Business Day Empowerment 2021

Gender Mainstreaming And The Lockdown We are now well over a year into the lockdowns in terms of the Disaster Management Act as a response to the Covid outbreak. At the start of the response many articles were written as to the effect that these lockdowns would have on gender mainstreaming in the private sector (and indeed the public sector).

It was unclear to many how and if the private sector, and the larger organisations who are listed on the JSE in particular, would continue on their gender mainstreaming drive. In times like these it is very easy for the leadership of the organisation, for understandable reasons, to focus on the core issues of the business (this is not suggesting in any way that gender mainstreaming is not core) often to the detriment of other issues. This is not only a South African consideration. Globally, the contemplations were and are the same.

We all agree that the playing field has changed dramatically. Working from home for many has become a way of life. Will this continue? The major landlords think not. They are of the opinion that the format of business working will return to the office / physical workplace. It is reported that Nedbank would expect 60% of the workforce in the office at any one time in a hybrid solution. Of course, nobody is talking yet as to whether those returning workers will be required to be vaccinated, that is yet another issue to be addressed in the future. So, how do we believe that we are fairing? Business Engage has been tracking the gender movement in the boardroom of JSE listed companies for four years now. This tracking was occasioned by the revised JSE listing requirements effective 1 January 2017 necessitating the listed companies to have a policy on gender at board level and to report to the stakeholders on such policy. In previous years Business Engage has proved beyond a shadow of a doubt that these listing requirements have had a positive effect as an enabler in advancing women into the boardroom. Whether this process is taking place at a pace that is considered appropriate and meaningful is beyond the scope of this current article.

If this is the case what effect is the lockdown having? Bearing in mind that because the research uses the Integrated Annual Reports of the organisations in question it is historical in nature. The research published in 2021 (the research is published in October each year) will focus on the information relating to 1 January to 31 December 2020. This will cover approximately three quarters of the year under lockdown. Current indications from the research are that there is no slow-down in the availability in board positions for women currently or targeted for in the future. Put another way the lockdown seems, at least initially, to be having little or no effect on women gaining board positions. Will it stay that way in the subsequent timeframes, who knows?

Does it mean that everything is all rosy? Not really, if you were to consider the number of female CEO’s and Chairs being appointed. Additionally, the pipeline to these appointments has to be carefully considered. For now though, it does appear that, without losing sight of the gains made and the work still to be done, any concerns that we may have regarding the future of leadership in this country would be better focused at other pressing issues.

Business Engage is an exciting and inventive organisation at the forefront of strategic thinking on gender mainstreaming in the private sector

www.businessengage.co.za colleen@businessengage.co.za

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OVERVIEW

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Positive impact The pandemic may have exacerbated SA’s fault lines but it has also exposed a deep-seated willingness to help

BY SILKE COLQUHOUN

THERE COMES A POINT

where the economy is so deep in the hole that you think it can’t sink any further. Yet the human mind tends to put a positive spin on it, as the late publisher of Forbes magazine, Malcolm Forbes, once explained. ‘When things are bad, we take comfort in the thought that they could always get worse. And when they are, we find hope in the thought that things are so bad, they have to get better.’

Well over a year into the global COVID-19 pandemic, SA seems to have reached that place where things can only get better. If we’re honest, things were already bad before the virus outbreak, and have only continued to worsen. In October 2019, Minister of Finance Tito Mboweni already expressed ‘hope for better days’ in his mid-term budget speech, saying that in

the previous months ‘our people became poorer; some lost their jobs’.

As a result of COVID-19, nearly 3 million more people lost their jobs during the hard lockdown, and despite many of these having been re-employed (according to the National Income Dynamics Study – Coronavirus Rapid Mobile Survey), people in SA are becoming poorer. Nearly one in five (18.9%) of the population survives on less than $1.90 a day, as noted in the UN Human Development Report 2020.

This comes in addition to the devastating human cost of more than 68 000 COVID deaths in SA, with modelling by the South African Medical Research Council suggesting that this official number could in reality even be three times higher.

‘I think the socio-economic situation is precarious, to say the least. There is increasing evidence that the pandemic

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‘It was certainly not a once-off emergency response, and there is no reason why this approach couldn’t become standard practice’ and the lockdowns have exacerbated our already high levels of inequality, and done so largely along existing lines,’ says David Francis, deputy director of Wits University’s Southern Centre for Inequality Studies. ‘For example, job losses have disproportionately affected women and informal workers, and those in lower-paid, more precarious jobs.’

For years, SA has been known as the world’s most unequal economy, according to the Gini Coefficient. While critics are questioning the quality of the available data behind these calculations, the huge disparity between rich and poor South Africans remains undisputed.

The wealthiest 10% of SA’s population hold more than half the nation’s income, while the poorest 40% account for just 7.2%, according to the UN Human Development Index. SA ranks a pitiful

114th out of 189 countries in the 2020 edition, which states that nearly 4 million South Africans are affected by ‘multidimensional poverty’ (which includes poor health, malnutrition, a lack of clean water, inadequate access to healthcare services and poor housing conditions).

To address this complex problem, the Southern Centre for Inequality Studies has been conducting interdisciplinary analysis of the pandemic across the Global South and developing a social and economic response. The team points out that, unlike other countries, SA’s informal sector provides no cushion to workers in times of crisis and that the country urgently needs to focus on how COVID will reshape its labour market.

‘Given the conditions the world finds itself in, an increase in employment or wages is unlikely,’ says Francis. ‘In the

case of South Africa, the country is also in a highly constrained fiscal position, which limits its ability to pursue redistributive policies. The government is constraining public spending, and this is going to negatively affect service delivery even further, as well as limiting the support available to those most in need of it.

‘This compounds a longer trend which predates COVID, of falling percapita incomes and rising poverty in the country in the last decade. Our unemployment rate is now among the highest in the world, and it looks set to keep climbing, and I think we can no longer ignore the problem or hope to address it indirectly.’

In SA, nearly one-third (32.6%) of the working-age population is unemployed, according to Stats SA’s

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Quarterly Labour Force Survey for Q1/2021. That’s 7.2 million people not earning a salary – more than the entire population of Bulgaria or all the people living in Ireland and Botswana combined. Alarmingly, 63.3% of South Africans between the ages of 15 and 24 are without a job, as are 41.3% of the 25 to 34 age group.

‘Youth unemployment, hunger, and poverty have been endemic for years.

COVID has only shown us what can happen when social problems remain unaddressed and is therefore a reason to do more,’ says Alef Meulenberg, CEO of Afrika Tikkun, a youth development NGO that uses the ‘cradle-to-career’ model to deliver holistic education, health and social services.

‘Our aim is to provide support and high-quality education to kids from early childhood until they are productive adults,’ he says. ‘Sadly, 10% of the ECD [early childhood development] centres that we work with have had to close permanently due to the pandemic. This will have far-reaching consequences for the development of these children and their overall chances in life, as the centres not only teach cognitive and physical skills, but also provide the vital nutrition they don’t get at home.’

He describes 2020 as a challenging but fulfilling year for Afrika Tikkun, which was selected for funding through the national COVID Solidarity Fund.

‘We reached 250 000 people through food parcels, more than ever before, by decentralising the distribution.

This meant collaborating with 100 community-based organisations and the private sector to widen our reach, track the process and avoid duplication.

‘Over the past year, we’ve seen a lot more people facing hunger and more gender-based violence. The levels of anxiety and trauma have increased, so our communities are on edge,’ he says.

‘For the first time we had a break-in at one of our centres. People are hungry, they’re desperate.’

The NGO Rise Against Hunger (RAH) Africa calls this a major crisis of food insecurity. ‘Pre-COVID, there were around 12 million people who were food insecure in South Africa and this figure doubled during the hard lockdown.

While some have returned to work, there’s still a major food shortage,’ says Brian Nel, CEO of RAH Africa.

‘During 2020, the overall support from corporates has been incredible.

2021 has been more challenging as donors re-evaluate their CSI spend.

That being said, many of our longstanding funders are still keen to assist.

‘From a CSI perspective, there has been a major shift to create food security within communities, mainly through sustainable community projects. We’re therefore placing more effort on our five community vegetable gardens. Our

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flagship project in Diepsloot provides fresh vegetables to 10 ECDs on our programme; has created two full-time jobs; and will assist women in that community to start their own vegetable mini markets.’

Afrika Tikkun pivoted to provide food relief and social support services from its five centres in Alexandra, Orange Farm, Diepsloot, Braamfontein and Mfuleni, with a smaller hub in progress at Maponya Mall, Soweto. The NGO also conducted COVID testing from the primary healthcare clinics at its centres, which Meulenberg would like to make available for the vaccination roll-out.

‘The first months of 2021 have been really good for us financially and we’re engaging with corporates to stay as relevant as we can be,’ he says. ‘For example, we now have an agri-preneurship programme and are also addressing gender-based violence. We anticipated a regression in funding as a result of the pandemic, but thankfully haven’t seen that yet.’

However, the majority of nonprofits are already feeling the pinch.

Cathy Duff, director at corporate responsibility consultancy Trialogue, says that, ‘anecdotally, NGOs have told us that their funding has been put on hold or cut, given the state of the economy. Our primary 2020 research didn’t capture most of the COVID response because of the lag in corporate

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‘Executives and board members have become more aware and personally involved’

OVERVIEW

reporting. So we expect an increase in reported CSI spending in our 2021 research. This will reflect the corporate COVID response, often with additional funds beyond the CSI budget. However, from 2022 we expect a drop in CSI spend as corporate profits decline’.

In 2020, SA companies spent an estimated R10.7 billion on CSI, which is a 4.9% increase from the previous year. According to Trialogue, 91% of corporates give some CSI to NGOs. Post-COVID, companies would do well not to reallocate all CSI funding to new areas but rather focus on those that are aligned with their business, suggests Duff.

‘Strategic CSI programmes are sustainable because they offer shared value for the beneficiaries and the business, for example telco companies providing zero-rating connectivity and data to schools, or food producers donating their goods to communities.’

She adds that the crisis has managed to elevate the concept of social consciousness to board level. ‘Executives and board members have become more aware and personally involved in the COVID response instead of leaving it up to their social and ethics committee,’ says Duff.

‘Many companies also changed the way they dealt with their NGO partners: there was more consultation, more flexibility with timelines and reporting, faster decision-making and

altogether better interaction and a more trusting collaborative relationship.’

Just Share, a non-profit shareholder activism organisation, has highlighted the COVID-related ‘corporate kindness’

by SA companies that showed commitment to the well-being of staff, customers and broader society.

‘This is not about self-serving, opportunistic ways to make money in a crisis, but generous, responsible, proactive steps that often do not have any immediate financial benefit for the companies involved,’ says Tracey Davies, executive director of Just Share. ‘We wanted to illustrate how quickly and ingeniously SA business can adapt and come up with innovative, exciting ideas to improve our society.

‘Of course the COVID situation was not the first time we’ve seen this; there are lots of examples of businesses having positive social and environmental impacts. So it was certainly not a onceoff emergency response, and there is no reason why this approach couldn’t become standard practice.’

The country urgently needs this kind of corporate citizenship, social stewardship and financial clout from the private sector to support the government and civil society in lifting the economy out of its current hole and creating a fairer society. When things are this bad, only strategic collaboration and targeted action from all players will ensure that things get better.

PHOTOGRAPHY: GALLO/GETTY IMAGES

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INTERNATIONAL

EXPERTS IN FINDING LEADERS FOR DIVERSE TEAMS

leonie@aims-southafrica.com arthur.nkuna@aimsinternational.com aimsinternational.com/za

MOVING YOUR ORGANISATION FORWARD Enviroment. Society. Governance.

WOMEN

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Equality equation While considerable progress has been made on the gender-parity front, the pandemic has highlighted that there remains much room for improvement

BY SILKE COLQUHOUN

A GIRL BORN IN SA TODAY

has more rights than her grandmothers, greatgrandmothers and female ancestors before her. She has more rights than girls born at the same time in some other parts of sub-Saharan Africa and the world. And she has the same rights as any boy born in SA. This may seem unsurprising now, but there was a time when adult women were legally regarded as minors under the guardianship of their father, husband or brother. Or during the apartheid era, when black women in particular were stripped of their human rights. It took until 1996 to fully enshrine the equality and personal rights (as well as property rights) of all girls and women in SA – regardless of their race, religion, marital status, age or sexual orientation.

SA can also be proud that, in addition to its progressive Constitution, the country also has strong genderequality legislation and is part of the international Convention on the

Elimination of All Forms of Discrimination against Women, which is a global bill of rights for women.

Overall, it’s a good time in history to be a girl, according to the Economist.

A recent essay featured in the Londonbased publication describes how girls in wealthier nations are finally coming into their own. ‘For centuries, much of girlhood was defined in opposition to boyhood: being nice when they were nasty, quiet when they were loud, social when they were sullen, pretty when they had personalities. Briefly late last century, things went the other way, with girls increasingly encouraged to be sporty, loud and assertive,’ the author writes, adding that today’s girls have wide-ranging interests and distinct identities of their own.

Statistically, their situation in SA compares favourably on the global front. In terms of gender parity, SA ranks 18th of 156 countries in the WEF’s 2021 Global Gender Gap report (outperforming more affluent nations

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such as the UK, US and Italy) and third in the 2019 Africa Gender Index ( just behind Namibia and Lesotho, and ahead of Rwanda). The WEF report benchmarks national gender gaps in economic, education, health and political participation criteria, with SA doing exceptionally well in enrolling girls in school and university as well as in female representation in Parliament (ranked 10th overall) and ministerial positions (12th overall).

Meanwhile the Africa Gender Index (compiled by the AfDB and the UN Economic Commission for Africa) assesses the state of gender equality on the continent by examining how women are faring in terms of economic, social and empowerment (political and institutional representation) well-being.

These are impressive rankings, but the lived reality of the majority of girls and women in SA is worlds apart from what one should expect, considering the nation’s strong women’s-rights legislation and high global-equality rankings. Twenty-seven years into democracy, gender and race are still determinants to the extent of poverty, unemployment and inequality.

The Africa Gender Index found that young women are more likely than their male counterparts to be in informal, low-paid and vulnerable employment.

It adds that unequal land rights are also a strong contributor to gender inequality in Africa. Here, women generally have less access to credit than men, which is often due to a lack of assets to use as

collateral and a major barrier to investment, which in turn hampers socio-economic development.

In monetary terms, inequality is costing the continent dearly. If each African country matched the gender equality of their best-performing neighbour, the continent’s GDP would be $316 billion better off by 2025, according to a 2019 McKinsey report.

Having said all that, the WEF was able to predict that global gender parity would be reached in 99.5 years – but then COVID-19 hit. It is threatening to reverse the gains made for girls and women across the globe, pushing them into crisis mode. The WEF now expects global gender parity to be achieved in 135.6 years, as the pandemic has worsened the existing gender gap.

The skewed impact of the crisis on women became clear in SA’s National Income Dynamics Study – Coronavirus Rapid Mobile survey, which revealed that two-thirds of the 3 million people who lost their jobs between February and July 2020 were women.

Nonsikelelo Ncube, an executive assistant at the Centre for the Study of Violence and Reconciliation, comments in the Mail & Guardian that ‘although two-thirds of job losses were experienced by women, two-thirds of the recipients of the R350 special COVID social relief of distress grant were men.

It’s likely that these women receive child-support grants, precluding them from qualifying for the COVID-19 relief grant, yet child support grants are

‘The vast majority of services related to GBV are delivered at local level by often small CBOs’

PHOTOGRAPHY: GALLO/GETTY IMAGES

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intended to cater for children and not their mothers’. She points out that millions of women working in the informal economy were badly affected by COVID-19 and the resulting business restrictions, but couldn’t benefit from the Temporary Employee Relief Scheme as it catered only for the formally employed.

We’re in the middle of a pandemicinduced ‘shecession’, according to PwC, in its 2021 Women in Work Index, which analyses the formal economy. ‘In South Africa, women are largely bearing the brunt of unemployment as a result of the COVID-19 pandemic,’ says Lullu Krugel, PwC Strategy& chief economist.

‘The resulting economic fallout has not only disrupted sectors with a larger share of female employment, but it has also increased the existing inequalities of unpaid care and domestic work shouldered by women [at home].

‘If action is not taken to address these challenges, there’s a risk that more women will leave or reduce their participation in the [formal] labour market permanently, reversing progress towards gender equality, and stunting economic growth.’

The ability of women to earn a decent income directly improves the socioeconomic well-being of their families and communities, especially since more than a third of SA households are headed by women – with female-headed households approximately 40% poorer than those headed by men, according to Stats SA. This is partly due to the fact

that women are over-represented in low-paying jobs (97% of domestic workers), and under-represented in high-paying professions (in 2018, just 32% of managers were female). Nearly half of female-headed households also support extended families, compared to just more than 20% of male-headed households, according to the Institute of Race Relations.

The pandemic underlined another deep-rooted societal challenge that led President Cyril Ramaphosa to declare that ‘South Africa is in the grip of two pandemics: the coronavirus pandemic and the scourge of gender-based violence [GBV] and femicide’. Earlier this year he launched a private-sectorled gender-based violence and femicide response fund to tackle this issue in an initiative that complements (but is not part of ) the efforts of the national COVID-19 Solidarity Fund.

The hard lockdown left many women and girls trapped at home with their abusers, while the situation was exacerbated by the strict regulations around alcohol that left many men frustrated and aggressive, according to Xolile Zondi, client relationship manager at Tshikululu Social Investments. ‘The public awareness for GBV has definitely increased during this crisis and, with it, we’ve seen a shift towards more corporate support for women and girls through CSI projects,’ she says. ‘In one exciting development, the COVID-19 Solidarity Fund purposefully selected 321 community-based organisations

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[CBOs] and 11 large public-benefit organisations for once-off funding to address GBV nationwide.’

Tshikululu assisted the Solidarity Fund in managing the process, in which CBOs could apply for grants between R50 000 and R250 000 (to a total value of R61.25 million) and larger programmes for R250 000 to R1 million (R9.99 million in total).

‘The vast majority of services related to GBV are delivered at local level by often small CBOs,’ says Zondi. ‘They are right there on the ground as part of established ecosystems, such as the Thuthuzela Care Centres in hospitals.’

Known as TCCs, these one-stop GBV facilities aim to reduce secondary victimisation after a rape, and build a case for the successful prosecution of offenders.

Government departments, private service providers and donors have partnered in this initiative to assist rape survivors with immediate medical attention, counselling services and arranging a place of safety if needed, as well as opening a police case and court preparation.

The lot of women and girls has improved significantly in the past century, but the current situation illustrates that a strong legal framework is not enough for those living in poverty and fear of violence. Now is the time to translate SA’s political freedom into the type of freedom that offers personal safety, real economic opportunities and true equality, so that any girl born into this society will be able to create a better future for herself.

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Fair play Structured, systemic gender diversity can lead to a more prosperous future

BY SILKE COLQUHOUN

WHAT IS THE BUSINESS CASE

for men on company boards?

Yes, for men. Countless studies have made the business case for women in business leadership, outlining why companies with women on their boards perform better financially.

Yet that’s the wrong approach, says Anita Bosch, research chair of Women at Work at the University of Stellenbosch Business School, whose recent publications include Women on South African Boards and the Gender Pay Gap. ‘It would be far more helpful to ask: “What is the business losing out on by not having any women on the board?”,’ she says. ‘The framing is really important, because just looking at the financial imperative, in other words the bottom line, is too narrow.

‘Diversity and inclusion are not initially an exercise to drive greater profitability. They are important for broadening the perspective of a company and dealing with blind spots, which can

strengthen business sustainability and profitability for the future.’

Such blind spots, or unconscious biases, can be found within companies and everyday life. They thwart not only women’s careers but, as the following examples show, make their lives more difficult and even contribute to physical harm. The world still sees men as the template for humankind (or mankind), with women as an afterthought or deviation, according to author Caroline Criado Perez. In her book Invisible Women: Exposing Data Bias in a World Designed for Men, she makes the point that cars are typically designed for male bodies and tested on male dummies. As a result, women are 71% more likely to be injured and 47% more likely to die in a car crash. Another example is speechrecognition software, which is commonly trained using male voices. As a result, women’s higher voices are 70% less likely to be understood by Google’s software than men’s. Then there’s the

practice of mostly using male participants in medical heart-failure trials. As a result, UK women are 50% more likely to be misdiagnosed after a heart attack.

Including more female experts in the product design, trials and decisionmaking processes could address and prevent serious shortcomings such as these.

And yes, there are enough qualified women to achieve gender parity in SA, says Bosch. ‘As reported by the Council on Higher Education in 2016, more women than men were registered in all the higher-education fields, namely education, business and commerce, science, engineering and technology, and humanities. More women successfully complete their studies. From 2010 to 2017, there have consistently been more women candidate attorneys registered than male ones.’

Yet the higher up the career ladder, the fewer women can be found. ‘The dearth of women in senior businessleadership roles in South Africa was apparent even pre-pandemic,’ says Advaita Naidoo, COO at executive search firm Jack Hammer.

‘We still only have two female CEOs in the JSE Top 20; the rest of the top leadership at these companies remains under 25% female. Any gains that had been made were incremental. Outside of the Top 20, the notable female CEOs who have recently stepped out of their roles […] have not been replaced by other women.

‘We maintain that the extent to which women have been affected by the pandemic has yet to be calculated;

but we do know that there have been real setbacks and it will take us years to regain the lost ground.’

She says that before COVID, the flexibility of working from home used to be valued by Jack Hammer’s female clients and candidates. ‘Anecdotally this led to enhanced productivity and time being saved. However, in the context of the pandemic, they have struggled to maintain clear boundaries at home and have trouble switching off “after hours”, not helped by the fact that male counterparts continue to set meetings during traditional family hours and that project timelines are evermore truncated.’

