Our public and private sector leaders need to take note of how quality of life is being measured and actively work to rise up the ranks into the premier league. We need them to provide a compelling vision of our national and urban futures, so that we can feel proud and motivated to help create a better place to live for all our citizens.

Having a clear set of sustainable development goals is half the story. The other half is being prepared to survive shocks

when they hit – be they from climate change, energy crises, community conflict, financial meltdowns or resource crunches.

This is where Rockefeller Foundation’s 100 Resilient Cities Project can help us to prepare, with its five pillars of resilience: 1. Constant learning – The ability to internalise past experiences linked with robust feedback loops that sense, provide foresight, and allow new solutions.

2. Rapid rebound – The capacity to re-establish function, re- organise, and avoid long-term disruptions.

3. Limited or “safe” failures – Using circuit-breaker type mechanisms that prevent failures from rippling across systems.

4. Flexibility – The ability to change, evolve, and adapt to alternative strategies in the face of disaster.

5. Spare capacity – Ensuring that there is a back-up or alternative available when a vital component of a system fails.

All of our cities – and indeed the sectors like energy and mining and the nation as a whole – can benefit from applying these principles in their strategic planning. As it happens, the Project shines a spotlight on Durban as one of the 100 cities, observing that although it is the poorest metropolitan area in South Africa, the city has become a global leader in climate change adaptation. On the other hand, with 30% of its population living in one of the city’s 500 squatter settlements, poverty and social cohesion threaten to undermine resilience.

One creative solution is being presented by Sohco (Social Housing Company), which buys dilapidated buildings and rehabs them, turning offices into apartments for families of between two and five people. Another is from sugar company Tongaat Hulett, which is planning to covert a 3 000-acre plantation over the next 20 years into a mixed-use $2.5 billion town called Cornubia.

It is this combination of vision, foresight and innovation that can make South Africa and its cities among the most desirable places to live in the future. But to do so, we need to move from denial to acceptance and then proactivity. We can still celebrate the things that make us great – our spirit of optimism and Ubuntu – but we must also break the chains that are holding us back from being unequivocally world-class and truly humancentred

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From left to right: Opentenders founders, Mnive Nhlabathi, Sivu Maqungo and Madoda Khuzwayo.

MEET THE 'TINDER' OF TENDERS Words Cara Bouwer

GORDON INSTITUTE OF BUSINESS SCIENCE

Dating app Tinder takes a user’s geographic location, mixes it up with an algorithm which analyses interests and basic information and offers up possible matches. While you may not find love on a new South African business social network called Opentenders, the three founders hope you hook up with some juicy opportunities.

To understand the new Opentenders.com platform it’s important to look beyond the name. While access to tender information is central to the network’s offering, it is by no means its only facet. In fact, explains co-founder Mnive Nhlabathi, a holistic view of the challenges facing South African entrepreneurs has necessitated a multi-pronged approach and the creation of an appropriate platform to bring like-minded business people together.

Like Tinder, Opentenders makes it easy and convenient to access opportunities via a platform that is tailored to a businessminded audience seeking ways to grow. But, unlike social platforms like Facebook, the clear business focus of the site ensures that messages don’t get lost amid a slew of distractions.

The site offers access to all government-issued tenders, a networking section, access to funding and also training.

Launched in September 2014 the timing could not have been more fortuitous for Nhlabathi and his co-founders Sivu Maqungo and Madoda Khuzwayo. For one, the newly amended BroadBased Black Economic Empowerment Codes of Good Practice are pushing enterprise and supplier development, making procurement using small and medium-sized (SME) businesses a

must for government and big corporates. And the launch of a new government tender portal now offers full access to all state tenders across all provinces.

THE START-UP

Nhlabathi and Khuzwayo met during the 2006 SAB KickStart entrepreneur development programme, with Khuzwayo winning for Gauteng. The two met Maqungo when they attended a seminar he was holding for entrepreneurs on doing businesses in Africa.

Khuzwayo explains that, after 2006, he and Nhlabathi began working with government and running company services to both government and the private sector. “We were given opportunities to do a lot of business with SAB, so we had this experience of doing business with government, with small business and with large corporates over a period of eight years or so,” he recalls. “Over these eight years the frustrations were always that there were opportunities out there, but nobody was able to collect them and put them in one place so we could access them.”

Rather than hunting for business, the pair longed for a system that would work for them, would be available on all the devices they used (be it email or mobile or apps) and could offer constant notification updates.

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Having been at the coal-face of business start-ups in South Africa, the trio know how hard it is for entrepreneurs to break through.

The 2014 Global Entrepreneurship Monitor puts this in stark terms, noting that the number of South Africans involved in starting a business has dropped by 34% since 2013. “Our aim as a platform is to reverse that by assisting entrepreneurs,” says Maqungo.

It’s as simple as filling in a funding application, explains Nhlabathi, and because the process is less arduous than that of the banks and Opentenders’ security is the awarding of the tender contract, the process takes seven to 10 days. “It has to be rapid, because when someone is awarded a tender they are obviously on a deadline to deliver, so they don’t have the luxury of time,” says Nhlabathi.

By their very nature, tenders offer young black businesses a chance to secure meaningful contracts around which to develop a business. But navigating the tender process is challenging in itself, and – until recently – accessing tender documents required driving to Pretoria, collecting forms and driving them back. That is if you could find out about a specific tender on offer in time.

Thus far, four people have been financed through Opentenders, says Maqungo. “But we, as individuals, have been shareholders of Royal Fields for some time and there we’ve financed more than 200 people. There are deals we have not yet completed within Opentenders that are currently in play.”

SA’S E-TENDER PORTAL

While funding and opportunities are the lifeblood of the service, the business social networking component and training and support element of the site is, believe the founders, the heart and soul of the endeavour.

The government tender system was also flawed, as a major assessment of the system by the Office of the Chief Procurement Officer (OCPO) recently discovered. The review highlighted the need for countrywide strategic sourcing to maximise savings and value by using government’s bargaining power.

Therefore, on 1 April 2015, three months after Finance Minister Nhlanhla Nene announced the prospective launch of a government e-Tender portal during his Budget Speech, a new e-Tender Publication Portal was launched. At the time National Treasury said the site – which will also contain a Central Supplier Database – would publish all national and provincial department tenders. As of 1 July 2015, municipalities will begin to publish their tenders on the Etenders.gov.za portal.

For the founders of Opentenders the move was not unexpected.

“Since June last year we were aware,” says Khuzwayo. Nhlabathi adds that during the year the trio spent developing the platform they were scanning the market and knew this move was on the cards. They used this knowledge to create a business plan which feeds off the government portal, rather than aiming to replicate its service or that of existing tender portals.

The question is how?

A MULTI-PRONGED APPROACH

Maqungo says the main differentiator for Opentenders is not in competing with government’s portal, but in replicating the e-Tenders information in a more user-friendly format, thereby facilitating ease of access to the information. “So Opentenders will complement what e-Tenders is doing by creating searches for specific categories and categorising information in a way that enables ease of access for the entrepreneur on a platform of the entrepreneur’s choosing (via the website, mobile updates or the recently launched Opentenders app),” he explains.

The second differentiator aims to service the growth of entrepreneurs. This, says Maqungo, will be achieved by offering funding to entrepreneurs who win contracts. Funding of between R70 000 and R2.5 million is offered at an interest rate of 3% a month, dropping to 2.5% on amounts over R1 million. This can be applied for via the Opentenders site and is serviced by Royal Fields Finance, a company in which the three have a shareholding.

“The main source of our (Royal Fields Finance) funding comes from the Industrial Development Corporation, the Development Bank of Southern Africa (DBSA) and some of our own money,” explains Maqungo.

SUPPORT AND TRAINING

“We are not just a tender notification site. There are many tender notification sites. We are a business social network, so you can register your business on Opentenders, upload your profile and indicate all your services. We have a growing membership (just under 2 000 by end-May 2015),” they say.

The founders see this community growing beyond South Africa’s borders, which is why they’ve kept membership free.

They’ve also started loading international tenders (those not limited to nationals of a country) on the site, and hope to continue expanding their continent-wide offering as members join the network from the rest of Africa.

Finally, the fourth leg of the site is focused on training entrepreneurs in the nitty gritty of running a business. In late-May 2015 the founders unveiled the Opentenders Small Business Toolkit, a downloadable software programme that offers simple and practical guidance to starting and sustaining a business. The toolkit will set you back R500 and comprises 12 chapters covering issues such as registering a company, opening a bank account, and registering for SARS and UIF, as well as marketing, financing and human resources. Once installed, the programme can be used offline although, when online, automatic updates will occur reflecting legislative and regulatory changes.

Ultimately the founders also see potential for free ‘how to’ videos on YouTube, which they hope will make knowledge more freely available to entrepreneurs using social media.

Nhlabathi, Khuzwayo and Maqungo believe they are in the right place at the right time, with South African entrepreneurs hungry for opportunities and government pushing the SME agenda. Furthermore, technology is enabling them to put their vision into action.

“We’re making procurement social,” says Nhlabathi. “We are trying to do for small business and procurement what Facebook has done for relationships. People will one day say ‘we met on Opentenders and we’ve blossomed into this great working relationship’.”

It might not be Tinder, but if these three have their way Opentenders could add a world-class edge to the way small business operates in South Africa

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A CINDERELLA PORT

GORDON INSTITUTE OF BUSINESS SCIENCE

Words Colleen Jacka Photographer Patrick King

Cape Town is iconic. Even for passing ships the image of Table Mountain takes centre stage as a backdrop to a city that is one of the world’s top destinations. Beaches, forests, mountain paths and an inviting CBD lace together the mountain’s petticoat of South Africa’s Mother City. South Africa’s first harbour, the Port of Cape Town should be an economic driver, an engine for the growth of all maritime sectors in the country. But conflicting interests that continuously vie for port space and maintenance budget have instead created a world-class container facility at the expense of some of the other maritime sectors. The marine engineering and ship repair industry is begging for quay space, upgraded facilities and access to harbour property. Cinderellalike, it waits for a fairy godmother to grant it access to better opportunities.

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Transnet’s National Port Authority has invested massively in container handling facilities, including extended quay space and state-of-the-art shipto-shore gantries. An extended reefer yard highlights the importance of the Cape’s fruit export market.

The Offshore oil and gas industry is considered by most to be the industry’s fairy godmother. Proximity to Africa’s oil fields is often waved as a magic wand that can conjure up rig and offshore-related vessel visits, drawing thousands of hopeful artisans each time a ship is floated into one of Cape Town’s two dry docks. But given recent low oil prices, it’s a solution that feels as brittle as Cinderella’s glass slipper.

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Most firms have geared up to capture the work from rigs that round the Cape. Specialist welders are on hand to work to international specifications.

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Underpinned by private investment, A-Berth was hailed as a key piece of infrastructure that could turn the tide for the ship repair sector. It has attracted a number of high profile, capitalintensive projects from the oil and gas sector, as well as a court challenge settled earlier this year. Its limited draft alongside does restrict the scope of work to the older generation rigs. In spite of constraints, the industry continues to attract sophisticated contracts and the Port is still seen as an attractive destination for repair and maintenance work.

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Sophisticated plans are needed to reach deep into a ship to retrieve engine parts for refurbishment.

To describe the marine engineering sector as rudderless would be unfair. But there is concern that, as the clock nears midnight and the industry faces infrastructure woes, there’s no Prince Charming in sight. An ageing skill set, more competition along the African coast, a feastor-famine mindset, a spate of retrenchments and strategic refocusing by the major yards all require a new fairy tale ending for this troubled sector.

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general management

DO YOU NEED BIG DATA? Words Kerry Chipp

There has been much hype around Big Data, especially for large and medium organisations. The bigger the organisation is, the more money it is able to pour into Big Data. The international experience of financial returns on this is mixed.

But what is ‘Big Data’ exactly? These are two small words to encapsulate what is for many an amorphous concept. Many speak of the three ‘V’s: volume, variety and velocity. Basically, massive amounts of data, many different types of data, coming into the organisation at rapid speed. Sometimes another ‘V’ is added, ‘Veracity’ which deals with the quality of such data. What makes ‘Big Data’ different from ‘data’: it is the ever-reduced cost of storage costs and computing power to crunch the numbers.

We can now keep more data and have the analysis capability to do more with it.

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In thinking about Big Data, think of three main things: capture, manage, commercialise.

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CAPTURE

GORDON INSTITUTE OF BUSINESS SCIENCE

In the age of digital, it is a belief, widely held, that an organisation with the ability to capture data in a digital form must be in want of commercialising it further. This is a good place to start. The first question you need to ask of your organisation, whether large or small, is what are we doing with the data we already have? Do we capture it fully? And by capture, I mean digitally process and store, hopefully in a central repository. For small organisations, how many business interfaces are captured? Are till receipts electronic? Do your machines speak to the Internet of Things?

Do you keep track of inventory movements? Do you keep track of supplier price increases – electronically across time?

For large organisations: what are all the data points we capture?

Where are they? How can we start bringing them together? Do we have single, agreed-upon and shared metrics? Does the whole organisation track sales in a similar way from a shared database?

Any sales report can be massaged; this is not as easily done when we all work from the same assumptions and the same data set.

What about external data? The discussion so far has been on internal data. Does your organisation, large or small, consider the potential contribution of other sources of data? This could mean purchasing advertising expenditure data of competitors from official suppliers such as AC Nielsen or downloading commodity price tracking data free from IndexMundi. IndexMundi covers both food and mineral commodities. Knowing the movement

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of commodity prices could impact the input costs of many businesses, large and small. With the advent of large volumes of data available, no small business owner should dismiss the potential impact of such data.

Detailed in Ross, Beath and Quaadgras (2012) “You may not need Big Data afterall.” Harvard Business Review, December, 90-98

MANAGE

Data only provides value to the extent to which it is managed.

The big question for all organisations before deciding on Big Data is simple: how do we manage the data we currently have?

Management means bringing different pieces of data together to form a conclusion. It can also start with a belief (or hypothesis) which is then tested on the data we have. Treating our beliefs as hypotheses means we accept that we could be wrong and will accept if the data tells us that we are indeed incorrect. This is not so easily done.

For small organisations, why should advertising expenditure data concern you? It provides the ability to manage better because you can overlay the promotional efforts of your own and other organisations with your sales. Did a large Internet campaign of the competition have no impact on your sales? Did a large television spend by someone else increase your sales? If it has no impact on your sales, does that mean the campaign missed the mark or does it mean you have strong brand equity? If the campaign of another increased your sales, perhaps advertising increased the overall demand. These are hypotheses which could be tested in your data over time. The results will give good insight into how to manage brands and competition. Commodity data help plan for pricing changes across an entire market and how these may impact your business. Knowing what happens to overall demand when the petrol price changes, sugar increases or meat prices change can help with planning orders to suppliers.

For large organisations, many of these data points are captured and often analysed at some level. Which level though? What is the degree that the data can become large? If it is in silos, its size is hampered as it cannot be overlayed easily with other data sources for additional insights. Nevertheless, regardless of storage, the key data management questions are five: are we able to analyse the data we have in ways that enhance our understanding of our business and our market? At what level of the organisation is

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the newly acquired knowledge delivered? Does it rest with the analysts? Can key insights frame entire organisational strategy?

How can we effectively get action from our insights? Generally the money spent on Big Data programmes captures the C suite’s attention more readily than the analyses done lower down.

Ironically most Big Data programmes at their outset (and just after the Big Spend) are the least ready to deliver Big Insight as it takes time to get the whole process going.

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COMMERCIALISE

Data insights need to be turned into action. Fundamental to this is whether the organisation, large or small, typically bases its actions on evidence or on intuition. You can have all the insights from data, small or large, in the world, but if the main culture of decision-making is based on feeling or intuition, then it is going to be an uphill battle. Internationally, companies who are best placed to take advantage of Big Data are those who already had a data culture. In their study of 51 organisations, Ross, Beath and Quaadgras, published in 2012 in the Harvard Business Review, found that a culture of evidence-based decision-making was quite rare. Evidence-based decision-making means the organisation by default relies on information to make decisions rather than on personal judgement. If managers in your company typically don’t rely on data to make decisions or dismiss results that contradict their own opinions, then your Big Data project will need a culturechange process running in tandem.

The big question is how many managers have access to these figures when they need to make decisions? Do they have access to figures on their own performance? 7-Eleven in Tokyo has been the most profitable retailer in Japan for over 30 years since CEO Toshifumi Suzuki placed the responsibility for daily orders in the hands of on-the-ground staff and gave them data on sales and other pertinent information, like weather forecasts. The company ensures that their managers have three things: access to company datastreams, the ability to act on this information and coaching on how to process information. The coaches became more important than regional sales managers1. Managing data means ensuring key points are in the hands of the right people at the right time.

Smaller companies which are born digital or are digital natives (Carfind, PrivateProperty and the like) should have a far easier time capturing and commercialising big data because they are already in the digital environment and are comfortable with the velocity of data flowing into their businesses.

HOW HAVE SOME COMPANIES MADE MONEY?

GIBS held a Big Data conference in June this year. It was great to see some South African companies forging ahead with making data into income streams. How have they done it? They have tended to fall into four of the five patterns identified by Parmar, Mackenzie, Cohn and Gann (2014) from IBM, Harvard Business School and Imperial College London: 1. Generated data to help management processes: companies such as Discovery have used data to make their own operations more efficient; data on driving habits is turned

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into better assessments of risk.

2. Digitised assets: companies like Lightstone have done this well in the South African environment. They have built assets out of property and car data.

3. Combined data across industries: many of our retailers, such as Spar, do well here, their central distributors have complex systems which can learn best stock levels based on historic data. Antoinette Coetzee of Redefine Properties reported how such systems have given retailers a competitive advantage over their peers who delayed the implementation of such systems.

4. Trading data: there are some companies which make their income from trading data. Brandseye trawls social media for sentiment; Ornico Media looks at a wide information stream.

But true opportunity can be made by Discovery Insure – they could trade their traffic data with organisations who have interest in maintaining better traffic flows. There has been talk of use of traffic data and social media data to find where best to place outdoor advertisements. Naturally this runs into a key ethical and legal problem with data – all data use must be within the law.

SMALL BUSINESS ADVANTAGE?

Smaller businesses could have an advantage as they have fewer legacy systems and are traditionally more agile. Data is also more likely to get into the hands of the right people at the right time; these decision-makers can also act quicker. Big Data tools are becoming cheaper, whether this is software or processing power, so cost is less of a barrier now than what it has been. The catch is though, the entrepreneur or small business owner needs to be someone who likes evidence-based decision-making.

WHERE TO START?

1. START WITH THE QUESTION

When faced with an overwhelming set of data options, best practice is always the first principle of “what business questions would I like answered?” Such a question could be, “How do I manage suppliers better?” With the question in mind, the natural process which follows is, “What data do I need to answer this question?” Big Data means that you need to consider a variety of sources, both internal and external; a volume of sources (data across time, data from devices) and data which is created in real time.

