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THE DEATH OF SHOPPING IN AFRICA? Ä‘ BLACK HEAVY METAL

AFRICA

SEPTEMBER 2017

AN

COMPANY

South Africa ZAR 46.50 (incl VAT) | Kenya KES 510 | Nigeria NGN 1,000 | Ghana GHC 10 | Angola AOA 830 Ethiopia ETB 110 | Tanzania TZS 11,100 | Tunisia TND 10 | Uganda UGX 16,800 | Zimbabwe USD 5 | Mauritius MUR 180 | Botswana BWP 55 | Namibia NAD 75 | Liberia USD 5 | Mozambique 270 Mts | Rwanda RWF 4,000

FORBES AFRICA

CONTENTS – SEPTEMBER 2017

VOLUME 7 NUMBER 8

4 | FORBES STREET // Chris Bishop 8 | AFRICA IN BRIEF 10 | TALKING POINTS

FOCUS

12

| BITCOIN, BLOCKCHAIN AND BILLIONS If you don’t know about Bitcoin and blockchain, you should – especially if you want to accumulate wealth in Africa. Bitcoin is the virtual currency challenging governments, circumventing banks and threatening to blow old-school currency out the water.

BY JAY CABOZ

36

| THE CASE OF THE FIRST LADY WITH THE WHIPCORD WHO WALKED FREE Zimbabwe’s First Lady, Grace Mugabe, has once again caused consternation in a foreign country.

This time, her actions left South Africans debating who is eligible for diplomatic immunity.

BY MELITTA NGALONKULU

12

38

| NAILED BY IMPOSTERS Having your identity stolen can lead to debt, being barred from a bank, married to a person you’ve never met, or worse – arrest.

BY YONELA MGWALI

42

| THE GRIME THAT COMES WITH CRIME Having a criminal record for a less serious offence which occurred years ago should not be used to bar someone from gainful employment today.

BY ANCILLAR MANGENA

48

| FAILING AND FADING INTO HISTORY If you went shopping in a big store in Africa this month there’s a good chance it’ll be shut down this time next year. The stores of Africa are struggling; to the south more than a century of selling history disappeared into thin air; in the east there are closures and angry workers; to the west there are more struggling stores, yet golden opportunities online. The business of shops – who would invest in it?

BY MELITTA NGALONKULU

48

58

| SHOULD AFRICA DITCH UBUNTU? Corneille Karekezi, Chief Executive Officer of Africa Re, thinks the continent needs to reconsider how it looks at the insurance industry.

BY JOSEPH BURITE

SEPTEMBER 2017

FORBES AFRICA | 1

FORBES AFRICA

CONTENTS – SEPTEMBER 2017

VOLUME 7 NUMBER 8

ENTREPRENEURS

64

| BATTLING GIANTS Clarifai’s image-recognition AI can go toe-to-toe with those of Google, IBM and Microsoft. Now the startup must fight to stay competitive.

BY AARON TILLEY

LIFE

68

| STUFF THE MONEY, FORGET ABOUT WITCHCRAFT – IT’S RAINING BEER They call it black metal. Pounding, grinding and clanging music. On a sweaty night in Pretoria, Africans storm one of the bastions of white music.

BY MOTLABANA MONNAKGOTLA

76

68

| A CONCEPT CAR THAT CAPTIVATES The Lexus LC 500 drew gasps when its designs were revealed; taking the car on the road lives up to its promise

BY DEREK WATTS

INVESTMENT GUIDE

80 82 84

76

| GOVERNMENT MUST STAY AWAY FROM ECONOMIC SUICIDE

BY RICHIE SEUN JOHNSON

| HOW TECH CAN CLOSE THE GAP IN AFRICA

BY OBINWANNE OKEKE

| BE PRUDENT WHEN PURCHASING

BY PAUL MASHEGOANE

SPORT

90

| I’LL EMAIL YOU BACK ONCE I’VE SCORED THIS GOAL Like many sports, hockey is becoming a story of rich man, poor man. One of the world’s biggest tournaments was held in Africa and exposed how painful it can be on the poor side of the divide.

BY JAY CABOZ

SOMETIME IN AFRICA

90 2 | FORBES AFRICA

96 SEPTEMBER 2017

| AN AWESOME, AWKWARD, AFRICAN NIGHT

BY THOBILE HANS

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FORBES AFRICA

FORBES STREET – CHRIS BISHOP “Carpe Diem”

Forbes 100 – Let’s Celebrate A Century Of A Business Idea Born In Africa

4 | FORBES AFRICA SEPTEMBER 2017

from Scotland, at the beginning of the 20th century to nurse a broken heart after being spurned. He spent a number of years writing for the Natal Mercury in Durban and the Rand Daily Mail in Johannesburg. You can read the full story in my new book, Africa’s Billionaires, published by Penguin.

Johannesburg became too small for the ambitious BC Forbes and in 1902 he jumped on a ship for New York. He took the risk of traveling first class even though, on a journalist’s pay, he couldn’t really afford it. His idea was that you had to mix with the right people.

When he arrived on Ellis Island, in New York harbour, along with the huddled masses of Europe, BC Forbes had $50 left in his pocket. The authorities let him in saying he was unlikely to be a burden on the state.

BC Forbes struggled to find a job in New York, few cared about his experience in Scotland and South Africa; when he struck lucky he made the most of it.

The strident, diminutive Scotsman swiftly made a name for himself as a sharp and parsimonious writer on business.

“I don’t lend money, I just write about it,” he used to tell colleagues sharply if ever they doubted he was careful with his dollars. This parsimony paid off; true to his beliefs of mixing with the rich and influential, BC Forbes rented a small room, that he also couldn’t afford, at the back of the Waldorf Astoria, in New York, one of the most luxurious hotels in the world. It meant in the evenings he could hobnob with the most influential names in New York in the bar. He paid for his room by walking everywhere, on

Chris Bishop, Managing Editor

assignment, in New York and saving the taxi money given by his employers. It took a lot of walking to pay the hotel bill; he was no stranger to struggle.

“Call the roll in your memory of conspicuously successful [business] giants and, if you know anything about their careers, you will be struck by the fact that almost every one of them encountered inordinate difficulties sufficient to crush all but the gamest of spirits. Edison went hungry many times before he became famous,” our founder once said.

BC Forbes also struck on the idea that people who owned businesses were a lot more interesting than the businesses they ran. A hundred years later, you can’t

Photo by Jay Caboz

A

nyone who knows me will tell it takes a lot to stun me into silence.

You could argue talking and commenting are sharp tools of my trade, as an editor, that I like to keep keen.

Yet one warm summer night, with the night sky crystal clear, I sat in sweet silence at Pilgrim’s Rest, Mpumalanga, the former mining town with its 100-yearold preserved wooden buildings, in the north east of South Africa.

The night sky was like a dark canvas strewn with sparkling diamonds; it took your breath away. I have yet to see a painting, or photograph, that can capture the beauty of an African sky at night, uncluttered by buildings, that stretches down to the treetops. It feeds your soul and opens the mind to a world of possibility. On that night, I visualized some of the achievements I wanted in life; of which editing this august publication is one and authoring a book is another.

It struck me, as I prepared to write this column, that Bertie Charles Forbes – the founder of the world-famous Forbes magazine of which FORBES AFRICA is the 16th English language version – would have looked up at the same African sky more than a century ago as he pondered his path to millions. It was clear that the genesis of his big ideas came when he was working in Africa.

Many people know that Forbes magazine turns 100, on September 19, with a huge party on Chelsea Pier in New York Harbour; few know the link with Africa.

BC Forbes, legend has it, came to Africa,

argue with that.

In September 1917 – the middle of a world war – BC Forbes launched his own magazine about entrepreneurs. He wanted to call it “Doers and Doings” a title which may not have stood the test of time. Thankfully, he was persuaded to give the magazine his own name that thrived and garnered more than six million readers. To this day, everyone wants to be on the cover; they even wrote a song about people wanting it so fricking bad.

And we at FORBES AFRICA? Well, in

just six short years (our anniversary is on October 1) we have garnered 200,000 readers making it the most read business magazine on the continent, building cast iron credibility taken seriously at the top tables in Africa. We have raised young and talented journalists of Africa to win awards by telling the stories of making and losing money. We are the drama critics of business in Africa. We are also nobody’s cheerleaders; when we don’t like something we say so. We do not shy away from exposing the dirty side of business, nor the unrest, nor the poverty

and political chicanery that eat at this continent like maggots.

We have made the billionaires of Africa household names; we did so with balance, integrity and panache.

BC Forbes and I probably have more in common that many may think. We both slogged our way up from the very bottom, we both loved writing and nurtured curiosity, both of us preferred to write about money instead of lending it.

Oh, and we both looked at burning stars in the African night and maybe shared the same ambition.

Views expressed by commentators in this publication are not necessarily those held by FORBES AFRICA or its members of staff.

All facts printed in FORBES AFRICA were confirmed as being correct at the time the magazine went to print.

Now you can enjoy reading FORBES AFRICA at:

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AFRICA

SEPTEMBER 2017 – VOLUME 7 NUMBER 8 CHAIRMAN: Zafar Siddiqi F0UNDER & PUBLISHER: Rakesh Wahi MANAGING DIRECTOR: Roberta Naicker EXECUTIVE DIRECTOR: Sid Wahi EXECUTIVE DIRECTOR: Bronwyn Nielsen NON-EXECUTIVE DIRECTOR: Busi Mabuza NON-EXECUTIVE DIRECTOR: Sam Bhembe PRODUCTION AND DISTRIBUTION Shanna Jacobsen

MANAGING EDITOR Chris Bishop

JOURNALIST, WEST AFRICA Peace Hyde

SUB-EDITOR Gareth Cotterell

PHOTOJOURNALISTS Jay Caboz, Motlabana Monnakgotla

BUSINESS DEVELOPMENT & STRATEGY DIRECTOR Quinton Scholes BDM – WEST AFRICA Patrick Omitoki

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ISSN 2223-9073 is published monthly except for two issues combined periodically into one and occasional extra, expanded, or premium issues.

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6 | FORBES AFRICA SEPTEMBER 2017

AFRICA IN BRIEF

MINING SHOWDOWN

BY CHRIS BISHOP

GUPTAS SELL MEDIA STAKES TO THEIR BIGGEST CHEERLEADER Former Cabinet Spokesperson and one of President Jacob Zuma’s most loyal supporters, Mzwanele ‘Jimmy’ Manyi, has bought the TV station and newspaper owned by the notorious Gupta family.

The Gupta-controlled Oakbay Investments sold its shareholdings in TV station ANN7 and newspaper The New Age to Manyi’s Lodidox for R450 million ($34 million). The Guptas happen to own 10% of Lodidox.

Ajay, Atul and Rajesh Gupta have been surrounded by controversy in South Africa. They are accused of using Zuma’s influence to benefit their business interests in South Africa.

Manyi is an outspoken supporter of Zuma and has publicly defended the Gupta family.

“I am thrilled about this new business venture with Oakbay and looking forward to growing further with these two successful publications and also looking forward to getting new talent on board,” says Manyi.

An ex-ANN7 employee, who refused to be named, said this is just a strategy by the Guptas to save the companies.

“Manyi is always on ANN7 and it is public knowledge that the Gupta family owns part of his company. This is just a front,” says the former employee.

Manyi angrily denies this.

“Fronting is a criminal offence in South Africa, and as a former state official I am the last person to commit such a crime,” he says.

The Guptas first announced their intention to exit their shareholding in all their South African businesses in August 2016, saying the sale would be complete by December. This did not happen. Last year South Africa’s major banks cut ties with the Guptas and their companies.

“The agreement is expected to be concluded over the next few weeks, subject to any regulatory requirements. The sale is part of Oakbay’s commitment to preserve jobs and provide certainty to over 7,500 hard-working employees throughout the group and to safeguard the inherent value of the businesses in which they work,” read an Oakbay statement.

Businesswoman and advocate, Brenda Madumise, says if there weren’t any of the banking issues the Guptas would certainly not have sold their shares.

“We are also not sure about the nature of the transaction, whether it’s funded by Jimmy Manyi or the Industrial Development Corporation (IDC),” she says.

Madumise added that Manyi has to prove to South Africa whether this is fronting or not.

The IDC had not responded at the time of going to print.

8 | FORBES AFRICA

SEPTEMBER 2017

On September 14 and 15 there will be a showdown in court that could decide the long-term future of Africa’s biggest mining industry.

It’s all about the controversial Mining Charter III, the document written by the South African government in an attempt to increase black ownership in the mining industry.

It calls for black ownership to be increased from 26% to 30% and maintained at all times. Other stipulations include more levies and a call for 1% of company turnover to be given to black shareholders before any other owners are considered.

The new codes also extend the preferential shareholding to people of color from outside South Africa.

The Chamber of Mines, which represents 90% of South Africa’s industry, will go to the High Court in a bid to get Mining Charter III reviewed and set aside. It believes the new mining codes, nearly five years in the making, were written poorly for political, rather than economic, gains.

Mining lawyers have panned the new mining codes and believe they will be thrown out of court as unlawful and unconstitutional.

Many in government agree with the mining lawyers, leaving mining minister Mosebenzi Zwane fighting a rearguard action.

“We do not want a continuation of what has occurred in the past, where deals that were structured only left the black shareholders with no real benefit being realized. The charter brings out the much-sought policy certainty that the investment community and the mining industry have been requesting from the government since the review of the charter began,” Zwane said in Johannesburg in August.

“Some have said to us that 30% is not radical enough on the ownership element, and why not 50% or higher? We are clear that we do not want a continuation of what has occurred in the past, where deals that were structured only left black shareholders in debt with no real benefit being realized. Only one stakeholder has voiced their opposition to the transformation of the mining industry.”

Attorney and African National Congress stalwart Mathews Phosa, who will run for president at the party’s elective congress in December, believes the mining minister is in trouble.

“I think there is a 90% chance the charter will be thrown out of court and then the minister must do the decent thing and fall on his sword,” says Phosa.

FIVE YEARS AND STILL NO JUSTICE

Photo by Gallo Images / The Times / Masi Losi; Photo by Chris Ratcliffe/Bloomberg via Getty Images; Photo by Waldo Swiegers/Bloomberg via Getty Images; Photo by The Times/Gallo Images/Getty Images

BY THOBILE HANS

CONGESTION HEADACHE SPLITS BITCOIN

BY JAY CABOZ

Bitcoin, the world’s first cryptocurrency, has split in two. Users frustrated that Bitcoin’s blockchain, that allows a limited 1,700 transactions per block, which performs about three transactions across the world each second, believe it should be doing more than that.

As the blockchain becomes more popular, congestion of the system means it can take hours for Bitcoin to be processed and even longer for transactions to be approved. The split was over how paying for something with Bitcoin should be sped up.

One group has built a soft fork, using what is called SegWit2x technology, that doubles the number of transactions allowed per second on the blockchain.

The other group built a new cryptocurrency called Bitcoin Cash. This hard fork route overhauled the old technology and allows for eight times the speed.

The winner will ultimately be decided by a popularity vote. As blockchain technology is driven by users, public sentiment is the overall judge of the Bitcoin race. The more people that show confidence by investing in computers to mine the coins, the faster the system operates.

August 16 marked five years since 34 mineworkers were killed by the police in Marikana, at Lonmin’s platinum mine, in South Africa’s North West province.

Joseph Mathunjwa, the President of Association of Mineworkers and Construction Union (Amcu), the trade union the miners belonged to, accused the government of failing to provide justice to the families of the dead.

“One would say as long as the widows are still going underground and work for their families, I don’t think there’s any progress. I would love to see those families going back their homes to look after their children,” says Mathunjwa.

He said the Farlam Commission, initiated by President Jacob Zuma to investigate what happened at Marikana, failed the families of the deceased.

“It was a political position. From the start, the massacre was caused by political influence. You will remember there were meetings that were held with people who hold positions in the political party. As a result, the strike of workers was characterized as illegal. After the massacre Amcu was clear in the media to say that we wish, if there’s any commission, that it will be established by the International Labour Organization (ILO) because we knew the government was party to this massacre. How can they be in a position to investigate themselves? So, we were not shocked when we saw such a report.

Even five years down the line, there are no police members that have been charged with murder. Instead workers who survived the massacre are the ones who are charged with murder.”

Mathunjwa says it’s wrong to term it the Marikana Massacre; he wants it to be referred to as the Lonmin Massacre. The Farlam Commission, however, did not find any wrongdoing from Lonmin.

“The narrative suggests the massacre was because of union rivalry, it’s not true. Miners wanted R12,500 ($950), and you know a majority of the workers belonged to the National Union of Mineworkers (NUM). Therefore, Amcu was not in the picture, we were recognized with limited organizational rights… So there’s no truth in suggesting that Amcu was fighting NUM or NUM fighting Amcu. All the workers were at the koppie (hill), together NUM and Amcu members were there, but it was predominantly NUM members,” he says.

The families of the Marikana victims have found no peace with South Africa’s Deputy President, Cyril Ramaphosa, who was a shareholder at Lonmin when the massacre happened. Amid reports that Ramaphosa intended to join the families in their commemorations, Mathunjwa said the families were not ready to meet him.

“Five years down the line he hasn’t apologized; why now? What is it that is pushing him to meet the families? Everyone knows of the email he sent [saying] that the police must act in a particular way. As a result of his instruction we saw a mass killing in Marikana. He will know better [than anyone else] who else was involved,” he says.

SEPTEMBER 2017

FORBES AFRICA | 9

TALKING POINTS

COURT ASKED TO DECIDE KENYAN ELECTION

Raila Odinga

BY ALLAN AKOMBO

Kenya’s Supreme Court finds itself at the center of a replayed presidential election dispute between Uhuru Kenyatta and his rival, Raila Odinga, amid concern over the country’s rising ethnic tensions.

Odinga is seeking to overturn a decision by the election board to declare Kenyatta the winner in the August 8 election. Kenyatta beat his rival by 1.4 million votes to secure a second fiveyear term in office, a position his rival disputes.

“By going to court we are not legitimising misplaced calls from some observers for us to concede. We are seeking to give to those who braved the long lines in the morning chill and hot afternoon… a chance to be heard,” Odinga told a news briefing in the capital, Nairobi.

It is the second time in five years that the Supreme Court is being asked to make a decision in the Kenyan presidential polls. In 2013, the top court ruled in favor of Kenyatta after Odinga challenged a decision by the election board to pronounce him winner having secured 50.07% of the vote, edging over the 50% needed to avoid a second round.

But even as the Supreme Court decides the winner, the presidential poll has once again left Kenyans divided down the middle along ethical and geographical lines.

“Kenya continues to sink deeper into a dangerous voting pattern driven by ethnicity and geographical zones. Elections have become sort of an ethnic census rather than a contest

of ideology and development policies,” says Paul Mwadime, a Nairobi-based political analyst.

A review of the election results showed that Kenya’s latest elections solidified ethnic divisions.

Although Kenyatta was declared the winner of the popular vote, data showed deep divisions at the county level – leaving the country divided down the middle.

“It is no secret that Kenyans drop their national identity when elections come around. They become something else,” says Tom Otieno, a Nairobi resident.

Kenyatta and Odinga both won solidly in 27 counties that account for about 60% of the country’s population. In the latest elections, Odinga was more popular in the coastal and western parts of the country while Kenyatta drew his support from the Rift Valley, North Eastern and Central Kenya.

Analysts are urging for an inclusive government to help clear the ghosts of violence that continue to hang over the country’s general elections since 2007, when Odinga called for demonstrations after a extremely flawed poll. The protests triggered tribal violence, resulting in the death of around 1,200 people.

“The next president must think of reaching out to all tribes as a way of dousing the tribal heat that continues to build. The country is deeply divided since 2007 and the ethnic divisions may explode into bad things,” says Mwadime.

Kenyatta, 55, centered his re-election crusades on outlining key growth projects implemented during his first term in office, including newly constructed roads and an expansion of the national electricity grid.

Odinga, 72, styled his campaign agenda on tackling corruption and taming the high cost of living.

ARTIFICIAL INTELLIGENCE MORE DANGEROUS THAN NUCLEAR WAR? While the rest of the world is worried about nuclear war erupting between North Korea and the United States, the Tesla and SpaceX chief executive Elon Musk is more concerned about artificial intelligence (AI).

