SOuth African Business Integrator Issue 3 March 2016 - August 2016 by Media Xpose - South African Business Integrator

South African Business Integrator

Issue 3

ALIGNING BUSINESS WITH GOVERNMENT March/August 2016

March/August 2016

Founded on empowerment, focused on women A future for women in mining Thinking differently about corporate governance What will keep directors awake in 2016?

www.sabusinessintegrator.co.za

sabusinessintegrator.co.za

Businesses face a changing risk landscape

Current Affairs I Economic Development I Business Integration SABI Vol 3 Issue.indd 101

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FEATURE

A future for women in mining Wesizwe is committed to providing an environment that is conducive to attracting, developing and retaining women in mining. EMMA DAWSON talks to BASETSANA RAMABOA, Executive: Human Resources at Wesizwe, about creating gender equality and recognising the role of women in this traditionally male-dominated industry. WESIZWE PLATINUM is a South African public company with shares listed on the Johannesburg Stock Exchange. Its intention is to participate in platinum group metals mining in South Africa as the launch pad for developing into a significant multi-commodity mining company that sets new benchmarks for sustainable mining practices. According to Wesizwe’s Basetsana Ramaboa, Executive: Human Resources, mining is the heartbeat of the South African economy. ‘It’s about time that the role of women in the growth of the economy gets recognised, and Wesizwe’s policies are aimed at creating a conducive environment for all its employees, including creating an environment that’s favourable for women.’ She adds: ‘Wesizwe fosters a workplace where all individuals are treated with respect and dignity. We do not condone any form of unfair discrimination that infringes on the values enshrined in South Africa’s Constitution.’ South Africa is making great strides in gender equality, which is often used as a model for other countries. ‘Women study and obtain training just as men do. However, in the mining sector, like many others, there’s a stereotype that needs to be abolished. Women head homes, as well as study towards professions that were once viewed as relevant only to men. Why would women not have equal opportunities and be viewed on an equal basis as men?’, Basetsana asks.

Walking the talk

Basetsana Ramaboa, Wesizwe’s Executive: Human Resources

‘Wesizwe’s policies are guided by all promulgated legislation that govern employment and, together with the company’s values and its job specifications for each job category, we have a clear outline of the steps to take to ensure the appointment, safety and specific needs of women in mining.’ Discussing doing away with gender barriers, Basetsana notes: ‘Fairness is one of our values. We emphasise the importance of walking the talk when it comes to our values and this is ingrained in the way we do things at Wesizwe. We treat everyone as equals in terms of the aspects of the job and output expected from employees. This levels the playing field for employees and motivates everyone to act in a manner that reinforces our values and the Wesizwe brand identity.’

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FEATURE

Wesizwe women are afforded opportunities on an equal basis to their male counterparts. ‘We motivate professionalism in everything we do and women are given a platform to perform to the best of their capabilities, not in competition with men but in a way that puts them on par with their male counterparts,’ she insists. When asked how men relate to, and treat, their female colleagues at Wesizwe, Basetsana comments: ‘Women have always been a part of industry, even before it became popular for them to work in male-dominated domains. While they may previously have been employed to take care of the places where men worked, in our business men are beginning to view women as adding value to the way things are done in mining. Women bring a sensitive element to the way miners do their jobs, which helps us to be alert to issues of safety and other aspects of our work.’ Wesizwe currently employs 2.77% of women in its workforce. ‘This low percentage is attributed to the fact that the company is still in its project development phase. After the five years (effective from 2015), this figure will go up to 15%, which is in line with our Social and Labour Plan commitment,’ Batesana points out.

A conducive work environment Programmes focused on creating a conducive work environment for women include: Recruitment and selection: Based on business needs, this is a targeted process that is used to achieve a minimum of 10% WiM (Women in Mining) targets. All positions are assessed in terms of preferential female employment. Safety: Appropriate risk assessments are conducted for all positions that are occupied by female employees. Candidates undertake a physical capacity testing to ensure compatibility with the planned roles, and Personal Protective Equipment (PPE) is provided to meet the needs of female employees. ‘Additionally, we groom a culture of “my brother’s keeper” among all our employees that sees them lending a hand when there is a need, regardless of gender.’ Health: No pregnant or breast feeding employee is placed in an environment deemed to be a potential threat to the well-being of the mother and/or child as defined in the company’s maternity policy. Additionally, Wesizwe adheres to the Basic Conditions of Employment relating to maternity leave. Harassment: Wesizwe does not tolerate harassment of its staff, contractors or suppliers in any form. Sexual harassment of any kind is taken seriously and disciplinary actions are enforced, which may result in dismissal if an incident does occur. ‘We have a detailed policy on harassment and promote gender equality, which means all actions that have a tendency to undermine one gender are viewed in a severe light and serious action is taken.’

Affording opportunities Wesizwe works hard to achieve equal opportunities for men and women, and to ensure that personnel do not have to overcome any difficult challenges in their work

Lukona Melento, a Wesizwe Platinum bursary student, is currently doing 3rd year studies in Mining Engineering at Wits University.

environments. ‘For the company to achieve its goals we need everyone focused on doing their work and not on overcoming challenges relating to their jobs. We afford everyone the opportunity to showcase their talents and skills and upskill everyone in the same manner so there is no possibility of unfairness, favouritism, or barriers to success,’ Basetsana explains. ‘Our aim is to see women thriving in the mining space, and a workplace that embraces diversity and capitalises on it as a means for growth. Women bring about that diversity. Women’s roles are not secondary but rather complimentary to men’s, and they play a vital role in nurturing the mining industry,’ she adds. ‘We believe that women should be given space to do their jobs and to strategically think about the future of the company. Wesizwe’s Chairperson of the Board is a woman, and that is where we see all women in Wesizwe,’ Basetsana concludes. n

Wesizwe W www.wesizwe.co.za

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Contents ■ COVER STORY

Founded on empowerment, focused on women .................10

■ FEATURES A future for women in mining ..................................................... 2 Paving the way for trade in sub-Saharan Africa ...................16 Thinking differently about corporate governance ................20 Businesses face a changing risk landscape.........................22 What will keep directors awake in 2016? ............................26 World Economic Forum 2016 .................................................28 Six trends shaping the sales industry.....................................32

■ ENTREPRENEURS Equity vs debt: How should entrepreneurs fund business ventures? .........................................................34 Why Millennials should look into entrepreneurship.............38

■ CORPORATE GOVERNANCE Top three challenges in reducing fraud and corruption .....40

■ HUMAN RESOURCES The holistic needs of the workplace .......................................42 Resolving internal conflict .........................................................44

■ SUPPLY CHAIN Supply chain trends for 2016 ..................................................46

■ FINANCE & TAX New lease standard to impact financial reporting ...............48

■ PROCUREMENT Promoting integrity in municipal procurement ......................50

Five reasons why everything is moving to the cloud...........51

■ MARKETING & COMMUNICATION Are you selling your business short by not marketing it?..................................................................54

■ HEALTH & SAFETY Uniforms: The role they play in private security....................58

■ INFORMATION & COMMUNICATION TECHNOLOGIES

■ INTO AFRICA Africa: Lucrative, but not for sissies........................................60

■ VENUE REVIEW New conference centre challenges convention...................61

■ SUSTAINABILITY Water, capitalism and the 21st century .................................62

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Dedicated to the Empowerment of Women

PHYSICAL ADDRESS: WIPHOLD House, 29 Central Street, Houghton, Gauteng, South Africa, 2198 POSTAL ADDRESS: PO Box 87277, Houghton, South Africa, 2041 SWITCHBOARD: +27 (0)11 715 3600 FACSIMILE: +27 (0)11 715 3612 EMAIL: info@wiphold.com WEBSITE: www.wiphold.com

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South African Business Integrator

Issue 3

ALIGNING BUSINESS WITH GOVERNMENT March/August 2016

March/August 2016

Founded on empowerment, focused on women A future for women in mining Thinking differently about corporate governance What will keep directors awake in 2016?

www.sabusinessintegrator.co.za

sabusinessintegrator.co.za

Businesses face a changing risk landscape

Current Affairs I Economic Development I Business Integration

Photographer: Jackie van der Berg Company: Adore Photography Make-up artist: Miriska D

Publisher

Media XPOSE excellence in exposure Tel: +27 21 424 3625 | Fax: +27 86 516 7277 PO Box 15165, Vlaeberg, 8018 Editor Emma Dawson editor@sabusinessintegrator.co.za Editorial Contributors Beatriz Arantes Carey van Vlaanderen Dale Cridlan Dr Roger Stewart Gerrie van Biljon Grant Marshbank Gugu Mjadu Jason Drew Kris Dobie Neville De Lucia Patrick Bracher Perry Hutton Sacha Matulovich Thabo Molefe William Jimerson Content Manager Melanie Taylor artwork@mediaxpose.co.za Content coordinator Melany Smith artwork2@mediaxpose.co.za Online Advertising & Marketing Coordinator Heloise Louw marketing@mediaxpose.co.za Design and Layout CDC Design carla@cdcdesign.co.za

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South African Business Integrator aligning business with government

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Disclaimer: The views expressed in this publication are not necessarily those of the publisher or its agents. While every effort has been made to ensure the accuracy of the information published, the publisher does not accept responsibility for any error or omission contained herein. Consequently, no person connected with the publication of this journal will be liable for any loss or damage sustained by any reader as a result of action following statements or opinions expressed herein. The publisher will give consideration to all material submitted, but does not take responsibility for damage or its safe return.

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EDITOR’S L E T T E R

Power to women in business

“

‘The glass ceiling that once limited a woman’s career path has paved a new road towards business ownership, where women can utilise their sharp business acumen while building strong family ties.’ Erica Nicole, who left Corporate America to start YFS MAGAZINE.

While SA BUSINESS INTEGRATOR doesn’t generally follow a theme, there are a number of recurring topics within these pages – some of which relate to corporate governance, changing legislation, the challenges of reducing fraud and corruption, the global water crisis (ours included), business interruption and cyberattacks. In fact, in January, many of these topics were on the agenda at the World Economic Forum (WEF) in Davos, where this year’s theme was Mastering the Fourth Industrial Revolution. In WEF-speak, this means ‘the fusion of technologies that is blurring the lines between the physical, digital and biological spheres. Read about what the world’s elite deem to be revolutionary on page 28. Other matters – some closer to home – are covered in Dr Roger Stewart’s article on page 20, where he considers the ongoing problem of codes of good corporate governance not meeting expectations, and questions whether the calls for new, stricter regulations will offer more of the same or yield different outcomes? And, on page 26, Dale Cridlan and Patrick Bracher from Norton Rose Fulbright South Africa Inc., provide their thoughts on what’s keeping directors awake at night during 2016? Among other things, their warnings about cyber risk and data protection are also reflected in the 2016 ALLIANZ RISK BAROMETER on page 22. Another topic that’s received extensive coverage in this edition is women in business. I was delighted to interview two remarkable women – Louisa Mojela, Co-Founder and Group CEO of Women Investment Portfolio Holdings (Wiphold); and Batesana Ramaboa, Executive: Human Resources at Wesizwe Platinum. A quote by Erica Nicole, who left Corporate America to start YFS MAGAZINE, says: ‘The glass ceiling that once limited a woman’s career path has paved a new road towards business ownership, where women can utilise their sharp business acumen while building strong family ties.’ And this is just what Louisa Mojela and her co-founders at Wiphold have achieved. Beginning on page 10, read about four remarkable women who created a financial services operation at a time when democratic freedoms had only just been afforded to all South Africans. Now, a little more than 20 years later, we review their incredible success and how they’re paving the way for those coming behind them. Another article that highlights women in business is, ‘A future for women in mining’ on page 2. Wesizwe Platinum is a mining company on a mission, which is to drastically increase the percentage of women employed in its workforce by 2020. Here’s to equality, conducive working environments, and fewer sleepless nights for South Africa’s directors.

editor@sabusinessintegrator.co.za

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COVER STORY

Founded on empowerment, focused on women

Photo credit: Jackie van der Berg, Adore Photography

A little more than 20 years since the launch of Women Investment Portfolio Holdings, EMMA DAWSON talks to the Founder and Group CEO, LOUISA MOJELA, about her and her fellow founders’ vision for broad self-empowerment and a dream of urging generations of women towards financial independence.

FEW people noticed the inauguration of Women Investment Portfolio Holdings (Wiphold) in 1994. It was, after all, a watershed year for South Africa and the national focus fell on the enormous shifts taking place after more than 40 years of apartheid. Besides, opening a small investment firm, by women for that matter, was nothing new or remarkable. But Wiphold is remarkable – a financial services operation established by four black women at a time when democratic freedoms had only just been afforded to all South Africans. Wiphold challenged an industry heavily skewed along racial and gender lines, but 1994 was a unique opportunity for everyone. ‘We recognised that this was the one time when no one knew anything; there was a new conversation taking place, and both men and women, white and black, felt a little out of their depth. If ever there was a time to strike out on your own it was then,’ recalls Louisa Mojela, Wiphold’s CEO. Wiphold is a story of great vision, ambition and resounding success. With a modest start-up contribution of R500 000, today Wiphold is a more than R2-billion investment giant that has distributed close to R500 million to shareholders and beneficiaries over the last 20 years. More than this, it is a story of self-broad-empowerment and smart decision making that continues to urge generations of women toward financial independence. Empowerment, sustainability, integrity and the creative exchange between profit and people are Wiphold’s guiding watchwords, underscoring everything it does.

In the beginning…

Louisa Mojela, Founder and Group CEO, Wiphold.

