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YOUR WEALTH
GIVEAWAY
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Commercial Vehicles
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REGULATING CROWDFUNDING BOSSES LIABLE FOR STAFF CRIMES! CARTELS CRIMINALISE INDIVIDUALS! ARE YOU WORTH LESS WITHOUT PROFESSIONAL RECOGNITION? October/November 2016 Vol 21 No. 5
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COVER STORY
52
FEATURE
CFO CONNECTOR OF DOTS!
1
BusinessBrief
CONTENTS
October/November 2016
16
YOUR WEALTH
REGULAR SECTIONS VIEWPOINT
26
ASSETS & INVESTMENTS
n DEVELOPMENT A SOCIAL IMPERATIVE
n RISING STARS & FALLEN ANGELS
n INCENTIVES FOR WHISTLEBLOWERS?
n MIXED BASKET OF CURRENCIES
MANAGEMENT
30
BANKING & INSURANCE
nT HE YIN AND YANG OF KING IV
nC ARTELS CRIMINALISE INDIVIDUALS!
n LEADERSHIP DIFFERENTIATORS
n BANK ALTERNATIVES CHALLENGING
EDUCATION & TRAINING
36
n RTB UPS ROI?
n OVERQUALIFIED, IN DEBT AND OUT OF WORK
n ADVERTISING & MARKETING OMBUD 42
68
n BOSSES LIABLE FOR STAFF CRIMES
n DRAFT DEBT COLLECTORS AMENDMENT BILL
n REWARD PROFESSIONALS INFORMATION TECHNOLOGY
n SARS USING PRIVATE DEBT COLLECTORS!
n UPDATE NETWORK ACCESS POLICY
n U-TURN ON WITHHOLDING TAX
n TELEPHONY IN THE CLOUD?
FINANCE & EQUITY
52
n CFO CONNECTOR OF DOTS!
5
76
TRAVEL & LEISURE
10
nE XQUISITE LOCAL EXPERIENCES 6
nA LL THE LATEST GADGETS, GIZMOS AND OFFICE MUST-HAVES GIVEAWAY
PROCESS & OPERATIONS
n RETHINK YOUR SUPPLY CHAIN
n ALL THE LATEST EVENTS BRIEFCASE
72
n PROCUREMENT SOFTWARE AID
n REGULATING CROWDFUNDING
SEMINARS & CONFERENCES
64
HUMAN CAPITAL
n DIRECTORS BEWARE! COMMUNICATION & TRANSPARENCY KEY
TAX 48
60
MARKETING & SELLING
nA RE YOU WORTH LESS WITHOUT PROFESSIONAL RECOGNITION?
LEGAL
56
CONTRIBUTORS 80 nC ONSULT OUR CONTRIBUTORS DIRECTLY FOR PROFESSIONAL ADVICE
7
n FITBIT CHARGE 2
Subscribe to BusinessBrief online: www.bbrief.co.za
follow:
@bbrief1
2
BusinessBrief October/November 2016
EDITOR’S NOTE
E
W
e are currently living in a time where there are momentous shifts that are causing us to reconsider so many things that are accepted as part of the established order of the world.
Disruption is creating cracks and ripples that dissipate into the disaffected parts of the economy and society. Seeing these cracks and ripples are, however, golden opportunities for the astute. So, we need to realise that by scrutinising the existing order, we will identify flaws that are being caused by a host of factors, from socio-economic, technological advancement to climate change. Seeing these all in a different light will open our minds to new visions of value. New concepts, methodologies and practice should be embraced. If not, there is the risk of being left behind with the challenging task of catching up. With this in mind, this edition’s articles will highlight some of thinking, developments and nuance that affect our everdeveloping commercial landscape. Our cover story, CFO Connector of Dots!, Badibanga Promesse, Regional Vice President, CIMA Africa, explores the role of the CFO. The article highlights the key perspectives that a CFO must manage in order to be effective as a board member. This must be seen in the light that boards are currently under heightened scrutiny, due not only to recent global financial turmoil, but also because they are faced with greater complexity and uncertainty. Crowdfunding is opening an exciting new way to raise capital. It is however critical that this new source of funding be properly understood and that appropriate mechanisms are in place in order to protect the interests of stakeholders. Portia Mashinini and Kent Davis, of Webber Wentzel, in their article, Regulating Crowdfunding, examine the current legislative framework.
Dr Ivor Blumenthal, in his article entitled, Are You Worth Less Without Professional Recognition?, distinguishes between those individuals who may have a qualification and those, who have been doing the work for a significant period of time and are considered to be professionally competent and productive, and how a Professional Designation is awarded to those individuals who are considered to have the whole package. In Ivan Israelstam’s article, Bosses Liable for Staff Crimes!, he states that employers could be held liable for the actions of employees according the principle of vicarious liability which can be avoided by ensuring that company policies and procedures are audited on a regular basis. Our feature article entitled, Your Wealth, looks at how protecting and growing wealth is critical in the current local and global economic and political climates, in order to take care of ourselves and our families. In addition, understanding and evaluating current and future requirements, in relation to expectations, will enable the development of a strategy that will create and grow wealth and assist in avoiding the pitfalls of wealth erosion. On our lighter side, The Corporate Traveller and Tourism set for growth? will provide you with the latest business travel and tourism industry news. And we are giving away a Fitbit Charge 2 to one lucky reader. Entries close 15 November 2016!
Wanita
Véronique
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PUBLISHER’S NOTE
BusinessBrief October/November 2016
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SEMINARS & CONFERENCES
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2016 COMPLIMENTARY SAICA
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BusinessBrief October/November 2016
BRIEFCASE
iPHONE 7 AND 7 PLUS The latest in the iPhone from Apple features massively fast processors, new camera technology and the most recent operating System iOS 10. Faster, smarter and enhanced apps make this the most intuitive iPhone yet. The headphone jack is gone, and a new fast, simple pairing with Apple Earbuds is available. The new iPhone 7 is water resistant and features longer battery life. The iPhone 7 Plus features a dual camera design offering optical zoom and enhanced quality. Available from all operators For more information go to www.apple.com/za
ACER SWIFT 7 ULTRALIGHT LAPTOP Acer has launched a new lightweight laptop slimmer than 1cm. The top of the range Swift 7 is available in Black and Gold and offers the latest Intel 7th generation processors resulting in exceptional performance and extended battery life. The Swift 7 has an all aluminium unibody shell with the full HD screen is protected by Corning Gorilla Glass. A quick Solid State hard drive and up to 8GB of memory complete the package. Available from user stockists For more information go to www.acer.co.za
SAMSUNG GEAR 360 CAMERA Samsungs new Gear 360 offers you a new view of the world in 360-degree splendour. The round dual camera Gear 360 camera is simple to use and provides 360-degree videos in 3480 X 1920 resolution along with 25.9MP still photos. The Gear 360 is an easy-to-use gadget that lets you take pictures and videos in this new format. It is also easy to pair with a Galaxy smartphone via Bluetooth. A Gear 360 Manager application for smartphones is available as well as the Gear 360 ActionDirector for a PC. Available from retailers For more information go to www.samsung.co.za
BusinessBrief
BRIEFCASE
B&O BEOPLAY H6 OVER-EAR HEADPHONES High-end audio headphones from the Danish leader in style and Quality. The B7O H6, part of the B&O play series offer outstanding sound. Anodised aluminium paired with ultra soft leather for comfort, highlighting craftsmanship and quality. The custom designed 40 mm driver housed in a brass port provides a smooth integration of bass midrange and treble. Solid fidelity and clear sound continue the B&O tradition. Available from premium retailers For more information go to www.beoplay.com
7
October/November 2016
GIVEAWAY For a chance to receive a Fitbit Charge 2, please send an email or postcard (one entry per person) with your name, physical address and telephone number marked “Fitbit”. Please note that these giveaways are only open to our South African readers. Email: editor@bbrief.co.za Postcard: P.O. Box 1546, Parklands, 2121 Closing date: Tuesday, 15 November 2016 Congratulations to last edition’s entrants: • Tim Moolman – Fondi OnReal • Luzanne du Toit – The Ultimate Companion for Birding
GIVEAWAY FITBIT CHARGE 2
MAKE EVERY BEAT COUNT Make every beat count with Fitbit Charge 2™—the all-new heart rate and fitness wristband. Maximize workouts with PurePulse™ heart rate, multi-sport modes and Connected GPS. Track all-day activity, exercise and sleep. And make the most of your entire routine with smartphone notifications, reminders to move and personalised guided breathing sessions. With so many next-generation features, plus interchangeable bands and long battery life, it’s the motivation you need to push yourself further.
8
BusinessBrief October/November 2016
BRIEFCASE
EMPLOYEE ENGAGEMENT IN A SOUTH AFRICAN CONTEXT Edited by Hester Nienaber and Nico Martins Employee engagement is at the forefront of business agendas as it facilitates organisational performance. Engaged employees result in delighted customers, which in turn contribute to improved financial results. The book addresses ‘employee engagement’ at different levels, i.e. organisational, department/team, individual. It also asks why employee engagement is important; how to measure employee engagement; the different instruments available; the different national and international approaches in measuring employee engagement and why it is important to account for context in measuring. There is a high-level overview of the Nienaber and Martins employee engagement framework and measurement instrument (including trust) as well as the current state of employee engagement in SA. It also includes engagement and related human resource concepts/ constructs (e.g. organisational culture, commitment and citizen behaviour). For more information, contact Knowledge Resources: +27 (0)11 706 6009 orders@knowres.co.za | www.kr.co.za
RETHINK Growth and Learning through Coaching and Organisational Development Edited by Natalie Cunningham The aim of this book is to be a bridge between a practical how to book and academic rigour, so that the reader can walk away with some techniques and applications equally grounded in academic research. The bias has been that in order to understand the applications, it is important to understand the philosophy and thinking that underpins the theory. This bias might be that many of the authors have close links to academia having recently completed research or alternatively working in a University setting or perhaps it is just a learning preference. For more information, contact Knowledge Resources: +27 (0)11 706 6009 orders@knowres.co.za | www.kr.co.za
FEES MUST FALL: Student Revolt, Decolonisation and Governance in South Africa Edited by Susan Booysen #FeesMustFall, the student revolt that began in October 2015, was an uprising against lack of access to, and financial exclusion from, higher education in South Africa. It is informed by Black Consciousness politics and social movements of the international Left. Yet, its objectives are more complex than those of earlier struggles. The student movement has challenged the hierarchical, top-down leadership system of university management and it’s ‘double speak’ of professing to act in workers’ and students’ interests yet enforce a regressive system for control and governance. This book maps the contours of student discontent a year after the start of the #FeesMustFall revolt. Student voices dissect coloniality, improper compromises by the founders of democratic South Africa, feminism, worker rights and meaningful education. In-depth assessments by prominent scholars reflect on the complexities of student activism, its impact on national and university governance, and offer provocative analyses of the power of the revolt. For more information, contact Wits University Press: +27 (0)11 717 8705/8700 Corina.VanDerSpoel@wits.ac.za | www.witspress.co.za
BRIEFCASE
BusinessBrief
9
October/November 2016
MISS MARBLE By virtue of its simplicity, Miss Marble already has all the ingredients of a great classic. What gives it real presence is the minimalist yet qualitative use of materials – a circular base that holds a cylindrical counter-weight in beautiful white marble, and an elegantly arced tube supporting the shade. The shade is in the form of a domed half-sphere which may be angled to diffuse the light – and highlight the purity of its immaculate design. This minimalism does not preclude an eye for detail (elegant black and white woven textile cable) or a preoccupation with ecology (low-consumption LED bulb), both constants with this designer, Fabien Dumas, whose fairly infrequent productions always aim for the very essential. For more information, contact Ligne Roset in Kramerville: +27 (0)11 262 5055 | info@ligne-roset.co.za
PONCTUEL The PONCTUEL wall clock forms part of Ligne Roset’s stunning new 2106 collection. Its Rennes-based designer, Frédéric Saulou, prioritises research into and experimentation with new materials, while aiming to strike the perfect balance between simplicity and technicality in each of his projects. Nowhere is this more evident than in the new PONCTUEL clock, which is made from a disc of linseed-oiled natural slate into which grooves have been cut. These grooves have been painstakingly sanded, and tell the tale of the clock’s handmade origin. A note of luxury is added by the second hand, which is in a gold finish. For more information, contact Ligne Roset in Kramerville: +27 (0)11 262 5055 | info@ligne-roset.co.za
POP CHAIR We began by asking ourselves a simple question: How can we make the perfect office chair? Why is it that comfortable office chairs are so ugly, and beautiful office chairs so uncomfortable? Come on, it’s the 21st Century. So we set out to do better. To make a beautiful looking task-orientated chair that provides total support through a long day at the office. At a fair and affordable price. We began by asking acclaimed German industrial designer Stefan Brodbeck to work with us on creating an office chair that would rewrite the office chair rules. It should be great looking yet comfortable, and solid yet fun. Then we asked our world-class team here in SA – product development, manufacturing, marketing, logistics, quality control, environmental standards and everyone else involved – to manufacture it to the highest international standards. The result is POP, the exciting range of great looking, very comfortable and amazingly affordable chairs from AngelShack. For more information, contact AngelShack: +27 (0)11 262 5811 info@angelshack.co.za | www.angelshack.com
10
BusinessBrief
October/November 2016
TRAVEL & LEISURE
The
corporate traveller
By Robert Nienaber | Chief Marketing Officer | robert@capetowncityaccommodation.com | @cyaccommodation
C
heck-ins can be a nightmare for weary travellers with big business presentations on their minds. To ease the admin, hospitality reception staff should prepare in advance, for expected guests, by knowing what information they need to request (preferred breakfasting time, wake-up calls, etc.) and ensuring that paperwork is printed out and pens are handy. Rewarding guests Making a point of remembering and rewarding regular corporate guests – being greeted by name, a complimentary bottle of wine or a newspaper/magazine they particularly enjoy in their room on arrival will add to the satisfaction of their stay and encourage them to book at the same establishment in future, as well as to recommend your establishment to others who also travel for work. Cuisine The restaurant should offer a service that is suitable for those attending external meetings all day. Those in town for work may need to entertain a client or two, coffee, drinks and lunch/dinner service provided should be slick enough for such instances. For those eating alone in the evenings, the staff should be welcoming and chatty It can be tough for such guests to eat alone, in silence, if the staff come across as particularly surly or unapproachable. Crawling for access In the rooms themselves, the business traveller’s needs should be considered, with a desk and an accompanying chair at a suitably comfortable or adjustable height. Plugging in cellphones and laptops should be done without having to crawl under beds and other furniture. Are a variety of plugs should be provided. Lasting impact Hospitality establishments need to ask themselves these questions.
Are there brochures on leisure activities in reception and the rooms? Do service staff have a thorough knowledge of the best sports and cultural activities; the nearest shopping mall or movie theatre? Regular training should be provided to service and reception staff to ensure that corporate guests are able to maximise their leisure time at your establishment, as well as in the fine art of discretion for celebrity or high-profile guests. They’ll appreciate the privacy offered; often, all this takes is a little sensible thought and consideration i.e. giving a guest, who would prefer not to be disturbed, access to the hotel gym outside of peak hours. Lastly, the establishment should try book at his own establishment to see how seamless the process or experience is from the guests’ point of view? Rooms also need to be serviced appropriately should a guest book in for a longer-than-average stay. And employees should be notified about long-stay guests at staff meetings, so that their preferences and special requests can be attended to. Return business Accommodation establishments need to ensure that staff have an awareness of the different needs of their corporate and leisure travellers, so that they can adapt their service as required. Essentially, there are many rewards if an establishment can adapt in this way. Corporate travellers tend to be on the move more frequently, so it’s possible to garner more return business; the corporate market also tends to be less price sensitive. Corporate travellers are usually willing (and able!) to pay slightly more for a good and reliable service and product, so don’t underestimate them. n
TRAVEL & LEISURE
BusinessBrief
11
October/November 2016
Turbine Boutique Hotel & Spa
O
ne of the most unusual hotels in South Africa didn’t used to be a hotel at all. It used to be a power station, and you can soak up its steamy history as you walk past massive turbines on the balcony and marvel at the intriguing steel pillars and pipes that now form its funky décor.
The Turbine Hotel & Spa in Knysna is a photographer’s paradise, with all the rooms shaped around its beautifully restored industrial past. If quirky is your thing, this old power plant is paradise. The industrial backdrop of bare bricks and huge whitewashed walls is softened by a sense of playfulness in the décor. The machinery and pipes are painted in vivid red, blue, green and orange, matched by dining chairs in different bright colours. All sorts of unusual instruments and contraptions are dotted around the hotel and will keep engineers, scientists and curious visitors fascinated for hours. The hotel on Thesen Island is part of a Heritage Walk, with its four imposing steam towers visible from far away. Yet there’s nothing old fashioned about it now, with modern 5-star facilities including the Amani African Spa, the excellent Island Café, a pool with a great view on the wooden deck and a variety of activities to keep you entertained. The 24 bedrooms are each individually decorated and styled in tribute to Knysna’s rich heritage - like the Schooner room, with paintings of ships on the walls, polished wooden floorboards, a seafaring chest and a mirror that looks like a porthole. Out of season you’re very likely to find the locals in the cozy tapas bar, enjoying a beer or a wine with a plate of calamari and chips, because this unique hotel has built up a loyal
local following who appreciate its fine food and welcoming ambience. For business visitors there are two state-of-the art conference/function rooms – each can seat 20 boardroom and 40 cinema style which are inter-leading for larger functions. Both are equipped with the latest technology, including fibre based Wi-Fi and are fully air-conditioned.. The Turbine Hotel offers an outstanding venue for meetings, conferences and incentive getaways for discerning executives: while art lovers can admire or buy the paintings on display in the foyer and courtyard, provided by the Knysna Fine Art Gallery. The Turbine Hotel & Spa was created during a massive project to turn Thesen Island into a residential marina with an upmarket shopping area. It stands in Knysna Lagoon, which is part of South Africa’s famous Garden Route. Watersports and exploring are the main attractions in the area, and hotel guests can kayak through the canals that criss-cross the island, or enjoy a sunset cruise in the lagoon. Other options include a hike into the ancient and beautiful Knysna Forest, a gentle cycle ride around the area or paragliding from the mountains across the beautiful bay. n Reservations: +27 (0)44 302 5746 reservations@turbinehotel.co.za www.turbinehotel.co.za
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TRAVEL & LEISURE
AVANI Victoria Falls Resort
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n David Livingstone’s footprints, only moments away from the dramatic torrent of the Victoria Falls in Zambia, is the AVANI Victoria Falls Resort.
The architecture is adobe style and the simplistic finishes highlight bright mosaics, ethnic wall stencils, timber and plaster ceilings, Zambian artworks and accessories. It is constructed in a series of eight buildings, consisting of the guest rooms, a central pavilion of restaurants and a fabulous convention centre. Guests can enjoy the wildlife wandering around the property from the beautiful outdoor venues. Guest room amenities include air-conditioning, satellite TV, mini-safe and telephone. Ice machines are conveniently located near to the rooms. The central reception area houses a family-friendly, highquality buffet restaurant, pool deck, bar and a lively, alfresco grill and entertainment area. The poolside restaurant offers an Al fresco menu of cool staples from prego rolls and snack baskets, to signature favourites like the Steak Portuguese – a garlic beef rump - or the Zambezi Cheese Burger made with pure grain-fed beef topped with all the trimmings. Guests rave about the cocktail menu. The Kalambo Jagermonster tag lined “It will bring out the animal in you” is a hoot, while the whiskey-based Luyando Slap is sure to get you giggling. Also on offer is live entertainment during dinner at the pool deck. The Theatre of Food buffet restaurant serves a daily
breakfast and dinner buffet. The menu changes often in order to keep it fresh and surprising. The hotel’s Convention Centre offers a superior conference facility. The centre can be sub-divided into separate areas and offers facilities for up to 450 people. The Convention Centre, richly decorated in an African style, is complemented by an authentic African Boma, designed for outdoor conferences and functions, and accommodating up to 450 seated guests. A children’s facility, which is every child’s idea of holiday heaven, is situated close to the hotel, giving parents plenty of free time to discover all the area’s attractions. About AVANI Hotels & Resorts AVANI Hotels & Resorts was launched in 2011 to complement Minor Hotels’ five star Anantara brand. AVANI offers relaxed comfort and contemporary style in city and resort destinations to guests who value the details that matter. The brand currently has 13 properties in operation in Thailand, Sri Lanka, Vietnam, Malaysia, the Seychelles, Mozambique, Botswana, Lesotho, Namibia and Zambia, with a pipeline of further openings in Asia, the Indian Ocean and the Middle East. MH has plans to grow the brand across Asia, India and the Indian Ocean and in the Middle East. W: avanihotels.com n Reservations: +27 0(10) 003 8977 http://www.minorhotels.com/en/avani/victoria-falls reservations.africa@minorhotels.com
Tourism set for growth?
S
outh Africa’s hotel industry is set for steady growth in the next five years driven by an increase in the number of foreign visitors into the African continent. Although the South African economy has weakened considerably, the overall outlook for hotels in SA is expected to remain positive.