“If you’re not concerned about AI safety, you should be. Vastly more risk than North Korea,” Musk tweeted, referencing North Korean leader Kim Jong-un’s threat of a missile strike on Guam.

The South African tech entrepreneur also posted a photo that read, “In the end the machines will win.”

This is not the first time Musk has expressed his fear of an AI uprising. In October 2014, he described it as humanity’s “biggest 10 | FORBES AFRICA

SEPTEMBER 2017

existential threat”.

Musk’s latest warnings coincided with an AI playing the multiplayer online battle arena game Dota 2, against the world’s best players. The AI won all its games. According to reports, the AI could predict what human players would do and improvise on the spot.

Bill Gates and Stephen Hawking have also issued warnings regarding AI. There is at least one high-profile tech entrepreneur who disagrees: Facebook founder, Mark Zuckerberg.

“It’s really negative and in some ways I actually think it is pretty irresponsible,” said Zuckerberg, on the AI warnings.

Elon Musk

Photo by: Bloomberg / Contributor via Getty images / JB Lacroix / Contributor via Getty images / Bloomberg / Contributor via Getty Images / Martina Nicholson Associates

YOUNGEST PATIENT IN AFRICA RECEIVES MECHANICAL HEART

JOHANNESBURG BEST FOR AFRICAN START-UPS Johannesburg is the best African city for start-ups, according to a recent index released by Nestpick, a Berlin-based start-up.

The 85-city ranking was calculated on the following criteria: existing start-up ecosystems, quality of life, salary, cost of living and social security and benefits.

Johannesburg is ranked 71. Surprisingly, Singapore is ranked number 1 and Helsinki, Finland, is second, ahead of San Francisco, the home of Silicon Valley.

Cairo (80), Tunis (83), Nairobi (84) and Lagos (85) are the other African cities included on the index.

Interestingly, Cairo, Egypt, has the lowest salaries across all industries for entry-level positions, while Tunis, Tunisia, has the lowest salaries for experienced positions.

Top Five Start-Up Cities 1.

Singapore 2.

Helsinki 3.

San Francisco 4.

Berlin 5.

Stockholm

A five-year-old boy from Newcastle, in South Africa’s KwaZulu-Natal province, has become the youngest patient on continent to get a lifesaving mechanical heart implantation.

Mnotho Mndebele, who had been in a critical condition in intensive care for four consecutive months prior to the ground-breaking operation, had a heart ventricular assist device (HVAD) implanted at Maboneng Heart Institute situated at Netcare Sunninghill Hospital, in Johannesburg, to keep his heart functioning.

“We fully expect him to be able to go to school and do everything a normal young boy would do. However, unlike other children, he will carry a small external battery pack for his implanted HVAD mechanical heart either on a belt around his waist, or in a small backpack.

The batteries for the mechanical heart will have to be recharged every eight hours or so,” says Dr Viljee Jonker, the cardiothoracic surgeon who led the implantation team.

Weighing only 17 kilograms, Mndebele is one of the smallest and youngest in the world to have had the benefit of a HVAD mechanical heart implant.

He suffers from dilated cardiomyopathy (DCM), a condition in which the left ventricle of the heart becomes enlarged and weakened and is no longer able to pump blood properly.

Mndebele still has a long and hard road ahead of him. The mechanical heart will help him until he can have a heart transplant.

“Mnotho had been on the heart transplant list but paediatric heart donations rarely become available,” says Jonker.

The mechanical heart will restore normal blood flow and help Mndebele get stronger and gain much-needed weight over the next few years. This will enable him to get healthy enough to undergo a heart transplant when a donor heart becomes available.

SEPTEMBER 2017

FORBES AFRICA | 11

B I T C O I N Blockchain And BILLIONS

If you don’t know about Bitcoin and blockchain, you should – especially if you want to accumulate wealth in Africa. Bitcoin is the virtual currency challenging governments, circumventing banks and threatening to blow oldschool currency out the water.

BY JAY CABOZ

J

ust 10 years ago, Bitcoin was another office joke in Africa. The rare few who took it seriously have made millions.

“One year and seven months ago.

November 2015. That was the month I started with R3,500 ($260) and now it’s worth R37,000 ($2,800).

A Bitcoin was $260. Exactly one year later that Bitcoin was $900. It grew over 300%. Today it’s $2,800.”

This was the moneymaking turning point for communications and marketing employee Shireen Ramjoo who, at the age of 32, was so taken by Bitcoin she left her job in the bank to start her own consultancy, Liquid Crypto-Money.

From humble worldwide beginnings Bitcoin, a digital currency, otherwise known as cryptocurrency, was born from blockchain technology – a mass linking of computers. The midwives are an estimated 5.8 million users generating a market value of $27 billion, which represents a level of value creation

12 | FORBES AFRICA

SEPTEMBER 2017

on the order of Silicon Valley success stories like Airbnb, according to the 2017 Global Cryptocurrency Benchmarking Study by the Cambridge Centre for Alternative Finance.

The impact of Bitcoin has been compared to the day paper money replaced gold and silver. It is so new that like there were no computer technicians before computers, there are few Bitcoin experts, more educated guessers.

Cryptocurrencies are the tip of the iceberg when it comes to blockchain technology. Many financiers argue it will transform the world money system and maybe be the next dotcom-style boom in Africa. Up for grabs are billions more as peer-to-peer networks spark new business platforms and threaten to wash away established business practices that have been around for centuries.

“The first time I heard about Bitcoin, I had to write a press release for Standard Bank. It must have been early 2012. At the time I didn’t understand it, it

Photos by Bloomberg / Contributor via Getty Images

IT’S A NEW ECONOMY, WHERE EVERYONE WHO CONTRIBUTES EARNS THEIR FAIR SHARE IN TOKENS.

FORBES AFRICA

just went over my head. I thought it was too technical. After I left the industry I wanted to be my own boss. I was looking for an opportunity and came across Bitcoin,” says Ramjoo.

She has made a business out of educating clients on Bitcoin, blockchain and cryptocurrency – topics that leave many baffled.

“We are in an evolution of money here. What people don’t realize is when the internet first started some governments were against it. As more countries started adopting it, more

is proof of your transaction. This is called the ledger system. The process of verifying the information takes days and also means banks are able to dictate the cost of these transactions.

Blockchain short-circuits the ledger system in the blink of an eye, by decentralizing it. In 2008, a paper published under the alias Satoshi Nakamoto suggested instead of your transaction being in one single computer server at the bank, you could store a transaction on thousands of computers around the world at the same time – rent-a-crowd worldwide.

“There are a whole lot of people logged onto this network and confirm all these transactions all day long. What do they get as a reward for it? The answer is Bitcoin. The reason why Bitcoin exists is to reward these people that make their computers available to store data and to become a world super computer that looks over transactions,” says Ran Neu-Ner, Johannesburg entrepreneur and Co-Founder of the Creative Counsel.

Not only does this mean there are literally millions of back-ups, so that you cannot delete the transaction should the bank be hacked, but also the bank is no longer needed to make the transaction.

In effect blockchain cuts out the middleman making all the rules, all the money and protecting your privacy.

“The Bitcoin isn’t important. The piece of tech that’s important is the blockchain that gets tech around the world to become a super computer to transfer money to store contracts or whatever else,” says Neu-Ner. Imagine a world where people go from place to place in driverless cars, where there are no stop streets, or traffic lights, and machines decide how fast you get to your destination. If you can dream

MILLIONS WERE INVESTED IN IT AND MANY LOST MONEY, BECAUSE THEY COULDN’T TELL IT WAS A SCAM. countries got involved. That’s the same phenomenon happening here,” says Ramjoo.

“We keep hearing of [blockchain] from a more technological point of view.

Remember the topic of money is social... when you understand that this is actual money that you can use – I can go and buy bread and put petrol in my car – then you start wanting to find out more.”

Ramjoo’s venture is just one small example the business generated by the rise of this cryptocurrency. Since Bitcoin, more than 800 cryptocurrencies have blossomed in this unregulated market.

So what is blockchain and bitcoin?

When you transfer cash your money goes through the bank to another person.

The bank, who acts as a central mediator, charges you a service fee and makes a record of the transaction.

Until recently, the bank was the only keeper of these records, which in turn 14 | FORBES AFRICA

SEPTEMBER 2017

Photos by Malerapaso via Getty Images / Sawitree Pamee / EyeEm via Getty images / Ryasick via Getty images / Andrew Baker via Getty Images / Rupert King via Getty Images

BITCOIN AND BLOCKCHAINS

AdVoice

BY LEGACY GROUP

LEGACY REACHES FOR THE SKY WITH “THE LEONARDO” MIXED-USE DEVELOPMENT it, Neu-Ner can see it.

“Think 10 years from now, when there are only driverless cars on the road. You don’t have to have anything on the roads created for human nature.”

“Imagine the scenario: we’re driving in driverless cars, we both need to get to work. Your car is in front of my car. You want to pass, so you would normally flash your car’s lights. But in a driverless car you’re not able to flash lights at each other and say move over.”

The solution will be for driverless cars to set up smart contracts and you’ll pay in [cryptocurrency].

“The guys who are working on driverless cars are working on that blockchain right-of-way system right now.”

“The keyword when you are thinking about the blockchain is decentralization… Just keep asking yourself, if something is centralized, how is it going to be disrupted?

Because it’s going to be disrupted. It’s a new economy, where everyone who contributes earns their fair share in tokens,” says Neu-Ner. Trading and spending Because it is an international currency, the Bitcoin, as well as the world, is your oyster. You can travel the world by spending Bitcoin. In Japan, for instance, over 200,000 stores now accept Bitcoin.

This is how it works.

While on the way, a Bitcoin can be purchased on exchange sites when you are starting out. All you need to do is download an app, load up some cash and then start buying. Some financial brokers will even purchase Bitcoin fractions on your behalf.

The exchanges vary but we’ve found bitcoinzar.co.za offers a number of companies that will accept PayPal, your credit or debit card, and person-toperson. There is even a BTM (bitcoin ATM) at a business called Metroman in

Investors speak of that once-in-alifetime investment opportunity. The one that yields exceptional returns coupled with unparalleled security – in short the Holy Grail of investment. Right now, that’s the phrase being used to describe the building that is inching its way up the Sandton skyline. The Leonardo is the Legacy Group and Nedbank Ltd’s latest mixed-use development, and it’s not only breathing new life into the famous skyline, but generating enormous buzz among investors in the financial capital of Africa.

The Leonardo is nestled in the heart of the vibrant and rapidly expanding precinct of Sandton, and can be found at 75 Maude Street. It is within walking distance of the Gautrain and all major businesses, and is also adjacent to the Johannesburg Stock Exchange (JSE). From this prime location, which represents the best of a frankly unequalled South African lifestyle.

“The Leonardo epitomises the ideal of a mixed-use development – a means to live-work-play in the lap of luxury, with every creature comfort and convenience at your fingertips a simple lift ride away,” says Gijs Foden, director of sales. “For residents this means a secure, luxurious living space, full concierge service, a crèche, a rooftop garden restaurant, coffee shop, heated pool, gyms and manicured gardens, and possibly even a commute to work that involves taking the lift a few floors down. For businesses it means much of the above, plus premium office space, and an in house business and conference centre.”

The Leondardo will comprise com-

mercial, sectional title office space; 230 one-, two- three- and four-bedroom apartments; eight penthouses; and the pièce-de-la resistance, The Leonardo Suite – a 2,880 square metre, three-floor penthouse with a 360-degree view, whose asking price of R250-million will make it the most expensive sectional title property ever sold in South Africa.

“The apartment component of the building starts from the 16th floor up, to ensure stunning views for every owner. Demand is high, and as we begin selling the higher floors, I expect the capital values of the properties will skyrocket, as was our experience with The Michelangelo Towers and the DAVINCI. I have no doubt that investors will view the The Leonardo in the same light as these highly successful properties, namely a dollar safe investment that protects their rands in a world class development.”

The Leonardo will offer investors and owners all the creature comforts of a five-star hotel. With a hassle free rental-pool option, owners moreover maximise their investments through a new rental structure.

“The Leonardo has everything going for it; not least of which is its development at the hands of Legacy – one of the continent’s most experienced and highly regarded developers in the luxury lifestyle, office, apartment, property and hotels industries. There’s a very good reason investors are so hyped up about this development, it truly is one you don’t want to miss out on. But really you can’t make a call from simply hearing about it and I appeal to potential investors to come and take a look for themselves,” concludes Foden.

Investors can acquire additional information from Gijs Foden on +27 76 860 0260 email: gfoden@legacygroup.co.za; www.legacyliving.co.za.

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Kyalami, Johannesburg, that accepts rand in exchange for Bitcoin.

In South Africa there are two licensed Bitcoin exchanges. These are Ice Cubed and Luno, according to bitcoinzar.co.za. It is even possible to get your salary in Bitcoin; it’s as simple as a shopping cart on an online store.

There are, however, pitfalls. You must research the apps and look for realistic returns when investing in cryptocurrency, especially ones you are not familiar with. Schemes, such as Pipcoin, offered high returns of 35% a month and many fell for it.

“Millions were invested in it and many lost money, because they couldn’t tell it was a scam. It was plugged as the coin of Africa. So if you don’t understand how coins are generated, you won’t know how these schemes operate,” says Ramjoo.

Bitcoinzar.co.za also recommends you don’t leave your Bitcoin on an exchange. Hackers know that exchanges are mostly honey-pots, with private user information, and, more importantly, Bitcoin that can be instantly stolen and transferred away to an anonymous Bitcoin wallet.

“People are losing their money very quickly. They are believing that if they buy into this hype today, tomorrow I’ll come away with a lot of money,” says Neu-Ner. If you are looking to invest, ensure you have a Bitcoin/cryptocurrency wallet where you can keep your data offline and private. You should always question the authenticity of these wallets and the company should be transparent.

It is even possible to mine you own Bitcoins, although this method of earning is considered to be going 16 | FORBES AFRICA

SEPTEMBER 2017

out of date. At the current rate of exchange, you would be spending more money on equipment and electricity, unless the price escalates substantially.

“You can compare it to when the internet first came and emails. The whole process of us writing a letter, going to the post office, then waiting for the letter to get to the person.

When the email came, the postal service became a third party, and not being used as much as we used it before,” says Ramjoo.

Banks are transforming Africa is looking at adopting blockchain-based currency. In February, the South African Reserve Bank said it is open to issuing a national digital currency, which would likely be based on blockchain or distributed ledger technology.

Senegal is set to roll out its eCFA, a digital version of the West African franc, later this year, and there are even plans to extend distribution across the West African Economic and Monetary Union (UEMOA).

“There is going to be a new generation for banks. We are starting to see it play out in the market – governments starting to issue out their own cryptocurrency. Tunisia was the first country in the world to have its own government-issued digital currency… Some people are old school and will keep their money in the banks. But the bank of the future will not be the same as it is now,” says Ramjoo.

This is just the beginning of a new system that will transform the world and make billions in the process.

Many people don’t understand what’s happening; those that do will likely become even richer.

COIN

COLLECTION? Cryptocurrency, such as Bitcoin, is generated in the form of data strings.

Only computers can solve the complex mathematical equations. For every completed equation, a coin is created and the coin that follows requires more data and processing power to add to the string, which in turn keeps a record of every transaction ever made.

“Bitcoin is not a company, nor does a single person or organization issue or control Bitcoins; therefore, it has no central point of failure. For this reason, nobody can inflate the currency supply and create hyperinflation crises, such as those that occurred in post-World War I Germany and more recently in Zimbabwe. In 2008, the government of Zimbabwe printed so much of its currency that in a single year, a loaf of bread increased from $1 to $100 billion.

In both cases, any savings that people had in the form of national currency were completely destroyed.” - extracts from Bitcoin for the Befuddled by Conrad Barski and Chris Wilmer

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The Emperor’s

NEW COINS We’re in the middle of the greatest bubble of the decade: $100 billion worth of cryptocurrency with little intrinsic value. a long-term system will emerge— but not before a handful of visionaries, and hucksters, take billions from the greater fools.

BY LAURA SHIN

18 | FORBES AFRICA

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BITCOIN AND BLOCKCHAINS

O

n April 24, Martin Köppelmann, 31, Stefan George, 29, and Matt Liston, 25, placed their laptops on a long wooden dining table ringed by highbacked wooden chairs and three-armed candelabra at their Airbnb in Gibraltar.

It was an old fashioned setting for a 21stcentury moment.

The three were about to launch a Kickstarter-style crowdsale, based on a concept they’d been developing for two years: a user-driven prediction market based on a coming “Cambrian explosion of machine intelligence” called Gnosis.

Their goal: raise $12.5 million. But instead of dollars, they would accept money only in the form of a new cryptocurrency, Ether, that didn’t exist two years ago. It was a new form of crowdfunding called an “initial coin offering,” or ICO. Supporters would not receive a finished product down the road, as in a typical Kickstarter project. Instead, for every Ether (or fraction thereof ) sent to Gnosis’ wallet, the “smart contract” would automatically send back a different type of money, a GNO coin, that would give people special access to the platform plus act as equity in the network.

Theoretically, as Gnosis became more popular, demand for GNO coins (also known as tokens) would rise, boosting the shares of existing GNO token holders. The founders had designed their crowdfunding as a Dutch auction, which starts with a price ceiling rather than a floor. Within 11 minutes, Gnosis had raised the $12.5 million, led mostly by programmatic pooled “bidding rings,” and sold only 4.2% of its allotted 10 million tokens. The final price, $29.85, gave their project— which had little more underlying it than a 49-page white paper and a few thousand lines of opensource computer code—a valuation of $300 million. In two months, GNO coins were trading at $335 each, and Gnosis was suddenly worth $3 billion, more than the market cap of Revlon, Box or Time Inc. Köppelmann’s stake alone is, in theory, now worth about $1 billion.

“It’s problematic,” admits Köppelmann,

who stammers and sighs repeatedly, in seeming embarrassment. His best defense for the valuation: There’s a lot out there that’s far worse.

That’s pretty much all you need to know about the great cryptocurrency bubble of 2017. The market capitalization for these virtual issues has surged 870% over the last 12 months, from $12 billion to over $100 billion. (This number is a moving target, though, since a 30% daily market plunge or gain isn’t out of the ordinary.)

That’s more than six times the rise in stock market capitalization during the dot-com boom from 1995 to 2000. A lot of this total gain comes from Bitcoin, the original digital asset—created out of an artful blend of cryptography, cloud computing and game theory—which is up 260% in 2017 alone. The total value of

Bitcoin now exceeds $40 billion, despite years of shady characters, fraud, theft and incompetence (including the Mt. Gox meltdown, which took almost $500 million with it) and despite the fact it has no intrinsic value—not even the promise of a central government or a precious metal mined from the ground. But the second movers are growing much faster and doing something more interesting.

Rather than a mere currency—which is largely used for speculation—these so-called “crypto-assets” intertwine businesses and tokens. The fuel here is something called Ethereum (whose currency is Ether).

Like Bitcoin, it’s based on blockchain technology, essentially a secure, decentralized, constantly updated ledger system. But while Bitcoin allows you to transact only in Bitcoin, the Ethereum SEPTEMBER 2017

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network allows for software programs. In other words, Ethereum-based currencies can actually do things. So suddenly anyone with a digital idea can launch a coin to go with it. There are now more than 900 different cryptocurrencies and crypto-assets on the market, with another launching pretty much every day. On June 12, Bancor, which plans to create a new reserve cryptocurrency, offered 50% of its total tokens and raised $153 million in under three hours, setting the record for an initial funding amount.

The very next day, an entity called IOTA listed a token designed for Internet of Things micropayments and immediately fetched a value of $1.8 billion. A week after that, a messaging platform named Status launched its coin offering, raising $102 million. In a gold rush, it’s good to be selling the pans.

Ethereum’s value has skyrocketed more than 2,700% in the last 12 months, to $28 billion, or $300 per token.

Of course, on the way there it has flash crashed to 10 cents and hit as high at

$415. Bitcoin has been historically just as volatile, trading from $31 to $2 to $1,200 to $177 to its recent $2,500, as armies of day traders try to time something that has all the predictability of a roulette wheel. Of course, that hasn’t stopped a slew of websites and Facebook groups from popping up, full of endless bragging of cryptoconquests, including token purchases financed with credit card debt.