On a Sunday morning in mid-April 1994, Louisa Mojela and Wendy Luhabe attended a workshop run by former Governor, Tito Mboweni, then head of the ANC’s Economic Department. The workshop focused on discussing opportunities for black professionals under the new government. Although the workshop emphasised opportunities for blacks, what its organisers really meant was black men. Never was it acknowledged that women were doubly disadvantaged under apartheid, both for their race and gender. ‘The challenge was for us to do it for

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COVER STORY

ourselves,’ Louisa comments. ‘This was a defining moment in the creation of Wiphold and the point at which we decided that whatever we did needed to involve critical mass if we were serious about the empowerment of women,’ she adds. Both Wendy and Louisa recognised that a successful venture had to have a team behind it and began earmarking key women to buy into the Wiphold idea. In the end two others – Gloria Tomatoe Serobe and Nomhle Canca – joined Wendy and Louisa to establish the WIP Four, as they called themselves. Today, Louisa and Gloria, remain at the company’s helm. ‘The minute I told Gloria, now CEO of WIPCapital, about the idea she was sold. In fact, she ran with it faster than both Wendy and me,’ Louisa quips. ‘I’ll always remember something she kept repeating: “the strength of this vision is in the numbers; we must mobilise these women now.”’ The Wiphold vision was not without sacrifice. All four women held fulltime jobs, which meant that the project could only be worked on after hours and often long into the night. ‘We were trying to crystallise and articulate exactly what Wiphold should be,’ Louisa remembers, ‘and that took time and concentration.’ But if Wiphold took time and concentration, it also took money. ‘By the end of 1994, we eventually borrowed funds from friends and family and drew on our own limited savings to collectively raise R500 000,’ Louisa says.

“

One of my career highlights was watching our first-time investors from all over South Africa respond to our initial public offering.”

It had to be financial services After many after-hours discussions and the firm commitment of seed capital, the WIP Four finalised their vision for the company – a company dedicated to the empowerment of women. It would use financial services and strategic investments to realise this vision on a large economic scale, converting the collective strength of women’s purchasing power and labour provision into scalable and profitable investment opportunities. Within a month of coming together, the WIP Four settled on their investment strategy and criteria for selecting investments. They also quickly decided that financial services would be the company’s core focus. ‘We knew that this sector would pose challenges – a male-dominated industry and strong perceptions of men as the heads of households,’ Gloria comments. ‘But I wanted Wiphold to become a global influencer and pointed out that worldwide there are three main

investors in an economy: banks (representing millions of depositors), insurance companies (representing policyholders) and retirement funds. These industries largely dictate the movement and channelling of funds. If we wanted to be an influential company that championed the rights and roles of women we needed clout; we needed the ability to build and invest in new projects. Financial services was the way to achieve this,’ Gloria maintains. She adds: ‘The WIP Four all have backgrounds in finance and business, which made this sector a natural fit.’ While financial services formed the company’s core focus, a portfolio of strategic investments and business partnerships would also be established in other sectors.

On the road From the outset, Wiphold’s founders were committed to running a business that was both profitable and motivated by social change. To convert the collective strength of women’s purchasing power into lucrative investment opportunities meant mobilising a mass movement of women from the ground up. To do this, Wiphold’s founders conducted roadshows across South Africa’s nine provinces, presenting their vision for a women-led, women-run investment fund, and offering these women in some of the poorest areas of the country a stake in the world of big business and real returns. They also spent time educating women about the idea of investment. While they couldn’t accept investments at the time because they were not registered, they were to return two years later to collect contributions from would-be shareholders via a sound and professional capital raising overseen by Standard Merchant Bank, Edward Nathan and Deloitte and Touché. It was important that corporate governance was instilled in the company from the very beginning. ‘Our primary goal was to teach women to pursue financial independence and make their own decisions. Another important aspect was to explain that investments have their own cycles and that our investors should create a nest egg while good times prevail,’ Louisa maintains. Wiphold’s first major investment success came from Geoff Snelgar at Baobab, where a R3-million investment yielded a return of over R200 million. A number of other successes followed and, by 1997, Wiphold became the first South African company to open a public offer exclusively to women, raising R25 million and attracting 18 000 women as shareholders and beneficiaries. ‘One of my career highlights was watching our first-time investors from all over South Africa respond to our initial public offering,’ Gloria enthuses. In 1999, after securing an additional R500 million funding from institutional investors, Wiphold listed on the Johannesburg Stock Exchange (JSE) with a market capitalisation of R804 million. It was the first black, women-owned and women-managed firm to list on the JSE. In 2003, Wiphold delisted from the JSE to focus on increasing the economic ownership of black women in the company.

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COVER STORY

Today, Wiphold is 35% owned by management and staff, 32.5% owned by Old Mutual, and 32.5% owned by two broad-based trusts. The company’s original 18 000 women beneficiaries fall under the umbrella of the Wiphold Investment Trust, of which they became beneficiaries at no cost provided that they had subscribed to the initial public offer and participated in the rights offer of 1998.

Business development and empowerment

Photo credit: Jackie van der Berg, Adore Photography

Wiphold actively implements business strategies to empower its beneficiaries and the communities in which its beneficiaries and/or investee companies’ operations are located. One of Wiphold’s key focus areas is BEE enterprise development, where new BEE companies are introduced to BEE deals. Wiphold is a Level 1 empowerment contributor. In South Africa, Wiphold’s resources and infrastructure portfolio currently focuses on coal mining – a partnership with Sasol Mining in Ixia Coal, which is operated by women; and cement manufacturing in a joint venture with Continental Cement and Jidong Development Group of China. Wiphold has a 25.1% shareholding in Landis+Gyr – the South African operation of the worldwide Landis+Gyr Group, a global leader in metering solutions, from credit and prepayment metering to meter test equipment. Lumber is another key focus area for Wiphold, and here the company holds a 9% share in the Hans Merensky Group – South Africa’s largest lumber product manufacturer and sub-tropical fruit grower. ‘Our investments in the financial sector are dominated by strategic partnerships with banking and financial services giants – Old Mutual, Nedbank and Mutual & Federal – but also include holdings in niche financial service provider, WipCapital (100%),’ Louisa explains. ‘WIPCapital was formed in 1999 as Wiphold’s financial services wing with start-up funding of R300 million. The new division quickly attracted talented people, soon becoming a credible and sought-after business,’ Gloria points out. In a fierce acquisition drive, WipCapital acquired controlling stakes in a treasury business (renamed WipTreasury Solutions), Futuregrowth Asset Management and Legae Securities (South Africa’s first black stockbroker and, later, hedge funds manager). While not every investment has been an unmitigated success, Louisa is keen to point out the advantage of sound corporate advisors. ‘To fulfil our vision of empowering large numbers of women and bring them into the mainstream economy, we needed to hire the best corporate advisors. This is expensive, but has reaped rewards on a number of occasions. Through WIPCapital we now have our own in-house advisors, which saves money and is a crucial element to our success.’ As far as strategic and value investments are concerned, the group has stakes in the Distell Group, Afrisun Leisure and MCG Industries. It also has a

Louisa Mojela (centre) with two of her protégés, Gugu Dingaan (Investment Executive), and Nontobeko Ndhlazi (Group: Chief Financial Officer).

significant shareholding in human capital development providers, Adcorp, and USB-Ed – the executive education arm of the University of Stellenbosch Business School.

Corporate social investments and projects ‘We firmly believe in corporate social investment (CSI),’ says Louisa. ‘As we become successful and generate sound investment returns, we must give back to communities. It’s important to determine how we can assist those less fortunate and improve their lives.’ Wiphold’s CSIs are geared towards women and children, and are largely based in rural areas in the form of agricultural projects, schools and libraries, to name but a few. ‘We want to leave something tangible behind that can be there for years to come,’ she insists. In 2009, Wiphold and Sasol Mining launched an initiative that enabled thousands of rural and peri-urban woman to participate in a BEE transaction for the first time. Valued at almost R1.9 billion, the deal resulted in Wiphold and these women becoming Sasol Mining’s BEE partner through a new entity called WipCoal Investments. WipCoal Investments is the majority shareholder in a

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COVER STORY

coal mining company called Ixia Coal, which is controlled by black women and has a 20% share in Sasol Mining. WipCoal Investments is jointly owned by Wiphold and Mining Women Investments, which comprises of 4 000 women drawn from the areas in which Sasol Mining has operations and coal reserves. Another important Wiphold project is Imbizo – a transformational financial services strategy developed and driven by Wiphold for the Old Mutual Group. It is a sustainable financial inclusion strategy that offers communities safe savings, safe and appropriately designed loans, and appropriate insurance services. This project helps communities to enhance incomes, acquire capital, manage risk, and move out of poverty. ‘One of Imbizo’s non-negotiable principles is that while some philanthropy is deployed, almost all of what we do is done on a commercial basis. Our experience shows that this approach is more sustainable than a predominantly grant-based model. Another key underlying principle is that income generation and wealth creation for communities must sit at the centre of the business model,’ Louisa maintains. To address the food security crisis, Wiphold has invested in the development of small-scale commercial agriculture in South Africa. The first agri-initiative was an Agri-Investment Fund aimed at realising meaningful profits so as to attract investors. Recognising that rural residents need social assistance to operate commercially, the second part of this initiative is social mobilisation. This means facilitating the right conversations between communities, financial institutions, government agencies, suppliers and retailers. On the education front, Wiphold is up-scaling its involvement in education by participating directly with schools through the Tiyo Soga initiative. The idea of this initiative is to perfect a model for both learner and teacher development that can be reproduced around the country.

Into the future… ‘We’ve always had really positive chemistry among the Wip Four, and our vision for success has remained firm. As the first black-owned investment company it has always been important for us to succeed and pave the way for those coming behind us. Failure was never an option,’ Louisa insists. And these are lessons she and Gloria are instilling in two of their protégés – Nontobeko Ndhlazi: Group: Chief Financial Officer, and Gugu Dingaan, an Investment Executive. ‘Nontobeko and Gugu are our future leaders at Wiphold. It’s important for us to create space for the next generation, to harness their talent, and lead them in the right direction. If we don’t do this, we’re at risk of losing them. While this is about giving back and passing on the baton, it’s also about establishing a strong succession plan for Wiphold to continue making a difference in women’s lives,’ Louisa says. Nontobeko comments: ‘It’s been a true inspiration

working so closely with Louisa and Gloria. I’ve learnt so much from them simply through informal, day-to-day mentoring. They bring such a wealth of experience and knowledge that I’ve been absorbing for the past few years. I really appreciate knowing that they’ve got my best interests at heart, and that they’re always there to assist me when needed. Another really important factor for me is that I’m encouraged to bring my whole personality to work. All facets of yourself are welcomed – woman, wife and mother,’ she enthuses. To this, Gugu adds: ‘Wiphold’s success not only lies in its commitment to empowerment, but also because it houses the necessary skills to make good on its vision. In 2005, before my 30th birthday, I was given the opportunity to sit on a listed company’s board with a highly-experienced team. This is the kind of exposure and knowledge that has nurtured and shaped my career, and the people that have supported me through thick and thin. It’s also important to me that we’re not just about the bottom line. We really care about the society in which we live.’

Real transformation Discussing her company’s vision and ethos, Louisa notes: ‘Quietly, at the forefront of real transformation over the years, our aim has always been to integrate socio-economic development into our business model. We have proved that this can be done successfully and to the benefit of all stakeholders. Our approach has always been broad-based because we believe in active empowerment, wealth creation and community support, rather than depending on the “trickle-down effect”. We have pioneered a new way of doing business and, despite the challenges, we have created an investment group that is genuinely focused on the triple bottom line: on people as well as profits.’ ‘The empowerment of women is not just a local issue. We hope to be a catalyst for change in the global environment and to aggressively grow our net asset value. We envisage opportunities outside South Africa to drive this growth,’ Louisa concludes. n

Women Investment Portfolio Holdings W www.wiphold.com

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FEATURE

Paving the way for trade in sub-Saharan Africa Intertek, a world leader in Conformity Assessment Programmes, provides insight into addressing the barriers to trade in sub-Saharan Africa through the use of cargo scanning, conformity programmes, and pre-shipment inspections and veriﬁcation. WITH much of the population of sub-Saharan Africa living below the poverty line, there is a pressing need to create a favourable environment for regional and international trade and investment. This will boost job opportunities and sustainable economic growth, resulting in increased access to health care, education and better standards of living.

Barriers to trade Sub-Saharan African countries face external trade barriers that include: • High import tariffs, which make it difficult for products to compete in some markets. • Export programmes, which can be complicated or restrictive. • Rules of origin about proof of where different products (and all their components or ingredients) come from. • The lack of conformity regarding inter-regional agricultural quality standards, which hampers trade as there is often no comparison between countries’ standards. Because of this, products that meet requirements in one country may be rejected by another. • Complicated health and safety requirements relating to food and agricultural products that put African products and producers at a disadvantage. • Problems obtaining export permits, quality certificates, and other documents from different countries to process transactions. Some of the other more general issues that make trade with sub-Saharan Africa challenging include: • Poor infrastructure such as roads, bridges and ports, and the effect this has on accessibility and transport costs. • Under-developed telecommunications systems and access to technology. • Lack of political stability and peace. • Corruption and illegal trade. • Poor exchange rates. Many of these issues have no quick or easy solutions, and are exacerbated by external factors – for instance, a lack of confidence in financial markets and reduced consumption from global partners such as China. In addition, sub-Saharan African economies can take strain from conditions beyond its control, such as the severe

drought brought on by the current El Niño climate cycle. However, some of these challenges have solutions that are within reach when working with ATIC (Assurance, Testing, Inspection and Certiﬁcation) companies, which offer quality control and inspections that are fundamental to all businesses involved in the import and export of products. These services help protect consumers, brands and company reputations by minimising defective merchandise, customer complaints, non-compliant products and late/short shipments, making trade within the region more proﬁtable and attractive.