2. START WITH THE DATA SET

What data sets do you have? What data can you capture? What businesses purposes, internal or external, could use this data?

3. DO WE HAVE AN EVIDENCE-BASED CULTURE?

What is the role of information in our daily decision-making? How can we increase this? Are we willing to accept information which goes against what we believe?

4. CAN WE MANAGE THE DATA WE HAVE?

Start taming the beast of current data streams. You can perform an assessment of how data is currently managed – stored and analysed – now. Then you can start thinking about how to improve this.

5. DO WE HAVE SYSTEMS OR PROCESSES THAT CAN TRANSLATE DATA INSIGHTS INTO BUSINESS ACTION?

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This is about getting insights to the right people at the right time.

Information too late is opportunity lost

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advertorial

UNIVERSITY OF FORT HARE PRODUCING GROUND-BREAKING RESEARCH Words Barbara Manning for the research arm of the University of Fort Hare – the Govan Mbeki Research and Development Centre (GMRDC). Manning is an independent service provider to the GMRDC and is not a University spokesperson.

As the countdown to its centenary celebrations in 2016 begins, the University of Fort Hare has established a research record which favourably compares with many former advantaged universities in South Africa.

Consider some of these figures: • In the early 2000s, Fort Hare awarded around 10 doctorates a year and was battling to attract postgraduate students. By the 2015 May graduation, the amount of doctorates awarded by the University had increased six-fold to around 65 PhDs per year.

Freedom Square UFH Alice campus

• Currently the University of Fort Hare has 21 National Research Foundation (NRF)-rated researchers across all five faculties – Science and Agriculture, Social Sciences and Humanities, Law, Education, Management and Commerce.

• By 2014, UFH had increased its research output by 251% since 2006.

GORDON INSTITUTE OF BUSINESS SCIENCE

• University staff researchers published more than 230 journal articles.

• The University holds a South African Research Chairs Initiative (SARChI) Chair in Social Change in the Faculty of Social Sciences and Humanities and is a Co-holder of a SARChI Chair in Meat Science-Genomics to Nutrinomics within the Faculty of Science and Agriculture. This Chair is shared in partnership with Stellenbosch University.

UFH has close to 13 300 students registered across three campuses in Alice, Bhisho and East London, providing vital tertiary education and training to students from both rural and urban areas in the Eastern Cape and wider afield in South Africa and the African continent. The university has nationally and internationally recognised researchers with expertise in areas ranging from biochemistry, ethno botany, water quality

monitoring and management, antibiotic resistance monitoring, primatology, climate smart agriculture, soil science, livestock and pasture science to the socio-economic issues facing both South Africa as a whole and the Eastern Cape province.

University staff have steadily improved their academic output from an average of 0.5 refereed papers per individual academic annually to 1.5. When one considers that the top formerly advantaged South African universities attain annual output rates of just over 2.0, this is an impressive comparison.

While the University is proud of its research achievements it is in the area of relevance, equity and transformation that Fort Hare University has shown its mettle. Fort Hare believes its research priorities and outputs actively contribute to the provincial and national priorities of addressing poverty, inequality and unemployment.

During 2014, the University started setting up the infrastructure for key Research Niche Area programmes in areas identified as contributing to the eradication of poverty, building food security, mitigating the effects of Climate Change and managing scarce resources. These are in line with the priorities identified by the

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South African government and the Department of Science and Technology.

The Research Niche Areas are: Medicinal Plants and Economic Development (Faculty of Science and Agriculture); Water Resources for Sustainable Development (Faculty of Science and Agriculture); Renewable and Sustainable Energy Technologies (Faculty of Science and Agriculture); Sustainable Agriculture and Food Security (Faculty of Science and Agriculture); Education: Early Childhood Development (Faculty of Education) and Law, Science and Justice (Faculty of Law), Democracy, Heritage and Citizenship (Faculty of Social Sciences and Humanities).

On the issues of transformation and equity, Fort Hare has made great strides in its research programmes. Highlights in this regard include the following:

THE FORT HARE DAIRY AND PIGGERY PROJECTS The fully commercially established and managed large-scale dairy (800-cow) and piggery (1,000-sow) projects established at Fort Hare are essentially Public-Private-Community partnerships. These ventures are aimed at incorporating efficient and financially sustainable production streams in pork and dairy production in a local value chain for the benefit of communities surrounding the Alice campus in the form of training, jobs and poverty alleviation. They provide excellent simulation environments for skills training and the lessons and practices are being replicated across rural communities, providing important opportunities and incubators for local small holder farmers to develop smaller associated enterprises.

THE IDC / FORT HARE NGUNI PILOT PROJECT

This project’s central objective is re-introducing indigenous livestock to traditional cattle farmers and developing an international niche market for organic, healthy Nguni beef through the large-scale implementation of the “Fort Hare model”. Improved breeding stock in the form of Nguni bulls have been introduced to herds grazing on common rangelands in the province. The project’s impact is immense resulting in local Nguni auctions for selling and buying breeding stock, it has created a support system for small-holder farmers through training Extension Officers and secondments to villages together with the creation of niche markets for quality Nguni meat such as local tourist hotels and overseas markets.

THE SIYAKHULA LIVING LAB

The University’s Computer Science Department, in partnership with Rhodes University, has been actively involved in bringing vital Information and Communication Technologies (ICT) services to marginalised communities at Dwesa-Cebe in the former Transkei. The research team developed and set up South Africa’s first WiMax network which provides internet services to some 17 rural schools and local clinics. An e-commerce platform for selling locally produced crafts is currently being developed and tested.

The project has provided a learning opportunity and a window to the outside world for 200 community members and 4 500 school learners together with providing an important platform for training future computer scientists in ICT for Development

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and associated community upliftment spin-offs. With its partners in industry and government, the initiative is a “living” example of science and innovation driving future growth as it is producing tangible skills and empowering impoverished communities in deep rural areas.

THE AFRICAN PRIMATE INITIATIVE FOR ECOLOGY AND SPECIATION (APIES)

Established by world-renowned primatologist Professor Judith Masters, an expert on tooth-combed primates (lemurs, lorises and galagos), APIES is actively training and growing future primatologists with ten postgraduate students (four doctoral, four Master’s and two honours students). Situated within the University’s Department of Zoology and Entomology, currently three South African students are conducting doctoral studies at the University Paul Sabatier-Toulouse III in Toulouse, France as part of the Aesop programme. Two are studying South Africa’s endangered Samango monkey while the other is studying lemurs. As it is estimated that one third of all land mammals risk extinction by 2050, the importance of training mammalian zoologists for the future cannot be over emphasised.

MRC EXTRA MURAL UNIT IN MICROBIAL WATER QUALITY MONITORING AT UFH

In recognition of the research expertise in microbial water monitoring at UFH, the University is hosting an Extra Mural Unit in microbial water monitoring in partnership with the South African Medical Research Council (SAMRC). Eight such units have been funded and established at South African universities and organisations following a rigorous peer-reviewed process by the SAMRC. These units are headed up by world renowned researchers and UFH is extremely proud of its research excellence in this vital area and the team which will run the Unit.

While these are just a few examples of groundbreaking research taking place at the University, it’s important to note that sustaining research excellence takes hard work, funding and resources and real effort and dialogue between not only the Universities themselves but also from partners in government and the private sector.

The University of Fort Hare is committed to the promotion of research as a core university activity and the building of research capacity within the University. Its research strategy recognises the need for research to address local, regional and national needs.

Fort Hare will continue to seek ways to engage in critical dialogue with partners to build research in areas which complement the University’s historical niche as an African university and national development priorities while ensuring internationally recognised excellence.

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Key research contacts Dean of Research Professor Gideon de Wet Email: gdewet@ufh.ac.za Tel: +27 (0) 40 602 2440 Fax: +27 (0) 40 602 2319

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general management

MAKING FRIENDS IN THE FOURTH ESTATE Words Francis Herd

As a CEO, when it comes to your company’s reputation management, some things are in your control and some things not.

Recent research for her GIBS MBA thesis by business media personality Francis Herd confirms that your relationship with the media is most certainly one of the things firmly in your grasp, with far-reaching consequences.

It’s not what you know, it’s who you know. That’s all well and good, until you read a news article that purports to be objective, and you wonder if the journalist has been snake-charmed. The impact of personal relationships between members of the media and business people is one of the most controversial aspects of journalism. Economist Joseph Stiglitz said the media were ‘active cheerleaders’ for the 2008 financial crisis. By spending too much time with the people they wrote about, the Nobel Prize winner believes journalists were swayed and blinded. As he puts it, ‘cognitively captured.’

Perhaps it’s time, however, for a cool assessment of how interpersonal relationships affect news coverage, and how they should be conducted.

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In my research, I interviewed some of South Africa’s most influential journalists and editors about the impact of relationships, especially in a crisis. They confirmed that executives could get away with handling relationships poorly when profits were high (in general, success is more newsworthy than bad behaviour). But when a crisis hit, the quality of relationships with journalists would be tested in the fire. As one colleague put it: “If you can prove to me over time that I can trust you, that you’re believable, that you’re stand up, when your company is in crisis, I will tend to believe what you tell me. If you’ve been ducking and weaving … when the sh*t hits the fan, I will go into that story looking for proof that you’re lying, as opposed to assuming that you’re telling the truth.”

My study also suggests that CEOs who are viewed as strong, ethical leaders by journalists can have a ‘halo’ effect, meaning they can raise the tone of coverage, even when they’re not being quoted directly. And this can act as a mitigating factor in a crisis. Some research suggests that companies with ethical CEOs perform better on the stock market, and it makes sense they can attract better press coverage as well.

Journalists interact daily with business leaders and view companies from a closer vantage point than the public enjoys. So the establishment of personal relationships is inevitable. If you don’t manage them and journalists form adverse perceptions, they could become the ghostwriters behind your company’s obituary.

It’s not only the public interactions that count, but the full spectrum of contacts, including phone calls, meetings and chats during broadcast ad breaks. These are ‘off the record’, not necessarily because they’re secret, but because, usually, they’re not that newsworthy. It’s also about the gossip your behaviour creates. Right now there are journalists sharing drinks and trading open secrets about CEOs and other business leaders that they can’t prove or report upon – yet. In future, I believe that direct correlations will be found between rudeness, reputation and the quality of coverage. But for now the evidence is mostly anecdotal.

In building relationships, the journalists I spoke to emphasised that honesty was important, as well as professional respect.

There is a way of speaking to journalists that respects our role in holding business to account. You can’t expect the deference you’re used to in the office. And you can’t take things personally and retaliate. If you are consistently defensive and aggressive, you will alienate the people whose understanding ear you will need desperately when things go wrong.

One of the brightest examples of a CEO mitigating a crisis involved Bidvest’s Brian Joffe. An editor said that, in a sense, due to his reputation, the company received a ‘free pass’ after Joffe’s Bidvest aggressively upped its stake in Adcock Pharmaceuticals, even though it turned out that Bidvest had massively overestimated the company’s prospects and paid dearly for it. In the editor’s assessment it should have been splashed across the front pages with horror headlines and scathing commentary, but journalists held back, waiting to see what Joffe would do next.

The reaction to Joffe was likely not only informed by his reputation as a dealmaker, but the humility he shows when interacting with journalists. When I interviewed Joffe in the wake of the deal, he was frank and open. He basically said: “I messed up.” He was willing to answer the same question as many times as it was asked.

Increasingly, as CEO, you will be the spokesperson in a crisis.

Leslie Gaines Ross has pointed out that the reputation of CEOs affect a significant portion of a company’s reputation (45%) and, in a crisis, the main responsibility is often attributed to the CEO (60%). Colleagues I spoke to not only respected leaders

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who were willing to face the music, but also expected them to. In broadcasting – my world – that means agreeing to live interviews and pitching up on time.

If all this sounds simple and intuitive, it should be. And yet, so many companies are employing otherwise brilliant CEOs that have no clue how to deal with the press. Cell C’s CEO was accessible before the company’s ‘billboard saga’, at which point he became extremely camera shy. The ripple effects will continue for his entire tenure. In future, whenever Cell C releases good news, journalists will want to dismiss it, remembering the boss who was too cowardly to face the bad. The man at the top has singlehandedly rubbed out PR budgets, past and future.

When an FNB employer went mad on Twitter, joking about bombs and disability, the company released an apologetic statement, but CEO Jacques Celliers wasn’t doing interviews. That earned the scorn of radio personality Bruce Whitfield, who compared him unfavourably to his predecessor, Michael Jordaan. Whitfield has more Twitter followers than FNB and Celliers combined. Have you noticed a difference in FNB’s coverage since the change at the top? I certainly have.

The findings echo research across branding, marketing, PR and reputation management that suggests that companies and people forge relationships that aren’t very different from ordinary, interpersonal ones. And it means that a crisis cannot be viewed in isolation. When damaging claims are being made about a lover or a friend, their previous patterns of behaviour, the trust they have earned or forfeited, will affect how quickly you jump to conclusions and lay blame. And whether you’ll forgive, condemn or just walk away. In the same way, companies with a strong reputation before a crisis suffer less when the crisis hits and their stock prices rebound more quickly.

This simply must be linked to media coverage. We know that due to the media ‘agenda-setting’ effect, people are more likely to be influenced by the way journalists interpret and package events, than the way the company does. In a crisis many companies have to respond to the media ‘frame’. And yet, in much of the research thus far, the focus has been on the relationship with the public, while the closer relationship between journalists and company officials has largely been ignored. Testing has mostly been used to determine how members of the public react to statements released by companies. Theorists have admitted, however, that it is journalists who will decide how to reflect these statements; what to include, and what to leave out.

In contrast to Stiglitz, another academic, Dane Claausen, argues that, with ‘citizen journalism’ rising, meaning anyone with a computer or smartphone can write blogs and have a say – it is precisely personal, one-on-one relationships that help to define credible journalism: “Real journalists practicing real journalism cannot effectively serve as an independent monitor of power if they do not have knowledge of those in power, and a working relationship with the powerful so as to ask them questions.”

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Isn’t it up to you, as CEO, to ensure those working relationships are in good order?

. . . I WILL GO INTO THAT STORY LOOKING FOR PROOF THAT YOU’RE LYING . . .”

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dynamic markets

DO NOT OVERLOOK AVIATION Words Victor Kgomoeswana

Ask anyone what has been behind Africa’s sustained growth and they will say infrastructure, ICT, financial services, resources, a growing middle class and rising urbanisation. Ask what Africa needs to do to ramp this growth even steeper, they will say more of the same. I might add beneficiation, or starting to add value to Africa’s resources instead of exporting them as commodities, and don’t forget agro-processing. That’s all great, but with limited infrastructure and long distances between economic hubs in Africa, air travel is another exciting growth driver that should never be overlooked.

What’s in a name? Everything. The loyalty programme run by Ethiopian Airlines is called Cloud Nine. Good luck in finding a more prophetic name than that when it comes to the fortunes of what is Africa’s most viable airline.

Granted, Ethiopian Airlines is big and has led the way on showing how a state-owned enterprise can be competitive, dynamic, pioneering and profitable.

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How competitive? The answer to this question is one line. Catch an Ethiopian Airline flight and judge for yourself.

On dynamism and pioneering spirit, this company has kept pace with the expanding needs of the continent. It flies to over 40 local and international destinations, under the leadership of its award-winning CEO Tewolde Gebremariam. In recognition of his contribution towards making the airline arguably the best-run in Africa, the Washington-based Corporate Council on Africa named him African Business Leader of the Year in 2012.

But why would an organisation representing the interests of American businesses in fostering US-Africa trade bestow an award on the head of an African airline that not many people had heard of?

Besides transporting several thousand Ethiopians based in the US between their home country and America, Gebremariam has presided over Africa’s most solid airline. The recognition was also for promoting US business interests, of course. Boeing, an American company, benefitted immensely from the business of Ethiopian Airlines – which was the first airline on the continent to fly its flagship B787-Dreamliner. In June 2015, it announced the purchase of 6 more of these aerial beasts, which will bring its fleet of Dreamliners close to 20.

Who buys so many monster aircraft unless they are justified?

Figures by the Centre for Aviation (CAPA) show that Ethiopian Airlines grew its annual passenger traffic by more than 100% to 6 million in 2014, from 2.8 million in 2009. In comparison to 2008, when this was 2.5 million, Ethiopian Airlines has grown by a rate that is way over that of its bigger rivals, namely, SAA and Royal Air Maroc. SAA still ferried 7.1 million in 2014, but that was lower than the 7.4 million it commanded in 2008.

Royal Air Maroc carried 6 million in 2014, nearly the same number it carried in 2008. Figures do not lie. Ethiopian Airlines is alone in its league on growth over the past 7 years. If everything stays the same, Ethiopian Airlines will become Africa’s largest airline on fleet size, number of passengers ferried and profitability.

As the awards continue to pour in, including the International Grand Prix in June 2015 for the CEO in Milan and the Vienna International Airport’s Rising Star award for the airline, and new routes are added – such as those to Los Angeles, Dublin and Tokyo all in 2015 – there is no doubt that the African skies are set to witness hectic action, led by Ethiopian Airlines.

HABARI YA AFRIKA – KENYA AIRWAYS

One thing stands out whenever I am at the Jomo Kenyatta International Airport: flight announcements are made in Kiswahili before they are repeated in English. The symbolic value of using an African language to address international travellers is that it affirms the confidence with which Kenya Airways is willing to punctuate its home ground advantage.

Although not quite like Ethiopian Airways, Kenya Airways (KQ) has been a true groundbreaker in increasing the number of

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An Ethiopian Airlines Dreamliner jet at Addis Ababa's Bole International Airport.

destinations faster than any of its competitors. At one point, the plan was to fly to all African capital cities by 2013. It turned out that was too ambitious, but still the winner of several awards, KQ is the true link of Africa to the world. Its alliance with KLM/Air France gave it global significance second to none. I, personally, have experienced the connectivity brought about by KQ. Whenever I land at Jomo Kenyatta International Airport, the other unique feature is that the announcement will feature no less than six connecting flights per flight. One never lands in Nairobi without the information on where to go to connect to other destinations such as Juba, Addis Ababa, Accra, Yaounde and Libreville.

Kenya is Africa’s largest exporter of freshly cut flowers, mostly to Europe. No wonder, then, that among the four major awards collected by KQ in 2014, one was that of the Best African Cargo Airline. Try transporting freshly cut roses from the Rift Valley plains of Kenya to Paris or London in time for some beau to charm his fiancée before they wilt, and you will appreciate how well KQ has done.

Back in 2012/13 KQ was a real star of the African aviation roster.

But turbulence in international oil prices and industrial action including demands for higher wages have since pushed this robust airline against the ropes. Although it had its own small fleet of 787s, KQ had to own up in May 2015. Financial woes drove it into the arms of its major shareholder, the government of Kenya, for a $42-million loan.

It did not have much choice – the numbers were not in its favour.