Or hucksters from trying to get people to put their retirement money in this stuff, via Ether and Bitcoin IRAs. Every new coin offering presents another chance to translate a flaky business into an absurd valuation. These

pioneers have certainly unlocked a better way to raise money and create a network effect. Why grovel before Silicon Valley venture capitalists or deal with federal regulators in the public markets when you can attach a token to your idea and have speculators throw money at it and then bid it up? These initial coin offerings have raised more than $850 million,

CASE STUDY: HOW COINS WORK

from Brave Software’s lofty “Basic Attention Token” (which sucked in $36 million in 24 seconds, at a $180 million valuation, on the promise of using blockchain technology to fix digital advertising’s deep problems) to the more basic Legends Room (a coin that gives users VIP privileges at a Las Vegas strip club).

If this all sounds familiar, it’s because it is. The same dynamics— companies with more concept than concrete, day-trader speculators, wild volatility, Dutch auctions, instant fortunes created out of thin air— were ubiquitous in the first internet bubble. As was collapse: In 2000, $1.8 trillion in internet stock market value evaporated, and unless you think a prediction-market concept is instantly worth $3 billion, history will repeat.

Ether is both a building block and the future description of what’s going to happen to most of this “value.” Still, we’re past the tulip stage. Yes, that first dot-com bubble was ridiculous, but it

Golem worldwide supercomputer network aims to become the Airbnb for computing, employing idle PCs all over the planet. Here’s how cryptocurrency plays a role.

CGI ARTIST A computer-graphics artist who bought Golem Network Tokens to rent computing power on Golem tells her computer to render an animation. Golem determines that the rendering can be completed by, say, five machines rendering for one hour each. (More likely, 100 for a minute each.) Each “idle” computer receives one GNT. All this happens automatically.

GOLEM WORLDWIDE SUPERCOMPUTER The Golem Network, in its role as an Airbnb for computingprocessing power, enables machines around the world to transact with each other. Computing power that would otherwise go to waste will soon be used by data scientists, companies training machine learning algorithms and more.

Golem had an ICO in November, and its tokens have already appreciated 4,425%.

ETHEREUM NETWORK Computers supporting the Ethereum network, called miners, compete to solve a computationally intense math problem. The first to solve it wins the “block reward,” which consists of newly minted coins (currently 5 ETH/block, or $1,350). The winning miner adds a new block of transactions to the ledger.

20 | FORBES AFRICA

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GOLEM NETWORK TOKEN’S SMART CONTRACT GNTs aren’t actually traded on the Golem Network itself. Ethereum makes it so easy to create tokens that the Golem Network (like many other networks) uses an Ethereum “smart contract” to trade GNT. The CGI artist’s transactions are recorded onto the Ethereum blockchain, which updates the account balances of each computer that participated.

ETHEREUM BLOCKCHAIN This time-stamped ledger contains the history of every Ethereum transaction since the network launched in late July 2015. New transactions are added in blocks roughly every 15 seconds. This single source of the truth is nearly impossible for anyone to tamper with, as the 32,000 computers around the world running the Ethereum software hold a copy of it. The CGI artist’s GNT transactions are recorded here.

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BITCOIN AND BLOCKCHAINS

also gave us enduring companies like Amazon, Google and eBay. And, yes, scores of foolish day traders and IPO junkies got crushed, but lots of smart, early players got very, very rich. That history is repeating right now, too.

To best understand how cryptocurrency works, think about videogames. You have a virtual world, and within this realm, you can often earn virtual currency, which can then be redeemed for rewards within the game—extra armor, more lives, cooler clothes. It’s the same here, except that it’s rooted in blockchain technology and (theoretically) you can either convert the play money into the real thing or deploy it for actual goods and services inside the entity that spawned it.

Many ICO descriptions even read like byzantine videogame rule books.

For example, owners of GNO tokens in the $3 billion prediction market Gnosis have the ability to earn a second kind 22 | FORBES AFRICA

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WHY GROVEL TO VENTURE CAPITALISTS OR DEAL WITH REGULATORS OF PUBLIC MARKETS WHEN YOU CAN ATTACH A TOKEN TO YOUR IDEA AND HAVE SPECULATORS THROW MONEY AT IT? of token, WIZ, valued at $1 each, to pay platform fees. Ingeniously, the coins are earned by voluntarily “locking in” tokens for periods up to a year, which conveniently props up Gnosis’ overall price. It’s a common model. Since most of these platforms cap the number of tokens, increased usage jacks up the demand for them and should, in turn, boost the price.

This network effect, in which a service becomes more valuable as more

people use it, mirrors the incentives of Amway-style pyramid schemes.

Imagine if Facebook had a token and by merely convincing a friend to join you would improve the network and your “token” net worth.

“We are crowdfunding a new decentralized digital economy,” says Chris Burniske, who recently left New York City’s ARK Investment Management, the first public fund manager to invest in Bitcoin.

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RETURN OF THE DAY TRADERS

A

t the end of the 20th century, there was no better indicator that the dot-com bubble was about to burst than the millions of everyday people— dentists, lawyers and bank tellers—armed with cheap PCs and internet connections who abandoned their day jobs to trade newly born internet stocks like Excite and Books-A-Million, based on the rantings in message-board posts. Token bubble traders have it even easier. Middlemen, regulators and tax reporting are easily avoided. Trading is 24 hours, including weekends. E-brokers have been replaced by “exchanges”—some 70 at last count—that offer “makers” and “takers” margin trading, pairs trading and derivatives, charging transaction fees that generally range from zero to 0.3%. One San Francisco exchange, Kraken, says it hired 100 customer-service people in May and June and has more hiring planned. “It’s been really crazy,” says founder Jesse Powell. “We’ve had about five times growth in terms of new signups this quarter versus last, and last quarter was already a pretty significant jump over the previous year.” No wonder.

Newly minted coins are now being crowdfunded at a rate of about 20 per month, and never before has there been an initial-offering market that has risen so fast, with such volatility. Ethereum, which has the status of Google or Apple in the crypto-world, trades on average 5% or more of its $30 billion float each day, compared to about 0.5% for Apple.

Ethereum is up fortyfold year to date, and it’s not unusual for it to move more than 10% in a day. There’s good action even in the less popular coins. Rubycoin, for example, was hatched in 2014 and purports to be an untraceable savingsaccount coin that pays 5% interest. Like a Pink Sheet penny stock, it recently traded only $37,000 in a day, but gained 9%.

Virtually all of the exchanges offer leverage of up to 5-to-1.

So if you bought $10,000 of an ICO like supercomputernetwork coin Golem, which ran up 5,000% in its first seven months, you would have $2.5 million. Not enough? Leverage of up to 100-to-1 can be found. Take the case of Alan Aronoff, a 47-year-old San Franciscan who has dabbled in the music business most of his life, playing in bands and, at one point, owning a private nightclub. In May 2016, Aronoff put $10,000 into Bitcoin—$8,000 of which came from a special

Burniske classifies the emerging assets into three categories. First, cryptocurrencies like Bitcoin and untraceable digital cash like Monero and Zcash. Second, cryptocommodities, the putative building

15-month zero-rate cash advance from his credit card.

After the Bitcoin exchange he was using got hacked, Aronoff defected to Kraken with $8,500 in Bitcoin and Alan Aronoff: From $8,500 to $7.5 began leveraging his million in six months thanks to positions. He bought digitalcoins and a dose of OCD. Ether at $7 per coin in December 2016, as well as Golem and Gnosis in early 2017. He began watching the BTC/USD and ETH/USD markets 16 hours a day, sleeping as little as possible and barely leaving his house so that every time his gains hit certain thresholds, he could trade. “I’m kind of OCD,” he says. Within six months, he turned his $8,500 into $7.5 million—a return of 88,000%. Another new cryptomillionaire is Sean Ironstag, administrator of the Facebook group Advanced Crypto Asset Trading. The 37-year-old former forex trader likes to brag about his exploits: “I used to stand on rooftops and scream revolution-type shit and travel around the world,” he says, mentioning his visits to Egypt and Syria during the Arab Spring. Ironstag trades more actively than Aronoff, having scored big wins in coins like Augur’s REP, Game, Litecoin, Ripple and Dogecoin, an alternative currency based on a meme about a Shiba Inu dog.

Ironstag netted 1,500% in Dogecoin and ultimately turned $15,000 into $3 million in less than two years. Thanks to a connection, he was recently invited to famed trader Michael Steinhardt’s estate in Bedford, New York, where he took the opportunity to educate a group of Wall Street titans about the future of finance. “An entire, like, sector of, like, archaic finance knows now they’re becoming irrelevant,” Ironstag says. What’s next for Ironstag? He’s launching a hedge fund and a crypto boot camp that he says will be folded into a crypto holding company he plans, modeled after Berkshire Hathaway.

blocks of a decentralized digital infrastructure. Golem Network Tokens, for example, harness a network of computers that rent or lease computing power—so while you sleep, your computer could

be used by an entrepreneur who needs to train her machine-learning algorithm, earning you coins in the process. An especially hot type of crypto-commodity: decentralized data-storage tokens, such as Filecoin, SEPTEMBER 2017

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Sia or Storj, which compete with Amazon Simple Storage Service. The third category (and farthest off ), crypto-tokens, promises to power consumer-facing, decentralized networks. Think Uber without Uber—a peer-to-peer network of riders and drivers (or driverless cars), earning and paying one another in the crypto-tokens needed to transact on that network. The entities raising money in thesen coin offerings are not always startups. Sometimes they’re merely developers collaborating on a project and don’t form a legal entity.

And even when the group is really a corporation, such as the messaging app Kik, which is launching the Kin token, the organizers will claim that the crowdsale is not actually offering a share in the company, conveniently sidestepping securities regulations.

And the people backing this technology aren’t naïve idealists.

Venture capital stalwart Tim Draper has backed two crypto-assets.

Brendan Eich, of Basic Attention Token fame, previously created Java Script and cofounded Mozilla. Tiger Management alum Dan Morehead founded Pantera Capital to specialize in these assets. They’re chasing firms like Blockchain Capital, founded by former child actor and videogame virtual-currency entrepreneur Brock Pierce.

He went as far as to finance the firm’s latest fund with its own cryptocoin offering, BCAP, ostensibly freeing its would-be limited partners from the usual regulations, including lock-ups. He raised $10 million in six hours in April. Pierce avoided regulatory scrutiny by limiting his coin crowdsale to 99 accredited investors in the U.S. and 901 investors overseas, where rules are more relaxed. Once it launched, though, anyone could buy in. And they did; the fund’s valuation has spiked, to a recent $17.5 million. “My phone has been 24 | FORBES AFRICA

SEPTEMBER 2017

ringing off the hook,” Pierce says.

“I have so many people coming to me saying, ‘Can I do this in my industry?’ ” Olaf Carlson-Wee is a 27-year-old son of Lutheran pastors. He can barely write computer code, has no formal training in financial analysis and has

never managed money before. This, of course, qualifies him as the poster child for the cryptocurrency bubble of 2017. Carlson-Wee’s Polychain Capital, based in San Francisco, has seen its assets swell from $4 million to $200 million in less than 10 months, mostly because of a series of deft maneuvers

ARE CRYPTO RICHES TAX-FREE? With billions being made in the crypto-bubble, Uncle Sam wants his cut. Getting his hands on it will be another matter.

In 2014, the IRS issued controversial guidance stating that U.S. taxpayers should treat digital currencies as capital assets, provided those currencies are convertible at some point into traditional cash. (In other words, play money in an online game doesn’t count.) The upside of capital-asset treatment is that anyone who sells a digital position he’s held for more than a year is taxed on his profit at the lower long-term capital gains rate—currently 0% to 20%. The downside is that traders who hold their positions for shorter periods are taxed on gains at ordinary federal income tax rates of up to 39.6%.

But an even bigger problem with the IRS’ position is this: anyone using digital coins to pay for some service online—say, buying data storage—would, it appears, have to treat each purchase as a capital sale.

And if the value of the coin being spent has gone up since he acquired it, he’d have to report and pay tax on a gain. (By contrast, if you hold a conventional currency—say, euros or yen—and you happen to spend it after it has gained value against the dollar, the IRS doesn’t consider that taxable income.)

Reporting on the taxpayer side isn’t optional: income is income, whether from trading stocks or Bitcoin or spending the latest token.

The reality, however, is that there is no current requirement that cryptocurrency exchanges report transactions to the IRS the way brokers like Schwab must report stock sales on form 1099-B. Is tax avoidance adding fuel to the current mania? Consider this: in 2016, only 802 individual tax returns out of the 132 million filed electronically with the IRS reported income related to cryptocurrencies.

The government wants more compliance. Last November, the Department of Justice filed suit in federal court seeking to issue a summons forcing Coinbase to turn over records on all U.S. customers who transferred convertible virtual currency between December 31, 2013, and December 31, 2015. The court sided with the IRS initially, but Coinbase—and Coinbase customers—have pushed back, delaying enforcement of the summons. Even if the IRS gets all those customers’ names, however, it still has a big problem if it wants to tax all the crypto-gains: much of the trading is done on overseas exchanges, and even more could migrate there. —Kelly Phillips Erb

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CRYPTOS IN WONDERLAND DOGECOIN (DOGE): In 2013, a Shiba Inu meme with broken-english captions went viral. Dogecoin, originally issued as a joke currency, has been a coinmarket star. Today it has a $280 million market cap, and it has already sponsored Nasdaq race cars and water wells in Africa, plus sent the Jamaican bobsled team to the Winter Olympics.

INSANECOIN (INSN): Its website says, “Insane Coin is more than just a coin, it is a happening . . . a state of mind. you don’t have to be insane to be part of our community, but it sure couldn’t hurt.” The coin’s development road map includes establishing a voting system and opening an Insane Space storefront in england in 2018. current market float of $2.5 million.

MOONCOIN (MOON): Mooncoin sits on the new Mooncoin blockchain and aims to revolutionize investing.

Forget researching companies and markets. you can “monetize your likes” by earning Mooncoins when others like them, too. Current market value: $21 million.

UNOBTANIUM (UNO): Only 250,000 coins will be mined over the next 300 years. So unobtanium coins are gunning to be the rarest crypto-token ever. “The platinum to Bitcoin’s gold,” says the website’s video.

Market value: $8.4 million.

POTCOIN (POT): This cryptocurrency, built specifically for the cannabis community, is best known for sponsoring a trip by Dennis Rodman to North Korea. Current market value: $22 million.

PANDACOIN (PND): Who doesn’t love panda bears? This cryptocurrency was marketed to crypto novices as easy to understand and use. It’s basically an alternative bank account. If you hold Pandacoins in its PandaBank, you can earn 2.5% annual interest, but only when your computer is online and PandaBank is open. Market cap: $1.6 million.

LEGENDS ROOM (LGD): For 5,000 tokens, holders get a lifetime VIP membership to a Las Vegas strip club run by a team that includes mixed-martial-arts fighter Phil “New York Bad Ass” Baroni. All holders get a 20% discount (members get 50%) on drinks and services except gaming. Its fully diluted coin market cap exceeds $50 million.

TRUMPCOIN (TRUMP): This coin is meant to “support President Trump and his vision of making America great again.” TrumpCoin Ambassadors are urged to post weekly articles on their Facebook page to earn coins. in January, before the inauguration, TrumpCoin peaked at 51 cents, or $3.38 million, in value but now trades for 6 cents, or $427,000.

based on his innate understanding of crypto-assets.

For Carlson-Wee, it all started on a Minnesota lake during his summer vacation from Vassar College in 2011, as he stared at $20,000 in studentloan debt and $700 in savings in the bank. While his two older brothers 26 | FORBES AFRICA

SEPTEMBER 2017

SKINCOIN (SKIN): Want a rainbow-colored skin on the Glock-18 9-millimeter sidearm you use in Counter Strike: Global Offensive? This cryptocurrency buys you more skins and allows you to trade and make bets with skins for videogame firearms. It began an ICO on June 21 and had raised $3.3 million in ether by June 30.

COINYE (COINYE): Originally called Coinye West, this cryptocurrency project was abandoned after a trademark-infringement lawsuit by Kanye West, whose image (in the form of a sunglasses-wearing fish) was its mascot.

have become poets, Carlson-Wee was obsessed with math, games and imaginary worlds from a young age. And after reading about the underground drug marketplace Silk Road and how it was enabled by Bitcoin, he conjured a world coursing with cryptocurrency and eventually

sank in almost all of that $700 into Bitcoin, at prices as high as $16, only to see it drop to $2. Undeterred, Carlson-Wee persuaded his sociology professors to accept a senior thesis on Bitcoin and graduated from Vassar with a degree in sociology.

After a stint as a lumberjack living

FORBES AFRICA

BITCOIN AND BLOCKCHAINS

in a yurt on a commune in Washington State, he emailed his thesis to Coinbase, the cryptocurrency wallet and exchange, in 2012, and became its first employee, charged with managing customer service.

Carlson-Wee requested that his dollar denominated salary of $50,000 be paid in Bitcoin, likely becoming the first person in the world to both earn and spend almost exclusively in cryptocurrency. Customer service gave Carlson-Wee a front-row seat to the competencies of the fast-growing company. Eventually he helped automate many of Coinbase’s routine customer-service responses and even created a sort of Bitcoin SAT, which he used to screen applicants for positions, eventually hiring eight, all of them paid in Bitcoin. He then got promoted

to head of risk, lowering Coinbase’s fraud rate by 75% via artificialintelligence algorithms.

By last September, he had quit and launched his crypto-only Polychain Capital with $4 million in funding from investors like Jack Herrick, founder of Wikihow, and Garry Tan, a former Y Combinator partner.

Since most venture capital and hedge funds are precluded from investing directly in highly speculative assets like cryptocurrencies, Carlson-Wee worked instead with the likes of Andreessen Horowitz, Union Square Ventures, Sequoia Capital, Founders Fund and Pantera Capital, as his three-plus years at Coinbase made him something of a sage in this space.

Accordingly, while the crypto-asset movement espouses a democratization

of nearly every aspect of business, life and wealth accumulation, like the “friends-and-family” allocations of the dot-com bubble, most of CarlsonWee’s 13 investments to date have been made before the ICO, at a significant discount. His investments include emerging industry-standard Ethereum and the decentralized supercomputer scheme Golem, as well as Augur, a prediction-market coin that Carlson-Wee prefers to Gnosis; 0x, a cryptocurrency exchange protocol that will allow for decentralized coin trading; and Tezos, an Ethereum competitor. “With Tezos, you can formally verify contracts whereby you essentially prove that the contract does what it’s intended to do,” says Carlson-Wee, looking out from more than 40 stories over the city, wearing a

The Fund Manager for Mastercard Foundation Fund for Rural Prosperity is KPMG International Development Advisory Services

FORBES AFRICA

BITCOIN AND BLOCKCHAINS

skull-emblazoned black T-shirt, track pants and a flat-brimmed rhinestoneadorned baseball cap.

He’s taking a longer-term venture approach rather than wantonly trading coins, but in a market frenzy advanced knowledge and preferential treatment translate into extraordinary gains.

So where do we go from here?

Carlson-Wee is one of the few who can articulate a vision. He believes that base-layer protocols and infrastructure such as data storage and computingpower services will be built first. “I could see a future where computers, instead of having their own internal memory, their own bandwidth, their own internet connection—and your own home computer, the CPU and GPU cycles on your device—all of that could be outsourced on a peruse payment basis using tokens,” he says. “You could pay for every packet

of internet you want, every cycle you want and every piece of storage you want in real time, instead of those things being on everyone’s device and unused most of the time.” In other words, cloud computing meets the sharing economy meets the Fed. Maybe. But before that happens, a lot of folks get hurt. Technically speaking, at least in the U.S. these “equity” coins aren’t securities so long as they are partly utilitarian and are not dependent on any particular party to succeed.

It’s sort of like taxi medallions or golf-club memberships. Some token developers have attempted to sidestep the issue of whether their coins are actually securities by basing operations in places that have low taxes and looser regulations, like Singapore, Gibraltar and Zug, Switzerland.

Unsurprisingly, insider trading and

THE SCAMS ARE VERY SUBTLE AND VERY SOPHISTICATED UNLESS YOU’RE WILLING TO READ THE SOURCE CODE

dirty deals are flagrant. One coinoffering creator told Metastable Capital’s Naval Ravikant, the CEO and cofounder of AngelList: “If you agree to buy tokens at the ICO and support the price, then 30 days later, we’ll secretly sell you any leftover tokens at a lower, pre-agreed price,” recalls Ravikant.