Why the need for quality controls and inspections? Unsafe and unreliable products can cost a country many millions of dollars each year through replacement costs

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FEATURE

for products that do not last as long as they should, and also in compensation because of injury, death or damage to property. Without any form of regulation, countries are at risk of being supplied with sub-standard products or counterfeit goods that are likely to fail the most basic safety requirements, endangering not only consumers but the local economy too. In countries where the safety and performance requirements of the importing country or region are not always understood, or may even be deliberately ignored for financial gain, there is even more need for control measures.

compliance with the standards. However, this has had the effect of forcing unsafe and unreliable products into emerging economies, adding increasing pressure for the African continent to implement the use of Conformity Assessment Programmes to assist Governments to enforce these standards at the point of export. International standards are selected wherever possible, which means that reputable manufacturers are able to comply with very little effort and, as programmes are usually paid for by exporters, the costs do not have to be carried by the government, or importers.

Options for stakeholders

Benefits of Conformity Assessment Programmes include: • Ensuring product conformity to standards prior to shipping. • Ensuring correct quantities are being shipped. • Minimising the amount of defective merchandise. • Reducing customer complaints because of inferior products. • Detecting merchandise containing non-standard or noncompliant components. • Eliminating or reducing late shipments. • Ensuring contractual quantity and quality specifications are as per purchase orders and letters of credit. • Preventing the dumping of poor quality and sub-standard products, thus helping domestic manufacturers to compete fairly. • Assisting when disputes occur, as certificates can form the basis for settling claims either between the parties or through underwriters. • Offering supply chain security. • Preventing the transportation of illegal and undeclared goods. • Improving the security of trade and transportation. • Ensuring compliance with Integrated Maritime Policy (IMP) and US or EU regulations regarding movement of goods and vessels through ports. Utilisation of these methods of quality control and inspections minimise risk and provide long-term benefit to sub-Saharan countries that are looking to grow their economies and ensure sustainable success. It is worth noting that one size does not necessarily fit all – the different countries within the region each have their own conformity programmes in place. However, there are usually a number of ATIC service providers within each country that can offer assistance on the country-specific services needed. Although there is obviously a long way to go in addressing the other barriers to trade in subSaharan Africa, the use of cargo scanning, conformity programmes, and pre-shipment inspections and verification will help reduce risk and make trade within sub-Saharan Africa easier and more profitable. n

Some of the quality control and inspection solutions available to governments, customs departments and industry include: Cargo scanning In a global marketplace where illicit cross border trade is still thriving, supply chain security has never been more crucial. Customs need to prevent illegal transport of drugs, arms, other illegal goods, and migrants. Cargo scanning can play a critical role in the non-intrusive inspection of import, export and security controls. When combined with effective profiling methods, the use of non-intrusive scanners can greatly improve customs and security functions by screening cargo flows at sea and land borders. Pre-shipment inspection Pre-shipment inspections (PSI) and Pre Export Verification Services may be mandated by the government of the importing country. Governments demand that the inspection programme should ensure that the price charged by the exporter reflects the true value of the goods, and that the standard of goods being received meet the country’s requirements. Presently, a number of countries in Africa only require inspections on shipments above a certain value. However, in some instances inspections are necessary for all imported products, regardless of the value. Standards programmes Manufacturers need to be able to verify that the products manufactured, shipped and distributed under their brand names meet industry and government regulations. To address this, many countries around the world have implemented and enforced safety standards to ensure that products imported, sold and used within their countries are safe. However, it is not enough for a country to merely publish safety standards. These standards must be enforced. Conformity Assessment Programmes have been widely adopted around the developed world to ensure

Intertek is a world leader in Conformity Assessment Programmes having implemented the first nearly 20 years ago. Intertek’s knowledge of international standards and local markets allows it to add value to companies and governments in regards to quality control and inspections. For more information, visit www.intertek.com/government/ or www.intertek.com/agriculture/.

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FEATURE

Thinking differently about corporate governance By Dr Roger Stewart

With an ongoing problem of codes of good corporate governance not meeting expectations, will calls for new, stricter regulations offer more of the same or yield different outcomes? FOR two decades, corporate governance of public companies has been regulated by codes that dictate board membership, structures and numerous practices. The lingering problem is that codes of good corporate governance have not met expectations: public companies are not generally more successful than in the past, corporate failures have not diminished in frequency or magnitude, and corporate scandals continue unabated. The calls for new, stricter regulations are reaching a crescendo – will more of the same yield different outcomes? Investigation reveals that the main tenets of the codes are not substantiated by empirical evidence. Sumantra Ghoshal argued convincingly that a dystopian governance environment, characterised by distrust, was underpinned by self-fulfilling agency and transaction cost theories. Jay Lorsch and Robert Clark from Harvard were not the only scholars who warned about the high cost of code compliance and about something more

ominous: directors’ focus on managing compliance has impeded their focus on ensuring the long-term success of their companies. Bureaucratic organisations are controlled in a codified, algorithmic kind of way with the consequences of inefficiency, sluggishness and loss of adaptability, the antithesis of what’s expected of public companies. Corporations are a tangled web of actively interconnected entities, purposeful people and processes enmeshed within even more complex social, technical and natural systems. Compliance with codes and rules is an inappropriate guide of goal-seeking and purposeful systems, such as public companies. Perhaps we should consider thinking differently. Jeffrey Sonnenfeld understood what makes the boards of companies perform well: ‘It’s not in the rules or regulations – it’s the way people work together.’ There are three important co-determinants of people working well together:

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Here’s an alternative way of thinking about the corporate governance of companies: • Appoint trustworthy directors, i.e. with proven competence and probity – perhaps the greatest challenge.

• Replace the codes with a short set of universal goals of good governance, expressed as deliverables, for example the Hermes Principles published in 2002 (below); and underpin these with the few universally applicable moral principles of good governance, expressed in unambiguous sentences. • Self-governance: directors design and implement an evidence-based, adaptable governance system that is grounded in trust and consistent with the goals and moral values of good governance, but customised by the company to the organisation’s internal and external context. • Orientate governance to the harmonious functioning of the whole rather than to the control of independently purposeful people. • Shareholders and other stakeholders regularly evaluate the performance of directors and managers against the companies’ purpose, goals and the value they create, and act accordingly. The Hermes Principles of Good Governance: 1. Honest, open dialogue. 2. Systems in place to identify value-maximising activities and skills. 3. Investment plans tested for long-term value. 4. Capital allocated to exploit core growth opportunities rather than unrelated diversification. 5. Cost-effective incentives to maximise long-term value. 6. Efficient capital structures to minimise long-term costs. 7. An accurate understanding of the strengths of the business model and of the forces driving growth. 8. Clear insight into why the company is the ‘best parent’ of any business. 9. Effective relationships with stakeholders; regard for the environment and society as a whole. 10. Measures that minimise the transfer of adverse costs to society at large. (www.hermes.co.uk) n Reference: The HOW Report, downloadable at htpp://pages.Irn. com/how-report.

Photo credit: Gareth Griffiths Imaging

1. Common purpose, goals and a definition of success that invigorate and direct joint work; 2. Shared values that guide decisions and collaborative behaviours; and 3. Trust, which unlocks the shackles of ineffective control and unnecessary constraints, thus promoting efficient and effective co-operative work. Control and compliance with codes are appropriate for the mechanistic elements of directors’ duties – for example, compliance with accounting standards for compiling financial statements. However, adaptive governance structures and practices, and an enabling organisational climate are essential if companies are to pursue their business purpose and economic success with enterprise, while competing in a turbulent and unpredictable environment. Through intelligence, innovation and disciplined experimentation, directors and employees can learn and adapt – develop new strategies and goals, new operations and also new ways of designing, managing and governing the business. Empirical evidence from 18 countries and 36 280 employees revealed that self-governance, grounded in trust, values and a purpose-driven mission, was far superior to both authoritarian and rules-based control in determining company performance. In this compelling study, performance was gauged by indices of value appreciated from a number of perspectives: financial outcomes, employee engagement and loyalty, innovation, customer satisfaction, ethical behaviour and reputation in society. Fundamentally, good corporate governance is about value – it is about aesthetics and ethics much more than it is about control from the top. Successful companies are highly valued because they achieve their economic goals as harmoniously integrated, efficient wholes that have a moral purpose, and also are in harmony with their society and environment. Self-governance grounded in trust is not a panacea. There will always be some breaches of trust ... codes and laws will not prevent them. Good governance pursues enduring success and also strives to minimise the adverse consequences of the corporation’s operations and its inevitable demise. However, good governance does not guarantee enduring success: the lives of organisations are ineluctably finite and the causes mostly frequently are deeply rooted in the system that is the company. Corporate failures may be traumatic and tragic but, somewhat paradoxically, they may be necessary to make way for fitter companies and for the successful development of societies and their economies.

Dr Roger Stewart

Dr Roger Stewart works with directors and senior managers on thinking creatively and finding novel solutions to their challenges. For more information, visit www.BusinessSculptors.com.

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FEATURE

Photo credit: Allianz Global Corporate & Specialty

Businesses face a changing risk landscape Key findings of the 2016 ALLIANZ RISK BAROMETER reveal that businesses need to prepare for greater disruptive forces in 2016 and beyond. THE risk landscape for businesses is substantially changing in 2016. While businesses are less concerned about the impact of traditional industrial risks, such as natural catastrophes or fire, they are increasingly more worried about the impact of other disruptive events, fierce competition in their markets, and cyber incidents. These are key findings from the 2016 ALLIANZ RISK BAROMETER, the fifth annual survey on corporate risks published by Allianz Global Corporate & Specialty (AGCS), which surveyed over 800 risk managers and insurance experts from more than 40 countries. According to the ALLIANZ RISK BAROMETER the top three leading risks for businesses in Africa and the Middle East are macroeconomic developments (44%), market developments (44%) and changes in legislation and regulation (32%). Political risks (war, terrorism and upheaval) rank higher than any other region. The area is the only one to rank power blackouts (10th) in the top 10. These risks are appearing for the first time for Africa and the Middle East. ‘The biggest contraction in global trade since the financial crisis, BRICS and other emerging markets hitting a wall, and a subdued knock-on effect from the drop in commodity prices all contribute to market and macro developments ranking highly in this year’s Risk Barometer,’ says Ludovic Subran, Chief Economist at trade credit insurer Euler Hermes, a sister company of AGCS.

South Africa, Brazil, Russia, Nigeria and Malaysia are among the countries that have been negatively affected by cheaper commodity prices. ‘However, it is fascinating to see that, in many cases, the decline in oil and gas, iron ore and steel prices has stressed the supply chain more than it has benefitted it,’ Subran adds. ‘Sectors such as construction, for example, have not done as well as anticipated because of structural difficulties. Additionally, some sectors, such as machinery and equipment, have seen the collateral damage of plummeting investment in the oil and gas industry.’

Business interruption – a top risk for business Business interruption (BI) remains the top risk for businesses globally for the fourth year in succession. However, many companies are concerned that BI losses, which usually result from property damage, will increasingly be driven by cyber-attacks, technical failure or geo-political instability as new ‘non-physical damage’ causes of disruption. Meanwhile, two of the major risers in this year’s report feature in the top three corporate risks for the first time with market developments ranking second and cyber incidents third. Cyber incidents are also cited as the most important long-term risk for companies in the next 10 years. In contrast, natural catastrophes (third in Africa and Middle East) drops two positions to fourth year-on-year, reflecting that in 2015 losses from

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natural disasters reached their lowest level since 2009. ‘The corporate risk landscape is changing as many industrial sectors undergo a fundamental transformation,’ explains AGCS CEO, Chris Fisher Hirs. ‘New technologies, increasing digitalisation and the ‘Internet of Things’ are changing customer behaviour, industrial operations and business models, bringing a wealth of opportunities, but also raising awareness of the need for an enterprise-wide response to new challenges.

Challenging market environment More than a third of responses (34%) cited market developments, such as intensified competition or market volatility/stagnation, as one of the three most important business risks in 2016, ranking this new survey category as the second top peril overall. Market developments are a particular concern in the engineering, financial services, manufacturing, marine and shipping, pharmaceutical and transportation sectors, where this risk ranks among the top three business risks respectively. In addition, it ranks as a top two concern in Europe, Asia-Pacific, Africa and the Middle East. Many businesses in Africa face a growing number of challenges that threaten their profitability and possibly also their business models. ‘Businesses constantly have to be on their toes, turning out new products, services or solutions to stay relevant to customers and to thrive in this rapidly changing and globally competitive environment,’ explains AGCS Africa CEO, Delphine Maïdou. ‘Innovation cycles are becoming rapidly shorter, market entry barriers are coming down, increasing digitalisation and new ‘disruptive’ technologies have to be quickly adopted, and potentially more agile start-ups are entering the game.’ At the same time, businesses are also having to comply with changing or enforced regulation, increasing safety requirements or import/export restrictions.