It had just reported an operating loss of 8.9% for the six months to 30 September 2014; from a slim profit of 3.2% in the previous corresponding period. Net after tax loss had deteriorated to 18.4%, from 0.7% in the previous reporting period. Reason?

One word – Ebola. Fire had gutted Jomo Kenyatta International Airport in August 2013, and the management of the airline were counting on a recovery phase, but then West Africa was hit by a wave of haemorrhagic fever. West Africa? Is Kenya not in the east?

It is, but remember the story about how many African cities KQ flies to via, or out of, Nairobi? So, when Sierra Leone, Liberia and

. . . IT WAS ONLY A MATTER OF TIME BEFORE FLIGHTS TO WEST AFRICA WERE SUSPENDED.” Guinea-Conakry were crippled by Ebola in 2014, it was only a matter of time before flights to West Africa were suspended. The snowball effect of this was that the entire business took a knock.

To its credit, KQ had an understanding, though disappointed, shareholder in the government of Kenya. Its other shareholder, KLM/Air France, was certainly unimpressed. New CEO, Mbuvi Ngunze, who replaced Titus Naikuni when he retired in November 2014, has his work cut out to change the fortunes of a fast-growing airline in the midst of financial turbulence. Unlike his Ethiopian Airlines counterpart who has been CEO since 2004, Ngunze has to stabilise a company in the face of financial anxiety and disillusioned staff.

Fortunately for him and the airline, Kenya is among the top 20 fastest growing economies in the world. Its capital, Nairobi, has been named Africa’s most intelligent city by the International Community Forum in the US – and among the top 21 in the world – for using IT to improve the quality of life of its people. Over and above that, the continent is continuing to grow at a rate above the global average. Africa is increasingly urbanised, more affluent and modernised. This scenario paints a promising picture for Africa’s aviation – and the most assertive of the industry in Kenya Airways and Ethiopian Airlines will continue to ride the wave and eventually cash in.

If Africa is open for business, then aviation has the key to regional integration, trade and investment. Lower cost airlines such as FastJet, Skywise and Fly540 are adding their voices to this crucial industry. If Africa can sustain its growth trajectory, aviation will carve its place as a major part of the story

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AFRICA IS NOT A COUNTRY Words Cara Bouwer Dr. Tendai Mhizha

Africa continues to make news headlines. But for every article focusing on Ebola, Boko Haram and al-Shabaab there have been an equal number noting the rise in African millionaires, tracking the continental growth of companies (both home-grown and multinational) and focusing on the most tantalising topic of all: Africa’s exciting consumer opportunities.

To be fair, this is not a new discussion. South African companies like Shoprite, Standard Bank and MTN have been pushing northwards for over a decade, but it was the McKinsey Global Institute that really started the mainstream conversation flowing back in 2010 with the release of the Lions on the Move: The Progress and the Potential of African Economies report.

Angola’s top-three consumer sectors mirror the key segments which Nielsen believes are the stand-out groups across Africa.

“The Balanced Seniors” (roughly 19% of Africa’s population) are 30-45 years old, traditional and family orientated… “I call this the foundational group and you’ll find various sizes of this sector across the continent,” explains Wingfield.

In 2010, at a GIBS Forum during which the McKinsey report was well and truly unpacked, Dr Lyal White of GIBS’ Centre for Dynamic Markets put it this way: “Africa is the last frontier for growth and the last chance for global companies to grow their markets substantially.”

The second group, which has opportunities for incremental growth, is the Trendy Aspirants (20%). “They are slightly higher in terms of their ability to consume products and slightly more open to trying new products and paying for things like quality, and for products which tap into their needs. They are more tech and media savvy.”

For some years forward-thinking companies veered away from former US President George Bush’s view of Africa as just ‘a big country’. These firms adopted a country-by-country strategy, recognising that tastes in Ghana might differ quite substantially from those in Nigeria. But now the conversation is shifting again and, armed with insights from trailblazing corporations, business leaders are learning that it’s not sufficient to segment and differentiate at a country-level alone, you need to drill down into the consumer fine print of every region, every country and every city.

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GETTING TO KNOW YOU…

In mid-2014 Nielsen, the global research firm, released an insights article entitled Getting to know the diverse African consumer, where the researchers looked at the likes of Cameroon, Angola and Ethiopia and attempted, per market, to segment the consumer profile according to seven categories. In the case of Angola, Nielsen determined that three consumer segments accounted for 77% of Angola’s market, namely: Trendy Aspirants (39%), Evolving Juniors (21%) and Balanced Seniors (17%).

During a Frontier Advisory conference held at the Industrial Development Corporation in Sandton in October 2014, Alisa Wingfield, Executive Director: Marketing and Communications Africa & Middle East at Nielsen, explained these segments in more detail, noting that, while not ideal, they did provide some deeper insights into consumer preferences and needs which “help us understand commonalities and some of those diversities in terms of how we look at consumers.”

The third group is the youth market. “We call them the Evolving Juniors (21%), that’s about 15-19 years old. We see large groups of these consumers. Today they are small in terms of what they contribute in terms of brand growth, but definitely big in terms of the future.”

TIME TO DIG DEEPER

While these studies are certainly a step forward in terms of insights, GIBS lecturer Dr Tendai Mhizha believes there is scope to take the discussion further. She fears the world is still grappling with the concept that Africa is not (and never will be) one homogenous country. “I believe it’s a point people haven’t got,” she told Acumen. In part because trying to understand and address 54 different countries “just makes things complicated”.

Wingfield agrees, noting: “There is literally no such thing as an African consumer when you are looking at 54 countries, 48 of those in sub-Saharan Africa. So I call them Africa’s consumers.”

Mhizha also believes that “each country is completely unique.

I’ve only found a few things which are similar across sub-Saharan Africa, like the respect process, collectivism, split paradigms (traditional and modern at the same time), the power of informal markets, the importance of engagement, and acknowledgement before a meeting.”

Wingfield says other commonalities include “spending time with family; the woman’s opinion on household matters features

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strongly; respect for elders in terms of tradition and culture…

We see a lot of marketing media messages tapping into this in terms of how products are positioned and communicated to consumers.”

Understanding these similarities does offer an opportunity to communicate across segments, but, as always, companies must guard against the temptation to lump all consumers together. As Bruce Layzell, GM of new African markets at fast-food chain KFC, told foresight consultancy, The Futures Company, recently: “A Zambian is as different to a Nigerian, as an Italian is different to a Russian, and people need to start to understand that… People are different, and that means tastes are different, cultures are different, religions are different. As a result, how we take our products to these different people, needs to be different.”

FIT INTO THE FABRIC

GORDON INSTITUTE OF BUSINESS SCIENCE

Exactly, agrees Mhizha, who stresses that companies need to “fit into the fabric of a country” and use current elements, topical debates and locally relevant insights from the get go. “A great example of a company getting this right is MasterCard in Nigeria; creating a much-needed national identity system digitally on the back of a debit card was pure genius. They are securely lodged in the hearts and minds of the Nigerian people,” says Mhizha.

“These types of needs-based segmentations must be underpinned by a reliable affordability measure,” says Mhizha, who put her views to the test in her PhD by creating a model for sub-Saharan Africa which segments people from 14 African countries into 17 groups, using 80 different variables. When using the Sub-Saharan African LSM tool you can at last compare apples with apples across borders and regions for the effective crafting of panAfrican strategies, says Mhizha.

“You can’t just plonk yourself in Africa,” says Mhizha. She stresses that real consumer understanding requires exploration into people’s backgrounds and how wealth manifests itself in particular markets; all of which differ vastly based on climate, history, politics and culture. Then you need to find robust target markets and learn how to communicate effectively with them.

“After that you take your concepts and theories and see how to adapt them to the market you’re moving into.”

Triangulation, or the use of different methods and methodologies, is the key to marketing in Africa, believes Mhizha.

“LSM data morphs and moves with the times. For example, I’ve been tracking Zimbabwe for 10 years and how (the middle class there) is structured is fascinating and evolving. The middle class disappeared and is now rebuilding in strange pockets.”

Lessons can also be learnt from less successful ventures, for example the high-profile exit of South African retailer Woolworths from Nigeria in late 2013. This move, which was picked apart in depth during the Frontier Advisory conference, is exactly why companies need to learn to dig into research and consumer behaviour.

Sound complicated? It is, agrees Mhizha, but there are companies getting this right. “I have a lot of respect for MTN’s work across the continent and that of Unilever, Coca-Cola and home-grown brands like EcoBank and United Bank of Africa in West Africa – although I’m not seeing enough of these indigenous companies doing well.”

“I had some contact with Woolworths before they entered Nigeria and I suggested they did not enter the way they wanted to,” recalls Mhizha. “Nigerians are very particular about what they are wearing, they won’t wear anything locally available off a rack.

But Woolworths went in with stylised clothing. They didn’t take time to understand what the Nigerian market was looking for.”

NEEDS, NOT BRANDS

Swaady Martin-Leke, Founder of the luxury African brand YSWARA, had this to say during the Frontier Advisory conference: “Having been to the Woolworths in Nigeria, in Lagos, I felt the quality was really bad. Again for a sophisticated consumer I was actually surprised; it did not look like a Woolworths. The quality was not there.”

“On a global scale only 10% of products achieve success. In Africa that’s 30%. But 40% – if not higher – would achieve success if they were made specifically for consumers in Africa,” says Wingfield. “That’s a subtle change. But that requires a deeper understanding of consumers.”

She continued: “In West Africa purchasing might not happen for high-quality or luxury products in a mall, but could happen in individual houses. It is not the traditional retail space as you would see, for example, in South Africa.”

ARROGANCE AND IGNORANCE

For Mhizha, this reiterates her view that researchers need to ask the right questions. “We need to start researching one level deeper. People look at a market like Nigeria and see there is money to be made. There is a level of arrogance and ignorance about local habits and attitudes… Nigerians don’t have that patience for outsiders who come in with dribs and drabs.”

This highlights why more in-depth research is so important.

As brands make friends with the open-minded innovation required to address African diversity, and when they begin to understand the implications of research which talks to meeting consumer needs rather than focusing on brand building, then we might start seeing more inroads.

Wingfield highlights the example of Samsung as a company that has figured this out. “They knew they had a very strong brand, but bringing that into Africa meant they needed to make some subtle changes. The Samsung slogan is ‘Made for Africa’, what that means is they changed some of the mechanics in the product itself to overcome things like dust in West Africa. And they have tremendous equity because of these subtle changes in positioning and make-up of products.”

That sort of behaviour leads to success into Africa. It will cause your product to stand out. It will help you talk directly to your customer. But, it requires an intimate understanding of how unique African countries are. And that means unlocking how Africa’s consumers think and behave

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GORDON INSTITUTE OF BUSINESS SCIENCE

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DARK GOLD OF THE AMAZON Words Kate Whitehead

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Recently confirmed as the global birthplace of chocolate, Ecuador is also seeking to regain its laurels as the world’s finest producer.

Bolivar Alvarado wields a machete with the confidence of someone who has grown up handling the long knives.

He tramps through the undergrowth on his small farm in the Amazon rainforest north of the capital Quito, pauses beside a cocoa tree and with the flick of his wrist cuts down a red and orange pod the size of a rugby ball.

He expects the output to continue climbing as trees planted in 2009 and 2010 begin to bear fruit and farmers helped by the government programme improve harvests.

A plan to provide financial incentives for a further 2 000 farmers to switch from bananas to cocoa beans is already in the works.

“We farmers didn’t use to focus on cocoa, but now we all know there is money to be made from cocoa – it’s better than bananas,” says Alvarado, whose family has been working this small farm in Santa Rita, Napa Province, for three generations.

Cocoa prices over the last five years have remained in the range of US$2 300 to US$3 200 per metric ton.

There are an estimated 200 000 farmers in Ecuador and 90% of them are small producers like Alvarado with farms that average three to five hectares. More farmers are joining the cocoa business, switching from bananas to the more lucrative beans as demand worldwide soars for the “Food of the Gods”.

Cocoa beans have been grown in Ecuador since preColumbian times, but recent years have seen a massive boom for the industry. In 2002 Ecuador was producing 100 000 metric tons of cocoa and by last year that figure had reached 235 000 tons, representing an increase of more than 130% in 14 years with a sustained growth of 10% a year.

With this increased production Ecuador has surpassed Brazil as South America’s top cocoa producer and is poised to become the world’s fourth-largest producer by the end of this year, says Ivan Ontaneda, president of Ecuador’s National Cocoa Exporters Association, known as Anecacao.

THE BUSINESS OF CHOCOLATE

For those who associate Ecuador with crude oil and bananas, this may come as a surprise, but it makes smart business sense. By taking advantage of the increasing demand for chocolate worldwide to diversify exports, this OPEC nation is trying to rectify its trade deficit which last year was its worst in three years.

Working in partnership with Anecacao, the Ecuadorian government has developed a programme to boost planting and offer education programmes to farmers.

“The programme encourages and supports small producers through cocoa farms’ rehabilitation, pruning, fertilisation and post-harvesting activities. As a result this has increased cocoa production to surprising levels,” says Ontaneda.

“We estimate that prices will reach higher levels in comparison to previous years due to an increase in consumption within different markets across the globe, especially China,” says Ontaneda.

QUALITY

The high prices have encouraged production of highquality cocoa beans and it’s for this that Ecuador has earned its reputation. It doesn’t just produce cocoa, it produces some of the absolutely finest cocoa in the world using “fine” or “flavour” beans, the top-quality varieties used in gourmet products because of their superior taste.

Much like wine production, cocoa reflects the flavour of the region where the beans are gown – Ecuador’s mineralrich volcanic soil and tropical equatorial climate provide ideal conditions – as well as how the beans are dried and fermented. Over the last 10 years as demand for more flavourful beans has risen, Ecuador has emerged as one of the leading exporters of fine beans.

To get Ecuador’s name out there as one of the world’s leading producers of fine chocolate, exporters are working to improve the traceability of beans.

“We are seeing more consumers who want to know where their chocolate comes from and also the labour and environmental conditions of that country of origin,” says Ontaneda.

FAIR TRADE

One chocolatier who has put environmental concerns and social responsibility on a par with product quality and profitability is Santiago Peralta. Together with his wife Carla Barboto, he founded Pacari Chocolate, a premium organic chocolate brand, 12 years ago. They work directly with about 3 000 small farmers. By cutting out the middleman and partnering directly with the cocoa growers, they are able to safeguard the biodiversity of cocoa and educate farmers to have a holistic approach to the land that considers the soil, plants, insects and birds.

They have also established schools and offered training in organic farming methods.

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ECUADOR PRODUCES SOME OF THE ABSOLUTELY FINEST COCOA IN THE WORLD . . .”

“Fair Trade incentives to peasants to use low intensity, environmentally-friendly methods where cocoa grows naturally in tropical gardens with other products such as papaya, banana, guava and lemon promotes sustainable production and protects the natural ecosystem,” says Peralta.

Bolivar Alvarado produces his cocoa for the Pacari Chocolate brand – and not just for the organic farming methods. He gets a better price for his crop. For 100 pounds of common cocoa beans, he says he could typically expect to earn US$28, but for fine cocoa beans he could get US$80 for the same amount. Pacari – as a Fair Trade producer – pays him US$150.

Peralta is justly proud of the brand’s good relationship with its farmers, calling it the foundation of their success.

“For too long growers have been the forgotten piece in the chocolate chain. We believe it is about time they get their dues and we hope other chocolate makers will follow our example and invest in their cocoa producers, pay them a better price for their product and work collaboratively,” says Peralta.

GROWTH

Consumers appear to like what they’re producing. The last few years have seen consistent growth upwards of 20% and Peralta expects that trend to continue this year. The brand’s main markets are Europe, North America and the leading economies in Asia Pacific – South Korea, Japan and Australia. And there’s a new surprise market.

GORDON INSTITUTE OF BUSINESS SCIENCE

“We are also seeing encouraging growth from non-traditional markets, most notably here in Latin America where consumers are becoming ever more knowledgeable about the source of goods they consume, demanding higher quality, organics and products that employ sustainable and just growing practices,” says Peralta.

He expects to see the price of the country’s beans increase in the coming years by possibly as much as three times as the global demand for gourmet chocolate soars.

“In terms of chocolate the world now respects Ecuador a lot.

Sadly, fine cocoa production is limited, so prices for Ecuador’s cocoa are going to rise,” he says.

The wider market trend also sees Europe as the leading consumer, accounting for 60% of exports. Ontaneda says Asia – particularly Japan – is a big growth market and much is also expected of the Chinese.

“China is an important market niche for high-quality cocoa, even though it’s still in growth. We are constantly developing strategies to make Chinese consumers aware of the fine characteristics of Ecuadorian cocoa,” says Ontaneda.

CHOCOLATE TOURISTS

Ecuador’s reputation for fine chocolate combined with a keen consumer interest in finding the source of their favourite products has led to a new trend in tourism in the country – chocolate tours.

Ecuador’s most-established tour operator, Metropolitan Touring, has teamed up with Pacari Chocolate to offer an overnight romp into the rainforest to find the source of chocolate in the Amazon.

The two-day trip, which includes the chance to eat raw cocoa direct from the pod and to make your own artisanal chocolate, was launched at the beginning of the year and has proved popular.

“A lot of people now care about what they buy and what they eat.

They want to find out where it comes from, who made it. And this is especially true of many people’s favourite treat – chocolate,” says Gabriela Parades, who leads the chocolate tours

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THE BIRTHPLACE OF XOCOLATL

The Amazon basin has long been considered the home of the cocoa bean, but it wasn’t until last year that an international team of researchers found conclusive evidence that pinpointed Ecuador as the source of the original cocoa bean.

Deep in Ecuador’s southern Amazonian region of Zamora Chinchipe, archaeologist Francisco Valdez found ceramic pottery dating back to 3 300 BC that contained microscopic remnants of cocoa. The discovery suggests that cocoa beans were being harvested and eaten more than 5 000 years ago.

“It was a tribe in the rainforest called the Mayo Chinchipe that domesticated the cocoa bean. But they didn’t eat it as we do now, it would have been used by shamans in sacred rituals,” says Parades of Pacari Chocolate.

Europeans became dedicated fans of the cocoa bean in the 16th century. It was Montezuma II, the last ruler of the Aztec Empire, who introduced the Spanish conquistador Hernán Cortés to a spicy chocolate drink known as xocolati. Cortés took the beans of the cocoa tree back to Spain where his cooks changed it from a cold drink to a hot one and added sugar and vanilla.

While the Spanish exploited other South American countries for their gold and silver, their primary interest in Ecuador was cocoa. Ecuador was the world’s largest exporter of cocoa until the beginning of the 20th century when plant disease and the introduction of new cultivations across Africa and Asia saw Ecuador lose its top spot. In the early 1900s many Ecuadorian farmers began switching from growing cocoa to bananas and coffee, which were more lucrative crops. But now the pendulum is swinging back to cocoa.