FAST AND CONVENIENT
Relaxation on visa regulations The devaluation of the rand and relaxation of certain visa regulations has had a positive impact on the tourism industry in SA, making the country a more attractive tourism destination. This has also had a positive impact on the number of foreign visitors to SA over the past six months. The new visa regulations had a sharp impact on the SA tourism industry. After growing at an 8% compound annual rate between 2009 and 2013, the number of foreign overnight visitors rose only 0.2% in 2014 before falling 6.8% in 2015 – the biggest decline in six years, according to official statistics. China and India A key factor cited as contributing to the decline of visits from China and India was the requirement that foreign travellers appear in person at South African embassies to have their biometric information taken. However, some countries such as India, Russia and China have very few South African visa processing centres. In October 2015, some of these regulations were eased and the Department of Home Affairs is considering introducing further amendments. UK visits Of non-African countries, the UK is still the largest source of visitors to SA at 407 486 in 2015, an increase of 1.4%. It was one of the few countries from where visitors increased in 2015, but that gain did not offset the overall 6.8% decline from 2014. Visits from the US dipped below 300 000 in 2015, down 3.9% from 2014. Germany was down 6.5% in 2015, while Australia fell 10.8%. Outlook The tourism industry continues to be one of the fastest growing sectors of Africa’s economy. In spite of recent challenges, including the change in visa regulations in SA and the contraction of the global economy, the sector has significant potential to create jobs and uplift inclusive economic growth across the continent. n
By Pietro Calicchio | Industry leader of Hospitality & Gambling | PwC Southern Africa pietro.calicchio@za.pwc.com
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YOUR WEALTH It is critical, in the light of the current local and global economic and political climates, to grow and protect one’s wealth, in order to take care of ourselves and our families.
W
ith this in mind, in order for investors to accumulate wealth, the following is required:
• A Target • A Strategy • An Implementation Plan
Investors then need to carefully assess their profile, in terms of the following: • Current Assets and Liabilities • Current Earnings • Risk Appetite • Required Rate of Return • Desired Lifestyle Requirements Understanding and evaluating current and future requirements, in relation to expectations, will enable the development of a strategy that will create and grow wealth and assist in avoiding the pitfalls of wealth erosion. BACKDROP It is interesting to note the state of HNWIs (High Net Wealth Individuals) in Africa, as summarised in the 2016 New World Wealth (NWW) Report, are: • Mauritians are the wealthiest individuals in Africa with US$21,700 in wealth per person, whilst people in the Zimbabwe are the poorest with US$200 per person • There are approximately 165,000 HNWIs living in Africa, with combined wealth holdings of US$860 billion • Approximately US$125 billion of African HNWI wealth is tied up with wealth management companies • South Africa (mainly Johannesburg) is the hub for African private banking with US$72 billion in assets under management • African HNWIs (outside South Africa) tend to keep their funds in traditional holding centers such as the UK, the Channel Islands and Switzerland. Dubai is another popular destination, especially for North
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• I t is estimated the African private banking market will grow by 7% per annum over the next 10 years • The most promising emerging African markets for private banking are Ghana and Kenya. - In Africa, around US$28 billion is tied up in venture capital companies and foundations that are linked to the wealthy. Many HNWIs use these vehicles as a way to transfer money to the next generation. PURPOSE According to Chris Lemmon, Head: Private Clients and Asset Management at Sasfin Wealth, the primary objective in wealth management, is to minimise risk and achieve superior returns, which is based on the following investment philosophy: •P ower of Time whereby the longer the investment horizon, the higher the returns, where the investment strategy is sustainable and the investment process robust. •O pportunities will always exist based on the thematic approach to investing that provides insight into current and future market trends and the potential impact these may have on investment returns. •G lobal investing: In today’s globalised world, one can identify the best investment opportunities irrespective of their geographical location in order to deliver optimal risk adjusted returns. •B eing adaptive: Be capable of simultaneously capturing alpha returns in several industries, irrespective of business, economic and market cycle. This ensures sustainable growth. •N o substitute for quality: A good investment portfolio should have at its core investments in companies recognised as leaders in their industry. These companies provide stability and are resilient irrespective of market cycle. •O ne size does not fit all: By truly understanding your objectives, constraints and dreams when implementing an appropriate investment strategy. STRUCTURING A vital exercise that should be done before one starts to generate wealth, is to consider which structure would best serve your objectives. Selecting the wrong structure from the outset could prove costly in future when taxes and transfer costs
are incurred to transfer your wealth into the correct structure. Trusts can serve as useful vehicles if your objectives are to generate wealth for retention over the long term and to provide for your family for generations to come. TRUSTS According to Tony Barrett, Financial Advisory Wealth Manager at FNB, trusts are there to limit the ability of taxpayers to transfer wealth from one generation to the next, without being subject to tax. High net worth individuals are essentially being caught between the proverbial rock and a hard place. Do they retain investment and growth assets in their own name and let their estate pay duty on the market value of these assets at death, but during their lifetime benefit from a more favourable capital gains dispensation? Alternatively, they can donate or lend assets to a trust, and have them excluded from their estate, but pay a higher and more punitive capital gains or donations tax. There is no easy answer to this predicament that faces the wealthy, and each case and family situation should be examined on its own facts and merits. The only good decision is to take professional financial advice and have a strategy that meets the needs of the family and ticks all the regulatory boxes. The only certainty is that whatever option is taken, the new dispensation promises to be more taxing than the current one. WILLS Carin Grobbelaar, Associate Director, Grant Thornton, says that your last Will ensures that your remaining assets are dealt with as you wanted them to be. She advises not to throw it all away by cutting corners, or not planning carefully. When updating your Last Will & Testament: •C heck your executor and plan ahead - It is very important to appoint an executor who is known and trusted, to deal with affairs in the event of death. One of the executors appointed should be a qualified Chartered Accountant or member of a professional firm and the executor should not be a family member. •C onsider how emigration affects your wishes - If either the testator or beneficiary in the last Will and Testament is contemplating emigration, this could have far-reaching consequences that affect the Will.
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In this event, the testator or beneficiary will need to comply with requirements laid out by the Financial Surveillance Department at the South African Reserve Bank (SARB) at the appropriate time. •C heck that your executor’s fees are within legal limits and that the Will is valid - It is important to note that there is a tariff of fees outlined by the Master of the High Court, and he has the power to moderate the fees for estate executors. •K eep your Will safe, but accessible - This is so as not to delay the expeditious reporting and administration of a deceased’s estate. Willie Fourie, Head of Estate and Trust Services at PSG adds that Wills must be very carefully worded to avoid misunderstandings and misinterpretation, particularly when leaving property behind, so it is important to avoid unclear property provisions. Use plain language to avoid ambiguous words and phrases so that your true intention is reflected in your Will. Limit the use of legal terminology to an absolute minimum, and only to instances in which you or your Will drafter has a thorough knowledge of the practical implications and legal consequences. INVEST WHERE? Steven Nathan, CEO of 10X Investments believes that investors can learn to identify asset classes that appear cheap or expensive, but this does not mean they can predict the turns. Markets invariably run longer and rally sooner than we expect; yet missing the turns makes it almost impossible to match the average market return,
let alone exceed it. Studies in the US have compared net fund returns with the average net investor returns; investors typically lag by around 3% (percentage points) pa, because they believe they can time markets. These investors would have been better served with a simple ‘buy and hold’ strategy. Rather than speculate on or react to volatility, investors should focus on what they can control. That, in essence, is their asset allocation and their investment costs. They should base their asset allocation (mix of bonds, shares and cash) on their investment time horizon, not on which asset class appears cheap or expensive at the moment. They should find the most effective and cheapest way to own these asset classes, and diversify adequately. This will ensure they capture the full market return over the period of their investment term. In all probability, this will lead to a much better outcome than basing investment decisions on what has just happened in the market. Investors should not fear the stock market because it is the only reliable way to create long-term wealth. Despite intermittent market corrections and crashes, R1 invested in the South African share market in 1956 would have grown to R135 by the end of 2015, in after-inflation terms. R1 invested in bond or cash would be worth less than R3. He adds that the path to success is remarkably simple: invest in a high equity fund, minimise fees and stay the course. Expect volatility along the way, knowing that it is safe, normal but unpredictable. Only short-term share investors – otherwise known as speculators – need fear volatility.
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Don’t believe that ‘high equity’ means high risk and ‘low equity’ means low risk. For long-term investors that is simply not true. In almost every 5-year period or longer since 1900, a high equity fund would have delivered a higher return than a low equity fund. This covers all types of market conditions, meaning that equities outperformed even during periods that include bear markets.
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challenges and opportunities, investors will be better positioned to navigate the complexity of the financial markets. Knowledge is not only power, but it’s also the foundation for intelligent, well-considered decisions when it comes to financial planning and investing.
The correct statement is that a high equity portfolio presents less risk to a long-term investor than a low equity portfolio; and a low equity portfolio presents higher risk.
Financial planning and investing should always be managed objectively instead of relying on short-term tactics. This helps investors avoid the trap of letting emotions drive decisions, as could have easily been the case with the local government elections, and keeps long-term plans on track and in line with an individual’s major financial goals.
Investors will survive a market crash, if they just follow through. Even the 2008 Global Financial Crash, which saw stock markets more than halve, proved harmless for sensible long-term investors who stayed the course. It took less than 12 months for most high equity funds to recover their losses from those crises. Only investors who ran for the exit were hurt.
RISK APPETITE When constructing your portfolio, you must decide what your benchmark is before you invest, and determine your investment horizon and risk appetite. These will be largely determined by your investment needs and objectives, comments Nesan Nair, Portfolio Manager, Sasfin Wealth.
CURRENCY VOLATILITY With the currencies responding severely due to renewed political uncertainty, Nathan notes it will affect everyone differently, depending on their assets and liabilities. Investors who have mainly offshore assets (income and investments) and local liabilities (debt, living expenses) will benefit from a weaker local currency; those who have mainly local assets and foreign liabilities will be poorer.
Secondly, ensure that you are sufficiently diversified – having a portfolio of 15 stocks is going to be a lot less volatile than say, 5 stocks. At the same time, be careful not to over diversify. If you have too many stocks, they tend to cancel out each other’s returns and all you end up is the market or benchmark returns when you will be typically be looking to achieve above-market returns.
POWER OF KNOWLEDGE It is absolutely critical that wealth managers and investors alike continually keep abreast of any developments and trends that take place in the local and international markets, says Carol Axten, CEO at Wells Faber She explains that by understanding the various
A rule of thumb is that a portfolio should consist of between 15 to 30 stocks – this should provide sufficient diversification reducing overall portfolio volatility without necessarily diluting the overall portfolio return with offsetting returns. RISK OF WRONG According to Nick Curtin, Investor Relationship Manager at Foord Asset Management, the most undesirable outcome for any investor must be loss from which there
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is no prospect of recovery. The investment landscape is full of examples: corporate bankruptcies, bond defaults, rights issues needed to recapitalise failing businesses, dilution from share options, corporate governance failures leading to share suspension or delisting, accounting failures grossly overstating reported earnings numbers, Ponzi schemes and other frauds, and many more. By successfully managing the risk of being wrong, one mitigates the risk of permanent capital loss. As a result, it is possible over longer time periods to generate returns that are significantly in excess of a market index constructed without reference to investment risk. One of the principal ways to manage the risk of being wrong diversification, which is the process of including different investments in a portfolio with negative correlations to offset or minimise investment risks. DIVERSIFY Currency volatility over the past year in particular is an important reminder of the importance of diversification; since markets seldom move in one direction and can be unpredictable in the shorter term, declares Izak Odendaal, Multi-Manager at Old Mutual. When the currency weakens, offshore investments and currencyhedge shares tend to benefit. When the currency strengthens, interest rate sensitive assets such as bonds, listed property and bank shares do well. It also remains true that over longer investment horizons, short-term volatility as experienced recently,
fades away. The key for investors remains to have a portfolio that is appropriately diversified, built around their eventual goal and the period over which they want to meet that goal. Once in place, the most important thing for investors (but often the most difficult), is to avoid chopping and changing their portfolio based on an emotional response to headlines. OFFSHORE As part of a strategy that maximises retirement savings and wealth creation, offshore investing is increasingly being advocated by investment professionals. The reasons for offshore investment are well sung and focus on the arguments of risk reduction and return optimisation. International diversification across different markets is at the heart of reducing risk concentration and also gives an investor access to new geographies, currencies, asset classes and industries, states Craig Sher, Head of Research and Development at Discovery Invest. For those wanting to explore international investment waters, there are locally registered unit trust funds. Depending on their design, they can invest a percentage or even all the fund into offshore companies and other assets. In these types of investments, investors should be aware that returns will in fact be coming from two key drivers – the real performance of the underlying foreign investment, as well as movements in the local currency.
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Another way of investing offshore is through ‘direct’ investing using foreign currency. Recent relaxation of exchange control and the ease of opening an offshore bank account using a local partner, direct offshore investing has become highly accessible. REAL ESTATE Real estate investment can provide a cornerstone on which an investor can build their wealth, provided of course that the prime principles of property purchasing are adhered to, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. Building a solid investment property portfolio takes time and a great deal of research. Savvy real estate investors spend much of their time gaining as much knowledge about
the local property market and trends as possible. This is because one property purchase can vary greatly from another, depending on the phase of the market, time of year and the property’s location to name a few aspects. It is vital to know exactly which phase the market is in and how this could impact on the return on the investment. The property market follows a cyclical pattern of boom and bust periods, and there is inevitability as to what will happen next. Goslett explains that a major factor that can influence the returns that an investor can expect is the property’s location. It is vital that the investor purchase in an area that they know will continue to perform well over time. Although there is no guarantee, looking into an area’s past performance as well
as at any future planned projects or developments will provide the investor with a glimpse into the area’s potential. Location is a key aspect to any real estate purchase. ART AND VALUABLES “All art is immoral,” said Oscar Wilde. He might have added that all art is emotional, including the buying and selling of it. Art is a very interesting reflection of wealth. Wealthy people acquire art for a myriad of reasons, ranging from the aesthetic pleasure, emotive connection with the subject, through to its potential as a wealth store, says Clive Sergay, Investment Art Dealer and Managing Partner at the White House Gallery. In a report entitled “Profit or Pleasure? Exploring the Motivations Behind Treasure Trends”, only a
FEATURE
10th of those questioned said they bought art purely as an investment, whereas 75% cited enjoyment as the key. The study is based on interviews with 2000 rich people in 17 countries, it engenders feelings of victory, cultural superiority and social distinction. Some say that it even fills a spiritual void. The term most commonly used by collectors, however, is that buying art gives them a ‘high’. Wealthy people are also driven to acquire art, a lot more than other collectables, as art can be shared. For example, a fine painting in your home can be shared with the rest of your family. They look at it, see it and appreciate it, says Sergay. If you collect stamps, for instance, it is private – the same can be said about coins or books. Although art, should be an investment in pleasure as opposed to finance - if one buys a highly desirable piece of art - it will most probably be a good investment and it has proven to be so over the years.
A lot of the art market is very sophisticated now. For instance, you can follow trends, and make a good investment decision – If you look at SA local market, the most expensive are Irma Stern, Pierneef, Alexis Preller and then William Kentridge – the difference between the first three and fourth is that the first three would solely be linked to a South African art collection. So, if you want to acquire a piece of art locally and want a great international investment then you could choose William Kentridge. Also, when investing in local market – Irma Stern presently offers the best return concludes Sergay. The risk of collecting ‘rare’ and ‘valuable’ items in the belief that one day that may be the answer to future wealth, is that their eventual sale will depend on social trends and the availability of collectors in like items, states David Crossley CFP® and Business Manager at BDO Wealth Advisers at BDO SA. One must be careful of investment ‘trends’ and instead go for investment ‘universality’. A good
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example is in the form of china figurines, once the ‘must have’ ornaments for people decorating their houses with collectable china. Nowadays, decorations are more contemporary and these once valuable china collectables either remind us of days spent with grandparents or they are gathering dust on the shelves of antique dealers. Some collectable items are ageless, such as certain makes of classic cars, which have enjoyed a massive bull market in Europe and the North Americas. Be sure that if you decide to invest in this area, that you select the right models. There have been dips in this market in the past, but the correct make – such as an Aston Martin DB5 (Not a DB6 – worth half the price), should always command a premium. However, any correct classic car investment will require a huge capital outlay and time to realise this investment. An additional bonus (and cost) of this sort of investment is to buy the correct car with a Provenance – a Ferrari owned by
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John Lennon at one time, will command more money than one owned by John Smith! PROTECTION Life cover Most people’s financial goals lean towards building wealth however the real question to ask is “What worth does this wealth have, if it is not protected?”, says Laurence Hillman, Managing Director at 1Life. Protecting your wealth means identifying key insurance policies that will protect you and your family’s finances, should something happen to you. As a starting point, it is important to find a reputable provider, one that is able to undertake and identify your specific needs, based on your current financial status. It’s also important to start planning your wealth from early on in life, as you are better able to reap the longterm benefits of financial protection. In addition, your cover should be tailored to you, ensuring that it provides the financial protection you need, if not only for death, but aspects such as disability or critical illness. There are insurers out there who offer one comprehensive policy, which includes two or more of the above mentioned products, such as dread disease cover – tailored to your needs - disability cover, funeral cover, as well as life cover – all based on your specific lifestyle @bbrief1
CONTRIBUTORS
Aon South Africa +27 (0)11 944 7000
PSG +27 (0)11 721 0600
BDO SA +27 (0)11 488 1700
RE/MAX +27 (0)21 700 2000
Discovery Invest +27 (0)860 67 5777
Sasfin Wealth +27 (0)11 445 8088
FNB Financial Advisory +27 (0)87 343 0795
Wells Faber +27 (0)21 818 5000
Foord Asset Management +27 (0)21 532 6988
White House Gallery +27 (0)11 268 2115
Grant Thornton Winelands +27 (0)10 590 7240
10X Investments +27 (0)21 412 1010
Old Mutual Private Wealth Management +27 (0)11 831 6460
1Life +27 (0)860 10 5197
requirements and income. Not only is this an effective means to manage your wealth, and your budget, but it will give you and your family the peace of mind that you are correctly covered for the unexpected – all through one, managed policy. Asset cover The most expensive artwork ever sold, fetched a staggering $300 million in 2015 for Paul Gauguin’s ‘When will you marry?’, which cast an ascetic spotlight on the growing value of art and collectables that are seemingly recession proof, says Mandy Barrett, Marketing and Sales Manager at Aon South Africa. The South African art and collectables market is also showing a marked increase in value that can be attributed to a growing pool of quality artists that is supported by an increasing number of buyers that are willing to pay a premium for quality work. There are however many costs and responsibilities that come with owning art and one of these costs is insurance. There is a wide disparity between insuring everyday household items and insuring art, collectables and antiques. In most cases prestige art collections are unique and cannot be replaced, which lends itself to a different set of criteria when it comes to assessing the insurable value of these items. Given the complexity around correctly scoped insurance covers for these appreciating assets, it is within the owner’s best interest to obtain a professional specialist valuation from where they can agree on an informed and current value with their insurer. The insurer should be a specialist insurer that is well positioned within the art and antique community in addition to being bolstered by the knowledge and expertise of an esteemed panel of local and international restorers. The insurer should leverage off expert valuators across the globe that is supported by a substantial information network, enabling it to professionally manage the insurance needs of your appreciating asset. BUILD YOUR LEGACY Being wealthy is more than merely being rich. To be rich is only to weather the storm, but to be wealthy is to be above the turmoil with resources that reach beyond the immediate. With careful planning, implementation and management, true wealth is achievable. n
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VIEWPOINT
Development a social imperative By George Asante | Managing Director, Head of Markets, Trading ex-SA | Barclays Africa Group George.Asante@barclayscorp.com | @BarclaysAfrica The development of Africa’s market is a social imperative and should be placed on the national development agendas of all African nations to accelerate the mobilisation of internal sources of funding.
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arket development has become more important given the current wave of regulations and economic downturn in advanced markets, which are having a negative impact on countries with significant reliance on external capital. In addition, the recent Brexit vote means increased uncertainty, and with most of Africa being a frontier market, less global capital will be allocated during this time of market turbulence. The African Development Bank (AfDB) stated last year that Africa requires additional financing of $50 billion per year to bridge its infrastructure gap. Infrastructure Infrastructure – both social and economic - is critical in linking individuals and economic agents to opportunities, and it acts as a catalyst to improve economy-wide productivity, efficiency and inclusive growth. Until now, the continent has relied on traditional external funding and to a limited extent on internal sources for its infrastructure development. This is because, with the exception of South Africa, most of the various African markets have varying but very shallow financial markets, which contribute only a small portion of its funding needs. Right framework With the right framework in place, the continent could rely on local market resources from investors to fund a significant portion of the $50 billion infrastructure funding gap. While policy makers, market players and central banks on the continent have a strong desire to harness this potential, very little has been realised so far. The repercussions of underdeveloped financial markets in Africa are extensive. Therefore, a joint approach to develop Africa’s markets by the following three sectors is critical. Government must prioritise market development Critical support, especially by the Ministry of Finance
and the legislature with respect to passing relevant laws, transparency of policies and ensuring market-friendly fiscal policy prescriptions, is needed. This must be supported by the right monetary policy that benefits the overall market in all its segments. Sustained macroeconomic stability is essential for orderly growth, and bad fiscal discipline, which results in huge budget deficits, is not conducive to the development of the market because it breeds excessive rollover risks, increases transaction costs, crowds out the private sector and creates other structural challenges for the market. Having said that, a few governments – such as Kenya, Mauritius and Ghana – have been noted for their commendable efforts in setting the right tone for the market to follow. Globally, financial Institutions subscribe to standard contractual frameworks that govern how they transact on certain defined cash and derivatives transactions. These frameworks provide security and guarantees that entities entering into them will honour whenever they are required to. Reduce risk to zero Consideration should also be given to rolling out Continuous Link Settlement (CLS) bank facilities in the market to eliminate settlement risk. The CLS banking facility, which is available in most developed markets including South Africa, ensures that foreign exchange transactions are settled only when both parties to a trade have their cash ready for settlement thus eliminating the risk of defaulting on payment dates. If the right collateral framework (known as Credit Support Annex or CSA) and a CLS facility are in place, the risk of trading could actually be reduced to zero, meaning that counterparts could transact without having to worry about the potential for others to default. These legal and infrastructure frameworks can have an incredible impact on the ease of trading – something that African markets are missing presently. n
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Professional bodies drive professionalism? By Mark Orpen | CEO | Institute of People Development | mark.orpen@peopledev.co.za | @ipd_gizellem It is the codes of conduct and ethical practices of an individual that define the profession. As such, the intervention of professional bodies builds the individual, in turn making the industry a more professional one.