A rise in sophisticated cyber attacks Another area of increasing concern for businesses globally are cyber incidents, which includes cyber-crime or data breaches, but also technical IT failures. Cyber incidents gained 11 percentage points year-on-year to move from fifth position (fifth in Africa and Middle East) into the top three risks for the first time (28%

of responses). Five years ago, cyber incidents were identified as a risk by just 1% of responses in the first Allianz Risk Barometer. Loss of reputation (69%) is the main cause of economic loss for businesses after a cyber-incident, according to responses, followed by business interruption (60%) and liability claims after a data breach (52%). Companies are increasingly concerned about the growing sophistication of cyberattacks. ‘Attacks by hackers are becoming more targetoriented, lasting for longer, and can trigger a continuous penetration,’ explains Jens Krickhahn, cyber insurance expert at AGCS. While cyber-attacks are increasing both in frequency and severity, companies should not underestimate the impact of an operational failure in today’s highly digital and connected industries. ‘A simple technical failure or user error can result in a major IT system outage disrupting supply chains or production,’ says Volker Muench, AGCS expert for property underwriting. ‘Early warning and better monitoring systems are necessary to prevent large cyber BI losses,’ Krickhahn points out.

Geo-political instability causing disruption BI remains the top peril in the Allianz Risk Barometer for the fourth year in succession with 38% of responses (30% in Africa and Middle East). Indeed, BI losses for businesses are increasing, typically accounting for a much higher proportion of the overall loss than a decade ago and often substantially exceeding the direct property loss, as AGCS insurance claims analysis shows. According to responses, major causes of BI feared most by companies are natural catastrophes (51%), closely followed by fire/ explosion (46%). However, according to the survey’s findings, multinational companies are also increasingly worried about the disruptive impact of geo-political instability as war or upheaval could impact their supply chains or their staff or assets could suffer from acts of terrorism. ‘Businesses need to prepare for a wider range of disruptive forces in 2016 and beyond,’ says Axel Theis, Member of the Board of Management, Allianz SE. ‘The increasing impacts of globalisation, digitalisation and technological innovation pose fundamental challenges.’ n

Allianz Global Corporate & Specialty (AGCS) is the Allianz Group’s dedicated carrier for corporate and specialty insurance business. AGCS provides insurance and risk consultancy across the whole spectrum of specialty, alternative risk transfer and corporate business: marine, aviation (including space), energy, engineering, entertainment, financial lines (including D&O), liability mid-corporate and property insurance (including international insurance programmes). For more information, visit www.agcs.allianz.com, or www.agcs.allianz.com/insights/white-papers-and-case-studies/allianz-riskbarometer-2016/ to download the full report.

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FEATURE

â&#x20AC;&#x153;

We all need to take more seriously the general obligation on directors to promote the purposes of the Companies Act that includes achieving economic and social benefits and promoting compliance with the Bill of Rights.

What will keep directors awake in 2016? Although the obligation of a board of directors to manage the company includes directing others who can be relied on to do so, the responsibility of directors is increasing all the time. This results from the pace of change and the increasing regulatory risks that grow exponentially by the year. ALL recent surveys place cyber risk at the top of the list. If the Cybercrimes and Cybersecurity Bill becomes law, not only electronic communications service providers but also all financial institutions and any company that deals with data on behalf of a financial institution or its clients will have cybersecurity obligations and a potential R10 000 a day penalty for breach. These companies will have to establish procedures to deal with cybercrime and inform clients what the risks are. If this is added to obligations under the Protection of Personal Information Act, where there are possible severe penalties and civil claims for loss of data, it is

clear that time and money will have to be put into cybersecurity. It is daunting because if hackers can get into the CIA then it seems no system is hack-proof. But directors will have to see that their companies install reasonable systems to cope with the risks they face.

The time to act is now Better electronic communication is also the source of South Africaâ&#x20AC;&#x2122;s commitment to the Common Reporting Standard. This was signed under an international convention on mutual administrative assistance in tax matters. Companies and individuals who have previously

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relied on the non-disclosure or non-detection of funds held offshore will find that revenue authorities worldwide are now parties to this standard by which taxpayer information will be exchanged between countries freely. The information includes detailed information such as account balances and interest earned. There are about 70 countries (including jurisdictions such as the UK, Isle of Man, Guernsey and Jersey) that have already signed up. Collation of information has begun and it will be shared from 2017. This year is the time act, possibly by availing oneself of the voluntary disclosure programme, if you do have funds offshore that have not been fully disclosed. Because there is so much new regulation coming out of parliament and government departments, there are not enough government officials to administer or police the regulations. The consequence is that government is placing more and more responsibility on the directors and executives of companies to do the policing for them. This often includes day-to-day control over third parties who act as agents for the company (agents for insurers for instance).

Corporate responsibility and personal liability

they took reasonably practicable steps to prevent the commission of that offence. In those terms, the provision is almost certainly unconstitutional. But, directors who are knowingly parties to offences or negligent conduct by the company can find themselves personally liable and there is an increasing trend to do so.

The obligation of directors We all need to take more seriously the general obligation on directors to promote the purposes of the Companies Act that includes achieving economic and social benefits and promoting compliance with the Bill of Rights. The recent marches by the EFF reminded companies that when directors are considering who their stakeholders are when making major decisions, they include not only the company, the shareholders, employees, customers and the environment, but may also include the many unemployed and unskilled people in this country. A concern for job creation and skills training is so important to national stability that it should form an active part of any business plan. It seems clear that some major issues such as carbon tax and contribution towards the national health insurance are not going to be on the statute books during 2016. So directors can save some of their sleeping tablets for 2017. n Photo credit: Norton Rose Fulbright South Africa Inc.

Corporate responsibility is finding its way into personal liability for directors and executives. The US Department of Justice recently announced its intention to ‘maximise the ability to deter misconduct and to hold those who engage in it accountable’. This includes personal liability (including criminal liability) for directors and executives, and other employees. There have been multimillion rand civil judgments against directors who have failed to fulfil their fiduciary duties in regard to major corporate transactions. A director can be found liable for a negligently managed poor merger transaction or missing a merger opportunity because of a breach of fiduciary duties. The supreme court in the US state of Delaware (the state where most US corporate regulation happens) recently introduced what they called ‘aiding and abetting liability’ for directors for unreasonable conduct in overseeing the sale of the company and in not properly managing their investment adviser who had serious conflicts of interest. The trend is finding its way to South Africa. The Financial Sector Regulation Bill now being debated in parliament includes a proposed section that if a financial institution commits an offence under a financial sector law, each member of the governing body of the financial institution also commits the offence unless they establish

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Corporate responsibility is finding its way into personal liability for directors and executives.”

Above: Dale Cridlan, Director, Tax, Norton Rose Fulbright South Africa Inc. Above right: Patrick Bracher, Director, Banking and Finance, Norton Rose Fulbright South Africa Inc.

Norton Rose Fulbright is a global legal practice. The company provides the world’s pre-eminent corporations and financial institutions with a full business law service. It has more than 3 800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia. Recognised for its industry focus, Norton Rose Fulbright is strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare. For more information, visit www.nortonrosefulbright.com.

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FEATURE

Photo credit: World Economic Forum

World Economic Forum 2016 For four days in January, the world’s political and business leaders, plus the usual smattering of celebrities, headed to the Swiss Alpine resort of Davos for the World Economic Forum’s annual conference. EMMA DAWSON reviews some of the key topics discussed at the conference. WE live in a fast-paced and interconnected world, where breakthrough technologies, demographic shifts and political transformations have far-reaching societal and economic consequences. More than ever, leaders need to share insights and innovations on how best to navigate the future. The official theme of the 2016 meeting was ‘Mastering the Fourth Industrial Revolution’. That, in World Economic Forum (WEF)-speak, means the ‘fusion of technologies that is blurring the lines between the physical, digital and biological spheres’. We stand on the brink of a technological revolution that will fundamentally alter the way we live, work and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders

of the global polity, from the public and private sectors to academia and civil society. The First Industrial Revolution used water and steam power to mechanise production. The second used electric power to create mass production. The third used electronics and information technology to automate production. Now, a Fourth Industrial Revolution is building on the third – the digital revolution that has been occurring since the middle of the last century. It is characterised by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.

The Fourth Industrial Revolution Are we on the cusp of a Fourth Industrial Revolution? Most participants at Davos think so. However, less clear is the impact this revolution will have on entire industries, regions and societies around the world. Will it be a force

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for good or evil? Will it provide new opportunities for all, or will it exacerbate inequalities? Included in discussions were the topics considered to be the top global threats:

The relentless rise of automation and ever more intelligent machines For some Davos attendees, this meant business opportunities. But Davos also highlighted the threat to white collar jobs, and posed the question about whether the changes are ‘failing the middle classes’. Another question considered was whether we are heading towards ‘a world without work’ – a serious issue given that some experts reckon that one in two jobs could eventually be taken by intelligent automation. And what about the implications of smart machines/robots going to war?

Terrorism and the migration crisis World leaders and the heads of humanitarian agencies debated how to address the growing migration crisis and better integrate refugees into the communities that shelter them. In addition to this, the EU foreign affairs chief, Federica Mogherini, and the French minister Emmanuel Macron, talked about whether Europe has been pushed to a tipping point by the crisis and discussed recent terrorist attacks.

Market turmoil The stock market rout of 2016 has already made a small dent in the large fortunes of the Davos elite. Plenty of nervous chatter ensued about whether we are heading into a new crash – and whether it can be fended off. Of course, the big worry is China, with its slowing economy and swelling credit levels. One of the Chinese government’s top market regulators, Fang Xinghai, and IMF chief Christine Lagarde, updated the global elite on where the economy is heading. Is 2016 the year when the world tumbles back into economic crisis? With crude prices falling below $30 per barrel, the energy ministers of the United Arab Emirates and Kuwait talked publicly about how Arab economies can reform to handle cheap oil. At WEF there were no fewer than 10 central bank governors discussing whether they will need to do more to help the global economy this year.

Climate change The forum also set out to build on the Paris climate deal, agreed in December 2015, by examining how governments and businesses can work together to cut carbon emissions. It’s widely agreed that failing to deal with and prepare for climate change is the biggest single threat facing the world economy. This is the first time in more than a decade that environmental issues have topped the world’s list of worries. A string of top

scientists provided technical expertise on how to tackle global warming and create cleaner energy.

Europe While turmoil in the Middle East and in the markets has pushed the eurozone debt problems down the agenda it was still up for debate, particularly with memories still fresh of Alexis Tsipras being forced into a painful third bailout deal.

Inequality Following a warning from Oxfam that wealth is becoming increasingly concentrated in the hands of a small group of billionaires, Save the Children highlighted how the Fourth Industrial Revolution risks deepening the gap between rich and poor. Their reason: Automation destroys job opportunities for those with few educational qualifications and hollows out labour markets in the developing world.

Medicine At Davos, the US vice-president, Joe Biden, pushed his ‘moonshot’ initiative to find a cure for cancer. Biden, leading a heavyweight US delegation, met with top scientists, doctors and data researchers in an attempt to speed up the fight against the disease. He believes that ‘cancer politics’ is holding back progress, and called for more data sharing about patient information and treatment outcomes. Ebola, and how to prepare for the next outbreak, was also on the agenda. Test results from Merck’s experimental ebola vaccine proved to be 100% effective in providing immunity to a disease that killed more than 11 000 people in 2014.

Cybercrime and civil liberties Davos also saw a clash between the authorities that want closer control of our digital communications, and campaigners, who fear privacy is being eroded. The US attorney general, Loretta Lynch, and Jürgen Stock, the head of Interpol, attended WEF to push for closer partnerships with companies and new laws to catch cybercriminals across the globe. Also on the agenda was how privacy and secrecy has changed in a world of digital communication and new terrorist threats.

Summing up About the Fourth Industrial Revolution, Klaus Schwab, Founder and Executive Chairman of the WEF, said: ‘The challenges are as daunting as the opportunities are compelling. We must have a comprehensive and globally shared understanding of how technology is changing our lives and that of future generations, transforming the economic, social, ecological and cultural contexts in which we live. This is critical to shaping our collective future to reflect our common objectives and values.’ n Source: World Economic Forum, www.weforum.org

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FEATURE

Six trends shaping the sales industry Gone are the days of having sales staff who depend solely on the gift of the gab to close deals. Today’s sales environment is focused on selling value to customers rather than merely solutions or products, which in itself demands a solid understanding of the customer’s requirements and highly-skilled sales representatives who continue to evolve to stay ahead of the market. ‘TODAY’S sales environment mandates that sales be approached as both an art and a science,’ says Thabo Molefe, Sales and Marketing Director of LexisNexis South Africa. The firm operates in a relatively conservative market, providing content and technology solutions for professionals in legal, corporate, tax, governmental, academic, property and non-profit organisations. To ensure its continued success, Molefe has led a sales transformation that began several months ago and is already beginning to bear fruit with a number of high-value deals under the firm’s belt.

Molefe views the following as important trends shaping and shifting the sales industry:

Selling value, not products ‘The focus is now on selling value to customers instead of just selling your products or solutions, and there is a rapid move away from transactional selling. ‘Level 4 value creation forces you to go to the customer and say: “Tell me about your business before I tell you about my product.” From there, you’re forced to go back and look at your product. Is it what the customer needs? If not,

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what changes can we make to ensure that it is? Things like service and the total brand experience also become critical,’ Molefe insists.

Commoditisation Increasing competition can lead to price becoming the primary focus for competitors and the key deciding factor for customers. ‘The challenge faced by LexisNexis has been that a lot of our solutions are being sold into markets that are becoming mature and we’re starting to come under price pressure from customers and competitors. For any sales organisation in this situation, the important thing is that you are able to consistently illustrate the value your solutions offer in terms of directly addressing the needs of your customers,’ he points out.