That’s a felony on Wall Street. In the cryptocurrency Wild West? “These are the kinds of deals being cut left and right.”

The SEC has said that it expects this industry to protect its investors, but given its Keystone Kop track record before and after the subprime meltdown, it’s hard to see it effectively regulating a world of functional currency.

“The scams are very subtle and very sophisticated unless you’re willing to read the source code,” Ravikant adds.

And even if regulators did read the code? “If my bank account [in the U.S.] gets shut down, I can’t just open up a Russian bank account and start using my bank credit card to go about my day buying Starbucks,” Carlson-Wee says. “But if my Bitcoin wallet provider gets shut down, I can shoot that bitcoin overseas so fast—literally in one minute— it’s like, ‘Okay, now that Bitcoin is in Russia, and now I’m going to participate in this crowdsale from the Russian exchange and store these tokens on a Russian wallet. . . . So on a global scale, trying to regulate these things is like Whac-a-Mole.” Ditto trying to collect taxes.

So buckle up for more blowups, more Mt. Gox-type fiascoes and tens of billions in losses for the people who are gambling in an area where there is precious little to protect them. The smart money, meanwhile, should do fine, vulnerable only to its own hubris.

“Everyone’s like, token sales are complete madness right now,” CarlsonWee says. “I don’t think we’ve seen anything relative to how big this could be.”

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FORBES AFRICA

BITCOIN AND BLOCKCHAINS NOT SO TINY BUBBLES THESE ARE THE TOP 25 OF THE 900+ CRYPTOCURRENCIES AND CRYPTO-ASSETS RANKED BY MARKET CAP. MANY ARE WORTH EVEN MORE IF YOU INCLUDE THE TOTAL SUPPLY OF COINS THEY HAVE AUTHORIZED. Coin/Token

Market Cap1

YTD Return

260% $40,520 Bitcoin Since only 21 million will ever be produced, the original cryptocurrency is the best store of value but still very volatile.

3,825% $26,720 Ethereum A blockchain for “smart contracts” (programs that will execute contractual terms automatically), Ethereum launched the token craze.

4,210% $9,980 Ripple Its XRP coin has soared. Wants to disrupt the slow, opaque and pricey world of international wire transfers. It already has 75 bank partners.

980% $2,080 Litecoin Litecoin has long marketed itself as digital silver to Bitcoin’s gold, in part because it’s less energy-intensive, with faster block times.

1,395% $1,720 Ethereum Classic This coin is from the original Ethereum blockchain, which was upgraded after a $50 million hack.

4,320% $1,330 NEM A cryptocurrency that is popular in Japan, where banks are testing an enterprise version. Many Western crypto enthusiasts have little idea what it is.

1,690% $40,520 Dash Originally called darkcoin, with an emphasis on privacy, Dash touts itself as digital cash, but its average transaction size is more than $10,000.

–35% $1,120 IOTA Bitcoin and Ethereum may be too expensive and slow for Internet of Things micropayments. IOTA could someday be in demand by Fitbits everywhere.

340% $640 Monero Privacy coin that aims to be a base layer for other privacy apps, such as messaging. Accepted on Dark Web marketplace AlphaBay. 6,190% $630 BitShares One-stop supermarket for crypto financial services, founded by controversial crypto serial entrepreneur Dan Larimer.

8,705% $620 Stratis A blockchain-as-a-service geared toward Microsoft platform users and targeted at enterprise customers.

2,825% $470 Zcash This privacy coin has beaucoup buzz: AngelList’s Naval Ravikant is on its board, and JPMorgan Chase is using its tech in its private blockchain.

6,135% $440 AntShares Early blockchain ICO that wants to be China’s version of Ethereum. Its fully diluted coin value is nearly $1 billion.

6,030% $400 Golem Global marketplace for idle computer power could be a boon for CGI artists, AI developers, DNA scientists and many more.

990% $390 Steem Crypto-Reddit of sorts. Rewards users who post and up-vote popular content. Has a dubious founding team and poor token distribution.

7,295% $390 Siacoin Taking on Amazon S3 with decentralized file storage that’s a tenth of the cost, faster and more reliable.

415% $360 Gnosis Prediction marketplace that could have applications in areas as wide-ranging as art auctions and insurance.

1,410% $350 Waves Insiders call it a cross between Ripple and a decentralized exchange. Fuels bubble trading by making it easy for members to create their own tradable tokens.

42,910% $350 BitConnect Cryptocurrency portal that aggressively solicits investments and promises suckers eye-popping returns as high as 120%.

260% $330 Iconomi Investment platform for cryptocurrencies. Its Digital Asset Arrays are basically crypto-ETFs. Two have already been launched, one for ICOs. 3,695% $330 Bytecoin Marketed as a private, untraceable cryptocurrency designed for enterprise clients by an anonymous team. Crypto insiders say steer clear.

740% $310 Augur Prediction market, founded by Joey Krug, who is now also head of Pantera Capital’s new ICO fund. Striving to become a decentralized financial system.

1,180% $280 Dogecoin Shiba Inu-meme-inspired community born out of a joke. It epitomizes the financial resources that can be marshaled by networks.

1,870% $270 Lisk Decentralized blockchain version of Apple and Google app ecosystems. In 2016, it was integrated into Microsoft Azure’s blockchain-as-a-service platform.

1,595% $270 Stellar Lumens Sister to Ripple’s XRP, which is targeting its services—remittance, mobile money—at the unbanked. Founder had been associated with troubled Mt. Gox. *Current priCe times “CirCulating supply,” in millions. Source: coinMarketcap aS of June 30, 2017.

30 | FORBES AFRICA

SEPTEMBER 2017

ATL:

Focused on Growth Through Route Development

T

he city of Atlanta — like few cities in the world — displays an unrivaled diversity of people and culture, a spirit of openness and hospitality, and true international character.

Atlanta is a proven leader in economic and business development; home to a thriving, global business community, and the leading global city in the Southeastern United States.

Atlanta’s No. 1 economic development tool is Hartsfield-Jackson Atlanta International Airport (ATL). The Airport supports more than 400,000 jobs in metro Atlanta and makes a direct regional economic impact of more than $65 billion.

In 2016, ATL topped 104 million passengers and expects to top 107 million by the end of this year.

Each week, ATL accommodates nearly 8,500 departures to about 175 domestic and 70 international destinations.

Hartsfield-Jackson is not resting on its laurels. The Airport is preparing for the future with a renewed commitment to growth in passenger and cargo air service development or route development, as is the terminology used in Europe, and necessary supportive infrastructure.

A key ingredient in the Airport’s air service development plans is Hartsfield-Jackson’s innovative Air Service Incentive Program (ASIP).

ASIP is designed to stimulate international air cargo and passenger growth, particularly along routes that link Atlanta to the world’s fastest-growing economies.

The incentive program waives landing fees for up to two years for qualified passenger airlines starting international routes not already served from Atlanta and matches up to one-half of promotional costs, capped at $50,000. International cargo service carriers benefit from a waiver of both landing and parking fees during the same periods.

The highest tier benefits are available to carriers starting service to major economies with the greatest potential for passenger and cargo growth, namely Brazil, Russia, India, China, South Africa, Latin America and the Caribbean in addition to select countries such as Switzerland, Qatar, Iceland, Norway, Turkey and Ukraine.

Carriers starting service to other parts of Africa, Eastern Europe and Southeast Asia can receive consideration for midtier benefits, including an 18-month waiver of landing and parking fees and up to $35,000 matching promotional support. Total ASIP for fiscal years 2016 and 2017 was $866,620.56 Along with being one of the ASIP target destinations, under a mandate issued by Atlanta Mayor Kasim

Reed, Africa is receiving additional attention from the Hartsfield-Jackson Air Service Development team.

The scarcity of direct flights between Atlanta and Africa has created an opportunity to develop new nonstop routes. While there is anticipation for greater connections to Africa via Turkish Airlines, one of ATL’s newest carriers, direct daily service from Atlanta is only available to Lagos and Johannesburg.

“New direct routes to Africa will help encourage direct investment and a steady stream of business opportunities both in the Atlanta region and the targeted destinations in Africa,” said Elliott Paige, ATL’s director of Air Service Development.

In this 21st century, international visitors choose to vacation, and foreign corporations choose U.S. cities in which to invest. Often, those choices hinge on locations where nonstop flights provide fast and convenient air links.

“We focus on additional air service development both domestically and globally, which allows us to increase our connectivity worldwide.”

Roosevelt Council, Jr., Aviation General Manager The ATL team has formed an alliance with the area’s economic development partners to make these new routes a reality.

In the area of cargo service development, improving ATL cargo efficiency of operations remains a top priority, combined with additional capacity, partnership and training of cargo stakeholders.

ATL air cargo activities account for 27,289 jobs at and around the Airport and $6.7 billion in business revenue. In 2016, Hartsfield-Jackson handled more than 648,000 tons of cargo, up 3.58 percent over 2015’s numbers. All-cargo carriers combined with passenger airlines that carry belly freight contribute to the year-round cargo traffic. Four new all-cargo airlines began operations at Hartsfield-Jackson in 2015, one in 2016, and plans are in place for additional carriers to launch operations this year.

To accommodate what is expected to be dramatic growth over the next two decades,

Hartsfield-Jackson has launched ATLNext, the Airport’s multibillion-dollar, 20-year capital improvement program.

One of the top and most immediate priority initiatives is the development of 1 million square feet of cargo warehouse facilities. Site preparation will begin this year in advance of the construction of two 275,000-square-foot warehouses. Additional warehouse space is slated to be developed before ATLNext is completed.

To meet passenger needs – which have evolved dramatically over the past 40 years – ATL will undergo a curb-to-gate modernization of the Airport’s Domestic Terminal. The centerpiece of this terminal modernization will be a multipurpose canopy that will protect guests from the elements as they arrive to or depart from the Airport.

Hartsfield-Jackson stands behind what it views as its purpose: to serve as the Atlanta community’s chief economic development tool for the creation of jobs and the growth of wealth for residents.

“Going forward, ATL will work tirelessly to maintain its leadership position, not only in the aviation industry, but also in efficient operations and worldclass service,” said Cortez Carter, ATL’s assistant general manager of Commercial Ventures.

“Through flights to Johannesburg from Atlanta, our city is positioned for a thriving trade relationship with South Africa. Expanding Atlanta’s current exports to South Africa and promoting our city as a world-class place to do business are a top priority.”

Mayor Kasim Reed

www.atl.com

@atlairport

AFRICAN NOTEBOOK

ALGERIA

POWER: Fitch’s BMI Research forecasts GDP growth this year to drop 15% to 2.9%, and by as much as 30% next year compared with the fouryear annual average of 3.4%.

BY MELITTA NGALONKULU

LIBYA

BORDER: The EU Trust Fund adopts a program worth $54 million to reinforce the integrated migration and border management capacities of the Libyan authorities.

KENYA

ELECTION: President Uhuru Kenyatta wins the elections for the second time against opposition leader Raila Odinga with a 54%-45% split in the vote.

RWANDA

BUILDING: Construction of the $818-million Bugesera International Airport has begun. The first phase of the airport is to be completed in December 2018.

POWER: President Paul Kagame wins elections by an overwhelming 98.8% to extend his 17 years in power.

NIGERIA

OIL: Femi Otedola’s petroleum company, Forte Oil is in talks with a major refinery to form a strategic partnership for local refining of petroleum products in Africa’s top oil exporter.

TANZANIA

GABON

RECOVERY: The government wants to protect and revive its oil sector which accounts for 27% of the GDP. It wants to increase the figures by putting in place a four-year development strategy. This strategy will also protect its economy from fluctuating oil prices.

ZIMBABWE

INVESTMENT: The country’s biggest financial service group Old Mutual seeks alternative investments methods from power generation, the diaspora market, and micro-lending as a result of the country’s troubled monetary assets.

SOUTH AFRICA

REMOVED: The Director General of Treasury, Dondo Mogajane, replaces former Governor of the South African Reserve Bank, Tito Mboweni, as the new Director to represent South Africa on the board of the BRICS New Development Bank (NDB).

34 | FORBES AFRICA

SEPTEMBER 2017

BOTSWANA

GROWTH: The International Monetary Fund (IMF) revises Botswana’s 2017 and 2018 economic growth forecast to 4.5% and 4.8%.

Illustration by Katlego Banoe, Pictures: supplied

PIPELINE: The leaders of Tanzania and Uganda laid a foundation stone for the construction of a $3.55-billion crude export pipeline that would pump Ugandan oil for international markets. The 1,445-kilometer project is set for 2020.

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The Case Of THE FIRST LADY With The Whipcord Who Walked Free Zimbabwe’s First Lady, Grace Mugabe, has once again caused consternation in a foreign country. This time, her actions left South Africans debating who is eligible for diplomatic immunity.

T

he issue over who is to be granted diplomatic immunity reared its ugly head in South Africa. This comes after Africa’s most renowned First Lady ran into trouble away from home in leafy Sandton, Johannesburg.

Gabriel Engels, 20, claims Zimbabwe’s First Lady Grace Mugabe whipped her with an electric cord when she found her and friends in the hotel room of her sons – Robert Jr, 24, and Chatunga Bellarmine, 20. The model uploaded images of her injuries on Twitter. She suffered gashes to her forehead and scalp.

The Department of International

36 | FORBES AFRICA

SEPTEMBER 2017

Relations and Cooperation (DIRCO) granted Mugabe, who married President Robert Mugabe in 2006, diplomatic immunity a week after the incident.

South Africa has strong trade and political ties with Zimbabwe, which is South Africa’s largest trading partner in the region.

Some disagree with this decision.

“She is the wife of the president. Our information is that she did not apply for diplomatic immunity in the country and to now do it after the event would be wrong. We are also saying she should be charged with grave offence. One shouldn’t be able to rely on diplomatic

immunity for grave offences,” says Gerrie Nel, the former Oscar Pistorius prosecutor and now advocate for civic group AfriForum.

Grave offence can see someone being sentenced to imprisonment for up to five years.

Mugabe has a history of losing her temper. In 2009, British photographer Richard Jones accused her of assaulting him outside a hotel in Hong Kong. Earlier in August, she was allegedly detained in Singapore after attempting to destroy camera equipment belonging to two journalists.

In both incidents diplomatic immunity

Photo by Louise Gubb/Corbis via Getty Images

BY MELITTA NGALONKULU

FORBES AFRICA

FOCUS – GRACE MUGABE protected her.

“This incident has reinforced already negative perceptions about Grace Mugabe and her inclinations for violent ‘remedies’. It would appear that this time, her actions have seriously backfired as she was hoisted on her own petard, for the first time facing prospects of real consequences. This is a profoundly embarrassing situation for President Mugabe and reinforces already strong sentiments that Zimbabwe’s First Lady is not appropriately equipped for public office,” says Piers Pigou, the Southern Africa Consultant of International Crisis Group.

David Monyae, Political Analyst & Co-Director at the

IT REINFORCES STRONG SENTIMENTS THAT ZIMBABWE’S FIRST LADY IS NOT APPROPRIATELY EQUIPPED FOR PUBLIC OFFICE. University of Johannesburg Confucius Institute, says this is a complicated case.

“This is a very tricky situation. Tricky in the sense she is the spouse of the head of state. I think the best way is to negotiate a way out. But the crisis it becomes is that it also becomes a rule of law. South Africa cannot allow one of its citizens to be abused and just let it go. This is a rule of law country and the constitution is quite clear that everyone is

equal and there is that tension between the two. But at the end of the day, I think politics will play a key role,” says Monyae.

Fellow Zimbabweans living in South Africa are disgraced.

“I strongly condemn the behavior of our so-called First Lady. No one has a right to beat someone. Her aggressive behavior does not surprise us, because she has a thuggish behavior, just like the ZanuPF party which does not

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respect the rule of law.”

Another says, “Very disgraceful conduct on the part of Grace Mugabe. I hope the South African government does the right thing and revokes her diplomatic immunity. We are celebrating Women’s Month and we should stand by the poor girl until she gets justice.”

Zimbabwe’s government has not publicly addressed the assault allegations. Nel, however, says the young model was offered a “blank cheque”.

“They received, via a third party, an offer to make up an amount of money so that the matter would go away.

What is important is that the family was strong enough to say no. We want justice to be done and for that we support them,” he says.

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FORBES AFRICA

FOCUS - IDENTITY THEFT

NAILE S R E T S IMP O Having your identity stolen can lead to debt, being barred from a bank, married to a person you’ve never met, or worse – arrest.

BY YONELA MGWALI

I

magine you lose your identity document; on your way home from work, you get arrested. You discover someone has been committing fraud under your name. It could happen to you.

This happens across Africa and no one is safe. It’s called identity theft.

This is the sad tale of 37-year-old Bokang Tsie. We meet outside a restaurant in Krugersdorp, a town known for mining, west of Johannesburg. He is a bit anxious as he tells of what happened when his green identity book was stolen from him.

On a quiet Saturday afternoon in 2014, Tsie was going home from varsity when three men attacked him and ran off with his bag. Inside was a phone, books and an ID book.

“They grabbed me, and my bag. I tried to take it back but one of the guys managed to run away with it,” says Tsie, who is now a pastor.

Tsie opened a case at a police station and received a case number but nothing happened. Four months later he got a call from a police station in Pietermaritzburg informing him of fraud they alleged he tried at a bank.

“A policeman asked when I was last in Durban; I told him I

CRIMINALS DON’T CARE HOW THEY RUIN LIVES, THEY JUST DON’T CARE

haven’t been to Durban for five years. He also asked when was the last time I used my ID, I said I had lost my ID. And I started opening up to him about what happened,” he says.

Before he could plead his case, the police came to arrest him. It was a petrifying moment for Tsie; he says his heart beat fast. He was taken to a police station. Luckily for Tsie he had reported the loss of his ID book.

“They said if I didn’t report my missing ID I would have been arrested on charges of fraud. Imagine, I’d be sitting in jail for a crime I didn’t commit and I’d have a bad credit record,” he says.

Fraudsters wanted to cash a cheque of R160,000 ($12,000), that they had stolen, under Tsie’s name. They failed when a banker noticed the photo was torn out.

“I was told that when the banker was checking out the ID, they noticed that. They were caught and ran away. That’s when the bank called the police station.”

That’s not all. The fraudsters also opened an account at a retail shop, it also failed because of a sharp-eyed shop assistant.

They removed Tsie’s photo and replaced it with another person who looked a few years younger than Tsie.

Tsie got his ID back and took it to private investigators to check for other accounts the fraudsters tried to open.

Sadly, its It’s been three years now and the people who attacked him and used his ID haven’t been arrested.

“Criminals don’t care how they ruin lives, they just don’t care.

They could be stopping a person’s life, I don’t know what happens with their conscious,” says an upset Tsie.

SEPTEMBER 2017

FORBES AFRICA | 39

APHELELE BUSUKU

‘IT’S LIKE I’M DEAD’ Aphelele Busuku got the shock of her life when she discovered she was married to a person she doesn’t know and had a child she’s never met.

BY YONELA MGWALI

A devastated Aphelele Busuku found out that she was married to a person she’s never met.

It was the end of October last year, when Busuku moved to Johannesburg, from Durban, for a new job. She needed a place to stay and after meeting a private property agent, she had to submit an ID number, bank statements, proof of address and a payslip.

“It was just two weeks into my new job, I gave him all my documents and went to view the place and found out that it was a scam,” says 23-year-old Busuku.

The fraudster took Busuku’s money and documents.

“I was going to apply for a car so I had to get my credit record at TransUnion and found out that my score was very low. I was wondering what was going on because I only had a certain amount of debt which was from owing school fees and one account,” she says.

“When I received my credit statement I saw that I have a recurring

40 | FORBES AFRICA

SEPTEMBER 2017

Vodacom under my name, and there was a Sportscene account.”

What shook her most is when she found out that she’s married to a man she has never met.

That’s not all; she also found out that she has a child. She submitted an affidavit to dispute this.

“I was so shocked because I don’t have a child and now I’m registered as a mother of one. It confused me.”

“On the statement there were phone numbers that are not mine. When I called it a lady answered, I asked her who are you and then she hung up. I don’t even know if I’m married to a male or female, Home Affairs couldn’t give me proper details,” says Busuku.

Home Affairs told her if she wanted to get married in the future, she’d have to first get a divorce.

Busuku had to start afresh; a new bank card, ID number and cell phone number.