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he Business Dictionary defines a professional body as a Trade association of an organised profession that certifies successful completion of its requirements, and thereupon awards a license and bestows a recognised appellation (designation). Professional bodies usually prescribe a discretionary or mandatory code of conduct for their members. The question is – do these associations add value for their members? Professional bodies build Professionalism is incredibly important in the skills development (SD) and learning and development (L&D) environment, however, while the key to quality and efficiency is professionalism, it is the codes of conduct and ethical practices of an individual that define the profession. As such, the intervention of professional bodies builds the individual, in turn making the industry a more professional one. In the SD and L&D sectors, these bodies play a pivotal role in developing a proficient and more-than-adequately skilled labour force. Professional bodies serve members by creating a platform for real, valuable, and practical value exchange. From knowledge sharing, to creating access to resources, benchmarking best practice, and creating communities of expert practice, their input is invaluable. Considering membership When considering membership to a relevant professional body - such as the Marketing Association of South Africa (MA[SA]), or the SA Board for People Practices (SABPP), two options are usually available; corporate membership and individual membership. Individuals decide whether they will honour the profession by their accountability to exemplary practices. Companies that pledge commitment to these practices through corporate membership present themselves as an extension of either the professional body, or the individual, of which the roles need to be well defined. Often companies simply pay for their employees’ professional membership fees.
Access to knowledge The advantages of a membership include the resultant access to current knowledge and practices, through continuous professional development (CPD). When the perceived value of the networking, information sharing and learning outcomes exceeds the cost to participate, membership is strengthened. As is the case with most membership platforms, some disadvantages do occur. Most associations become tested as platforms where individuals influence others for their personal aims. The leadership of an association (or professional body) remains the critical success factor – along with healthy communication, a commitment to quality and a culture of sharing and learning. Credentials When considering membership to a professional body, potential members should check the professional body’s credentials. The South African Qualifications Authority (SAQA) accredits professional bodies and measures their performance. Successful professional bodies manage member records, implement online CPD and events that synchronise real time, provide cloud access to members to view their professional development and status, and deploy established and reliable technologies. They also ensure that learning is conducted through reputable institutions. n
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INCENTIVES for whistle blowers? By Liezl Groenewald | Manager: Organisational Ethics Development | Ethics Institute | liezl@ethicssa.org | @EthicsInst Offering rewards for whistleblowing can yield results, but should not replace the creation of an ethical culture. Should South Africa, with its high levels of corruption, be considering a similar approach?
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anada’s Ontario Securities Commission recently announced that it would begin paying incentives to whistle blowers. The scheme allows for payments of up to $1.5 million, or more if high amounts are collected. The US Securities and Exchange Commission (SEC) is the flag-bearer for this approach, paying famously high rewards to those uncovering corporate wrongdoing. US payouts This approach has generated results for the United States. Complex frauds have been uncovered, and the payouts help to compensate whistle blowers for the fact that many lose their jobs or find their careers in free-fall after coming forward. For example, former Enron Vice-President Sherron Watkins, who helped uncover accounting irregularities at the company 14 years ago, has been unable to obtain a corporate job since. UK no payouts However, British regulators decided not to go this route. They argue that only a small number of whistle blowers – perhaps as low as 1% – actually qualify for a payout; no such protection is afforded to those whose information does not result in a concrete outcome, but who may still suffer negative consequences. Decline in reporting misconduct in SA South Africa is generally credited with an exemplary protection framework for whistle blowers, anchored by the Protected Disclosures Act. However, The Ethics Institute’s South African Business Ethics Survey 2016 shows a decline in the number of South African employees who report observed misconduct. In 2016, only 48% of those who observed misconduct reported it, down from 64% in 2013 and 66% in 2009. The most prominent reasons for not reporting misconduct are a fear of victimisation at work (36%) and a belief that the company would take no action (32%). Severe consequences or even death Locally, there have been a number of high-profile instances where whistle blowers have suffered severe consequences or even death. One such case was Moss Phakoe, a councillor
in Rustenburg who was gunned down after giving evidence of municipal corruption. Another is Mpumalanga politician, Jimmy Mohlala, who was shot dead after blowing the whistle on corruption linked to the building of a 2010 FIFA World Cup Soccer venue, the Mbombela stadium in Nelspruit. Another factor for the decline in reporting misconduct could be that the profile of perpetrators has shifted, with 41% categorised as senior managers, up from 17% in 2009, according to PwC. It seems that employees are less willing to blow the whistle on their seniors, despite the protection afforded by internal whistle-blowing policies and the Protected Disclosures Act, and the fact that most corporates have a hotline run by a third party where reports can be made anonymously. Justification for incentive? This could be justification for considering some sort of incentive to encourage whistle blowing. At the same time, though, care must be taken to craft the approach in such a way that it does not undercut efforts to build an ethical culture in our businesses and more generally. An incentive scheme could play a valuable role in foregrounding ethical behaviour, and promoting the concept that ethical actions yield positive results. It may also help to reverse implicit cultures that prioritise loyalty to fellow workers above loyalty to the organisation. Protected Disclosures Act Based on international experience as well as the requirements of the Protected Disclosures Act, it’s important to emphasise that whistle blowers should only be allowed to contact regulators, other authorities or the media after having exhausted internal reporting avenues. Not only could it strengthen the ethical culture within corporates, but employees will be protected by the Act. The key to halting corruption is to create a situation in which acting ethically is the default behaviour pattern. Clearly, as a business community and a nation, we are far from reaching that goal—some form of incentive for whistle blowers might therefore have a role to play. n
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Yin and Yang of King IV By Loshni Naidoo | Director: sustainability and integrated reporting | Grant Thornton | Loshni.naidoo@za.gt.com | @GrantThorntonZA
The King IV Report on Corporate Governance provides an ideal opportunity for creativity and innovation.
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he King IV Report on Corporate Governance while introducing greater complexity for organisations and the auditing profession, provides an ideal opportunity for creativity and innovation - not usually synonymous with accountants. The latest iteration of the guidelines on how companies are expected to conduct themselves places a far greater emphasis on asking companies to approach running their businesses from an integrated thinking perspective, rather than ticking off actions to demonstrate compliance. Blurring lines This therefore holds the potential to blur lines that may have been more clear-cut under the King III principles that had focused quite heavily on demonstrating compliance. While public companies would undoubtedly be able to adapt to this new environment, as they have the resources to implement the King IV recommendations, the question of cultural change within organisations is probably the bigger challenge. The changes also pose a challenge to the audit firms that have traditionally restricted the scope of their work only to the accuracy of financial statements. What is clear from King IV is that an organisation’s credibility and integrity no longer hinge solely on the financial reports. Missing out on the big picture Audits - both financial and nonfinancial - have always been backward looking, focusing on a relatively limited view of sometimes isolated aspects of the business. As a result, they may miss out on seeing the big picture. With the King IV now also requiring audits of nonfinancial information to be wider in nature.
Future orientated Users of annual reports are looking for forward-looking information and require assurance that this information is accurate. King IV appears to align itself to this view with one of the recommended practices asking that the audit committee consider the assurance requirements of future-orientated non-financial information. This change in skills applies equally to audit firms’ clients, who will need to adapt to understanding the implications of applying the principles, and not merely focusing on ticking a box to indicate they complied. Opportunity to innovate This presents the audit profession with an amazing opportunity to innovate - working together with the standard-setting bodies to develop the appropriate standards for auditing integrated reports that not just tick the ‘audit box’, but add value to the businesses; and bringing diverse teams together with the ability to support an ‘integrated think’ approach to audits so that teams don’t get lost in the detail and miss the big picture. The risk and opportunity committee proposed in King IV is one such example that should find ready acceptance within all organisations. Introducing the business opportunities into the governance framework makes this activity more visible for the organisation that could lead to more opportunities for growth. The Future of Audit report also highlights that an audit can no longer be ‘one size fits all’. Users are saying although a quality audit is required, it must not place any additional burdens on smaller companies. King IV understands this dilemma all too well. They have heard that smaller companies and the public sector have many challenges and imperatives and as such have set out guidelines for local government and state-owned entities, non-profit organisations, retirement funds, and small and medium enterprises. This presents an ideal opportunity for the audit profession to take a leaf out of the King IV playbook, to engage with these smaller companies to understand how best to provide real value-adding audit in a costeffective manner without compromising quality. According to the Institute of Directors Southern Africa (IODSA), it is expected that the new King IV Report will only be completed in the second half of 2016. Providing for a two-year period in respect of the drafting process and another year grace period to allow organisations to implement, King IV is expected to become effective from approximately the middle of 2017. n
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MANAGING volatility By Monte Maritz | Associate | Oliver Wight Associate | monte.maritz@oliverwight.com
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anaging volatility is critical to business success in any market, but especially so in developing markets where the business environment is often unstable, or can change quickly. Deciding on the right strategy to align the business model to the market is critical. However, a business also requires the ability to respond effectively to external change, while eliminating internal volatility and ineffectiveness. Be brave When it comes to predicting growth in emerging markets, this is not always so easy to define and measure, as there is often no clear history to base estimations on.
Role of IBP To understand why IBP should be implemented into developing markets, it is important to understand its role. IBP provides the framework for effective responsive decision-making. The business environment and latest plans are reviewed monthly, using a 24-36 month horizon, and gaps to strategy are identified, highlighting key changes requiring a management response. This is done in a structured, integrated way with the re-alignment of strategic and tactical plans each month, and allocation of resources to satisfy customers in the most profitable way. By looking beyond the immediate horizon, the focus is on building the right capability, whether it is assets, process or people, to service the market effectively.
Consumers grow into markets, often at an extreme rate, while market behaviour is strongly influenced by external factors. Brave decision making is required to invest in uncertainty, and this must be linked to a good awareness of the total environment, and not just internal growth plans. In order to manage volatility, more organisations than ever are adopting Integrated Business Planning (IBP). However, business leaders in developing markets often question the suitability of IBP for volatile, rapidly changing or high growth environments. The concern is that for a business to implement a process that involves planning ahead – often for 24 months or more - a certain level of stability is required. This is simply not true.
Fire fight issues The key to a successful IBP process is the commitment of people and their behaviours, especially by leadership. Although complex and unpredictable environments provide many challenges, this also brings the added benefit of a high calibre of leadership especially in relation to understanding and managing change. Business leaders in emerging markets tend to understand that in order to move forward, it is essential to focus on what is required for the future success of the business rather than falling into the trap of having to fire fight issues. n
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Leadership differentiators By Leon Ayo | CEO | Odgers Berndtson Sub-Saharan Africa | leon.ayo@odgersberndtson.co.za | @OdgersBerndtSA The nature of the global economy, the impact of the digital era, and diversity in the boardroom and in the workplace have transformed what is required for successful leadership.
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erhaps at no other time in history has adaptability been more important for good leadership than it is now. The nature of the global economy, the impact of the digital era, and diversity in the boardroom and in the workplace have transformed what is required for successful leadership. It is no longer good enough just to bring the right job skills to the table – today’s leaders need to demonstrate one key competency above all others: the agility to operate and think in a number of different ways.
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• Agility to operate number one! A crucial aspect of leadership agility is self-awareness –the highest performing leaders today are those that are interested, good listeners, seek feedback and able to change behaviour. They have emotional and social intelligence, a well-developed sense of compassion, and highly developed personal interaction skills. Recent research conducted has shown that agile leaders have the following characteristics: •R esilience: Leaders must be able to bounce back intellectually, physically and emotionally. There will always be knocks along the way – how they respond is what sets them up for success of failure. •V ision: The ability to define and communicate a clear vision and value set for an organisation that cascades successfully through all levels is critical – as is the ability to stick to the vision, while resetting the course when necessary. •P eople-centricity: If executives lead by example, and take care of their teams, employees will take care of the company’s mission and its clients. Having compassion
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for others is a trait that allows you to make a positive impact on the lives of your employees. Being peoplecentred will contribute immeasurably to a positive, happy culture. O ptimism: Positivity in the workplace leads to increased productivity – negative people can be a drain on any organisation. P rinciples: Leaders should never let their desire to win, compromise who they are. A moral compass and strong set of principles are essential when steering a large organisation. I nnovation: The world is constantly changing – being brave enough to venture in new directions is critical for continued success. C ourage: Leaders need to be bold in their planning. They should be prepared to challenge the paradigm, take calculated risks, and learn from mistakes. O pen communication: How leaders communicate is critical – the distance between the CEO and employees is so much shorter these days. Emotionally, physically and intellectually robust Agile leaders need to: •E nsure clear communication and understanding of team roles •E nsure that personal values are aligned to those of the organisation, so that leaders can practice true, authentic leadership •C reate a mission-oriented culture of high performance •B e emotionally, physically and intellectually robust • I nnovate and listen to their markets. Over the next 10 years, change in the world will take place faster than over the past decade. This will generate more diversity, creativity and innovation, and of course, competition. Leadership agility will be the key competency and differentiator for success in this rapidly changing world. n
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MANAGEMENT
Double-edge of technology With increased online activity within the business, there is also increased potential risk to the business and particularly the growing occurrence of technology-enabled fraud.
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here’s no denying that we live in a fast-paced digital era that is underpinned by this consumerism sense of instant gratification. As a direct result, companies are continually transforming their technology-driven business processes so as to maximise on efficiencies, as well as integrating different processes and systems and even enabling inter-company and global connectivity aimed at remaining competitive. Technology-enabled fraud This also then means that there are more sophisticated and data-driven processes in their business operations, which comes with increased online activity and agility on the part of their employees. While all this collectively can bode significant benefits to the business, consideration must also be given to the fact that with increased online activity within the business there is also increased potential risk to the business and particularly the growing occurrence of technology-enabled fraud. Where are the anti-fraud tools? Today, technology is a significant enabler for fraudsters, where tech-savvy fraudsters are using it in a variety of ways to perpetrate frauds. It comes as no surprise then that cyber fraud continues to be identified as a growing threat to business, however, cyber is not the only form of fraud that threatens businesses. Yet there is very limited, if not negligible, use of antifraud tools by companies and government entities in combatting fraud, leaving them vulnerable and exposed. Added to this, not enough threat analysis is done through data analytics in proactive fraud detection – and the majority of fraud continues to be a result of weak technologically-supported internal controls. Creatively beating the system Often, the fraudsters are ahead in finding creative ways
to beat the system while companies and governments play catch-up in trying to prevent fraud after it has already occurred. In today’s online and digital world, fighting fraud without technology is a lot like ‘going to a gunfight with a knife’ and expecting to win. As the game changer, technology can be described as a ‘double-edged sword’, where despite its increasing use as an enabler, embedding technology as a key driver and enabler in fraud detection is critical to successfully managing fraud risk exposure. Stamp out fraud Managing the risk of fraud requires a multidimensional approach underpinned by a concerted effort by the leadership of the business in driving a top-down approach in stamping out fraud. This should then be visible and evident within the business by strengthening the control environment through robust anti-fraud controls, continuous technology-driven auditing and monitoring, management oversight and regular fraud risk assessments as key first-line defences to minimising the opportunity for fraud. Report without fear Providing mechanisms for employees to report fraud without fear, conducting regular fraud and ethics awareness education, as well as communication on enforcement actions are just as important to embedding an anti-fraud culture within the business. Such activities are aimed at influencing employee ethical behaviour and ultimately reducing the rationale and motivation for employees themselves to commit fraud. Globalisation and regulation are just a few of the megatrends why controls are more important than ever in business today. Fraud remains a global scourge that harms business and government reputations, costs millions and ruins lives. It is a heavy economic and moral burden on society. However, by profiling potential fraudsters and adopting more proactive strategies and the right technological tools, we can fight back! n
By Shirley Ivason-Wagener | Partner and Country Leader | KPMG Fraud Risk Management and Ethics Advisory shirley.ivason-wagener@kpmg.co.za | @kpmg_sa
LEAVING A LASTING LEGACY OF SKILLS DEVELOPMENT & TRAINING A Chinese Proverb wisely indicates that: “If you are planning for a
on these areas to facilitate the transformation imperative. This means
year, sow rice; if you are planning for a decade, plant trees; if you are
that Coloured learners in the Western and Northern Cape provinces
planning for a lifetime, educate people.” To fulfil its mandate to develop
can now access Fasset’s bursary schemes, apply for grants and be
the skills necessary to bolster economic participation, the Finance and
funded on discretionary projects. Resultantly, Western and Northern
Accounting Services Sector Education and Training Authority (Fasset)
Cape Province employers also benefit, as they can now fully utilise the
has vowed to leave a “Lasting Legacy” – and it aims to do so by
grants available to them.
following a carefully mapped, strategic plan. Fasset’s #LastingLegacy strategy strives to benefit the sector, the To deliver on its mandate, while remaining effective and relevant,
learner and the employer. To get more information about the revised
Fasset has developed a strategic plan that would ensure positive results.
interventions, please visit Fasset’s website on
In consideration of stakeholder needs, and in response to the changing
www.fasset.org.za to access more information.
SETA landscape (as proposed by the Minister of Higher Education and Training, Dr Blade Nzimande); Fasset developed #LastingLegacy strategy. This new strategy presents a more focused approach, rather than a change in direction. The strategy hinges on two pillars: placement (direct placement into employment, including learnerships and internships), and academic support (supporting learners to complete their degrees, professional qualifications and/or designations). Fasset recognises that if it is to leave a lasting legacy, it needs to build a robust and sustainable skills pipeline. Engaging on issues of skills development and transformation is important to Fasset. With a noted under-representation of African Black people in all nine provinces and Coloured people in the Western and Northern Cape provinces, Fasset has honed in
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EDUCATION & TRAINING
Are you WORTH LESS without PROFESSIONAL recognition?
he professional recognition by the process of ‘designation’ is the most powerful tool in the hands of employers to distinguish between individuals having a qualification but not yet considered as professionally competent, and those who don’t have the qualification but have been doing the work for a significant period. To the employer, the latter are considered professionally competent and productive. The professional designation is awarded to the individual considered to have the whole package. Application They either have the qualification or are competent in the outcomes of the qualification, and also (and this is the distinguishing feature) have had sufficient time to apply the learning in the workplace to be recognised as professionally competent at a particular level on the designation taxonomy developed for that particular industry, for and by employers. Professional recognition will be different between industries within a sector. In those industries where training is more formalised, and more trades have been registered, it is easier to link professional designations to registered trades. However, a Trade does not a Designation make, unless the qualified artisan has worked for a suitable period in that trade, in the workplace, to a specified level and standard of application. Employer tool Professional designation is therefore an employer tool. Importantly therefore, reward and recognition is for contribution and not for qualification. Qualification is a means to allow the employee to be considered for professional recognition, if and when combined with the requisite amount of experience, applying what has been learned in the qualification.
Employer association Having a qualification is not the same is as being recognised as professional and designated as such. Whereas obtaining the qualification is within the employee’s control, and once obtained can never be taken away from the employee, it is for either a professional body or in its absence, an employer association, to confer professional recognition on an individual, making its retention contingent on ongoing criteria of performance and behaviour expectations. Very importantly, it should be contingent on the professionally designated individual, participating in Continuous Professional Development or CPD. The distinguishing feature here is that the professional designation conferred on the individual by the employer association can be taken away if the individual does not comply with the conditions for retaining professional recognition, which can be related either to performance (competency) or to behaviour, or both. Professional competence Across a sector containing many industries, there will be a distinction between the industries well organised by professional bodies, sometimes even statutory bodies, with properly placed qualifications and well considered trades, and other industries not having professional body guidance, nor registered qualifications or identifiable trades. In the latter, individuals who should be considered professionally competent require those who are conferring professional recognition to determine who should be recognised and designated, by other means than necessarily qualification or registered trades, doing so mostly around the years of service and the contribution on the job, day-after-day. While this requires more effort and a higher level of competency amongst assessors, the rewards, especially for the employer are immense. Recognition of Prior Learning (RPL) is a commonly used process to assess unqualified people against established criteria and outcomes, which ordinarily would be contained in NQF-registered qualifications. Employer vs training provider In essence, if persons can demonstrate that they are competent, on the job, reflected by how they do the job, then they are competent. They do not need to sit in a classroom for three years to be adjudged as competent.
By Dr Ivor Blumenthal | CEO | ArkKonsult | ivorblumenthal@gmail.com | @Ivorblumenthal
EDUCATION & TRAINING
This is the distinguishing feature between what is important to a training provider, as opposed to what is critically important to any employer. To the former, the candidate enrolled for training can only pass the qualification when formerly assessed. To the employer, what is important is whether the employee is able to work to a consistent standard repeatedly and remains productive. What is more important to the employer, is a focus not only on the performance on-the-job, but also the behaviour and attitude in the course of carrying out the work. It is this distinguishing feature that can only be assessed on-the-job, after the requisite amount of time has been spent on that job, which can and should be recognised and rewarded by the employer. This then becomes the difference between what a trade union would fight for, and what any employer would want
to prioritise. A unionist would prioritise qualification and learning, and would want recognition and compensation for qualifications. The employer would be less interested in the qualification than in the professional recognition earned by the employee because of ongoing and productive contribution in the workplace. The difference is inherent in paying for qualification as opposed to contribution. This is one of the reasons for creating a professional body. It is only to satisfy, the needs of the employer to have a standardised mechanism for distinguishing who is professionally competent and who is not, and for the employee to have access to professional recognition and ongoing lifelong development. Relationship It is the employer who assumes the complete risk in the employment relationship, in having to find the income, to pay the employee, consistently
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and reliably. The employee’s only risk is in contributing consistently and professionally and thus keeping the company productive and profitable. For this reason, the recognition of what constitutes competency and the determination of how an individual should remain competent and in the process remain productive, falls within the hands and determination of employers individually, and within an industry collectively through an employer association or professional body within which the employer association plays a leadership role. When an employee asks a company for support in obtaining a qualification, the employer is advised to think long and hard about the relevance of that qualification and the added contribution which obtaining it, will make, in the employee becoming productive and enhancing the required level of productivity, in the workplace. n
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Overqualified, in debt and out of work!