Bosch refers to a recent study in Nature confirming that the enforced work-from-home trend is widening the gender gap. The scientific journal notes that during the pandemic, research productivity dipped among female scientists while that of their male colleagues increased.

‘Workplace equality cannot exist without gender equality in the home and public spheres,’ says Bosch. But it’s difficult to change culturally entrenched stereotypes. Her research looks, for example, at how Australia, Germany, Norway, Spain and the UK are using numerical quotas and targets to encourage gender diversity in the workplace. In SA, (mandatory) quotas are considered unconstitutional but (voluntary) targets can be just as effective, she says.

‘Therefore numerical targets should be driven with greater focus, similar to procurement targets from womenowned businesses.’

Bosch recommends a voluntary target of 30% women on the board for listed companies as ‘reasonable and feasible’ in SA, and suggests 40% as a stretch target.

Parmi Natesan, CEO of the Institute of Directors South Africa (IoDSA), also speaks out in favour of gender targets, but says entity-specific discretion is necessary. ‘I am therefore not a supporter of forced blanket quotas. Both King IV and the JSE listings requirements already require boards to set gender targets and report on progress thereof, which is a step in the right direction.

But true progress will only be made if shareholders and other stakeholders are then holding those boards to account for real and noticeable progress against these targets.’

Everybody has an active role to play in this, and Bosch outlines in her research how to tackle systemic biases against women who strive for leadership positions – starting with subject choices at school, continuing with maternity leave and family-friendly work policies, tax and investment schemes, to performance rewards and work experience.

One key factor is for women to realise the impact that taking extended maternity leave may have on their careers.

Timing is crucial, says Bosch. ‘Taking a maternity break after a promotion or key projects are completed could help prevent women missing out on key experiences that could lead to promotion.’

Companies could further assist by consciously giving young women highprofile, stretch assignments before they have children, to develop critical skills.

PHOTOGRAPHY: GALLO/GETTY IMAGES

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Employers should also consider paternity leave, workday flexibility and on-site crèches or financial support for childcare.

Bosch also suggests that women need their fair share of ‘glory projects’ at work, because high-profile, strategic projects are often a fast-track to salary increases and promotions.

In patriarchal societies, men are more competitive and push themselves forward, which makes them more visible and likely to be considered for leadership roles. ‘In South Africa, men outnumber women approximately four to one when it comes to appearing in the news as experts and sources,’ says Kathy Magrobi, founder of a free database called Quote this Woman+ (QW+). The non-profit was recently launched to give female experts and thought-leaders a voice in

the media. The ‘plus’ after its name refers to the inclusion of experts ‘who don’t identify as women but feel marginalised for another reason’, perhaps disability, sexual orientation or gender identity.

‘We actively link journalists to smart, switched-on woman+ experts, and we make it easy to gain access to these experts for media interviews, or for that last-minute quote needed for a news report,’ says Magrobi. QW+ covers an extensive range of topics and lists more than 100 experts related to COVID-19 alone. The fortnightly updates reach up to 1 000 journalists and news producers, and every major newsroom in SA has access to the searchable database.

This underlines the need for gender equity rather than equality. As Bosch explains, ‘gender equality is often used in

‘Gender equity is defined as the ability of both men and women to participate fully in both work and personal life from a point of difference’

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the sense of “sameness” between men and women, whereas gender equity is defined as the ability of both men and women to participate fully in both work and personal life from a point of difference’.

In business leadership, this has inspired the concept of ‘corporate gender intelligence’. The IoDSA’s Natesan says she believes that corporate gender intelligence is about the culture or DNA of an organisation embracing the need for and benefits of gender mainstreaming. ‘It’s a deep commitment to equity throughout an organisation and goes a lot further than simply setting gender targets. So while gender diversity can be seen as adding more of the lessrepresented gender, gender intelligence is more about enabling different genders to work better together to improve productivity, innovation, decision-making and growth. Without gender intelligence, gender diversity can be reduced to a mere tick-box exercise without the desired substance or impact.’

Nicola Jackson, Sibanye-Stillwater VP of business development and chairperson of the company’s Women in Mining initiative, agrees. ‘Truly embracing diversity in the workplace and closing the gender gap is far more than a numbers game,’ she says. ‘It’s about changing the actual fabric of an organisation.’ Jackson adds that ‘it demands dedication from leadership at all levels’.

Ultimately, a deeply structured, systemic gender diversity – in which female board representation is one aspect – will lead to a more prosperous, fairer future for all South Africans.

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Public interest There are finally moves to address governance challenges at the country’s beleaguered parastatals

BY MARK VAN DIJK

SA HAS ABOUT 700 STATEowned enterprises (SOEs) at the national, provincial and local levels. You may have heard of a few. There’s Eskom, which is at least R400 billion in debt. There’s South African Airways, which appears to be in a perpetual state of business rescue.

There’s the Road Accident Fund, which in 2019/20 tried to balance about R10.7 billion in assets with more than R300 billion of debt. And of course, there’s the South African Broadcasting Corporation, which finds itself in the unenviable position of describing itself as ‘cash-strapped’ in its own news reports.

Our SOEs have become a punchline, with columnists and commentators reduced to statements such as, ‘the phrase “a well-run SOE” has become an oxymoron,’ (Solomon Makgale in the Mail & Guardian) and

‘the state-owned business model is not working, has not worked, and is a complete failure’ (Moneyweb’s Mamokgethi Molopyane).

It’s bad. So bad, in fact, that when President Cyril Ramaphosa faced questions from deputy chief justice Raymond Zondo about the state of SOEs during the Commission of Inquiry into State Capture, he used extraordinary language to describe how the boards of these entities were appointed.

‘There was a massive system failure,’ said the president. ‘Some of it could have happened where certain people were put in certain positions to advance certain agendas, as you are investigating now about the capture of some of those entities. Some of it was hidden – so masked that you just couldn’t see that certain individuals were there to advance a particular agenda.’

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‘A clear distinction between the roles and powers of the board and the executive management is necessary’ Corruption within, and organisational mismanagement of, SOEs would be a problem anywhere, but in SA it’s compounded by our economic landscape.

As the Organisation for Economic Cooperation and Development (OECD) outlines in its 2020 economic survey of the country, ‘South Africa has one of the highest public ownership of firms with an extended scope in the economy among OECD and emerging economies. Such a prevalence of public entities has effects on the competitiveness of the economy through the cost of intermediate goods (in particular network services) and competition (entry-exit) in these sectors’.

The report adds that ‘in the case of South Africa, where most public firms are underperforming, it has detrimental effects on the cost of doing business’.

That’s the problem: some of SA’s key SOEs are not functioning as they should, and – to borrow an old idiom – the fish is rotting from the head, with serious

problems at a leadership, or boardroom, level. The OECD’s recommendations focused on precisely that, calling for an effective governance framework alongside transparency and accountability.

‘Professionalising SOEs’ boards, including the participation of competent independent members, is instrumental for transparency and proper monitoring of SOEs,’ it states. ‘A clear distinction between the roles and powers of the board and the executive management is necessary, along with the assurance of operational independence of the executive management and the limited temporary governmental intervention.’

In June 2020, the Presidency took steps towards that, announcing the appointment of the Presidential StateOwned Enterprise Council (PSEC) to ‘reposition state-owned enterprises as effective instruments of economic transformation and development’. By February 2021’s State of the Nation

Address, Ramaphosa was promising that ‘overarching legislation for stateowned companies [would] be tabled in Cabinet this financial year and in Parliament in the next the financial year’, together with the implementation of a ‘centralised SOE model’ to ensure a standardised governance, financial management and operational performance framework for all SOEs. In a joint statement, Institute of Directors in South Africa CEO Parmi Natesan and her colleague, facilitator of director-development programmes Simo Lushaba, describe the launch of the PSEC as ‘a milestone in the vital process of addressing the complex governance challenges faced by SOEs’.

However, they warn that the current model for SOEs has a fatal built-in flaw: SOEs only have one shareholder – and that shareholder (the government, represented by the relevant minister) has all the power. That minister can ‘often act unilaterally in making appointments and in forcing decisions that do not necessarily advance the interests of the SOE in the fulfilment of its mandate’.

This, they add, ‘upsets one of the fundamental girders of good governance as set out in the King Reports on Corporate Governance: that the directors are ultimately responsible for the strategy and governance of the organisation, and that the board appoints the executives and holds them accountable. Publicsector boards thus sometimes find themselves responsible for crucial governance decisions like executive

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appointments despite having little or no control of the appointment process’.

There’s a further challenge in that nominations to SOE boards are often made directly by the shareholder (again: the government/minister) without a full account of the qualities and skills required for the job. In 2020, the Department of Public Enterprises suggested a mechanism whereby the minister would have the authority to dissolve SOE boards and step in when things went wrong. That idea was swept aside when commentators pointed out that the problem was not that the government had too little power to step in, but rather that it had too much.

To that end, the Dullah Omar Institute for Constitutional Law, Governance and Human Rights has long been calling for ministers and members of the executive to have a limited role in the appointment of SOE board members; while the South African Chamber of Commerce and Industry has asked (since at least 2019) for those appointments to be conducted via public hearings, as when judges are appointed.

That might not be practical. There are, after all, several hundred SOEs of varying shapes and sizes, with thousands of potential board members.

A case-by-case framework might be a better option. As one paper published by the Dullah Omar Institute points out, ‘it is simply not advisable to compare a major public entity such as Eskom with a provincial public entity such as a liquor board. When looking at SOE

reform, it is then necessary to understand the entity and its mandate and the possible impact if things go awry’.

Speaking to the Mail & Guardian in July 2020, Business for South Africa’s Martin Kingston insisted that the directors of SOEs should be able to work without the government becoming overinvolved in their strategic, operational and accountability structures.

‘When you’ve got a board at a stateowned company, and it has certain fiduciary responsibilities, it must be left alone to discharge them,’ he said.

‘What you often find is that the board takes decisions on how it will achieve key objectives, and who it will involve and hold accountable, but these efforts are undermined by the shareholder representatives, who often have different goals.’

Kingston added that it was ultimately the boards that take accountability for the performance of the entity – which would have been music to the ears of Zondo. In February he suggested that board members should be held accountable for the losses incurred by the SOEs they lead, pointedly asking his commission of inquiry to seek compensation from the former Passenger Rail Agency of South Africa (Prasa) non-executive directors who awarded a R3.5 billion contract to buy 88 locomotives, despite the sellers not qualifying for such a deal.

Zondo called on Prasa to ‘investigate the possibility of suing everyone who made decisions that resulted in these losses in circumstances where these individuals

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cannot give proper explanations for their decisions. They should explain to Prasa, [and] if their explanations are not satisfactory, then Prasa should consider suing them, because this is a lot of taxpayers’ money’.

That captured the sentiment of many South Africans whose lights don’t switch on (Eskom), whose trains don’t run (Prasa), whose planes don’t fly (SAA), and whose news feeds (SABC) are filled with stories of failing SOEs (Land Bank, SANRAL, Denel…). The list goes on.

Yet, as Finance Minister Tito Mboweni pointed out in October 2020, some of the C-suite executives at these malfunctioning enterprises earn bigger salaries than the president.

Former Eskom CEO Phakamani Hadebe (R8.62 million), current SABC CEO Madoda Mxakwe (R3.92 million), former SABC COO Chris Maroleng (R4.1 million), current Eskom CFO Calib Cassim (R3.25 million) and former Denel CEO Danie du Toit (R3.22 million) all took home more than their boss, President Ramaphosa.

Mboweni proposed a new salary structure whereby the SOE CEOs should be seen as directors-general and would earn the same salaries (about R1.9 million). As he told Fin24, ‘it is not true that if you don’t pay those salaries, you won’t attract expertise. It is a myth and a figment of imagination’.

Mboweni at least had the good sense not to add that things couldn’t get much worse if the directors of SA’s struggling SOEs were paid any less.

YOUTH

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High potential Holistic development programmes hold the key to creating employment for the youth

BY DI CAELERS

‘MY NAME IS XXX. I’M 29.

I’m desperately looking for job, I’m a hard-working person. I’m willing to do any kind of job. I’m a fast learner…’

It’s a common refrain in a country with one of the highest youth-unemployment rates globally and where more than half of all 15- to 24-years-olds are not in jobs, education or in training. Compounding the issue is the fact that, in times of crisis, young people are the first to lose their jobs, and the last to regain them.

With the onset of COVID-19 and the associated lockdowns leaving SA’s economy teetering, the depth of the challenge is brought into sharp focus by the extent of the country’s very young population; about one-third of everyone living in SA is aged between 18 and 34.

Now the government’s Presidential Youth Employment (YES) intervention – the most comprehensive plan to address youth unemployment in SA’s democratic history – holds the hopes and futures of about 19 million youth in its hands.

Waseem Carrim, CEO of the National Youth Development Agency (NYDA) – which is working with the Presidency, the Department of Employment and Labour and other government departments, as well as civil society – says they’re tackling the crisis via a fivepronged strategy. First is SA Youth, an online platform that connects young people with opportunities for earning, learning and volunteering, and is accessible free of charge via a mobi-site.

In the six months to February, according to Carrim, more than 1.2 million young people signed up and were linked to 200 000 opportunities.

Secondly, a budget has been set aside for an agile-skills development programme, focused on sectors in the SA economy that are growing fast despite the pandemic. Carrim cites global business services such as dataprocessing and call centres, along with digital and tech, as areas in which the country has the capacity to create jobs, and to do so at scale.

Next is stimulus within the township and rural economy, which will include catalytic interventions to help promote youth self-employment. This is followed by workplace experience, which will see them continue the work of the YES initiative.

Carrim says a very important focus will be the country’s approximately 500 000 learners at TVET colleges who have completed the theoretical component of vocational and occupational education and training to prepare them for a skilled trade. Without the requisite work experience, however, they cannot qualify. ‘What we are doing, as government, is placing those learners in experiential earning opportunities, subsidising their work so they can gain their diplomas,’ he says.

The fifth component of the strategy is a comprehensive national youth service programme, specially designed to see young people make a meaningful contribution to their communities, while learning skills and earning a wage.

According to Carrim, the intention is to place 50 000 youth in service programmes over 12 months. ‘We really want service to come back big,’ he says.

It’s a mammoth task, but Alana Bond, co-founder of youth development lab Lucha Lunako, says the development and empowerment of youth is critical to taking South Africans ‘out of the clutches of poverty’. Earlier this year, Lucha Lunako released its Youth Development Re-imagined report, which red-flagged the fact that while significant

efforts are being made in this important sector, sustainable employment prospects for youth remain grim. Outcomes and impacts are also relatively low when considered against investment being made in the sector, says Bond.

The criticism delivered by the report included that the current focus on providing youth with technical skills, preparing them for the workplace and ensuring work-experience opportunities, fails to examine how they are affected and shaped by poverty and inequality.

Missing is the provision of holistic, intentional, high-quality development and support that builds human foundations, she says.

‘To bridge this glaring youth-development gap, the report recommends more active consideration of proven best practices to inform programme design and implementation. Youth development interventions need to be holistic, and must be coupled with deliberate efforts to create clear pathways for young people,’ says Bond, adding that this requires youth to be exposed to career guidance and possibilities beyond their frame of reference.

‘Different lenses must be applied to the problem of job creation, and the potential demand for jobs in South Africa must be mapped out differently.’

That’s interesting in light of the findings of a 2020 survey by the UCT Graduate School of Business’ Bertha Centre for Social Innovation and Entrepreneurship, which saw nearly 60% of respondents indicate that they

wanted practical tips for planning their future, and to ‘read, hear or watch people talk about how to become motivated about the future’. Nearly half said they wanted a mentor, or to connect with groups focused on motivating the youth.

‘This shows that this is not only about providing technical skills, but also the need for practical and meaningful content that provides tried-and-tested solutions for moving young people towards their future,’ says Bertha Centre director Solange Rosa.

In light of the continued increase in youth unemployment pre-pandemic to now, despite government investment (from 59% in Q1 2020 to 63.3% for 15to 24-year-olds and 37.3% to 41.3% for the 25 to 34 age group, according to Stats SA), experts argue that it’s crucial to understand which interventions are indeed working.

In an article featured in the Conversation earlier this year, three authors from UCT and the University of Johannesburg (UJ) cautioned against the practice of relying only on job placement as an indicator of successful intervention. ‘Doing so misses out on outcomes that are equally important, or more so, amid high structural employment,’ say UJ professors Lauren Graham and Leila Patel, and their co-author, UCT’s Ariane de Lannoy.

Two other factors that require consideration include that many jobs in SA, especially at entry level, are insecure, part-time or casual; and that young people typically do not remain in

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YOUTH

BD EMPOWERMENT

‘This shows that this is not only about providing technical skills, but also the need for practical and meaningful content’

jobs. This, they say, is either because the job is not a good fit; is only short-term; or attendance is negatively impacted by barriers such as transport costs.

The authors urge funders, policymakers and programme developers to invest in more intensive support that ensures young people can actually face the challenges inherent in their journeys as jobseekers. At the same time, they recognise the crucial contribution these programmes play in keeping the youth connected to opportunities, so reducing social exclusion and social drift.

In a separate 2020 article by the UJ researchers, they recorded how they tracked 2 000 young people between 2013 and 2019, all of whom were participants in youth employability programmes. These were run by the Harambee Youth Employment Accelerator, loveLife’s groundBreakers, Afrika Tikkun Services, the National Youth Service (facilitated by the NYDA), Fit for Life Fit for Work, the Thabiso Skills Institute, the Raymond Ackerman Academy, and EOH (one of Africa’s largest technology services companies).

A number of positive outcomes for young people were noted, including improved job-search resilience and small improvements in self-esteem and self-efficacy.

Graham and Patel say these were important markers of success in the context of the significant hurdles young people face, and could be important in the transition to employment in the longer term. ‘While such programmes cannot replace economic growth as

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a strategy for improving employment outcomes, they nevertheless play a crucial role in supporting young people, and offering bridges to the world of work over time,’ they write.

Meanwhile, Anzisha Prize deputy director Melissa Mbazo-Ekpenyong cautions that turning SA’s large youth population into an asset for socioeconomic growth cannot occur without investment in, and support for, the country’s young entrepreneurs. Her organisation has spent the past 10 years building an ecosystem that drives entrepreneurship and economic growth through young people.

Mbazo-Ekpenyong adds that the onset of COVID-19 has made entrepreneurial training that equips young people with agile, sustainable and transferable skills that can be adapted to changing environments and situations more critical than ever.

Quoting a WEF report predicting that about 65% of children entering primary school now will end up working in jobs that don’t yet exist, Mbazo-Ekpenyong says entrepreneurship has the capacity to provide youth with a level of control over their own futures. In addition, the organisation’s research and experience has shown that young entrepreneurs tend to hire other young people, thus growing employment opportunities.

Ultimately, the specialists agree – the youth are not a ‘problem’ that needs solving. Instead, appropriate development programmes that go well beyond on-the-job training hold the key to unlocking their full potential.

EDUCATION

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Open minds With a blended approach to learning becoming the new normal, increased access for all is an urgent priority

BY DI CAELERS

WHEN VICE-CHANCELLOR

of UCT Mamokgethi Phakeng says that few academics will ever again ‘teach in the same way as before’, following the rapid switch to e-learning demanded by the onset of COVID-19, she echoes the view of tertiary institutions across SA. But what does that mean for high-school educators and the pupils they are preparing to enter those gates of higher learning?

While there are unlikely to be differing opinions about the need to make remote learning central to SA’s future education system, specialists in the field warn that without a committed focus from the government and publicprivate partnerships, the country runs the risk of exacerbating the existing digital divide.

Compounding the challenge is the complexity of SA’s education system, not least thanks to historical inequalities dating back to the days of apartheid.

And as Mmaki Jantjies, associate professor in information systems at the University of the Western Cape, writes in the Conversation, ‘language is an

issue; most pupils do not speak English as a mother tongue, yet English dominates in many classrooms’.

As in most developing countries, SA educators also have varying digital skills, with many teachers and families simply unable to afford the data necessary to sustain online learning activities.

Despite the hurdles, Jantjies warns that COVID-19 has proven that technology is no longer a luxury, but rather a critical component of the education process. In addition, she says, the pandemic offered up a unique opportunity to harness the enthusiasm among teachers and learners to become digitally savvy.

‘With the right support and training, digital teaching and learning can become ubiquitous, even in resourcestrapped environments,’ says Jantjies.

While many international highereducation institutions have long had online platforms readily available, even if academics preferred physical student interaction, Aradhana Ramnund-Mansingh, an academic at the Management College of Southern Africa, says SA was largely the opposite.

EDUCATION

In public higher-education systems, which saw first-year classes of as many as 1 500 students packed into lecture halls, COVID-19 prompted new-found respect for the concept of ‘online learning’. Meetings, training sessions, social events, empowerment activities and facilitation of lectures all became synonymous with the terms Zoom, MS Teams and webinars. Ironically, Ramnund-Mansingh suggests, a pandemic that gutted world economies, impacting populations physically and emotionally, has been the best possible driver for improvement in an education system that is rife with challenges.

In 2020, Basic Education Minister Angie Motshekga announced the rollout to SA schools of an intelligencebased educational platform to support the introduction of the 2020 coding and robotics curriculum. Earlier this year, she called for comments to amend the Curriculum and Assessment Policy Statement (CAPS) to make provision for coding and robotics in schools. She said in a gazette and notice published on the department’s website that the subjects would form part of the curriculum for grades R to 9.