“I had to change at least one digit to get a new ID book, and have a clean credit record. It’s like I’m dead.”

WHAT TO DO WHEN YOUR IDENTITY IS STOLEN: ƀLJ Contact the credit bureaus ƀLJ Change bank accounts ƀLJ Change your car registration number ƀLJ Seek legal advice ƀLJ Report it to the police ƀLJ Hire a private investigator ƀLJ Renew your driver’s licence ƀLJ Alert the Fraud Prevention Services WHAT TO WATCH OUT FOR: ƀLJ Identity thieves may shoulder-surf when you are entering your pin at an ATM ƀLJ Dumpster diving – criminals seaching through rubbish ƀLJ Phony websites that look identical to those of authorized banks HOW TO AVOID IDENTITY THEFT: ƀLJ Shred your documents ƀLJ Do not disclose your identity number unless it’s necessary ƀLJ Don’t provide sensitive information over the internet ƀLJ Check your credit reports regularly ƀLJ Never carry more credit cards than you need

FORBES AFRICA

FOCUS - IDENTITY THEFT

mine but I had never lost my ID before. I was like ‘how the hell did this person get my identity when I’ve never lost my ID?’” she says.

Four years later, the problem resurfaced. Mbele had just started work and wanted to open a retail account.

“I wanted to open a Woolworths and an Edgars account. Woolworths was like ‘sorry this is fraudulent,

and registered her at the Department of Labour.”

When Mbele gave birth she couldn’t register her daughter for four months.

She was a non-existent citizen because, according to Home Affairs, Mbele had another child who was eight years old.

“I’ve sworn at everybody, including Malusi Gigaba, the [then] Minister of Home Affairs, I went to them over

I REMEMBER CRYING AND SITTING ON THE FLOOR AT HOME AFFAIRS THINKING THAT THIS CANNOT BE MY LIFE. GABISILE MBELE

‘PEOPLE THOUGHT I WAS A SCAM’ After having her identity stolen, journalist Gabisile Mbele had to sign her own death certificate.

BY YONELA MGWALI

“I’ve been a whole new person since April last year.

I had to get a new passport, a new ID number, I had to denounce myself and sign a death certificate. Everything that I’ve done in my life doesn’t exist.”

These are the words of Gabisile Mbele, a journalist and one of many victims of stolen identity. But here’s the twist; she never even lost her ID book.

It was in 2000, in matric when somebody opened a bank account using Mbele’s ID number.

“Luckily I was with FNB since I was nine years old; they quickly picked up that someone is using my ID and told me that this person has the same ID number, same birthday but different address,” says Mbele.

The person also tried to open an account at an Absa bank. All the banks were alert and informed Mbele.

Criminals use an ID, change the photo, buy on credit, apply for loans and open bank accounts.

“When I looked at that girl’s ID, I could swear it was

we’ve already got an account with this number’. I gave them my bank details and cell number but they still said no.”

It got worse when Mbele fell pregnant and needed to apply for UIF at the Department of Labour.

“I was told I need to own up for the job of being a domestic worker and why don’t I have a UIF form. The first thing I thought was ‘do these guys think I worked as a journalist first and left to become a domestic worker?’ It didn’t add up,” says a puzzled Mbele.

She asked the labor department to give her the woman’s contact details.

“I called her employer, it was a white lady from Kempton Park; she said her domestic workers name is also Gabisile Ndebele, but from Zimbabwe. I then asked her ‘do you know that she can’t possibly have an ID?’ Her response was she has an ID, she went

and over. And still nothing.”

Mbele’s parents, and a witness not related to her, had to do an affidavit confirming that she never had a child. She also had to change her surname from Ndebele to her father’s surname Mbele.

In April last year, when she wanted to renew her passport for a trip to Los Angeles for the BET Awards, she couldn’t.

“A woman at Home Affairs said ‘hayi sisi (no my sister), we’ve just given you a passport last week and now you want a new one. I remember crying and sitting on the floor at Home Affairs thinking that this cannot be my life,” says Mbele.

“I had to change everything, people thought I was a scam. I had to get all the paperwork, emails and faxes. It is the most devastating thing ever; I don’t wish it on anyone.”

SEPTEMBER 2017

FORBES AFRICA | 41

FORBES AFRICA

FOCUS - PRISONERS

THE GRIME That Comes

WITH CRIME Having a criminal record for a less serious offence which occurred years ago should not be used to bar someone from gainful employment today.

BY ANCILLAR MANGENA

Photos by Motlabana Monnakgotla

I

t’s a sunny winter’s day at Avalon Cemetery, in Soweto, and there are rows and rows of graves as far as the eye can see. For nearly 50 years, thusands have been buried here. We find 50-year old Dan Makete knee deep in a grave, digging out the dry soil for yet another burial.

“This is one of the few places I can ever find work. I get so comfortable, it’s like home,” he says.

Makete is one of thousands of exprisoners struggling. It is a sad story that began in 1995; the days of democracy and hope for South Africa were days of despair for him.

“Life was tough back then and I got involved in terrible things. I was arrested for armed robbery, house break-ins and hijacking,” he says.

The price was an 18-year jail term.

“Six of those years were suspended and because of good behavior, I served nine years [and] six months.”

But good behavior didn’t mean rehabilitation.

“Prison wasn’t correctional. I was in jail for a very long time but I didn’t get a skill or any kind of empowerment. We spent days doing nothing. The best you could do

was work in the kitchen, dairy or maybe in the garden,” he says.

According to Makete, there was no counselling, meaning he went back to crime.

“When I got out for the second time, I had a different mind-set and wanted to make sure I don’t go back to crime. I have managed to stay clear of that but it is tough.

I can’t find a decent job because I have no skill and employers don’t take people with criminal records.”

Makete takes any menial job that comes his way. One of them is cleaning and digging graves at the cemetery.

“If you aren’t strong enough you will go back to prison because there is nothing you can do. While I was in prison we fought, by hunger strike, to try convince them to empower us but there was never a response and if there was, they would promise but nothing would happen.”

Makete says he feels rehabilitated, but unskilled.

“I don’t see myself going back to prison because I have learned my lesson but the pain is I have been out of prison for years but there is a big stigma. You are used as an example. I have heard people say, ‘don’t be like that useless one’,” Makete says in a SEPTEMBER 2017

FORBES AFRICA | 43

FORBES AFRICA

FOCUS - PRISONERS

I WAS IN JAIL FOR A VERY LONG TIME BUT I DIDN’T GET A SKILL OR ANY KIND OF EMPOWERMENT. low voice.

With three children to support, life is tough, yet there is help at hand.

Founded in September 1910, the National Institute for Crime Prevention and the Reintegration of Offenders (NICRO) specializes in helping people like Makete. It directly helps 12,000 to 15,000 people a year.

“This is a huge challenge because many of our ex-prisoners cannot find work because of the criminal record and sometimes it’s impossible. We were hoping to get enterprises up and running in order to employ ex-prisoners but it has not materialized yet,” says NICRO CEO, Soraya Solomon.

The vast majority of South African employers disqualify applicants with a criminal record. NICRO calls for employers to be more lenient.

“Aside from this practice being unconstitutional and a derogation of the right to equality and non-discrimination, a considerable part of the problem of crime in South Africa is that most offenders who wish to lead a crime-free life are prohibited from doing so because of their past actions.

Having a criminal record for a less serious offence which occurred years ago should not be used to bar someone from gainful employment today,” she says.

Solomon recognizes that successful job applicants sometimes can’t have a criminal record, especially for a particular type of offence, but says a balancing of rights is necessary.

For the system to work, she says rehabilitation must start as soon as the offender arrives in prison. The problem is there is overcrowding, few staff and low pay. It means a small percentage of prisoners have access to services to assist 44 | FORBES AFRICA

SEPTEMBER 2017

them in changing behavior. Upon release, most NGOs, like NICRO, do not have the money to help. In 2013, according to Solomon, about 23,000 inmates were released from South African correctional facilities while another 25,000 entered the system each month.

“Clearly the influx of prisoners will continue to be a problem and facilities will experience ever-increasing overcrowding and worsening prison conditions. We need to think beyond this present crisis in order to find sustainable solutions,” says Solomon.

Solomon and her team are attempting to find such solutions. They offer services for youth at risk, young people in conflict with the law, diversion services and noncustodial sentences served outside of prison that equip offenders to rehabilitate and reintegrate into society. Additionally, NICRO has designed a comprehensive community-based initiative to manage and significantly reduce the number of remand detainees in correctional centers.

“NICRO’s remand solution has been designed to reduce prison overcrowding and the processing time of offenders, prevent low-risk offenders from being sent to prison while on remand, provide

much-needed and often overlooked key services, such as victim and trial support, preparation for incarceration, restorative justice interventions and professional comprehensive assessment to reduce recidivism,” Solomon explains.

Clinical psychologist and criminologist, Craig Traub, agrees with Solomon. He says the criminal justice system is more retributive than rehabilitational.

“Unfortunately prison systems, without bounds of stimulation, tend to be systems to improve criminality and criminal behavior in terms of skills, deception, and familiarity. Being a warden and nursing staff in prison is tremendously noble and dangerous. In that, increased employment packages for these workers would benefit the system as a whole,” says Traub.

In the Judicial Inspectorate for Correctional Services’ (JICS) 2015/2016 annual report, Inspecting Judge Johann van der Westhuizen found only 46% of centers visited had permanently employed educators. To make it worse, some centers in small rural areas did not offer any education, rehabilitation or vocational opportunities.

“We were informed that inmates who wish to further their education are

FORBES AFRICA

FOCUS - PRISONERS

transferred to centers with educational facilities. This, however, results in the inmates being transferred further away from their family. This in turn limits visits and the family interaction that is crucial for a successful reintegration into the community,” says Van der Westhuizen.

To make matters worse, inmates sentenced to 24 months or less do not take part in any programs but are rather considered for parole on completion of a quarter of their sentence in terms of section 73 (6) (a) of the Correctional Services Act. It is a problem that lawyers can fix, but it comes at a high price. This means the poor, like Makete, suffer more while those who have done worse get off more lightly because they have money.

According to Traub, the poor sometimes suffer because forensic workers are overloaded; DNA/fingerprint measures aren’t always done in time, evidence goes missing, is stolen or sold, and oversight mechanisms to prevent police and government corruption are laughable.

“Again, those who are better educated and skilled have a higher likelihood of gaining employment, despite their record, than those who are not,” says Traub.

Traub says to better prepare prisoners for reinsertion into the society we need more halfway houses for prisoners, similar 46 | FORBES AFRICA

SEPTEMBER 2017

to those of addict rehabilitation. These would incorporate a gradual step-by-step facility, general reintroduction, skills-ofdaily-living workshops and a person who can facilitate such a move.

If ex-offenders are able to find lawful employment, there are broad social benefits. According to Solomon, in a German study, the re-offending rate was reduced by 30%, and in the US by 20%.

In South Africa, she says, the government would save about R7.3 million ($550,000) a month if 20% less of the 4,300 offenders released monthly did not re-offend.

“For that reason alone, reintegrating ex-offenders and supporting employment as a key part of that process is in everyone’s interest,” says Solomon.

The government may be trying, but not hard enough.

South Africa tried a restorative justice system, during the transition from apartheid South Africa to a free one, through the Truth and Reconciliation Commission (TRC). Here, a criminal would return or give something the aggrieved requires or deserves, for example through a truth-telling testimony.

Some would argue that this system played a role in rehabilitation.

Another problem is the country’s criminal record system. For example, in some cases diversion – a process to

steer lower risk offenders away from the criminal justice system while still holding them accountable for their actions, by making the offender perform some sanction, such as attending a behavior change program or counselling, pay a fine or perform unpaid community service – doesn’t work.

“A person who is diverted does not have a criminal record. However, it has come to NICRO’s attention that despite being diverted, a number of people report that a criminal conviction has been recorded against their name. This is typically found out when a person applies for a job or a visa for travel,” says Solomon.

According to Solomon, this is the result of a clerical error between the court clerks and the South African Police Services (SAPS) and can be corrected by approaching the court clerk, where the diversion was ordered.

“There are many incidents where adults committed a less serious offence when they were younger and find later in life that they cannot obtain employment or educational bursaries. At the same time, other people who have committed similar offences are being diverted without any criminal record,” she says.

To add to that, South Africa’s criminal justice system allows for a criminal record to be expunged. The tricky part is the offender must wait 10 years before applying. This means although exprisoners, like Makete, have served their time, they may continue to pay for their crimes once released.

“In many of these cases, the period of 10 years of being unable to travel, obtain employment and, in many cases, being unable to study further, embody sanctions that are more severely punitive than the offence warrants,” says Solomon.

Without enough rehabilitation programs, South Africa has a cancerous crime problem. It is so bad that a First National Bank study found that crime was one of the reasons hundreds of South Africans were selling their homes and moving overseas.

It sees the cost of crime far outweighing the cost of rehabilitating criminals.

FAIL

G N I Y R D O FA In

If you went shopping in a big store in Africa this month there’s a good chance it’ll be shut down this time next year. The stores of Africa are struggling; to the south more than a century of selling history disappeared into thin air; in the east there are closures and angry workers; to the west there are more struggling stores, yet golden opportunities online. The business of shops – who would invest in it?

BY MELITTA NGALONKULU

48 | FORBES AFRICA

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Photos by Motlabana Monnakgotla / Epoxydude via Getty images

A

sad story; the death rattle of an African legend. On this Friday, the lights shine brightly but the shelves are gloomy. The manikins lay in a pile, stripped of their designer labels and dignity. The shop assistants wear black as sombre as the day. Outside stand the last two flimsy racks of cut-price clothes; like the store itself, everyone wants to see the back of them. A sorry end to more than a century of tradition.

“When one door closes, another one opens,” says one shop assistant, through a smile as empty as the shop.

These were the last heavy hours of 159 years of South African department store – Stuttafords. An economic slump and the shift to online shopping has seen many retail stores shut across the continent.

On August 1, the last Stuttafords stores in two Johannesburg malls, Eastgate and Sandton City, took their final bow after years of struggle.

“Stuttafords just became more irrelevant to the customer. There was no individuality to it, it just became a portfolio of global brands. It became a departmental stocking global brands, which were stocked in the centers independently anyway,” says portfolio manager at 36ONE Asset Management, Evan Walker.

When the first shop was opened in Cape Town, in 1858, by English immigrant Samson Rickard Stuttaford, the vision was to establish a Harrodslike department store in what was then a Crown Colony. Its main store opened in 1938 in Cape Town. It was designed by in-house Harrods architect Louis David Blanc and echoed the British store’s famous frontage in London’s exclusive Knightsbridge district.

It went through many hands, including winemaker, Graham Beck, who died of lung cancer in 2010. Beck bought Stuttafords in 1978 with its six department stores from the Stuttaford family for R12 million ($900,000), and shortly thereafter delisted the company from the Johannesburg Stock Exchange (JSE).

However, it stayed focused on the middle- and upper-class market, despite the economy’s failure to recover from the deep recession of 2009.

Stuttafords Chief Executive Robert Amoils, who declined to be interviewed, told business website Fin24 that the damage had already been done.

“I believe the path we set was correct.

We ran out of time. The market downturn was so swift, so severe,” says Amoils.

Then came President Jacob Zuma’s surprise removal of South Africa’s former finance minister Nhlanhla Nene. In December 2015, the rand dropped, which raised the prices of stock that Stuttafords had committed to buying up to a year in advance.

The company filed for voluntary business rescue in October, cutting 50 jobs – out of 800 employees. The store had 61% independent creditors, and owed R836 million ($63 million). They included Nedbank, Estée Lauder, Levi Strauss, Tommy Hilfiger and Polo.

The rescue plan was amended four times. There was conflict between shareholders and management as well as creditors and management.

Months before its closure, the department chain launched a slew of promotions which were a mix of high discounts and three-for-two promotions.

This was to raise money for stock for the winter season.

The single largest shareholder Ellerines Bros, which currently owns 26.4%, withdrew from its commitment to inject R12 million ($900,000) in exchange for a 76% stake.

It left Stuttaford’s in liquidation. Its assets would be sold and some creditors will only be paid three cents for every R1.

Creditors, whose debt is secured against Stuttafords’ assets, would be paid 90 cents for every R1.

The South African Revenue Service (SARS) would be the first to receive its R28 million ($2.1 million) in taxes.

Creditors with secured debt and other shareholders, including Ellerines and Vestacor, will also receive what is due to them, leaving the employees last in line.

SEPTEMBER 2017

FORBES AFRICA | 49

FORBES AFRICA

FOCUS - RETAIL

“I am really worried about finding another job.

I am a mother of two and I support my brother as well because our parents passed away. Last year I moved to Stuttafords for greener pastures, little did I know that I would find myself in this crisis,” says a distraught employee at the Sandton store.

“They did nothing themselves in turning around the store. They had zero output for the customer. I would say that they have been outdated for the past 10 years. I think what has kept them more relevant is the fact that, I think that they had more relevant regional locations and sub–centers, and the brands in South Africa have taken a long time to get here,” says Walker.

“Big stores, like H&M, Zara and Cotton On, keep introducing new product lines all the time and they keep

analysis focused on groceries, clothing and speciality items, like stationery.

Last year, return on equity (ROE) was strong for specialty retailers at 51.6%, grocery retailers averaged 22.3% and clothing ROEs were 41.1%.

The grocery retailers had a 62% share of total retail spend, specialty retailers had 23% and clothing retailers achieved 15%. In terms of share of profits, grocery retailers achieved 66%, while speciality and clothing retailers had lower shares at 18% and 16% respectively.

Many of Africa’s retailers are gloomy.

The sector is trying to recover from weak and declining Gross Domestic Production (GDP) growth, low credit growth, and low investment levels.

In the difficult retail business of Africa there are no sacred cows – just ask Stuttafords.

STUTTAFORDS JUST BECAME MORE IRRELEVANT TO THE CUSTOMER. THERE WAS NO INDIVIDUALITY TO IT, JUST BECAME A PORTFOLIO OF GLOBAL BRANDS.

50 | FORBES AFRICA

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having different footprints and different handwritings all the time, at way more affordable prices. I do not see any future for departmental stores, there is very little future growth. Globally, we have seen the added footprint of online shopping that is destroying the retail market.”

EY’s analysis on the 12 largest retailers in South Africa accounts for about R600 billion ($45 billion) in annual sales. The

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FORBES AFRICA

FOCUS - RETAIL

Empty Shelves,

UNPAID BILLS,

Angry Workers

In East Africa – where the tills used to jingle all year round – the picture is even grimmer. The big retailers are on the ropes, yet the developers plan even more shops. Crazy?

BY ALLAN AKOMBO

I

n the once bustling supermarkets of Kenya, shelves are empty; the maddening queues are no more; and unpaid shop workers threaten to join the exodus of customers.

This has become the face of the two big names in retail in East Africa: Nakumatt and Uchumi Supermarkets.

Just three years ago, homegrown Nakumatt supermarkets were a signature success story in the region with expansion in mind.

Today Nakumatt – which has the highest number of supermarkets in East Africa – is a shadow of itself, choking with debt and battling insolvency lawsuits by suppliers, as well as industrial action by its workers over unpaid wages.

Nakumatt has shut down two stores in Kenya, and another three in Uganda, to curb debts of more than $145 million.

Nakumatt can’t pay its 5,700 workers on time. Its woes are compounded by cautious suppliers who now demand upfront payments. Others have cut their shipment of products altogether, while some have filed insolvency lawsuits for non-payment of debt.

Insiders say Nakumatt’s financial

52 | FORBES AFRICA

SEPTEMBER 2017

troubles stem from an ambitious brickand-mortar expansion gone wrong.

Agitated by the entry of new rivals into the region – including Choppies of Botswana, France’s Carrefour, South Africa’s Game and Walmart – Nakumatt and other Kenyan retailers expanded their footprint to ward-off competition.

This backfired because of a shaky economy and competition.

Nakumatt looks to a long-awaited $75-million cash injection from an undisclosed private equity fund to help shore up its stores. Despite the crisis, Nakumatt has 45 stores running in Kenya, eight in Uganda, three in Rwanda and five in Tanzania.

Uchumi Supermarkets faces the same trials. Its shelves are either empty or filled with single-line products as suppliers stay away due to lack of payment.