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Cocoa pods split open

Cocoa pods

Bolivar Alvarado

Santiago Peralta with daughter and cocoa farmer

Bertrand Indemihi

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NEW TECHNOLOGY DISRUPTING INSURANCE INDUSTRY - AGAIN Robert Boccia, Chief Information Officer at Lion of Africa Insurance, sees major changes on the horizon.

A wave of new technological developments bringing driverless cars and app-based household security systems are set to change the short-term insurance industry as we know it.

For an industry that generates on 85% of its revenue from vehicle and household insurance, this will dramatically alter the playing field and will force insurance companies to rethink their business models and diversify product offerings.

And the sooner they take notice, the better.

It is no longer applicable to say that “Africa is ten years behind the rest of world” – from a technological perspective, we have equal access to innovation and technology. In fact, Africa is able to leapfrog decades of development through applying technology.

One real game changer for the insurance industry is the introduction of autonomous vehicles. Already being tested in two US states, initial findings indicate that these vehicle don’t crash and they can’t be stolen, which has enormous implications for insurers.

I foresee fairly deep market penetration for driverless cars in the next five years. Cars which do not crash will eliminate the need to repair and replace vehicles, meaning that insurance payouts and prices will drop dramatically. There may also be a shift in liability as drivers become less responsible for incidents. A self-drive car that can be ordered by using mobile apps can also mean the end of the private car ownership.

Conversely, though, autonomous vehicles will require more complex and costlier components than today’s human-driven ones, implying higher repair costs in the event of an accident.

Home security is another area where technology is evolving rapidly. Homeowners will be able to connect wirelessly to numerous sensors in their homes that will track everything including movement inside the house, water, smoke, temperature and light. It also becomes simple to monitor multiple homes – around the globe.

Devices already available in other countries include bulbs mimicking typical light switch behaviour, cameras with facial recognition and gadgets which learn behaviour and notify owners

Robert Boccia, Chief Information Officer at Lion of Africa

when something unusual happens. In the UK, a start-up company has developed a device that senses movement through walls while smart carpets have been developed which can alert owners to break-ins.

The benefits of smart home security have been demonstrated in San Bernardino, California: a study showed that the arrest rate for a traditional burglar alarm was only 0.08%, but when police response was less than five minutes, the officers made arrests 21% of the time. The chance of an arrest is therefore over 250 times better when homes are fitted with monitored, videoverified alarms.

To prevent the dwindling income streams of technological progress, insurance companies will need to diversify dramatically. While such advancement can mean cheaper, or even the end of, car and household insurance, it will create opportunities for other types of insurance, for example liability insurance. Other options to consider include cyber-criminal insurance and insurance against hacking of security systems.

Technological advances may even mean the disappearance of household lock-up and parking garages as driverless cars change consumer habits and choices. With self-drive vehicles that park themselves and apps to tell it where to pick you up, vehicle storage is likely to become centralised.

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62 Wierda Valley Wierda Valley Sandton Te: 011 780 2059 www.lionsure.com for more info visit Lionsure.com or find us on facebook or twitter Lion of Africa Insurance Lion of Africa Insurance Company Limited is a South African non-life insurance company, licensed by the FSB in terms of the Short-Term Insurance Act No 53 of 1998 and an authorised financial services provider (FSP 17511) in terms of the Financial Advisors and Intermediaries Act No 37 of 2002.

The company is the first insurance company in South Africa to achieve a Level 1 BBBEE rating in terms of the BBBEE Act of 2003 and is a wholly-owned subsidiary of The Lion of Africa Holdings Company (Proprietary) Limited, owned by JSE-listed Brimstone Investment Corporation Limited.

For more info visit http://www.lionsure.com.

DOING BUSINESS IN RWANDA

GORDON INSTITUTE OF BUSINESS SCIENCE

Words Dianna Games

A porter carries boxes on his head as he delivers goods in the market district of Kigali, Rwanda.

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“Rwanda is an economic success story. This is not accidental. It is the upshot of strong and concerted policies and a deliberate focus on inclusiveness.” - IMF Managing Director Christine Lagarde, visiting Rwanda, 2015.

Lagarde’s words were praise indeed for President Paul Kagame’s government. The administration has become used to acclaim in recent years for its economic policies at home and dedication to deepening regional integration. The country is setting benchmarks for improving the business environment and opening its borders to its fellow East Africans to boost the economic performance of the region. Vision 2020, drawn up in 2000, aims to transform Rwanda into a middle income country and considerable effort has been put into transforming it from its agrarian base to a knowledge economy.

The economic leadership has been pronounced in Rwanda’s leap up the rankings of the World Bank’s Ease of Doing Business Index from 150 in 2008 to 46th in 2015. This makes it the third-easiest country in which to do business in sub-Saharan Africa after Mauritius and South Africa.

Since the early 2000s, Rwanda has grown at an average of about 8% – well above the regional average, and GDP per capita has more than trebled, although it is still relatively low at $638.

Poverty remains high – at about 45% of the population. But an estimated one million people have been lifted out of poverty in the past decade and there has been a strong focus on women and small and medium enterprises as drivers of inclusive growth.

Poverty reduction has focused on modernising agriculture, which employs most people and accounts for the biggest exports, primarily tea and coffee.

The country is positioning itself as a services hub, with a specific emphasis on ICT. Kagame, who says the Internet is as much of a public utility as water and electricity, is eager to introduce e-government and already there are many projects under way to this end. By 2014, the national fibre optic backbone network had links to all 30 districts of the country and nine border posts. The government is working with Korea Telecom to deploy a highspeed (4G) broadband network across the country by 2017. The penetration rate of mobile phones is currently 73%.

A THIRD TERM?

The president is leading from the front with the aim, he says, of pulling Rwandans out of poverty and developing a landlocked country with few natural advantages. His critics, however, allege that he is using economic policy to entrench his political tenure.

The theory is that by making material improvements to peoples’ lives, they will support an extension to his rule.

If this is true, it seems to be working. In July, Rwandan legislators in both the lower and upper houses voted in support of a petition to remove presidential term limits from the constitution, setting in motion a process that may allow Kagame, who has been in

power since 2000, to stand for another seven-year term in 2017.

The move is controversial, particularly given the renewed outbreak of violence in neighbouring Burundi, a decade after the end of civil war, after President Pierre Nkurunziza unconstitutionally declared he would stand for a third term earlier this year.

The one thing Rwandans fear is an issue that may fragment the country although analysts believe Kagame’s grip on power, and control of the security forces, mean Rwanda is unlikely to go the way of its neighbour should the president be allowed another term, a change that still has to be voted through both houses of parliament with a two-thirds majority and pass muster in a national referendum.

Despite allegations of political intolerance, Kagame still enjoys the political dividend of having led the Rwanda Patriotic Front (RPF) forces that ended the terrible 1994 genocide which led to the deaths of about 800 000 people in just 100 days.

Kagame is much admired, in and outside Africa, for his achievements both in ending the genocide and his astute and energetic economic leadership. He comes across as a man in a hurry. He has a reform agenda that stretches across the economy to the improvement of social services and gender empowerment.

His strength is delivery, an area where many of his counterparts in Africa often fail.

A THOUSAND HILLS TO CLIMB

Making Rwanda a success story is not an easy job. There are many obstacles, such as high transport costs because of the distance to the nearest port – transport is up to 40% of total costs of importing and exporting – as well as a small domestic market. It is a country of just 12 million people, many of whom remain poor and based in rural areas, despite significant improvements in the economy. A dire lack of skills is another issue. Many professionals were killed in the genocide, leaving large gaps in the economy, academia and other areas.

A chronic power shortage is constraining development.

Generating capacity is just 119MW but 563MW is required by 2017 if ambitious development objectives are to be realised. In 2014, the country benefited from a large investment under the US’s Power Africa Programme – a $157 million deal to extract methane gas from Lake Kivu.

Rwanda has tried to address its problems partly by deepening regional integration, recognising that its future is inextricably linked to the five-member East African Community (EAC).

The bloc provides investors with the market size that attracts investors.

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In 2013, Rwanda removed the need for Africans to apply for visas to visit Rwanda and made them available on arrival. Its immigration processes are among the most technologically advanced in Africa, with biometric data and fingerprinting.

Rwanda, along with Kenya, has pushed for the free movement of nationals within the EAC. In 2010, the two countries agreed to waive work permit fees for each country’s citizens. According to the Rwandan immigration authorities, the number of visitors to Rwanda from Kenya doubled between 2009 and 2012 to 63 222 visitors.

In 2015, Uganda came to the party. Although work permits are still required for many jobs, professionals such as lawyers can now work without permits in the three participating EAC states, although they are required to register with sector associations where they exist. Nationals of the member countries can use identity cards or drivers’ licences rather than passports to move around the region.

The three countries are also liberalising services for companies to provide cross-border services without restrictions and mobile phone companies have dropped roaming charges for nationals who move within the EAC borders.

CUTTING RED TAPE

Rwanda’s competitiveness has been boosted by recent regional measures to remove man-made obstacles to trade. They include reducing the number of weigh bridges from Mombasa port to the interior, removing unnecessary road blocks, introducing one cargo system for the whole region and clearing goods for inland countries just once, on arrival at Mombasa. This has reduced the time to move goods from Mombasa by road to Kigali from 22 days to five and halved the cost of transport.

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Rwanda has attracted about $2 billion in investment since 2009.

Kagame and his ministers travel extensively to sell the country and bankable projects within it. In 2014, the country attracted $390 million in projects, compared with $445 million in 2013.

Deals are in multiple sectors – ICT, power, construction and logistics and manufacturing.

A lack of corruption and a generally welcoming business environment are major draw cards for investors. The regional market is another. Companies say that there is a “can do” feeling in Rwanda and generally well-run state agencies with which investors have to interact.

TALKING TO BUSINESS

(AfDB) annual meetings in Abidjan earlier this year. He reminded delegates that it’s not governments that do business but companies.

“We can put in place a good business climate and good governance and this should be enough, but it isn’t. We need to have dialogue with the private sector as we make our policies, particularly if we want to industrialise. This helps to focus our strategy and spending choices. It is the private sector that comes to do business so you have to talk to them and create a proper partnership for development.”

The country is positioning itself as a regional hub for meetings, incentives, conferences, and exhibitions (MICE), a vision supported by the construction of a new international conference centre that will be the most modern facility in the region.

Although construction has been stalled by a dispute with the Chinese construction company building it, Rwanda is already attracting large events. Last year, the AfDB held its annual meeting in Kigali; later this year, the city is hosting the annual meeting of security organisation Interpol and next year, the 2016 World Economic Forum’s Africa meeting.

On the back of this, a number of international hotel brands are setting up in the city, including Marriott, Radisson Blu and Sheraton.

The central bank governor John Rwangombwa told the Financial Times earlier this year that the country aimed to increase the contribution of tourism, the biggest contributor to Rwanda’s foreign exchange revenues, to the national fiscus, through the MICE initiative. In 2014, $49 million of the nation’s total tourism takings of $305m was accounted for by conferences. The aim is to raise that to $150m by 2017. Rwangombwa reckons the conference programme “can really be a quick-win in terms of increasing our foreign exchange.”

The national airline, Rwandair, is planning to increase its fleet and destinations to support the conference industry.

THE BEGGING BOWL?

But for all the progress that has been made, Rwanda remains a donor-dependent country with an estimated 38% of budget made up of foreign funding. This is a lever for donors to use if they disapprove of actions of the government, as they did in 2012 over allegations in a United Nations report that Rwanda was supporting a rebel insurgency in neighbouring Democratic Republic of the Congo (DRC).

The government says it has one simple premise with regard to business, but one many African governments tend to avoid – ensuring regular dialogue with the private sector at the highest levels. Rwanda Development Board CEO Francis Gatare, commenting earlier this year on Rwanda’s impressive performance in the World Bank’s Doing Business Index, said, “We have achieved this mainly through constant dialogue with the private sector to determine their perspective and needs.”

Kagame denied the allegations but the relationships and linkages between his government and the eastern DRC are complex and longstanding, reaching back to the genocide. Many Hutus, the ethnic group that had ruled Rwanda before 1994 and which masterminded and executed the genocide against the Tutsis, fled to the eastern DRC and used it as a base to launch attacks on Rwanda. This led to incursions of troops from Rwanda and Uganda into the DRC to protect their security interests.

This was echoed by Claver Gatete, Rwanda’s Minister of Finance and Economic Planning, at the African Development Bank

But both countries have been accused of using the cover of security to build up economic interests in this mineral rich part

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Village market in Gisenyi

of the Congo. Rwanda has frequently been accused of illegally siphoning coltan, a rare metallic ore used by manufacturers of mobile phones and electronics, from eastern DRC and exporting it legally as part of national exports. Kagame insists the country has its own extensive reserves of coltan and denies smuggling charges.

Similar allegations have been made about the DRC’s diamonds.

NEXT, PLEASE...

There are those who believe that the removal of the old guard in Rwanda and in Uganda may help to end the low-level simmering conflicts in this part of Africa. But that may not be anytime soon.

Museveni remains in power after 30 years and Kagame has dealt ruthlessly with critics and those with whom he has fallen out, presumably to prevent any challenge to his rule. Stories abound of assassinations and attempted killings of prominent Rwandans who have challenged Kagame. His former head of intelligence was found murdered in a hotel in Johannesburg last year, for example.

The president has become so central to the economic and political dynamic of Rwanda that there are concerns about continuity in terms of projects he is driving and about the resilience of the reconciliation project should he leave power. There is likely to be some support outside Rwanda for a term extension, given the peculiar circumstances of the country. But the strong push for dropping constitutional limits on political tenure has echoes of other African countries such as Uganda, where political goodwill was lost in the attempt to hold onto power. This may yet backfire on Kagame and eventually harm the investment prospects for his country he so desperately wants

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The Kigali City Tower which houses the Rwanda Stock Exchange in Kigali.

PHOTOS: GETTY IMAGES / GALLO IMAGES

Much will depend on what happens in 2017. There is no succession plan and if Kagame stands down, it is not clear who will take over. In the unlikely event that Kagame’s third term bid fails, his successor would almost certainly be someone anointed, and possibly controlled, by Kagame given the weak opposition in the country.

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TOP SIX THINGS TO DO AND SEE IN RWANDA Words Dianna Games

GORDON INSTITUTE OF BUSINESS SCIENCE

EXPLORE KIGALI

The capital has been a hive of construction over the past decade. New hotels, government buildings, shopping centres and residential areas have mushroomed and there are now several shopping malls and even a 24-hour supermarket.

Most shopping is still done, though, in local markets selling everything from fresh produce to African fabric and handicrafts.

There is no shortage of accommodation in Kigali, from the top end Kigali Serena Hotel and Grand Legacy Hotel near the airport to smaller guest houses and boutique hotels. An international convention centre, currently under construction, is set to draw international brands such as Sheraton and Radisson Blu, to the city. The HÔtel Des Milles Collines, made famous by the film Hotel Rwanda, which captured its history as a refuge for Rwandans during the genocide, has been managed by international chain Kempinski since 2014.

RESTAURANTS IN KIGALI

Modern and rapidly expanding Kigali has a wealth of restaurants, coffee shops and nightlife. Zuri Restaurant is a top-rated restaurant. Others include Sakae Japanese Restaurant, Brachetto Restaurant and Wine Bar, the new Poivre Noir Restaurant serving French and Belgian food, pizza place Sol e Luna near the airport and Republika Lounge Restaurant, which is popular with expatriates. The local tennis club is a relaxed venue and frequented by locals.

Bourbon Coffee Ltd is a popular Rwandan café chain with branches at the airport and around the city. The name originates from the Bourbon varietal of Arabica coffee beans which grow wild in Rwanda. Coffee tours, which take in growing and processing centres, are popular in Rwanda. Blues Café in central Kigali is also a popular coffee shop.

There are number of night clubs and bars but it is best to check with locals or your hotel where to go as places open and close all the time.

GENOCIDE MEMORIALS

Many visitors to Rwanda include a visit to at least one of the eight or so genocide memorials around Rwanda, which commemorate the slaughter of nearly a million Rwandans in just a few months in 1994. The biggest is the Kigali Memorial Centre in the city, which has a large photographic exhibition and an audio guide showing the build up to and execution of the genocide as well as many of the victims. About 250 000 people are buried in mass graves on the property. There is a café to sit and take it all in after the tour.

GORILLAS

The mountain gorillas are a major tourist draw card. The Virunga Mountains that straddle Rwanda, Uganda and Democratic Republic of Congo (DRC) are home to an estimated 480 gorillas, and in Rwanda they are found in the Volcanoes National Park. Booking in advance is necessary as only 80 permits a day are issued to trek to their habitat. Permits are also expensive – $750 each. Overnight accommodation is available at the park and in Ruhengeri town nearby. At a push, the gorilla trek could be done as a day trip from Kigali.

It is worth visiting some of the smaller memorials around the country, many of them churches, which are where the massacres actually happened and offer a more close-up view of the horror.

A few are quite close to Kigali and can be done as a half-day trip.

NATIONAL PARKS

Most tourist destinations in Rwanda are about two hours’ drive from Kigali on reasonable but winding roads. Heavy traffic can make it longer. This means a long day trip or an overnight stop to visit them. Villages and farms line many of the main roads and mountain views abound in almost every direction.

In addition to Volcanoes, there is the Akagera National Park in the east, which has a lot of wildlife and a lodge that overlooks a network of lakes, which form part of the Akagera River, said to be the most remote headstream of the Nile.

The Nyungwe Forest National Park in the hills of south-western Rwanda, is a centre of flora and fauna with hundreds of species of trees and plants as well as several hundred chimpanzees and other primates. There are a few accommodation options.

LAKE KIVU

Further along the road to Volcanoes National Park is Gisenyi on Lake Kivu, which runs along the border with the town of Goma in Democratic Republic of Congo (DRC). The town is unremarkable but the lake is worth seeing. The main hotel is Serena Kivu Hotel, on the lake shore, but there are other accommodation options. It is possible to get a visa at the DRC border to visit Goma.

The tropical town of Kibuye on Lake Kivu, also about two hours’ drive from Kigali, is worth a visit. Boat trips to islands in the lake are popular and there is a genocide memorial nearby – an old church still in use. There are also a few guest houses

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Accenture is growing because we continue to innovate and deliver positive outcomes, which help our clients become high-performance businesses. And we are looking for innovative leaders to grow with us.

We are speaking with dynamic leaders to help shape this exciting chapter in Africa’s resurgence—a resurgence based on thinking and doing differently. If you’re an industry leader looking to make a difference, we have the scope and global range to help you succeed.

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FROM WESTMINSTER TO WOOLIES Words Cara Bouwer

In 2013 Susie Squire was at home in the hallowed halls of Westminster. Her work address was 10 Downing Street and she enjoyed privileged access to British Prime Minister David Cameron’s inner circle. Today she’s Head of Corporate Communications & PR at Woolworths. A different ball game perhaps, but the pillars of great PR remain the same.