President Cyril Ramaphosa is on record as saying that the country’s higher-education sector has raised concerns about the large numbers of learners in subjects for which there is less demand in the economy. Addressing the 2021 Basic Education Sector Lekgotla, under the theme of equipping

‘Digital teaching and learning can become ubiquitous, even in resource-strapped environments’ learners with knowledge and skills for a changing world, he was frank that SA has often faced criticism for lagging behind in the critical ICT skills necessary for the digital revolution.

‘If we are to meet our developmental goals, we need to provide young people with quality education that prepares them not just for the challenges of the present, but also for the opportunities of the future,’ he said. ‘Not only must we adapt to new ways of learning, but our curricula have to respond to the changes in the world of work.’

So while learners, students, teachers and lecturers have begun the return to brick-and-mortar institutions, calls for hybrid approaches are gaining traction.

Linford Molaodi, a lecturer in ICTenhanced learning in the University of Johannesburg’s faculty of education,

argues in an IT Web article that blended ways of teaching and learning are preferable to a complete substitution of traditional pedagogy.

Moira de Roche, non-executive director of the Institute of IT Professionals South Africa, concurs. She is quoted in the same article as saying that even if the Department of Basic Education is not ready to commit to online learning, they should at least consider a hybrid model, in the short term, that sees the majority of learning take place online, with learners attending school part-time.

‘It does require a new way of thinking, but this is 2021 and time for us to reengineer education,’ she says. ‘For example, smart whiteboards have replaced chalkboards, but the teaching methodology is still the same. Education

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BUSINESS DAY EMPOWERMENT BD EMPOWERMENT 2021

must be built around the learner, with teachers facilitating and guiding, rather than teaching.’

Jantjies, meanwhile, is of the view that in addition to ICT being taught as a subject in schools, the government must also pay attention to a range of other issues if it is to solidify its commitment to e-learning into the future. These include policies and strategies surrounding connectivity, data costs, skills development and hardware access, as well as contextual multilingual digital-learning content.

‘Many schools have little or no technology facilities. Some have tablets and only a few have advanced computing laboratories’ she says. ‘Formal training in applied technology skills is provided for teachers who want to teach a technology specialist subject in schools. But all this needs to be extended.’ Jantjies adds that digital skills training should become a mandatory component of all teacher training programmes at universities, universities of technology, and colleges.

‘While there have been several digital training programmes for both inservice and trainee teachers in some provinces, it is time for a concerted national programme to ensure all teachers are skilled in digital teaching and technology.’

The concern is not unique to SA either. Elizabeth Losh, a professor at the College of William and Mary in Virginia in the US, has warned against

the presumption by universities that all students are tech-savvy.

In a piece published by Times Higher Education, she says that as millions of students around the world grapple with online classes due to the pandemic and related lockdowns, campuses are relying on faulty assumptions about the who, how, what and why of digital literacy.

‘Although considerable resources have been invested in helping teachers retool, not much has been done to assist their pupils,’ according to Losh.

‘Instead, it has been taken for granted that 21st century youth naturally become fluent in any technology, even without explicit directions. While supposedly clueless instructors are given a plethora of tips and tricks […] students are being overlooked.’

Even students and lecturers who describe themselves as ‘digital natives’ find online teaching and learning challenging, according to Antoinette van der Merwe, senior director of Stellenbosch University’s learning and teaching enhancement division.

It calls for a remarkably high level of motivation and resilience, she adds, as opposed to face-to-face learning, which offers a supportive environment that is conducive to learning.

‘At Stellenbosch University, we have committed to provide digitalliteracy training and support, especially for first-year students, even before they arrive at university.

And we hope there will be a synergy

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between our approach and that of schools,’ she says.

‘If we can learn from the experiences of schools, and they can benefit from adapting some of our solutions for their needs, we have the opportunity to craft a response that speaks to our context – as opposed to mimicking ones that don’t.’

Pre-pandemic, multi-year ethnographic studies by UK digital-literacy expert Sonia Livingstone speak to the SA reality. These illustrate the importance of living arrangements, domestic space and family dynamics in the acquisition of digital literacy – something that has become even more important in the current scenario.

Even in the US, says Losh, assumptions about the devices that students use for digital access have been ‘particularly deleterious, since many young people don’t have access to a computer – with schools and libraries closed – and they must rely on smartphones with smaller screens and less functionality’. Their connectivity, she adds, is often impeded by budget decisions that prohibit upgrading broadband services or mobile phone data plans.

In short, digital literacy comprises various components, including technological aptitude, social confidence, privacy awareness and financial literacy.

For SA, a pertinent question now is whether the rapid shift to remote learning at tertiary level prompted by COVID-19 will negatively impact the already prevalent ‘achievement gap’.

AGRIBUSINESS We focus on developing and driving Agriclusters and agroprocessing

SUPPLY CHAIN & MANUFACTURING Support SMEs access procurement opportunities driven by the public and private sector

FRANCHISING Increase entrants of previously marginalised individuals into the mainstream franchises and create sustainable jobs. This includes food, services and retail type franchises

TOURISM Support companies in areas of accommodation, hospitality and related services

TECHNOLOGY, MEDIA AND TELECOMS Focus on sub-sectors such as hardware and software, social media and online content, infrastructure and services

38%

15%

SMEs

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Big deal The importance of SMEs to the economy has been highlighted

BY MARK VAN DIJK

FOR A WHILE IN APRIL 2020

it really felt like the world was going to end. For millions of South African small-business owners, it nearly did. At the end of the year financial services company Finfind published a report showing how the country’s small, medium and micro enterprises bore the brunt of the coronavirus hard lockdown.

According to its survey results – covering 1 489 businesses across all major economic sectors, and published in collaboration with the Department of Small Business Development – about 76.2% of businesses experienced a significant decrease in revenue in the first five months of the lockdown. Unlike big businesses, SMEs had neither the cash reserves nor the clout to cope with the economic setbacks created by the pandemic. They were like the proverbial canary in the coal mine: when the air ran out of the economy, they were the

first to suffocate. And they did. Finfind’s survey found that the combination of existing debt, inadequate cash reserves, outdated financials, lack of access to relief funding and an inability to operate forced nearly half (42.7%) of small businesses to close – at least temporarily. Just 47.9% of them had applied for COVID-19 relief funding. Nearly all (99.9%) saw those funding applications rejected.

For John Dludlu, CEO of the Small Business Institute, 2020 was an absolutely harrowing experience. ‘We watched, in real-time, as survey after survey told us that fewer and fewer small businesses expected to survive after three to six months of lockdown,’ he writes in an opinion piece.

‘Some 91% of consumers surveyed in one study were concerned about how they were able to pay their household bills; 20% of them reported having lost their jobs. Sixty percent of these consumers had jobs in small

and medium firms employing fewer than 100 people and many of them were young.’

Yet the crisis was like a curate’s egg: obviously and almost entirely awful, but with at least one redeeming feature. At last, in 2020, it became clear to everybody that small businesses are key to the national economy.

As Dludlu remarks, ‘more ink has been spilled about the urgency to protect and support small businesses over the last five months than in the last five years’.

When President Cyril Ramaphosa presented the South African Economic Reconstruction and Recovery Plan to a joint hybrid sitting of Parliament in mid-October, he pointed out that the country had between 2.4 million and 3.5 million small businesses, with most of them operating in the informal and micro sectors. At the time, he spoke about small business’ ‘untapped potential for growth’. By February 2021, he was putting hard numbers to that.

‘In South Africa, while 98% of formal businesses are SMMEs, they make a far smaller contribution to employment and GDP,’ Ramaphosa said during a virtual engagement with SMEs and co-operatives. ‘If we are to achieve the goal of the National Development Plan for SMMEs to create at least 90% of the targeted 11 million new jobs by 2030, we need to pay far closer attention to developing small businesses.’

He noted that the R500 million SMME Debt Relief Scheme had saved more than 23 000 jobs through its payouts. ‘Of the SMMEs approved for support, 67% were black-owned,

33% were female-owned and 21% were owned by young people,’ he said. ‘It is a concern, however, that only 0.3% were owned by people with disabilities.’

In April 2021, Treasury announced that its COVID-19 Loan Guarantee Scheme had been extended for three months. While the government’s efforts weren’t immune from criticism (five months after its R200 billion loanguarantee scheme went live, barely 8% of the available funds had been approved for disbursement), at least the public sector was trying to help. Where was the private sector?

Taking a long, hard look at its own role in the crisis, for the most part. In November 2020 more than 50 large companies formally committed to paying their SME suppliers within 30 days, as part of an effort to ensure small businesses survived the economic crisis.

Corporates involved in the initiative included listed companies and major players such as Sasol, Massmart, Allan Gray, AngloGold Ashanti, BP Southern Africa, FNB, Gold Fields, Liberty Holdings, OUTsurance and Sanlam.

Before COVID-19 had a name, and before anybody had even imagined the prospect of a national lockdown, SMEs were struggling with access to working capital and cash flow. A December 2019 survey by Xero Accounting found that an astonishing 91% of SA’s small businesses were owed money outside of their payment terms.

‘Cashflow is key,’ says Allan Gray CEO Rob Formby. ‘These small businesses are heavily reliant on being paid for their services so that they, in turn, can pay their staff and replenish supplies. Large

corporates like ourselves can make a big difference by simply paying on time; a relatively small thing.’

To their credit, several large corporates and multinationals have programmes in place to support and empower their SME suppliers. Tech giant Google, for example, recently launched a digital hub for 500 000 small businesses to improve their digital presence.

According to Google South Africa country director Alistair Mokoena, ‘small businesses have been hardest hit during this period. Many of them have had to figure out quickly how to pivot their operations to a “digital-first” approach, yet there remains a gap between those who can access these online opportunities and those who can’t. That’s the gap we want to bridge with this initiative’.

Of course, Google is not alone. Most major corporates include SME support in their procurement policies, or have some kind of support mechanism or outreach initiative in place. Airbnb partnered with local payment app SnapScan to incentivise consumers to support small businesses in Johannesburg; banking giant Absa launched a zero -fee transactional account, Business Evolve Zero, specifically designed for sole proprietors and SMEs; and private equity fund Secha Capital announced a R400 million fund aimed at investing in SMEs while offering on-the-ground operational support to accelerate growth.

The list goes on.

In November 2020 Yoco CEO Katlego Maphai told the Money Show that Black Friday had been the payment provider’s

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BUSINESS DAY EMPOWERMENT BD EMPOWERMENT 2021

‘It speaks to what’s happening in small business, and to the idea that consumers are starting to choose small’

biggest day, by volumes, by far. ‘We did not expect to see that, to be honest,’ he said. ‘It was really exciting, and it speaks to what’s happening in small business, and to the idea that consumers are starting to choose small.’

The government and big businesses are too. But research by consultancy McKinsey & Co highlights a blind spot when it comes to the growth and funding of SA’s SMEs. ‘It is clear that in their struggle to access funds – both during the [COVID-19] crisis and before it – not all SMEs are affected equally,’ McKinsey’s report notes.

According to their analysis, larger SMEs are the most likely to receive financing from commercial banks, as they have the administrative and operational capacity to meet the required credit criteria.

Then at the other end of the spectrum, micro-businesses with a turnover of less than R1 million that employ five or fewer people may have limited access to bank lending facilities, but – as the report puts it – ‘they are able to tap into personal credit facilities, micro-finance funding, grants, and other forms of government financing’.

In between are an estimated 780 000 formal and 2 million informal very small, small and medium-sized businesses that make up what McKinsey calls the ‘missing middle’. These are the momand-pop shops: local restaurants, hair salons and boutique clothing stores that felt the pinch of the COVID-19 crisis most keenly.

‘Unlike their large and micro counterparts, missing-middle businesses find themselves to be neither small nor large

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enough,’ the report states. ‘With an average turnover ranging from R1 million to R100 million and employing between five and 35 people, they do not often qualify for government grants as they are considered too well resourced, nor do they have success accessing capital from commercial banks because they don’t have the required credit criteria.’

Yet for those that survived 2020, the future looks (dare we say it?) fairly positive. SMEs are firmly on the radar in terms of private and public sector support, and consumers are more aware than ever of the benefits of supporting local small businesses.

By April 2021, exactly a year after SA first went into lockdown, Retail Capital found that 83.4% of the SMEs it surveyed had made it through the year. Some 7.9% said their financial performance had improved over lockdown, while 20.9% said their profits had either increased or stayed the same.

‘While these may be relatively low percentages, they are encouraging and indicate that it has not necessarily been doom and gloom for all SMEs,’ says Retail Capital CEO Karl Westvig.

Remarkably, while the majority of small businesses were affected financially, half (50.2%) said they did not reduce their staff complement.

‘This is typical of a small business owner,’ says Westvig. ‘We have seen time and time again that they will do everything in their power to reduce costs before implementing retrenchments or salary cuts, even cutting their own salaries before anyone else’s.’

Just another reason why they need all the help they can get.

TA K IN G B L AC KO W N E D S M E s TO T HE NE X T L E V E L Standard Bank is a proud partner in growing, scaling and supporting sustainable black-owned South African businesses by offering funding, access to markets and development.

I

n times of uncertainty, businesses want partners that bring them certainty, reliability and excellence when it comes to service, according to Timothy Matlala, head of Enterprise Development at Standard Bank. ‘They are looking for partners who understand their needs and who are committed to helping them achieve their goals.’

Standard Bank Enterprise Development understands that every business is more than its bottom line; there is a deeply rooted understanding that businesses exist for a greater purpose, and Standard Bank is committed to helping businesses succeed in fulfilling that purpose.

Standard Bank’s comprehensive Business Banking offering is an ecosystem of innovative products designed to meet even the most complex needs. As the world accelerates towards an increasingly digital way

of living, working and doing business, Standard Bank has adapted its approach to servicing its business clients, overhauling its products and services to make sure they are more effective in a digital world.

‘In line with this, Standard Bank Enterprise Development aims to support black-owned small and medium-sized enterprises [SMEs] to move their businesses to the next level by providing bespoke access to development, supporting access to market initiatives, and creating alternative means for small businesses to access funding.

‘We do this through a variety of initiatives, all aimed at working with small businesses to ensure they can succeed, grow and have the necessary help to bridge any gaps to sustainable success,’ says Matlala.

‘We continue to support our SME clients through financial relief, and the development and implantation of innovative digital

technology to aid their survival during this time.’

The bank’s enterprise development goal is to be part of the business culture by turning its offerings into enablers that will equip businesses with the tools and resources to help them start, manage and grow.

LENDING A HELPING HAND In the first six months of 2020, Standard Bank collaborated with the South African Future Trust (SAFT), established by Oppenheimer Generations, to help South African small businesses impacted by COVID-19 access a limited fund for support.

The SAFT funds have helped more than 20 000 employees of the bank’s customers.

‘We partnered with the Small Enterprise Finance Agency [Sefa] to help spaza shops purchase stock using government funding

‘We have continued to develop and launch new solutions and expand the digital solutions available to our clients’ T I M OT H Y M AT L A L A H E A D O F E N T E R P R I S E D E V E LO P M E N T AT S TA N D A R D B A N K

from Sefa-approved wholesalers at discounted prices. This partnership helped to address the problem of food and consumables shortages in townships and rural communities,’ says Matlala.

‘We have continued to develop and launch new solutions and expand the digital solutions available to our clients.

We have enabled customers to take their businesses online with the SimplyBlu offering,’ he continues.

Standard Bank is encouraging clients to use platforms like BizConnect where they can learn valuable lessons from other businesses that have adjusted.

It also encourages clients to continue to look for turnaround specialists and people within the market who can help where Standard Bank may not be able to provide the requisite level of expertise.

Understanding its clients and the dayto-day business challenges they face makes Standard Bank believe that its offering will be indispensable.

‘Our offerings extend to working with small businesses across all industries, as well as working with other corporate partners to support their Enterprise and Supplier Development initiatives through partnership models that transform supply chains,’ comments Matlala.

Through its latest business banking proposition, titled ‘South Africa banks on business; business banks on us’, Standard Bank wants South Africa to understand that small businesses are the heartbeat of South Africa’s economy, and that when it comes to supporting these enterprises, Standard Bank is providing far more than banking services alone.

‘We are not only helping these small businesses grow, but we are also setting into motion an impact on the broader ecosystem and uplifting the economy as a whole,’ concludes Matlala.

To find out more about the corporate and public sector solutions, feel free to reach out to your relationship manager.

enterprisedevelopment@ standardbank.co.za www.standardbank.co.za

BANKING ON S M A LL AN D M E D I UM E NTE R P R I S E S Standard Bank is focusing on initiatives that will include and assist small and medium-sized enterprises to grow and contribute towards economic recovery.

‘We want to be the partner that businesses can trust and bank on to support them’ JENINE ZACHAR HEAD OF ENTERPRISE AND DIRECT BANKING PROPOSITIONS STANDARD BANK

In the spirit of Standard Bank’s new business proposition titled ‘Africa banks on business; business banks on us’, this re-imagined approach towards business banking sees Standard Bank partnering with influential entrepreneurs and thought leaders and inviting them to share their stories on how they have managed to keep their businesses sustainable or take them to the next level.

As we look towards the rest of 2021, we highlight some of the solutions that are geared towards helping businesses across the various stages of their development – from start-up and management to future growth.

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s society navigates the global pandemic, entrepreneurship continues to be a beacon of hope for economic recovery, and a significant contributor towards employment in the country.

Through various initiatives, Standard Bank seeks to inspire businesses to explore their potential as the driving force of the economy while fostering connections and increasing collaborations within their ecosystems.

‘We want to drive tangible efforts towards achieving real transformation and the inclusion of small and medium-sized enterprises [SMEs] within the economy while traversing the current business landscape. We want to be the partner that businesses can trust and bank on to support them,’ says Jenine Zachar, head of Enterprise and Direct Banking Propositions at Standard Bank.

Having a digital presence has become an effective way for businesses to continue operations and reach a new audience.

A digital presence includes having a registered domain, finding ways to market your business digitally, for example, using social media, and having an e-commerce website presence to display and sell goods and services online.

Standard Bank is making it easier for business owners to take their products and services online with SimplyBlu, which enables a business to create a customisable e-commerce website with point-of-sale features, including collaboration with MasterCard and Google to give customers more visibility with free Google Ads.

point-of-sale device at a reduced fee for MyMoBiz customers.

It is imperative for small businesses to have a business account as this inevitably aligns with running the business operations and could assist business owners in their journey of making business transactions to build a business profile.

S A L A R Y PAY M E N T S Through the Standard Bank Salary Payments solution, which is available on internet banking, customers can pay their employees’ salaries seamlessly and safely.

BIZCONNECT A new and improved BizConnect site provides the insights and information needed for every stage of a business’ development. It offers a wide range of guides, templates and information to equip and empower business success.

‘We recognise that being a business owner can be a lonely journey and that owners often wear numerous hats throughout a day.

‘BizConnect aims to be a source of information that is with you every step of the way of your journey,’ says Zachar.

‘We hope that, through the solutions Standard Bank offers, we can lift the limitations that sometimes hamper business owners on their journey as we bank on South Africa’s SMEs for continued growth, success and hope.’

MYMOBIZ ‘Our MyMoBiz solution focuses on simple, affordable pay-as-you-transact banking for small businesses from R5 a month,’ says Zachar. ‘It meets the unique needs of small businesses to receive payments from their customers, pay their suppliers and staff and keep track of their business finances in a way that is simple and affordable.’ The offering includes an optional PocketBiz

www.standardbank.co.za

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Letter of the law Businesses must get to grips with complex new BEE rules and obligations

BY SILKE COLQUHOUN

AFTER AN EXCEPTIONALLY

tough economic year, corporate SA is being urged to remain committed to BEE. ‘There are no exemptions from B-BBEE requirements.

Companies will still be measured on the basis of the same targets in the various scorecards,’ says Ashleigh Hale, co-head of corporate at Bowmans law firm.

‘Although the B-BBEE Commission has acknowledged that the COVID-19 crisis and lockdowns will impact on companies’ performance, companies have been urged to adjust their B-BBEE plans to maintain their levels. The commission did relax the deadlines for the filing of reports by listed companies.

From a commercial perspective, where companies have made commitments to their customers to maintain a particular B-BBEE level and they won’t be in a position to comply, they may need to negotiate with the customers to relax the B-BBEE commitments in light of COVID impacts or they will need to follow their rights under their agreements.’

Hale adds that the South African National Accreditation System, which is responsible for accrediting the BEE

ratings agencies that measure companies’ BEE scores, has allowed ratings agencies to perform remote verifications instead of insisting on on-site verifications, given the COVID restrictions.

However, at the same time, Parliament invited comments on the Employment Equity Amendment Bill, which intends to accelerate transformation within the workforce of designated companies (those employing 50 or more).

‘The bill introduces a provision that empowers the Minister of Employment and Labour to determine sectoral numerical targets for any national economic sector,’ says Lauren Salt, employment executive at ENSafrica.

‘These targets may differ across occupational levels, sub-sectors, regions or based on other relevant factors.

‘The amendment, if effected, will require that an employer, in setting [its] numerical goals in their employmentequity plans [and] comply with any sector target – this may mean having to reach higher targets than they do currently. Once the proposed sectoral targets are out for public comment, should the amendment be passed

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unaltered, employers would be encouraged to consider whether they are achievable and make any representation prior to the final setting of the sectoral target,’ she says. ‘It’s likely that employers’ employmentequity reports and their progress will be more closely scrutinised.’

Another proposed amendment requires a certificate to be issued to employers, confirming their (substantive) compliance with the provisions of the Employment Equity Act as a prerequisite for contracting with an organ of state, according to Salt.