The chain, in 2016, closed stores in Kenya, leaving Uganda and Tanzania in an attempt to climb out of a financial hole. Uchumi is also selling assets, like land, to improve its cash reserves. The partly-owned government retailer was declared insolvent on May 30, 2006.

A decade on from this insolvency,

Uchumi survived a winding-up suit and is banking on a $17.6-million Treasury bailout package; so far only $4.9 million has been released. Another $34 million is needed from investors to restock shelves and pay supplier and bank debts.

But even with all of this debt and despair, developers plan more retail space.

“The demand for brick-and-mortar retail is still high in East Africa... More new smaller retailers are emerging to service customers,” says John Ndirangu, a property agent in Nairobi.

International brands are also rising.

“Ultimately, landlords want tenants who can do the most business. The result is numerous international brands are now entering the market and local retailers feel the need to expand their number of outlets,” says Gordon Bell, Director and Head of East Africa Operations for Broll Property Group.

Online outlets are attempting to grab a bigger share of the cake, sending those with brick-and-mortar stores turning to smaller and cheaper shops.

They may find it a rollercoaster ride in the uncertain world of East African shopping.

FORBES AFRICA

FOCUS - RETAIL

TROUBLE IN STORE Unless You

GO ONLINE

A falling naira and oil price may be crippling stores of Nigeria, but there is hope online and in pandering to the whims of the mega-rich.

A

lara is a store that nestles into the heart of the busy and prosperous Victoria Island district in Lagos. It could as easily be in London or Paris; it sells designers from Dries Van Noten to Valentino. Rich customers spend thousands of dollars every day here in contrast to the poor pickings in the rest of Nigeria’s retail industry.

“We realized that people were craving the luxury shopping experience they had in places like Paris or London... They wanted the retail experience at home, without the hassle of flying around the world,” says Reni Folawiyo, the founder of Alara.

“Even in these turbulent economic times, we have found that our high net worth clients still crave exclusivity of products and the convenience of shopping at home,” says Deremi Ajidahun, who opened the first boutique selling the luxury watch brand, Ulysse Nardin.

These stores are lucrative spots on a dingy canvas. Nigeria has 180 million customers to sell to, but the country’s short-term retail prospects are gloomy.

“The foreign exchange (forex) crisis, which is largely the result of the falling demand for the naira from foreign buyers of Nigerian oil and gas, which accounts for a significant balance of payment for the government, is a strong catalyst for

54 | FORBES AFRICA

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these challenges. The Central Bank of Nigeria (CBN) proceeded to cut about 680 categories of items from the list of those it would provide forex at the official rate, forcing retailers to secure US dollars through the black market at a much higher exchange rate,” says Bismarck Rewane, Managing Director and Chief Executive of Financial Derivatives, a financial advisory firm in Lagos.

This led to an exodus by international retailers. South African shopping giant Woolworths – that has easily ridden hard times at home – ran from Nigeria in 2013. The reason: high cost of rent, taxes and supply-chain management.

Clothing retailer Truworths, also of South Africa, followed in February 2016, citing a struggle to stock its outlets and manage the forex challenge. Items subject to the CBN’s import controls, like textiles and clothes as well as glassware and utensils, affect the retail sector, making it more expensive to stock these products.

“The old or traditional brick-andmortar retail system, which accounts for almost 90% of retail activity in Nigeria, has continued to decline because of the government’s policy, changes in the composition of Nigeria’s population and increasing sophistication of the Nigerian consumer,” says Rewane.

These old school stores are facing stiff competition from digital and e-retail. The

rise of Nigerian online seller Jumia is a sign of disruptive times. It is backed by big hitting investors: the US’s Goldman Sachs, Germany’s Rocket Internet, South Africa’s MTN, and Sweden’s Millicom.

“People told us when we started about six years ago that it won’t work, people don’t trust the internet in Nigeria so they have to feel and touch the product. Our response was to build Jumia as the first Amazon of Africa,” says Jeremy Hodara CEO and founder of Jumia.

Satisfying the demands of an increasingly tech savvy millennial consumer has become integral to survival.

“It is simply a case of those who dare, survive,” says Rewane.

“I use Jumia and other online retailers, like Konga, to shop mostly for clothing because it is faster, much more convenient and I can get the best prices and deals all from the comfort of my home,” says Stephanie Bello, an MBA student at the Lagos Business School.

Deloitte forecasts that e-retail in Nigeria will grow at a compound annual growth rate of 37.7% from 2013 to 2017.

The CBN recently announced a review of the current currency policy, which experts believe is the most important factor for the retail sector, especially for those importing global brands.

If old school retailers don’t feel threatened; they should.

Photo supplied

BY PEACE HYDE

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AND BEYOND. Fly Delta from Johannesburg to Atlanta and connect to destinations across North America, Canada, Latin America and the Caribbean.

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FORBES AFRICA

FOCUS - RETAIL

Stores Of The

FUTURE?

Shops are closing across Africa; still they come like lemmings to a cliff. Entrepreneurs prepared to throw good money after bad.

Mbukwashe Zwide

S

hops are closing around Africa and yet still they throw more money. Entrepreneur Mbukwashe Zwide is one of

them.

“I took a decision of balancing social media, pop-up sales with brickand-mortar. This was informed by the understanding of the market. The type of clothing one sells, being vintage, tends to be tricky selling it online, seeing a picture looking all pretty online as compared to seeing the garment and feeling the fabric,” she says.

Vintage-meets-urban chic fashion is her game. Zwide, who holds a national diploma in information technology, ditched her permanent job to pursue her passion for clothes.

“It was then that the fashion bug bit and it was just too strong to ignore and I left the corporate world to pursue what was dear to my heart and soul; fashion,” she says.

In 2014, she started Hombakazi

56 | FORBES AFRICA

SEPTEMBER 2017

Vintage Cabin (HVC) from her mother’s garage in Port Elizabeth, and with just R10,000 in stock. She advertised her clothes on social media and would travel to different provinces in South Africa, with a black plastic bag, to sell.

As the demand grew, she opened a shop.

Zwide turns over R1.3 million ($98,000) annually across the counter, making 20%. Her profits online are 30% and pop-up sales [temporary store] are 50%.

She has 75,000 followers on Facebook and over 2,000 followers on Instagram.

“Social media still gives us the reach, marketing and online orders, while popup sales is part of our customer touch points and market development across the country. Retail has its own function [over social media and pop-up sales] of growing and sustaining my business,” says Zwide.

Not everything has been a perfect fit.

“My biggest challenge is the conversion rate of walk-in customers.

Since I have opened my store, I have observed that during certain periods of the month I have high volume of traffic in the store but a low percentage of converting the traffic into sales. This could be caused by not finding a specific

garment at that particular time, and also size tends to be an issue at times. …I plan to introduce an incentive-driven program for my team to work on a 30% conversion rate of traffic during certain periods of the month,” she says.

Zwide says it is up to newcomers, like her, to make sure that retail does not die.

“The industry reports predict continuous decline in revenue generation from store traffic holds, as we have seen with the 159-year-old retail giant [Stuttafords], and probably a consolidation of retail businesses… these open opportunities for emerging players like HVC to come up with unique offering to your counterparts.

That way one can then convert these newly unattended customers from affluent areas and traditional in-store shopping to online and pop-up sales.

Given my background in information technology, I’m considering the use of emerging technology, such as virtual reality and digital innovation, with the sentiment of improving store productivity and aggressively enhancing customer experience,” she says.

Zwide is also concerned that not all likes and shares mean money.

“My social media posts directly generate 1,000 likes on clothing items we post, however, this is translated into 10% sales from likes; my ambition is to have a 100% conversion rate,” she says.

Photos by Phaphama Media

BY MELITTA NGALONKULU

SHOULD AFRICA DITCH UBUNTU?

Corneille Karekezi, Chief Executive Officer of Africa Re, thinks the continent needs to reconsider how it looks at the insurance industry.

BY JOSEPH BURITE

A

t Mable Busagwa’s store in the central Ugandan district of Wakiso, the six kids playing on the verandah give the impression it’s a daycare center, but the branded merchandise on the cabinets quickly betrays that. Busagwa, 52, has run the store,

where she also lives, for two decades, often helping take care of her neighbors’ kids as the mothers go off to work in the capital, Kampala.

A grandmother of one, Busagwa holds no insurance policy – be it for fire, accident, property or health – despite being diabetic.

When she falls ill, Busagwa can count on her neighbors for nursing

FORBES AFRICA

Photo by Joseph Burite; Photo by Klaus Vedfelt

FOCUS - INSURANCE andher adult children to pay medical bills. If a fire destroyed her store, material andfinancial supportwouldpour in from the community members, helpingher rebuild.

Thisage-oldreliance on family andcommunity has served as an informal type of insurancefora majority of Africans on a continent where insurance penetration in mostcountries accounts forless than1%of GDP. Butfor Corneille Karekezi, Chief Executive Officer of Africa Re (African Reinsurance Corporation), one of thelargest reinsurers in AfricaandtheMiddle East,it’s time the continentput anendto the systemcommonly known as Ubuntu.

“My vision for the insurance industry on the continent is a vision where every African citizen will knowthatthere is amechanism ofrisk sharing, of solidarity which canimprove his/her life,” says Karekezi atan industry conference inKampalain May. “We cannot counteternally on our traditional structures of solidarity which are under immense transformation because of the social, economic and demographictransformation of ourcontinent.”

“In our culture, we have developedself-insurance and community resilience based on families, communities, villages.

Because of the goodcultureof African countries of helping eachother in families, expanded families, communities, villages,that isaninformal way of insurance,” hesays.

“Now we are talkingabout a formal way of insurance whereany African citizen will pay premium to aninsurance company which will beready to assisthim incase of a claimor accidentor loss. Wehave tocreate thattrust, thateducation.”

Karekezi, aRwandan who boasts 25 years’ experience in the

insuranceindustry,has served as Africa Re’s CEO since2011,rising from Chief OperatingOfficerand Deputy ManagingDirector.He previously served as theManaging Directorat Sonarwa S.A.and has been a Directorat ShelterAfrique.

Karekezi also served as a Governor of the Eastern and Southern African Trade and Development Bank.

Africa Re, established in 1976, is owned by 41 African Union membercountries whichcontrol 33.59%. The African Development Bank has an 8.17% shareholding and 111 African insurance and reinsurancecompanies hold 32.85%.Canada’s Fairfax Financial, France’s AXA and Proparco,aswell as IRB Brasil RE of Brazil,controla combined shareholdingof25.39%.

The reinsurer has opened a seventh officein Kampala,Uganda,totap opportunities emergingfromthe East African nation’s oil and gas sector, says Karekezi.

Africa Reaccounts forone third of Africa’s reinsurance market capacity as measured by shareholderfunds,whichisan estimated $2.9 billion, including South African reinsurers.The continent has 47 reinsurance companies that writeonly35% of African reinsurancepremium income,accordingto Karekezi.

Africa Re estimates the reinsurancemarket of Africa in 2015 fell by 12.5% in US dollarsbut grewby morethan 15% inlocal currencies.It likely “contracted furtherin USDterms because of the massive depreciation in Sudan, Egypt and Nigeria.”

“Thecurrency in Nigeria is really underpressureand that has impacted thetoplinein USD.For Africa Re,thedeclinein USDhas been 5% but this is reallya matter of conversionand reporting,but underlyingbusiness hasbeen growingby almost 11% indifferent currencies,” says Karekezi.

“Insurance uptake isstillvery lowinAfrica due tothe high povertyrate and lackofcapital and expertise withininsurance companies,” readsa report bythe AfricanInsurance Organisation.

But “shiftingdemographics, changingcultural norms,an increasingurbanizationaswellas declininginfluence ofextended familyasa source ofinformal insurance are likelytoaccelerate insurance salesfurther,” the report, knownasthe AfricaInsurance Barometer,says.

While Karekezi sees a need for consolidation, African insurance companies will need help.

“More cooperation, more integration of markets and more importantly, enough capital in the insurance and reinsurance industry will be the major factor if we want Africa to retain more risks and premium income,” he says.

“Today, 65% of reinsurance premiums generated on the continent are leaving the continent because of a lack of financial capacity.”

South Africa, the continent’s most industrialized country, accounts for 72%, or $46 billion, of Africa’s insurance premiums.

The other major markets are Morocco, Egypt, Kenya and Nigeria, according to the insurance barometer report. Life, motor and engineering are the fastest growing lines of insurance business, the report shows, while the fastest growing distribution

Africa Re CEO Corneille Karekezi

channels are bancassurance and mobile phones.

“We know that in our dignity as Africans, when we had elders among us we used to accommodate them and stay with them in villages but now families are scattered with children going to study and work across the cities and countries… a child will be sending money via mobile phone to his father to help him buy this and that, to buy medicine for his cow. Very soon, the means of payment will be electronic, even in the villages, it’s coming with mobile money and other systems of payment,” says Karekezi.

“All those things cannot be managed as we used to manage them in the past. The sooner we increase the education of insurance, the better we will manage our various challenges in terms of risk management in our lives, families, communities and even state,” he says.

“If we don’t do that, we will have tremendous challenges and problems.” .

IN OUR CULTURE, WE HAVE DEVELOPED SELFINSURANCE AND COMMUNITY RESILIENCE BASED ON FAMILIES, COMMUNITIES, VILLAGES. SEPTEMBER 2017

FORBES AFRICA | 59

FORBES AFRICA

FOCUS - INSURANCE

Oil And Farming A Boon For Insurers

BY JOSEPH BURITE

J

ohn D. Rockefeller said the secret of success is to “get up early, work late and strike oil.” Uganda has struck oil; around 6.5 billion barrels are scheduled for commercial production in 2020. This drive towards production, which government estimates will attract investment of up to $8 billion, has raised the prospect of increased demand for auxiliary services, including insurance.

“An oil and gas co-insurance syndicate has been established to pool the industry’s technical and financial capacity thereby better positioning us to underwrite oil and gas risks,” says Miriam Magala, Chief Executive Officer at industry lobby, Uganda Insurers Association. “In addition, the syndicate is serving as a capital pooling mechanism.”

Insurance companies in Uganda held around $177 million worth of gross written premium in 2016, up by 3.6% from the previous year, according to the Insurance Regulatory Authority of Uganda (IRA). But this compares poorly with average growth of 17% in the last five years, even as assets increased by 9.3% to $114 million, says Kaddunabbi Ibrahim Lubega, the IRA’s Chief Executive Officer. The market paid $72.8 million in claims, while life insurance registered the most growth at 32.7% in sum assured.

Premium growth will likely more than double to 8% this year, according to Magala, on increased regulatory enforcement of workers compensation, motor third-party, ring-fencing of marine insurance, and implementation of a $1.4-million government subsidy for agriculture insurance. The industry expects penetration to increase from just less than 1% of GDP to 3% by 2025, she adds.

“We expect a stimulus effect from large public investments intended to address infrastructure constraints and prepare Uganda for oil production,” says Lubega. “In readiness of the market, an oil and gas syndicate on a co-insurance basis was approved.”

As prospects increase, two of the continent’s largest reinsurers, Africa Re and Zep Re, have set up offices in the capital, Kampala, as they seek to tap cessions emerging from the oil and gas sector.

In anticipation of increased activity, the government pushed reforms through parliament last year to improve the financial system, introducing risk-based supervision where an insurer’s capital requirement will be automatically adjusted – depending on the risk they are carrying. The amendments also covered

60 | FORBES AFRICA

SEPTEMB BER 2017

compliance with insurance core principles and financial action task force (FAFT) regulations, according to a ministry of finance report, which also notes that the amendments also improved harmonization with the East African Community bloc requirements.

A separate amendment also introduced bancassurance, a distribution channel that is expected to promote growth of the sector due to the vast bank network in the country, says Lubega.

In agriculture, the insurers lobby estimates companies will underwrite $2.3 million in the next six months, before applying the government subsidy, as the pilot scheme looks to guarantee returns from crop and livestock farming, according to Finance Minister Matia Kasaija.

Insurers needed to work closer with farmers to understand different crop varieties and planting windows in order to reduce commercial premium rates. Corn is covered as high as 23.9% versus a 10% average affordable to farmers, according to Shadreck Mapfumo, the International Finance Corporation’s Senior Financial Specialist.

“I don’t think we are ready to provide sustainable agriculture through insurance when we don’t have the man power,” he told an industry conference, in Kampala, in May. According to Magala, other areas of opportunity include a new requirement to check for motor third party insurance as part of the mandatory vehicle inspection checks, which should see compliance boosting premiums. The government has also made it mandatory that policies on ships, aircraft and other vehicles registered in Uganda – as well as goods imported from other countries – be issued by locally licensed insurers in Uganda. Unlike many countries, the Ugandan government does not insure its assets. If it did it would see a windfall in excess of $27.5 million covering public sector workers compensation, fire and public liability insurance, says Kasaija.

Despite low insurance penetration in Africa, analysts remain bullish on Uganda.

“Foreign investors are interested in Uganda due to the positive growth trend and favorable business environment,” says Arthur Kamp, Investment Economist at Sanlam Investment Management. “Uganda is going to exceed Kenya in terms of total population numbers by 2040. Population growth is an indicator of development.”

Ugandan insurers are taking note.

FORBES AFRICA

ENERGY

An Ill WIND Blowing NOBODY ANY G O O Dithering and delay are leading to bitter, unintended consequences of a bright government energy policy in Africa that is likely to end in tears and job losses.

D

I

t was an African dream to create a cutting edge renewable energy industry in one of the continent’s biggest economies to attract foreign investment and train a pool of talent to run it; that dream is in tatters with the companies, that sank nearly $5 billion into it, left in limbo and out of pocket.

In the next few months, companies behind 37 signed-off renewable energy projects are likely to be on shaky ground because South Africa’s Department of Energy has failed to sign 20-year power purchase agreements. These agreements not only secure a connection to the national grid, but also revenue.

Government promised to sign the PPAs on April 11. This evaporated and many fear they may not be signed before the next Integrated Resources Plan – the national plan for the energy mix to take the country to 2050 – to be finalized next year.

Reading between the lines, it appears the Department of Energy is more interested in eking out aging coal-fired operations, which generate more than 70% of South Africa’s power, and planning for a highly expensive nuclear program that could set back the taxpayer $50 billion.

There have also been fewer power cuts this year. The feeling among many insiders at Eskom is ‘why should we pay for what we don’t need right now?’ The national power generator also pleads poverty.

“I would say of the 37 projects, 14 are

62 | FORBES AFRICA

SEPTEMBER 2017

very vulnerable right now,” Brenda Martin, the head of the South African Renewable Energy Council, said.

“If nothing happens in the coming months, companies will not be able to hold on and there will be closures and retrenchments in which hundreds of South Africans will lose their jobs.”

If you want to check the temperature of the sick South African renewable energy industry you should look across the border into Botswana. It is a minor player in energy, let alone renewable energy, with peak demand of a mere 600MW for its tiny population of fewer than two million compared to around 40,000MW in South Africa.

In May, the state-run Botswana Power Corporation put out a call for an expression of interest for a partnership in a small 100MW solar project. Usually a call like this would attract a handful of bidders.

This one attracted a staggering 166 bidders, most from South Africa – a clear indication of the hunger at home. A mere 62 of these were selected.

“It’s just crazy. We have to search to survive,” one of the South African bidders, who asked not to be named, said.

The dearth of PPAs in South Africa appears to have unintended consequences

across Africa.

“The markets are all opening up across Africa. We have seen shifts happen in sub-Saharan Africa in wind, solar and hydro. Biomass is moving quite fast too and energy from waste is very labor intensive.

The bigger companies can go for these projects but the smaller companies won’t be able to afford to,” Martin said.

“But what we are doing now is training wind technicians for jobs in Zambia, Uganda and Ghana. This is the opposite of development that was meant to stimulate jobs for South Africa. We are simply creating jobs for other countries.”

As for a new date for the signing of the PPAs for South African producers?

“I don’t see any strong leadership among government officials right now,” rues Martin.

The Department of Energy requested FORBES AFRICA to e-mail questions over when the PPAs would be signed, which we did and followed up with numerous phone calls. Like the renewable energy producers of South Africa, we didn’t get any joy.

Photos by Jose A. Bernat Bacete via Getty Images

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FORBES AFRICA

ENTREPRENEURS - CLARIFAI

Battling GIANTS

Clarifai’s image-recognition AI can go toe-to-toe with those of Google, IBM and Microsoft. Now the startup must fight to stay competitive.