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raduates are struggling to find work because they may have spent too much time and money at university and not enough time getting work experience. Students should educate themselves while working rather than accumulating many degrees – and debt - in lieu of experience. Too much! The unfortunate reality is that there is such a thing as ‘too much’ when it comes to education. Especially if experience is lacking. Job prospects for new graduates are the poorest in 30 years. According to a 2014 Graduate Careers Australia survey, only 68% of graduates found full-time work within four months of graduating, down sharply from 82% in 2000. Global and local conundrum Meanwhile in South Africa, 600 000 university graduates are languishing at home, unable to put into practice what they spent years learning. The massive figure was revealed in employment consultancy Adcorp’s Employment Index, pointing towards the fact that unemployment amongst graduates is a global and local conundrum. Employers who are seeking out graduates to fill positions are no longer just looking at degrees. Instead, they want applicants who have gained some practical industry experience – in other words, those individuals who will add transferrable skills to the company. Start gaining skills From a study by Dr Haroon Bhorat from the Development Policy Research Unit of the University of Cape Town, it was found that those
By Kay Vittee | CEO | Quest Staffing Solutions KayV@quest.co.za | @MissyQuest who have a tertiary qualification, but not necessarily a degree, have 50% chance of finding a job. Those with a degree only have 17% chance of being employed. You don’t need to immediately start working in the sector you plan to move into after graduation to gain experience. At this point, you just need to start gaining certain skills and any job can teach you effective communication skills, email etiquette, phone etiquette, time management and team work. Following this, you need to know how to emphasise and highlight these skills properly on your CV and in interviews when you eventually start looking for a job in your specific field. Doing a couple of different internships and part-time jobs will give you an idea of your strengths and capabilities when it comes to surviving in the work place. Remember that the more work experience you have, the bigger your advantage will be over other graduates. This is something that all employers are expecting from graduates apart from the academic scores achieved. Experience will help you gain knowledge and understand how companies operate and work. Assistant to CEO Many famous leaders also had to start somewhere to gain the experience they needed in order for someone to recognise them. Think of the likes of Mary Barra, CEO of General Motors. She is the first female CEO in GM’s history and the highest-ranking woman at any auto-company. However, her first job was working as an assistant to a CEO. Indra Nooyi became PepsiCo’s first female CEO, but to gain experience while she was a graduate student at Yale University, she accepted a graveyard shift at her first job because the hourly rate was 50 cents higher than the normal shift. At the end of the day, gaining work experience before accumulating too much education really has the ability to boost your CV and make you more employable. n
EDUCATION & TRAINING
BusinessBrief
39
October/November 2016
Continuous learning wise in a downturn By Charisse Drobis | Head of Career Management Services | Wits Business School | Charisse.Drobis@wits.ac.za In times of economic downswing, training should be top priority. This is counter-intuitive for many businesses as when the going gets tough, our natural instinct is to batten down the hatches and go into ‘saving mode’. But training and learning should always be viewed from a long-term perspective.
Worth the investment Courses that advance skills in organisational design; leading and managing self and others within complexity; strategic thinking, planning and implementation; entrepreneurship and innovation; negotiation and deal making and sales (particularly courses with a focus on competitive intelligence, big data analytics and digital marketing and sales) are well worth the investment. Up in a downturn The uptake in general management courses such as the MBA, the Postgraduate Diploma in Business Administration (PDBA) and the Management Advancement Programme (MAP) has always been high during times of economic downturn. Any course where you can gain advantage in the market place by updating or sharpening your critical thinking, problem solving and business management or leadership skills, or in acquiring new thinking or expertise in emerging fields, is a good idea. The rationale for training and upskilling goes deeper than simply adding a fancy acronym to your CV, however. Companies today are increasingly interested in people with an inherent desire to grow and develop both personally and professionally. As an individual, it has never been more challenging to find and retain a good job: training and upskilling can be insurance for your future, putting you in ‘pole position’ for that enviable top position. Transform Engaging in a learning programme leads to higher levels of confidence, personal empowerment and self-efficacy. The consequences of undergoing transformative learning experiences are far reaching, and often result in the innovation and turnaround of the environments from which students derive. Ilka Dunne, Senior Learning Architect at Rand Merchant Bank, notes that there is significant psychological value in upskilling when the ‘tools are down’. Development
training ensures that managers are able to keep things on an even keel, the manage stress and change when the environment is being tested. Also, employees need to feel engaged during trying times. They focus on staff acquiring new skills based on personal development plans to enable employees to transition to new roles when the market kicks up again. Learning currency Learning is, in fact, becoming a recognised economic currency of itself. According to Ursula Fear, Director of HR practice for Deloitte, the number one issue is ‘culture and employee development’. Traditional ways of learning aren’t useful anymore, so the role in HR has become far more an advisory than transactional – ‘We pay you this amount for that skill’. Continuous learning is also what millennials want in their jobs. The current wisdom is that no matter the state of the economy, continuous learning should be an integral part of life, not only for the sake of future marketability and keeping up with the rate of change in the workplace, but ultimately, for fulfilment on a personal level. n USB164031E
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s a company, investing time and money on training during a downswing can prove a springboard to business success when the economy improves. So what sort of training and development should companies focus on?
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Louw Barnardt, 28, Co-Founder and Managing Director of OutsourcedCFO Louw Barnardt’s career as an entrepreneur began at the age of six when he discovered that marshmallow cookies could be sold at a very good markup and that most people loved them. ‘Those who didn’t initially want them could almost always be convinced by a blonde, blue-eyed boy that was determined enough to keep trying after a few noes. Kids also love surprises, so our surprise crackers with their sweets, small toys and a R20 reward in every hundredth one, were also a hit in the otherwise fairly dull Kimberley market,’ he says. ‘Audit was a bitter pill to swallow many days, but those years taught me the professional and practical skills needed as a CA and businessman. It also gave me the opportunity to learn from many other entrepreneurs’ successes and mistakes. Seeing the general lack of financial knowledge that many private companies are run with, formed part of the formation of the concept of an outsourced CFO.’ Louw and his wife Dana Pretorius, founded OutsourcedCFO, a financial management boutique, after completing their Articles in December 2013. ‘We more or less had clarity on what we wanted to do. By that time, we had completed a business incubation course part-time and spent many nights networking at the entrepreneurial events that Cape Town has to offer. We were signed off at Greenwoods at the end of November and started work at the Bandwidth Barn first thing that December, having completely parted with the idea of ever working for
someone for any kind of salary. This first step was critical.’ In their first year, with a little help from Dana, they landed a massive takeover in the diamond mining industry. ‘My wife sat in a plane next to the CEO, who wanted to meet us after hearing what we do. No marketing channel could beat that.’ This engagement made Louw the financial head of a takeover of two diamond mines by a consulting engineering group. OutsourcedCFO has helped raise more than R100 million in growth funding for startups in the last 12 months and has an annualised growth rate exceeding 100% per annum. Louw’s work in the tech startup and finance space has recently seen him named among the Fast Company Top 20 under 30. ‘Breaking R100 million in growth financing raised by our clients was a big highlight earlier this year. We now look forward to breaking R1 billion raised for SMEs.’ For more on this story and other inspiring stories visit www.findacasa.co.za
Call for Entry SAICA Top 35 under 35 CA(SA) competition SAICA is looking for 35 of the most outstanding and promising CAs(SA) under the age of 35. With tremendous dedication and energy, young, inspiring people are shaping the future of our country. These are the leaders of tomorrow and it’s our intention through the Top 35-under-35 competition to showcase and recognise these remarkable young CAs(SA) as they positively influence business and impact our communities. This exclusive list of 35 will recognise the most inspiring, professional and out of the ordinary young CAs who are influencing not only business, but also society. Bronwyn Corbett – Overall Winner 2015 Top 35 under 35 Competition.
They are the innovators who are driving change and taking the lead in business. The winner will be announced in September 2017. This person will represent SAICA at the global youth summit, One Young World, which is a conference that brings together the brightest young leaders from around the World, empowering them to make lasting connections in order to create positive change. Enter today if you have the characteristics of a responsible leader and are a Top CA(SA), or nominate someone you know who has these features and give them an opportunity to be the next Top 35-under-35 CA(SA). Entries open on 30 September 2016.
Don’t miss this opportunity! For more details, visit the ASA website: www.accountancysa.org.za/35-under-35
responsible leadership.
42
BusinessBrief
LEGAL
October/November 2016
Directors BEWARE! Communication & transparency key The Constitutional Court’s judgment in Makate v Vodacom (Pty) Ltd [2016] ZACC 13, has been the subject of much debate. Presumably because it serves as a severe caution to directors in their dealings with third parties. The Constitutional Court’s judgment in Makate v Vodacom (Pty) Ltd [2016] ZACC 13, has been the subject of much debate. Presumably because it serves as a severe caution to directors in their dealings with third parties, both internal and external to a company.
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t was pointed out in the concurring judgment, that in order to avoid liability, as soon as the board of directors, CEO or MD are aware that someone is purporting to act on behalf of the company without the requisite authority, they should immediately inform the third party that “no agreement can be concluded without reference to higher authority” within the company. Buzz me The facts of the case are well known. The appellant (Mr Makate), a trainee accountant at Vodacom, developed an idea that enabled a Vodacom subscriber, without airtime, to ‘buzz’ another subscriber in order to induce the latter to return the call. It is this notional idea that developed into the well-known ‘Please Call Me’ service. Eight years after the ‘Please Call Me’ product was launched, Mr Makate sought remuneration for his idea. He claimed that he entered into an oral agreement with Vodacom’s Director of Product Development and Management (Mr Geissler) whereby he would be rewarded with a share of the revenue generated by the concept, if it turned out to be commercially and technically viable, which it certainly did. Failure to prove The High Court agreed that a contract was indeed concluded on Mr Makate’s terms, but found that he failed to prove that Mr Geissler had the ostensible authority to bind Vodacom. On appeal to the Constitutional Court, Mr Makate had to overcome two major obstacles. First, he had to show that his claim had not prescribed and second, that Mr Geissler had the ostensible authority to bind Vodacom. Doing justice Thus, the Constitutional Court remarked that ostensible authority must also be considered “with the view to doing justice to all concerned”. Prior to Makate, the leading case on the issue of ostensible authority was NBS Bank Ltd v Cape Produce Company Pty
Ltd and Others 2002 (1) SA 396 (SCA). The crux of the NBS Bank case is that ostensible authority is a form of estoppel: a situation in which the principal represents to an innocent third party that its agent, had the authority to act on its behalf and the third party reasonably relied on the principal’s representation. In that circumstance, the principal is prevented or estopped, from saying that the agent did not have the necessary authority to act on its behalf if the innocent third party proves that they suffered prejudice due to the principal’s representation and that the principal should reasonably have expected that third parties would rely on its representation. No real authority In both instances, the agent acting on the principal’s behalf has no real, actual or implied, authority. However, estoppel serves as a mechanism through which to attribute authority to the principal, to remedy the prejudice suffered by the unknowing, innocent third party, and “bring justice to all concerned”. In so doing, the majority judgment appears to have underestimated the extent to which companies, or principals, reasonably and with good faith, expect their agents to act consistently with the powers conferred on them. A company may not intend to be bound to a contract concluded by its agent acting beyond the scope of his/ her authority, but can nevertheless be liable because of the “‘aura of authority’ associated with a position which a person occupies”. In that regard, the intention of the principal is, in our view, irrelevant to the inquiry. (MEC for Economic Affairs, Environment and Tourism v Kruizenga 2010 (4) SA 122 (SCA) at para 16). Prudent, vigilant and transparent Rather, as highlighted by Makate, in order to avoid liability, it is crucial that a company, including its CEO, acts prudently with vigilance and transparency in communicating the limitations of directors and those purporting to act on its behalf in their dealings with those both internal and external to the company. n
By Yana van Leeve | Associate, Dispute Resolution | yana.vanleeve@cdhlegal.com & Pieter Conradie | Candidate Attorney | pieter.conradie@cdhlegal.com | Cliffe Dekker Hofmeyr
LEGAL
BusinessBrief
43
October/November 2016
Stop Chinese counterfeits! By Nalla Tayyiba | Associate – Trade Mark Litigation | Adams & Adams | Tayyiba.Nalla@AdamsAdams.com | @AdamsAdamslaw
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n all too common reality is that intellectual property right (IPR) holders may be active in enforcement against counterfeit goods in a number of jurisdictions, but might find that such goods are being manufactured in China and exported to the rest of the world for sale. Recordal system While most countries only detain goods being imported into their country, the General Administration of Customs of China (GACC) has introduced a recordal system that empowers it to detain suspected infringing goods entering or leaving China. Welcome process Since GACC is not obliged to detain any infringing goods unless a valid recordal is in place, this system could be a useful tool to IPR holders as part of their intellectual property enforcement strategy. The progressive initiative is a welcome process in the crusade against counterfeit goods. The IPR holder can record various types of intellectual property with GACC, including trademarks registered in China, or international trademark registrations extending to China, as well as designs, patents
and copyright, although the bulk of goods detained are on the basis of trademarks, which are the easiest to recognise and recall. According to its statistics for 2014, GACC revealed that 96.5% of detentions related to goods being exported from China. Infringements While specific documentation must accompany the application (such as a power of attorney, certificate of incorporation, registration certificates, colour photographs of genuine goods, details of authorised exporters, distributors and licensees), the overarching guideline is to provide GACC with as much information as possible to enable it to make a preliminary determination as to whether the goods infringe any recorded intellectual property right. Valid for 10 years GACC will issue its written acceptance or rejection within thirty working days of receiving the application. If granted, the recordal is valid for a period of 10 years, or until the expiration of the intellectual property right, whichever is shorter, and is renewable. If the IPR holder has complied with the requirements, GACC will detain the goods, investigate and make a determination on the matter within
30 working days, failing which the case must be referred to Court, or the goods released. If it deems the goods to be infringing, depending on the nature thereof, the goods will either be donated once the infringing portion has been removed, sold to the IPR holder, sold on auction, or destroyed. The IPR holder is liable for storage and destruction costs. Fines are sometimes also imposed on the consignor, at GACC’s discretion. Recommendations It is recommended that IPR holders be mindful of the recordal, paying careful attention to any changes in the application, which must be reported to GACC within 30 working days, failing which the recordal may be cancelled. GACC also invites training sessions to keep up to date with changes in the IPR holder’s rights, including the launch of new products or change in product packaging. Since GACC is not obliged to detain any infringing goods unless a valid recordal is in place, this system could be a useful tool to IPR holders as part of their intellectual property enforcement strategy. The progressive initiative is a welcome process in the crusade against counterfeit goods. n
TAILORED • CREATIVE • INTELLIGENT Tel (+27 11) 685 0000 Email info@roodtinc.com www.roodtinc.com
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BusinessBrief
October/November 2016
LEGAL
Draft debt collectors amendment bill The effect of the Bill is that the vast majority, if not all attorneys, will be brought under the jurisdiction of the regulatory body responsible for debt collectors.
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he preamble of the draft Debt Collectors Amendment Bill states that recent court cases and media reports have highlighted the flagrant abuses in the collection of debt. It is therefore evident that the recent decision of the Western Cape High Court in the matter of University of Stellenbosch Legal Aid Clinic and others v Minister of Justice and Correctional Services and others (South African Human Rights Commission asamicus curiae) [2015] 3 All SA 644 (WCC) has significantly influenced the proposed inclusion of attorneys within the ambit of the draft Debt Collectors Amendment Bill. What is meant by “debt”? The proposed amendment to section 8 states: “any person, including an attorney or his or her employee or agent contemplated in section 8A, or a party to a factoring arrangement, who for reward collects debts owed to another on the latter’s behalf;” Unfortunately, what is meant by “debt” or “debt collection” is not defined. As the terms are not defined, they will be interpreted broadly. Not the intention The effect is that the vast majority, if not all attorneys, will be brought under the jurisdiction of the regulatory body responsible for debt collectors. Attorneys who are not registered as debt collectors, will effectively be prevented from engaging in litigation in respect of money owed.
If an incorporated firm of attorneys is in any way involved in debt collecting...all the directors of the firm will in turn have to register. Clearly, this far-reaching consequence was never intended. In addition, in terms of section 8, if an incorporated firm of attorneys is in any way involved in debt collecting, the company will have to be registered, and all the directors of the firm will in turn have to register. The result of this is that directors who have nothing to do with debt collection will be required to register. Further confusion Further confusion is created by the words “contemplated in section 8A” in relation to attorneys in the definition of “debt collector”. The clear intention was to include all attorneys involved in the collection of consumer credit debts in the definition of “debt collector”. However, the words “contemplated in section 8A” may be interpreted as meaning that only attorneys registered in terms of section 8A will be deemed to be debt collectors – thus, if an attorney fails to register, he/she is not deemed to be a debt collector and then the Act will not apply to him/her. The formulation of the definition is circuitous and creates a nonsensical scenario. The phrase should rather be removed from the definition for the sake of clarity. Mimicking The proposed changes to section 8 of the DCA are unfortunately not the only proposed changes that go too far. The draft Bill seeks to introduce
in section 15 of the DCA as improper conduct, “charges collection costs, an initiation fee, service fees, default administration charges or other charges which exceed the unpaid balance of the principal debt at the time of default”. This seems to mimic section 103(5) of the National Credit Act 34 of 2005 (NCA) with the purpose of aiding in the enforcement of section 103(5). This is unfortunate as many debts collected are not subject to the NCA. More conflict Where the NCA is not applicable, the common law in duplum rule applies. Although the draft Bill does not amend the in duplum rule, it does seek to introduce a form of misconduct as though the rule does not exist. As a result thereof, it makes perfectly lawful conduct a form of misconduct. The wording of the proposed amendment to section 15 is also in conflict with the wording of section 103(5) of the NCA. What a debt collector is entitled to collect is already regulated by section 19 of the DCA, which must be read with section 103(5) of the NCA. In both instances, a contravention is an offence and clearly improper conduct. Accordingly, it is suggested that the proposed provision only creates confusion and should be scrapped in its entirety. n
By Sean Barrett | Director | Woodhead Bigby Inc. (LexisNexis) | SeanB@woodhead.co.za
TogeTHer, we Can build a HealTH plan THaT works. How do you keep your employees healthy and productive at a cost your business can afford over the long term? It starts with having a true partner. Hollard and Cigna have combined their local expertise and global capabilities in a single health insurance product that responds to the need for a compliant and affordable solution in sub-Saharan Africa. We work with organisations of different sizes to help them build a compliant health plan that works. Every business faces unique challenges, and we believe the solution is partnership. So if you want help growing your business, but not your benefit costs, we’re in. To learn more, visit wwww.HollardCignaHealth.com
www.hollardcignahealth.com We refer to our policy terms and conditions for a complete list of benefits, exclusions and limitations. Products and services may not be available in all jurisdictions and are expressly excluded where prohibited by applicable law. Cigna International Health Services BVBA with registered office at: Plantin en Moretuslei 299 • 2140 Antwerpen • Belgium • RPR Antwerpen • VAT BE 0414 783 183 • FSMA 13799 A-R. ‘The Hollard Insurance Group’ refers to, amongst others, the following entities incorporated in South Africa: the Hollard Insurance Company Limited (Registration No 1952/003004/06), Hollard Life Assurance Company Limited (Registration No 1993/001405/06) Hollard Investments Pty Limited and Hollard International (Registration No. 2015/122349/07). Hollard Global Health Benefits is a cell in Manzillo Insurance (PCC) Limited, with its registered offices at: Maison Trinity, Trinity Square, St Peter Port. Guernsey GY1 4AT and is regulated by the Guernsey Financial Services Commission. (Registration No. 35007). Insurance cover in terms of the Hollard Cigna Health Plan will be provided by the Hollard International subsidiary or associate incorporated in the country in which the Plan is sold. Copyright 2016 Cigna Corporation
46
BusinessBrief
October/November 2016
LEGAL
Rehabilitation financial guarantee question? By Chantal Murdock | Associate | Hogan Lovells (South Africa) Inc. | chantal.murdock@hoganlovells.com
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he rehabilitation of the environment adversely affected by mining activities has been for some time a debate topic amongst role players in the mining industry.