The minister may only issue such certificates once satisfied that the employer has complied with any numerical targets applicable. Fines for non-compliance with affirmative-action provisions can range from R1.5 million to up to 10% of annual turnover.

In January 2021, the B-BBEE Commission made headlines with its explanatory notice that requires entities to provide more supporting evidence for BEE claims.

‘The market has complained that these additional reporting obligations are onerous and unclear, particularly in relation to the status of B-BBEE compliance of JSE-listed companies,’ according to Candice Meyer, partner at Webber Wentzel. ‘Although this may seem onerous, it will strengthen the commission’s ability to make recommendations for improvement.’

She explains that the extent of details now required in the annual compliance report has grown significantly since the initial compliance matrix was published in 2017.

‘The reporting metrics in the 2021 explanatory notice drill further into detail around procurement, including

identities of B-BBEE-compliant suppliers, their B-BBEE status, ownership, nature of procurement and total spend with each entity. Procurement support for exempted micro-enterprises and qualifying small enterprises is also highlighted, as in Explanatory Notice 01 of 2018. The compliance matrix is intended to enable the commission to determine the extent of B-BBEE implementation, so that it can effectively measure the levels of transformation within the context of B-BBEE,’ she says.

‘What is challenging is that some of the detailed information that now apparently must be included in the compliance report does not have to be verified during the formal verification process. That means it may not be readily available.

‘One example is mandated investments, where the black ownership breakdown is not known. An entity may only record a score of zero in the compliance matrix for geographical location; youth; women; or people with disabilities, if it does not claim any B-BBEE points under the related category on its scorecard.’

If a reporting entity fails to provide the information outlined in the reporting matrix, it will contravene the B-BBEE Act and the annual BEE compliance report is likely to be rejected, according to Meyer.

However, she concludes, ‘the benefits of transparency afforded to the B-BBEE Commission through the detailed compliance reporting process far outweigh the added administrative responsibility imposed on entities by the reporting duties under the expanded compliance matrix’.

Several industry sectors will have to come to grips with new, sector-specific

BEE legislation. ‘At the end of 2020, a draft sector code for the legal sector was published for comment. In terms of the draft code, providers of legal services including attorneys’ firms and advocates will be measured against sector-specific targets,’ says Bowmans’ Hale.

‘Later this year, legislation is expected to be tabled in Parliament to address the slow pace of transformation in financial institutions. The proposed legislation aims to make transformation an explicit function of the Financial Sector Conduct Authority [FSCA]; will require financial institutions to have transformation plans showing their compliance with B-BBEE legislation; and will enable the FSCA to issue directives forcing compliance.’

Most of the spotlight, however, is on the Independent Communications Authority of South Africa’s (ICASA) new rules on ownership and control that will impact telcos and broadcasters.

‘In terms of the regulations, a minimum of 30% of the individual licensee’s equity must be owned by historically disadvantaged groups [HDGs] and, as a separate requirement, a minimum of 30% of an individual licensee’s equity must be owned by black people,’ says Safiyya Patel, partner at Webber Wentzel.

‘These minimum ownership requirements must be achieved using the “flow through principle”. This is a significant departure from the requirements set out in the ICT Sector Codes, which allow ICT companies, including individual licensees, to achieve a target of 30% black ownership utilising the “modified flow through principle”.’

As a result, many individual licensees may be unlikely to achieve the new requirements and potentially contravene

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PHOTOGRAPHY: GALLO/GETTY IMAGES

‘The compliance matrix is intended to enable the commission to determine the extent of B-BBEE implementation’

the provisions of the new regulations, according to Patel. ‘Individual licensees may thus be required to consider concluding top-up B-BBEE transactions to enable them to achieve the 30% black ownership requirements,’ she says.

Livia Dyer, partner at Bowmans, explains the feasibility of ICASA’s new rules further. ‘Companies with very large market caps may struggle to comply and have to restructure some of their operations to make introducing additional HDG ownership in their licensed operations more feasible.

‘Although the larger telcos and broadcasters generally have high levels of B-BBEE ownership, smaller companies are going to have to ensure that they introduce empowerment shareholders,’ she says.

‘The new ICASA rules mean that companies are going to have to look at empowerment on two separate levels – from a telco regulatory perspective and from a B-BBEE perspective. The fact that the rules

are different under the two regimes makes compliance more complex for companies in the sector.’

Dyer adds that the new rules may make it more difficult for foreign companies to invest because of the significant local ownership requirements.

‘Broad-based black ownership has been a burning issue in South Africa for some time now and, unfortunately, the uncertainty and confusion continues,’ says Sanjay Kassen, head of ENSafrica’s B-BBEE practice group.

In terms of the ongoing discussions about the legality of broad-based black ownership schemes, he says many large SA corporates have implemented such schemes to make a more meaningful and widespread impact on underprivileged black people, while at the same time enhancing their black ownership credentials.

‘There is no question that such broad-based ownership schemes have significantly benefited black people at large. The B-BBEE Commission,

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however, has consistently indicated that the vast majority of broad-based trusts are not compliant with the law and do not result in genuine and effective ownership for, and participation by, black people in the economy, despite having been recognised as such for many years.

‘Many broad-based trusts have engaged extensively with the commission, but the view and approach remains the same.’

Kassen says the pre-eminent BEE pioneers (such as Kagiso Charitable Trust, Mineworkers Investment Trust, HCI, Ditikeni Trust and WDB Trust, among others) are facing significant financial and reputational risk through continued claims of non-compliance and fronting. After years of petitioning by the trusts for policy certainty, Minister of Trade, Industry and Competition Ebrahim Patel stated in February 2021 that such trusts deserve recognition – again adding to the confusion, given the consistent views of the B-BBEE Commission that these trusts are not compliant.

‘While legislation is always open to interpretation, broad-based trusts have always been held to be compliant with the B-BBEE Codes,’ says Kassen.

‘To effectively disregard the trust as an ownership vehicle and measure the achievement of rights of ownership at beneficiary level would be inconsistent with the legislation and would render the ability to hold rights of ownership through a trust – or any other entity for that matter – entirely irrelevant.’

More policy certainty regarding this – and in fact, all BEE matters – would be a crucial step towards an inclusive COVID recovery and a clearer direction for transformation in SA.

ICT

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Hard reboot As the backbone of progress, ICT access and skills should be considered a human right

BY MARK VAN DIJK

THERE’S A (VERY OLD) BIT

of advice in tech support circles: if something isn’t working, the best solution is to switch it off and back on again. It was tempting to think that that’s exactly what SA did in April 2020, when the COVID-19 pandemic forced President Cyril Ramaphosa’s government to lock down – and, in the process, shut down – the national economy. Click. Off. Click. On. During the economic reboot, Thabo Mashegoane, president of the Institute of Information Technology Professionals South Africa, told the organisation’s stakeholders that SA needed to develop a stronger ICT skills pipeline, and to extend digital access to all sectors of society.

‘The COVID-19 pandemic has proven beyond a shadow of a doubt that ICT is in fact critical infrastructure – as important as roads, sanitation and healthcare,’ he said at the virtual

AGM in August. ‘ICT access is becoming a human right, and without it, millions of people cannot access education, jobs, vital information and services,’ he said.

‘As ICT professionals, we cannot simply be torch bearers for ICT – we need to assume greater responsibility for helping build this critical infrastructure.

We need to ensure equitable access for everyone. Now more than ever before, ICT needs to be talking to the government and forming partnerships across policy formulation and implementation.

‘We need to be working together to create digital education platforms that are free or low-cost, co-ordinated and transparent. The foundation for skilled or employable youth is access to training and education, so we have to create policies that give all young people equal access.’

Mashegoane’s rallying call articulated what had become blindingly obvious to every South African who’d been working,

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learning and living at home during lockdown: the world had, almost overnight, gone digital… And anybody who wasn’t part of that digital world was going to be left behind.

Minister of Communications and Digital Technologies Stella NdabeniAbrahams underlined this when her department published its National Digital and Future Skills Strategy.

‘Globally and locally, the mining, manufacturing and services sectors are in the process of being transformed by digital automation, artificial intelligence and a range of other digital technologies,’ it states. ‘Furthermore, government entities, private sector firms and development institutions increasingly rely on digital technologies to drive economic growth, promote social development and provide cultural enrichment. Legacy skills, and even existing ICT skills, are becoming obsolete, while new digital skills are in short supply.’

The strategy calls on ‘the whole of society’ to become digitally adoptive and digitally adaptive to ‘ensure digital inclusivity for future generations’.

To accelerate this strategy, on 31 March 2021 the Independent Communications Authority of South Africa (ICASA) announced draft regulations aimed at promoting historically disadvantaged South Africans in the ICT sector – specifically by boosting equity ownership by historically disadvantaged groups and by promoting BEE. The new regulations listed in ICASA’s directive included requirements for

‘Now more than ever before, ICT needs to be talking to the government and forming partnerships’ licensees to comply with the mandatory equity ownership requirements, 30% equity ownership by black people and Level 4 BEE status; along with penalties of up to R5 million or 10% of the licensee’s annual turnover should a licensee fail to maintain the mandatory minimum requirement.

ICASA’s draft regulations weren’t met with universal support. MyBroadband quoted one ‘prominent’ industry insider as calling them ‘a disaster’ that would lead to inflated prices. The fact that the anonymous expert was male speaks volumes about the state of the ICT sector.

In 2020, women occupied just 23% of tech jobs in SA, according to industry website Women In Tech ZA. (The exact numbers they quote are 56 000 out of 236 000.) ‘As a sector, we need to hire women to improve diversity in the workplace, and it’s been proven that higher diversity equals higher productivity and profit,’ says co-founder Samantha Perry.

‘But we cannot find women with the required skills, and we cannot attract young women to the sector because when they look at conferences, in the media and inside technology companies, they mainly see men – who they can’t relate to – doing what they perceive to be “boring” jobs.’

Several listed companies are hoping to change that. In April 2021, 146 youth (including 89 women) graduated from Vodacom’s Youth Academy programme, which to date has provided training to 1 479 unemployed youth. Vodacom has committed to train another 1 750 by 2025. The training, valued at more than R100 000, is offered free of charge.

Vodacom also zero-rates public platforms for schools and universities, reaching more than 1.2 million users through its e-learning platform.

‘Increasing rates of youth unemployment remain a major challenge in South Africa. At the same time,

PHOTOGRAPHY: GALLO/GETTY IMAGES

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businesses of all types and sizes are struggling to fill a wide range of digital technology roles that are critical for future growth,’ according to Takalani Netshitenzhe, external affairs director for Vodacom South Africa.

‘The programme, which is a partnership with various players within the ICT space, aims at developing ICT skills in the youth of the country who would otherwise not have the opportunity to do so and give them a fighting chance in this tough economy.’

Microsoft, meanwhile, recently announced that it had helped more than 30 million people in 249 countries and territories – including nearly 300 000 in SA – gain access to digital skills during the COVID-19 pandemic.

At the same time, Samsung South Africa continues to invest in youth development through its Equity Equivalent Investment programme.

In October 2020 it marked the second intake at its App Factory internship programme at Wits University’s Tshimologong Digital Innovation Precinct, where interns work with experienced senior developers over nine months to hone their coding skills.

‘Despite the many challenges that face our country’s youth, there is immense potential that can be explored,’ says Hlubi Shivanda, director of the business innovation group and corporate affairs at Samsung South Africa.

That’s not just media-release bumf.

Between July 2019 and February 2021, venture-capital firm Empowerment

Capital Investment Partners reported investments totalling R162 million into 13 SA start-ups.

Executive director Mark Fitzjohn told ITWeb that ‘except for two investments, every other transaction we have concluded has had some sort of a tech angle to it. Most are straight-out tech businesses’. And, despite the bleak state of the economy and investment landscape in 2020, Fitzjohn reported a positive outlook.

‘We were actively looking for investment opportunities from 2019 that are aligned to our mandate of inclusion, transformation and empowerment. What we found was not doom and gloom,’ he said. ‘In fact, we found an overwhelming number of opportunities in the market in the form of amazing ideas, promising talent and innovative solutions that all deserve the support that we offer.’

That anecdotal sense of an industry filled with promise is supported by onthe-ground research. A recent report by social enterprise Harambee Youth Employment Accelerator found that digital skills have the potential to create more than 66 000 jobs in SA’s ICT sector in 2021, with two-thirds of those being entry-level positions.

Harambee’s survey of businesses and employers found that 69% of respondents currently outsource digital work and expertise to other countries.

That’s about R150 million paid per year to service providers in other countries – and an estimated R8.5 billion in annual lost export revenue.

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‘Re-shoring and bringing back this digital work presents significant high-earning job opportunities for unemployed youth in South Africa,’ says Evan Jones, Harambee’s group strategy director. ‘The country must prepare its skilling pathways and training programmes to meet this demand and ensure that young people who need those jobs the most are brought into the digital economy.’

Ramaphosa underlined this at the ANC’s Progressive Business Forum in January, saying that the government was looking at how black-owned businesses could participate in the recovery of the country’s economy in 2021. This would include focusing on the role that black people have in sectors that drive the national economy.

‘That, in my view, will be the game changer,’ he said. ‘Sometimes we talk in broad terms about the economy. We now need to go deeper into exactly what makes the economy work and function, and the participation of black people in all areas of economic activity. We will then see how best we can get black people to participate.

‘This is the year that we should be able to do that, and move the needle of economic empowerment for women, young people and black people broadly.’

If the lingering memory of 2020 is one of COVID-19 disruptions, then perhaps 2021 will be remembered as the year of the economy – and the ICT sector in particular – got the reboot it so urgently needed.

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HEALTHCARE

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Good medicine The country’s embattled healthcare system requires private-sector collaboration to ensure access for all

BY SILKE COLQUHOUN

EVOLUTIONARY THEORIST

Charles Darwin once said: ‘In the long history of humankind those who learnt to collaborate and improvise more effectively have prevailed.’ So if he was right, there’s still hope that SA’s embattled national health system might be fit enough to survive the destructive chaos of COVID-19.

The first year of the pandemic certainly saw a strong collaboration between business leaders, government and civil society beyond the realm of healthcare, which pooled their skills and resources to fight the impact of the virus. Their level of improvisation and learning by trial and error has been unparalleled.

‘Together we are stronger. We will move faster, further and more fairly if we move together as a nation to achieve the goal,’ says Martin Kingston, steering committee chairman of Business for South Africa (B4SA) – a voluntary

alliance of influential businesspeople and companies who have partnered (without pay or brand recognition) with the government and other social partners to combat the pandemic.

‘Not everything will be smooth sailing as we are building and improving this capacity as we go,’ he says. ‘But we are committed to addressing any issues quickly and collaboratively.’

In the early stages of the pandemic, public-private collaborations assisted in financing and setting up emergency field hospitals across SA, and in pivoting manufacturing capacity towards producing ventilators. They also helped source and fund PPE during the global shortage (unfortunately, this effort was tainted by government tender corruption). Most recently, the government and B4SA have committed to rolling out COVID-19 vaccines to 40 million adults by February 2022.

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This is an ambitious target; particularly as SA’s public healthcare system was dysfunctional even before the coronavirus outbreak and the implementation of universal healthcare in the form of the National Health Insurance is still a long way off. Just 17.2% of the population is covered by private medical aid, according to Stats SA, with the vast majority having to rely on the over-stretched, under-resourced public sector.

Yet despite being burdened by HIV, TB and lifestyle diseases such as hypertension and diabetes, SA’s healthcare sector seems to have coped better with COVID-19 than some other emerging economies – notably its BRICS partners Brazil and India, where overwhelmed hospitals are turning away coronavirus patients and the horrendous death toll is rising further.

However, Alex van den Heever, chair of social security systems administration and management studies at Wits University’s School of Governance, cautions that looking at the excess death information, SA has had a devastating epidemic accompanied by substantial under-reporting of both infections and deaths.

‘South Africa’s deaths from COVID are estimated to be roughly three times the officially reported number. This suggests that many people die without receiving any hospital treatment. The public sector reporting on COVID inpatients has been appalling in all provinces outside of the Western Cape,’ says Van den Heever. ‘The government

has also not made any of the underlying statistics available – which limits the ability of anyone to properly check case fatality rate by hospital. The reasons for not making the data available appear intended to control the narrative rather than to provide reliable statistics to the public.’

As the sole procurer of COVID-19 vaccines, the government is facing a multitude of issues, including the question of efficacy for the local virus variant; securing and funding enough doses; transporting, cold storage and administration of the jabs; as well as funding all of this.

The public-private vaccination acquisition task team, which reports to the health minister, has agreed that private medical schemes should crosssubsidise COVID vaccines, so that every jab procured for a scheme member will pay towards the vaccination of higherrisk non-members.

One major challenge is equitable vaccination access in an unequal society – this means not only equity between rich and poor citizens, but also between urban metros and rural districts.

‘As no one in South Africa has access to a vaccine at the moment we have perfect equity between the public and private sectors,’ said Van den Heever in early May 2021. ‘South Africa failed to make any meaningful preparations for a government-led vaccine roll-out.

To date not a single vaccine has been provided through a government programme. The AstraZeneca vaccine was not deployed – and the reasons for

this do not stack up – especially when attempts are being made by the government to pursue the Russian and Chinese vaccines, which have no known efficacy against the South African variant.’

By early May, more than 366 000 health workers had been vaccinated with the Johnson & Johnson (J&J) vaccine through the Sisonke programme. The vaccine is being manufactured locally by Aspen Pharmacare, whose R3 billion sterile factory in Gqeberha was selected to compound, fill, finish and package the single-dose J&J vaccine, not only for SA, but also to provide 400 million doses for the AU. Stavros Nicolaou, B4SA health workgroup lead, explains that B4SA has re-organised itself to mirror the five work streams in the national Health Department (costing and funding; service delivery platforms; information and data management; logistics and distribution; and stakeholder engagement, communications and advocacy). He says the idea is ‘that business support aligns as seamlessly as possible with its government counterparts and provides integrated support in the design, development and implementation of the vaccine roll-out programme, and particularly with regard to the administration of the vaccine’.

The government has contracted three private firms – Imperial, BioVac and DSV Healthcare – for the transport, warehousing and distribution of vaccines.

Meanwhile businesses across all sectors are raring to provide vaccines to their workforce and wider communities.

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PHOTOGRAPHY: GALLO/GETTY IMAGES

‘South Africa’s deaths from COVID are estimated to be roughly three times the officially reported number’ Supermarket giant Shoprite has said it would purchase vaccines for its employees if that was allowed and vaccinate front-line workers as quickly as possible. The group’s MediRite pharmacies are also ‘well placed to become COVID-19 vaccination sites: they are easily accessible to customers across all income levels and already set up and equipped with the necessary facilities and employees to administer the vaccines’.

In January 2021, the mining sector announced its readiness to use its significant healthcare infrastructure and capacity to drive the vaccination process, particularly in remote regions. The Minerals Council South Africa (MCSA) expects it will cost about R300 million to support the government’s vaccination roll-out to mineworkers and community members. The mining industry has the capacity to vaccinate 60 000 people per day, with the potential to increase this to 80 000.

Sibanye-Stillwater alone could vaccinate 18 000 people per day and cover its entire workforce in a week, according to James Wellsted, senior VP of investor relations. ‘We have 44 healthcare facilities with trained medical personnel across the country near our operations and have also offered to contribute financially. We’re only waiting for the government to make a decision,’ he says, explaining that this is in addition to the company’s CSI programme.

‘We want to help. This is a national cause and we’re doing this for the health and safety for our employees, their families and their communities and to help the country. It’s the right thing to do.’

The MCSA has collated data on potential mine-based vaccination sites at a sub-district, district and provincial level (around 55 sites at present). According to its spokesperson Charmane Russell, there are around 433 000 employees and contractors at primary facilities, 6 482 employees over the age of 60 and 74 000 employees with co-morbidities, who need vaccinating. ‘An important

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component of our work has been to educate and inform employees about vaccinations. We are keenly aware that we need, in the first instance, to persuade as many people as possible to take the vaccine,’ she says. ‘We have a very good track record in terms of the implementation of medical interventions – from annual flu vaccines, to HIV and TB testing, to adherence to TB protocols, and the roll-out of wellness and antiretro-viral programmes for HIV.’ In the US, some companies are offering employees $100 in cash to get vaccinated, but Van den Heever finds this, as well as making the vaccine mandatory, counterproductive. ‘The best approach is positive messaging,’ he says, emphasising that the key constraint to vaccination in SA at the moment is the government.

‘The private-sector funders and providers are better placed than the public sector to support both public sector and medical scheme members in a full vaccine roll-out,’ he says.

‘South Africa’s largest companies are also the main beneficiaries of a working economy. Their voluntary support is both necessary and in their interests – given the weaknesses of government.’

It’s clear that the state needs to be stronger and more decisive in its collaboration with the private sector and allow big business to play its part.

Ultimately the post-COVID survival of SA’s healthcare system depends on collaboration, improvisation and decisive action to ensure the majority of the population is vaccinated.

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Enable their future Did you know four million South African children go to bed hungry every night?

JAM South Africa is working hard to change this through our nutritional feeding programmes that also encourage children to attend Early Childhood Development centres so that they can fulfill their potential.

NUTRITIONAL FEEDING

SCHOOL MAKEOVERS

TEACHER TRAINING

In our endeavour of “Helping Africa Help Itself” JAM feeds more than one million people a day in Africa and more than 110 000 pre-school children in South Africa.

At JAM SA we believe, that as well as nutrition, children need a healthy and safe stimulating environment that is conducive to learning.