I

n the summer of 2013, as Matthew Zeiler was close to finishing a Ph.D. in artificial intelligence at New York University, he seemed to have every tech giant in the palm of his hand. Zeiler had left an internship with a Google AI group a few weeks earlier when he got a call from an unknown number while he was running along the Hudson River. It was Alan Eustace, then a senior vice president of engineering at Google, who had heard about Zeiler’s AI chops. Eustace wanted Zeiler to join permanently. To entice him, Eustace told him he would make an offer that was among the highest Google had ever made to a new graduate, Zeiler recalls. Zeiler won’t say how much he was offered, and Google declined to comment.

But offers for top recruits with specific expertise can add up to several millions of dollars over four years, according to people with knowledge of the matter. Regardless, Google’s

64 | FORBES AFRICA

SEPTEMBER 2017

offer kicked off a bidding war for Zeiler and his knowhow in deep learning, the vaunted branch of AI that’s driving major breakthroughs in computing.

Within days, Zeiler received a bigger offer from Microsoft, which Google promptly matched. Apple also wanted to chat, and when Zeiler flew out to Silicon Valley, Mark Zuckerberg personally sought to persuade him to join a new AI research group at Facebook.

Zeiler respectfully turned them all down, deciding instead to start a company with an audacious goal: to compete with the giants that were courting him. “It was a crazy period, Zeiler remembers. “I had this low-risk opportunity of joining a tech giant versus doing my own startup.” Zeiler says he knew that some of his algorithms worked better than Google’s on certain AI problems. “I knew I had to follow my gut,” he says.

Four years later, Zeiler’s New York City-based startup,

Clarifai, is widely seen as one of the most promising in the crowded, buzzy field of machine learning.

Clarifai offers image- and video-recognition tools for developers that rival those from Google, Microsoft and others. Much as Stripe and Twilio make it easy for programmers to tap into payments and communications capabilities, Clarifai gives its customers access to cuttingedge AI techniques that would cost millions to replicate.

Companies like Unilever, BuzzFeed, Ubisoft and Staples U.K., as well as makers of medical devices and drones, use Clarifai to automatically analyze millions of images and videos. One of the company’s 100 or so customers, i-Nside, makes a smartphone accessory for imaging the inside of an eardrum and diagnosing ear diseases. Revenue, while still small, is expected to reach $10 million as early as next year, according to people close to the company.

That Clarifai has made it this far is, in and of itself, remarkable. In the past few years, AI— in particular a form of it called deep learning or deep neural networks—has emerged as the Next Big Thing in tech. Deep-learning techniques work loosely like the brain, with layers of “neurons” connected with “synapses.” The techniques are leading to substantial breakthroughs in areas like image and speech recognition, which in turn are ushering in advances in everything from medicine to self-driving cars to robotics.

But there’s a problem: Amid the scramble for talent, the richest companies in tech have consumed entire university departments and

Photo by Franco Vogt For Forbes

BY AARON TILLEY

Small is beautiful: Clarifai is a guppy to whales like Google and Microsoft. CEO Matthew Zeiler insists that’s a plus.

acquired just about every AI startup they could get their hands on. Google has been the hungriest, with at least 11 AIrelated acquisitions, spending upwards of $1 billion for just two of those, DeepMind and api.ai. Nearly all the upstarts that competed with Clarifai have been bought: Amazon acquired Orbeus; Salesforce got MetaMind; IBM snapped up

AlchemyAPI. When it comes to image recognition, Clarifai is perhaps the only one left that can compete with Amazon, Google, IBM and Microsoft, all of which offer AI image recognition tools to their cloud-computing customers.

Clarifai has already rebuffed several multimillion-dollar acquisition offers, according to an early employee. Zeiler says

BY FAR THE GREATEST DANGER OF ARTIFICIAL INTELLIGENCE IS THAT PEOPLE CONCLUDE TOO EARLY THAT THEY UNDERSTAND IT. —ELIEZER YUDKOWSKY

he is determined to keep the company independent.

Clarifai has none of the might or reach of its rivals, but Zeiler insists, convincingly, that playing Switzerland in a global AI war is a valuable asset. Many large companies that want to incorporate AI into their products are fearful of handing over their data to giants like Google and Amazon. Photobucket is a case in point. After assessing competing tools from Amazon, Google and IBM, the imageand video-hosting service became one of Clarifai’s largest customers in terms of image volume. “Any time you’re dealing with Google, you have to wonder if they’re taking your data and training their own system,” says Mike Knowles, SEPTEMBER 2017

FORBES AFRICA | 65

WHO CAN SEE BETTER? Deep-learning systems typically identify an image by guessing the categories to which it might belong—and adding a measure of their confidence in the guesses. Here are some of what aI systems from clarifai, google, IBM and Microsoft saw in three images we selected. (unlike the other three, Microsoft assigns a confidence percentage to the “caption” it writes for each image while also including a number of tags.)

Croissant

Maine coon cat

Bowling

GOOGLE

SEPTEMBER 2017

MICROSOFT

BEST CROISSANT 98% SO-SO BREAD 96% DOUGH 93% SUGAR 87% SAY WHAT? REFRESHMENT 83%

BEST CROISSANT 88% SO-SO BAKED GOODS 91% DANISH PASTRY 75% BREAD 60% SAY WHAT? PAIN AU CHOCOLAT 75%

BEST CRESCENT ROLL 99% SO-SO BUN 99% BREAD 99% FOOD PRODUCT 99% SAY WHAT? LIGHT-BROWN COLOR 100%

BEST PIECE OF BREAD 86% SO-SO DOUGHNUT BROWN EATING SAY WHAT? BANANA

BEST CAT 100% SO-SO CUTE 99% PUREBREED 96% FURRY 94% SAY WHAT? YOUNG 94%

BEST MAINE COON 86% SO-SO WHISKERS 88% FUR 79% TAIL 53% SAY WHAT? NORWEGIAN FOREST CAT 60%

BEST CAT 97% SO-SO FELINE 97% MAMMAL 97% DOMESTIC CAT 93% SAY WHAT? CARNIVORE 97%

BEST CAT LOOKING AT CAMERA 95% SO-SO MAMMAL SITTING GRAY SAY WHAT? LAYING

BEST RECREATION 94% SO-SO FUN 97% GROUP TOGETHER 92% FRIENDSHIP 91% SAY WHAT? DANCING 94%

BEST TENPIN BOWLING 98% SO-SO LEISURE 83% FUN 82% BOWLER 72% SAY WHAT? PERFORMING ARTS 51%

senior infrastructure developer at Photobucket. With its Photos app, Google competes with Photobucket. Zeiler says many other potential customers are at risk of colliding with the ever-expanding ambitions of tech’s biggest companies. “They open new divisions that compete with their customers,” Zeiler says. “That’s what we don’t do.”

At 30, Zeiler, who grew up in Beausejour, a small town in Canada some 40 miles northeast of Winnipeg, seems an unlikely challenger to tech’s powerhouses. With slicked-back hair that he cuts only a couple of times a year, he retains the disheveled air of a college student.

But Zeiler’s obsession with AI put him on a path to be mentored by some of the field’s biggest luminaries. Oddly enough, his interest in the field started with a video of a flickering flame that he saw while an undergraduate at the University of Toronto. The video, shown to him by a grad student, looked startlingly real, yet it was generated by a computer using an AI technique. Zeiler had just learned the basics of computer programming but hadn’t taken to it. The flame represented something different. No human had explicitly programmed it to move around in predetermined ways.

Instead, a computer had been fed video data, deduced a pattern and generated the video on its own. “I was completely blown away,” Zeiler says. “It was a whole new way to get computers to do what 66 | FORBES AFRICA

IBM

BEST BOWLING TENPIN 75% SO-SO BOCCE BALL 59% BOWLING ALLEY 50% BOWLING BALL 54% SAY WHAT? SKATING 51%

BEST BALL SO-SO PERSON WOMAN STANDING SAY WHAT? GROUP OF PEOPLE RIDING ON BACK OF A WOMAN 20%

you wanted. I had to learn more.”

Graham Taylor, the Ph.D. candidate who had shown him the video, brought Zeiler into a research lab that was run by Geoffrey Hinton, widely considered one of the godfathers of neural networks. Taylor liked the ambitious yet amiable Zeiler. “He was smart but wasn’t a jerk,” Taylor says. In Hinton’s lab Zeiler worked on using AI techniques to track pigeons’ mating rituals, resulting in his first paper, “Learning Pigeon Behaviour Using Binary Latent Variables.” He graduated at the top of his class.

Zeiler then headed to NYU for a Ph.D., following Taylor, who was a postdoctoral student there. Taylor worked under Yann LeCun, another pioneer in deep learning, who now heads Facebook’s AI efforts. Eventually, Zeiler did two internships at Google and worked for Jeff Dean, the head of a then-new deeplearning research group called Google Brain. Hinton, who now works at Google and retains a position at the university, was part of that 20-person AI skunkworks. (Google Brain has since grown into one of the most high-profile and vital groups within Google.)

Zeiler founded Clarifai in November 2013 after his second internship, just as he was finishing his Ph.D. The company got off to an auspicious start. Zeiler tested his image-recognition algorithms in a highly regarded contest called ImageNet. The

Photo by KATHLEEN CHAYKOWSKI; MartIn HarVey/corbIs/getty IMages; g-stockstudIo/getty IMages

CLARIFAI

FORBES AFRICA

ENTREPRENEURS - CLARIFAI 2012 ImageNet had shaken the AI world when a team from Hinton’s lab in Toronto, using deep-learning techniques, cracked a huge barrier in accuracy: Its error rate was 15%, far better than the 25% attained with earlier AI approaches.

In 2013, Zeiler beat out the competition with an error rate of just 12%.

For the next few months, Zeiler worked alone, pushing the limits of his neural networks and rewriting the code to turn it into a commercially viable product.

He installed four servers in his apartment to crawl the Web for images to train his algorithms. At one point, his apartment got so hot that he had to leave his windows open in the middle of winter.

By April 2014, Zeiler hired a second employee, and the two moved the servers to a New Jersey data center, where Clarifai continues to expand. In October 2014, he made the service available to developers. His first customer was a wedding lifestyle website called Style Me Pretty, which uses Clarifai to identify and categorize thousands of user-uploaded pictures and serves ads based on what’s in an image.

In 2015, Clarifai landed its first sizable investment: a $10 million round led by Union Square Ventures.

The corporate coinvestors, who clearly understood the potential of what Zeiler was building, included Qualcomm, AI chip specialist Nvidia and, interestingly, Google’s venture arm. The following year, in a round led

by Menlo Ventures, Clarifai raised another $30 million, at a valuation of $120 million, according to PitchBook. “Tech giants are working on similar products, but they don’t wake up every day living and dying on building the best imagerecognition service,” Menlo partner Matt Murphy says.

Clarifai now has 55 employees, including 10 dedicated to digging through the latest AI research so the company can stay current. Last year, it hired a veteran sales executive from Google’s enterprise unit as its chief customer officer.

A recent study by the consulting firm CapTech shows Clarifai remains competitive with, and insome cases outperforms, tech giants like Amazon, Google and Microsoft in image recognition. But finding and keeping AI talent to maintain that position—let alone expand into new areas like audio recognition and beyond—won’t be easy. In February, Clarifai scored a longtime Google AI researcher, Andrea Frome, as its head of research, but she abruptly departed after only four

HOW TO PLAY IT

Artificial-intelligence investors would be foolish not to consider search giant Alphabet. The Silicon Valley stalwart is best known for advertising, but it’s really a machine-learning company. Advertising just happens to be where it flexes its sensational AI muscle. When traditional Web advertising started to wane, it stepped up its algorithms and dominated mobile and programmatic media buying with AI software that automates and optimizes media placement. In the public cloud its open-source TensorFlow is the powerful AI platform behind the wizardry of Google Photos.

AI is also central to its ambitions in self-driving cars and consumer electronics. It even has lifesciences businesses trying to control human aging and combat diseases. It is also buying small AI companies before they go public, building incubators and sucking up AI engineers from the elite schools. The stock is off its high and trading at just 32 times earnings.

Jon D. Markman is president of Markman Capital Insight.

months. Frome declined to speak about her departure, and Zeiler says it was the result of differing priorities.

Access to data—lots of it—to “train” algorithms is also an area where Clarifai is likely to find itself at a permanent disadvantage compared to its much-larger rivals. Clarifai’s latest tool trains AI models on smartphones, not in the cloud, where most AI systems do the bulk of their computing. On a recent day, in a San Francisco

“Shifting landscapes?”

“Rooted partner.”

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hotel lobby, Zeiler pulls out his cracked iPhone 6. As he moves the camera, the phone identifies all the objects around it—chairs, a fireplace, people, cars, as well as a MacBook that Zeiler had just trained it to recognize. It’s a tantalizing demonstration of the potential for deep learning as it moves into the most important device in people’s lives. “We’re only seeing the tip of the iceberg of what these systems will be able to do,” Zeiler says.

FORBES AFRICA

LIFE - METAL

The fans at Arcade Empire enjoying Demogoroth Satanum’s performance

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Stuff The MONEY, Forget About WITCHCRAFT

– It’s Raining Beer They call it black metal. Pounding, grinding and clanging music. On a sweaty night in Pretoria, Africans storm one of the bastions of white music.

WORDS AND PHOTOS BY MOTLABANA MONNAKGOTLA

SEPTEMBER 2017

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FORBES AFRICA

LIFE - METAL

I

t’s a midweek afternoon and I meet up with an old friend in Dobsonville, Soweto. We used to go to hip-hop shows together. Now Trevor ‘Paranoia’ Macupe is a black man who pounds out white music. He’s a member of a black metal band, from Soweto, the urban township to the south of Johannesburg; his music is kicking down barriers.

Black metal is fast, with high-pitched, piercing vocals and distorted guitars. It grabs you by the gut. The artists often appear on stage with painted faces, looking like corpses; a dark look for black metal.

The members of this metal band have taken the aggressive guitar music from the northern hemisphere and made it their own.

The five musicians met through skateboarding and hip-hop and now they spill black metal into the African night.

Macupe is the guitarist; Thapelo ‘Bellicose’ Mokoena, the bassist; Modiba ‘Belgaroth’ Rabothata, the drummer; Siyabonga ‘Thronum’ Mngadi is the other guitarist.

Dreadlocked Sthembiso ‘Tyrant’ Kunene, the vocalist, lives up to his name on stage. They are known as Demogoroth Satanum and they are the first all-black, black metal band to come out of South Africa. They have been playing together since 2012.

The band’s technical skills have earned them fans in faraway places like Botswana and Germany. They didn’t have money, nor equipment, nor resources, to go to music school but they practised hard and taught themselves to rock hard.

“Upon discovering it, we didn’t understand it; we dived into it and upon exploring it we found the sound that we are known for today,” says Mngadi.

They acquired the taste while skateboarding and playing video games, with rock ‘n’ roll and punk music playing in the background.

The band usually meet at Mngadi’s room, in Zola, Soweto, sometimes to listen to what they have produced or to write songs before they head out to a community center to rehearse.

Passers-by are stunned when they hear metal churning out in

UPON DISCOVERING IT, WE DIDN’T UNDERSTAND IT; WE DIVED INTO IT AND UPON EXPLORING IT WE FOUND THE SOUND THAT WE ARE KNOWN FOR TODAY 70 | FORBES AFRICA

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Trevor ‘Paranoia’ Macupe playing the guitar

A fan takes a photo of Sthembiso ‘Tyrant’ Kunene

a place where township music is the beat of the streets.

“Not just our families, but the whole black community had a very negative view on what we’re doing because it’s not in the Sowetan comfort zone. They would say it’s witchcraft or Satanism with the corpse paint and the loud music and screaming,” says Kunene.

Kunene says that the younger generation accuse them of playing “white-boy music” and say they are trying to be white people. The older generation just say its witchcraft.

Mokoena had a bad experience while sitting on a train bound for Johannesburg. He

was wearing a black metal t-shirt with dark imagery and there was a gentleman sitting in front of him and staring.

“He eventually had the courage to say something. The first thing he said was that I am ‘evil and Illuminati, you’re the one poisoning our children’. He attacked me and didn’t get to know my name. I let him vent because it was a scary situation because of mob justice. If half the train thinks he’s right, I would have got my ass kicked for wearing a metal t-shirt. I didn’t want to engage him in case I incite a violent situation,” he says.

On August 4, the band was in a safer place.

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Trevor ‘Paranoia’ Macupe (left) and Sthembiso ‘Tyrant’ Kunene praise the crowd for its support

Fans make ‘devil horns’ with their hands - a traditional metal symbol

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AS THE MOSH PIT IS HAPPENING AND THE CROWD IS GOING CRAZY, I KNOW WE’RE DOING THE RIGHT THING. The gig was in Pretoria, the capital city of South Africa, about a 91-kilometer drive from Soweto – in cultural terms, it could have been on Mars – at a pub called Arcade Empire peopled by whites. On the night, the only black people there were the members of the bands, the waiters and myself. Nothing unusual for Demogoroth Satanum.

Four bands are playing on the night; Demogoroth Satanum is the only one playing black metal. An ear splitting kerrang from the lead guitar announces them on stage with a swagger.

“This song is made out to two girls who tried to make it to hell but, unfortunately, they made it to heaven,” says Kunene before one of their numbers.

The audience cheers and the mosh pit – an area on the dancefloor where fans jump into each other as the aggressive music plays – comes to life more and more with every song. Before the song had finished I had to be careful with the camera; it was raining beer as the crowd jumped with bottles in their hands.

“As the mosh pit is happening and the crowd is going crazy, I know we’re doing the right thing,” says Kunene.

The last song ends and the lights go up. It was like the calm after the storm. The guys had just performed yet another show for free and didn’t mind because they love the music.

Demogoroth Satanum sustain themselves with day jobs. Mngadi works as a retention agent, Kunene trades online, Rabothatha recently left his job as call center agent to focus on the music, and Macupe freelances shooting and directing videos. When he is not playing the bass, Mokoena does street cleaning and sweeps bus stops.

“Metal is not one of those genres you’d get into for the money, because you going be sorely disappointed.

Trust me, you’re not going to make money, not in this country,” says Macupe.

Just as well. With all the negative commentary from the township and stereotypes about the genre, they have turned their most unlikely fans, their families, into their greatest supporters. Their long-term aim is to get more black people into the mosh pit.

THIS SONG IS MADE OUT TO TWO GIRLS WHO TRIED TO MAKE IT TO HELL BUT, UNFORTUNATELY, THEY MADE IT TO HEAVEN

Sthembiso ‘Tyrant’ Kunene

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A Concept Car That

CAPTIVATES The Lexus LC 500 drew gasps when its designs were revealed; taking the car on the road lives up to its promise

BY DEREK WATTS

L

exus launched an expensive plan to enter F1 way back in 1983. Not quite Formula One, but a project code named Flagship One which was to take the Japanese car manufacturer into a new realm of luxury to compete with the elite German marques.

It started with a simple challenge from Founder Eiji Toyoda – build the world’s best car.

It culminated in the launch of the acclaimed LS 400 after a feverish five years.

The Relentless Pursuit of Perfection took $1 billion, 450 prototypes, 60 designers and 400 engineers. And the expertise of a special “Team One” unit from leading agency Saatchi & Saatchi to pioneer the marketing.

The legend goes that the F1 designers rented a home in Laguna Beach to get a glimpse of the well-heeled American consumer and their motoring minds.

The project wasn’t aimed at the home market – rather the United States. And the core reason was a trade agreement between the Japanese government and US trade officials to restrict the export of less expensive models.

In an automobile version of the Space Race, Honda got into the American arena with the Acura and Nissan reached for the skies with the Infiniti.

Some reports claimed the LS 400 had better handling and performance and shockwaves rocked the Mercedes Benz and BMW camps with Cadillacs and Lincolns being traded in and German luxury vehicle sales dropping by almost 30%.

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By 1999 Lexus had recorded the millionth vehicle sold in the US and in 2005 there was an organizational separation from Toyota, with dedicated designers and engineers working exclusively for the brand.

Despite the fact that the Lexus offering was comparable to the German leaders and left the showroom floors with some fancy features included in the price, it wasn’t a package to get the adrenaline pumping.

The sporting badges of Merc AMG and the BMW M division had been wheel-spinning to capture the drivers who want more than a quiet and leisurely jaunt to the shopping center and certainly relish the looks and audio levels to get noticed en route.