Procedures to withdraw? One of these topics is whether there are any regulatory procedures to be followed by a financial institution to withdraw a financial guarantee that it may have furnished to the Department of Mineral Resources (“DMR”) on behalf of a mining company in respect of that company’s mining operations. The requirements to issue financial guarantees for rehabilitation obligations have come a long way under South African Law relating to mining operations. On 20 November 2015 the Financial Provision Regulations pertaining to the financial provision for prospecting, exploration, mining or production operations, published in GNR 1147 of 20 November 2015, under NEMA (“the Financial Provision Regulations”) were published. Regulation 17(17) of the Financial Provision Regulations (part of the transitional arrangements) specifically provides that, in the event of a bank or financial institution intending to withdraw the financial guarantee, which was issued prior to 20 November 2015, Regulation 8(3), 8(4), 8(5) and 8(6) of the Financial Provision Regulations, apply (notwithstanding that the financial guarantee was issued prior to the coming into force and effect of the Financial Provision Regulations). In effect, the Financial provision Regulations regarding the withdrawal of financial guarantees, applies retrospectively. Procedures to follow In this regard, Regulations 8(3) to (6) will determine the procedures that have to be followed by a bank or financial institution when withdrawing a financial guarantee. • The bank would have to provide the Minister of Mineral Resources, the Minister of Environmental Affairs and the mining company who was covered by the guarantee, with at least 4 months’ notice of its intention to withdraw the guarantee, irrespective of what was initially stated in the guarantee furnished to the DMR; •O nce the mining company has received the notice from the bank, the mining company will have seven days to notify the Minister of Mineral Resources and the Minister of Environmental Affairs of the bank’s intention;
• The Minister of Mineral Resources shall, within 10 days of receiving the mining company’s notice, request the mining company to provide an alternative arrangement for financial provision within 60 days of receipt of the request; • If the mining company fails to provide an alternative arrangement within the 60 day period, the Minister of Mineral Resources must call on the financial guarantee and deposit the money guaranteed in terms thereof into a bank account which he will administer until such time as the mining company has provided the Minister of Mineral Resources with a suitable alternative; •T he Minister of Mineral Resources will only release the guarantee once the money has been paid into the designated bank account, or an alternative arrangement has been made for the financial provision by the mining company. The Financial Provision Regulations make it mandatory for the Minister of Mineral Resources to call up the guarantee provided by banks and financial institutions in the event that the intended withdrawal of the guarantee has been communicated, and the holder of the right is unable to make any alternative arrangements for financial provision to the DMR. Financial institutions and banks are left exposed when they wish to withdraw a guarantee that had been issued to the DMR for rehabilitation purposes. In the event that the mining company is unable to provide a suitable alternative guarantee, the Minister of Mineral Resources will call up the existing guarantee, and administer it in a manner that he/she deems appropriate. It would appear that no provision is made for interest once the money has been paid in to the designated account, and there is no time period specified for the return of the existing guarantee or any money which may remain in the designated account once a suitable guarantee has been furnished to the Minister. It can be argued that should a mining company be placed under business rescue or liquidation, and as a result is unlikely to obtain a suitable alternative guarantee, the Minister of Mineral Resources will not release any money called up in terms of the existing guarantee, back to the financial institution or bank. n
The opportunity: Africa
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©2016. PricewaterhouseCoopers (“PwC”). All rights reserved. (16-19001)
48
BusinessBrief
October/November 2016
TAX
SARS using private DEBT-collectors! By Lesedi Seforo | Tax project Manager | SAICA | lesedis@saica.co.za | @saica_ca_sa
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trange as it may seem, some people have been receiving phone calls from private debt collecting companies urging them to pay their taxes. It seems like a hoax, until the person on the other side of the line mentions your tax number, which particular tax returns are due, and even how much tax is owed to the South African Revenue Service (SARS). SARS has outsourced some of its debt collecting activities to some players in the private sector. How and when did this happen? In 2015, SARS presented its Strategic and Annual Performance Plans, during which it was mentioned that tax of R97 billion was due to the State, and that a special project, whereby the collection of some of the debt would be
outsourced to debt collection agencies, was underway. SARS will only outsource the collection of debt older than four years (for a total of R15 billion). It adds that ‘from time to time SARS will also embark on outsourcing certain categories of debt to the preapproved debt collection agencies on its panel’. In other words, the success of this endeavour may encourage SARS gradually to outsource the recovery of a greater portion of the overall debt. The successful bidders appointed for an initial period of 36 months were Credit Solutions, NDS Credit Management and Lekgotla Trifecta Capital Consortium. The agencies must provide SARS with a monthly report containing, among other, information about the taxpayers contacted by letter and phone call, payments made by these taxpayers, payment promises or arrangements, and returns promised to be submitted. The report must also list those taxpayers still on the list who are found to be deceased, as well as those who are unable to pay because they untraceable, or have been liquidated or sequestrated. Peace of mind? SARS has availed its taxpayer database to the agencies in order to allow them adequately to perform their mandated required functions. Importantly, the debt collectors were required to sign an oath of secrecy, where they had to declare not to disclose taxpayer information to any non-SARS officials. They also agreed
to potential criminal prosecution should they violate this clause. This strict condition should give taxpayers some degree of peace of mind. What does this mean? If your tax debt is older than four years, expect a call from one of these agencies (if you have not received one already). This also implies that people should make a concerted effort to pay their taxes as soon as possible, even if their debt to SARS dates back less than four years. Potential scammers It is also important to be aware of potential scammers who may try to use the intentions of SARS for their own nefarious purposes. Those who receive notifications from persons claiming to be from the above-mentioned agencies are encouraged not to volunteer private information to the caller, but to require that the caller first provide the information that they have about you. A good idea would be to refer the caller to your CA(SA) tax advisor, who will take it from there. For your own protection, you should also log onto your eFiling profile to verify that you really do owe the amount alleged by the caller. Whatever you do, do not make any payments to a bank account provided by the caller. Pay the money into the same SARS bank account that you have been paying into over the years, even if the caller insists that the banking details they have mentioned belong to SARS. n
TAX
BusinessBrief
49
October/November 2016
COMMENCE trade!
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efore a company would be allowed to claim expenses as a tax deduction, it must be “carrying on a trade”. If a company is not “carrying on a trade”, its income (if any) remains taxable, but no expenses may be deducted against such income. The mere fact that the company intends to trade is insufficient, however. There must be evidence of active steps taken, which is more than the mere laying of plans. Trade commences It seems generally accepted that a project company (ProjectCo) would not be “trading” during the bidding process or the pre-financial close phase. During these stages, there are no guarantees that ProjectCo will either be successful in being granted preferred bidder status or reach financial close by the due date. If these milestones were not reached, ProjectCo would not be in a position to operate and generate income. Many companies take the view that trading commences at financial close. From this date, ProjectCo may incur costs such as salaries, rent, etc., and would be contractually obliged to commence and complete construction, in order to generate electricity and produce income. Active steps In other words, as at financial close, ProjectCo is no longer merely laying out plans, but taking active steps to start generating income. However, are preparatory activities for a future venture sufficient to constitute trade? ProjectCo is not yet carrying on its core business of generating and selling electricity. No income is earned, and although this is not the
By Tanya Engels | Director International and Corporate Tax KPMG Tax Services | tanya.engels@kpmg.co.za only factor to consider, it will most certainly be an important one. In the American case Richmond Television Corp vs Commissioner, the judge said “…even though a taxpayer has made a firm decision to enter into business and over a considerable period of time spent money in preparation for entering that business, he still has not ‘engaged in carrying on any trade or business’… until such time as the business has begun to function as a going concern and performed those activities for which it was organised.” Conservative view The South African Revenue Service may very well take a conservative view and argue that ProjectCo is only able to perform those activities for which it was set up once the relevant third party testing in respect of the plant’s connection to the grid, as well as compliance with the relevant technical and operational requirements, have been successfully completed. Thus, it will be argued that trade only commences when formal sign-off is given that ProjecCo can start generating electricity for Eskom’s account. Although no expenses would be deductible before ProjectCo is “trading”, the result is not as harsh as it may appear. Expenses incurred prior to trading are not necessarily lost, but possibly deferred until the year when trade commences. Further, if income is earned prior to trade, there are circumstances where such income may be deferred to a later tax year or otherwise shielded from tax. n
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50
BusinessBrief
October/November 2016
TAX
Executive share incentives at crossroads By Dan Foster | Director, International Tax Law | Webber Wentzel | Dan.Foster@webberwentzel.com | @webberwentzel
Share incentives typically make up a far larger portion of potential executive pay as compared with rank-and-file employees; usually on the basis that management must have more skin in the game if their interests are to be properly aligned with shareholders.
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n the debate on executive pay, it is often forgotten that share prices fall as well as rise, and that executives compensated with equity are taking that risk along with shareholders, usually whether they like it or not. The tax system principally encourages and rewards risk-taking with lower tax rates, as is the case for capital gains and dividends. This principle is not reflected in how equity compensation is taxed, however.
Transactions & deals A similar problem can arise in M&A transactions and private equity deals, where business founders, who are also key managers of the target company before and after the transaction, find themselves flipped into shares on the wrong end of section 8C. With careful drafting and good advice, the problems noted above can be mitigated or solved, but ideally such problems should not arise in the first place.
Use post-tax funds This is no more profoundly noted than when executives are invited to use their own post-tax funds to co-invest with shareholders. No tax problem arises here if the shares are unrestricted, but that is rarely the case in the wild.
Section 8C is simply cast too wide. At the heart of the problem is that the provision essentially deems a restricted share to be remuneration if it is acquired by an employee or director. The commercial and economic realities of an entrepreneurial world are not accounted for.
Even where executives are treated like any other shareholder, private companies typically require all shareholders to sign a shareholder agreement.
Changes to CGT The recent changes to the capital gains tax (CGT) rules for employee share trusts, and the proposed amendments that will affect dividends and other amounts received in respect of restricted equity, only serve to highlight how far we have strayed from a common sense approach. The new rules for share trusts could result in share vestings being taxed at up to 73.8%, while the revised proviso to the dividend exemption could see employees’ dividends taxed at 57.52%.
The SHA restrictions may be benign (i.e. typical pre-emptives) or may qualify as actual restrictions in terms of section 8C. Unlike listed shares, private company shares are illiquid and most investors are holding until a liquidity event occurs. This presents no tax problems for the other investors, but for management it means they may have acquired restricted shares by virtue of employment, even where they have invested their own funds, and can only exit with the other investors. Both investors have taken the same risk, but management have their gains taxed as income.
These kinds of punitive tax rates will obviously not encourage executives who have skin in the game to drive value for shareholders. In fact, it drives the use of straightforward norisk bonus plans, where the payment is at least tax deductible for the employer. Tax policy is effectively discouraging employee share ownership, which cannot be the correct outcome. The proposed 8CA deduction, in its present form, will not reverse this. BEE trust losers Perhaps ironically, the biggest losers from these amendments will be participants in broad-based BEE trusts. Such schemes are restricted, and administered in trusts, so that the employer can maintain its BEE rating regardless of staff movement. Participants in such schemes will be hit by both the CGT and dividends tax amendments, cutting returns for the very employees that are meant to be empowered. A radical rethink on tax policy applied to employee share ownership is required, not more complex tax traps for the unwary. n
TAX
BusinessBrief
51
October/November 2016
U-turn on withholding tax By Graeme Palmer | Director, Commercial Department | Garlicke & Bousfield Inc | graeme.palmer@gb.co.za
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ithout withholding taxes, it becomes difficult for the South African Revenue Service (SARS) to collect tax due by foreign persons as it has no jurisdiction over non-residents and would have to rely on the assistance of foreign governments Tax Authorities have over the years introduced various withholding taxes to make it easier to collect tax from foreigners. Without withholding taxes, it becomes difficult for the South African Revenue Service (SARS) to collect tax due by foreign persons as it has no jurisdiction over non-residents and would have to rely on the assistance of foreign governments. Cross border A withholding tax on cross border service fees was proposed in the 2013 Budget, which culminated in the introduction of sections 51A – 51H of the Income Tax Act, 1962 (“the Act”). This provided for a withholding tax of 15% on the amount of any service fee that is paid by any person to, or for the benefit of, any foreign person to the extent that the amount is regarded as having been received by or accrued to the foreign person from a source within South Africa. Identify and collect The withholding tax was initially set to commence on 1 January 2016 but was later postponed to 1 January 2017. The purpose of this tax was to identify and collect revenue from non-residents who provide technical, management or consulting services and earned income from a South African source. It was also aimed at curbing the erosion of the South African tax base. Arrangement regime Treasury recently published the Draft Taxation Laws Amendment Bill, 2016 where it is proposed that the sections in the Act that provide for the withholding tax on service fees be repealed in its entirety with effect from 1 January 2017, that is, the date the tax was meant to commence. The reason provided by Treasury for this change is that service fees to non-residents will now be
dealt with through the reportable arrangement regime. Report to SARS In February this year a list of arrangements was published, which required participants to report such arrangements to SARS. Included were arrangements for the rendering of consultancy, construction, engineering, installation, logistical, managerial, supervisory, technical or training services to a resident by a non-resident. In terms of such arrangement the non-resident must be, or must be anticipated to be, physically present in South Africa in connection with, or for purposes of rendering the services. Furthermore, the expenditure incurred or to be incurred in respect of the services must exceed, or be anticipated to exceed R10 million. If these criteria are met, and provided that the amounts do not qualify as remuneration for employees’ tax, the arrangement must be reported to SARS. n
52
BusinessBrief
October/November 2016
FINANCE & EQUITY
CFO Connector of Dots!
“The role of the modern board is very challenging. Not only have boards come under greater scrutiny following recent global financial turmoil but they are faced with greater complexity and uncertainty” says Badibanga Promesse, Regional Vice President, CIMA Africa.
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ne such example is the impact of disruptive technologies such as Blockchain and Fintech, which seem to be creating just as much turbulence as the uncertain economic conditions themselves. Investors and stakeholders want increasing ROI and are expecting their boards to realise their expectations. They want transparency and they want to trust those they have put in governance positions. ‘Guidance on board effectiveness’ issued by the UK Financial Reporting Council says that ‘the CFO has a particular responsibility to deliver high-quality information to the board on the financial position of the company’.
With this in mind, what then is the role of the CFO on the board? According to a recent CIMA panel discussion titled ‘The role of the CFO on the modern board’ the CFO plays a particularly important role in the functioning of the board and its ability to cater to the needs of investors. The CFO is seen as: • The guardian of integrity and quality of all management information • Connector of dots, understanding how different parts come together to create value • Through communicating insights, he or she is an influencer for better decision making.
TASKS
RELATIONSHIPS
Financial security The CFO’s responsibility is to ensure that the business is financially secure ensuring that the company has financial stability in the short-term while working through the longterm financial issues. To be on top of the business the CFO needs to understand what is driving the business.
Head of HR for finance People selection is fundamental as controls alone will not hold the business together. They need to be reinforced by the right behaviours, training, coaching, development and the tone from the top. The CFO must strive to provide objectivity and integrity for the entire organisation.
Compliance and control Building on the financial security the CFO needs to ensure that not just financial controls but the overall business controls are fit for the purpose as the organisation grows, evolves and becomes more complex.
The CEO/CFO relationship In this relationship the CFO plays an important role in providing checks and balances. The key competency is to choose the right ‘battles’ on where to have the most impact in a challenging but constructive way.
Strategic direction The CFO needs to help business navigate the shifts in the way that the business is changing and be in the position to advise on strategic direction. He or she needs to be in tune with the external environment in a manner that helps him/ her or the business act and react in a speedy manner.
Management team member The CFO works with peers, helping and supporting the CEO to drive the agenda. To an extent this is a filtering role, determining which issues can be sorted within the peer group and which need to be escalated to the CEO for resolution.
Capacity building The CFO must lead the finance community within the organisation and build capacity for the future.
Executive director of the company The key aspect of this role is to inform the agenda of the audit committee and provide the second view on how the organisation is doing. In addition to the CEO, the CFO should recognise the importance of the role of the chairman of the organisation to good governance and therefore work on building a constructive relationship.
By
Badibanga Promesse | Regional Vice President | CIMA Africa | Badibanga.Promesse@cimaglobal.com
drive this vision, the CFO would have the tools at his/her disposal to identify opportunities to extract value, realign resource requirements where necessary and ensuring that every function is fit for purpose. • Impact on value is analysed
The CFO’s role is therefore seen in terms of two key perspectives – tasks and relationships.
This Principle helps organisation to simulate different scenarios to understand their impact on generating and preserving value. Once value has been extracted, the CFO will be in a position to analyse the effect on the business, optimise processes to extract efficiency and engage with stakeholders to effect a holistic change. • S tewardship builds trust
It was agreed by participants that the ‘Guidance on board effectiveness’ reiterated the fundamentals of the Global Management Accounting Principles (GMAP’s) which are: • C ommunication provides insight that is influential The Principles have been designed to help organisations cut through silos and encourage integrated thinking, leading to better decisionmaking. In terms of financial security, the CFO can effectively communicate the strategic direction of the business and bring together stakeholders who understand and embrace the overarching vision. • Information must be relevant This Principle provides guidance on identifying past, present and future information, including financial and non-financial data from internal and external sources. This includes social, environmental and economic data. In order to
Accountability and scrutiny make the decision-making process more objective. Balancing short-term commercial interests against long run value for stakeholders enhanced credibility and trust. The CFO as the guardian of the integrity and rigour of all management information, both financial and non-financial, from inside and outside the organisation, across different time frames. The CFO needs to ensure the provision of quality metrics. In conclusion, the panel discussion suggested the following tips to help the CFO juggle the tasks and relationships with the aim to make very good use of board time: • Plan carefully • Manage expectations • Use opportunities for free flowing conversation • Think carefully • Use technology effectively n
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FINANCE & EQUITY
BusinessBrief
October/November 2016
Regulating Crowdfunding In South Africa, crowdfunding is still a new concept, not clearly understood or trusted by most and there is no specific mention of ‘crowdfunding’ in any piece of legislation, nor is there any proposal of legislation in the pipeline.
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rowdfunding is a way of soliciting funds from the public on an online platform; money is raised in small amounts usually in the form of donations or investments to fund different causes ranging from business ideas to charity initiatives. Promising For businesses, crowdfunding promises capital for entrepreneurs in need of funding while for charity causes it promises a helping hand. Crowdfunding has the potential to impact on the growth and development of small businesses and in most jurisdictions including South Africa, crowdfunding is seen as an innovative way to facilitate funding for small and medium sized enterprises (SMEs), with a goal of promoting economic growth and development. In SA, it seems to be gaining momentum amongst entrepreneurs who may have had trouble in accessing funding through the traditional models of financing, such obtaining bank loans. However, it is not guaranteed that entrepreneurs in need of funding will achieve their goal, as the receipt of funds is dependent on the success of the entrepreneur’s campaign. Crowdfunding platforms such as Thundafund require projects or campaigns to reach their funding target within a set period, failing which any funds received will not be transferred to the campaigner and contributors will be reimbursed.
banks / funders in approving applications, the crowdfunding platforms furnish such entrepreneurs with three main benefits: • a platform to pitch an idea to a wide range of potential funders or investors; • a marketing tool, because by launching a campaign on the platform the entrepreneur is essentially marketing his or her brand, making the crowd aware of the brand or the product and possibly establishing a customer base; and • Easy access to capital. Regulations The Financial Services Board has noted the activity of crowdfunding in SA and has highlighted that despite the absence of regulation; crowdfunding activities may already be subject to or find application within existing legislation. It has advised that a person interested in crowdfunding activity must first contact the Financial Services Board to establish whether the activity falls within the sphere of existing legislation or otherwise one might fall foul of the law.
Raising risks Furthermore, it has been argued that crowdfunding raises potential risks to the investing public within the financial services industry such as fraud, money laundering, platform failure and business failure as funding does not guarantee returns, lack of due diligence and disclosure risks such as lack of liquidity and the inability to obtain a return on the investment. It is because of such risks that a need for regulation arises in order to protect the unsuspecting crowd, but also to further promote certainty within the public.
In light of the highlighted risks and the approach adopted by the Financial Services Board, the question that arises is whether it is correct to assimilate crowdfunding with activities that are generally regulated under existing legislation while keeping in mind that crowdfunding may be associated with a number of elements such as investment management, consumer protection, client credibility, tax implications and intellectual property. Alternatively, should the Financial Services Board propose a specific piece of legislation designed to cater for all the identified benefits and associated risks of crowdfunding? It may also be necessary for one to consider how far the arms of regulation should go, whether it is the crowdfunding platform that should be regulated or whether regulation should also extend to the relationship between all parties participating on the crowdfunding platform.
While the traditional models of funding for small business entrepreneurs could mean that such entrepreneurs will be faced with complicated paper work, tax considerations, insufficient skill considerations and delays by
The Financial Services Board’s challenge will lie in striking a balance between encouraging crowdfunding, which promotes easy access to capital for businesses, on the one hand and protecting investors on the other. n
By Portia Mashinini | Candidate Attorney | Portia.Mashinini@webberwentzel.com & Kent Davis | Associate | Kent.Davis@webberwentzel.com | Webber Wentzel
BBBEE – need for accurate certification
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he Broad-Based Black Economic Empowerment (BBBEE) commission, founded to investigate and deal with fronting, fraud, and other BBBEE transgressions, commented on the nearly 100 cases that it had received since April this year. The commission was established to monitor and address what was termed as ‘rife fronting’. Fronting Fronting is a deliberate circumvention of the BBBEE Act and Codes and commonly involves reliance on data or claims of compliance based on a misrepresentation of facts. Some of the core issues highlighted in fronting incidents by the BBBEE commission are organisations that position unqualified employees, such as a gardener or office manager as a board member or a shareholder. In such cases, it is common that these employees would be asked to sign documents without truly bearing knowledge of the nature of the agreement at hand.
stricter BBBEE codes - implemented on 1 May 2015 - together with the looming scrutiny of the BBBEE Commission, there would no doubt be more severe consequences for fronting going forward. The process of lodging a complaint is straightforward and can be submitted by anyone, even a disgruntled employee or a competitor that suspects foul play. Those who lodge complaints will now also be able to follow-up on the progress of investigations and findings. Engaging in fronting knowingly Engaging in BBBEE fronting is a criminal offence and can lead to fines of up to 10% of the entity’s turnover or up to 10 years imprisonment. Of course, the company in question would have to engage in fronting knowingly for these penalties to apply. However, any negligence on the part of the company could hold consequences of its own, such as an investigation by the Commission.
There have also been instances where companies duplicate the organisation in order to increase business within the public sector while a noncompliant entity offers the same products and services in the private sector.
The BBBEE Commission views fronting as a prevalent problem and as such, is not only renewing its efforts to root out cases of fronting, but - according to legislation – BBBEE verification agencies are also expected to report instances of fronting.
Cases were also found where a Black person would be appointed as shareholder or board member, without fulfilling the duties associated with this role.
In addition to financial and criminal penalties, misrepresentation of a BBBEE scorecard can result in severe reputational damage to a business as well.