At the heart of effective communication and marketing, Squire told Acumen, is great PR. “Great PR is about honest, two-way communications with whichever stakeholder you’re trying to reach. I think great PR is open, transparent and authentic. It’s collaborative. Those would be the key words I would say that distinguishes great PR from good PR. Anyone can send out a press release and ring up a journalist. Great PR is more than publicity.”

Although she has ties to South Africa, Squire’s previous role was as Press Secretary to the UK prime minister. Prior to that she was Head of Press for the UK’s Conservative Party and, before that, Special Adviser to the Secretary of State for Work and Pensions.

However, with 18 months under her belt in her new role at South Africa’s second-biggest retailer, Squire has had time to reflect on the local landscape. What has struck her is that fact that South African, and indeed African, companies are entering a “brave new world in terms of reputation management.”

Squire explained: “The way companies used to handle PR and corporate communications is outdated. Now even smaller businesses are dealing with reputation issues on a daily basis, largely due to the advent of social media. Customers and other stakeholders are now able to voice their opinions immediately and in a very public space. As we move from traditional media to social media, the whole world of reputation management in PR has become much more challenging.”

Certainly, when it comes to social media and the court of public opinion, even a practiced hand like Squire can find the going tough. In November last year Woolworths came under fire during its AGM from the South African pro-Palestinian Boycotts Divestment and Sanction (BDS) movement to cut ties with Israeli companies over the ongoing expansion of Israeli settlements in Palestine. Reactions to Woolworths’ unyielding response were mixed, although the reaction did come swiftly with Squire noting that: “Woolworths, like all South African retailers, is guided by the South African government. The South African government

Woolworths Head of Corporate Communications and PR, Susie Squire

made it clear that South African companies are free to trade with Israeli companies.”

In an interview with News24, Squire displayed the subtle messaging which is part of a practiced PR arsenal. She addressed the issue while still sliding in a positive: “Crucially at Woolworths we source over 95% of our foods locally, here in South Africa.

We are a proudly South African company. The only time we get anything from abroad, whether it’s from Israel or Spain or Greece or Kenya, is if we can’t find it here locally, because it’s out of season and our customers would like it. To go to the point around Israeli sourcing, we absolutely understand that the BDS have a point of view on Israel and on Israeli products, what I would say … is that we only currently, out of thousands of products in our food stores, have three from Israel, which are figs, pomegranate seeds and pretzels. They are clearly labelled, in line with the South African government guidelines, so our customers have the right to choose.”

Then she came back to her primary message: “We have no deeper relationship with … the supplier we work with in Israel than the suppliers we work with in Spain or Kenya. So I think it is quite wrong to draw any political conclusion from the fact that we get the odd food item from Israel. We are a South African retailer. We create South African jobs for South African people. And we are not in the business of foreign affairs or politics.”

By mid-2015 the debate might have moved out of the mainstream media, but the BDS’s #BoycottWoolworths campaign was still very much in evidence on social media – specifically Twitter – highlighting the power of social media to democratise information and opinion, and give a voice to people who previously didn’t have one.

This is something of which Squire is well aware. Indeed, social media is both a trend and platform which will surely shape the future of the PR profession. “Many people say that social media is incredibly harsh and often negative. However, if you are seen

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to be transparent, quick to respond and engaging genuinely, social media can be amazing for having a conversation with your customers, your voters or your stakeholders,” stresses Squire.

“We have to box much smarter,” she said. “If something happens in a store or something happens to a minister, the news cycle is real-time and highly visible.”

Far from being a cause for alarm, Squire sees this as an opportunity. “What’s exciting, if you are in our field of work, is that nowadays pretty much every company accepts the need to be proactive in terms of managing their reputation and their stakeholders. They need to communicate their story, their vision and their people much more effectively. It’s exciting, but it can also be a little scary. We are in a world where you can run, but you can’t hide.”

This dynamic new world goes some way to explaining why a high-level press secretary would turn her back on UK politics in favour of an Africa-based retailer. “What I did in politics prepared me very well for coming into Woolworths,” explains Squire. “It’s a business that is both challenging intellectually and is growing to become this huge Southern Hemisphere retailer.”

In politics you are persuading someone to vote for you. In retail you are persuading someone to shop with you, explains Squire.

“At another level, Woolworths is a huge agent for change and social good in the countries in which it operates. Coming out of politics, I obviously have quite a view on society and want to feel I am at least making a positive impact in this respect. A big part of what attracted me to Woolworths was the Good Business Journey (a programme launched in April 2007 as a formalisation of Woolworths’ sustainability commitments).”

GORDON INSTITUTE OF BUSINESS SCIENCE

There is a definite thread linking her previous life and her new life, believes Squire. But the commonality lies in being a communications professional first and foremost. “I have always been in positions where I have a huge amount of respect for the institution and for the people with whom I work. That’s what attracted me to Woolworths,” she explains.

Early exposure to the media (Squire gained work experience as a features writer while studying for her Masters at the University of Cape Town) has also stood her in good stead in terms of understanding the pressures and complexities of the fourth estate. “I loved working at Condé Nast,” she recalls. “The editors taught me a lot about professionalism, about how I present my work and, importantly, the demands and needs of the media. It taught me about deadlines and how much goes into producing a single article. Part of the reason I was able to work at such a high level in London was because I always understood the needs of journalists and was always willing to help them.”

Speaking more broadly, Squire admits there are aspects of PR and marketing which are often overlooked by businesses.

“Stakeholder engagement is incredibly important. In terms of where global trends are heading, just because a company says something, it doesn’t mean the general public will buy it anymore,” she notes. “Most businesses have traditionally focused on the press and investor audiences, but it is the third-party space that has become more and more important. Traditional

media and the news agenda has become more of a conversation than one-way traffic. Businesses need to recognise that.

Communication is more ‘dialogue’ and less ‘broadcast’, forming a two-way conversation.”

This shift has heightened the strategic importance of good PR and marketing. And Squire is well placed to comment on this development. “South African businesses have always taken traditional marketing very seriously, but what’s been fascinating for me to see in South Africa is how people are moving away from a traditional marketing approach of buying media, putting an advert up and telling you what’s great about them, to more of a public and stakeholder relations influencer strategy,” she says.

“In South Africa, and much of Africa, traditional print media is not consumed by the majority of the population. Not every single person will read a newspaper, but they have a mobile phone. Because of mobile technology, people can engage in the conversation on any given day. I do think that South African companies are increasingly as aware as companies anywhere in the world that they need to be part of the conversation, and need to be active in managing their reputation and communicating with all their different stakeholders."

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THE SA CONNECTION

Susie Squire is no stranger to the Mother City, having completed her MA in English and Political Philosophy at the University of Cape Town (UCT).

Acumen asked if this was a factor in deciding to relocate back to South Africa? “Totally,” said Squire. “I grew up partly in South Africa and had the great fortune of studying at university here. When I was in the UK I missed South Africa a great deal because I had some of the happiest times of my life at UCT. I absolutely love South Africa and I always have. I love the people, I love the country and I love the energy. I also believe that the best days of this country are in front of us and not behind us.”

There is also a family connection to one of South Africa’s favourite pastimes: rugby. Squire’s father, Jeff, is one of Wales’ most admired rugby forwards and a three-time British Lion.

“The reason I originally came out to Cape Town was because of my father and I think in terms of my life and my values, my father has played a huge part in shaping everything that I do,” says Squire. “I admire him more than I could ever say and a lot of that came through our time here when he was both playing and coaching rugby at Wits. I grew up in a sporting family and on the touchline of many rugby pitches. I feel very at home in the sports world here and I love the passion of the South African people. When I think of Springbok games in South Africa, it reminds me of the South African optimism and the spirit of Ubuntu, which I admire.”

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FROM POTENTIAL TO PERFORMANCE The talent management space is characterised by a plethora of management tools and methodologies designed to leverage employee potential. These methodologies include the application of complex competency frameworks, different performance management systems (online and manual), talent management grids, the use of psychometric, cognitive and behavioural assessments and a multitude of coaching and team interventions.

While all of these methodologies undoubtedly achieve a level of success, they often appear too static, and do not always allow the uniqueness of each individual to shine through because they force people to “fit into a box”, where certain results are more sought-after than others. This often results in ‘talent’ being viewed as the minority of people that can be found at the top of the structure, while the majority of any organisation’s workforce will be made up of people who fit somewhere in the middle (i.e. neither high flyers nor poor performers). Finally, the typical assessment process can be quite a cold, impersonal experience for candidates, as they are often expected to complete a series of online surveys and psychometric assessments, where they are not provided with any leeway to express their individuality.

At BIOSS SA, our approach addresses the above criticisms in several ways. We believe that there are natural themes of work that manifest into different accountabilities throughout organisations, all of which are crucial to ensure that the organisation, and its employees, are able to meet their strategic mandate. This is evident in our core management model, the Matrix of Working Relationships (MWR). In this model, seven themes of work are described, each with a specific valueadding theme and each concerned with providing a unique contribution to the organisation.

The first three work themes are considered the production engine of the organisation and are concerned with creating value for the present. These themes of work are referred to as: Quality, Service and Practice.

The next two themes are concerned with adding value for the future viability of the organisation. These themes of work are referred to as: Strategic Development and Strategic Intent.

The final two themes of work are about value systems which ensure global positioning and transformation of corporate entities and industry. These themes of work are referred to as: Corporate Citizenship and Corporate Prescience

Kevin Distiller, Director, Bioss Southern Africa

Capability, according to the MWR, is defined as the decision -making process that takes place when knowledge and experience do not suffice. The future generally tends to be unknown and it is only our judgement that allows us to deploy ourselves and our teams’ knowledge and experience to best effect.

Capability is more commonly referred to as Strategic Thinking.

Another value that is a key feature of the BIOSS Approach is the concept of “Appreciation”, where we focus on creating a space for candidates to explore their career journey, aspirations and preferred ways of working. This means that a candidate who goes through one of our approaches (such as the Modified Career Path Appreciation (MCPA)) is left fulfilled, with a clear understanding of both their current level of complexity at which they can comfortably function, as well as the likely longer-term development of their capability. Thus, it is an appreciation of where an individual experiences “flow” – i.e. the work that they find challenging and stimulating, as well as how they prefer to approach work in ideal circumstances.

The MCPA process is unique, and is an unforgettable experience that creates mutual benefit for an individual and an organisation. Ideally there should be as good a match as possible between an individual’s capability and the responsibilities with which they are entrusted. When this balance prevails, the individual experiences a flow of energy connecting them to their work and sustaining them. This results on optimal engagement, performance and success

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Johannesburg Office Foundation House, 24 Lucas Lane, Bedfordview +27 11 450 2434 Info@bioss.com

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TOWERS ACROSS AFRICA Words Chris Gibbons

The spectacular rise of the cellphone is one of Africa’s enduring success stories. But it would not have been possible without the complex and costly array of transmission towers that make up the networks, run by companies like Nigeriabased IHS Towers and engineers like Mohamad Darwish.

Mohamad Darwish was born in Beirut and grew up there during Lebanon’s agonising civil war. He credits his parents “for providing me the most precious gift they could, during the period when people were fighting, which is education as it was the key factor to my future success.” But the war also had an effect on the youngster: “When you live in circumstances where in the morning you go to school for a normal day, and you end up running back home, taking a different route every time, it just makes you stronger and want to achieve more in life.”

Darwish has certainly made his mark. Along with his brother Issam, he’s a co-founder of IHS Towers, which currently manages 23 000 towers in five countries on the African continent. Those, approximately 15 000 are based in Nigeria, making IHS Towers the No.1 tower company in Africa, as well as EMEA, and one of the Top 10 tower companies in the world. Currently, he sits on the Group’s executive committee and is deputy CEO of IHS Towers Nigeria.

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“As devastating as the war [in Lebanon] was, it taught me the importance of development. It gives me happiness now to know that IHS supports thousands of families and its business model inherently improves life for ordinary people through cheaper and better-quality communication networks,” says Darwish.

From his parents’ investment in education flowed a Bachelor’s degree in Electrical Engineering from the American University in Beirut, an MBA with Honours from Rollins College and a Master’s degree in Engineering and Applied Operations Research from Cornell University in the US. His brother is also an engineer, and Darwish says “it forms the very DNA of our business, as we are able to grasp not only the business side of running a company like IHS, but also have a solid understanding of the technical aspects of owning, managing and growing a telecommunications tower business.”

I suggest to Darwish that cellphone towers is not a very glamorous business and that it probably contains a lot of rolledup sleeves, steel-capped boots and hard hats?

“Spot on,” he replies. “What we provide is core engineering services.

Behind the high availability and fancy offering comes a large team of staff and partners who work day and night across the countries we are in, in challenging areas, overcoming access conditions and security concerns.”

There’s an element of understatement at work here: unable to rely on the national electricity grid, each tower has to have its own independent power generation system. Along with solar technology, these have to be supplied with diesel on a regular basis, which Darwish says is “a very complicated and challenging supply chain process.”

He also believes the engineering background is what gives IHS a competitive edge: “Keep in mind that what differentiates IHS from its competitors is its technical edge and the innovative solutions it implements on its sites.”

The company manages towers for both Orange and MTN in Cameroon and Côte d’Ivoire and recently completed two similar deals with MTN and Airtel in Zambia and Rwanda. Two transactions closed last year in Nigeria, adding a further 12 000 towers to an already impressive base. Key to IHS’s success is the concept of tower-sharing, which sees more than one mobile network operator using the same mast.

“Mobile Network Operators (MNOs) outsource their tower portfolios to IHS creating three significant and almost immediate benefits,” explains Darwish. “For the customer, the network improves, uptime increases to over 99% as the network is now run by a specialised team and the network expands quicker and cheaper through sharing towers with other networks. Second, for the MNO, costs are stabilised and capital is released for spending, i.e. improving the network and developing products for customers.

And third, for Africa, the benefit is wider, more reliable and efficient networks, built and maintained by professionals.”

Darwish sees IHS as a truly entrepreneurial company, “one of the pioneers who ventured into the infrastructure sharing and leasing

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. . . EDUCATION . . .

WAS THE KEY FACTOR TO MY FUTURE SUCCESS.” business in Africa, as well as continuously looking at and designing smart solutions on our systems that provide better performance at lower cost.”

He is also quick to point to its green credentials: “Each of our portfolios is also serviced with a bespoke energy mix to ensure maximum uptime, but also to minimise the consumption of diesel. We achieve this through the most up-to-date batteries and generators and the latest innovative solar technologies.”

Born in 2001 out of the privatisation of the Nigerian telecommunications sector, IHS began as a company that specialised in building base stations for the operators.

“Over the years, IHS has evolved into operating and maintaining the MNOs’ sites, which eventually made us the perfect partner for our customers in providing telecom passive infrastructure sharing and leasing services,” says Darwish.

But why the decision to headquarter itself in Lagos, Nigeria?

“Africa’s population is just over 1 billion and is set to double over the next 40 years,” explains Darwish. “This rising population is more affluent, mobile and connected than ever before and Nigeria alone has 170 million people in it. As one of the world’s fastest growing economies, as well as being Africa’s largest, Nigeria is leading this change.

“The country’s economic fundamentals are very attractive to MNOs and infrastructure companies. It is Africa’s largest mobile market, with more than 125 million subscribers and a market penetration of 75%.

And it is still growing, year-on-year,” notes Darwish.

“IHS invested over $10 million in 2012 and is planning to invest more than five times that amount, into developing the most advanced Network Operations Centre in Nigeria. This will give us 24/7 awareness and data capture of tower performance.”

.

Mohamad Darwish

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NEW BUSINESS MODEL OR SLICK COSTUME CHANGE? Words James van den Heever

The collaborative economy is much hyped. What is it, and is it set to disrupt business as you know it?

A job at Google is widely considered to be the height of achievement, and yet Brett St Clair gave up his at Google South Africa last year. His motivation? To do work that would make the world a better place while still generating money.

He joined Money4Jam, a local start-up that connects people with time and a smartphone to companies that need micro jobs performed. The company has big ambitions, and recently secured an investment from Tencent, the Chinese company in which Naspers holds a substantial stake. Tencent is one of the world’s largest Internet companies and competes with the likes of Amazon, Google, eBay, Facebook and Alibaba.

“We’re interested in building a business that will affect hundreds of millions of people,” St Clair says.

This combination of commercial ambition and idealism is a recurring theme in the story of the collaborative economy. In many ways, it is a genuine attempt to reinvent capitalism with a more human face.

GORDON INSTITUTE OF BUSINESS SCIENCE

DOWN AT THE VILLAGE PUMP

The roots of the collaborative economy lie in peer-to-peer networking; essentially the use of technology to recreate the village community where you could borrow your neighbour’s hoe and he would borrow your mangle. A good example is Yerdle, which aims to reduce the amount of stuff we buy/own by 25% by making it easy to exchange unused items without using cash.

view, the size of the company shrinks – fewer assets, less staff – but its scope broadens. Customers and service providers are everywhere.

Stafford Masie, founder of Thumbzup, says the collaborative economy is all about harnessing the latent creativity of humanity.

The company is no longer seen as the fount of innovation but its midwife, one might say. Instead of having employees, the company collaborates with individuals who have something to contribute.

Nasty Gal illustrates this approach. It was founded by Sophia Amoruso, who quit a dead-end security job to found a business selling vintage clothing on eBay. Nasty Gal is now a $100 million business. Amoruso is not eBay’s employee, but her business is dependent on its platform – the two companies “collaborate”, with eBay providing the payment mechanism, the platform and the trusted brand.

CAPITALISM AS EMPOWERER OF INDIVIDUALS Empowering individuals to create their own businesses in their own way allows the collaborative economy to claim it is humanising commerce. This moral high ground is desirable at a time when capitalism seems unattractive to many – hence the vigour with which entrepreneurs piously claim to be collaborative.

There’s a faintly hippie-ish flavour to these networks, and a sense of bypassing commercialism to allow humans to deal with humans directly. This sharing economy has spawned a distinctive, but definitely commercial, business model. Its underlying dynamic is that sharing is actually about unlocking the value of underused, existing assets, be they infrastructure or equipment, time or skills.

A good example of this is Zipcar’s Robin Chase, whose book Peers Inc puts her company squarely into the collaborative camp. Strictly speaking, though, it’s just using technology highly innovatively to meet a need created by people’s inability to share cars. Zipcar is not connecting individuals; it owns the cars and so is a party to the transaction. Nonetheless, its unique selling proposition is definitely “collaborative”. To the cynical observer, it’s just a new take on car hire, but it positions itself as a way to share cars.

Now, the concept of peering has broadened to include “collaboration”, in which individuals provide goods or services to other individuals (or companies) facilitated by a platform.

The platform is the business. From an organisational point of

Perhaps the classic mainstream collaborative economy business is Airbnb, which provides a way to link people with excess rooms to people who need accommodation. A clear peer-to-peer network enabled by a slick transaction and payment platform.

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Without owning a single room, Airbnb is responsible for more heads on pillows than the venerable Hilton Hotel group.