In order to ensure that our makeovers make a real difference, JAM SA works with partners to provide training to the childminders or caregivers, so that children are properly stimulated and well prepared for primary school.

Children who attend our JAMassisted Early Childhood Development centres are given a Red Bowl of highly nutritious porridge each morning which contains 75% of their daily nutritional requirements.

A full tummy means that children are able to learn, play and grow to become productive members of society.

We facilitate makeovers for daycare centres ranging from mini to extreme makeovers, depending on the needs and the funds available. Makeovers are carried out by volunteers.

As well as upgrading the facilities, we provide the centres with highquality educational equipment, books and toys, as well as mattresses and blankets.

Your partnership can change lives!

Feed a child for R50 a month or R600 a year

Find us on

www.jamsa.co.za or email jamsa@jamint.com Find us on

AGRICULTURAL TRAINING Our Agricultural Programme has trained more than 900 community farmers who are able to supplement their family and community’s nutritional needs, as well as generate an income. ECD practitioners are also trained to grow vegetables.

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Complete cover The insurance sector is well primed to help communities overcome the pandemic

BY TONI MUIR

‘GOOD AND IMPACTFUL CSI

does not happen in isolation or without context,’ says Santam’s CSI manager, Tersia Mdunge.

‘We believe that our CSI strategy needs to reinforce Santam’s approach to sustainable business, as well as adhere to national transformation agendas.’

According to Mdunge, the group’s CSI spend was R26 million for the 2020 fiscal period. One of its most impactful initiatives is its Partnership for Risk and Resilience programme, which increases collaboration between provincial and district disaster management centres.

‘The objective of this focus area is to support community-led disaster prevention and management,’ says Mdunge. ‘We do this by reducing chronic-disaster vulnerability and minimising the catastrophic impacts of disasters. A key effort of this is training and awareness programmes.’

These include a partnership with the Red Cross to provide training to volunteers and communities in first aid and basic disaster management; a partnership with the National Sea Rescue Institute to provide training to

school communities (both teachers and learners) on drowning prevention and basic CPR; and workshops with school communities (including leadership, governing bodies, teachers and learners) to increase their knowledge regarding risk identification and mitigation.

Soon after COVID-19 brought about lockdown, Santam made R5 million available for its CSI projects to provide PPE to frontline workers, and hunger and poverty alleviation to the most vulnerable. Along with the Emthunzini B-BBEE Community Trust, Santam also made a R5 million donation to the Solidarity Fund.

As for the status of the company’s empowerment charters, Mdunge says the business is aligned to the Financial Sector Charter and that its CSI initiatives are ‘strategically focused and aligned to our core business objectives and priorities’.

Asked what CSI means to the organisation, Liberty’s lead specialist for CSI, Nomaxabiso Matjila, says it’s about ‘being a responsible citizen’. When deciding the focus areas for the company’s CSI spend, Liberty considers the needs of society,

as well as the areas that need to effect change in the economy. In so doing, the company identified education as a primary theme for its CSI activities.

With lockdown came the closure of schools, and the government and private sector were left scrambling to enable continued learning. Like many organisations, the Liberty Group re-purposed its CSI plans and programmes in response to the pandemic, redirecting funds and helping partners assist with the new challenges as they arose.

Liberty partnered with Primestars and its #SaveTheClassof2020 campaign, aimed at providing online and face-toface tutorial support to more than 5 000 matriculants from participating schools.

The company also joined forces with Mindset Learning to magnify its digital learning platforms.

In addition, Mindset increased the number of learning programmes broadcast on DStv channels, most notably the grades 10 to 12 maths and science programmes, through this partnership.

According to Matjila, the company’s monetary contribution to CSI during the 2020 financial year amounted to around R45 million, with the trust/foundation contributing an extra R14 million. The group also made additional financial contributions to the Solidarity Fund.

In terms of its empowerment charters, Liberty has a transformation strategy that was co-developed with the executive committee and other key stakeholders in 2018, and implemented in 2019. While much progress has been made over the past two years against the strategy, and Liberty (and STANLIB) has maintained a Level 2 BEE rating, the company believes there is still room for improvement and says it is actively working towards closing gaps to target the areas where these exist.

‘Assupol operates largely in emerging markets where there are many pressing social challenges well beyond the ability

of any single individual or business to impact on a wide scale,’ says Vuyelwa Nhlapo, CEO of the Assupol Community Trust. ‘We believe there has to be a close correlation between serving our clients with products and services they need, and investing in their communities.’

The Assupol Community Trust focuses its CSI on the provision of universal access to early childhood development (ECD) for children aged zero to five years, in designated communities within KwaZulu-Natal and Gauteng.

It also works to accelerate access to ECD by engaging in various activities, such as raising awareness about the importance of ECD, and expanding ECD services to include non-centrebased ECD, such as day mothers or play groups. Through the trust, 20 new ECD centres with two or three classrooms, a kitchen, an office with a sick bay and ablution facilities have been built, while a further 25 ECD centres have been renovated.

In terms of how the pandemic has changed the way the trust directs its CSI spend and efforts, Nhlapo says that, given the closure of so many ECD centres during lockdown, the trust had to change its normal business plan, halting activities such as training, the provision of learning materials, and running of awareness campaigns, and focus instead on providing a COVID-19 relief plan to assist these centres to cushion their vulnerability.

‘The plan focused on three activities, namely the provision of stipends to 258 staff in the ECD centres to address loss of income; operational cost support to 92 ECD centres to run operations of the centres including payment of rates and taxes; and lastly, PPE was provided to 211 centres.’

The Assupol Community Trust spent R7.1 million carrying out its mandate in the past financial year,

PHOTOGRAPHY: GALLO/GETTY IMAGES

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according to Nhlapo, R2.6 million of which was spent on COVID-19 relief.

‘A year ago, our lives changed, inconceivably and irreversibly,’ says Nonkululeko Maninjwa, head of CSI at Telesure Investment Holdings (TIH).

‘Uncertainty and disruption became the new normal and everyone had to conjure a strength and resilience like never before.’ TIH houses several companies, including 1st for Women, DialDirect, Budget and Auto&General.

Given the proximity of TIH’s offices to Diepsloot in Gauteng, the company chose to focus its CSI efforts on this community. As such, it supports several Diepsloot-based organisations, including the Diepsloot Foundation, the Food Security Programme, OLICO, LEAP and Lawyers Against Abuse.

Since 2005, the 1st for Women Foundation has contributed more than R70 million to organisations that fight woman abuse. Believing that education is a fundamental tool in championing gender equality, the foundation launched a school-based learning programme at several ECD centres, as well as primary and high schools in the Diepsloot community. The programme also includes a comprehensive community-based

support programme for survivors of abuse, implemented with Lawyers Against Abuse in Diepsloot.

In addition, 1st for Women partners with Think Equal, the first global education initiative endorsed by the UN Human Rights Office, and the Ntataise Trust, an independent organisation that helps women in disadvantaged, rural communities to gain the skills needed to establish and sustain effective ECD programmes for children in their care.

A swift response met the President’s call to fight COVID-19, and the Douw Steyn Family Trust, on behalf of Douw Steyn and his family, along with the SA companies he founded – TIH, Steyn City Properties and the Saxon Hotel – pledged financial support of R320 million, which included a relief fund of R70 million to assist small businesses, including those in TIH’s supply chain that were unable to earn an income during lockdown.

Lebo Sikwebu, Hollard’s head of transformation, ESD and CSI, says the company prefers to think in terms of social impact. ‘As a proudly South African company, we understand that the government alone cannot achieve the level of socio-economic development required by our country and its people.

‘The pressing issues faced by South Africa were brought into sharper focus during the pandemic, but they didn’t change’

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We need to play our part.’ She adds that ‘for Hollard, the idea of social impact involves thinking beyond our bottom line and in terms of a higher purpose that is meaningful to all stakeholders and which can bring about sustainable outcomes to targeted beneficiaries and communities’.

Asked whether she thinks the CSI landscape has changed since COVID-19, Sikwebu says that ‘the pressing issues faced by South Africa were brought into sharper focus during the pandemic, but they didn’t change. While we did create specific COVID-related interventions, our longer-term focus on our social impact programmes remained’.

In addition to contributions to the Solidarity Fund by both the Hollard Group and its institutional shareholder, Tokio Marine, Hollard donated 13 containerised testing units to augment the government’s efforts in Gauteng, KwaZulu-Natal and the Eastern Cape.

These can be re-purposed for other healthcare needs once the pandemic recedes. Hollard also participated in the organisation and distribution of food parcels to families in vulnerable communities. Sikwebu says the lockdown had a severe impact on the sustainability of several of Hollard’s enterprise and supplier development beneficiaries. The company continued and augmented its support of these businesses by providing grants equal to the value of the income lost during the period, among other measures.

Aside from its ongoing longerterm social-impact initiatives, the organisation’s estimate of its financial contribution to COVID-19 interventions stands at R475 million.

Sikwebu adds that Hollard believes its social-impact initiatives ‘demonstrate a determination to remain true to our purpose, through enabling our customers, employees, partners and intermediaries to secure a better future’.

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Safety deposit Financial services are placing considerable focus on grassroots initiatives

BY TONI MUIR

‘SOCIETY REQUIRES

businesses to go beyond commercial and profit motivations, and take an active role in social, political and environmental development,’ according to Bulelani Ntuli, Nedbank Foundation manager of CSI strategy alignment and reporting.

‘This “social contract” is an unwritten promise that each company and organisation will do good for the communities in which it operates.’

Ntuli adds that Nedbank formalised this social contract by setting out its purpose as a bank, which is to use its financial expertise to do good for people, communities, businesses, the environment and society.

A key vehicle for the delivery of this is its primary CSI arm, the Nedbank Foundation. Over the last financial year, Nedbank contributed some R103 million to CSI, with education receiving the largest proportion (R35.4 million),

followed by community development (R18.9 million), and health (R15.9 million). The impact of COVID on all sectors of society required what Ntuli calls a ‘significant, group-wide response’ from Nedbank. Indeed, the bank’s support was both swift and generous, to the tune of R16.5 million.

‘The Nedbank Foundation provided most of this support but also played an invaluable co-ordinating role in terms of ensuring that COVID-19 support from across the group was distributed to those organisations most able to access and help those in need.’

Looking ahead, Ntuli says a recent re-evaluation of Nedbank’s strategy ‘within the context of dynamic and fast-changing global and local socioeconomic environments’, recognised the need for a clear CSI ‘anchor’, which was identified as the green economy.

‘We believe the transition to the green economy will be a catalyst to unlock

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sustainable and scalable economic opportunities in SA,’ she says.

‘Through investing in initiatives, organisations and projects that align with this strategy we can meaningfully impact job creation, skills and education and entrepreneurship in sectors such as energy, water, waste and agriculture.’

Mary Vilakazi, COO of FirstRand, describes the developmental need in SA as ‘immense’, saying this has been further amplified by the socio-economic fall-out of the COVID-19 pandemic.

‘FirstRand and its foundations are very focused on using their networks, platforms and resources to be a force for good by delivering systemic interventions through partnerships,’ she says.

In response to the social challenges that the pandemic presented, FirstRand created the South African Pandemic Intervention Relief Effort (SPIRE) immediately following lockdown. SPIRE – a public benefit fund created to assist the government and other social partners with their COVID-19 response – leveraged the FirstRand group’s platforms, systems, client relationships and ability to reach the top 1 000 SA corporates and more than 50 000 SMEs. Through the rapid mobilisation of these resources, it was able to create solutions to social challenges at scale.

One of the ways in which FNB positively impacts economic development and employment on an ongoing basis is by providing funding solutions to SMEs. During the past year, FNB extended R19.5 billion in unsecured limits to SMEs. An example of this is its SME booster loan, a business-credit product. Since launching the booster loan in August 2018, FNB has disbursed more than R43 million to at least 700 businesses.

In addition, FNB is a firm supporter of women-led businesses, and even

more so in the wake of COVID-19, as the economic fall-out of the pandemic has had a significant impact on these enterprises. FNB provided R295 million to 1 017 businesses through the government-backed COVID-19 loan scheme, and helped administer South African Future Trust loans to the value of R35 million for 430 women-led businesses, supporting more than 3 136 jobs.

According to the JSE’s head of transformation and CSI Idris Seedat, CSI ‘is no longer seen as a charitable donation but rather as contributing to the real needs of communities in which corporates operate’.

The JSE focuses its efforts on sustainable health, education, social development and environmentalpreservation initiatives that impact the communities it supports, he explains. ‘Our engagement with organisations that have a tangible impact in communities supports other social-development needs through bursaries, poverty alleviation programmes, anti-crime projects, environmental preservation, and funding for school development.’

The JSE was quick to heed the call for COVID-19 relief. ‘Last year we redirected our spend and partnered with Business Leadership South Africa to each donate R1 million towards a hygiene hamper and food parcel drive to assist disadvantaged communities in Gauteng,’ says Seedat.

The project was divided into two phases – the first involving the distribution of 14 000 hygiene hampers; and secondly, the distribution of a further 8 000 hygiene hampers and approximately 2 000 food parcels through the Gift of the Givers Foundation.

One of the JSE’s primary areas of CSI focus is education, and the JSE Investment Challenge is its flagship

‘The advantages of securing the right BEE partner cannot be underestimated’

initiative. According to Seedat, all other CSI recipients are being aligned to this initiative by exposing them to the world of investing and finance. ‘The aim of the Investment Challenge is to enhance South Africans’ understanding of the securities market and the role that it plays in wealth generation,’ he says.

‘This is achieved by hosting a competition in the form of a virtual trading platform, where participants trade on the securities market and manage their portfolios on a daily basis. Participants

PHOTOGRAPHY: GALLO/GETTY IMAGES

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are encouraged to develop and apply research skills, share investment strategies and also learn about the importance of saving, in order to maintain a growing and profitable portfolio.’

Benedikta Nakos, executive at RMB Corvest, says that ‘the advantages of securing the right black economic empowerment partner cannot be underestimated in the South African context – demonstrated by the far-reaching impact of BEE funding for companies – whether to grow the business or assist management in rolling out their strategies to succeed in a very challenging and complex business environment’.

She adds that RMB Corvest, one of SA’s most successful private-equity companies, is fully committed to BEE and makes a concerted effort to drive and develop the various industries in SA. The firm first provided BEE finance in 1998 – nine years before BEE codes were officially established and implemented. To date, the company has invested in 91 BEE transactions and deployed more than R2.7 billion in capital through its BEE partners.

The Shalamuka Foundation, established by RMB Corvest and Shalamuka Capital, funds the Penreach programme, a non-profit, in-service educational development training programme with a focus on early childhood development, literacy and numeracy, maths and science, and leadership projects.

Nakos says that dividends earned though the investments are funnelled through the Shalamuka Foundation to Penreach. ‘As partners, RMB Corvest and Shalamuka Capital seek to find the most appropriate investments that are sustainable, with future growth potential.’

The impact of the Penreach programme is vast – it has benefited 900

schools, 2 000 teachers and 350 000 learners thus far. The female-beneficiary base of Penreach primarily comprises black women and, as such, enables target companies invested in by Shalamuka Capital to treat these investments as 48% black womenowned, and more than 50% owned by black designated groups.

‘RMB Corvest always partners with the management team of a business, advising and participating in robust debate around strategy and growth potential at board level, but, as investors, are always driven towards common goals,’ says Nakos.

‘Support on the various boards by experienced individuals allows people who are able to actively drive skills transfer and skills development to enable meaningful empowerment.’

According to Alexander Forbes investor relations and transformation head Zakira Amra, ‘transformation is an imperative of our business strategy and, as a result, our commitment to transformation is deep rooted and extends beyond compliance with B-BBEE regulatory requirements’.

Alexander Forbes is a Level 2 BEE contributor, and considers diversity an important competitive value proposition, taking a deliberate approach to developing and recruiting black and female talent, supporting black business and empowering previously disadvantaged communities, says Amra.

She adds that 2020 was a critical year for Alexander Forbes as the company focused on re-establishing the framework that drives its transformation journey. ‘This is an important step in reformulating our transformation strategy aligned to the “One Alexander Forbes” way of operating,’ she says. ‘The strategy will continue to take a broad view of transformation – internally by

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empowering our employees through ownership and employment opportunities, across our value chain through procurement and supplier development, and for society through financial wellbeing and community initiatives.’

The Alexander Forbes Community Trust manages its social investment initiatives, which include capacity building, employee volunteering and a tertiary bursary programme for students from previously disadvantaged communities who are enrolled in bachelor programmes, specialising mainly in commerce, accounting and actuarial science.

Another aspect of Alexander Forbes’ CSI is its CoHubs community-development programme, which primarily benefits orphans and vulnerable children, and people with disabilities.

During the 2020 financial year, the CoHubs programme reached more than 1 500 beneficiaries by providing daycare facilities, care services, nutrition and education, paying salaries and promoting economic sustainability.

In addition, as part of its broader transformation agenda, Alexander Forbes has been implementing a consumer education programme in line with the Amended Financial Sector Code, the BEE legislation governing the sector. The programme sees community participants trained on finance-related matters such as budgeting, wills and investments.

Over the past two years, close to 10 000 participants have passed through the programme. ‘Active community engagement is the glue to the successful implementation of CSI programmes in general,’ says Amra. ‘It allows for effective and better exchange of information, collaboration and sharing experiences, leading to high probabilities of achieving desired outcomes.’

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Full service Retailers have stepped up to safeguard against hunger and poverty

BY TONI MUIR

INTERNATIONALLY, SPAR

is the biggest independent supermarket retail network in the world, with 13 000 stores. The Spar Group, owners of the Spar retail brand, supports a network of independent retailers operating under its trademark through its distribution centres.

In SA, the group has six distribution centres (and one Build It distribution centre), supported by several satellite warehousing hubs, all of which supply and service 903 independently owned Spar stores.

Thuli Tabudi, group HR executive for the Spar Group, says the company’s key focus areas for CSI include foodsecurity initiatives, such as feeding schemes, orphanages, community projects and assistance for the homeless; education and skills development programmes; healthcare initiatives, including disabilities, terminal illness, and HIV/Aids; and crime-related programmes, including community education and counselling.

Tabudi says the group tries to identify NPOs and/or NGOs that are reputable and keep audited financials, and prefers working with long-standing beneficiary organisations as this enables the group to provide them with sustainability, rather than once-off donations. According to Tabudi, the measured socioeconomic development spend for the period 1 October 2019 to 30 September 2020 was R22.4 million.

One of the Spar Group’s most impactful ongoing initiatives supports small-scale farmer entrepreneurs. The Spar Rural Hub initiative, which has its origins in 2016, is a first for SA. The programme aims to help small-scale local farmers enter the formal retail value chain by equipping them with skills and technical support, and facilitating access to input and infrastructure funding. Training interventions include land preparation, planting, integrated fertilisation, irrigation, pest and disease management, harvesting, food safety and financial management. Among the

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targets for 2021 are growing and scaling the initiative nationally, and expanding both the farmer base and markets.

In terms of the pandemic impacting on the way the company directs its CSI spend and efforts, the group continued to give assistance to the organisations that it has always helped, because it understood that its beneficiaries would have been under much stress due to COVID. ‘Poverty alleviation was a big problem during this pandemic, so all the divisions made special efforts to reach out to NPOs that were responsible for feeding people who were affected by the pandemic,’ says Tabudi.

According to Sanjeev Raghubir, group sustainability manager at the Shoprite Group, the company’s sustainability strategy ‘is rooted in our purpose of being an accessible, affordable and innovative retailer. We invest in building food security and resilience in the communities in which we operate because they are home to our current and future customers, employees and suppliers’.

The group’s sustainability work is well aligned with the UN Sustainable Development Goals, and its focus areas for CSI include nutrition and food security, early childhood development, and skills development and training.

With the aim of building resilient communities, and with hunger relief at the heart of its CSI programmes, the group in the last financial year invested R135.9 million through its CSI initiatives, including surplus food donations to the value of R95 million. Since 2015, it has also ploughed a cumulative R26.5 million into community food gardens.

The group’s response to the pandemic was swift, and it introduced various

‘We urgently needed to create a dedicated support system for the country’s most vulnerable’

relief initiatives for communities, customers, employees and suppliers.

Its fleet of mobile soup kitchens was increased, as was its support for community food gardens and surplus food donations.

Shoprite donated PPE (through Gift of the Givers) to healthcare workers and care packs to COVID-19 patients and healthcare practitioners throughout the country, and raised R3.7 million for the Solidarity Fund (including R2 million donated by the group) through an in-store customer-donations facility.

Meanwhile, Pick n Pay launched its Feed the Nation campaign in April 2020, with an initial donation from the group itself, the Ackerman family and the group’s executives. ‘Since inception, Pick n Pay has had a deep social conscience and believes in being

part of the society we serve,’ according to Suzanne Ackerman-Berman, Pick n Pay director of transformation and trustee of the Feed the Nation Foundation.

During the past year, Pick n Pay commenced what has since become one of the largest humanitarian efforts the group has undertaken in its 54-year history, she says. ‘Soon after lockdown began, it became clear to us that we urgently needed to create a dedicated support system for the country’s most vulnerable – South Africans who were completely dependent on meal donations for survival.’

Shortly after launching its Feed the Nation campaign, Pick n Pay partnered with customers, businesses and organisations to extend its reach and impact.

The campaign grew at such scale and magnitude that is was registered as an

PHOTOGRAPHY: GALLO/GETTY IMAGES

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NPO – Feed the Nation Foundation – in June 2020. To date, more than R136 million has been raised, and around 28 million meals have been provided, with a focus on food relief at shelters for the homeless, frail-care facilities and orphanages.