Lodging a complaint There has been a lack of consequences for such cases, as no ‘watchdog’ existed to investigate claims of fronting. Under the new,
Businesses can work with an accredited and reputable BBBEE verification agency to ensure their BBBEE status is evaluated and reported correctly. n
By Mohamed Khan | BBBEE Manager | MAZARS mohamed.khan@mazars.co.za | @Mazars_SA
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56
BusinessBrief
October/November 2016
ASSETS & INVESTMENTS
Rising stars & fallen angels By Dr Andrew Dittberner | Chief Investment Officer | Cannon Asset Managers | andrewd@cannonassets.co.za | @AndyDitts
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onventional wisdom tells us that large, established companies are a safer and better investment option than smaller companies. These ‘blue chips’ are the perceived stalwarts of the market, while smaller companies are regarded as riskier. While there may be an element of truth to this, taken in the extreme it could be a dangerous approach on which to build a portfolio.
such as Impala Platinum, ArcelorMittal, African Rainbow Minerals, Exxaro and Lonmin, at one time or another, were market darlings. Going back 40 years, in comparing the names of blue-chip companies of 1975 to today’s big names, only five companies have maintained their blue chip status: Anglo American, AngloGold, AngloPlats, Remgro and SABMiller.
Too big to fall… In the South African context, companies making up the JSE Top 40 Index are viewed as blue chip due to thier sheer size, as measured by their market capitalisation. This would suggest that not only are they great businesses, but these blue chips have also proved to be great stock picks in the past. In turn, this encourages the view that these companies will remain solid investments because they are ‘too big to fail’. From this, it is a short leap to simply employing an autopilot approach of blindly investing in larger companies.
Shrinking in value Of the 40 companies comprising the Top 40 Index in 2005, only 13 companies have managed to perform better than the market as a whole, on a total return basis, over the preceding 10 years. Even more startling is the fact that 11 companies produced negative real returns, while over the same period the market returned 370%. Thus, 28% of South Africa’s blue-chip companies have shrunk in value, causing a write down in the real wealth of investors. Furthermore, 40% have failed to beat the market. The story is not dissimilar when looking over a shorter five-year period where only 16 companies have been able to outperform the market and, again, 11 companies produced negative real investment returns.
In ascension or decline? History, however, tells a slightly different story. At any moment, market indices comprise companies that are in ascension as well as decline or, to put it more colourfully: rising stars and falling angels. One only has to look at the historical constituents of the JSE, from a super-sector perspective, to get a sense of the evolution of indices and markets. What was seen as a great investment in 2010, following the commodities super-cycle, for example, would have turned out to be a very poor investment five years later. To begin to understand the vagaries the exist within the top counters, consider that among the JSE’s ‘fallen angels’
How risky? From a small- and mid-cap point of view, although blindly picking companies remains a dangerous approach, the likelihood of selecting winners is substantially enhanced. But the chance of picking a company that destroys capital is also increased. Over the past 10 years, 47% of small- and mid-cap companies have outperformed the market and 29% have produced negative real returns. Over a fiveyear period, 49% of mid- and small-cap companies have outperformed the market and 33% have produced negative real returns. It is, therefore, among this group of companies that investors will uncover rising stars. The evidence above dispels the notion that investing in large companies is a safe investment approach. If anything, investors should have anxious nights if they have invested in large companies based solely on the premise that they are blue chips. The probability of being invested in an underperforming share, or worse, a potential fallen angel, is real when subscribing to the view that large companies are ‘too big to fail’. n
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ASSETS & INVESTMENTS
BusinessBrief
57
October/November 2016
Distressed property solutions
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By Adrian Goslett | Regional Director and CEO | RE/MAX | Adrian@remax.co.za | @remax
f financially distressed homeowners don’t relook at their situation and make the necessary adjustments as soon as they can, they will find themselves in a far more dire predicament. The worst thing that a financially distressed homeowner can do is nothing – it is imperative that action be taken immediately.
repossessed. However, not contacting the lender and defaulting on the bond repayment could result not only in losing the property, but possibly a blemished credit record and black listing. A negative credit record can make even renting a property difficult because most property owners do credit checks on their potential tenants.
Repossession They should take stock to determine whether they will be able to continue to bond their bond or not. If the answer to this question is no, they should contact their bank and notify them of their current financial circumstances. Many homeowners avoid this as they Business Briefthat Advert 2.pdf 1 will 2016/09/21 are worried their home be
Communication is key It is in both the banks and homeowner’s best interest for the owner of the property to continue living there and paying the bond. For this reason, banks will often try to assist homeowners where possible by perhaps rescheduling the debt or giving 04:25:43 PM advice. financial
Speak to the professionals In the instance where the situation has moved beyond the homeowner’s own capabilities, it is advisable to consult with a professional debt counsellor who can review the homeowner’s circumstances and provide a possible solution or guidance. Once the counsellor has assessed the homeowner’s finances, they will be able to submit a repayment proposal to all the relevant creditors. An application will then be made in court to have the proposed repayment plan granted to ensure that legal action cannot be taken against the homeowner and the bank will not be able to repossess the property. n
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+27 (011) 325 5914 | info@afrikatikkun.org | www.afrikatikkun.org
58
BusinessBrief
October/November 2016
ASSETS & INVESTMENTS
Mixed basket of currencies A hybrid facility, blending a basket of local and hard currency with a bank hedge, provides an alternative to managing currency volatility and liquidity risk in African commercial property transactions.
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dollar yield accounts for much of the attraction of investing in African commercial property. A US dollar-yielding commercial property investment, ideally needs to be funded with a US dollar denominated debt instrument. Protracted devaluation Since commercial real estate in Africa typically generates earnings in local currency even though it is indexed to the US dollar, risk arises when the local currency depreciates against the US dollar. African currencies are currently in protracted devaluation against the US dollar. In this environment, African commercial property funds are increasingly running into US dollar-driven volatility and liquidity challenges as local currency earnings devalue against US dollar-denominated debt. As the US dollar continues to appreciate against African currencies there is likely to be downward pressure on rentals as more local currency is needed to generate the US dollars required to service hard-currency denominated lease obligations. Either that, or vacancies will increase as tenants can no longer afford to fund the growing difference between local currency earnings and US dollar lease obligations. Added to this, investors’ ability to convert local currency rentals into hard-currency is becoming increasingly strained as hard-currency liquidity dries up in some markets. Basket of currencies The proposed solution is to blend the denomination of the investment in a basket of currencies – similarly secured by a multiple-currency denominated bank hedge. It is believed that this approach would entail a complete shift in thinking about how investments, leases and debt instruments are denominated. Hybrid approach In other words, this blended or hybrid approach for
managing currency volatility and liquidity risk in Africa has two parts. Part one provides a partial hedge against depreciation, part two provides a multiple-currency bank hedge, partially relieving the business of the obligation of sourcing US dollars to make repayments or repatriate earnings. This blended approach reduces currency volatility risk, while also ensuring that the bank assumes some of the risk, or obligation, of providing the requisite foreign currency when earnings need to be repatriated – rather than the business. Currency alternatives Moreover, in environments where central banks focus almost exclusively on managing currency levels through high interest rates, value will always need to be stored in foreign currency – largely US dollars. When US dollar inflows decrease, central banks are often forced to allocate US dollars selectively in auctions. Having one’s commercial property investment denominated in a basket of currencies gives financial institutions more currency alternatives to provide the money to repatriate earnings. This is especially so in East and Southern Africa’s more diversified economies where inflows in euros, Canadian dollars and yen, for example, might remain strong even where central banks experience short-term US dollar shortages. Buys businesses time Yet another advantage of the blended hedge approach is that it buys businesses more time. Generally in Africa, financial institutions run out of US dollars first, often retaining healthy holdings of euro, yen, rand and renminbi even after their US dollars have dried up. When financial institutions run out of US dollars, investors are unable to repatriate their earnings - and have to wait in line until the institution replenishes its US dollar holdings. Having part of a commercial property investment denominated in currencies other than the US dollar means that financial institutions will be able to continue allocating foreign currency to investors seeking to repatriate earnings – even after US dollars have run out. However, if liquidity shortages persist, eventually all currencies would run out. n
By Wicus Badenhorst | Head of Real Estate | Finance for South and Central Africa | Standard Bank Wicus.Badenhorst@standardbank.co.za | @standardbankza
Bulk up BEE weight The traditional approach to BEE property investment has been to focus on the acquisition of assets that have large public-sector tenancies. While this was a viable approach a decade ago, in today’s market this strategy has become stale.
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more exciting opportunity lies in investigating the potential for sale and leaseback agreements, which can bolster companies’ balance sheets, and simultaneously reap BEE rewards. Lease-back The notion of leveraging sale and lease-back agreements to improve a BEE rating is innovative, yet simple. One of the ways to improve a company’s BEE scorecard is to increase BEE procurement spend. And one of the main expenses for a company is rental. It makes sense for a company to explore the notion of selling their property to a BEE-compliant company, and then to rent it back through a longterm lease. This would improve the company’s procurement profile. Thinking about sale and leasebacks in the context of BEE is only now beginning to gain traction. This has not necessarily been ‘top-ofmind’, but upon consideration, becomes a compelling prospect. The commercial point of view is that these assets are non-core. Selling lazy assets Companies that could benefit from this approach are large corporations that have ‘lazy’ assets on their books. These entities don’t need to raise capital, as they are not concerned with a financial transaction. However, from a corporate social responsibility perspective, and in terms of JSE requirements, it is important to increase BEE points as much as possible. If they were to sell
these ‘lazy’ assets to a Level 1 BEE concern, they would improve their procurement profile. Another type of company that could use this strategy are those multinationals with very little or no BEE profile, yet as providers of necessary equipment or services to public companies, they would critically need to increase the BEE rating of their South African operation. Not always favourable Conditions might not always be favourable for sales and leasebacks though such as in the following case. A strongly BEE compliant company mandated a property broker to sell their portfolio. What wasn’t fully considered was that by selling the portfolio, the company’s procurement spend would be allocated to entities with non-BEE status, ultimately weakening its own BEE status. So it works both ways. The bottom line is that there is benefit in considering the implications of any sale and leaseback agreement from a number of angles, in the context of BEE. While there is a great competitive advantage in having a level one BEE partner, the focus should always be on quality assets. The winning formula is a good quality asset that happens to be owned by a black-owned and controlled firm. Interestingly, we are seeing that BEE funds are, in fact, moving in this direction.” n
By Lyndon Kan | Executive Director of Divergent Real Estate lkanbravura.net & Andrew Glencross | Executive Director of Divergent Real Estate | aglencross@bravura.net | Bravura
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BANKING & INSURANCE
BusinessBrief
October/November 2016
Cartels criminalise individuals! New legislation that came into effect on 1 May 2016 now holds individuals involved in Cartel behaviour personally liable for penalties in their personal capacity of up to R500 000 or ten years imprisonment, labelling it a criminal offence.
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artel behaviour is nothing new and takes the form of colluding with competitors to fix prices, divide markets among themselves or collude in relation to the award of tenders. Cartel behaviour has historically been addressed by the competition Act of 1998, which took various companies to task in the form of hefty fines, while very little action and consequences were taken against directors who practice cartel conduct. Criminal offence However, new legislation that came into effect on 1 May 2016 now holds individuals involved in Cartel behaviour personally liable for penalties in their personal capacity of up to R500 000 or ten years imprisonment, labelling it a criminal offence. These new changes do not only hold the directors and officers involved in the action liable, but also those who have had actual knowledge of collusive conduct without taking any preventative action. For this reason, a correctly structured Directors and Officers (D&O) liability insurance policy could potentially be a lifeline. What is D&O liability insurance? The main purpose of a D&O policy is to offer financial protection for executives, which provides investigation and defence costs together with awards for a valid claim. The cover that a D&O liability insurance policy provides is necessary when it comes to the protection of the personal assets of directors, officers and other employees that are charged with supervisory and managerial responsibilities, who can be held liable for wrongful acts, which may occur in their day to day management activities. If cartel behaviour is suspected, the Competition Commission or Competition Tribunal will start their investigation by requesting information from the director or manager to appear at meetings or to provide them with information. In some instances, a company can also
be raided to confiscate documentation, records or other information that the Competition Commission or Competition Tribunal may need in their investigation. It is also crucial to note that any statement made by the directors or managers that give formal written admission could result in them waiving their insurance rights. It is recommended that directors and officers advise their broker and insurer of the situation as soon as possible to activate their D&O cover. The insurer’s written consent is required before any fees, costs and expenses will be permitted in their preparation and response to the inquiry. The D&O policy will pay pre-investigation costs if the extension is available on the policy, in addition to paying defence and investigation costs until the matter is resolved in court. Dishonest or fraudulent acts will void The policy will, however, stop responding if there were any deliberately dishonest or fraudulent acts or personal gain on the part of the director or officer, which could also result in the insurer potentially reclaiming any costs incurred from the director or officer. Certain D&O policies make provision for civil fines and penalty fines arising from anticompetitive behaviour, but only where there has been no determination of intentional, grossly negligent, wilful misconduct or wilful breach of the law by the directors. These particular fines need to be permissible by the court before they can be paid by the insurer. Why is D&O liability insurance important? Directors and officers can be held personally responsible for losses and face costly litigation in prolonged legal proceedings, defending claims. Whilst they would normally expect to be indemnified by the company, directors and officers should not rely on the company to incur the costs of the cover, as in some instances, companies may be prohibited from doing so either by law, financial inability or corporate policy. n
By Geoffrey de Pinchart | Unit Manager Directors and Officers Liability Aon South Africa | geoffrey.de.pinchart@aon.co.za | @Aon_SouthAfrica
BANKING & INSURANCE
BusinessBrief
Streamlining payments industry By Chris Hamilton | Chief Executive Officer | BankservAfrica chrish@bankservafrica.com | @chrisbsvafrica
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here are revolutions underway in global payments infrastructure – and it is necessary to re-design them to keep up with the ‘payments Joneses’. The economy of the future will need a vastly different platform for making payments. Consumers and corporations will need access to easier, faster and flexible platforms. There are revolutions underway in global payments infrastructure – and it is necessary to redesign them to keep up with the ‘payments Joneses’. Don’t want to think about it Payments infrastructure design is similar to plumbing and sewerage – we all really need it, but we don’t want to spend a lot of time thinking about it. To meet the future payment needs of our community and our economy, businesses need to approach payment system modernisation empirically, inclusively, holistically but above all, collaboratively. The design process really matters. System design also doesn’t happen by itself, it needs intense collaboration. Variation Payments systems vary between, and even within countries, and are complex. They serve different agendas and business needs. One only has to look at the variation from PayPal to Bitcoin, Visa to Mastercard; and the range of secure options offered by individual banks. Given the complexity, infrastructure redesign is costly, complicated and highly contentious, and thus only takes place every 20 to 30 years. The time, however, for a new South African design is now. Otherwise, the South African economy will not have the basic plumbing it needs for the future. Left behind? Globally, there is a step-change happening in national payments infrastructure, from overnight batch with basic data to real-time, data-rich, flexible and layered. South Africa must join the trend, or be left behind. Global lessons Since time immemorial, we have been expecting our customers to adapt the way they pay to our available ‘set of rails’. So if you want to buy something at the shop, you get out your card. There is nothing wrong with this; it is just the way the world looks right now. But will this do for the digital economy of the future where other aspects of our lives are fully online, real time and automated? We need to start thinking creatively now because new systems take a very long time to develop – at a minimum five years. This is not because of the technology; it’s because of all the competing business and policy interests.
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This approach calls for a rigorous, inclusive process. The US – the world’s largest and most complex payment market – is the least designed because it is just too big. There are 13 000 payment institutions with millions of interested parties. Co-created networks The United Kingdom, Canada, Australia and the United States of America all have gone a long way towards renewing their payments infrastructure. There is no substitute for the industry players doing it themselves, and together. Co-created networks are always better than government-built networks or compliance-driven outcomes. Only the participants know how the whole thing really works. Streamlining the payments industry is still like herding cats, but a business-led process can be powerful and galvanising. It can also radically reduce the cost base, while revolutionising the industry. n
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BANKING & INSURANCE
Bank alternatives challenging
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s disruptive bank alternatives pose new challenges for the banking industry, it is also creating a pivotal opportunity to regain relevance with consumers. With the emergence of digital and innovation, traditional banks’ connection to their consumers is now more important than ever. Measuring bank relevance To measure the state of bank relevance, more than 55,000 consumers around the world were surveyed this year to produce the Bank Relevance Index (BRI). The BRI measures a range of current and future behaviours and attitudes to build a composite score based on: •H ow consumers currently use banks: role of the primary financial service provider and banking products and services consumers use • H ow consumers want to use banks in the future: a combination of consumer trust in banks and the products and services they would consider buying from banks in the future No country is immune BRI in South Africa stands at 75.1%, in line with the global average, but higher than emerging markets at 71.9%. This suggests that in other emerging markets, banks are more susceptible to losing market share to new market entrants in comparison to their counterparts in South Africa. A closer look at underpinning drivers suggests that banks remain the primary financial services provider for the majority of surveyed consumers; however, decreasing bank relevance results, primarily, arise from the decreasing relevance of products and services. Not using banks for new products Despite higher trust levels among SA consumers, many
are not utilising traditional banks to buy new products and services, severely diminishing overall bank relevance in these markets. The research shows that consumers trust banks to ensure their money is secure, but tend to question whether banks provide high quality unbiased advice. In addition, consumers question whether their bank’s products will remain relevant to their needs in the future. Bank relevance by demographics BRI varies across age groups with consumers younger than 24 years and those older than 65 years having the highest BRI (76.3% for below 24s, 78.5% for above 65s). The higher index for younger consumers may be indicative of credit needs within in a country, where youth unemployment rates are relatively high and where this market segment previously had not had access to financial services. Income contributes Income levels and level of education are also contributing factors, with banks becoming less relevant in higher income brackets and for individuals with higher levels of education. BRI is relatively constant across the major banks in SA. The BRI score, however, changes with respect to the expected relevance of future products, where all of the SA banks rate relatively low. This indicates that, in the future, non-traditional banks and new entrants will become larger factors for SA banks to consider. These observations, combined with data from the survey suggest four actions banks can take to regain the consideration of consumers across their full range of products and services: 1. D ifferentiate products and services from new entrants through innovation, potentially by emulating, partnering with or acquiring Fintech companies. 2. S ignificantly enhance the consumer’s experience, through simple, personalised consumer journeys. 3. E nable the frontline to rebuild trust by radically overhauling their skills, culture, incentives, processes and tooling. 4. G o beyond banking and provide services that support consumers throughout life events, in order to deepen the relationship banks have with their consumers. n
By Marius van den Berg | Financial Services Advisory | Director | EY | marius.vandenberg@za.ey.com | @EY_Africa
BANKING & INSURANCE
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October/November 2016
Beware of on-demand guarantees By Lischa Gerstle | Partner | Bowman Gilfillan | l.gerstle@bowman.co.za | @BowmanGilfillan
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t is South African market practice in the context of financing transactions that when a party is required to provide a guarantee in respect of another party’s (debtor) obligations to a creditor that such guarantee is treated like a call or ondemand guarantee. Until now, not much thought has been given as to whether such a guarantee can be treated as anything other than just that – an ondemand guarantee. Principal obligation Typically, an on-demand guarantee will include wording such as “this is an unconditional and irrevocable guarantee” and “the guarantor hereby undertakes (as a principal obligation enforceable against the guarantor) to pay”.
Akin to a suretyship A recent Supreme Court of Appeal judgment, however, has caused some confusion in this regard. In this judgment, a purported on-demand guarantee was found to be inextricably linked to the performance by the debtor in respect of the underlying contract and therefore to be akin to a suretyship, as opposed to an on-demand guarantee. In reaching this conclusion, the court referred back to the parties’ intention in respect of the guarantee and in so doing found that the guarantee could not be considered an autonomous guarantee or obligation, but rather that it was inextricably linked to the underlying contract and the performance required by the debtor in respect of that underlying contract.
Connecting People...
State expressly To avoid this conclusion with guarantees, which are intended by the guarantor and beneficiary of the guarantee to be ondemand guarantees and not suretyships, it is important for South African law purposes that that guarantee expressly states that the parties intend that the guarantee be a principal obligation and not merely an ancillary obligation. Essentially the guarantee should state that the guarantor “hereby (as principal obligor and not merely a surety), irrevocably, unconditionally and on the basis of a several and discreet obligation enforceable against the guarantor whether or not any or all of the guaranteed obligations are enforceable against the Debtor” to avoid any kinship to a suretyship. n
Connect with us t. 011 440 3430 m. 083 407 2690 e. vickyb@limemarketing.co.za
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powerhouse of connectivity; successful company networking; business training programmes; one-on-one introductions; state-of-the-art Israeli products and technology; monthly local and Israeli newsletters; proactive promotion of business and investment between South Africa and Israel; business delegations to Israel. Join SAIN (part of the SAICC) & watch your business grow and flourish; gain invaluable skills and learn from the experts profit from the dynamic opportunities on offer - and forge ahead to take the lead in your sector. Results speak for themselves; success breeds success; SAIN members are right there in the frontline of victory.
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MARKETING & SELLING
RTB ups ROI? By Paula Raubenheimer | MD | SouthernX | paula@SouthernAdx.com RTB Programmatic buying is a relatively new concept in South Africa and it uses highly advanced technology – both of which can make it seem intimidating.
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he way in which advertising inventory is bought and sold on a per-impression basis, via programmatic instantaneous auction, similar to financial markets is defined as real-time bidding (RTB). If you are a marketer who has mainly operated outside of digital planning a programmatic ad-buying budget probably feels overwhelming. The reality is, programmatic buying allows more control over your advertising campaign than most traditional platforms. Fast paced Media buying and selling is fastpaced and being able to make decisions in real-time can give your brand a competitive edge. Simply put,
programmatic buying enables brands to utilise audience insights and technology to tailor messages to the right person, at the right moment, in the right context. This means that the real-time data provided through the technology creates the opportunity for greater efficiency and improved campaign outcomes. Here is a case study that proves just that.
it ensures that you’re getting the best results for the money that you spend on the campaign. From a data perspective, it would be a shame to only run a standard display campaign when you could also be building an audience segment of users that can be excluded from the current campaign once they have been converted - and then retargeted in future with a very specific campaign.
Goals of the Campaign A sports betting company wanted to test an online campaign to generate new business by garnering new client sign ups to increase deposits. Their secondary goal was to reactivate existing, but dormant clients.