Uber is also seen as a collaborative-economy company. As Uber GM for Joburg, Pretoria and Durban, Alon Lits, makes clear, Uber provides the technology to link people (professional drivers or Joe Public) driving their own cars with people wanting a lift.

Without owning its vehicles, Uber is valued at more than $40 billion, more than many airlines.

This emphasis on enabling access is, in the words of the collaborative economy’s chief evangelist, Rachel Botsman, a move from an asset-intensive to an asset-light business model.

At a more philosophical level, the collaborative economy favours access rather than ownership. It parallels the rise in consumer desire for experience rather than ownership, and by the startling finding (at least to one of my generation) that 75% of German 1825 year olds would choose a smartphone over a car.

1

Available at Pwc.com/CISsharing

In this world, you see, the smartphone becomes the remote control through which one accesses what is needed when it’s needed. Rent a Porsche on the day you feel like driving fast, don’t go into debt to have one in your garage.

But let’s not lose sight of the money. In reality, according to PwC’s report, The sharing economy1, cost and convenience are its primary attractions. Frankly, people use Airbnb to get, and pay for, cheaper accommodation; if their host gives them the inside story on the city, that’s just a bonus.

SAME, BUT DIFFERENT

Botsman usefully says the collaborative economy is recalibrating supply and demand; Michael Jordaan, former CEO of FNB and now heading up Montegray Capital, says it’s all about “ondemand sharing”. This on-demand model, Lits adds, makes for greater efficiencies. A taxi booked for 2pm, for example, cannot

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accept other commissions for the preceding hour, whereas the Uber model approximates the just-in-time approach, hooking up client and free vehicle at the time of need.

While peer-to-peer networks can be highly efficient and reduce costs, they lack both resources and the power of the brand – components a business can supply, Jordaan notes.

But these are only advantages if the business is flexible enough to re-evaluate its business model, adds Ian James, Programme Director: Digital Disruption at GIBS. The collaborative approach is already being used to access skills and information within corporates, now it needs to be applied to the way they conduct business.

When confronted by a new concept, many companies try to kill it or buy it, James observes. Rather, they should be trying to understand how they can enable the new idea. Rakesh Parbhoo, Executive for Emerging Markets at Dimension Data Middle East and Africa, says these start-ups identify gaps in the market, and thus should be welcomed by established companies on that basis alone.

Traditional businesses that can think their way into this new way of doing business can provide the platform that enables it, plus the brand, as already suggested. They can also act as the “internal regulator”, setting and enforcing the rules of the game. They can determine who can participate either as suppliers or consumers, and maintain the essential ratings that each party makes of the other. The latter function, Botsman argues, is in fact emerging as critical, with trust becoming the currency of the collaborative economy.

GORDON INSTITUTE OF BUSINESS SCIENCE

James suggests a potentially even bigger benefit for a business to enter the collaborative economy: access to “richer data points” that will enable it to respond to customer expectations better and offer the desired experience.

But despite this genuinely new approach, money remains the lubricant and purpose of the collaborative economy. Payment mechanisms are critical to make the whole thing work and here, surely, established businesses with the right vision could really score. Thumbzup’s Pebble is one example of a way to make the collaborative economy work by decentralising payments; Uber and Airbnb, among many others, use Braintree for the slick and seamless payments that make them so user-friendly.

The collaborative economy will not replace traditional capitalism but it will radically disrupt certain sectors where it can offer efficiencies and a better match with customer expectations. Banking is usually fingered as the sector most vulnerable to large-scale disruption, and companies like TransferWise are already proving that collaborative-economy approaches can work. But perhaps more importantly, as companies like Zipcar show, the underlying principles of the collaborative economy resonate with consumers, and can be used to gain competitive advantage

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THE COLLABORATIVE ECONOMY WILL NOT REPLACE TRADITIONAL CAPITALISM . . .”

REDEFINING WORK

The collaborative economy is not just disrupting business models, but the nature of work itself, Jordaan points out.

A true believer like Masie argues that the opportunities for making money are vastly increased for those who can think differently. And yet, while the concept gets points for humanising commerce by allowing individuals to operate commercially under their own terms, the flipside is that work will be less formal and only those with drive and ability will survive. There will be more jobs, Parbhoo agrees, but there are trade-offs: work will be less formal, less certain.

This congruence of meritocracy and the collaborative economy can be seen in the trajectory of Money4Jam – the firm that Brett St Clair left Google to join. The company originally saw itself as providing new job opportunities, but in fact the takeup has been from ambitious people who want to supplement income from existing jobs.

“Clearly, one has to balance the greater flexibility in matching demand and supply with the possibility that people will be exploited,” James says. “It’s neither good nor bad: it’s just the way that society is moving and, at best, it offers everybody the opportunity to do work they love.”

One does wonder how this will play out in South Africa, where the demand from the left is for “proper” (i.e. protected and with benefits) jobs. To some, the collaborative economy might look like an opportunity for the able and driven; to others, labour broking by another name.

IS YOUR INDUSTRY RIPE FOR DISRUPTION?

Five tell-tale signs that a sector is vulnerable to disruption by collaborative-style businesses: · · · · ·

Complex experiences and processes Waste Broken trust Redundant intermediaries Limited access

(Source: Rachel Botsman, available at Slideshare.net/CollabLab/evolution-of-theories-45919648)

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I WANT IT, AND I WANT IT NOW! Words Dion Chang

If you can’t be bothered to assemble your newly bought flat-pack shelving unit then somebody somewhere will to do it for you.

That’s the attraction of the on-demand economy.

Earlier this year – in April, just when the stress of the year’s first quarter was starting to accumulate – Uber launched a unique once-off service: UberRELAX. People who were in desperate need of a tension releasing Indian head and shoulder massage, but were too busy to visit a spa, were able to simply call the e-Hailing service which then dispatched a qualified masseuse to you, in an Uber cab. The service was available for up to six people, at a flat fee, which enabled small companies to treat their staff without having to leave their offices. The following month Uber partnered with Discovery Health and, using the same principle, were able to send out a registered nurse to provide flu inoculations (up to five per call) before the onset of winter.

GORDON INSTITUTE OF BUSINESS SCIENCE

Uber, which provided the massage and flu vaccination service, is essentially an on-demand service itself and has managed to position itself as this new industry’s trailblazer as it mutates myriad on-demand services: anything from bringing you kittens to pet for a few minutes, to bringing you lunch. Seamless convenience is the beauty of on-demand services and it’s a business trend that is not only spreading fast, but also across all industries, creating a niche economy all of its own.

Delivery services may have been around for a long time but technology, and in particular smartphones, has changed the game completely. With the help of mobile Internet access, apps for everything and specifically geo-mapping capabilities have not only broadened the range of services that can now be dispensed, but also ensured that requests can be acted upon instantaneously.

Today, whatever your heart desires is literally a tap or swipe away.

TaskRabbit, launched back in 2008 in America, was one of the pioneers of this industry, and running out of dog food was what initiated the idea for founder Leah Busque and her husband.

The original concept was based on an old-school principle of neighbours helping neighbours. They were convinced that there was someone in their neighbourhood who would be willing to assist with a chore or provide a service, for a fee, and they were absolutely correct. Eight years later the company now operates in 19 cities in America and across the globe and has managed to

raise $40 million in venture capital. The range of tasks that you can outsource is astounding: everything from asking someone to queue for you at a popular restaurant, to getting someone to decorate your Christmas tree. (I’m contemplating this on-demand service for myself later this year!)

But the on-demand economy is not just about customer convenience. On-demand services are proving to be huge industry disruptors, and the threat is spreading. DriveNow is a remarkable service that fuses car sharing with an ondemand twist. The German-based company leverages a brilliant collaboration with BMW and Mini Cooper. Like Uber, you locate a car that is closest to you via their app. Rather than having to go to a car rental depot, the car you access has simply been parked wherever the previous user left it. The car is accessed via a NFC card device, which not only unlocks the car but also logs your journey. No keys are required and you simply use the car and park it at your destination, where sooner or later another DriveNow customer will access it.

This is just one disruption that is about to hit the automotive industry. The combination of on-demand services like DriveNow and Uber, coupled with the looming (and very real) prospect of driverless cars paints a challenging future for the industry.

It is estimated that by 2030, ancillary industries linked to the American automotive industry such as the $198 billion automobile insurance market, the $98 billion automotive finance market, the $100 billion parking industry, and the $300 billion automotive aftermarket could well collapse as demand for their services evaporates. A 2013 Columbia University study even suggested that “with a fleet of just 9 000 driverless cars, Uber could replace every taxi in New York City and passengers would wait an average of 36 seconds for a ride costing $0.50 per mile. Such convenience and low cost would make car ownership inconceivable, and autonomous, on-demand taxis – the ‘transportation cloud’ – will quickly become the dominant form of transportation.”

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Clearly, the ripple effect of the on-demand economy is not to be ignored. Even the somewhat cynical South African mantra of “we lag behind in these types of innovations and technologies” now rings hollow. In June, Africa’s first car-sharing scheme was launched in Johannesburg. Locomute does not have the “free floating” access that the DriveNow ecosystem offers but follows the template of another car-sharing scheme called Car2Go, a subsidiary of Daimler. Cars are accessed via “Locoparks”, a concept that still sidesteps the traditional centralised rental office model currently being used by car rental companies. This added convenience ensures that Locomute will gradually move ever closer to a pure on-demand service.

The concept of “anything on-demand” is not limited to delivery services and cars. On-demand entertainment is already making broadcasters, and their advertisers, decidedly nervous.

Last year, Serial, the iTunes weekly podcast phenomenon took everyone by surprise. Hosted by Sarah Koenig, Serial explored the 15-year-old murder of Hae Min Lee, a teenage girl in Baltimore and convicted killer Adnan Syed. Serial became the fastest podcast in iTunes history to reach 5 million downloads, with 2.2 million live streams per episode. Once the frenzy had passed it became clear that one of the main reasons for the podcast’s success was the on-demand factor. It was a perfect entertainment formula for the millennial generation: listen when you want to, rather than be tied to a broadcaster’s schedule.

The fact that music streaming services like Spotify are adding video news feeds to their offering, as is Apple, with Apple News, signifies a looming challenge for traditional TV news channels.

The new trend of “binge viewing” (watching multiple series of a TV show in one go) is another on-demand manifestation. People view episodes of a series back-to-back, eliminating the need to fast forward through advertising breaks. This not only alters how the producers construct the storyline (no need for cliff hangers), but also the length of each episode if there is no need for advertising slots, which in turn brings the difficult question of loss of advertising revenue to the fore.

But even outside the commercial arena of services and broadcasting, the on-demand economy is starting to affect human resources and the way in which companies are run.

Technology has enabled a new transient labour force: the growing numbers who prefer freelancing, outsourcing their services and determining when and where they work. These transient workers are in turn being used by companies as “work swarms” as the nature of work becomes more modular and project based. Work swarms are brought together and disbanded depending on the length and nature of a project, and it is proving to be a mutually beneficial relationship: workers escape the 9 to 5 rat race, while companies save on both office space as well as employee benefits.

The cover story of the January 2015 edition of The Economist (There’s an app for that) covered this emerging workforce, referring to it as the future “gig economy” when computer automation takes over many full-time office jobs, forcing workers to become freelancers or to simply “fill in the gaps” that computers can’t. They estimated that 70% of the world’s workforce could be “on-demand” by 2025.

. . . JUST HOW FAST IS YOUR CONCEPT OF ‘FAST’?”

The business mantra for the digital era has already switched from Big vs. Small, to Fast vs. Slow, and the on-demand economy is just accelerating that concept. There are already apps – like Magic and GoButler – that will help you filter and find the most appropriate on-demand service you’re looking for: it’s becoming that specialised.

The rise of e-Commerce has ensured that speed of delivery is now not only a company’s new competitive edge, but also their UPS. As drone delivery, autonomous cars, 3D printing and robotics become a near-future reality, one of the biggest impacts of these technologies, collectively, will be on the logistics, transportation and delivery industries. If you’re in these industries, or your business is reliant on them, ask yourself: Just how fast is your concept of “fast”?

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TERRIFIC TORRES Words Caroline Hurry

In Brazil, the beach is an open-air service to hedonism where congregations of surfers and bikini babes worship at its sandy altars

Selling Sarongs in Torres

GORDON INSTITUTE OF BUSINESS SCIENCE

Seeking the kingdom of suntanned revellers, my husband and I hire a car in Porto Alegre, Rio Grande Do Sul’s capital, and head north-east for Torres, on the Atlantic Coast’s Litoral Gaúcho, passing dozing farmsteads, and stalls selling contorted butternuts aka abobora.

From the 20th floor of our self-catering apartment, a line of surf caresses the reclining belly of the Praia Grande beach where local folk prance about in G-strings irrespective of age or sex. We stick out like … well, gringos on a Brazilian beach.

We spend our days catching waves and the ice-cream vendor’s eye, washing down grilled salmon with cold Kaiser beers and Aqua de Coco. In the evenings we drink champagne on our balcony, count star constellations, and fall asleep to the lullaby of breaking waves.

We watch the sun rise over the Atlantic and, as the orange sky turns blue, we walk towards the Morro do Farol lighthouse.

We cross a sweep of sand draped around the shoulders of a bay until we reach the Parque Estadual da Guarita, where cliffs offer superb views down the coast that stretches all the way to Uruguay.

On our return, we stop at a grotto.

Flowers, candles and black Madonnas

Torres Cliff Beach

adorn the rock face above a small pool where believers queue to fill plastic containers. Just one swallow of the holy water severely unsettles my stomach.

After a long night on the bathroom tiles, I beg to return our base in Porto Alegre, founded in 1755 as a Portuguese garrison.

The city lies on the eastern bank of the Rio Guaiba, where five converging rivers form a giant lagoon navigable by huge ships.

Keen to show me more of the country, my husband chooses an inland route. Passing dunes knitted together by tough grasses, we turn left and bounce along a dirt track that plunges into dense jungle until a few shacks are the only signs of civilization.

We press on regardless until Pete admits he has no idea where we are. No matter, the views are spectacular: tumbling waterfalls, thickets of palm, huge hydrangea bushes, pampas and arboreal mountains. After three hours, we emerge at the village of Campara Do Sul, in the opposite direction to Porto Alegre.

Thanks to our rudimentary Portuguese and some gesticulating locals, we turn back on a tarred road for Taquara, marvelling as mountains and jungle give way to sprawling cattle farms with

colonial homesteads and sleek horses.

Brazil's cowboys, the vaqueros, live here.

Two more hours and we hit rush hour Porto Alegre where we have to crawl through the red light district to get to our hotel. Prostitutes pace the streets like fat-bottomed beasts in an urban zoo. A tall gender-bender in black thigh boots and leather corset brandishes a riding crop.

We don’t stop. We see fire-eaters, jugglers, beggars and a street brawl. Outside the bar areas, the ground is slippery with spilt beer dregs. Brazilian women believe if they finish their drink they’ll end up on the shelf.

By day (while my husband works) I explore markets that sell everything from crafts to voodoo spells on how to win a man’s affections. Write his name on paper; wrap it around a chicken heart and set it alight. Mix the ashes with perfume and use the liquid to water a rosebush. Er, não, obrigada.

But to blend in with the locals, I buy a pink ribbon to tie around my wrist. The “blessed” ribbon grants the wearer a wish but you have to wear it until your desire manifests. I make a wish to return to Porto Alegre during their September Semana Farroupilha festival when traditional dancers and singers take to the streets, but my ribbon falls off on the way home, so who knows?

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SAN FRANCISCO SURPRISE Words Caroline Hurry

You’ll find it hard to part from the city on the bay with its compact, culturally diverse neighbourhoods, natural beauty, 21st century architecture and history In 1848, all that glittered around San Francisco was the gold rush. The Financial District was once a cove packed with 700 abandoned ships. The odd archaeological foray has unearthed masts, hulls, bone toothbrushes, buttons, coins, and opium pipe bowls from those wild days when 20 000 Chinese workers were shipped in to do the jobs nobody else wanted, like cleaning fish and latrines.

Our guide spins tales of immigrant struggles, racism, prostitution and foot binding, as she walks us through China Town to see a fortune cookie factory, temples and balconies festooned with laundry and strips of drying meat. An old man plays Jingle Bells and Hark the Herald Angels Sing on a one-stringed lute, even though it is early May. When Will Durst described San Francisco as a circus looking for a tent, he was probably talking about Fisherman’s Wharf.

The northern waterfront area is full of surprises from scary Laughing Sal at the Musée Mécanique to pelicans and sea lions on Pier 39’s concrete slabs.

Here, a gesticulating war veteran rants at his invisible companion. There, a local wag known as “the bushman” hides behind branches to frighten unsuspecting tourists. Most amusing when it’s not you leaping sideways with a shriek!

Fairmont Lobby

We learn about Whitey Bulger, a prisoner of Alcatraz until 1963, who returned to his alma mater to pose as a tourist in 1995, still on the run from the FBI. An Alcatraz tour offers stunning views of the bay and Golden Gate Bridge, still the most spectacular show in town.

We take the tram up to North Beach.

“Wow! This tram’s packed! Standing room only! Who’s giving up their seat to Angela Lansbury?” bellows the driver as a white-haired woman gets on. “Nothing like a good murder to relax you! You want out, you pull the cord. Roll it! Roll it!

Ding! Ding!”

In Little Italy we check out the Church of Saints Peter and Paul where Joe DiMaggio and Marilyn Monroe posed for their wedding pictures before lunching at The Stinking Rose in Columbus Ave, which features garlic in every dish. No vampires here, obv.

From my room at the Fairmont Hotel atop Nob Hill, which has hosted presidents, royalty, and the Hollywood elite since 1907, my gaze swept across city streets, way beyond the bay and island of Alcatraz. Walls lined with photographs of President Kennedy, Princess Margaret and assorted famous folk, provide a sense of elite 20th century opulence.

City scape

The hotel’s Tonga Room is the place to splash out. Opened in 1945, the former Olympic-sized pool was transformed into tropical rain forest with faux thunder, lightning and rain showers. Tables under thatch surround the pool, retro Tiki Mai Tais come in ceramic coconut shells, and the band performs from a floating raft. The Tonga Room is post-war 40s, swinging 60s, whatever spacetime continuum you want.

It’s worth visiting the Fairmont just to sip tea in the lobby with its marble Corinthian columns, vaulted ceilings, velvet chairs and a wrap-around staircase. And oh, the joy of calling reception day or night and having your call answered after one ring with: “Good morning/evening Ms Hurry. How may I best assist you?”

Now that’s what I call Nirvana

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Getting there: San Francisco is the latest British Airways A380 destination from London. BA offers several flights from JHB to London a week. Britishairways.com/travel/ home/public/en_za Accommodation: More about the Fairmont, San Francisco from Fairmont.com/sanfrancisco/ Cable car

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THE FINER THINGS Words Cheska Stark

GORDON INSTITUTE OF BUSINESS SCIENCE

HIS CHECKLIST 1.