The retailer also helped school learners through the Pick n Pay School Club – a network of about 3 000 schools where learners relied on feeding schemes at school for their only daily meal.

South African Breweries (SAB), the world’s second-largest brewer, was also quick to react to the pandemic, offering support that included face shields, hand sanitiser, medical equipment and food vouchers.

SAB delivered 100 000 face shields to national and provincial health departments for the protection of healthcare workers and community workers, as well as 150 000 litres of sanitiser to the departments of Health, Social Development, Basic Education and Transport.

In addition, it sponsored medical supplies worth R25 million to the Gauteng provincial government, and a further R22 million worth of PPE to the Eastern Cape. Its foodvoucher project also protected the food security of retailers who lost all their income due to the alcohol bans, with SAB sponsoring Shoprite/ Checkers/U Save vouchers to 14 000 small-business customers.

As part of its CSI, this year the brewer’s focus is on supporting its black-owned, small township retailers’ businesses on their journey of economic recovery through business training and diversification. This will ensure that

they are not solely dependent on the sale of alcohol to survive.

Pioneer Foods, which was acquired

by PepsiCo Inc in March 2020, is one of the largest SA producers and distributors of branded food and beverage products. During the COVID-19 crisis, PepsiCo Sub-Saharan Africa provided meals to vulnerable people across SA, Nigeria, Uganda and Ethiopia, through its #GiveMealsGiveHope initiative, part of a $71 million global initiative launched

by PepsiCo and its philanthropic arm, the PepsiCo Foundation.

‘As a leading food and beverage company in sub-Saharan Africa, we believe it is our responsibility to focus our social investment in those areas where it has the biggest impact in alleviating hunger on a sustainable basis,’ says PepsiCo’s sub-Saharan Africa CEO, Tertius Carstens. In SA, PepsiCo partnered with Food Forward SA and Red Cross SA to deliver 17.6 million meals. In Nigeria, it partnered with Food Clique to distribute 1.1 million meal boxes; in Ethiopia, together with Mekedonia, it provided 112 000 meals; and in Uganda, alongside Uganda’s Red Cross, it helped deliver 438 000 meals.

According to Zinzi Mgolodela, Woolworths’ director of corporate affairs, making a difference in communities ‘is a pivotal component of our “good business journey”, which speaks to the ethos of who we are as an organisation’.

Woolworths Holdings Ltd, made up of Woolworths South Africa plus Australian retailers David Jones and Country Road, sees itself as one of the world’s most responsible retailers, undertaking its CSI efforts through what it calls the ‘good business journey’.

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Mgolodela says the group set a 2020 goal to contribute R3.5 billion in monetary donations, sponsorship and surplus food and clothing donations to communities over five years, and has exceeded this target by contributing R3.97 billion. Its CSI strategy focuses mainly on the eradication of hunger and the upliftment of education in SA. In March this year, Woolworths announced a R2 million commitment to water security and sanitation in schools. R1 million of this has been committed by the Woolies Water Fund to the installation of comprehensive water-security systems based on rainwater harvesting at schools in waterchallenged provinces, while the other R1 million will go towards Woolworths’ partnership with the Unicef WASH programme, which installs handwashing units in schools and communities.

Over and above its CSI budget, Woolworths allocated additional spend to meet the challenges brought on by the pandemic. By mid-April 2021, some R50 million had been contributed to various initiatives, including a foodparcel campaign with Gift of the Givers, which is still ongoing.

Mgolodela says COVID-19 has highlighted the need for business and other stakeholders to come together to solve for good and sustainability. ‘In the context of a disaster, there has been a greater emphasis on supporting people with their immediate urgent needs like food relief and sanitation, as well as supporting schools and learners with access to online education,’ she says.

‘Social development initiatives will be judged more on their lasting impact in addressing societal challenges.’

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SMEs HAVE BEEN HARD

hit by the pre-COVID economic landscape and, of course, the pandemic itself. Unemployment, announced by Stats SA in June 2021, stands at 32.6%, translating into 7.2 million people, the highest number ever recorded by the organisation. Many government directives aim to address this dire situation but with its own economic woes, the government is dependent on the private sector to assist in creating and developing SMEs, especially those owned by previously disadvantaged individuals.

This is why the Masisizane Fund exists. An Old Mutual South Africa initiative, it aims to contribute meaningfully to employment creation, poverty eradication and the reduction of inequality, and to stimulate economic growth and attract investment by promoting entrepreneurial enterprise finance and support for SMEs. The fund, however, was not created in response to the current challenges; Old Mutual brought it about 14 years ago following the closure of its Unclaimed Shares Trust in consultation with National Treasury.

‘We recognise that SMEs are effective engines of inclusive economic growth and development, and more so in the current economic environment,’ according to Lebogang Serithi, CEO of the Masisizane Fund.

‘The sector accounts for a huge [amount] of employment and growth, and more so today, where these businesses can meet the demands of current and potential consumers and stakeholders by being innovative and undertaking activities that accelerate progressive social progress,’ he says.

‘They also uphold and maintain environmental integrity, which improves economic growth.’

With a focus on providing access to enterprises that are 51% or more owned by previously disadvantaged individuals, the Masisizane Fund gives priority to rural and peri-urban township areas, especially businesses owned by youth, women and people with disabilities.

Masisizane focuses on productive and labour-absorbing sectors, those highimpact industries that will benefit broadly from the fund’s comprehensive SME-financing solutions, which include business-support services.

Serithi explains that the fund takes a holistic approach to SME funding and provides financial and non-financial solutions to clients, which encompasses enquiries management, stakeholder relations, detailed business analysis, due diligence and, most importantly, loan approvals and disbursements for qualifying SMEs. ‘Post that investment, we provide value-adding support through a collaborative and bespoke approach to advisory, funding and growth solutions that will enable the businesses to be successful and sustainable,’ he says.

‘This service is crucial because without development support, small businesses cannot be competitive.’

The fund runs a number of programmes for SMEs, which includes but is not limited to how to run a small

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business like a big business; a guide to growing a business and starting, launching and registering one; a media and branding strategies governance checklist; marketing return-oninvestment tracking; credit vetting and collections; creating financial, business and other templates; common mistakes within small start-ups; how to secure funding and win corporate accounts; and the mental toughness required to sustain a business.

To date the fund has manifested in the creation of 11 385 jobs through its support of 463 SMEs, of which 39% are female- and 13% youth-operated.

As Serithi says, the fund has helped ‘fulfil ambitions’ and supported those SMEs to achieve profitability margins they couldn’t reach before. ‘For example, an acquisition of a significant asset in a production process that may increase turnover through efficiencies,’ he says.

‘Achieving economies of scale is another sign of the impact the Masisizane Fund makes. Business continuity is a vital sign of our contribution.’

Another reason Masisizane works so successfully is that it doesn’t play the role of simply being a funder. It is a growth partner. ‘We make a commitment to walk the journey with the SMEs we assist. Therefore monitoring is not a policing or tick-the-box strategy

‘We view the collaborations we have as critical in delivering effective economic-development initiatives’

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‘This service is crucial because without development support, small businesses cannot be competitive’

to ensure repayment. Yes, the journey sustains until the loan is repaid but the essence is to open opportunities, usually non-financial, and to identify capacity-development gaps for scaling up SMEs,’ says Serithi.

It is this partnership approach that attracts other stakeholders to come on board in support of the Masisizane Fund’s various initiatives. ‘It also proves the case for much-needed private-public partnerships for the transformation of the economy. We view the collaborations we have as critical in delivering effective economic-development initiatives.’

One such example is the partnership the Masisizane Fund has with SMTAX

PROFILE

Digital Accounting’s Transire accelerator programme, which ensures SMEs receive targeted skills training and support upfront to improve their eligibility to receive financial assistance. It is pertinent that SMTAX is itself a 100% black-youth-owned digital accounting and tax-service provider that uses technology as a tool for a greater impact in the SME sector.

The SA SME Fund is yet another partnership that works with the fund, in this case proving how leveraging other funding sources can increase investments. The SA SME Fund is a standalone investment vehicle that was created by a collaboration between the government, labour and business, specifically to address pressing challenges to SA’s economic growth. ‘With SA SME, we set up “Franchise Fund 1”, to make equity and/or quasi-equity investments available to enterprises within the fuel services environment,’ says Serithi.

There are three specific sectors that the fund is currently directing its SME loan-financing to, namely agriculture; supply chain and manufacturing; and franchising. It is also looking at expanding into other growth sectors, for example tourism, telecoms and digital. For agribusiness the fund is developing and driving agriclusters and agriprocessing, particularly for small-scale farmers who have a need for value-chain financing. Supply chain is a big part of this, so much so that it is a standalone tool for the fund, whereby SMEs’ access to procurement opportunities cut across many sectors and diversified markets.

‘Franchising is a differentiator,’ says Serithi. ‘It is an effective transformation tool that increases entrance of young people and women into the mainstream franchise chain and, better yet, it creates

sustainable jobs in townships, small towns and peri-urban areas.’

Case in point is the participation by the Masisizane Fund in the Pick n Pay township revitalisation project, which was established in collaboration with the Department of Small Business, Brimstone, Pick n Pay and other stakeholders. The bottom-line goal was to create channels for products produced from small-scale rural and peri-urban infrastructure to reach retail shelves.

Yet another case study is the involvement of the fund in a fiveyear flagship programme in Matatiele in the Eastern Cape and Umzimkhulu in KwaZulu-Natal, which led to the establishment of a mechanisation company owned by local grain farmers who had under-utilised land with the potential for grain production.

‘In the initial phase, 16 farming entities were supported for production of yellow maize and soya beans,’ says Serithi. Key players involved in the project included social facilitators, co-funders from the government, the Grain Farmer Development Association and other agricultural-development agencies, suppliers and off-takers.

‘What we have seen over the past 14 years of Masisizane’s existence is that sustainability is the hardest part of an SME’s journey. This is why they need specific handholding beyond just the supply of funding. Market research and linkages, financial systems and management training, feasibility studies and business mentorship are skills and knowledge that all need to be provided if SMEs are to survive and become contributors to the rejuvenation of the country’s economy,’ says Serithi.

‘This is exactly why we view what we do as stimulation for a “brighter tomorrow”, the Masisizane Fund’s ethos.’

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Road to recovery Freight and logistics companies have proved to be pivotal in the COVID era

BY MARK VAN DIJK

THE WORLD OF FREIGHT

and logistics is one of perishable cargo, fast-moving consumer goods, delivery dates and priority shipping. Here, a few tardy minutes can seem like days. Imagine, then, how long 18 months must feel.

The past year and a half has been – in this industry, as in so many others – an absolute eternity. The pandemic has impacted the sector in ways that outsiders can barely begin to fathom.

Wind that clock back to the latter months of 2019, and, even given the troubled state of the SA economy, you have an industry that knew, more or less, what the future looked like.

Tata Motors, for example, had recently launched an initiative to train underserved African youth under its SkillPro programme, inviting promising young students to participate in intensive nine-month training curricula in India. ‘For us as a company, this

programme is a step towards delivering better customer satisfaction,’ Len Brand, CEO of Tata International Africa, said at the time. ‘As our students become professionals who have been trained on Tata’s latest products and technology, so they will become better equipped to handle our local customers’ needs. It is also a wonderful window to different cultures for the students. As a result, they become more receptive to different sets of people and situations, and more global in their outlook. These students also become our biggest brand ambassadors.’

Meanwhile, Isuzu dealerships were tackling youth unemployment by partnering with tertiary institutions to prepare students for the workplace.

Isuzu Truck World in Kempton Park, for example, was providing internships to third-year students, aiming to expose them to real-life business activities where they could apply the theoretical knowledge they’d acquired in class.

FREIGHT & LOGISTICS

‘Among the things I learnt have been how to handle customers and how to communicate as a team to work towards the same common goal,’ intern Ronny Palane told the media team. ‘I also learnt that location is one of the key components of increasing sales.’

Then COVID-19 happened. By June 2020 David Logan, CEO of the South African Association of Freight Forwarders (SAAFF), was expressing ‘serious concern’ at the high level of charges being invoiced by shipping lines for storage and demurrage on cargo that could not be delivered during the early stages of lockdown. Local businesses were facing an estimated R1.4 billion bill as more than 20 000 containers stood piled up in storage facilities.

‘The level of charges levied by ocean carriers has been a source of concern for many years, but in normal times there was some justification for this, as it was – generally speaking – relatively easy to clear and deliver containers within the free time allowed. Under these circumstances it was reasonable for the carriers to expect that their containers should be returned and put back into service without delay,’ said Logan. ‘COVID-19 has changed all that.’

All that, and so much more. Last September Samantha Naidoo, logistics industry value advisor at SAP Africa, spoke about how the pandemic’s impact on logistics was causing knock-on effects in other industries. ‘This was most acutely felt in the global shortage of protective personal equipment,’ she said.

‘Since China supplies 60% of the world’s exported goods, the sudden halt in production has left many industries short of the essential components they need to not only operate effectively but also weather the economic storm brought by the pandemic.’

Transport parastatal Transnet, for example, had only 50% of staff operational, and was barely able to make 60% of its forecast revenue during Q1 2020. Its Port of Cape Town staff was operating at just 60% capacity, forcing exporters to choose between losing millions in revenue or transporting goods hundreds of kilometres away – by road, by sea or by whatever it took to get the goods delivered on time.

Meanwhile, SAAFF reported in February that the cross-border queue time for road freight at Beit Bridge averaged 19.6 hours, costing the industry an estimated R450 million.

Across the sector, ideas of forwardlooking skills-development and empowerment initiatives quickly gave way to solving the crisis at hand. What was the biggest challenge now? What needed fixing now? Thoughts of the future were largely overshadowed by the crisis of the moment.

Yet that same crisis prompted some creative thinking about how to keep the wheels turning, both through the pandemic and into the future. Marcus Ellappan, director of road freight at Bidvest International Logistics, explains how BIL had worked towards futureproofing its business by cutting waste in the present and empowering staff for the future.

‘There are solutions in the detail,’ he says. ‘You have to look at the lowhanging fruit and getting quick wins like saving on fuel costs. Ask if you’re getting the best fuel consumption. Are you getting the best deal on fuel purchases?

Investing in skills is a no-brainer. The returns are exponential with a skilled workforce,’ he says. ‘You also need to engage, engage and engage with clients.

You need to understand their business and look for win-win scenarios.’

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‘We are confident that the recipients of YES will continue to excel both academically and professionally’ To his point about skills investment, Ellappan notes that BIL was automating manual tasks wherever possible. ‘This creates a fresh look to business and also eliminates conventional methods of doing things.’

Global logistics group Rhenus remained committed to skills development through the pandemic, taking part in the public/private Youth Employment Service (YES) initiative. In March 2021 the company selected 15 learners from communities in Johannesburg, Durban, East London, Gqeberha, George and Cape Town, and provided them with a structured 12-month workplaceexperience development plan comprising workplace readiness, mentoring, on-thejob training and regular assessments to track their progress. This builds on the 33 young South Africans who concluded learnerships with Rhenus through the upheavals of 2019 and 2020. On completion of their workplace-experience period, candidates are issued with a YESaccredited CV and reference letter, which aims to unlock employment opportunities. The skills they learn could prove invaluable as they enter the industry.

‘We believe the YES programme will support youth in their development and tremendously improve their employability,’ according to Dirk Goedhart, MD of Rhenus Logistics South Africa.

‘Through this, we hope to play some small role in addressing some of the major social challenges facing South Africa, including unemployment, poverty and inequality. We are confident that the recipients of YES will continue to excel both academically and professionally, gaining the much-needed skills and workplace exposure to develop into true, well-rounded logistics professionals, closing the skills gap and mapping a successful career.’

Elsewhere, SA’s Road Traffic Management Corporation (RTMC) continued its partnership with insurer Santam to provide long-distance truck drivers with training on road-safety awareness and driver wellness. Together with corporate sponsors and stakeholders such as Coca-Cola, Drive Dry, AB InBev, Diageo South Africa and the Bakwena N1/N4 Toll, they hosted a twoday campaign at Mantsole weighbridge

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in the Limpopo province during October’s Transport Month.

‘Further advancement of the country’s road-safety initiatives, such as driver and pedestrian behaviour, as well as awareness of the sector’s economic benefits, are extremely important,’ says Anton Cornelissen, Santam’s head of heavy haulage.

Small-scale interventions such as these, while tremendously valuable, obviously cannot match a sustained, long-term approach to empowerment and skills development. Yet at a time when the transport sector was under unprecedented strain, many organisations shifted their focus entirely to keeping supply chains running.

The focus was on survival, but there were many moments of life-saving social impact. In March 2020 Isuzu Trucks worked with disaster-relief organisation Gift of the Givers to deliver 22 500 litres of water – through the donation of an Isuzu FSR 800 Tanker truck and two FTR 850 trucks fitted with water tanks – to drought-stricken communities in the Eastern Cape.

‘The trucks are of great help,’ said Gift of the Givers project manager Ali Sablay.

‘They bridge the gap between boreholes and water delivery to the communities in Makhanda, in the east of the province right through to Graaff-Reinet towards the west, covering towns such as Bedford, Adelaide and Cebe.’

The overarching theme, however, was one of hunkering down, focusing on the here and now, and ensuring that the wheels of the freight and logistics sector kept on turning. There remains an urgent need for skills development. That hasn’t changed. But in a time of national lockdowns, closed borders and congested ports, the priority for most businesses – regardless of their size – is survival.

BakwenaN1N4 BakwenaN1N4

CONSTRUCTION

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Breaking ground Partnerships are key to rebuilding the construction industry

BY DAVID CHRISTIANSON

THE SA CONSTRUCTION

industry took a big hit from the COVID-19 pandemic, but it had been faltering for several years before that. Legislative amendments and the government’s new infrastructure investment fund offer hope to this struggling sector. But a critical axis of empowerment may lie elsewhere – in the residential property space and especially its social-housing component.

The construction industry shrank by 20.3% in 2020, the worst affected of all economic sectors. According to Stats SA, infrastructure spending had been declining for several years as a result of lower spending from a cashstrapped public sector. In its 2021 budget review, Treasury noted that ‘government does not have sufficient financial resources to meet the growing infrastructure need’. The result has been a drop in investment as a percentage of GDP to a record low of 13% in 2020.

Investment needs to consistently be at about twice its current level to deliver sustained growth. According to Kgosientso Ramokgopa, head of the Investment and Infrastructure Office in the Presidency, the government’s intention is to get the ratio up to 30% as outlined in the NDP, but he says this will require the government to ‘lean heavily’ on the private sector for capacity.

The government’s response to the problem has been twofold. First, it has established an infrastructure fund to be managed by the Development Bank of Southern Africa. An infrastructure roll-out is the cornerstone of the economic reconstruction and recovery programme announced by President Cyril Ramaphosa last year.

The Infrastructure Fund is not large, especially considering the scale of what is needed. Its initial start-up capital is just R18 billion for 2021/22 and, according to Finance Minister Tito

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Mboweni, the three-year allocation to infrastructure is R93.1 billion. But the objective is not on-budget, state-driven capital spending; instead it is to leverage private-sector spending. Infrastructure Fund operations specialist Pam Majola points out that ‘the Infrastructure Fund is not a fund in the traditional sense, but more of an enabling platform that packages projects and programmes and then draws in private investors’.

Government spokespersons have taken to describing these kinds of packaged projects as ‘shovel-ready’.

Ramokgopa announced 55 ‘bankable’ projects in June last year, spanning a range of sectors including energy, roads, ports and social housing. ‘These projects are packaged in such a way that we will be able to invite private-sector participation,’ he said.

The success of the infrastructure roll-out hinges on uptake by the private sector. Will the country’s big retirement funds bite? The chances will be greatly increased by the proposed revision of Regulation 28 of the Pensions Funds Act this year. Regulation 28 determines the maximum exposure allowed to retirement funds in different asset classes. It is the rule determining, for instance, that no more than 25% of a pension fund can be held in offshore assets.

Owing to the complications in the definition of different asset classes, it is not clear how much of the SA retirement industry’s R1.8 trillion in assets is currently invested in infrastructure.

But it’s only a small proportion.

According to estimates, just 2.8% of private-sector investment in Africa goes into infrastructure. Old Mutual Corporate MD Prabashini Moodley

notes that in SA the company’s impact investment portfolio allocates just more than 8% of funds to infrastructure projects. The draft amendments allow infrastructure exposure of up to 45%.

There may be a considerable appetite among SA pension fund managers for infrastructure investments. Leon Campher, industry veteran and CEO of the Association for Savings and Investment South Africa, says that ‘pension funds actually like investing in infrastructure’. He observes that ‘the industry wants bankable projects with long-term income streams’.

Campher does, however, warn not to expect miracles. He points out that the largest defined benefit funds in SA – the Government Employees Pension Fund, Transnet Pension Fund and Telkom Pension Fund – are not subject to the Pension Funds Act and have always been able to invest in infrastructure.

‘It’s a matter of offering a competitive, risk-adjusted return,’ says Campher. It would seem the contributions of the government’s Infrastructure Fund and the private savings industry are only part of what is required to revive the construction sector.

Another part of the answer may lie in residential-property development.

Housing sales made an unexpectedly rapid recovery from the depths of COVID-19 inertia in 2020, helped crucially by a three percentage point cut in interest rates over the course of the year. Balwin Properties, probably the country’s largest residential developer, sold double the number of apartments in the eight-and-a-half months to November 2020 compared to the same period in 2019 (4 233 versus 2 280).

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‘Urban densification must take the form of many less expansive projects that rely on ordinary people’

Balwin Properties chief financial officer Jonathan Weltman says there has been a huge spike in demand for affordable stock – especially well-located one- and two-bedroom units. He believes that lower interest rates are the primary driver of the market, and that demand could outstrip supply in 2021. But land availability (and affordability) remains a hurdle.