Disintermediation In many sales environments, the sales person is now being cut out and customers want to go directly to the source. Molefe notes: ‘The information age presents challenges and opportunities for any sales organisation because customers may feel they can cut you out completely or have their needs met directly via the internet. Again, the added value of your expertise and insight to customers is key.’

Continuous improvement

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The focus is now on selling value to customers instead of just selling your products or solutions, and there is a rapid move away from transactional selling.”

Technology

While sales organisations should embrace technology platforms that support the sales process, there needs to be a balance. ‘Customers don’t want to be treated like numbers but that’s an unfortunate outcome if companies rely too heavily on technology and automation in their sales practices. There’s a delicate balance that needs to be struck,’ Molefe maintains.

Alternative channels ‘With the advent of e-commerce, the gift of the gab doesn’t work. Now it’s about public relations coupled with driving eyeballs to your website, while still talking to customers and interacting with them in new and improved ways that demonstrate a clear understanding of their needs,’ Molefe advises. By paying attention to these trends and implementing measures to stay ahead of the curve, Molefe believes that sales organisations can begin to reap real benefits and close those coveted deals. n

Photo credit: LexisNexis South Africa

Sales skills are premium and must be kept fresh to ensure survival in this cut-throat industry. According to Molefe, this requires an honest look at your sales team to ensure you have the right mix of skills to match your targets and close any gaps. In LexisNexis’ case, the process has involved sales skills assessments; tests of personalities, acumen, interests and temperaments; matching those to suitable customer accounts; plotting skills gaps; and designing a training curriculum to keep sales people performing at their best.

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Today’s sales environment mandates that sales be approached as both an art and a science.”

Thabo Molefe, Sales and Marketing Director, LexisNexis South Africa

LexisNexis is part of RELX Group plc, a world-leading provider of information solutions for professional customers across industries. South African investment firm, Tsiya Group, owns a minority interest in the company. LexisNexis South Africa’s acquisition of Korbitec (Pty) Ltd from the Naspers Group in November 2015 established the company as the leader in conveyancing solutions in the South African legal market, as well as expanded its reach to other spheres and stakeholders within the property transfer process. For more information, visit www.lexisnexis.co.za.

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ENTREPRENEURS

Equity vs debt: How should entrepreneurs fund business ventures? During the process of securing funding, entrepreneurs and business owners are not always aware of the pros and cons associated with asking for too much or too little finance for their business, or whether they should consider debt or equity to fund their business.

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The financial needs of a business stem from either its current position, or the proposed plans for the business, such as expansion, increasing capacity, acquisitions or capital to develop a new product range.”

He warns businesses with high growth potential about taking more funding than what is required. ‘Investors may offer the entrepreneur more funding than what is required, which will result in the investor obtaining a larger shareholding in the business. Introducing this equity may be a very expensive exercise, should the entrepreneur decide to buy the investors’ shares at a later stage, as this figure could be inflated because of the growth that the company has experienced.’ He cautions that although entrepreneurs may be tempted to spend any additional funds available, they need to understand the potentially dangerous long-term effects of utilising these funds and, instead, carefully allocate funding to items that will grow the business. ‘During the process of establishing what type of funding is appropriate, professional advice is recommended as not all entrepreneurs are financially orientated or familiar with the financial principles. Sound, professional advice will guide and steer the entrepreneur to the most suited solution for their particular needs,’ concludes van Biljon. For professional guidance on funding, entrepreneurs can contact the BUSINESS/PARTNERS Entrepreneurs Growth Centre on 0861 SMEFIN (0861 763 346) or email enquiries@businesspartners.co.za for free support and guidance from experienced and seasoned mentors. n

Photo credit: Business Partners Limited

ACCORDING to Gerrie van Biljon, executive director at Business Partners Limited (BUSINESS/ PARTNERS) – a leading risk financier for SMEs in South Africa – entrepreneurs should be cautious of the amount of finance they apply for because the wrong amount could jeopardise their business’ success. He explains that while applying for too little funding may not satisfy the financial needs of the business, securing funding in excess of what is required will put additional pressure on the cash flow of the business. ‘This debt needs to be repaid to the lender and the more debt the business is in the higher the repayment will be.’ There is also the risk of the business owner being tempted to utilise the additional funds for private use, says van Biljon. ‘Obtaining too much money could lead to the improper use of the additional funds suddenly becoming available to the business owner. This money is also very likely to be spent on unnecessary items that will not necessarily improve the position of the business.’ Van Biljon adds that asking for too much funding can also hinder an entrepreneur’s approval rate for finance. ‘Should an entrepreneur apply for an amount that the financier believes is unjustified, the possibility exists that the application will be rejected. This could be for a few reasons, such as the financier not being confident that the entrepreneur is familiar with his/her financial position and the needs of the business, or that the applicant is not fully transparent on the proposed application of funds.’ The financial needs of a business stem from either its current position, or the proposed plans for the business, such as expansion, increasing capacity, acquisitions or capital to develop a new product range. ‘When applying for finance, an entrepreneur should be very clear on the position and strategy of the business as this will determine what type of funding is appropriate for the business. For example, is short- or long-term finance more suitable, or should the finance be in the form of debt or equity?’ van Biljon points out. Bringing an investor into the business usually implies that equity will be introduced and that the investor will obtain a shareholding in the business. Van Biljon notes that although this format of funding has the advantage of no fixed repayment terms, in the process the entrepreneur parts with a portion of ownership of the business. ‘When opting to go with this finance option, selecting an investor should be done with caution, and both parties should agree on what their expectations are.’

Gerrie van Biljon, executive director at Business Partners Limited

About Business Partners Limited Business Partners Limited is a specialist risk finance company for formal small and medium enterprises (SMEs) in South Africa, and selected African countries. The company actively supports entrepreneurial growth by providing financing, specialist sectoral knowledge and added-value services for viable small and medium businesses. For more information, visit www.businesspartners.co.za.

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ENTREPRENEURS

Why Millennials should look into entrepreneurship By William Jimerson, Group CEO, MUSA Group

As is reflected in South Africa’s alarming level of youth unemployment, one of the biggest challenges facing Millennials is finding a job. With the need to create more new employers and more opportunities for others, should Millennials be following the path to entrepreneurship?

ACCORDING to the 2014 GLOBAL ENTREPRENEURSHIP MONITOR (GEM) SOUTH AFRICA REPORT, 7.0% of the adult population in South Africa is engaged in entrepreneurship, while 2.7% already own or manage an established business. It also reveals that for every 10 adult males engaged in entrepreneurship there are eight females.

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It is safe to say that South Africa needs more male and female Millennials to consider starting businesses.”

2016/02/25 1:22 PM

ENTREPRENEURS

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The majority of Millennials are risk takers and dream chasers, willing to make mistakes and learn from them.”

William Jimerson, Group CEO, MUSA Group

Photo credit: MUSA Group

From this report we also learn that the typical South African entrepreneur is male, between the ages of 25 and 44, lives in an urban area, is involved in the retail and wholesale sector, and has a secondary or tertiary level of education. Based on the report’s findings, it is safe to say that South Africa needs more male and female Millennials (born between the early 1980s and early 2000s) to consider starting businesses. The reason for this is that the biggest challenge this group faces is finding jobs and/or opportunities, hence the alarming level of youth unemployment. Education plays a significant role in starting a new business and Millennials, unlike generations before, have more access to education. Moreover, Millennials are tech savvy and possess IT skills that are a must have for any business start-up. Currently, 28% of South Africans start businesses because they do not have another option for work – they are known as ‘necessity entrepreneurs’. In this day and age, we need to create more new employers that will create more job opportunities for others. The challenge begins after graduation when the majority of graduates opt to seek employment instead of starting a business. Some graduates even settle for career paths different from their field of academic study, while others eventually give up and end up sitting at home. Our society is in dire need of ‘opportunity entrepreneurs’ who can identify an opportunity to start a growing business that, in return, will create employment for others. The majority of Millennials are risk takers and dream chasers, willing to make mistakes and learn from them. A generation that has been constantly overcoming obstacles and has gained tremendous amounts of bravery, boldness and confidence growing up. This generation is distinctive and open minded. Millennials believe in lifelong self-development and growth. A wealth of information is available at the Entrepreneurs Growth Centre (0861 SMEFIN) for this purpose.

Millennials are also entering into what THE FUTURE OF ENTREPRENEURSHIP: MILLENNIALS AND BOOMERS CHART THE COURSE FOR 2020 REPORT refers to as the traditional ‘peak age’ bracket – around 40 – for entrepreneurship. Millennials are resilient, assertive go-getters and fall into the 35.5% of adults in South Africa who identify good opportunities to start businesses. This compared to 25.4% of adults who are prevented from starting businesses because of fear of failure. A prosperous future for Millennials in entrepreneurship begins with establishing a locally desirable idea, ensuring it is clear and simple for people to understand, it is relevant and provides a needed service or product, and that they identify mentorship from knowledgeable and supportive people. It is of utmost importance to maintain focus on acquiring and maintaining customers by fulfilling on a promise to provide a quality product at a value proposition. Following this mantra will allow the entrepreneur to do good for the community in which they operate while doing well (making financial, social and emotional profit) for themselves. n

MUSA Group T +27 011 771 6300 W www.musacapital-impactinvesting.com

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SABI Vol 3 Issue.indd 39

2016/02/25 1:22 PM

CORPORATE GOVERNANCE

Top three challenges in reducing fraud and corruption Being too ethical, human nature, and transforming ethics risks into change opportunities are three major challenges in reducing fraud and corruption. These challenges were highlighted at the recent 8th annual Ethics Officer Learning Forum.

striving for creating a workplace that is both ethical and enjoyable.’ Beale advises against leaving ethical conduct up to complying with laws, procedures and guidelines such as the King Code of Governance. A more effective approach is to use ongoing training to entrench ethical habits and behaviours, after which compliance to rules and regulations will usually follow.

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The purest ethical intentions supported by the best ethics training will be challenged by our human nature.”

Plan for human nature to derail ethical intentions ‘The purest ethical intentions supported by the best ethics training will be challenged by our human nature,’ says Paul Vorster from JVR & Associates. Ethical conduct means different things to different people, and when faced with ethical dilemmas people will act based on their own morals and values. Employers assuming that the morals and values of employees align with the ethical goals of the company face huge ethics risks. THE 8th annual Ethics Officer Learning Forum was hosted by the Ethics Institute of South Africa (EthicsSA); currently the only organisation in South Africa that trains Certified Ethics Officers. Since 2004, 1 093 delegates have completed theoretical training, with 498 completing the practical component that is required to become a Certified Ethics Officer. ‘Ethics officers are charged with the planning and execution of activities that reduce fraud and corruption, and that also build an ethical organisational culture,’ explains Prof Deon Rossouw, CEO of EthicsSA. ‘The purpose of the annual Ethics Officer Learning Forum is to bring Ethics Managers together to learn from each other.’

Convert ethics risks into opportunities for change

Leaders can be too ethical

An ethics risk is a situation that could force those involved to have to choose between acting ethically and getting a job done in an unethical manner. With relevant training, employees will know how to confidently act in the best interests of the greater good, themselves or the organisation they represent. ‘Risk contains both danger and opportunity,’ points out Lea Annandale-Dippenaar, an ethics and enterprise risk management advisor. ‘Ethics risks hold opportunities for organisations to develop, grow and teach their employees to develop finer skills in managing and reducing ethics risks.’ n

‘The ethical leader is not a moral saint to be feared and excluded by others,’ notes Tom Beale, a consultant in the field of governance, ethics and compliance. ‘A good ethical leader is someone that is genuinely concerned with finding a sound balance between the interests of the self and others. This will usually be evident in their

Ethics Institute of South Africa W www.ethicssa.org Ethics Institute of South Africa Ethics Institute of South Africa

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SABI Vol 3 Issue.indd 40

2016/02/25 12:35 PM

ADVERTORIAL

RETAIL MOTOR INDUSTRY – The leading voice for the automotive industry

The Retail Motor Industry Organisation (RMI) is a proudly South African organisation committed to sustainable development through a process of transformation of our economy, of business, and the creation of job opportunities in the country. The RMI is the largest employers’ and business representative organisation in the South African retail motor industry with 7 500 member establishments representing all sectors of the retail motor industry, as well as the vehicle body building and component manufacturing sectors. The RMI is a registered employers’ organisation in terms of the Labour Relations Act, and is the largest employer party to the Motor Industry Bargaining Council (MIBCO) where the Collective Labour Agreement for the industry is negotiated with the trade union parties to the Council. RMI also promotes and implements training initiatives through the MerSETA/W&R Seta. While members of the RMI are all employers, their business activities are varied and cover the entire spectrum of the retail motor industry and the component manufacturing and vehicle body building sectors. The business interests of RMI members are served by the organisation’s Constituent Trade Associations that represent the various industry sectors. The spectrum of business activities and interests represented by the RMI, as evidenced by the large number of Constituent Associations, is an indication of the wide diversity of activities in the automotive retail sector.

RMI’s mission and vision The RMI’s mission is ‘to be the lead voice in the motor industry’; and its vision is the ‘proactive, relevant retail and

associated motor industry organisation recognised both as the lead voice serving the daily needs of its members, and for its key role in enabling motor traders to deliver top class service to motoring customers in South Africa’.