Sunglasses, R2 270, Carrera at Safilo Get into the mood for summer with a new pair of sunnies. This pair of tortoise-shell sunglasses scream LA poolside, which is just the look you want as we hit the hot months.

2.

Tog bag, R650, Woolworths Travel in style this season, whether it’s for an overnight work trip, a weekend getaway or just hitting the gym. We love this cool leather and denim mix while the casual shape looks good all day long.

3.

Valentino Uomo, R1 160 for 100ml, Red Square This fragrance was created as a classic of the future, aiming at men who strive for classics and like casual style. Expect woody notes in the base. The composition opens with bergamot and myrtle, succeeded in the heart by roasted coffee combined with gianduja cream, on a rich base created of cedar and precious leather. Delicious!

4.

Work Shoes, R1 299, Aldo Step out in style with these classic work shoes. We like the slight texture which changes these babies up, but no matter what, they mean business.

5.

Coin wallet, R849, Pringle of Scotland These super stylish wallets are a must for any man on the go. Pure leather, sleek, thin and compact – they won’t make your pocket bulge. We love the simple, clean design.

6.

Tuxedo Jacket R3 650, Ben Sherman This tux jacket is one of the most perfectly tailored items that we have seen in a long time. We love how the contrasting trim highlights the sleek lines while not giving too much away. You will feel as good as you look in this one.

7.

Shirt, R1 299.95, Ted Baker Once again Ted Baker is on our wish list for his perfect design and cool style. Pair this shirt with chinos for a casual day at the office or white shorts for a fun weekend out and about. Look out for the different colour waves, we guarantee you will want one of each.

8.

Shorts, R2 000, Gant We’ve been waiting all winter long to get back into shorts. We love these classic camel shorts, which go with pretty much anything.

Rolled-up sleeves to T-shirts for a casual day, sneakers or slops – anything goes!

7.

8.

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HER CHECKLIST 1.

Dottie umbrella, R405, Ban.Do at In Good Company What better way to celebrate spring than a fun, bright umbrella – ensuring that just because it’s raining doesn’t mean you can’t look super stylish.

The first signs of the hot months are making their appearance, so don’t be afraid to use this umbrella every day – it doesn’t matter what you are wearing: clashing prints is bang on trend.

2.

Beautiful Colour Moisturising Lipstick in Bold Red, R220, Elizabeth Arden One never needs an excuse for wearing a bold red lipstick. Our top tips for wearing a bright red lip: don’t play up your eyes, bold lip means natural eyes and vice versa. Prevent "bleeding" – apply a little concealer around the border of your mouth and be precise – red lipstick should never be applied in the back of an Uber.

3.

Sunglasses, R4 755, Marc Jacobs at Safilo Time to get your glam on with these classic shades. Summer is all about sunshine so shield your eyes and add a touch of glamour to your daytime look with these sunglasses – they mean business, whether it’s on the beach or on the way to the boardroom.

4. Heels, R1 299, Pringle of Scotland Gone are the days when white heels were reserved for the bride. These strappy sandals are a perfect addition to your summertime wardrobe, a fresh approach to your workwear heels. Pair these babies with a pant suit or a bright printed dress and you are good to go.

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Printed dress, R4 400, Karen Millen UK designer Karen Millen knows how to get the proportions of a summer dress just right. This bright, printed item will be your favourite this season.

Pair it with classic flats for a weekend brunch or with heels and a blazer for the office. Yes, you will turn heads; no, you don’t mind.

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Scotty Dog Mug, R59.99, Mr Price Home Get your coffee to go in this fun, ceramic coffee mug from Mr Price Home.

Make your at-home Nespresso in this cool, easy-to-travel mug or take it with you to your favourite coffee spot for a way more stylish take-away.

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Tote, R3 499.95, Ted Baker Hello two-tone tote! We love you. This mix of colours – nude, pink, snakeskin and coral are the perfect match for summer. Say goodbye to your monotone handbag and hello to this bright inspiration which you will love to wear everyday with everything.

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Jumpsuit, R1 799, Country Road Jumpsuits are the easiest one-piece to ever exist, as easy to put on and accessorize as a dress but as sexy and striking as a fantastic pair of pants.

Pair this elegant Country Road one with a killer pair of heels and a bold necklace for the ultimate head-turning look

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FORWARD MOTION Words Jacques Marais and Stephen Smith

With or without an internal combustion motor, here are half a dozen ways to get ahead (and stay ahead) of the pack.

Funky or fun. Far-fetched or absurd. Classic or alternative. Acumen’s motion maestros check out six incredible ways of having fun while moving from point A to point B …

GORDON INSTITUTE OF BUSINESS SCIENCE

HUMAN-POWERED

ON THE TRAILS: ALTRA LONE PEAK 2.0 RUNNING SHOE

ON YOUR FEET: HOKA ONE ONE CHALLENGER ATR

WHAT IS IT: Altra is a shoe brand committed to teaching runners an efficient, low-impact running technique in order to avoid injury. So, whether you’re a rookie runner or prepping for your next race, check out their ‘Learn to Run’ initiative to improve your running form: Altrarunning.com

WHAT IS IT: The Hoka One One Challenger ATR is a highly cushioned, versatile trail running shoe designed for a neutral or supinated foot motion. As opposed to ‘minimalist’ shoes, Hoka takes an ‘over-sized’ approach to running, with maximal protection through 31mm of heel cushioning and 26mm underfoot.

WHY DO YOU WANT IT: The Altra Lone Peak 2.0 is the second incarnation of a trail shoe that’s perfectly positioned to ensure underfoot protection without sacrificing proprioception (‘feeling’ the terrain over which you are running). So, if you’ve been searching for footwear that combines the dual concepts of foot support with a barefoot running feel, this is it.

WHY DO YOU WANT IT: The high degree of cushioning ensures that the Challenger ATR provides a smooth and stable run on even the roughest terrain, while the low 5mm drop still ensures adequate proprioception for those technical trails.

Most impressive of all is that the shoe still remains one of the lightest trail running shoes on the market today.

DESIGN USPs: Step into the only trail shoe featuring a FootShape™ toe box combined with a well-cushioned Zero-Drop platform. This combination ensures natural foot positioning for efficient, stable trail or road running, with flexible protection from gnarly terrain and road pounding. It is still recommended that proper low-impact techniques are learned.

GO GET IT: Drifters (CPT & JHB); Mindful Runner ( JHB); Trail & Tar or Athlete’s Foot (CPT) from R1 850

DESIGN USPs: An early stage Meta-Rocker promotes speed to appeal especially to runners looking for a fast, fluid stride transition. The ‘H’-shaped outsole geometry provides a wide, mid-foot platform designed for great stability, while full-contact outsoles ensure maximum ground contact at all times. Lightweight and breathable SpeedFrame uppers combine mesh with a seamless, supportive overlay, providing a comfortable glovelike fit in all conditions.

GO GET IT: Available from leading footwear retailers or email Jan@royaltysports.co.za for detail on stockists. R2 799

ON THE OCEAN: THE PIONEER AMBITION RECREATIONAL FISHING KAYAK WHAT IS IT: The Pioneer Ambition is primarily a fishing craft, but the stable design and solid construction make it a perfect boat with which to explore the rugged ocean shore or rocky river courses of South Africa.

WHY DO YOU WANT IT: The wide beam and corresponding stability make this a watercraft eminently suited to the whole family. The Pioneer Ambition is packed with features like moulded carry-handles, and the two hatches (with bags) allow for ample gear storage. The bungee strap system keeps additional items in place, while the paddle is kept secure in a holder when not in use.

DESIGN USPs: The Pioneer Ambition comes with a seat, paddle, two fixed rod holders and a swivel rod holder. Add to this a moulded bottle holder, bow and stern carrying handles and mid-boat moulded side handles, as well as a drain plug and scupper plugs. The 23.5kg weight is more than manageable for a solo paddler, while a carrying capacity of 140kg benefits big people. Luxury seat backs come as an optional accessory.

GO GET IT: Available at Due South Stores (check Duesouth.co.za) - R7 999

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FOR THE HEAD

FOR THE HEART

FOR THE PLANET

MOTORISED On the motorised side, we look at three machines similar at first glance, but with many a difference under the hood, so to speak.

Read on and see which appeals to your soul...

FOR THE HEART: MERCEDES-BENZ S65 AMG COUPÉ WHAT IS IT: Not all cars that tug on the heartstrings are expensive or ludicrously fast. But this one is. The SL 65 AMG Coupé is an example of what Mercedes engineers are capable of, and it sets the bar very, very high.

WHY DO YOU WANT IT: You obviously haven’t looked at the picture yet. There are very few cars as fast and as luxurious as this, never mind as gorgeous. The SL 65 AMG Coupé goes beyond expectations in almost every way, from performance to opulence and status appeal.

DESIGN USPs: A 6-litre V12 engine bolstered by twin turbochargers (463kW and 1000Nm) is a start, but it is by no means the only appealing element.

There are a plethora of hidden features, like massaging seats and Magic Body Control, which scans the road ahead and automatically adjusts the suspension to enhance ride comfort. The car will even lean into corners like a motorcycle, for extra grip (and fun!) A seven-speed automatic gearbox manages all that power and somehow gets it through to the rear wheels.

GO GET IT: Priced at R3 070 000, the SL 65 AMG Coupé comes with a 6-year/100 000km maintenance plan and a 2-year/ unlimited mileage warranty. Visit Mercedes.co.za for more information.

FOR THE HEAD: JEEP CHEROKEE WHAT IS IT: Jeep’s mid-size SUV has finally come of age and is, in my eyes, the most complete product ever to emerge from the American 4x4 stable.

The 4x4 versions are even good off-road!

WHY DO YOU WANT IT: There is a chance that not everyone WILL want a Cherokee, because its space-age looks are bound to divide opinions. But if those slit-eyes and bent grille do it for you, the rest of the vehicle will make you a happy owner. The engines are petrol only at this stage, with either a 2.4-litre or 3.2-litre, but diesel models are apparently on their way.

DESIGN USPs: The one area that has improved the most with the Cherokee is the interior, which is now an elegant space filled with premium quality materials, all thoughtfully laid out for everything to fall easily to hand.

Keyless unlock and go, an 8.4-inch touch screen and adaptive cruise control that prevents you from speeding into the car ahead of you are a few of the many highlights.

GO GET IT: Prices start at R501 000, although you will need to pay R655 000 for a pukka 4x4 Cherokee Trailhawk.

It comes with a 6-year/100 000km maintenance plan and a 3-year/ 100 000km warranty. Visit Jeep.co.za for more information.

FOR THE PLANET: CITROËN C1 AIRSCAPE WHAT IS IT: Cars don’t have to be hybrids or electrics to be good for the environment. They don’t even have to be diesels – they just have to be light on fuel, really. The Citroën C1 Airscape is such a car, but with plenty of other attractions too.

WHY DO YOU WANT IT: I could say that you want one to ensure that the polar ice caps don’t melt and turn Bloem into a coastal village, but I don’t have to.

The C1 Airscape is the embodiment of French charm and allure, in a relatively affordable and fun-loving package. And it’s almost a convertible.

DESIGN USPs: What really sets this little charmer apart from the competition is the roof. While the Airscape isn’t a true convertible, the fabric roof slides back concertina-style for open-air motoring. The efficient little 1.2-litre engine (which uses just 4.3 litres of petrol per 100km) is a cracker and feels far more sprightly than an engine of this size should, making the Airscape very entertaining to drive. There are also a host of features, from a reversing camera to a 7-inch touchscreen and hill start assist.

GO GET IT: The price is R195 000, including a 3-year/100 000km warranty. Visit Citroen.co.za.

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TECHNO Words Aki Anastasiou

FIND THE CHEAPEST FLIGHTS BETWEEN CAPE TOWN AND JOBURG Free

GORDON INSTITUTE OF BUSINESS SCIENCE

Did you know that the air traffic corridor between Johannesburg and Cape Town is one of the busiest in the world? Last year more than 4 million people flew between these two cities. Competition is fierce amongst the airlines and the price variance on airfares can be quite confusing – but then again has anyone actually ever understood how air ticket prices work! But if you commute regularly between Johannesburg (OR Tambo International Airport) and Cape Town and vice versa you need to download the Flapp app available on iOS and Android. The app offers a seven-day window period for commuters wanting to book flights between the two cities. It gives you the flexibility to travel on the spur of the moment.

Simply scroll down on the day you want to travel and flights are either displayed according to departure time or price. Click the flight you want, enter your credit card details and you’re booked! The great thing about the app is that all commercial airlines travelling this route are listed. I picked up some bargains! Yes it is possible to book a return ticket for R1200 including taxes!

LG DELIVERS ANOTHER WINNER WITH THE G4 R8 999 or on contract

LG have been consistently delivering innovative and fantastically designed smartphones since their re-entry into a very competitive Android market.

The LG G4 stands out with its unique design and features. They have focused on how the phone feels in your hand and the quality of the photography.

The camera is exceptional. The 16 MP f/1.8 low-light lens takes incredible photographs especially in low-light conditions. It probably has the best camera on a smartphone in the market right now. The Quad 5.5 inch display is crisp and has great warm brightness. Because phones are so visual they have become fashion statements. This is why such an emphasis has been put on the LG G4 back cover. The new phone comes with a choice of genuine leather back covers that actually look really good. For non-leather fans there is a metallic cover alternative. It will be difficult to choose the top smartphone of 2015, but the LG G4 is a very strong contender for that award.

CYCLING GOES HIGH-TECH WITH THE LIFEBEAM HELMET R3 899 at CycleLab

The LifeBeam Helmet is the world’s first “smart” cycling helmet. Bio-sensing technology which has been used by astronauts, fighter pilots and Special Forces has now entered the cycling realm. LifeBeam have combined tiny high-tech sensors that measure speed, calories burnt and heart rate into a Lazer Genesis helmet. While cycling, it will relay the information using a special algorithm to your device using Bluetooth 4.0 and ANT+. The LifeBeam Helmet is compatible and works seamlessly with apps like Strava, MapMyRide, Endomondo and Runtastic.

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SAMSUNG NX1 MIRRORLESS DIGITAL CAMERA R16 000

Samsung’s NX1 camera is getting rave reviews and rightly so. It’s a semi-pro mirrorless interchangeable lens camera taking on the high-end DSLR variants in the market. The NX1 is packed with features! It has a solid build quality and the magnesium alloy body feels well balanced when holding it in one’s hands. The 28 megapixel APS-C BSICMOS sensor produces amazing images and this camera has the ability to shoot up to 15 fps. The guts of the camera are impressive. It is equipped with a really fast image processor to give you this impressive performance. Another awesome feature of the NX1 is the ability to shoot video in 4K which it does really well. It has superb connectivity as well. Featuring the latest in Wi-Fi and Bluetooth standards, it will allow you to transfer and share those photos wirelessly very quickly. The NX1 is a very good camera overall and delivers great photographs. If you’re in the market for a high-end camera take a close look at this one.

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SONY XPERIA Z4 TABLET – IS THIS THE BEST TABLET IN THE WORLD? R10 999

Sony did not cut any corners when producing the Xperia Z4 Tablet. It is beautiful, light, super thin and probably the most perfectly ergonomically designed tablet in the world. The 10.1 inch Xperia is just 6.1 mm thin, weighs just 393g and boasts a 2K display. Under the hood is the Qualcomm Snapdragon 810 octa-core 64 bit processor which means this tablet has huge horsepower. The battery is enormous. You can comfortably watch videos all the way on that 16-and-a-half hour flight from Joburg to JFK without charging.

Oh, and it’s waterproof, so technically you can work while you’re showering.

Is it better than the iPad Air 2? They are on par overall, it boils down to a preference of Android or iOS. You’re either a BMW or a Mercedes driver.

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BOOKS Words Chris Gibbons

HEAVEN’S BANKERS – INSIDE THE HIDDEN WORLD OF ISLAMIC FINANCE

GORDON INSTITUTE OF BUSINESS SCIENCE

HARRIS IRFAN I LITTLE BROWN I R220 There’s a fair chance that if the likes of Bear Stearns and Lehman Brothers had embraced the principles of Islamic finance, we might not have had the 2008 global financial meltdown. That’s because Islam forbids usury, which is taken to mean all forms of interest and not just excessive amounts. It also forbids the kind of speculation which produced the CDOs which underpinned the sub-prime mortgages which caused the crash in the first place. In short, Islam forbids the use of money to make money.

All this and a great deal more I learnt through a reading of Heaven’s Bankers

by Harris Irfan, a former head of Islamic finance at both Deutsche Bank and the Barclay’s Group. Irfan traces the origins of Islamic finance back to Islam’s roots in the 7th century, but more so from its reemergence in the 1950s and 60s, through to its explosive rise in the 90s and the early part of this century. As he does so, he explains the theological tenets – Sharia law – which underpin Islamic finance’s rules. At its heart, it’s about fairness and justice and ensuring that the rich do not oppress the poor – hence the ban on interest.

Irfan’s book explains the key principles of Islamic finance and its development, and also gives an insight into Islam itself which is far, far more nuanced and informed than anything you’ll read in the mainstream press.

It’s a must-read not only for anyone involved in the banking and financial industries, but also anyone watching our current geopolitical evolution.

@WAR – THE RISE OF CYBER WARFARE

CHINESE RULES

SHANE HARRIS I HEADLINE UK I R325 There’s a terrible dichotomy at the heart of Shane Harris’s book. “They” really are out there on the Internet, trying to steal our information and do us harm, and that’s why government security agencies need to be able to read all our emails and snoop on us digitally. But more often than not, “they” are the very same agencies which claim to be doing this all for our own good.

According to the likes of Edward Snowden and Julian Assange, they’re hoovering up vast and unnecessary amounts of personal information that is no possible use to anyone.

TIM CLISSOLD I HARPERCOLLINS UK I R270 Could this be the best book I’ve ever read on China? No, that honour is still reserved for On China, by Henry Kissinger. But that’s a big heavy political text filled with dense political and historical insight. It was tough going towards the end.

Tim Clissold’s new one, on the other hand, I read in two sittings, coverto-cover.

Harris has written extensively about cyber security over the last decade or so and in @War he assembles a persuasive case that many large nations are already engaged in hostilities in the online arena. Witness recent headlines about the United States and China, which routinely penetrate each other’s defences to steal crucial information, both military and commercial.

So why is this book vital reading for business executives? Put bluntly, if you think that IT security is something best left to the geeks in the basement, you are hopelessly wrong. This issue must be on the CEO’s desk as well as the Board’s Agenda. At the simplest level, your new product blueprints could already be in someone’s computer in Beijing or Moscow. In the worst case, the global financial system could implode in a way that makes the collapse of Lehman Brothers look like a pre-school picnic.

It’s a business book but with a major difference: it’s also a fascinating yarn. Tim Clissold, a businessman with deep experience of China, tells the story of how he was called back there, first to save and then launch a new venture in trading carbon credits. His writing quickly engages the reader in the tale which has a number of elements of genuine suspense. Will the deals go through or not?