For poorer South Africans (precisely the category for whom home ownership offers one of the few available routes out of poverty), the cost and availability of urban land has turned out to be a critical constraint. The government’s strategy of building heavily subsidised low-cost houses, colloquially referred to as RDP houses, delivered around 3.2 million units between 1995 and 2018. Over time, however, these have come to be increasingly located on the urban periphery where land is cheapest, which means travel costs, inconvenience and lack of economic opportunity have deepened the poverty trap for many recipients. Annual delivery of RDP

houses peaked as long ago as 1999 and the financial resources to build more may have run out.

In December 2020, the Department of Human Settlements ordered provincial departments to scale back radically on new low-cost housing projects. The plan appears to be to offer site-and-service schemes instead, with urban services but no top structure. This is certainly bad news for big low-cost housing developers such as the blackowned construction firms Motheo and Lubbe. However, the new policy may prove beneficial to small-scale building contractors paid out of the pockets of those who receive serviced sites.

Is there a role in this new residential market for the private sector? Paul Jackson, CEO of the Trust for Urban Housing Finance – generally referred to as TUHF – believes there is.

TUHF launched SA’s first-ever social bond on the JSE earlier this year. Arranged by Standard Bank, the R609 million Urban Ubomi 1 bond, is intended to finance inner-city residential

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development. The purpose of the social bond is to eliminate finance as an entry constraint for new property entrants.

Jackson argues that ‘urban densification is a national imperative’. The proportion of the SA population who live in urban areas has increased by more than 10 percentage points since the end of apartheid and is well on its way to 70%. He points out that ‘due to space pressures within the existing landscape of most inner cities, urban densification must take the form of many less expansive projects that rely on ordinary people with local knowledge for their success’.

Jackson adds that ‘we are seeing small and medium-sized developers taking up opportunities to develop projects of between R1 million and R100 million, and we can expect to see this phenomenon to continue’. He wants city governments to be more facilitative than they have been in the past and to redirect their resources in ways that empower communities. Releasing and re-zoning well-located land would be part of this process. His view is that this collaboration between private-sector finance, smaller construction companies and metropolitan government will free up state resources ‘to focus on [urban] infrastructure development’.

There can be little doubt that the private sector has a very considerable role to play in dealing with the country’s infrastructure constraints both at city and national levels. There’s clearly an appetite for mobilising funding for projects.

What remains to be seen is whether the shovels will be breaking ground on a large scale.

MINING AND METALS Key among the Mining and Metals SBU objectives is to support the development of a globally competitive value chain (steel, aluminium value chains), in South Africa and on the African continent. The ultimate objective is to develop large-scale industrialisation and job creation in the county and the continent.

AGRO-PROCESSING AND AGRICULTURE Through its Agro-processing and Agriculture Strategic Business Unit (SBU), IDC invests in the development of projects and businesses that either create new or expand local manufacturing capacity – which often results in the creation of new jobs as well as replacing imports, facilitating increased exports, and enhancing competitiveness. This is done by, amongst other things, reducing production costs by and promoting a value chain approach.

TEXTILES AND WOOD PRODUCTS enterprises across both sectors. The textiles and wood sector focus ranges from home decor to leather goods producers to manufacturers of natural or synthetic fabrics. The wood sector focuses on the to the manufacturing of paper and packaging. The aim is to build a locally and regionally competitive industry through strategic partnerships that promote entrepreneurship and social and industrial development. The unit works closely with the Clothing Textiles Competitiveness Program, a grant scheme managed on behalf of the DTIC.

ENERGY The South African energy sector is currently undergoing several impactful transformations, moving from traditional fossil fuel power sources to lower carbon environmentally sustainable technologies and business models such as Renewable Energy (e g. Solar PV, Wind, Biomass and Hydropower), Energy Storage Technologies, Green Hydrogen, Distributed Generation, Mini and Micro Facilitating Economic Development through Cleaner Energy, the Energy SBU seeks to consolidate the IDC’s Green Energy mandate by facilitating the Just energy transition and ensuring sustainable energy security in South Africa and the rest of the continent in support of growing economies.

AUTOMOTIVE AND TRANSPORT EQUIPMENT The IDC Automotive and Transport Equipment Strategic Business Unit (SBU) is focused on ensuring both domestic and global competitiveness in the downstream manufacturing of automotive, transport equipment and related components. It prioritises funding and support to automotive and transport developmental impact on return while playing a MEDIA & AUDIO-VISUAL The Media & Audio-Visual SBU places a primary focus on producing locally relevant and internationally animation and TV series. The SBU also aims to close rebate incentive. The objectives of the SBU include assisting in the following: • Production, post-production, and broadcast studios • The creation and acquisition of platforms across TV, radio, and digital media • The development of new or alternative distribution systems for content • The funding of gaming and interactive media • Projects or initiatives that support the more chain, such as equipment rental.

INFRASTRUCTURE The infrastructure SBU has the mandate to unlock infrastructure development opportunities and investments in line with government objectives and stimulate SA’s economic growth and regional integration. Our investments in infrastructure aim to support value chains such as Mining, Agroprocessing, Chemicals, and other industries that contribute to the South African economy’s industrial development.

TOURISM & SERVICES With its primary objective aligned to facilitating job creation in both the local economies and those in the rest of Africa, the IDC Tourism & Services SBU primarily invests in the accommodation sub-sector, focusing on business hotels in fast growing areas.

CHEMICALS, MEDICAL & INDUSTRIAL MINERAL PRODUCTS IDC’s Chemicals, Medical & Industrial Mineral Products SBU supports entrepreneurship, promotes industrial development and strategic partnerships by building competitive industries and enterprises in South Africa and the rest of Africa, targeting a variety of sectors and sub-sectors, the Chemicals, Medical & Industrial Minerals Products.

MACHINERY, EQUIPMENT AND ELECTRONICS Machinery, Equipment and Electronics SBU comprises a combination of the Machinery and Equipment and Light Manufacturing business units, which were previously stand-alone units.

With a broader focus on supporting industrial activities in the manufacturing of machinery and capital equipment, combined with innovations in electronics and robotics, the IDC Machinery and Equipment SBU aims to leverage the strength of pre-existing investments and relationships while allowing for alignment to the future of Machinery and Equipment for the 4IR enabled industry.

SMALL BUSINESS FINANCE AND REGIONS (SBF) The Industrial Development Corporation (IDC) actively promotes investment across all provinces in South Africa. provinces to ensure that entrepreneurs are opportunely serviced in the provinces they reside in.

The corporation’s Small Business Finance and Regions (SBF) strategic business unit, which houses all regional

that the IDC funds.

Transaction types funded under the SBF include: • Start-ups • Capex for expansions • • Working capital •

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Digging deep Miners have taken a proactive approach to their CSI responsibilities

BY TONI MUIR

COVID-19 HIT THE MINING

industry particularly hard, with many companies continuing to pay salaries despite no work taking place. And, as things got tougher for communities surrounding the mines, additional funding was made available to help with everything from schooling to food parcels, to healthcare and even skills training so that people could find alternative employment opportunities.

Asked how the CSI landscape has changed because of the pandemic, Harmony Gold executive director of corporate affairs Mashego Mashego says it unleashed a Pandora’s box within their host communities.

‘Many [people] lost their jobs and the subsequent ability to financially sustain themselves. Job losses meant parents could no longer spend substantially on their children’s education, and older kids could no longer take care of their elderly parents financially,’ he says.

‘As a company, we are currently spending a bit more on school-based initiatives – we have increased the number of school shoes that we buy

during our back-to-school campaign, and the number of requests for assistance that we get from old-age centres has dramatically increased. This scenario occurs in both our host communities and labour-sending areas.’

As for whether or not the pandemic has changed the way the company has been directing its CSI spend, Mashego answers in the affirmative. ‘This year the focus has shifted more towards education, social development and health, and effort will be taken to reskill community members on sought-after skills that will render them employable.’

One of Harmony’s most impactful initiatives is its back-to-school campaign.

‘Annually we buy more than 2 000 pairs of school shoes to provide to needy learners in our host communities,’ says Mashego. ‘This is usually paired with reusable sanitary pads to enable school girls to stay in school, with no loss of learning days due to a lack of sanitary wear during menstrual cycles.’

Another successful project is the annual matric excellence campaign,

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through which Harmony sponsors 65 laptops for matriculants who have performed exceptionally well in their final exams.

‘This initiative is coupled with bursaries from the desk of the CEO,’ adds Mashego. ‘This year we gave out 30 bursaries.’

According to Mashego, Harmony has spent R7 million on CSI programmes during the past financial year, and an additional R3.137 million on COVIDrelated initiatives, including food parcels, care kits, educational leaflets and booklets, and radio campaigns.

During 2020, Anglo American Platinum’s social investments totalled R459 million, including R378 million on social and labour plans (SLP) as well as CSI projects, and R81 million on COVID-19-support measures.

In addition, host communities received R400 million in dividends through the chrome plant joint venture at the Amandelbult mine and the Alchemy community share scheme, which benefits host communities and labour-sourcing areas.

‘COVID-19 highlighted the serious needs in our communities, which require a collective response effort,’ says Jana Marais, head of communications at Anglo American.

‘Our COVID-specific efforts to support local communities and protect the livelihoods of employees included providing monthly food parcels and vouchers to assist 160 000 community members; expanding our potable-water supply to communities, benefiting over 100 000 people; and providing equipment to 77 local clinics and hospitals.’

She adds that, during 2020, the company paid R1.6 billion in salaries during lockdown and continues to

pay those who are still unable to come back to work.

‘We’re also working on extending our response plan beyond the pandemic to support South Africa’s economic recovery and enable the development of self-sustaining communities,’ says Marais. ‘In the short term, these efforts will focus on on-the-job training for employment opportunities, and we will work closely with national and regional government on projects to enhance regional economic development. We continue to focus on growing local procurement, amounting to R21 billion in 2020. This includes R3.8 billion spent directly in doorstep communities.’

Sven Lunsche, VP of corporate affairs at Gold Fields, says that ‘one of the few positives emerging from the COVID-19 crisis has been that the pandemic served as a catalyst to work more co-operatively with our key stakeholders — trade unions, communities, industry peers and governments’.

During 2020, Gold Fields donated around R44 million in medical and sanitary equipment and other services to host communities and governments.

More than a third of this was at its South Deep mine.

Over the past two years, Gold Fields intensified its efforts to ensure that its social and economic development projects focusing on agriculture, infrastructure development, education and training, and economic diversification sustain non-mining jobs. During the group’s 2020 financial year, 672 nonmining jobs for host community members were created, more than half of which are in the agricultural sector.

One example of this is at the Lima rural agricultural development project in the Eastern Cape, where 421 farming

‘We need to work with all our partners to build an inclusive economy that provides opportunities for social mobility’

PHOTOGRAPHY: GALLO/GETTY IMAGES

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jobs were created. (The province is home to 16% of the company’s workforce.)

The Thusanang informal settlement is the closest host community to Gold Fields’ South Deep mine, and home to 208 family members of its employees and contractors. The settlement has grown rapidly over recent years, but local infrastructure – including sewerage, waste removal, electricity and water – has not kept pace.

Over the past five years, Gold Fields has been working with the local government and other business partners to provide services and infrastructure, and the settlement now has a clinic offering primary healthcare services; a basic library; community food gardens; and, most recently, solar-powered street lighting – the latter project costing approximately R1.4 million.

Northam Platinum has a strong focus on local procurement wherever possible, and has also spent the past five years making a significant impact on local communities. By leveraging its enterprise and supplier development (ESD) programmes, the company has, over that period, procured R1.2 billion of goods and services from its local community-based companies.

During the same period, the number of local, community-based companies registered on the group’s vendor database grew from 11 in the 2016 financial year, to 96 in the most recent. This means an increase in local procurement spend from R54 million in the 2016 financial year to R602 million.

During the 2020 financial year, Northam spent around R653 million on community-development projects. The company’s ESD programmes received the lion’s share of this – R609 million – followed by its SLPs at R37.3 million,

and CSI initiatives at R7.1 million.

Among the projects under Northam’s ESD banner is an entrepreneurial skills development and incubation programme through which business owners or entrepreneurs of local SMEs are coached on tendering, pricing, invoicing, branding and other capacity-building initiatives.

In line with its SLP commitments, the Booysendal operations delivered infrastructure development that included a water-reticulation system and a science library – this at Gobetse Secondary School, to concentrate the focus on science, technology, maths and other critical skills.

‘Implats believes the sustainability of its mining activities depends on our ability to contribute to the well-being and prosperity of its mine-host communities,’ says Tsakani Mthombeni, sustainable development executive at Implats. ‘It is through our core activities – employing people, paying taxes and procuring from host communities and countries – that we make our most significant contribution to socio-economic development in the countries where we operate.’

Implats’ investment into the living conditions of its employees has seen the company recognised as a sector leader. Over the past 12 years, it has invested more than R4 billion in accommodation around its SA operations. So far, it has built 3 420 houses, of which 90% have been sold to employees.

Its flagship housing projects are the Platinum Village and Sunrise View housing developments at its Rustenburg operations. Constructed in partnership with government and independent developers, they include bulk infrastructure such as roads, water, electricity, health and sewerage, as well as schools.

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The Rustenburg operations also provide 4 188 single-accommodation residence units (converted from hostel buildings prior to 2013), and 308 family units.

Mthombeni says Implats threw its full weight into supporting its communities when COVID-19 hit. At a group level, Implats donated R36 million to SA communities. R26 million of this was channelled to the Gift of the Givers Foundation, which delivered more than 300 000 food parcels, supported about 100 feeding centres and delivered PPE to at least 200 clinics and hospitals around the country.

The remaining R10 million was donated to the Solidarity Fund. Group subsidiaries also stepped up, with Impala Rustenburg committing R10 million to its surrounding communities, and Marula R4.07 million.

In terms of the status of Implats’ empowerment charters, and whether there remains room for improvement, Mthombeni says that in SA, the group complies with the requirements of the Mineral and Petroleum Resources Development Act and is committed to meeting the expectations set out in the B-BEE Charter for the South African Mining and Minerals Industry.

Looking ahead, Mthombeni argues that greater collaboration is crucial.

‘We need to work with all our partners – including business, the government, labour and local communities – to build an inclusive economy that provides opportunities for social mobility, facilitated by equitable access to jobs, education and health.

‘We understand that our heritage is not only about mining but also about ensuring that we make a sustainably beneficial impact across the communities in which we operate.’

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Green light Energy projects are finally being given the go-ahead

BY DAVID CHRISTIANSON

POWER PROCUREMENT

is taking off again in SA. Empowerment opportunities are likely to be driven by two dynamics – Eskom’s unbundling into three units and the revival of the country’s renewableenergy programme after a seven-year hiatus. There has been considerable recent evidence of capital mobilisation, including specialised empowerment funds, in anticipation of developments in the renewables space.

A fifth bid window for independent renewables projects was announced

by Minister of Mineral Resources and Energy Gwede Mantashe in March.

The government will be procuring 2 600 MW of power from wind and solar sources. The previous bid window (4.5) closed in 2014. Mantashe added that there would be four more requests for proposals in the next 12 months for 2 600 MW of renewables, 3 000 MW of gas, 1 500 MW of coal and 513 MW

of battery storage. In President Cyril Ramaphosa’s State of the Nation Address in February, he committed the government to procuring 11 813 MW of energy through various sources.

A critical driver of developments will be big private-sector operations seeking to secure primary or back-up energy supplies. In March, Mantashe announced that the cap on self-generated energy projects would be lifted from 1 MW to 10 MW (disappointing some energyintensive users, especially in the mining sector, which had hoped the cap would be raised to 50 MW). Three months later, however, this was followed by yet another announcement that the cap for embedded generation would be set at 100 MW. This opens considerable new room for investment.

Last year Amazon Web Services, the world’s largest cloud-computing firm, opened an African data centre in Cape Town. Not only is this an energy-hungry

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operation, as are all data centres around the world, but Amazon is on track to be using 100% renewable energy by 2025.

Eskom’s ‘dirty’ coal-based supply is anathema to the global IT giant.

The solution is to commission a 10 MW solar energy plant in the Northern Cape, currently being constructed by SOLA, a 100% SAowned solar installation company.

Significantly, Amazon has been given permission (by the National Energy Regulator of South Africa [NERSA]) to ‘wheel’ power through the Eskom transmission system to supply the data centre.

SOLA is a significant empowerment player. The Amazon solar plant will be 45% owned by Mahlako a Phahla Investments, a black-women-owned and -operated energy and infrastructure holding company. Mahlako a Phahla launched a R1.5 billion energy-focused investment fund called Mahlako Financial Services earlier this year.

Co-founder Makole Mupita says ‘this fund is the first of its kind – a 100% black-women-owned energy fund with a mandate that expands beyond renewable energy, to include gas and energy services sectors, as we endeavour to tackle, disrupt and transform South Africa’s energy sector’.

This is not the only empowerment interest in SOLA. At the end of January, Patrice Motsepe’s energy vehicle, African Rainbow Energy and Power (AREP), announced that it had taken a 40%

stake in the company. AREP is a cleanenergy-focused fund with a portfolio of 740 MW in renewable investments.

Previous investments include R50 million into blockchain tech start-up Sun Exchange, whose business model involves installing solar PV panels on privately owned buildings and properties, and selling the energy generated to a variety of users.

AREP’s chief executive is former Eskom CEO Brian Dames. He says ‘the transaction with SOLA allows us to benefit from the utilisation of modern technology to provide affordable electricity, as well as benefit from their expertise in solar photovoltaics’.

Wheeling has been mooted as a significant part of the solution to SA’s power constraints. Wheeling enables independent power producers to generate renewable energy at the point where resources are located (for example, solar power in the Northern Cape) and then sell it to a specific end-user – typically a big company such as a mine or industrial plant – in a different part of the country.

Tiaan Hendriks, sales engineer at energy, water and sustainability engineering firm SEM Solutions, comments that wheeling offers ‘a highly effective decentralisation of power supply’. He points out that it has been available as a solution, in terms of NERSA’s rules, since 2011 but has seen limited implementation as a result of tightly administered regulations.

Hendriks expects ‘generation for own use’ to be an integral part of the future, with companies selling the surplus power either back into the grid or to other users. ‘The unbundling of electricity sectors has been international best practice for three decades,’ he says.

The Eskom unbundling provides the wider context and is the factor with the most profound long-term implications.

Paul Semple, head of unlisted credit at Futuregrowth Asset Management, says the shape of the future electricity supply industry is clear. ‘Eskom has a vital role to play in continuing to manage one of our national assets, the 33 000 km of transmission lines that make up the national grid, but the utility’s role is to be an unbiased electricity-market operator, facilitating the contracting of many independent power producers and off-takers, and managing the balance of electricity demand and supply across the national grid.’

The outline was laid out in the government’s Roadmap for Eskom in a Reformed Electricity Supply Industry, published in 2019. In terms of the roadmap, the three Eskom units – generation, transmission and distribution – are due to be legally separated by the end of 2021 and operating as distinct units by the end of 2022. New boards were appointed for each of the new divisions in March last year.

Semple argues that it is in generation that the biggest shift will be seen.

‘Eskom is scheduled to decommission

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PHOTOGRAPHY: GALLO/GETTY IMAGES

‘This leaves no option but to establish new – and renewable – forms of electricity supply’

at least 13 GW from its end-of-life coal fired plants over the next 10 years, 28 GW by 2040 and 35 GW by 2050,’ he says. This means that 80% of Eskom’s coal-plant capacity will be replaced in less than 30 years, under the current plan. ‘This leaves no option but to establish new – and renewable – forms of electricity supply.’

It is in replacing this generation capacity that empowerment opportunities will occur on scale. Some indication of the shape of the future can be seen in the winning projects in the risk-mitigation power-procurement programme announced by Mantashe in March. The programme opened with a request for proposals to deal with SA’s

immediate power-generation constraints in July last year. The eight successful bids were announced in March and include technologies as diverse as solar PV, wind, liquefied natural gas (through ‘powerships’) and battery storage.

While the terms offered to the successful bidders – especially the powerships – have not been uncontroversial, the empowerment credentials of the bidders look to be solid – 51% of the equity is SA owned and 41% of it is black owned.

There has been considerable capital mobilisation in anticipation of an expanded energy programme. Moshesh Partners closed a R2 billion renewable and clean-energy-focused fund in April, while Agile Partners announced that it

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had a R900 million cash pile and was seeking opportunities.

Other empowerment vehicles are opening the possibility of future new investments by refinancing previous loans. Emvelo, founded by Pancho Ndebele, has refinanced its 15% holding in the Karoshoek Solar One concentrated solar power plant in a R440 million deal involving Momentum Metropolitan Life and Absa and thus positioned itself for future investment.

It is not only empowerment funds that are readying themselves for new opportunities in the energy space.

Investec has been raising R1.5 billion for its Revego Africa Energy Fund, in which it is partnered by the Eskom Pension and Provident Fund and British government-financed UK Climate Investment. Revego has said that it is interested in a JSE listing.

There is much stirring in the energy space in SA. The government seems to at last be coming to the party after a delay of several years. In renewables, the market has matured and deepened with financially conservative players such as pension funds buying out less riskaverse early movers and thereby opening up the capital and capacity for the next phase of investment and expansion.

Empowerment players are well represented in all facets of these developments. With empowerment now being a mandatory requirement for all energy investment in SA, they can be expected to do well as these developments unfold.