RMI and the government As the leading voice in the motor industry, the RMI continuously engages with government and legislative bodies on national, provincial and local legislation, policies and regulations that affect business in the various automotive sectors. The RMI has formulated and maintains effective resources to ensure legal compliance with various legislative requirements such as Labour Relations, Basic Conditions of Employment, Skills Development, Employment Equity, BBBEE, Compensation for Occupational Injuries and Diseases, as well as Occupational Health and Safety. ■

RMI

T: +27 011 886 6300 W: www.rmi.org.za FB: retailmotorindustry LIn: Retail Motor Industry Organisation - RMI

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SABI Vol 3 Issue.indd 41

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HUMAN RESOURCES

Photo credit: Steelcase WorkSpace Futures

The holistic needs of the workplace Workplace productivity continues to be a worry for organisations and, in South Africa alone, absenteeism is believed to cost the economy approximately R12 billion annually, with an estimated 4.5% of the workforce absent on any given day. EMMA DAWSON talks to BEATRIZ ARANTES from Steelcase WorkSpace Futures about how to combat absenteeism. ACCORDING to AIC Insurance, the R12-billion cost of absenteeism to South Africa’s economy is especially worrying when you consider its impact in a significantly lowered economic growth environment. As much as low morale and compensation are among the best known contributors, another considerable factor is working conditions. Even though companies are increasingly placing emphasis on the wellness of their human resources, many tend to focus on the most obvious aspects and do not have a clear view of their employees’ holistic needs. Beatriz Arantes, Senior Design Researcher at Steelcase WorkSpace Futures, believes that the mind, body and environment are intrinsically linked and organisations need to think of wellbeing beyond physical and mental health but, rather, from a physical, psychological and cognitive perspective. Arantes has conducted extensive research that uncovers how the physical places in which we work can support mindfulness, as well as five other dimensions of worker well-being. She has found that the physical environment offers behavioural cues that can promote, or hinder, employee’s physical, cognitive and emotional wellbeing.

Emma Dawson (ED): Why is absenteeism such a problem and how far reaching is the effect of an absent member of staff? Beatriz Arantes (BA): Absenteeism has a ripple effect because we are impacted by the behaviours that we observe around us, and especially negative behaviours – these tend to have more of an impact on people than positive behaviours. However, absenteeism should be seen as a symptom of a bigger problem that requires an employer to step in and try to investigate what that problem is. ED: What are employees’ needs in terms of their holistic wellness? BA: Our research shows that we need to holistically take note of an individual’s cognitive, emotional and physical wellbeing. This also requires that the individual is in a materially and socially supportive environment. For instance, employers need to consider not only the work conditions but also other urban conditions (for example, whether their employees have access to healthcare and education). It is also important to recognise the social

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HUMAN RESOURCES

context and take note of the individual’s social support structure (do they have people that support them when they need help, are they receiving encouragement?), which is also key to sustaining wellbeing. ED: How do meeting these needs have a positive impact on employees and the organisations they work for? BA: When an employee has positive social relationships at work, including with management, they are more engaged and therefore become more dedicated to their work because they don’t want to let their peers down (they know that people are counting on them so they feel committed to them). This is key for engagement because when people don’t feel personally valued or taken care of, they don’t want to take care of others and their work. Another important factor goes back to our basic biology – when we’re feeling under threat or attacked, or that there’s something wrong in our personal or professional lives, we are distracted and focused on those problems. This results in less mental and emotional ability for our work. So, when people are taken care of holistically, they are a little more care-free, giving them the ability to focus on their work. When people are in a positive state of mind they are more creative, more willing to help others, and to build more trusting relationships, which positively impacts the employee and the organisation.

ED: What should employers consider to ensure a more productive and happier workforce? Employers should carefully consider how well their company mission and employee objectives are understood. One of the most important things that work provides to people is a sense of meaning and a sense of purpose in their lives. If they do not feel a sense of purpose in their work it will hinder their productivity (when employees feel like they are making an impact, they are willing to go the extra mile which helps work and productivity). When people feel that their jobs are not just jobs, but rather a calling (they think of their work as a personal vocation rather than solely the means to earn a living), then they’re more likely to be dedicated to it. Employers also need to consider whether their employees have the necessary tools and resources to accomplish these objectives. Generally, as long as you give people the means to do their work they are more likely to do it well. It’s also important to give feedback to people about how they are making a difference. n

Photo credit: Steelcase WorkSpace Futures

ED: How do employees’ physical environments offer behavioural cues that promote or hinder their physical, cognitive and emotional wellbeing? BA: The physical environment offers the possibility to engage in certain activities and also demonstrates the values and the permissions of a company. Everything around us is made for a certain intention, and that communicates. For instance, if we see an environment that has social spaces, it tells employees that the company thinks that it’s important to have that social time, and gives employees the ability to congregate – and the permission to congregate. When a company invests in providing thoughtful and pleasant spaces, supporting the dimensions of wellbeing, this indicates to employees that they are valued and that they are supposed to take care of themselves while giving them the possibility to do so.

In terms of authenticity, employers also need to look at spaces that relate to the language of the home rather than the traditional office. This indicates that employees can be more relaxed and speak a bit more freely, rather than formally. Some cues for this are, for example, having more colour and softer patterns to make people feel ‘more at home’ and a bit more relaxed.

Beatriz Arantes, Director Steelcase Workspace Futures

Beatriz Arantes is a psychologist and Senior Researcher based in Paris for Steelcase’s global research and foresight group, WorkSpace Futures. She provides expertise on human emotion, cognition and behavior to inform organisational practices and workplace design. Arantes has spent the last 10 years researching the impact of work and work environments on performance and wellbeing. WorkSpace Futures WorkSpace Futures is a multidisciplinary group of researchers in the fields of architecture, industrial, interior and end-user design, engineering, ergonomics and economics. These experts identify emerging trends related to work, workers and workplaces; and design experimental prototypes based on applied research that serve for the development of innovative architecture, office furniture and technology to help people around the world having a better working experience.

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SABI Vol 3 Issue.indd 43

2016/02/25 12:36 PM

HUMAN RESOURCES

Resolving internal conflict By Neville De Lucia, New Business Development Director, Dale Carnegie Gauteng

Conflict resolution is an important management skill and knowing how and when to intervene is essential for keeping the peace. CONFLICT in the workplace is often unavoidable because of differences in work goals and personal styles. It exists in every organisation and, to a certain extent, indicates a healthy exchange of ideas and creativity. However, counter-productive conflict can result in employee dissatisfaction, reduced productivity, absenteeism, increased employee turnover or a hostile work environment.

The ability to deal with people is a purchasable commodity Workplaces are naturally stressful environments and personal conflicts between co-workers can be a cause and product of this stress. Allowing conflicts to build and intensify will only impair the work environment, eventually leading to the whole office choosing sides and resulting

in an extremely volatile atmosphere. In anticipation of this it is crucial for management to intervene. It is a key management competency to practice effective conflict management to maintain a positive workplace environment.

Process conflict â&#x20AC;&#x201C; control what you can Resolving conflict is a process, and determining how much control you have as a manager over this process is the first step. By identifying the core of the problem and pin pointing someone to take ownership of the issue ensures that this isnâ&#x20AC;&#x2122;t just on your shoulders, but rather that everyone takes responsibility. Discuss the problem and establish a workable solution and action plan that is agreed upon by everyone. The owner of the process should follow through on the plan but as the leader, even

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HUMAN RESOURCES

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Conflict in the workplace is often unavoidable because of differences in work goals and personal styles.”

though you may not be implementing the resolution plan, it is your job to show recognition where necessary.

Role conflict – responsible action When conflict arises because of different roles within an organisation, it’s important for each person to perceive their own role in relation to others involved. Each person needs to take responsibility for their own actions as they pertain to the issue, and be prepared to change their perception of their role should the need arise. You won’t receive the desired results if one or more parties are not interested in resolving the situation. Everyone involved will need to be on the same page and will need to show willingness to be flexible in achieving the organisation’s goals. If you are in the middle of the conflict, it’s imperative for you to stay positive and view any role changes in terms of a new opportunity. This indicates the importance of keeping our attitudes in check as managers and team leaders.

Interpersonal conflict – fine-tuning human behaviour

Direction conflict – set the record straight When there are many decision makers working on one project, it is natural for each person to have their own

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It is a key management competency to practice effective conflict management to maintain a positive workplace environment.”

External conflicts – put them into perspective External situations that are out of your control can easily arise in the workplace and result in conflict among employees or clients. Establish how much control you actually have over the situation and carefully choose which battles are worth fighting, bearing in mind you may still need to liaise with the person in the near future. To resolve the issue, maintain your perspective and focus on the things you can do rather than complaining about the things you can’t do to change the situation. If things get too out of hand, talk to someone you trust and who is able to offer you reputable advice. n

Neville De Lucia, New Business Development Director, Dale Carnegie Gauteng

Photo credit: Dale Carnegie

Everyone has their own personal opinion about things, but the problem comes when people believe their opinion is dominant to everyone else’s. As a manager you cannot always get people to agree, especially when it comes to personal ideas or biases. In a situation where two employees are constantly knocking heads, sit them down individually and ask them to write down three behaviours they could change to help reduce the conflict. In a South African context, there may also be prejudices at play. It is of vital importance that these are managed in a working environment. To take the focus off individuals, take it a step further and get them to write down five strengths they recognise in the other person. For the next three months ensure they are accountable to you until you start to see a difference in their behaviour.

opinion about the direction to take. The solution to resolving directional conflict is to get each individual to clarify the discrepancies they have so that it can be described in neutral words. Do this in an informal meeting ensuring each person is friendly and non-confrontational, ultimately resulting in agreement. If there are differences in values, as a leader make the call to always go with the higher value.

With over nine million graduates globally and representation in 80 countries, Dale Carnegie Training® is arguably the world’s most famous corporate training programme. The organisation provides internationally renowned and accredited training to the corporate and private sectors with the aim of equipping delegates with the skills necessary to improve their performance in the workplace. Working directly with companies and individuals, Dale Carnegie Training offers programmes tailored to specific client needs with a strong focus on the challenges people and organisations encounter as they implement current business goals and long-range vision. What differentiates Dale Carnegie Training® is its distinctive four-phase training cycle that integrates attitude change, knowledge, practice and skill development. These newly-learned principles evolve into acquired lifelong skills that produce long-term behavioural change. For more information, visit www.gauteng.dalecarnegie.co.za.

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SABI Vol 3 Issue.indd 45

2016/02/25 12:36 PM

SUPPLY CHAIN

Supply chain trends for 2016 Supply chains – the series of events needed to get goods and services to customers at the right place, time, quality, and price – face a number of impending challenges in 2016. ‘SUPPLY chain managers are already under huge pressure to adapt to turbulent economies, labour issues, and expansion into global markets,’ notes Grant Marshbank, COO of VSc Solutions. ‘While the bad news is that the rate of change isn’t going to slow down, the good news is that emerging trends hold opportunities to reduce both costs and carbon footprints, and enable exceptional customer service at the same time.’ According to Marshbank, some of the major keys to future success lie in the selection of a technology partner. The ideal service provider is comfortable with providing insights into strategic business matters unrelated to their own product offering, and is able to provide advice based on where the most advanced operators predict businesses will be five years from now.

Technology as a core strategic driver instead of an operational enabler Aging systems that were implemented years ago to enable smoother operations are quickly being replaced by smarter technologies that easily incorporate trends like big data, the Internet of Things, and the coordination of multiple sources of data. Demand is growing for technology that can successfully translate any electronic message into any format required by existing systems, allowing for full electronic data communication between customer and supplier bases.

‘Technology will only deliver the intended positive results if it is implemented with strategy and operations that adhere to best practice in supply chain management,’ Marshbank warns. ‘Get the basics right first – not even the smartest technology can compensate for less-thanbest practices.’

Flexible, transparent, responsible supply chains While agile and sustainable supply chains have been buzzwords for a number of years, 2016 will start to see the dominance of supply chains that have figured out how to balance being completely flexible with reducing environmental impact and stakeholder demands for transparency throughout the value chain. ‘Real-time system integration, secure data exchange, visibility and traceability between disparate systems across multiple supply chains and industry verticals are just some of the options already available through technology,’ says Marshbank. ‘The greatest barrier to the adoption of these technologies is a lack of understanding of the benefits combined with an expectation of high implementation costs.’

Small improvements will lead to big success Optimisation of every component of the supply chain is already an imperative to growth and success. A new

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SUPPLY CHAIN

microscopic level of optimisation will further differentiate between competitors. Predictive route planning and management solutions, intelligent storage and distribution space allocation software, and real-time integrated delivery tracking will become mainstream for both the biggest and the smallest of supply chains.

Think and do faster Advances in technologies available to optimise supply chains have made faster implementation times a reality. ‘It is easier and more affordable for both big and small businesses to go live with a new system within two weeks of finalising paperwork,’ explains Marshbank. Further developments in consumer technology are also making it easier for multiple-use communication devices to be linked to existing company systems, significantly reducing the need for additional expense and waiting times for custom mobile devices. ‘Turbulent economic times don’t allow for big expenditure on trial-and-error technology. Service providers need to keep the bigger picture of sustained success in mind and be able to provide trusted advice on a plan that won’t cost and arm and a leg, and will deliver a quick return on investment,’ advises Marshbank. ‘Most supply chain professionals already have a sound strategic plan in place. Instead of being sold a new system, they might just need some guidance on how to solve their pain points by repurposing their existing technologies,’ he points out. ‘Being able to blend systems and implement tools on a scalable basis is what sets the technology of the future apart from the unwieldy enterprise-wide software packages that were popular in the previous era,’ Marshbank concludes. ■

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Photo credit: VSc Solutions

Grant Marshbank, COO of VSc Solutions

VSc Solutions is a leading provider of supply chain technology and consulting solutions to emerging markets across the globe. The company provides custom solutions that are scalable to any industry and any supply chain environment with the key focus on delivering profits and enhancing competitive advantage. The team at VSc believes in creating long-term partnerships with its customers and the company’s offering is continuously evolved to meet their ever changing needs. For more information, visit www.vscsolutions. co.za.