The Process In phase 1, both mobile and display inventory was targeted across three publisher groups on the platform - sport, motoring and news, with unique creatives developed for each channel.
The campaign set up was configured in such a way that every conversion recorded captured the deposit value as well as the user ID, thereby allowing the client to attribute a direct value to the conversion and also determine whether the converted user was a new acquisition or a reactivation. The ability to know exactly what the value of a conversion is, without estimating, is a powerful measurement tool that programmatic buying, if set up correctly, can provide to buyers.
Results The results for phase 1 proved that the news channel outperformed sport and motoring across both mobile and display. In addition, display outperformed mobile, both in terms of number of conversions and the value attributed to conversions.
The approach The campaign was run over two phases: • Phase 1 was to test the inventory. • Phase 2 was to optimise the campaign based on the results of the first phase. Phase 2 is extremely important for a number of reasons, firstly to have the ability to optimise your campaigns based on actual data is immensely powerful;
This was contrary to what was expected, as one would have assumed that the sports channel would perform best for a sports betting business. As a result of the above, for phase 2 the majority of the budget was moved to the news display channels, where underperforming creatives were also taken out of rotation. Programmatic buying is a way to automate fully the often complex processes that advertisers must consider when purchasing display, mobile and native ads. Simply put, programmatic buying gives marketers, media buyers and brand managers a simplified way to read analytics and make more intelligent decisions going forward. n
MARKETING & SELLING
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October/November 2016
African Public Relations Public Relations firms are reaping the benefits of the move towards digital and social media activity.
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rowth and development in the communications industry continues to rise in all sectors of the market. Public Relations firms are reaping the benefits of the move towards digital and social media activity with over 70% of consultancies reporting that they are the main drivers for growth. This is especially true for the African market where opportunities are expanding as the economy in the region continues to strengthen and grow. Need for PR The World Bank’s Global Economic Prospects report lists six African nations in the top 13 countries around the world with the highest projected compounded annual growth rate from 2014 to 2017. This kind of growth along with the associated interest and increased investment from local and international companies will undoubtedly create a greater need for quality public relations and communications on the continent. The effect of this is already being seen with global agencies opening fully-fledged offices to allow them to operate more efficiently and effectively. For example, last year well known agency Hill+Knowlton opened an office in the key West African market of Nigeria. The success of these agencies however does not end with having a presence in Africa, it is about ensuring that they are able to understand and adapt to the needs of these markets. Localisation is important Too often, agencies try to mirror what they do in their home market in another market – simply changing the media list and angle but otherwise keeping everything else the same, only to find that success is limited and non-lasting.
various regions) has its own personality and rules of engagement and needs to be understood and adhered to if one wants to establish a credible presence in the market. Good local talent The other challenge is finding the kind of good local communications talent that is needed to create and deliver good communications strategies and campaigns. New media skills, sophisticated content development, crisis communications and effective social media strategies are all required. This kind of talent may not be immediately available and may need to be trained and nurtured. This includes new media and social media skills that are critical nowadays as digital media continues to be the fastest driver for growth. Mobile is massive in Africa Ironically, despite the impression that Africa lags the rest of the world when it comes to technology, mobile marketing is massive on the continent. This is due to high mobile usage and access to desktop computers is comparatively low. Further more mobile penetration is increasing all the time, which presents PR and communications companies with massive opportunities. Mobile marketing is no longer seen as an add-on but rather as an essential platform for reaching target audiences, especially the rapidly growing and digitally connected under 35 middle-class demographic. However, traditional media should not be ignored as many companies still want traditional coverage in print and broadcast as well. Agencies therefore need to be able to combine print and cutting-edge digital skills to satisfy their clients’ expectations.
Localisation does not merely mean including certain local facts, quoting local representatives and adding a bit of local ‘flavour’, but rather attempting to understand how the media and business landscape work in order to correctly position the brand and build a local business reputation.
Partnering locally It is also a good option to look for an agency to partner with – one that is already operating in the local market and therefore has contacts and knows the local industry taking into consideration that it is important to create a real partnership where knowledge and experience is shared rather than one dominating the other.
Understanding how the politics, geographical location, religion, cultural backgrounds and even the weather influence communication and your strategy is what true localisation is about. Each market (broken down into
Regardless of how the challenges and opportunities for public relations agencies are addressed, Africa represents an exciting and fresh opportunity for agencies, which are willing to adapt and approach the market strategically.n
By Jacqueline Boulo | Owner | Innocomm | jacqueline@innocomm.co.za
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MARKETING & SELLING
Advertising & marketing Ombud
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he Advertising Standards Authority of South Africa (ASA) has approached the National Consumer Commission (NCC) for accreditation as an ombud scheme for the advertising and marketing industry, in terms of Section 82 of the Consumer Protection Act of 2008 (CPA). It has also proposed an industry code, the Advertising and Marketing Industry Code of Practice (the Industry Code), which was published for public comment in the Government Gazette of 26 July 2016. The Industry Code aims to ensure that all advertising and marketing in South Africa is informative, factual, and honest, conforms to fair marketing practices, and does not contravene any laws. Contribute to funding If the Industry Code is accepted, it will be compulsory for all advertising and marketing industry participants and subscribers to register with the ASA, and to comply with the Industry Code. They will also be required to contribute towards the funding of the ASA (it is proposed that a levy collection agency will be established for this purpose). ‘Advertising and marketing industry participants and subscribers’ is widely defined, and includes marketing and advertising agencies, media owners and their agents, media buyers and all other marketers and advertisers of goods and services in South Africa (such as retailers, suppliers, wholesalers, distributors, manufacturers, producers and importers). Bring in line Although the Industry Code overlaps, to a certain extent with the ASA’s current Code of
Advertising Practice, some changes were necessitated by the need to bring that Code in line with the CPA. The Industry Code appears to place more emphasis on consumer rights. Similar to the ASA Code, the Industry Code provides a basis for dispute resolution between two industry participants (i.e. competitor complaints), and between a consumer and an industry participant (i.e. consumer complaints). The complaints procedure overlaps with the current complaints procedure before the ASA. Initial complaints will still, in general, be considered by the ASA Directorate, and appeals may be filed with the Advertising Industry Tribunal, Advertising Standards Committee or the Final Appeals Committee, as the case may be. The sanctions that may be imposed by these tribunals have been limited to: • withdrawal or amending the contravening advert • submitting the proposed amendment(s) to the advert for pre-publication advice and • ordering the advertiser to publish a summarised version of the ASA ruling in certain media. The Industry Code also provides that non-compliance with ASA rulings will be escalated to the NCC, and dealt with in term of the CPA. Only a few of the 19 general principles that are found in Section II of the ASA Code have been incorporated into the Industry Code, including those relating to truthful presentation and substantiation of claims. Limitations However, many of the clauses in the ASA Code that often form the basis of competitor complaints before the ASA (including those relating to disparagement, imitation and exploitation of advertising goodwill) have been excluded from the Industry Code. In the circumstances, if the Industry Code is accepted in its current form, the grounds on which the ASA will be able to consider competitor complaints will be more limited. It follows, therefore, that, in certain instances where the ASA may have been an appropriate dispute resolution forum in the past, other suitable Tribunals may have to be approached in the future. It remains to be seen, however, which amendments, if any, will be made to the Industry Code before it is finalised and accepted. Interested parties have until 20 October 2016 to submit comments to the Industry Code. n By Jeanette Visagie | Associate | Adams & Adams Jeanette.Visagie@AdamsAdams.com | @AdamsAdamslaw
MARKETING & SELLING
BusinessBrief
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October/November 2016
Consumers’ evolving drivers By Dylan Piatti | Deloitte Africa Consumer & Industrial Products Chief of Staff | Deloitte | dpiatti@deloitte.co.za | @dylanpiatti
Historically, shoppers have made purchase decisions based primarily on traditional drivers, which are taste, price, and convenience. According to a global study a series of ‘evolving drivers’ have become an increasingly important feature of the international consumer’s purchase decision.
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hese evolving value drivers are health & wellness, safety, social impact and experience and transparency (overarching driver)
Region, age and income The growing importance of these evolving drivers is evident across region, age and income, and the same trends are discerned in Africa across the region. Eco-friendly In general, consumers are becoming aware of brands that emphasise elements such as being eco-friendly, organic and responsibly sourced. Sustainable value chain The South African Food and Beverage industry should focus on sustainable value chain development and production. If developed correctly, the country
could maintain and grow its competitive edge in both the local and the international markets. Digital closing the information divide Driving this shift in purchase decisions are consumers’ welldocumented digital addictions and growing tech savvy. Repositioning These types of consumer-led disruptions represent a unique opportunity for manufacturers and retailers to reset and dramatically reposition themselves in the market. The Value Equation Major brands are taking concrete steps toward becoming more responsible corporate citizens in the food and beverage sphere. The impending SA sugar tax anticipated for April 2017 may be an example of Government leading this concern around impacts on consumer health and wellness. n
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HUMAN CAPITAL
Bosses liable for staff crimes!
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here employees cause damage to property or persons in the course of their employment duties this can result in the employer being sued for damages on the principle of vicarious liability. In the matter of Hirsch Appliance Specialists vs Shield Security Natal (Pty) Ltd. security guards stole items from Hirsch Appliances while supposedly guarding its premises.
of their duties or during working hours •e nsure that their rules are comprehensively codified and thoroughly communicated to all employees •e nsure that all employees are properly trained in the employer’s rules and in their duties and have the necessary licences and qualifications for the job • discipline employees who break the rules
Despite the fact that the security company had not in any way been complicit in the theft, the company was found to be vicariously liable for the victim’s losses. Not even an employee It does not even always have to be the employer’s own employee who caused the damage. For example, in Midway Two Engineering and Construction Services Bpk vs Transnet Bpk (Contemporary Labour law Volume 12 No. 2 page 14), the employee, while driving a truck on Transnet property, caused damage to another person’s vehicle. Despite the fact that the driver was not a Transnet employee the Court found that Transnet was liable because it had the control of the employee at the time the damage was caused. Advice to employers Due to the extremely onerous responsibility of employers for the actions of their employees, employers are advised to: • obtain insurance cover against vicarious liability • insert protective clauses in employment contracts
•m ake sure that managers know that they are responsible for overseeing rule compliance Precautions The above precautions are in any case necessary regardless of the issue of vicarious liability. All employers, on a regular basis, need to have their policies, rules, employee qualifications, rule communication systems and performance appraisal procedures audited. This will not only reduce the risk of vicarious liability, but will also optimise employee compliance with the employer’s internal standards of work performance, safety and conduct. Where employers do not have the resources on board to conduct such regular audits, they should not use this as an excuse for failing to their duty. The cost of using external experts will be far lower than the cost of lawsuits, payment of damages, lost customers, materials wastage and rework. n
Despite the fact that the security company had not in any way been complicit in the theft, the company was found to be vicariously liable for the victim’s losses.
•e xert careful control of all employees who might come in contact with third parties in the course
By Ivan lsraelstam | Chief Executive | Labour Law Management Consulting | ivan@labourlawadvice.co.za
HUMAN CAPITAL
BusinessBrief
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October/November 2016
Change-Maker: Its Own Reward By Sibani Mngomezulu | Group Executive for Human Resources, Strategy & Sustainability | Barloworld | groupmarcomms@barloworld.com
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uring good, but even more crucially, during harsh times, one of the most critical assets for business sustainability is its human capital. Earlier this year Finance Minister Pravin Gordhan called on the private sector to partner with government to help address some of South Africa’s most pressing issues – including power supply, infrastructure, water availability and job creation. The SA economy is facing one of the most challenging periods experienced in years with low economic growth expectations. Harsh times While it is in the interest of big business to get on board, the current economic conditions are disproportionately harsh on business growth. The private sector has to ensure business sustainability under trying conditions, while considering its contribution to overall growth of the economy. During good, but even more crucially, during harsh times, one of the most critical assets for business sustainability is its human capital. Seek out the change-maker Companies have to focus on creating the kind of environment that not only attract, but also retain talent. More importantly, they need to actively seek out ‘change-makers’ in the workspace; those who can both contribute to corporate leadership and make broader socio-economic contributions. So what kind of people are changemakers for an organisation? These are people who understand their role in delivering on the company’s vision, who serve and make a difference with their passion, ideas and determined actions. They inspire others with the way they initiate changes in their environment, tackle challenges, pioneer new thoughts and use
innovative thinking to turn a situation around. They are adding value for the stakeholders of the organisation. Refresh, spark, build But what can be done to inspire change-makers, refresh their thinking, spark new ideas and build confidence to do things differently? Incentive tools can maximise employee performance, such as the implementation of balanced scorecards, which can be kept for both individuals
and teams, with the outputs measured and aligned with business objectives. Often, employees are measured and reviewed to see where they are performing well, and what improvements can be made, with the results ultimately impacting on salary increases, as employees are encouraged to take ownership of their career progression. Short-term incentives The implementation of short-term incentives for quick turnaround delivery, excellence and beyond the call of duty achievements can be beneficial – although in the long term employees are encouraged to focus on their career development with an eye on succession planning. With industry changes, people are pushed to adapt. Great employees seek flexibility, and by focusing on their needs, businesses are able to meet these demands. Being a change-maker Whether it’s introducing ground-breaking new innovations, or simply just doing a job really well and bringing great returns to the company, being a change-maker is a crucial approach to survive and excel in business today. But at the end of the day, change happens. Organisations, groups, teams, and those working in collaboration or partnership need to develop people’s confidence and capacity to be more effective change-makers. In business you get what you give – and therein lies the reward! n
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HUMAN CAPITAL
Reward professionals By Dr Mark Bussin | Executive Committee Member | South African Reward Association (SARA) | drbussin@mweb.co.za | @SA_reward
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ewarding professional in today’s tough sociopolitical climate where the economy is battling some severe headwinds is a great risk but also a great opportunity. How a company rewards its employees has become one of the flashpoints in this environment.
companies, like nations, need great leaders to be successful. CEOs and other executives carry an enormous burden of responsibility and expectation and the new Companies Act makes them personally liable for any decisions that go wrong. All of these factors mean they can and do command very high rewards.
Get it wrong, and the flames of resentment can be fanned into an inferno; get it right, and a corporate culture based on performance can be created.
Against this backdrop, it is important to create a reward structure that properly incentivises everybody in the company—but it’s never been more important to get it right. Here are a few pointers:
Inequality According to the Organisation for Economic Cooperation and Development (OECD), South Africa has an unemployment rate of 25.4 percent, the worst of all the countries they list. This creates a situation of huge inequality in the country, something that creates social instability. The same is true within companies, where the gap between what executives and lower paid employees receive is large and growing. The effect on corporate culture is devastating. Witch’s brew The most toxic ingredient of this witch’s brew has to be inflation, which has been eating into the value of everybody’s salaries but, of course, hitting the lowest earners hardest. Our official rate of inflation is 6 percent but that does not reflect the reality of the man in the street— food and transport inflation, two of the biggest items in his or her basket, have been growing much faster. For many people, inflation is much, much higher than 6 percent. Great leaders Equally important,
Improve business acumen You need to understand how the business works in order to create the right structure. And, in these times, it has to be done without just spending lots of money. Focus on the long term Ensure that pay for performance schemes are closely linked to the company’s actual performance—with a focus on the long term. Too often, executives take decisions that have negative long-term consequences in order to meet short-term targets. For example, reducing head count may help meet cost-reduction goals but jeopardise the company’s sustainability. Be on top of the effect of inflation on lower level employees Get a good fix on the salaries at the bottom of the pay scale, and the effect of inflation on these employees. As noted above, one has to be realistic about what inflation actually is, which means considering what these people spend their money on. Because this is not happening, we are seeing more and more of what I call ‘in-work poverty’—people whose salaries do not allow them to live decently. Work on a strategy to reduce inequality within the company inequality is dangerous. Rewarding professionals should play a leading role in helping to reduce it within the corporate environment. Make sure the optics work The focus should not be on what is legal, but what makes sense to all stakeholders. One of the key elements here will be to communicate the rationale behind the reward structure and what those who receive high rewards did to improve the company’s performance n
HUMAN CAPITAL
BusinessBrief
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October/November 2016
Workplace morale crushers By Lizette Bester | Executive | Agility Corporate | lizetteb@agilityghs.com
The relationship between staff morale, productivity and a business’ ultimate success is documented in corporate success stories of companies such as Apple, Google, Amazon, Walt Disney and Starbucks – all ranking highly in their respective industries in Fortune Magazine’s World’s Most Admired Companies for 2016. Golden thread The single golden thread running through each of these companies is that they understand that it is people rather than profits that build successful companies. Given the poor state of the economy, busy work schedules and that most companies are understaffed, it is more likely that companies believe their workforce should feel grateful for employment, irrespective of whether they find their work fulfilling. However, staff that lack job satisfaction may keep their noses to the grindstone, but are unlikely to go beyond the bare expected minimum.
Few pay attention Few businesses are paying sufficient attention to whether employees are performing at optimal level and whether or not they are fulfilling their true potential in the workplace. issues causing dissatisfaction among employees are more often than not overlooked, generally at the expense of productivity and ultimately at great cost to the success of the business. One can ask executives why staff members have left and they would most likely attribute it to ‘more money’. Exit interviews the world over, however, tell a very different story. The main reasons for poor staff morale,
resignations and a general lack of productivity as being boredom and a general lack of challenge, lack of financial stability of their employer, unhappy corporate culture, poor treatment of staff, poor communication and unclear expectations. Staff needs to feel that their contribution to the business is valuable, and that they are developing their skills and feeling a sense of challenge in their work. In order to achieve this, it is a good idea for managers to get to know the capabilities of everyone in the workforce and to encourage them to take on gradually increasing responsibility as they grow within their role in a company. n
A BUSINESS APPROACH TO RECRUITMENT Many recruiters can give me: Web based applications, electronic responses to my posted positions, and internet matching of candidates and positions
My recruiter: • Uses traditional head-hunting and recruitment skills • Visits my business and understand my requirements • Conducts definitive personal interactive interviews and reference checking • Has sound operational business experience and understanding of my business • Would definitely employ for themselves the people they send to me • Can interact with candidates on a business level to get the best information
Head-On Recruitment YOUR BUSINESS | YOUR CALL | YOUR CANDIDATES For your Recruitment Solution Contact:
Arlaine’ Kramer | Email: arlaine@head-on.co.za | Tel: 011 026 6000 | Cell: 082 884 1144
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INFORMATION TECHNOLOGY
UPDATE network access policy By Tim Zimmermann | Research vice president | Gartner | @Gartner_inc
By 2020, 21 billion of Internet of Things (IoT) devices will be in use worldwide. Of these, close to 6% will be in use for industrial IoT applications.
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owever, IT organisations have issues identifying these devices and characterising them as part of current network access policy. Infrastructure and operations (I&O) leaders must therefore update their network access policy to seamlessly address the onslaught of IoT devices. Headless devices difficult Having embraced a bring-your-own-device strategy, organisations must now get employee devices on the enterprise network and start addressing the 21 billion IoT devices that the project will want access to the enterprise network. Whether a video surveillance camera for a parking lot, a motion detector in a conference room or the HVAC for the entire building, the ability to identify, secure and isolate all IoT devices — and in particular ‘headless’ devices — is more difficult to manage and secure. Identify all devices & projects Many IoT devices will use the established bandwidth of the enterprise network provided by the IT organisation (wireless 1.3 Gbps of 802.11ac Wave 1 or 1.7 Gbps of 802.11ac Wave 2). However, it is important that the IT organisation works directly with facilities management (FM) and business units (BUs) to identify all devices and projects connected to the enterprise infrastructure and attaching to the network. Once all of the devices attached to the network are identified, the IT organisation must create or modify the network access policy as part of an enterprise policy enforcement strategy. This should determine if and how these devices will be connected, as well as what role they will be assigned that will govern their access. Connectivity policy In order to monitor access and priority of IoT devices, I&O leaders need to consider additional enterprise network best practices.
It is important that the IT organisation works directly with facilities management (FM) and business units (BUs) to identify all devices and projects connected to the enterprise infrastructure... These can be defining a connectivity policy, as many IoT devices will be connected via Wi-Fi; performing spectrum planning — many IoT devices may be using 2.4GHz, but may not be using 802.11 protocols such as Bluetooth, ZigBee or Z-Wave, which may create interference; or considering packet sniffers to identify devices that may do something undesirable on the network. While more IoT devices are added to the enterprise network, I&O leaders will need to create virtual segments. These will allow network architects to separate all IoT assets (such as LED lights or a video camera) from other network traffic, supporting each FM application or BU process from other enterprise applications and users. Virtual segments As the concept of virtual segments continues to mature, the capabilities will allow network architects to prioritise the traffic of differing virtual segments as compared with the rest of the traffic on the network. For example, security video traffic and normal enterprise application traffic may have a higher priority than LED lighting. n
INFORMATION TECHNOLOGY
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Document capture solutions By Malcolm Hart | CTO | i1Solutions | Mhart@i1solutions.co.za | @i1Solutions
South African organisations such as insurers, healthcare companies and government agencies still depend heavily on paper forms and documents for many of their business processes.