PROFILE

Helping hand AVBOB CEO Carl van der Riet on the company’s rapid response to the pandemic

BY SILKE COLQUHOUN

BD EMPOWERMENT

FOR MORE THAN A DECADE,

AVBOB has converted shipping containers into fully equipped libraries and, more recently, into modern sanitation facilities to uplift underprivileged schools. But since the outbreak of COVID-19, the funeral insurance and services group has gone one step further. Its manufacturing plant in Bloemfontein is now turning refrigerated containers into fully functional mortuaries – complete with a cooling system, mortuary racks, lighting, ramp and a standby generator.

‘This was not something we had intentionally planned for, but we had to act quickly when the pandemic hit, innovating to literally change our business overnight,’ according to Carl van der Riet, CEO of AVBOB, which is SA’s oldest mutual funeral insurance and services society.

‘Coincidentally, AVBOB was born in the wake of another global pandemic, the Spanish Flu in 1918,’ he says, and explains that as a result, dealing with tragedy by restoring dignity to those taken by the outbreaks, while providing comfort and clarity to the bereaved who are left behind, is deeply engrained in the company DNA. To this end, the innovative container solution has been helping the group’s funeral branches boost the capacity of their mortuaries, enabling them to cope better with surging COVID-19 mortality rates in hotspot areas.

Recently, AVBOB responded to a plea for mutual support by the Nelson Mandela Academic Hospital in the Eastern Cape, which did not have sufficient space in its existing facility.

The pandemic has overstretched the public hospital, which serves five district municipalities in the Mthatha region and also provides support to the Mthatha General Hospital and Bedford Orthopaedic Hospital.

‘A handover event is normally a happy occasion and cause for celebration,’ said Van der Riet before officially presenting

the hospital leadership with the keys to the container mortuary. ‘Today we hand over a gift we would have liked not to have needed to give – simply because of what it symbolises: death, grief, mourning and a profound loss of a loved one. But we know this facility will help you to serve your community and make a difference in your daily operations.’

At AVBOB, making a difference is a central theme. In addition to the mobile mortuary, the company has donated 56 container school libraries and invested R135 million in the upgrade of rural schools, as well as a further R15 million in the Sanitation Appropriate for Education project.

Its extensive CSI programme further includes a popular annual poetry competition, now in its fifth year. By 30 November 2020, at the close of the fourth year of the competition, it had attracted a grand total of 121 629 entries in all 11 official languages. The poems are themed around love, hope, death and birth, with the intention of providing a cathartic experience for the writers and those requiring support and comfort during their time of mourning.

Looking beyond CSI, AVBOB strives to make a meaningful societal difference through its day-to-day business. ‘There’s a saying that in times of true crisis your real purpose and strengths are revealed,’ says Van der Riet.

‘While the devastating toll of COVID19 on South Africa continues to be unquantifiable, it’s been a time for us as a business to stand up and be counted.

Our shared-value strategy means that the benefits of everything we do are given back to our members and the extended AVBOB family.’

In its more than 100 years of existence, the company has fostered a culture of empathy and loyalty that brings together its staff and customers as one caring ‘family’. This also includes the funeral agents, who are being nurtured through the supplier and enterprise development programme

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‘Our sharedvalue strategy means that the benefits of everything we do are given back to our members and the extended AVBOB family’

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PROFILE

‘There’s a saying that in times of true crisis your real purpose and strengths are revealed’ to independently run AVBOB branches.

It’s a sustainable partnership model in which the company provides the capital, infrastructure, property and branding as well as legal and technical support.

In return the funeral director empowers local entrepreneurs by procuring services such as catering flowers, and transport.

AVBOB’s growing family comprises more than 2.3 million policyholders and covers roughly 7.5 million lives – well in excess of 10% of SA’s population.

As a mutual society, the organisation doesn’t have any external shareholders and is fully owned by (and for the profit of ) its members – a business model that Van der Riet describes as ‘the very essence of shared value’.

The surplus profits are ploughed back to policyholders in the form of regular enhancements and additions to their policy benefits, as well as free funeral products and services. This means, for example, free retrenchment cover for up to six months and a free basic funeral benefit, valued at R17 500, for every policyholder.

Furthermore, customers are not being charged for the PPE that has become compulsory for undertaker and frontline staff at funerals. The company has footed the bill for PPE, which had amounted to more than R12 million

by March 2021.

In the 2020 financial year, AVBOB provided free funeral services and products to the value of R320 million to insured lives. In 2021, this amount will have risen to R500 million.

‘For me, personally, it’s extremely gratifying that we’re actively addressing

the erosion of wealth among our members,’ says Van der Riet, who was a practising actuary for nearly three decades before joining AVBOB. He has been at the helm of the mutualassurance society since November 2019, after two years as deputy CEO. His expansion strategy has seen the company footprint increase to at least 350 offices, with more to follow. Under his watch, the company assets have grown by 14.8% to R21.4 billion in 2020, with the premium income increasing by 14% to R4.7 billion.

Yet the numbers tell just one part of the story. AVBOB sees its role as being more than just transactional.

‘Because we offer combined insurance and funeral services, the purchase of the policy is merely the first step in our relationship with a customer,’ says Van der Riet.

‘We have a different attitude from traditional insurers in that we will stand by our customers after the financial transactions of purchasing the policy and the claim’s payout to take them through the funeral and grieving process. Again, this comes back to our shared-value approach and our emphasis on trust and family values.’

The global crisis has underscored just how resilient and adaptable the organisation and its approximately 8 000 staff members can be.

‘We have seen this in the level of commitment of our people who were working 24/7 during the COVID-19 spikes,’ says Van der Riet.

AVBOB’s front-line employees, sales agents and funeral agents have had to continuously adapt to the uncertainty of pandemic restrictions, while providing services to clients through new methods, such as the digital underwriting of policies and live-streaming of funerals.

Ultimately, its handling of the pandemic has proven that the company motto, ‘we’re here for you’, is not a mere slogan but actually the way AVBOB does business.

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Travel pass A focus on local may well be the saving grace for tourism

BY LUCY PARKER

BEFORE THE PANDEMIC, SA

was one of the world’s most popular tourism destinations, with the sector representing a major source of trade to the country. According to World Travel and Tourism Council figures, travel and tourism contributed 7% to SA’s GDP in pre-pandemic times.

That may be below the global average, but the sector accounted for 1.5 million jobs. This is the third-highest of 82 countries tracked by Bloomberg.

However, the numbers for now paint a bleak picture. ‘Measured in nominal terms (current prices), total income for the tourist accommodation industry decreased by 72.9% in January 2021 compared to January 2020,’ according to Stats SA. Government had grand plans for the sector, acutely aware of its ability to generate employment and drive the economy. In mid-2019, President Cyril Ramaphosa announced plans to double international tourist arrivals by 2030 to 21 million. So pandemic-related losses represent a massive setback.

‘It’s worrying, and it is going to be a difficult period. You feel like you’re chasing a moving target,’ Minister of Tourism Mmamoloko Kubayi-Ngubane said in an SABC interview.

‘We will continue to see businesses being affected, and jobs will continue to be lost until we see the pre-2019 international numbers.’

Last year, the Department of Tourism issued its Tourism Recovery plan, which outlines the dire state of the tourism sector. It focuses on three strategic themes, namely protecting and rejuvenating supply, re-igniting demand and strengthening enabling capability. In other reboot measures, the government launched a R1.2 billion Tourism Equity Fund earlier this year to promote the participation of black enterprises within the industry.

The emergence of the beta variant in SA earlier this year resulted in targeted travel restrictions to and from the country. And the triple whammy of winter months, the ongoing pandemic and the arrival of a third wave means

it will take a long while yet before the situation improves.

The government is certainly working hard to see the industry through the storm, and the Department of Tourism is in the process of engaging foreign countries to revive international travel to SA. ‘We’re talking to international partners – both in government and the private sector – and sending out the message about what we are doing to manage the pandemic and be touristready,’ says Kubayi-Ngubane.

The department had its eye on the prize of a bullish summer in 2021 – that key period from September to December – but it would appear the summer of 2022 is more likely, if that. Hard lobbying and firm, fact-based assurances around health and safety have to be given as Europe starts to slowly open up for travel and looks to a dizzying choice of longhaul destinations all vying for attention.

When things look better, we’re going to need to market the country to the world again, and we’re going to need to focus on all the right points to get the foreigners back on shore, says Kirby Gordon, chief marketing officer of FlySafair. ‘It’s going to be about awareness of all we have to offer. It’s probably going to be a focus on the safety protocols we have in place and the “status” of our country in terms of vaccine roll-outs, and the risk of possible restrictions and lockdowns during a visit.

‘It’s also probably going to be about hitting some lower price points in the early days to lure visitors back – although hopefully that will just be needed as a catalyst to get things started.’

On the vaccine roll-out, SA Tourism is clear: to remain an attractive tourism destination, ‘the key focus needs to be the efficient roll-out of the vaccine’,

it states in its March 2021 Road to Recovery report.

There’s no place like home goes the saying, and it seems South Africans have been taking this to heart as they are enjoying ‘staycations’ in numbers seldom seen before. This is crucial to an industry obliterated by COVID, and spells the start of a recovery of sorts at local level.

In a MoneyWeb interview, Lee-Anne Bac, a director in advisory services at BDO, points to an encouraging pickup in domestic tourism since the relaxing of last year’s Level 5 lockdown.

‘What we have seen, which is really fantastic, is the growth of our domestic market,’ says Bac. Most specifically, she points to the spike in a previously untapped sector – the black middleincome market.

The industry has been trying to get this sector travelling for a long time, she says, and it’s finally happening.

‘What that means is we are starting off with a higher base of domestic tourism, which is something that we need to leverage off and grow even further.’

Gordon echoes Bac’s sentiments regarding domestic travel. ‘In the near term, we need to encourage our countrymen to explore and fall in love with the rich diversity of experiences that we have at home,’ he says.

‘We need to park ideas of Thailand, the Maldives and Bali and instead look to the Garden Route and KZN. We need to forget New York, London and Paris, and instead explore New Town, Maboneng, Sandton, Long Street, the V&A Waterfront and other amazing urban spaces.’

Gordon adds that local tourismservice providers also need to restructure their offers to meet this market, with pricing being key. ‘Many of our

establishments, airlines, transfer companies and so on are usually able to fetch slightly higher prices for an elevated service, which is generally more easily accessed through the purchasing power of the foreign currency and those bearing it when visiting us.’

He points out, however, that catering for a local market might require scaling back a bit to some extent. ‘It means getting those price brackets to a point where enough locals can utilise the service, and for the providers to get the loads and occupancies they need to make their service viable,’ he says.

It also requires some creativity and ingenuity as stakeholders pivot to shape their offering around a new market.

Kubayi-Ngubane believes a two-tier pricing system would encourage locals to travel affordably (with different rates for domestic/SADC and international tourists). While the system is already being practised informally, the Department of Tourism has approached the policy review panel in a bid to make a two-tier pricing system official.

‘We have looked at other countries where this is enforced and want to put this in place as a long-term solution,’ says Kubayi-Ngubane.

Stakeholders have also been examining how they can tailor packages to attract local tourists. Bac points to the agility of the many small-scale operators who have had to change focus to make their offerings accessible and attractive to the local market. ‘Many of those who previously played in the international tourism space have started creating products for the domestic market, or made changes to suit this market.’

Bac says she has seen a lot of creative re-purposing of facilities and restaurants, for example. This could be anything

PHOTOGRAPHY: GALLO/GETTY IMAGES

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‘What we have seen, which is really fantastic, is the growth of our domestic market’

from turning more costly fully catered accommodation options into selfcatering – simply by investing in a fridge or microwave or braai.

Bac also notes a fundamental shift in how people spend their money.

‘There’s been a global trend towards authentic tourism experiences, with people seeking local, off-the-beatentrack experiences.

‘Ultimately tourists want to do what locals do. Visit small dorpies, get away from mass tourism, doing the obvious big five experience… And now more than ever, they want space. Our resurgent domestic tourism sector is preparing us for this.’

In terms of stoking both domestic and international tourism, it’s encouraging to see some innovative thinking driving recovery efforts.

In March, for example, SA Tourism partnered with Netflix to showcase stories made in SA. According to SA Tourism, ‘the partnership will also see [us] working closely with Netflix in promoting the country’s must-visit sights through its locally produced series into international markets’.

SA Tourism and Qatar Airways also hosted a webinar featuring more than 300 global trade partners.

‘Focused on showcasing the work that both SA Tourism and Qatar Airways are doing to mitigate the impact of the pandemic on the tourism sector, the webinar also aimed to engage with global trade to ensure alignment of efforts while emphasising the commitment of both SA Tourism and Qatar Airways.’

SA Tourism has also been engaging with stakeholders across the country and hosting skills-development programmes. These have included workshops for SMEs, for example,

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at which they support, guide and assist small players in the recovery of the tourism sector.

SA Tourism and the Department of Tourism have also launched the Basic Quality Verification programme. It aims to ensure that accommodation establishments, particularly in rural areas, have formal quality assurance.

Locals Who Wander, meanwhile, is an innovative platform established last year to help the recovery of domestic tourism by connecting locals to affordable travel deals in all SA provinces. Simply put, it’s a platform that takes the work out of finding the best local travel deals.

Despite the chaos of the pandemic ‘some local businesses have come out stronger, with companies like ANEW adjusting their focus to what South Africa can offer the domestic traveller’, says Kevin Burley, group operations director at ANEW Hotel & Resorts.

Adaptability, he notes, is pivotal to the recovery of the country’s hospitality sector. Other key trends, he adds, include recognising the importance of guest feedback and being cognisant of consumer demands.

‘Businesses need to almost “re-educate” themselves on their guests and how to operate with these new restrictions in place. Education around safety within hotels will be a trend this year, as well as learning how to work within the current limits while still respecting them,’ he says.

The experts may not agree on time frames, but they share one voice in believing that SA is poised to reboot.

‘The journey back will be a slow one, but we are optimistic,’ says Bac. And while recovery is unlikely to happen this year SA needs to invest in it right now. After all, the country has a great product.

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Net effect Managing ocean assets requires a delicate balance between conservation and prosperity

BY DI CAELERS

EVERYONE SMILED IN

delight at news of the pink dolphins returning to Hong Kong, pelicans wandering through London, and our own African penguins taking over the streets of Simon’s Town.

Were the COVID-19 human lockdowns really all that was needed to see nature begin to thrive again in a world desperate for environmental progress?

Unfortunately, these incidences are likely to fall into the category of what the UN Global Development report calls ‘tinkering around the margins’. And in SA, where the blue economy encompasses everything from fisheries, ecotourism and coastal development, to oil and gas production and marine mining, protecting the country’s ocean assets is serious business.

SA is certainly well placed to develop the necessary innovative, resourceefficient pathways towards sustainable development, according to John Duncan, WWF for Nature South Africa (WWFSA) marine programme senior manager.

But experts across the field caution that those pathways cannot focus solely on the potential of SA’s oceans as areas of opportunity, growth and development.

Integration plans need to include the role they must play in social inclusion, environmental sustainability and innovative business models.

WWF-SA notes, in its most recent ocean economy scorecard, an increase in overfished stock compared to two years previously, along with a 4% drop in under-fished stock.

In short, it warns that species are being fished to capacity and beyond, with no improvement in the number of sustainably fished species.

These concerns are echoed in other literature, including the Department of Forestry, Fisheries and Environment’s Status of the South African Marine Fisheries Resources 2020 report. It points out that the number of stocks considered to be ‘of concern’ had improved only slightly – from 10 in 2014/16 to nine in 2020. The number

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‘We need to take better care of this shared resource for the health and prosperity of current and future generations’

of stocks considered to be over-exploited, meanwhile, remained at 15.

So while fisheries are important to SA both economically and culturally – the commercial and recreational fishing industry was valued at up to R5 billion in 2018, providing employment, both landbased and sea-going, for about 27 700 people – there is broad agreement that this is no time for ‘business as usual’ if the country is to generate meaningfully greater economic returns.

The government’s NDP positions the ocean economy as a key driver of economic activity and growth, bearing the onerous responsibility for helping eliminate widespread poverty and inequality by 2030.

Yet the arrival of the COVID-19 pandemic, combined with its associated lockdowns, has especially impacted low-income SA households, sending food insecurity spiralling – and

increasing the need and demand for affordable protein.

For example, Imraan Soomra, CEO of the Oceana Group, one of Africa’s biggest fishing companies and producer of the iconic South African brand Lucky Star, says that more than 14 million households – translating to around 4 million meals a day – consumed the cost-effective canned fish last year, up from 13.4 million in 2019.

Describing the pandemic as making 2020 one of the most challenging years yet, Soomra says it has, from an organisational perspective, underscored the fact that ‘sustainability efforts are not the preserve of a single team or department’.

His company was classified as an essential service provider and so could continue operating throughout, but he is frank that the pandemic, imposed on an already fragile economy, is likely to have a profound long-term impact.

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Felix Ratheb, Sea Harvest chief executive and chair of the South African Deep-Sea Trawling Industry Association, concurs – saying that the pandemic will have affected every one of the organisation’s members, with company balance sheets severely weakened. However, he stresses that the industry has to survive.

It’s not only a significant exporter, but also an important employer, providing quality jobs in coastal towns.

Commenting on the changes in demand, Ratheb said in an interview with MoneyWeb earlier this year that the massive decline in food service and hospitality, restaurants and catering was balanced by a massive surge in retail.

With Sea Harvest predominantly based in smaller and distressed towns such as Saldanha Bay and Mossel Bay, it was the primary employer. ‘So we’re an absolutely key contributor not only in terms of direct employment, but also downstream employment,’ he said.

Meanwhile, SA holds projected resources of approximately 9 billion barrels of oil, and roughly 60 tcf of gas offshore. Oil and gas exploration and development has become an integral part of a number of government’s development plans and initiatives, including Operation Phakisa, the Integrated Resource Plan and the NDP. This potential brings into sharp focus that fine line between economic relief and conserving the environment, with potential threats to fish stocks and the destruction of marine habitat.

Small harbours are another element of the country’s ocean economy, with the development of these in discussion in SA since 2014 when the first Operation Phakisa: Oceans Delivery Laboratory took place.

The Small Harbours Development Mini-Lab won standalone status from the Marine Transport and Manufacturing Laboratory in the 2018/19 financial year,

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‘Sustainability efforts are not the preserve of a single team or department’

following growing criticism about the disintegrating state of the 12 proclaimed small harbours on the country’s coastline.

In April this year, News24 reported on a visit by Public Works and Infrastructure Minister Patricia de Lille to Saldanha Bay to inspect a multimillionrand harbour upgrade. She said the Small Harbours programme was gazetted as a strategic integrated project under the Infrastructure Investment Plan, which comprises 62 gazetted projects.

The news report says work is being executed at fishing harbours including Kalk Bay, Gordon’s Bay, Hermanus, Gansbaai, Struisbaai, Arniston, Hout Bay, St Helena Bay and Lamberts Bay. De Lille is quoted as saying that the Small Harbour Unit applied to Treasury for additional funding, and was allocated R100 million in the current financial year. The total budget for the programme is R500 million.

Against this background, WWF-SA’s Duncan says that if SA wants a future in which the country’s needs are met, despite growing water scarcity and increasing climate variability, there must be a focus on three non-negotiables.

First, the country must manage its fisheries for recovery, resilience and

maximum sustainable yield, by establishing recovery targets that recognise that fish are part of a broader ecosystem.

Second is the finalising of the Marine Spatial Planning Bill to drive the development of marine spatial-planning frameworks to minimise conflicts, and enable a holistic management approach. Last but just as important is to declare Phakisa marine protected areas to secure at least 20% of SA’s oceans, in order to protect critical biodiversity and ensure ecosystem functioning.

Balancing the myriad demands from multiple sectors on SA’s oceans is paramount, according to a paper by local academics published in Nature Communications. They are adamant that governance approaches must be not only environmentally or economically viable, but also socially just and inclusive if the country is to move towards a more sustainable way of managing our oceans.

Tanya Brodie Rudolph, a research fellow at Stellenbosch University’s Centre for Complex Systems in Transition, is a co-lead author of the blue paper on which the Nature article was based.

The paper was commissioned by the High Level Panel for a Sustainable Ocean Economy, an initiative of 14

serving world leaders to build a sustainable ocean economy, based on effective protection, sustainable production and equitable prosperity.

In an interview with UCT News, Brodie Rudolph says that human wellbeing relies on the biosphere, including natural resources provided by ocean ecosystems. ‘As multiple demands and stressors threaten the ocean, transformative change in ocean governance is required to maintain the contributions of the ocean to people.

‘We need to take better care of this shared resource for the health and prosperity of current and future generations, for the environment, for biodiversity and for the climate. The way we have governed the ocean in the past hasn’t reflected these complex relationships.’

In the paper, Brodie Rudolph and her co-authors proffer more co-operative ways to manage ocean space, systems of traceability and accountability in fisheries value chains, the decarbonisation of shipping, and legal innovations such as establishing defensible rights for nonhuman nature and a clean environment as a human right.

She explains in the interview that small disruptions can have disproportionately large and impactful effects on complex systems such as the ocean. The COVID19 crisis, she says, is the classic example of the well-known ‘butterfly effect’, the concept of small things having nonlinear impacts on a complex system.

‘From the over-exploitation of nature in a Wuhan wild-meat market to a global pandemic, this crisis demonstrates the absolute necessity to build the kind of resilience that enables effective, agile responses to sudden system changes.

‘This is as true for the complex ocean system we depend on,’ says Brodie Rudolph. She adds that a collapse of the ocean system would be as devastating as the COVID-19 catastrophe.

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Creating a better future …through the way we do business

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