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SABI Vol 3 Issue.indd 47

2016/02/25 12:36 PM

FINANCE & TAX

New lease standard to impact financial reporting The new lease standard, IFRS 16: Leases, was published on January 13, 2016. The new standard, which is the culmination of nearly a decade’s long project by the International Accounting Standards Board (IASB), will be effective for all financial periods commencing January 1, 2019, and will have a wide-reaching impact on business in South Africa. ACCORDING to Tapiwa Njikizana, Director at W.consulting, the new lease standard, IFRS 16: Leases, is the biggest accounting event in the last decade and will significantly affect every financial director and accountant in the country involved in financial reporting. The current standard made a distinction between so called ‘finance leases’ and ‘operating leases’ with the key difference between the two being: finance leases were deemed to be analogous with buying the underlying asset and therefore resulted in lessees recognising the leased assets and liabilities on their balance sheets, whereas in the case of operating leases, the transaction was deemed to be more a transitory right-of-use of the underlying

assets, hence lessees would not recognise the underlying assets or liabilities on their balance sheets. This type of funding, related to operating leases, is often referred to as ‘off-balance sheet funding’ as the liabilities do not appear on the balance sheets of the lessees. ‘This will have a knock-on effect exacerbating the effects of an already over-indebted economy,’ says Njikizana. He adds: ‘The gearing ratio of companies that rely significantly on off-balance sheet funding from operating leases will immediately deteriorate, possibly leading to breaches of debt covenants or further reducing the ability of affected businesses to access new funding for expansion or to weather tough periods of liquidity constraints.’

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FINANCE & TAX

Reported cash flows will also be affected. Currently, cash outflows arising from operating leases are reflected as operating cash flows, under IFRS 16 these cash flows will now be reflected as a combination of financing cash flows (servicing of the lease liability), which will be the major portion, with a residual amount relating to the finance costs classified under operating cash flows, currently all operating lease cash flows are classified as operating. Many accountants that have criticised some of the complexities of modern IFRS have pointed to the Statement of Cash Flows as one of the places where ‘accounting still makes sense’, and they may find this change somewhat of an irritation. One of the key business consequences of this distinction between finance and operating leases is that finance leases result in a higher gearing ratio for business (being the ratio of a business’ debts to its equity) whereas operating leases do not impact gearing ratios. This advantage, of a lower perceived gearing, led many businesses to prefer entering into operating leases wherever possible suggesting there will be many companies affected by this change. Njikizana provides some background about the reason for the change: ‘With the global financial upheavals of the last decade, a number of areas of accounting came under scrutiny and chief amongst these were matters relating to the accounting for financial instruments and the matter of off-balance sheet funding related to operating leases in particular. It is estimated by the IASB that the extent of off-balance sheet funding sits, only for listed companies, at approximately US$2.86 trillion.’ Njikizama reiterated that although the implementation date is three years away, financial directors and financial departments will have to start preparing the necessary information required to on-board these off balance sheet liabilities from as early as 2017 in preparation for

“

It is estimated by the IASB that the extent of off-balance sheet funding sits, only for listed companies, at approximately US$2.86 trillion.”

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It’s essential that companies conduct an impact analysis as soon as possible and see which of their stakeholders will be affected and develop tailored communication strategies for each.”

the 2019 effective date. ‘It’s essential that companies conduct an impact analysis as soon as possible and see which of their stakeholders will be affected and develop tailored communication strategies for each. Our experience with the implementation of significant new standards such as for financial instruments IFRS 9 and revenue IFRS 15, shows that businesses need to invest significant time and resources for several years before the effective date,’ he adds. ‘This is a total mind-set change – companies need to change their focus from the recognition of the leased asset and start paying more attention to the lease indebtedness. Banks won’t place much collateral value on leased assets but will penalise for the related lease liability. ‘W.consulting provides training on new and emerging accounting requirements for listed companies and large public entities that apply IFRS. Additionally, because of the far-reaching ramifications of this change, we will be publishing a video on our FRS Quickies YouTube Channel (www.youtube.com/user/Wconsulting) to assist investors, managers and shareholders to grasp of the key aspects of the standard.’ For a more detailed explanation of the new lease standard, W.consulting is providing in-house training and advisory services that assist companies in developing a robust response to the new standard including developing sub-projects for engaging with the key stakeholders affected. W.consulting provides public training courses that will provide attendees with an opportunity to understand the new standard in detail, equipping them to go back to their organisations and champion their own implementation projects. n

W.consulting is an independent IFRS Advisory and Training business. Their JSE accredited IFRS Advisors team of accounting experts assist companies to research emerging accounting issues, formulate accounting opinions for contentious matters and they work closely with business in responding to new accounting requirements. Issued by Catalyst Communication on behalf of W.consulting. For more information, visit www.wconsulting.co.za.

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SABI Vol 3 Issue.indd 49

2016/02/25 12:36 PM

PROCUREMENT

Promoting integrity in municipal procurement The Ethics Institute of South Africa (EthicsSA) has released a booklet designed to help businesses understand the municipal procurement process, and what their rights are if they suspect irregularities.

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One practical example of how a business executive can keep track of the process is to be present when the tender box is opened.”

‘We would like to see the booklet become a reference document for all businesses undertaking work with municipalities and have made it available as a free download on our website. We encourage business chambers and other business bodies to distribute the booklet to their members,’ Dobie comments. ‘Creating an ethical tender system that is fair to all depends on strong mutual accountability, something this booklet will advance if used correctly,’ Dobie adds. ‘We aim to empower businesses by making them aware of how the process should work, what to do if irregularities are suspected, and how to pinpoint their own responsibilities.’ To download the booklet, go to www.ethicsa.org/ index.php/resources/handbooks-and-toolkits. n

Kris Dobie, Manager: Organisational Ethics Development at EthicsSA, and co-author of UNDERSTANDING THE MUNICIPAL PROCUREMENT PROCESS: A GUIDE FOR BUSINESSES.

Photo credit: EthicsSA

KRIS DOBIE, Manager: Organisational Ethics Development at EthicsSA, who, with Namhla Xinwa, co-authored UNDERSTANDING THE MUNICIPAL PROCUREMENT PROCESS: A GUIDE FOR BUSINESSES, says the booklet aims to simplify procurement procedures and make businesses aware of the regulations that are intended to foster transparency and accountability in the process. ‘If business executives know their rights they can hold municipalities accountable to follow the procedures correctly,’ Dobie points out. Municipalities spend billions of rands every year in procuring products and services from companies both large and small. Many companies find themselves at a disadvantage because they do not fully understand the often-complex tender processes, or how to question what they see as irregularities in the awarding of tenders. Dobie notes that there is strong evidence of irregularities in the municipal procurement process, as shown by the persistently high number of qualified audit reports for municipalities issued by the Auditor General. As a result, government has introduced numerous checks and balances to help prevent corruption, but these also introduce complexity into the tender process. The EthicsSA booklet provides a clear guide to each step in the process, and how to raise questions. One practical example of how a business executive can keep track of the process is to be present when the tender box is opened. In this way he/she will have first-hand knowledge of submitted bids and their values. Armed with this knowledge it is then easy to check that the eventual award of the tender dovetails with the original bids. It’s also very important to recognise that many companies are unaware of their obligations in terms of keeping the tender process fair and above board, and the booklet also spells out businesses’ responsibilities. These include avoiding anti-competitive business practices, BEE fronting and conflicts of interest. It also deals with the ever-present topic of gifts and entertainment. Dobie warns that even relatively low-cost gifts or entertainment could be construed as bribes.

Ethics Institute of South Africa W www.ethicsa.org

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SABI Vol 3 Issue.indd 50

2016/02/25 1:24 PM

INFORMATION & COMMUNICATION TECHNOLOGIES

Five reasons why everything is moving to the cloud By Sacha Matulovich, Sales & Marketing Director of Connection Telecom, and CEO of FatBudgie

Notwithstanding the soft-edged depiction of ‘the cloud’ on network diagrams, it is neither a fuzzy (ill-defined) nor a fluffy (hyped) concept. It is easy to understand and it is big, big business. PRACTICALLY everything IT, from server infrastructure to applications and development platforms, is already in the cloud and available as a service to anyone with an Internet connection.

Why is cloud such a big story?

5. It opens your eyes with analytics: The incredible power of cloud in the abovementioned example is that it opens a direct line from an erstwhile B2B business to the consumer. THE ECONOMIST cites the example of Dollar Shave Club, a US company doing home delivery of personal grooming products. Before cloud, it would have had to go via a high street shop! It’s mail order shopping on performance-enhancing drugs. But the real leverage of this direct relationship is that it gives merchants insights – that is, access to a lot of consumer data that can inform their marketing, stockholding and customer service, enabling highlycustomised, personal experiences, cross-selling and other business-enhancing tactics.

Get on the bandwagon It seems these days everyone is a cloud business, and with good reason. It is a momentous development in the history of computing. Its true power is the speed and agility afforded by the huge computational power behind it. As THE ECONOMIST puts it, cloud allows companies to adopt a quick-to-market approach to launching new products and services and business innovations. n

Photo credit: Connection Telcom

1. It is possible: At the most basic level, the reason why such a vast array of services is migrating online is because it is now a practical possibility. Faster Internet speeds – fixed and mobile – enable Internet-delivered applications such as CRM, entertainment streaming or massive multiplayer online gaming. 2. It is cheap and saves its customers money. It provides access to massive computing power at a low, predictable cost spread out over time, allowing customers to get away with owning zero IT infrastructure (other than a nice big pipe), zero application infrastructure, and an army of relatively low-powered customer devices. The Netflix movie you stream, the Salesforce.com application powering your sales team, the Spotify MP3, and the servers providing the grunt for all of these – it’s all rent-ware. 3. It opens up new channels: From the point of view of cloud providers such as Apple, ShowMax and Microsoft, cloud allows you to reinvent your business from being product-centric to service-centric. It requires capital investment, but it streamlines delivery and enables agile product launches and business innovation. 4. It makes businesses out of nothing at all: But again, that is old hat. What we’re seeing today is the emergence of a ‘sharing economy’ where customers of cloud-delivered services can provide the same service. An example is holiday accommodation via Airbnb. App users rent accommodation in other users’ homes and in turn offer holiday accommodation to the same global customer base. Instead of an intermediary that invests in capital, the model relies on buyers and

sellers sharing in each other’s stock in trade. Airbnb doesn’t own any stock, and yet, with the right idea (Uber taxis, job matching, etc) this can be a goldmine. This innovative new business model is based on a digital platform, enabled by cloud technology.

Sacha Matulovich, Sales & Marketing Director of Connection Telecom, and CEO of FatBudgie

While deploying a call centre division in his business, Matulovich discovered the FatBudgie Cloud PBX and realised the potential of this product for the South African SMME market. He made an investment into FatBudgie and took up the role of CEO. Connection Telecom acquired FatBudgie in 2014. Matulovich is respected as an energetic marketer with a customer-centric approach. He heads up sales and marketing for Connection Telecom and remains CEO of the FatBudgie business.

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MARKETING

Are you selling your business short by not marketing it? Can you afford not to market your business? GUGU MJADU from Business/Partners explains why she believes marketing is important as competition for products and services continue to rise.

MANY small business owners in South Africa often put off marketing their businesses as they don’t believe they have the budget or time for it. Gugu Mjadu, Executive General Manager: Marketing at Business Partners Limited (Business/Partners), says that this mind set needs to prudently change as competition for products and services increase annually.

‘In a world where a consumer’s first point of call to purchase products or services is the internet, it is surprising how little of an online presence some small businesses have locally. While there is an expense for developing a website, the rewards far outweigh this initial outlay cost. Apart from a website, businesses can also utilise social media platforms, which are free to sign up for.’

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SABI Vol 3 Issue.indd 54

2016/02/25 12:37 PM

MARKETING

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While there is an expense for developing a website, the rewards far outweigh this initial outlay cost.”

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Establishing connections with substance through networking is part of the marketing process, and is vital to businesses of all sizes.”