C
onstrained by regulations, budget and legacy systems, they cannot yet completely digitise all of these processes. Yet paper-based processes are slow, expensive and introduce scope for human error. They also damage customer satisfaction and tie up corporate resources that could be deployed to areas of the business that add more strategic value. To address these challenges, South African businesses are starting to look towards distributed document capture solutions. These solutions enable companies to capture documents anywhere, digitise them immediately and eliminate the inefficiencies of moving paper. They streamline the capture, recognition, and classification of business documents and to quickly and accurately extract important information from those documents for use by business users and in applications. Using distributed data capture, organisations can capture documents where data enters an organisation, for example at point where a field technician gets the customers sign off on a job or where a salesperson closes a contract with a customer. Thus, rather than relying on centralised scanning operations, leading companies are taking advantage of the latest solutions that turn MFDs, mobile devices, and network and personal scanners into secure, easy-to-use capture workstations Key functionalities A good distributed data capture
solution will improve efficiency by automating three key areas: •C lassification: The software should streamline document preparation tasks, such as manual sorting of documents into classes before scanning. It will enable users to scan a stack of mixed documents that will be automatically sorted. •D ata extraction: It must also be able to extract information from unstructured documents dynamically, or use templates for forms-based documents—eliminating wasteful, error-prone manual data entry. •V alidation: Finally, it should also provide multiple methods to automatically check captured data to verify accuracy. Marketing-leading solutions like IBM’s Datacap use advanced cognitive computing technology to streamline management of documents. Using natural language processing, text analytics and machine learning technologies, these solutions automatically identify, classify and extract content from unstructured or highly variable documents that usually require manual intervention. This can help significantly reduce labour and paper costs. Benefits In a distributed data capture environment, employees and customers can perform capture tasks with easy-to-use interfaces on familiar devices. For example, new customer onboarding or new loan applications can be concluded inside a mobile app rather than the paperwork going to a data capture hub. As a result,
important documents and data are fed into business processes and analytics systems quickly and accurately. Preconfigured workflows can be used to automate processing. This, in turn, reduces costs while enhancing the business’s agility and efficiency. Distributed data also help reduce expenses by eliminating document shipping, paper handling and storage as well as decreasing manual data entry and the costs of indexing errors that cause lost or misrouted documents. It also provides a dependable audit trail of who has captured the documents. Another potential benefit lies in better customer service. Customer-facing employees can process information quicker and more accurately, as well as easily access information electronically to answer customer inquiries. Distributed document capture can deliver rapid return on investment by boosting customer satisfaction, easing compliance and improving efficiencies. It is a technology that addresses one of the biggest challenges organisations face: taming the costs of paper and accelerating business processes to the pace of a digital world. n
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INFORMATION TECHNOLOGY
Telephony in the cloud?
F
or many years, IT as a Service (ITaaS) has enabled enterprises of all sizes to leverage off of the specialist skills, software and equipment of service providers with Voice being the prominent exception. Recently IT decision makers have been under increasing pressure to justify the monumental spend on telephony every couple of years when everything else is available, at arm’s length, as a service, month-to-month. The traditional arguments of onsite reliability and buying an asset no longer hold water. So what is the new school of thought? BENEFITS It’s about the money Whether you’re a small business required to commit thousands or a large enterprise looking to commit millions of Rands to an onsite telephony system, you’re tying up cash that could be put to better use. Due to the fast pace of technology, your onsite PABX will need to be maintained and upgraded every 6-12 months by staff and all the integration done on installation will need to be updated and maintained. It’s about the flexibility Does your telephony system need more functionality? In this instance, you can pay for more functionality. And, if you don’t need all the bells and whistles as you thought you did, it’s not a problem as you can downgrade easily and pay less. It’s about the scalability Cloud serves and provides a huge benefit to the small business by providing enterprise grade telephony features to the two or three extension business. At the same time, cloud serves the large corporate too by seamlessly scaling from one branch to many. Queue your calls in the cloud and deliver them anywhere where you have spare capacity. You can also spin up
a new branch or business in days or close down or consolidate a non-performing business unit without worrying what you are going to do with the infrastructure spend onsite. It’s about reliability Your service provider has a vested interest to ensure that their platform is robust and reliable, more so than you’ll find you have on your existing telephony system. An outage on a hosted platform affects all clients, not just a single site so your provider will ensure they watch it like a hawk! Providers hosting in reliable data hosting facilities (such as Teraco in South Africa) will guarantee power, security and ensure high capacity Internet access via peering facilities such as NAP Africa. The current Fibre land grab in the South African telecommunications market has driven the price of fibre connectivity lower than ever before making carrier grade IP connectivity a reality for many organisations in all segments. Furthermore, with the uptake of Software Defined Networking (SDN) and more specifically VeloCloud delivered Software Defined-WAN (SD-WAN) the ability to implement service provider independent connectivity, load balancing, and link redundancy has put the power in the enterprises hands. It’s about the commitment Or lack thereof. An on-premises telephony solution is sticky. Moving to cloud gives you the freedom to walk away from a bad service provider and switch to something better. The ball is in the providers court to provide a rock solid service, if they drop it, they lose you; it’s that simple. It’s about leverage Moving to the cloud allows you to leverage off of the best hardware, software and people in the industry. It allows you to choose and ally yourself with the service provider that best matches your business’s technological needs. It’s no longer a question of whether you should move your telephony to the cloud, but a question of how and when. Today there are more Cloud telephony options for organisations to choose from than ever before. The market is on fire! The secret to migrate your telephony to the Cloud successfully is by pairing your company with the service provider that has the goldilocks mix of leading edge technology, industry expertise and rock solid support that you require. n
By Greg de Chasteauneuf | Chief Technology Officer (CTO) | Saicom Voice Services | email address | @saicom
INFORMATION TECHNOLOGY
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Fibre enables VOIP for mainstream South Africa’s ICT industry has long talked up the benefits of Voice over Internet Protocol (VOIP) as an alternative to traditional mobile and fixed-line telephony, but it is only now that a wide rollout of last-kilometre fibre has made it a truly compelling option for mainstream business use.
C
oncerns about voice quality have held back many businesses from replacing traditional switched voice lines with VOIP based solutions, especially small to medium operations running DSL lines. Complexity issues Many businesses used options like Skype for some internal calls to drive down some of their voice costs, but also realised that it couldn’t completely replace their traditional telephone lines due to quality and complexity issues. A call on a standard ADSL line might be marred by issues such as dropped voice packets, delay and echo. These problems could be caused by oversubscription to the ADSL provider’s infrastructure or voice traffic needing to compete with other data such as browsing or social network traffic. The solution usually involves complex and costly optimisation of the wide area network. In a business environment this is not acceptable. Often, the end-user will use a costlier option like his or her mobile phone rather than putting up with poor voice quality. What’s more, while applications like Skype might be fine for internal calls, management of payments and credits for calling fixed and mobile numbers can be complex and expensive. Reliable and consistent However, the arrival of fibre in business parks in South Africa’s metropolitan areas means that telcos can at last offer VOIP solutions that are as reliable and consistent in their quality as a traditional switched voice line. This is in part due to the boost in bandwidth levels to far beyond even top-end ADSL and VDSL products, and also thanks to innovative solutions such as cost-effective, dedicated bandwidth for voice traffic. The shift towards VOIP is an ideal opportunity for businesses to revamp their voice environments to achieve cost-savings, improve effectiveness, simplify their voice and data environments, as well as provide By Robert Marston | Global head of product | SEACOM Robert.marston@seacom.mu | @SEACOM
a better experience to their end-users. Another benefit is that companies can buy cloud, voice and Internet access services from a single provider, making costs more transparent and giving them access to a single point of support for their business needs. Inflexible Companies can shift away from inflexible, hardwarebased PBXs on their own premises towards softwarebased PBXs in the cloud that offer them lower costs and more business agility by being able to scale up and down quickly. Cloud PBXs are managed on the company’s behalf by a specialist service provider such as SEACOM, which hosts the infrastructure in a secure data centre. One of the major benefits lies in their flexibility and scalability – they make it easy for an organisation to provision more extensions for end-users without installing additional lines or hardware. They also take the burden of maintaining the PBX off the company’s hands. These solutions provide a central portal to manage calls and extensions, greatly simplifying running VOIP in the business and providing insight and comprehensive reporting. This can be really powerful in increasing effectiveness within the business, especially when combined with features such as call recording, hunt groups and other powerful features which cloud based hosted PBX provides. n
Creating the strategy required to effectively operate online Tel: +27 11 782 0045 ✱ www.Strategyworx.co.za
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PROCESS & OPERATIONS
Procurement software aid By JD Henderson | Managing Director | X/procure®, a Primedia Unlimited company | jd@xprocure.com | @Xprocure
Markets are stagnant or declining with many companies looking at ways to sustainably save money and increase efficiency.
O
ne way to achieve this may be to partner with an electronic procurement provider that is specialised and has a proven track record.
Customers’ life easier Any business solution, whether for procurement purposes or otherwise, has to be customer centric and seen to be a holistic business tool rather than simply just an ordering system. A business’s key focus areas must always be to make a customer’s life easier. This means that the focus should be on actual product replenishment, analysis of a customer’s order history and making sure the messaging and products on offer are seasonal and relevant. It’s small details like ordering stock ahead of public holidays and enabling predictive ordering to ensure that shelves aren’t empty that many businesses dismiss or simply don’t think of. However, with the correct electronic procurement system these issues are avoided with a simple reminder message that pops up on the customer’s screen. Web-based platform Hosting a procurement solution on a web-based platform is ideal for customers and businesses because it becomes device agnostic. Creating apps on iStore or Window Stores becomes costly and time consuming so hosting a solution online is a win for everyone. Tailored algorithm A procurement system should offer customers predictive ordering,
it certainly helps with forward planning and is an offer that can be developed in-house. A tailored algorithm allows a user to see when a client has utilised a certain amount of product and when it may need to be reordered. Over the next few years, systems on offer will only improve. As an industry, we’re going to rely more and more on systems such as these to assist with daily tasks and procedures to enable better decision making at the point of purchase. Automation is definitely going to be key over the next few years. SA on par Globally South Africa is on par with many offerings, and in some instances, pushing ahead, particularly when compared to Europe, Australia and America because of the dynamism of, for instance of SA’s pharmaceutical industry in comparison to others. The States don’t have the benefit of ordering portals that comply with legislations of their pharmaceutical Industries like SA does. In closing, keep the TIPS model in mind - Technology, Innovation, People and Systems - this provides a great model to follow and sets businesses apart from competitors. Simplicity, efficiency and getting great results for clients will ensure that a business remains at the forefront of its industry and grows even more in the years to come. n
BPO growth limited
E
ven though South Africa is considered an attractive emerging offshoring destination for business process outsourcing (BPO), there are several factors limiting the growth potential of the country. Top destinations In 2014, the South African BPO industry accounted for 1% of global revenue and is expected to increase to 4% by 2030. Additionally, Johannesburg (number 20), Cape Town (56), and Durban (100) feature in the top 100 global outsourcing destinations. The global shift towards a digital economy has made it important for telecommunication operators to provide competitive voice and data services. The cost of business broadband connectivity and associated services are quite high in Africa. There are a number of factors behind this which are inextricably linked to the growth of BPO in South Africa. Wireless tariffs impeding The overall cost of wireless and fixed line tariffs is impeding the potential for BPO in the country. Other factors such as government support, availability of the labour pool, linguistic capabilities, cultural compatibility, and the legal structure also play an important role in positioning the country strongly in the global market. The Global IT Report 2016 of the World Economic Forum ranks South Africa 58th and 61st (out of 139 countries) respectively in terms of prepaid mobile cellular tariffs and fixed broadband internet tariffs. Lower tariffs needed Lower tariffs are widely considered to play a major role for the growth of BPO in a country. And when one considers that the market is being severely curtailed for growth due
to the country being one of the most expensive when it comes to broadband connectivity. Given how increased broadband access and faster connectivity can be a windfall for the economic growth and job creation in a country, it is critical that these areas are addressed to accelerate business development by providing new prospects for innovation and growth. Declining rand positive However, there are positive signs that things are changing in the country. To promote the BPO industry and create an adequate supply of talent, government has launched a number of schemes and taxation incentives for the establishment of infrastructure and skills related support. The declining rand against the dollar and euro currencies can play in South Africa’s favour to attract global business. But in order for South Africa to entrench itself as a BPO destination of choice, much more has to be done across industry with support from government. For example, the implementation of a digitisation programme from government will create a mass uptake of connectivity and outsourced solutions driven by internet access.
improve your end to end
supply chain capability SAPICS
your partner in Africa providing:
• Education • Events • Networking • Membership
The government and ICT organisations need to work together to increase local manufacturing, expand networks, and reduce connectivity tariffs to help drive the growth of a globally competitive BPO industry in South Africa. With so much potential and opportunities that are evident, the role-players in the country need to find a way to harness the collective innovation taking place and do whatever it takes to create an enabling environment for growth. n
By Sharoda Rapeti | Director of Business-Process-as-a-Service | Deloitte srapeti@deloitte.co.za | @DeloitteSA
info@sapics.org.za www.sapics.org.za +27 11 023 6701
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PROCESS & OPERATIONS
Rethink YOUR supply chain By Mungo Park | President | SAPICS | MPark@go2uti.com
M
odern organisations are striving to become more efficient by focusing on improving core competencies. When it comes to procurement and the supply chain, they face a number of key decisions in order to achieve their business objectives. These include balancing inventory while being mindful of cost and service implications, facility and asset optimisation and decisions regarding the outsourcing of certain activities and functions. Extended supply chain evolution Globalisation has led to the evolution of the extended supply chain where businesses have reduced visibility of activities once handled internally, reducing the ability to control efficiencies outside their perimeter. Supply chain risk is therefore increased with the potential to impact a firm’s business performance and competitive position because of supply chain inefficiencies. This scenario makes good supply chain management critical to business. The technology and best practices exist to help organisations maximise efficiency across the supply chain, not just in their own companies. The nucleus company needs to exert control over the extended supply chain, i.e. the upstream and downstream suppliers and partners, to manage the challenges of the increased complexity and to optimise product flow. It is necessary to rethink supply chain management. To get the most from their supply chain, companies can start with the following: Use supply chain as business integrator. Often, there is misalignment between business strategy and supply chain
The partnership model has greater long-term benefits, drives increased value, and promotes continuous improvement because both parties have a vested interest in the success of such a partnership.
strategy. If you are following a growth strategy but don’t invest in supply chain improvement, that’s a mistake. The supply chain strategy must be aligned with the business strategy. Furthermore, the supply chain is the ideal internal business integrator because it touches every other function in the business. So strategically, it can and should play a key role. Make supply chain a core competency. If supply chain management is key to strategy, then the skills to execute effectively can’t be ignored. With SCM skills still lagging in South Africa, companies should take advantage of the many educational opportunities available in the country to create in company supply chain capability. Focus on partnership models The transactional logistics model – buying services based on lowest cost versus lead times and service requirements – may seem best to cost-conscious businesses when dealing with supply chain service providers, however this is not advised.
Embrace extended supply chain With solid partnerships in place, the supply chain can become more interactive. Data can be shared both upand downstream to improve visibility, resource planning and efficiency. The SCOR model is a good illustration of the extended supply chain – where visibility (and therefore control) reaches beyond the four walls of the business to suppliers and customers. Improve integration throughout Real-time data sharing is still not as advanced as it could be. Nucleus companies – those with the most touchpoints in the supply chain – can coordinate the sharing of data between parties, usually with the support of a logistics service provider as partner. However, third party information portals also offer a convenient means of sharing data and specialise in systems dedicated to providing supply chain visibility. Conclusion Companies must focus on excellence in supply chain management and collaborate with customers, vendors and service providers across the extended supply chain to make it work efficiently. In this way, they can ensure the smooth flow of raw materials and finished goods through the increased efficiency across their supply chain. This will result in both reduced risk and cost while improving product availability. n
PROCESS & OPERATIONS
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October/November 2016
Contract MANAGEMENT Contracts, for most organisations, define the very playing ground for its entire business operations. With the everincreasing volumes and demand for contracts, is your organisation leveraging its contract basis to secure the best possible reward? What risks is your organisation exposed to by ineffective management of its legal obligations? Do protracted turnaround times hamper the conclusion of revenue generating activities?
E
ffective contract strategy and management has become essential to the functioning of any organisation. Contracts are no longer a legacy instrument that rests in the domain of lawyers and only invoked on dispute. Contract management unlocks an ‘asset’ that can be used to effectively manage risk and increase revenue. Tools for effectiveness Processes dictate how contracts are incorporated into workflows. Standardised processes not only reduce turnaround times, but also help organisations minimise costs associated with contracting. Effective review, dynamic repositories, standardised templates, contract playbooks and lean workflows are some of the tools available to organisations to improve process effectiveness across its contract lifecycle. Rich Data The biggest benefit associated with process driven contract management is availability of rich DATA. Contract data assists organisations in planning and forecasting its contract needs by accessing historical information and patterns. This not only mitigates risk but also unlocks revenue lost by identifying problem areas. It further manages bad contracts to ensure that they are either removed or managed prior to incurring further costs associated with contractual disputes. Ensuring compliance Audits, effective controls and alerts assist operational requirements by ensuring compliance with and adherence to contractual obligations. Tracking and monitoring performance of contractors allows for better risk management as well as securing the best financial reward from the transaction. The metrics chosen to assist must further speak to the objectives of the contract, be it percentage of revenue, and spend to budget, value-add to risk exposure and importance to organisation as a few examples. These performance metrics increase the value generated from data analytics, which can be directly, used to improve processes, reduce costs and increased turnaround.
Right technology Technology can help organisations manage its contract lifecycle obligations, however, it is important to ensure that the chosen technology assists the effective management of contracts rather than hinders it by not being fit for purpose. Technology can greatly assist in streamlining processes, reducing costs with low complexity/low value activities and reduce unnecessary or repetitive steps in the contract lifecycle. Organisations must choose their technology and contract lifecycle management software suppliers carefully to avoid a low return on investment associated with the implementation of software support platforms. Human interaction Human interaction in the contract lifecycle cannot be completely excluded. However, process-driven technology supported by contract management reduces risks associated with human interaction. By further ensuring that there is allocation of the appropriate level of resource to the complexity of required work ensures that low value added tasks within the contract lifecycle are dealt with accordingly, usually freeing up expensive legal resources to focus on the high complexity strategic contracting work that organisations require. Making use of outsourcing organisations to handle high volume low complexity contracting can create economies of scale that cannot be generated internally, which can further be leveraged to reduce costs and increase turnaround. Increased visibility and access to contractual information ensures alignment across an organisation and fosters collaboration between all stakeholders in the contract lifecycle. Contract management increases the profitability and productivity of the organisation and limits risks associated with contractual disputes. The results of implementing leading practices in contract management: a contract strategy that facilitates and enhances the organisations overall strategy. n
By Rian Hancock | LPO Delivery Manager | Integreon | rian.hancock@integreon.com
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CONTRIBUTORS
As a service to our readers, we have listed this issue’s contributors, together with their contact details. Should you require more information or consultation on these topics, please contact the company or firm concerned.
VIEWPOINT
Barclays Africa Group Ethics Institute Institute of People Development
+27 (0)11 350 4000 +27 (0)12 342 2799 +27 (0)11 315 2913
barclaysafrica.com tei.org.za peopledev.co.za
MANAGEMENT
Grant Thornton KPMG Fraud Risk Management and Ethics Advisory Oliver Wight Odgers Berndtson Sub-Saharan Africa
+27 (0)10 590 7200
grantthornton.co.za
+27 (0)11 647 7111 +44 (0)1452 397200 +27 (0)21 418 1516
kpmg.com oliverwight.com odgerberndtson.com
ArkKonsult Quest Staffing Solutions Wits Business School
+27 (0)82 880 5316 +27 (0)11 628 0300 +27 (0)11 717 3544
facebook.com/conbussa quest.co.za wbs.ac.za
Adams & Adams Cliffe Dekker Hofmeyr Hogan Lovells (South Africa) Inc Woodhead Bigby Inc (Lexis Nexis)
+27 +27 +27 +27
(0)11 (0)11 (0)11 (0)31
895 562 286 360
1000 1000 6900 9700
adamsadams.com cliffedekkerhofmeyr.com hoganlovells.com woodhead.co.za
KPMG Tax Services Garlicke & Bousfield Inc Webber Wentzel SAICA
+27 +27 +27 +27
(0)11 (0)31 (0)11 (0)11
647 570 530 621
7111 5300 5000 6600
kpmg.com gb.co.za webberwentzel.com saica.co.za
CIMA Africa MAZARS Webber Wentzel
+27 (0)11 788 8723 +27 (0)11 547 4000 +27 (0)11 530 5000
cimaglobal.com mazars.co.za webberwentzel.com
ASSETS & INVESTMENTS
Cannon Asset Managers Divergent Real Estate RE/MAX Standard Bank
+27 +27 +27 +27
(0)11 722 7580 (0)11 459 5000 (0)21 700 2000 (0)860 123 000
cannonassets.co.za bravura.net remax.co.za standardbank.co.za
BANKING & INSURANCE
Aon South Africa BankservAfrica Bowmans Gilfillan EY
+27 +27 +27 +27
(0)11 (0)11 (0)11 (0)11
944 497 669 772
7000 4000 9000 4805
aon.co.za bankservafrica.com bowmanslaw.com ey.com
MARKETING & SELLING
Adams & Adams Deloitte Innocomm SouthernX
+27 +27 +27 +27
(0)12 (0)11 (0)83 (0)11
432 806 305 706
6000 5000 4943 2357
adamsadams.com www.2.deloitte.com innocomm.co.za southernx.co.za
HUMAN CAPITAL
Agility Barloworld South Africa Labour Law Management Consulting South African Reward Association
+27 +27 +27 +27
(0)21 (0)11 (0)11 (0)11
918 445 888 061
6210 1000 7944 5000
agilitychannel.co.za barloworld.com labourlawadvice.co.za sara.co.za
IT
Gartner i1Solutions Saicom Voice Services SEACOM
+27 +27 +27 +27
(0)11 (0)11 (0)10 (0)11
803 017 140 461
4706 6500 5000 6355
gartner.com i1solutions.co.za saicomvoice.co.za seacom.mu
EDUCATION & TRAINING
LEGAL
TAX
FINANCE & EQUITY
PROCESS & OPERATIONS
Deloitte Integreon SAPICS X/Procure
+27 +27 +27 +27
(0)11 (0)11 (0)11 (0)11
806 591 253 562
5000 2272 6701 6500
www2.deloitte.com integreon.com sapics.org.za xprocure.co.za
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