The experts say we learn through stories. Tim Clissold’s Chinese Rules is ample demonstration of that.

Highly recommended

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INVESTING – DO THE BASICS Words Professor Adrian Saville

The two most important investment questions are “When do I start?” and “What do I get exposed to?”

The power of compounding is remarkable. Just a couple of years’ difference at the beginning of your investment can lead to far greater wealth at the end. A second disproportionately powerful principle is asset class. While the timing of getting in and out of asset classes is a key factor, over long sweeps of time, even allowing for reasonable timing errors, the best place to expose your capital is to companies that are in the business of growing their earnings and paying dividends.

Companies have internal earnings engines that can compound the return on your investment and also reward you for holding that investment. By that, I refer to businesses that grow steadily over long periods and pay some part of that growth back to us, as owners, in the form of dividends.

To illustrate the importance of asset class decisions, consider the following long-term picture: Returns on investment in SA, after inflation, for the 50 years 1965-2015: l Equities 47x money l Bonds 2.5x money l Cash 2.0x money l Ignore property And over a slightly shorter time frame: Returns on investment in SA, after inflation, for the 15 years 2000-2015: l Equities 3.6x money l Bonds 2.4x money l Cash 1.3x money l Ignore property This pattern is not unique to SA. With such disproportionate difference through the power of compounding, it follows that, over time, and across geographies, equities are the best place an investor can be.

Two questions determine which equities.

The first relates to the principle of the difference between a good investment and a good business. Good businesses are easily identifiable, although they’re certainly not a dime a dozen. We can relatively easily separate out a business that has competitive advantage and that has cashflow earnings, as opposed to accounting earnings. Those are key components of robust businesses that are likely to have powerful earnings growth and contribute to your wealth.

However, a good business becomes a bad investment the moment you overpay for it. This is one of the most common mistakes made by investors. The moment you have overpaid for a business, you have reduced the rate of return that you will get over the years. Valuation equips us to either wait for a better time – in other words, better prices – or to look somewhere else.

Having established that the time is right, the second question deals with looking for what can be called “compounding machines”. In the investment landscape there are two types of businesses. Those, like commodity companies, that might be well run, yet generally are a consequence of their environments.

Most of their earnings is a function of what the environment does to them, rather than what they can do back to the environment.

They can be great investments, but you have to be astute in getting in at the right time – when these businesses are most unloved – and getting out – at the top of a commodities cycle.

This kind of timing is beyond almost all of us as investors.

Market timing aside, I’m biased towards companies that are “compounders” or, simply, businesses that have a competitive edge. Not only will they navigate difficult economic times better than most, but when things improve, these businesses are set to generate earnings tomorrow that are greater than today’s earnings.

MARKET TIMING ASIDE, I’M BIASED TOWARDS COMPANIES THAT ARE ‘COMPOUNDERS’ OR, SIMPLY, BUSINESSES THAT HAVE A COMPETITIVE EDGE.”

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There are two clear markers of these businesses.

First, they generate cashflow earnings growth, and not simply accounting earnings growth.

Cashflow is tangible; and no matter how impressive, we can’t eat accounting earnings!

Second, whilst competitive advantage takes various forms and has numerous sources, these businesses can be readily identified by the fact that they consistently show a return on capital that is ahead of the cost of capital.

In the current environment, SA has a number of businesses that are highly competitive, but I caution around their valuation. Most obviously businesses like Naspers, Richemont and SABMiller are superb, well-established companies with earnings growth, high cash conversion and robust competitive edges, but their valuations are demanding. And together, they make up 20% of the JSE!

GORDON INSTITUTE OF BUSINESS SCIENCE

By contrast, a number of businesses have as impressive earnings engines and evidence of competitiveness, but are on far less demanding valuations. One is Combined Motor Holdings (CMH), a motor retailer founded in the 1970s and listed on the JSE since 1987. In SA’s current sluggish economic environment, motor retailers aren’t fashionable, yet in CMH, we have a longestablished business that has also consistently grown earnings with an elevated return on capital versus cost of capital. In addition, CMH sits on a single digit earnings multiple and has a 5% dividend yield. CMH is buying back 20% of its shares, and if a business says that one of the best available opportunities is its own shares, then this speaks volumes to me as an investment prospect.

A second example is family-owned Sasfin, founded in 1951 and, coincidentally, listed on the JSE in 1987, the same year as CMH. Over that time, you would have made about 150-times your money versus the 25-times money generated by the market as a whole. Compared to other banks, Sasfin has an elevated return on assets and return on equity, giving evidence of a competitive edge.

Compared to the major banks, not only does Sasfin have a defendable niche, describing itself as the bank for entrepreneurs, but also one of the strongest bank balance sheets in SA. Earnings growth is supported by dividend payments and if you look at Sasfin’s valuation right now, not only are you getting a good business, you’re getting it at a good price

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WHY ART AS AN ALTERNATIVE INVESTMENT NOW Words Mandy Walker

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Is modern and contemporary SA art an investment terrain as unpredictable as the Wild West? These updated facts and viewpoints help you calculate collectability and return in a landscape where there’s talk of “tailwind.”

ART’S ON THE INVESTMENT MAP GLOBALLY

World records were set at a New York Christies auction in May. 10 artworks sold for a combined $705 858 000. Picasso’s cubist work “Les Femmes D’Alger, Version O” fetched $179 365 000 making it the most valuable artwork ever sold at auction.

Christies says it’s a new art market era where collectors from all over the globe now compete for the best works across categories and generate record prices. 15 000 people visited the pre-sale exhibition and the auction had guests from 35 countries.

ESPECIALLY ART FROM AFRICA

Africa is “the new China” and “one of the hottest properties on the art block,” said Giles Peppiatt, Bonhams London, Director African Art, in April. Since 2007, Bonhams (one of the world’s oldest and largest fine art/antiques auctioneers) has trailblazed the way for modern and contemporary African art. “Arab Priest” (a 1945 work) by South African painter Irma Stern sold for €4.2m in 2011 to the Qatar Museums Authority. Sales continue to flourish, with Nigerian masters like Yusuf Adebayo, Cameron Grillo and renowned South African painters like Stern, Gerard Sekoto and J H Pierneef consistently fetching highest prices. And Peppiatt predicts a “glut” of potential buyers at their next “Africa Now” sale (London, October).

South African Michael van Rensburg, Portfolio Manager & Head of Dealing at Futuregrowth has invested in SA contemporary art personally since the beginning of his working career. He says South Africans who’ve left the country are driving the auction prices fetched at Bonhams. And, where ten years ago, there were four major auctions of SA art held internationally a year, now there are four a quarter. “Investors are thinking – if I can buy this today and sell it tomorrow, it’s worth investing in. So they’re talking tailwind,” says Michael.

A recent article in The Citizen newspaper confirms that whereas a decade ago, “leading African artists were virtually absent from art sales, contemporary works now feature strongly at international auction houses.” Also in May, art-related online site News.artnet.com reported that the second 1.54 Contemporary African Art Fair held in New York that month, was the highlight of the NY fair week.

More specifically, in October 2014, The Wall Street Journal cited Johannesburg (along with Bogotá, Budapest, and Seoul) as one of “Four Emerging Art Cities You Should Know”, adding that it’s making its presence felt on the global art scene. Curators from London’s Tate Gallery and the Centre Pompidou in Paris attended last year’s FNB Joburg Art Fair.

Nor is it likely coincidental that, for the first time, the world’s biggest annual art happening – the 56th Venice Biennale Arte – has been curated by an African. The press has praised Nigerian Okwui Enwezor for galvanizing focus away from Eurocentric elitism to art from disenfranchised countries. His event title, All the World’s

Futures advocates a new direction – for aesthetic consciousness and for investment. Not only for moral reasons, but because art from Africa shows massive talent and freshness. The Biennale, on until November, showcases an explosion of works from countries populated by “immigrants, refugees and desperate people”. For more read: Artsbeat.blogs.nytimes.com/2015/03/12/ venice-biennale-shows-its-political-stripes.

INVESTMENT OPTIONS

Art Investment Funds are structured like hedge funds, to pool investor capital to buy and sell fine art. Fund managers charge a 1-3% management fee and take 20% profit. They track auction houses, curators and galleries to deliver returns through appreciation and sale of assets (paintings, sculpture, photography, video or print collections.) London’s The Fine Art Fund Group is the biggest, with over $500m in assets under contract. It requires a minimum investment of $500 000 to $1m.

Whilst often considered unpredictable, mostly unregulated and speculator-dominated, funds like these have caught a niche “uber-rich” market sector worth $1.3bn in the US, said CNBC. com in May. These are investors looking to diversify their portfolio in new growth markets (like Asia, the Middle East and Latin America).

“I don’t know of any such funds in SA yet open to the general public,” said Michael. “Although one or two guys are looking at them.” The bonus of investing privately in art, he adds, “is that you don’t pay capital gains tax on it.”

MICHAEL’S ADVICE FOR PRIVATE INVESTORS: 1 2

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Whether you like the artwork or not is secondary.

Attend art auctions. There’s no better place for proper price discovery. For one willing seller, there are usually two willing buyers, one who’ll pay R9 and the other R10 for the same work. Consider R1 the premium needed to become a buyer.

Forge a relationship with two/three sound galleries to broaden your knowledge.

Start an informal investment group fund with four investor friends. So it’s more affordable to buy a R2 million William Kentridge work, for example. Compile a spreadsheet inventory and rotate paintings/artworks in each home for three months of the year. Two years later one of you can buy it or you can re-auction it.

SOUND BETS AND UPCOMING TALENT

Darryl Gray, curator and owner of The Henry George, a new gallery in Parkhurst, Johannesburg, says, “Invest in known names on the contemporary scene: William Kentridge, Dylan Lewis, Robert Hodgins, Deborah Bell, Norman Catherine and Lionel Smit. And suss out freshly pressed university talent selling at exhibitions. We’ve had interest around UJ graduate Jamy van Zyl and will continue to find the best young talent out there and bring it to first-time investors.”

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WINE Words John Maytham

Acumen’s wine expert picks three of the best at three different price points: Everyday, Dinner Party and Out To Impress.

OUT TO IMPRESS One of the trends in modern local winemaking is for winemakers to set up their own brands on the sidelines of the main brand they are hired to represent. One thinks of the four superb wines under the Savage label made

by Duncan Savage of Cape Point Vineyards; the delicious drinkability of the Yardstick wines made by Adam Mason of Mulderbosch; the elegance and refinement of the Max Mossop range made by the man who draws a salary from Tokara, amongst others. A relatively new entrant into the ‘side-project’ field is Craven Wines, made by husband and wife team, Australian Mick (Mulderbosch) and Saffer Janine (Dornier Wines). They’ve added several new wines to their maiden Clairette Blanc of last year. All are characterised by low alcohol levels, freshness, exuberance and a minimalist approach to winemaking. Let the grapes do the work is the mantra of most of the new generation. Sometimes the ‘natural’ approach results in funky wines that are best left to geeks.

Not with the Cravens. My favourite of the four current releases is the 2014 Syrah made from Faure grapes.

Bursting with flavour despite the very modest ABV of 11.4%. There’s a precision and purity about the wine that is immensely appealing. It’s delicious, and fairly priced at R150.

DINNER PARTY

GORDON INSTITUTE OF BUSINESS SCIENCE

Wine competition results generally raise at least a few eyebrows. But more eyebrows were raised than is usual, and they were raised higher, in June, when the results of the Old Mutual Trophy Wine Show (OMTWS) were announced. Not only was the generally unheralded (and a corporate brand, nogal) Fleur Du Cap Shiraz 2013 chosen as the best Shiraz on show, it was also garlanded as the Best Red Wine. Questions about what the judges had been smoking was a common thread in conversation, especially when some writers bought a bottle, tasted it, and then opined with considerably less enthusiasm. But there is an explanation. Big volume wines like this are often made from different batches of grapes, and there can be, and in this case there was, a noticeable difference in quality between batches. Brand owner Distell has committed to identifying wines from the Trophy-winning batch via a sticker. Buy the wine without it, and you get a perfectly decent, wellmade, sweet-fruited, slightly peppery Shiraz, which at R79 provides a very decent return on outlay.

The sticker identifies a wine with much greater depth, focus, complexity and oomph. And at the same asking price it provides exceptional value. And the opportunity to raise your own eyebrows!

EVERYDAY The industry is rife with stories of farmers pouring excess wine down drains or pumping into dams because it’s the most economical way of disposing of unlikely-to-be-sold liquid before going to the expense of bottling and labelling.

Some of these stories might even have a grain of truth about them. What is indisputable is that some very big name cellars dispose of wine in bulk when it’s thought the quality falls short of what the brand stands for. I know of one luminary farm that sold at R10 a litre a wine that wasn’t up to the standard of that farm’s calling card red blend. And this practice can lead to incredible bargains. Such as the Secret Cellar Merlot Malbec Cabernet Sauvignon No.702 2103. (Exclusive to Ultra Liquors.) Wine Department Head, Mark Norrish, won’t say more than that the wine comes from a very well-known cellar. Its quality is emphasised by the Discovery of the Show Award at the OMTWS. It’s a very, very good wine with deep dark fruit and fine tannins and an uplifting acidity that belies its laughably low price of R29 a bottle. No wonder Ultra restricts buyers to 6 bottles. Otherwise I’d buy the lot for myself

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BHEKI KHOZA’S SOUND OF SURPRISE Words Victor Dlamini

When it comes to music, South Africa often keeps its greatest talent unheralded. Bheki Khoza, guitarist, composer, arranger and music teacher should be a national treasure, but he is known only to a handful of music lovers. Khoza has one of the most distinctive sounds on the guitar, with lightning speed and unmatched musical intelligence.

I recently watched him play at the increasingly important Jazz Orbit in Braamfontein, and at The Chairman in Durban. Both performances reflected years of study, practice and passion.

But there’s something else in the notes that pour out from his guitar. Like Philip Tabane, founder of the band Malombo, and inventor of a new sound that blends Jazz with Mbaqanga, Khoza’s playing stretches one’s aural sensibilities. Khoza rarely sings, but when he does, the influence of the church is unmistakable.

Like Duke Ellington, whose arrangements were drenched in the soul music of the church, Khoza’s vocal arrangements take one directly to the church choir.

It’s as if he’s found a way of creating a cornucopia that blends his native Mbaqanga and Maskandi with Soul and Jazz. This is music at its most irresistible.

Even when he plays a ballad, there’s an urgency to his attack that revitalises the most clichéd of the Jazz Standards.

Playing to an appreciative audience at the Orbit, Khoza opened with the tune

Qhwayilahle and then went on to play Remember You Don't Have To Die, The Sacred Ones and Asambe. One of Khoza’s great influences is the now largely forgotten guitar genius, Allen Kwela, and Khoza stunned the audience with his rendition of Kwela’s Black Beauty.

If Khoza’s power is derived from his guitar, then his legacy is likely to come from his role as an arranger. When he won a scholarship and spent four years in the United States of America between 1991 and 1994, he studied piano.

“As an arranger, the piano is my most important tool. One can actually hear the sound of a band from the piano. Around 1985 when I started to compose for a band I realised how difficult it was to pass information to a pianist using a guitar and it was then that I decided to fiddle with the piano for communication purposes.

So when I got to America I took lessons on piano with classical teachers for technical reasons, and it has come in handy when studying harmony, since every note is in

front of you,” explains Khoza.

Khoza adds that his earliest experience as an arranger was with the African Jazz Pioneers, a big band that also featured singers such as Dorothy Masuka, Thandi Klaasen, Abigail Kubeka, Dolly Rathebe and Sophie Mgcina. He says that it was this experience that prepared him for his role as Musical Director on the documentary, Sophiatown. His other film credits include the movie Drum, directed by Zola Maseko.

“It was my grasp of the sound that defined Sophiatown that allowed me to distill the musical identity for the film.” What is noteworthy about the soundtrack is that Khoza called on the talent of many of the musicians who had played in Sophiatown before it was bulldozed to make way for Triomf.

Like Jimi Hendrix who brought rock ’n roll into jazz, Bheki Khoza is quietly rewriting the sound of South African music. Perhaps it is the fate of left-handed guitar players to change everything in their wake

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CONSULTANTS OR INSULTANTS? Words Mike Wills

GORDON INSTITUTE OF BUSINESS SCIENCE

A while back in Cape Town, car guards were called “Arthurs”. Why? Because suddenly they were everywhere without apparent need and they were people who had never driven a car expecting a payment for telling an experienced driver how to park. Which, of course, is pretty much what the (then) big consultancy firm of Arthur Andersen did all the time.

The consulting arm of Andersen’s became Accenture just before the parent brand went down the Enron gurgler but they (and the other current major players) still pull pretty much the same stunt to the point where there are hundreds of gags to be found if you Google ‘management consultant jokes’. Two of the oldest are “A management consultant is someone who borrows your watch to tell you the time and then keeps your watch” and, “How many management consultants does it take to change a light bulb? It depends on how big your budget is.”

Frankly, you should be very wary of any industry which also constantly provides such rich comic material for the perspicacious Dilbert workplace cartoon strip where the question was once famously posed as to why management consultancies don’t hire other management consultancies to improve the management of their own consultancies.

There are some specific occasions, usually limited to major IT platform or distribution system investments, when you can possibly justify pouring vast sums of money down the consultancy hole but in most instances hiring these insidious creatures represents an expensive cop out.

If you’re being paid a substantial sum to make the key decisions involved in running a company, how on earth do you justify paying someone else a substantial sum to do that for you?

Maybe a healthier formula would be for all consultancy firm fees to be deducted from the salary pool of the ExCo. That would certainly sharpen some minds, as would taking a peek inside the belly of the beast with Duff McDonald’s book The Firm: The Story of McKinsey and its Secret Influence on American Business.

The author points out that the big consultancy firms have as many misses as they have hits, so any management which believes it’s buying some form of guarantee in a consultancy’s input actually is buying something closer to a spin of the wheel. And they’re also buying a formulaic outcome – what is dressed up as “best practice” is often a cut-and-paste job forced into a trademarked template with not

much more than a change of logos on the PowerPoint slides from the previous client.

Furthermore that management is paying way over the top for what is largely a research task. Why not commission a couple of your own brightest and best to do the background digging and a bit of travel for interviews and observation?

That way you get a cheaper and, probably, better set of data and insights, and, in the process, you develop your own staff instead of building the careers of Boston Consulting’s hit squad.

In truth, management consultants would more accurately be called Backside Coverers. Executives faced with a defining decision deploy these firms to give themselves procedural protection from the consequences of that decision. In Duff McDonald’s words, the consultants provide “a high gloss imprimatur of objectivity.” This responsibility-shifting is particularly objectionable when job losses are involved. Trying to pass that pain to Bain & Co. – “they recommended that we do it” – is a dereliction of duty.

So every time you think of hiring these expensive guns remember that other old joke: "A management consultant is a man who knows 101 ways to make love but doesn’t know any women.”

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