Pinterest can be a suitable platform. On the other hand, if the product or service is more professional, Facebook or LinkedIn could potentially be more suitable. • Implement clever email campaigns: 66% of consumers have made a purchase online as a result of an e-mail marketing message (Mark the Marketer). Targeted e-mail marketing campaigns remain one the most effective marketing tools and can assist in converting leads into customers. Businesses should focus on building and keeping an up-to-date mailing list. Tools, such as MailChimp, enable businesses to implement an email marketing campaign in-house with ease. • Create local awareness: Public relations (PR) is a powerful tool for local businesses as it helps spread awareness of your business and its expertise via content generation (or editorial). While some small businesses may not have the budget to outsource this function to a PR agency, it can be implemented on a smaller scale internally. • Networking: Establishing connections with substance through networking is part of the marketing process, and is vital to businesses of all sizes. Entrepreneurs should set time aside every week to network, including speaking at industry events, as good business relationships don’t just happen overnight. n

Photo credit: Business Partners Limited

Mjadu points to the SOCIAL MEDIA MARKETING INDUSTRY REPORT FOR 2015, published by Social Media Examiner, which reveals that by spending as little as six hours a week on social media, more than 66% of business owners saw lead generation benefits. She adds that while social media strategies and search engine optimisation have become buzzwords, a base of traditional marketing tactics remain important for small business. These include local advertising spend, events and community networking opportunities. Business owners should reflect on the state of their marketing presence – both online and traditional – and Mjadu suggests five marketing areas that business owners should be exploring in 2016: • Establish a website: It was reported by the Earnest Agency that 81% of business-to-business (B2B) purchase cycles begin with a web search, and that 90% of buyers reported that they will source their supplier via a web search when they are ready to buy. This highlights the importance of a company website that profiles the business and its services to ensure that the audience landing on the website is informed, engaged and ultimately converted into customers. Investing in a company to design a website and aid in optimising your search engine functions will reap returns for a business. However, should there be budget constraints, there are various free tools available for small businesses, such as South African Business Woza Online. • Maximise social media strategies: The majority of B2B buyers (85%) believe companies should present information via social networks (Iconsive). However, only 20% of Chief Marketing Officers are leveraging a brand’s social networks to engage with its audience. (Marketing Land). Through social media efforts, business can create a community for engagement, a platform to share company news and updates, as well as a channel to offer customer support. However, businesses need to evaluate which platforms are best suited to their audience. For example, if the business has a strong visual element, Instagram or

Gugu Mjadu, Executive General Manager: Marketing at Business Partners Limited

Business Partners Limited is a specialist risk finance company for formal small and medium enterprises (SMEs) in South Africa, and selected African countries. The company actively supports entrepreneurial growth by providing financing, specialist sectoral knowledge and addedvalue services for viable small and medium businesses. For more information, visit www.businesspartners.co.za.

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SABI Vol 3 Issue.indd 57

2016/02/25 12:37 PM

HEALTH & SAFETY

SPARKS & ELLIS, South Africa’s leading uniform supplier, recently conducted an industry survey to establish the importance of uniforms within the private security industry. The survey’s aim was to reveal opinions about the impact of uniforms on employee professionalism and the experiences that security companies have with their uniform suppliers. ‘The survey results show that most respondents feel that uniforms are highly relevant, and wearing one instils a sense of pride for the company’s employees,’ says Sparks and Ellis’ Managing Director, Sue de Wet. ‘We were surprised to learn that respondents even felt that more attention and budget could be assigned to issuing uniforms for employees, and that new uniforms should be issued on an annual basis.’ Importantly, the survey revealed comfort and fit, promoting the company’s image, and high durability as key factors. Respondents also felt it important that uniforms are appropriately chosen for the specific job or site. Another interesting perception is that the appearance of a uniform reflects the level of service a company provides.

Photo credit: Sparks & Ellis

Uniforms play an important role in the private security sector Some statistics from the survey: • 99% of respondents believe it is important for security officers to wear uniforms. • 98% felt that wearing a uniform instils a sense of pride in employees. • 94% felt that issuing a uniform provides a financial saving for employees as they do not have to purchase their own work clothing. • 92% felt more attention and budget should be placed on uniforms. Respondents believe a uniform’s most important features are: • Promotion of image (94%) • Durability (89%) • Comfort (87%) • Good ﬁt (86%) • Easy to care for (82%) • Colour fastness (71%) • Chemical fastness – water/insect-resistant (60%) The element that most respondents would like to see improved is durability. ‘Every year when we conduct this survey, the dominant result is that uniforms remain an integral part of work culture within the security sector,’ de Wet concludes. n

Sparks & Ellis is South Africa’s oldest and most respected supplier of uniforms. The company was registered in the early 1930s and in 1967 was bought by Cape Union Mart. Owned by Cape Union Mart Group (70%) and empowerment partner, Thebe Investment Corporation (30%) Sparks & Ellis is one of the few suppliers of uniforms to have a Level 1 BEE rating. It also has its own factory: K-Way Manufacturers, which is part of the Cape Union Mart Group of companies. The Sparks & Ellis product range includes clothing and equipment for security, traffic, fire and rescue, ambulance, law enforcement and corporate clients. The company specialises in complete uniform solutions, offering many clients a head-to-toe quarter-mastering service. Sparks & Ellis believes it adds real value to its customers because, by outsourcing the complete uniform supply function to Sparks & Ellis, customers are able to focus on their core business. Sparks & Ellis has its head-quarters in Cape Town, and branches in Johannesburg, Durban and Port Elizabeth. For more information, visit www.sparks.co.za.

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SABI Vol 3 Issue.indd 58

2016/02/25 12:38 PM

SABI Vol 3 Issue.indd 59

2016/02/25 12:38 PM

INTO AFRICA

Africa: Lucrative, but not for sissies By Perry Hutton, Regional Director – Africa at Fortinet

Africa, with the highest concentration of high growth and rapidly emerging markets in the world, presents huge potential growth opportunities. But it’s not a market for the faint-hearted. The harsh realities ‘Some international vendors including large Chinese firms, and some US, Israeli and European vendors, are making inroads into the market,’ he notes. ‘But not every company has the appetite for the harsh realities of doing business in Africa.’ Hutton points out: ‘You have to understand the market conditions, and only the tough survive. For example, central Africa tends to be home-grown – companies in Kenya, Ethiopia and Uganda only want to deal with local businesses. Further north, we see challenges such as the availability of currency in Nigeria – they’ve run out of dollars and it’s becoming more difficult to lay your hands on dollars to do business. We recently changed our policies to reduce the time customers had to register a product down to 100 days. This was done for accounting purposes, but it instantly became a problem in places like Egypt, where it can take up to three months for goods just to clear customs. We see these delays in many areas and often we must use clearing houses to clear goods into country at horrific premiums.’ In addition, in many countries, there are myriad ‘service fees’ required to oil the wheels of business. ‘Corruption is a problem in many African countries, and business protocols are often quite different from what Western businesses are used to,’ Hutton warns. ‘Because our partner channel understands the local markets, they know how best to operate successfully within these environments.’ n

Perry Hutton, Fortinet Africa Regional Director

Photo credit: Fortinet Africa

‘OUR business started in South Africa before we began actively expanding into other African regions from 2007. Now South Africa forms less than half of our business in Africa, and some markets – such as North Africa – are achieving nearly 50% growth yearon-year,’ says Perry Hutton, Regional Director - Africa at Fortinet. In an environment where Information & Communication Technology (ICT) vendors battle to achieve double digit growth, these figures may sound too good to be true. Hutton notes that not every international vendor expanding into Africa has been this fortunate – some have tried and failed, some have placed expat staff in African countries and had to close offices when security risks became too high, and some have found the business culture too foreign for them to operate successfully. Hutton attributes Fortinet’s success to its model of hiring local staff to represent the company in key regions, who then service local channel partners in their countries and neighbouring countries. ‘We hire our own direct touch people in countries to engage with and develop the channel. They understand the local market and business culture and are more successful than foreign representatives in engaging with the channel in those areas. We now have staff in Nigeria, Ivory Coast, Morocco, Tunisia, Algeria, Egypt, Kenya and South Africa and this model has been hugely successful for the company. ‘Strong network growth and rapid moves to high-speed broadband and LTE across Africa present a number of opportunities for IT vendors and service providers,’ says Hutton. ‘We see LTE becoming mainstream in Africa over the next few years. With it comes certain potential information security risks. For Fortinet, strong business opportunities are emerging as securing the network becomes a top priority for telcos and carriers.’

Fortinet is a global leader and innovator in network security. Its mission is to deliver the most innovative, highest performing network security platform to secure and simplify your IT infrastructure. It provides network security appliances and security subscription services for carriers, data centres, enterprises, distributed offices and MSSPs. For more information, visit www.fortinet.com.

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SABI Vol 3 Issue.indd 60

2016/02/25 12:38 PM

VENUE REVIEW

New conference centre challenges convention The highly-anticipated Century City Conference Centre and Hotel is officially open for business with a significant number of confirmed bookings for 2016 already in place. WITH Cape Town Tourism’s massive drive to market the Western Cape as a global destination for business travel, the launch of the Century City Conference Centre (CCCC) meets demands with its capacity to host up to 1 200 delegates in one venue (1 900 people in total) across 19 venues. Designed with both hospitality and operations in mind, the advantageously located adjacent hotel – which offers 125 rooms – increases the number of rooms in the area to six hundred; all within walking distance of the Conference Centre. The CCCC has had vast industry support from organisations that include the South African National Convention Bureau and WESGRO, as well as Derek Hanekom, the Minister of Tourism. They are all in agreement that this new development is key to promoting business

Century City Conference Centre W http://ccconferencecentre.co.za/ https://www.facebook.com/centurycityconferencecentre 1@CCCC_ZA

Photo credit: Century City Conference Centre

Joint CEOs, Glyn Taylor and Gary Koetser.

travel to the Western Cape. Additionally, there has been a substantial private equity investment of R1-billion into this mixed-use development in the Bridgeways precinct, exposing Century City to a global audience and providing local businesses with the advantages of a spill-over effect. Joint CEOs, Glyn Taylor and Gary Koetser, have travelled the globe extensively to draw inspiration from the best conference centres in the world and, more recently, to promote the CCCC as a world-class facility. They have been received with great interest and excitement at international annual trade shows and are gratified by a general sentiment that Cape Town is one of the leading conference destinations in the world. Following their travels, Koetser comments: ‘It is encouraging to learn that the Western Cape is clearly seen as one of the world’s leading leisure destinations and as a forerunner for business travel globally.’ To this, Taylor adds: ‘We believe that the CCCC is a great new asset to the hospitality industry and a perfect opportunity to increase the number of business travellers to South Africa and Cape Town.’ The Century City Conference Centre and Hotel offers functional efficiency, urban integration, spirit of place, and sustainability – it encourages delegates and visitors to experience all that the Mother City has to offer. n

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SABI Vol 3 Issue.indd 61

2016/02/25 12:38 PM

SUSTAINABILITY

Water, capitalism and the 21st century By Jason Drew

THE industrial revolution and modern capitalism were powered by water, and the sustainability revolution we are entering will depend on it. Water will define our future as clearly as it has our past. How we manage this scarce resource, the choices we make and those that are made for us as a result of our actions will define the 21st century for individuals, businesses and nations alike. Let me explain. There is as much water now as when time began, you can’t make more and you can’t throw it away – water just is. It is one of the few substances on earth that is endlessly recycled. Indeed, the drop of water in your morning coffee could have been in the heart of a whale or the sweat of a slave. When the industrial revolution kicked off there were one-billion people depending on that water – today there are seven billion. Just as we have mined the earth for

ancient sunlight in the form of coal and oil, so we have drained our aquifers of water to drive manufacturing and our industrial farms. One hundred cities in northern China already ration water – Beijing’s future as China’s capital has been under review as its growth has outstripped its water resources. And, as their populations continue to grow, 24 countries in Africa will not have enough water to meet their needs by 2025. Our modern corporations are defined by and use unimaginable amounts of water. I would argue that Coca Cola Corporation is not in the business of manufacturing soft drinks but rather the business of procuring more clean water than almost any other enterprise on earth. Intel Corporation has a water recycling programme that claims to have saved 10-billion litres of water per annum – imagine what their usage is if that is the saving!

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SABI Vol 3 Issue.indd 62

2016/02/25 12:38 PM

SUSTAINABILITY

following the same development trend. Our children may well question our sanity in using our precious water to irrigate our lawns – then drilling for oil so that we can spend our weekends mowing them. The first modern war over water has already taken place. The seven-day war between Israel and Jordan to take the Golan Heights was as much about controlling the headwaters of the Jordan River as anything else. We need to get busy making some hard choices. We need to move to water-wise agriculture that will require a transfer of technology and funding to developing nations. We need to reduce our waste of water for pleasure and move to water-wise gardening and civic spaces. Our leading companies are already understanding that water is no longer free and managing this increasingly scarce and expensive resource like any other – those companies that ignore their water footprint will fail their shareholders and employees as the sustainability revolution takes hold. The real issue is what we decide to do with the poor – many of whom have limited access to water. During the industrial revolution the rich have become overweight whilst the poor go hungry. In this sustainability revolution will we continue to water our lawns whilst the poor die of thirst as we take their water to make our consumer goods and food? If we do not make better choices in the 21st century than we have in our past, we risk nothing less than the collapse of civilisation as the environmental migrations we will see will dwarf the economic migrations of the past. As we have seen in Yemen – people can put up with hunger and political repression but not with a lack of water. Let’s get busy repairing the future. n

Photo credit: Jason Drew

However, we continue to waste water on a monumental scale both in open canal agriculture in the developing world, wasteful manufacturing processes, and for pleasure. In the US there are now 17 000 golf courses, up from 4 000 in the 1950s. It is estimated that there are 32-million acres of irrigated lawn in the US – more than three times the amount of irrigated corn fields. China is

Jason Drew

Jason Drew will be a plenary speaker at Sustainable Brands in Cape Town from May 14 to 17. Cape Town’s Sustainable Brands® event will create an opportunity for professionals from various industries to network and learn from their peers and a collection of thought leaders in an optimistic, collaborative environment about how to implement sustainable solutions. For more information, visit http://events. sustainablebrands.com/sb16ct. Article supplied by The Change Agent Collective – ‘We believe that to create positive social and environmental change we must clearly communicate solutions that prove change is possible, profitable and achievable. Our aim is to inspire our clients, colleagues and communities to become CHANGE AGENTS in our society and help build an economy based on purpose’. For more information, email deon@ thechangeagent.co.za.

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2016/02/25 12:39 PM