The Japanese reply, fresh off the drawing board of the F-Sport Division, came in the form of the IS F, launched in 2007 and the much vaunted LFA – custom built to the last detail. It was only in production for two years and the allotted 500 specialized models found relatively happy homes.

“The LFA is an icon now and possibly always will be – we don’t need to replace it to keep that status. It is a car we can reference for another 25 years if we choose. Its status is assured,” said European boss, Alain Uyttenhoven.

“It is possible that we will one day create another supercar, but in my view a super highend machine is not what we need right now.”

Enter highway left the Lexus LC 500. The concept car drew gasps five years ago and Lexus have been one of the few automakers brave enough to take a dream design to the production line.

Photos by www.lexus.co.za

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FORBES AFRICA

LIFE - DRIVING AMBITION

Maybe not a supercar – the definitions vary – but not light on the wallet at a retail price of $130,000.

“Not only has Lexus delivered a design with high visual impact, it has also developed ground-breaking engineering and technology for the LC 500. This isn’t simply a car that looks good – the LC 500 has been engineered in every dimension to deliver a very special driving experience,” says Calvyn Hamman, Sales and Marketing Senior Vice president of Lexus South Africa.

And with such a long title, he should know! While sportscar designs can be hotly debated, this one is hard to ignore. It almost seems to perch on the tarmac like a squat sprinter waiting for the buzzer.

The meshed grille, like a more macho version of the Mercedes diamond front end, reaches out to you with its contoured mould. It is flanked by recessed and diminutive triple LED headlights that blend into the bodywork in a Star Wars fashion.

The “Experience Amazing” theme flows to the rear with L-shaped taillights that have an acclaimed “afterburner” effect courtesy of 80 concentric LEDs per lamp.

Open the door and the interior is dashing with crisp metallic lines, the controls easily at hand and the seats firm and supportive.

But don’t plan on taking any six-footers in the back seats – like most GT cars this is really the home of Yorkies on their way to the parlor.

When it comes to infotainment systems, the cry of the decade seems to be for systems to delight a 16-year-old but take a bit of head scratching for the Stoneage.com generation.

So you may have got used to the touchscreen or the round click wheels – or

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even voice recognition – to command your high-tech steed.

Now we have the track-pad – very much like the device on your laptop. I’m sure it can control anything from heating the seats to ordering a hot take-away. And given weeks of practice it may feel like an extension of your left hand.

But it is finicky, to say the least, and by carelessly resting your elbow near the ultra-sensitive pad you may find the climate control battling the Arctic or iTunes blasting out from your cellphone.

Fortunately there are the old fashioned

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knobs and switches for some of the basic requirements at the wheel!

The daring overall creation is wrapped around a normally aspirated 5.0-liter V8 which propels the LC to 100km/h in a swift 4.7 seconds with the most pleasantly guttural sound yet to be emitted by a Lexus.

Yet not quite in the league of a Porsche 911 or Jaguar F-Type R and it only really sings at the higher revs.

What is absolutely phenomenal is the 10-speed box which is so smooth that it’s a challenge not to paddle up and down through the gears to feel the silky

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BY CHIVAS REGAL

CHIVAS REGAL CONTINUES TO PROFILE AFRICA’S GROUNDBREAKING ENTREPRENEURS

transitions or get an additional growl from the exhausts.

It is a hefty beast but delivers an engaging drive that sometimes sees you straying over the speed limit. And you have no excuses – the heads up display will give you ample warning.

There have also been many profit warnings in the motor trade in recent years. Lexus doesn’t disclose too much publicly about their financial operations but insiders say the division contributes a healthy share to Toyota’s bottom line.

The Group recently raised its full-year profit forecast by 16%, citing expectations of a weaker Yen. So now they say a profit of $16.8 million is on the cards – slightly down from last year.

“Our organization has been working to evolve with the changing consumer tastes in luxury,” says Tokuo Fukuichi, President of Lexus International.

“The new LC embodies a shift in forward-thinking culture, and is a glimpse into the products and experiences you can expect from Lexus in the coming years.”

South Africans will only get a fleeting taste right now. There are just a handful of LC 500s heading this way and the hybrid LS 500h is restricted to selected overseas markets.

Will the new flagship herald the next chapter in the Lexus tome and feed down the line to all the upcoming models? It has been an encouraging new beginning.

Chivas Brother’s Limited was founded in 1801 by brothers James and John on the principles of sharing success and winning the right way. These principles established the foundations on which the Chivas brothers crafted their luxury whiskey and grew a business and a brand of global scale. Both James and John understood the value that businesses become truly rewarding when people share in their success. It is with this impetus that CNBC Africa and Forbes Africa partnered with Chivas Regal to develop the Chivas ‘Win The Right Way’, which endeavors to discover the best and brightest social entrepreneurs who embody the ethos of the Chivas brothers’ values.

The first season proved to be a success as six African leaders who are dedicated at using their entrepreneurial prowess for social and economic development were showcased on Chivas ‘Win The Right Way’. The lineup included South Africans Doug Hoernle, the Founder of Rethink Education and Laduma Ngxokolo, fashion designer and founder of MaXhosa by Laduma; together with Joel Macharia from Kenya, the CEO of Abacus; Ghana’s John Armah, CEO of Orios Group and Uneko Atawodi, CEO of Malaik Africa.

The sextet of young Africans who ensure that their businesses benefit their surrounding communities was completed by Nigeria’s Chioma Ukonu, Chief Operations Officer of Recycle Points.

Ukonu also participated in the The Venture competition in her home country

and she went on to fly the African flag high in the global finale of The Venture in Los Angeles, taking second place and earning her business US$200,000!

These successes have been the impetus in the evolution of Chivas ‘Win The Right Way’. Building on the triumph of the first season, the show will expand to showcase more pan-African stories of emerging social entrepreneurs and established business people which means an increase in episodes documenting the journey of young African entrepreneurs from more African markets.

The second season of Chivas ‘Win The Right Way’ will also be anchored by a new presenter in the experienced and well-travelled business journalist, Gugulethu Cele, who will document the journey of the new pool of social entrepreneurs. We hope that this second series will inspire social entrepreneurs in Nigeria, Kenya and South Africa to enter the fourth installment of The Venture competition to stand a chance to win a share of $1 million dollars to help fuel their businesses.

Be sure to catch more rising Africans in season two of Chivas ‘Win The Right Way’ starting from October 4, 2017 on CNBC Africa, DStv channel 410, to see Africa’s top social entrepreneurs.

For more information, visit www.theventure.com/en-za You can follow The Venture on Twitter @ChivasVenture | #WinTheRightWay #ChivasVenture

Pernod Ricard CEO Alexandre Ricard toasting to success, with Nigeria’s Chioma Ukonu (sixth from right) who ensured Africa was represented at The Venture Finale in LA. Chioma was joined by Hollywood stars Halle Berry (second from right) and Josh Gad (centre), who formed part of the judges’ panel. Sonal Shah of the Beeck Centre in Georgetown (fourth from right) also joined the other social entrepreneurs from around the world

INVESTMENT GUIDE – WEST AFRICA RICHIE SEUN JOHNSON

I

t is common knowledge that West Africa is blessed with abundant mineral resources. Aside from the macro-economic factors that affect the price of commodities, the micro-economic factors of each country in the region dictate the pace at which their mining sector progresses.

Australia, Canada and South Africa are generally perceived to be first-class mining destinations and are highly revered by countries that harbour aspirations of replicating their successes. They are not immune from the global factors associated with mining, but they have developed sustainable, and implementable, mining policies with supporting financial networks. It is this that should be followed, not the comparison of resources.

At present, a number of mines in West Africa are facing a number of challenges, such as a difficulty in accessing finance as well as the global slump in the sector. As a result, investment in mining projects has slowed down; though there are investments being made with China-based Chalco recently announcing plans to invest $500 million in a Guinean bauxite project. Crucially the alu-

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minium will be produced in Guinea, a major coup for Guineans, especially as the issue of capital flight plagues the continent. In more developed mining countries, part of their success has been the ability of the government to develop and implement policies to protect resources. There is also a concerted effort to aid industrial development and, where possible, finance is made accessible to companies who wish to acquire foreign assets.

In many West African countries, wouldbe participants in the mining sector are restricted to small scale and artisanal mining due to an inability to obtain finance at competitive rates. In Nigeria, for example, two out of 25 banks have desks dedicated to solid minerals. Coupled with high interest rates for loans and a dearth of viable mining projects to finance, there is a catch-22 for banks to lend to participants in the sector.

However, with the development of the Solid Mineral Development Fund, there is fresh hope and, crucially, the political will to assist artisanal and small-scale miners with funding. Though there are on-going projects

in Nigeria, the level of activity pales in comparison to Burkina Faso, which as recently as 10 years ago, did not have a notable mining sector to speak of. Despite its challenges, Nigeria remains an attractive proposition for foreign investors.

Some governments may not have the financial capacity to develop projects. They then need to ensure there is a stable political environment, with a clear understanding it acts as a crucial component in attracting investors.

South Africa, which is widely acknowledged as the premier mining destination in Africa, serves as a prime example to all. It has a wealth of experience to lend. However, the recent proposed revision of the mining code has triggered a wave of uncertainty among mining companies in the country. This is the second revision in recent memory and only goes to support the idea that investors require a degree of certainty, which they can marry with their long-term plans.

Tanzania has also ruffled the feathers of multinationals operating in the country as recent policy changes have had an adverse effect on foreign investments. The political landscape of the continent often goes through periods of volatility. For the development of a nation to happen smoothly, government interference must be limited to policy development and implementation. International mining companies, along with the expertise and technical skills they provide, also increase the profile of the host nation they operate in. This, in turn, reflects well on the host nation’s ability to create an environment suitable for international best practices to be adhered to.

The resultant effect is improved credibility and more investment.

Deterring investors through haphazard policy changes is tantamount to economic suicide.

Photo by Simon Dawson/Bloomberg via Getty Images

GOVERNMENT MUST STAY AWAY FROM ECONOMIC SUICIDE

INVESTMENT GUIDE – 30 UNDER 30 OBINWANNE OKEKE

HOW TECH CAN CLOSE THE GAP IN AFRICA

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economic focus in African countries. Now the private sector has more opportunity to drive growth, even against the backdrop of infrastructural and institutional gaps. Nigeria’s tech incubator, the Co-Creation Hub, which is solely private sector driven, appears more vibrant than the Botswana Innovation Hub (BIH), which is piloted by the government. The former attracted the attention of Facebook’s Mark Zuckerberg, culminating in his first visit to Nigeria.

At the Forbes Under-30 Summit in Israel, in April, where I was one of the selected speakers, venture capitalism and foreign direct investments in emerging economies was predictably top of the agenda. Since I featured on FORBES AFRICA’s 30 under 30 list in 2016, I was fortunate enough to attend the Forbes Under-30 Summit in Boston, USA, in October last year. It gave me the opportunity to interact with investors and entrepreneurs.

These events create opportunities for young African entrepreneurs, like myself, to find ways to shape the future of our own businesses and economies, in collaboration with important global capitalist actors.

The discussions at the summit in Israel touched on new frontiers for investment. Interestingly, Africa hardly features in this conversation. There are investors with money to spend, but the continent is yet to position itself to welcome these opportunities.

This is where tech incubators can act as catalyst for economic growth. Zambia and Côte d’Ivoire are showing promising signs in attracting this sort of FDI, but Nigeria has the potential to attract much more if there is a policy to develop spaces for tech incubators to thrive. Tech incubators can generate ideas to solve economic, social and even governmental problems, while also attracting foreign capital.

In Nigeria, BudgIT uses charts and infographics to explain government revenues and remittances. Initially, investment group Omidyar Network injected $400,000 in BudgIT. Less than two years later, it won a $1.4-million grant from the Bill & Melinda Gates Foundation. BudgIT proves start-up ideas can plug governance gaps and attract foreign capital at the same time.

This is not to suggest that every tech company has to solve governmental problems.

Tech incubators can be used for economic and social needs, while making a profit.

Every round of funding an organization receives puts it in a position to scale up its activities. This is one way the private sector drives growth in an economy.

Tech incubators, and other spaces for technology-driven solutions, are urgently needed on the continent if we are to join the global business train. Currently, Africa is still stuck on the platform at the station.

Photo by Prasit photo via Getty Images

I

n the latest Africa’s Investment Destination Index released in April, Nigeria was ranked 19 out of 54 African countries. In effect, if a foreign investor was to make a choice in which economy to do business, Nigeria would be their 19th choice. It is a steep fall for a country, which not so long ago was ranked as the third-fastest growing economy in the world.

For much of Africa, the ‘Africa rising’ slogan is wearing thin. A big problem is that many African economies are rentier states.

In effect, when there is a boom in the sale of natural resources, the economy looks healthy.

At best, this creates a superficial climate of prosperity; at worse it fosters complacency.

The revenues from such booms are largely frittered away by the political class. Little effort is ever made to close the infrastructural gaps that could aid SMEs. According to the index, some economies are steaming back to life. Zambia is a clear case in point, in fifth position. Egypt’s economy stands third; a clear sign that it has put the political turmoil of the last few years firmly behind it. This strengthens my belief in an Africa that is capable of rising above its challenges, an Africa that has the resources to courageously confront the future. At the same time, there is a sadness that some African countries are not focusing on their economies enough to become favorable destinations for foreign direct investments.

More African countries need to start paying attention to changing economic and investment realities. When we understand how money and investment works on a global level, we can better understand how to attract it. The digital takeover is the new conversation, and start-ups that have found brilliant and effective ways of simplifying daily life are the new magnets for venture capitalists.

Previously, governments shaped the

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INVESTMENT GUIDE – AFRICAN ENTREPRENEUR PAUL MASHEGOANE

T

here is something at play that many company leaders just can’t get right – acquiring other companies. Many assumingly lucrative companies were acquired and then failed.

Either there was a lack of full disclosure before the transaction, or the new owners were over confident in their ability to create astronomical profits from those companies.

A mantra I fully subscribe to is, great companies are bought, not sold.

When a company approaches you to sell their business, you must ask why they are selling. Could it be that the ship is about to sink, are they relocating, retiring, bored by their industry or do they foresee calamity.

Back in 2012 Tiger Brands acquired 63% of Dangote Flour Mills, therefore controlling the company; changed the name to Tiger Branded Consumer Goods Plc. However, the company performed poorly.

Three years later, Dangote Industries had to buy it back for a nominal $1 and took

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over their debts. Tiger Brands had to write off R700 million ($53 million) in loans that it granted the operation.

On the same note, in January 2005, Bebo, a social networking website, was launched.

It became one of the most visited sites, with millions of active users. In 2008, AOL came along, excited about the prospects of expanding it. They purchased it for $850 million – making the founders, Michael and Xochi Birch, $595 million richer as they owned 70% of the company.

In May 2013, the company voluntarily filed for Chapter 11 bankruptcy protection.

On July 1, 2013, the Birches paid $1 million to get the social network back. Consider the profit they made after receiving $595 million for the company five years before.

In both stories, the former owners bought the companies back for a price drastically less than they sold them for.

There were many examples of this type of disaster during the dot-com bubble around the turn of the new millennium. A promising

company, owned by Mark Cuban and partners, was on the rise. Back then, Broadcast. com was breaking ground with online live streaming.

Yahoo! got excited about the new concept and jumped into a hole thinking it was a springboard. In 1999, they purchased Broadcast.com for $5.7 billion in Yahoo! stock.

Cuban became a billionaire and quickly diversified his newly-found pot of gold into other asset classes.

Broadcast.com soon went bust, becoming one of the spectacular failures of the last two decades.

It wasn’t the most notorious failure though. The worst of all time is AOL again.

They acquired Time Warner for $160 billion to create the world’s largest media company.

Within 18 months, the company reported a $99 billion loss and the combined value of the company had dwindled from $226 billion to $20 billion. Unthinkable!

With most failed acquisitions, what is often evident is that the entrepreneurial drive is misplaced. The original vision is lost as the company is absorbed into a big corporation that does not share the same founding values and company culture.

To become a gigantic multinational, acquisitions are quicker than organic growth.

We cannot avoid acquisitions as a growth mechanism. So, how do entrepreneurs, looking to make an acquisition, institutionalize the vision, drive and company culture that will exist beyond the founder?

Due diligence needs to be done, and the top talent at those companies need to be retained, particularly at an executive level. It is common for major companies to acquire just 80% of another company, leaving 20% for the management and founder.

This keeps them motivated and encourages them to stay and help the company to continue to grow.

Photo by Freepik

BE PRUDENT WHEN PURCHASING

SPORT NOTEBOOK

BY GARETH COTTERELL

FORMER FORBES AFRICA COVER PULLS OUT OF CRICKET LEAGUE Brimstone Investment Corporation has said it will not proceed with the acquisition of one of the franchises in South Africa’s T20 Global League.

The company, headed by CEO Mustaq Brey, was set to run the Stellenbosch franchise and was one of only two South African franchise owners.

“We follow a rigorous investment process.

This venture had to undergo the same process and be tested against our standard investment criteria as all other investment proposals. Our investment decisions take cognisance of the risks and benefits to all our stakeholders,” says Brey.

Brimstone would not comment when asked

by FOBRES AFRICA for the exact reasons they decided it is not in their interests to own a team.

DANGOTE STILL GUNNING FOR GUNNERS

KENYA TO BID FOR WORLD CHAMPS After finishing second on the medals table at the athletics world championships in London in August, Kenya is hoping to become the first African nation to host the event.

Kenya will bid to host the IAAF World Championships in 2023.

The country’s sports minister Hassan Wario says Kenya has proved itself when it brought together athletes from 130 countries to compete in the IAAF World Under-18 Championships in Nairobi earlier this year.

Plans to build several new stadiums will form part of the bid.

Africa’s richest man, Aliko Dangote, has again expressed interest in buying English football club Arsenal.

American billionaire Stan Kroenke owns 67% of Arsenal, while Russian billionaire Alisher Usmanov has a 30% stake. It would take a serious offer to tempt them to part ways with the London club. Dangote, worth an estimated $13.5 billion, is probably the only African who could seriously pursue this deal.

The Nigerian billionaire said the first thing he would do if he bought the club is sack the coach, Arsene Wenger.

“He has done a good job, but someone else should also try his luck,” says Dangote.

VAN NIEKERK DEMANDS MORE RESPECT South Africa’s Wayde van Niekerk says he deserves more respect from his fellow African athlete, Isaac Makwala, and athletics legend Michael Johnson, after the pair claimed he received favorable treatment from the International Association of Athletics Federations (IAAF).

Makwala, of Botswana, was forced to withdraw from the 400m final – that Van Niekerk won – after a virus spread through his team’s hotel. Johnson said Makwala was prevented from running to ensure Van Niekerk bagged gold.

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Makwala jumped on the bandwagon afterwards, saying, “There is something fishy they do not want to tell us… Usain Bolt is out now, so the IAAF wants someone to be the face of athletics.”

Van Niekerk took offence.

“If I was an overnight success, and this was my first gold medal, I could have accepted a statement like that. But I have been putting out great performances the last two years now, including this competition’s double. I definitely deserve way more respect from my competitors.”

NIGERIAN STAR DENIED WORK PERMIT Nigeria international Ogenyi Onazi has been denied a work permit to play for English Championship side Birmingham City.

Birmingham agreed terms with the 24-year-old to sign him from Turkish club Trabzonspor, but an application for a work permit was turned down by the Football Association in England.

The reason for this is Nigeria’s average FIFA ranking over the past two years is 54. The Super Eagles need to be in the top 50 for Onazi to qualify.

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SPORT – HOCKEY

Belgiums Cedric Charlier celebrates after scoring in the final against Germany, winning 6-1, hosted in Johannesburg

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‘I’LL EMAIL YOU BACK ONCE I’VE SCORED THIS

GOAL’

Like many sports, hockey is becoming a story of rich man, poor man. One of the world’s biggest tournaments was held in Africa and exposed how painful it can be on the poor side of the divide.

WORDS AND PHOTOS BY JAY CABOZ

FORBES AFRICA

SPORT – HOCKEY

W

hen the moneyed giants of the hockey world came to Africa they came with medical teams and salaries. When Africa’s number one team, South Africa, took to the pitch they had to answer emails, design apps, and study at the side of the pitch.

Another contrast, champions Belgium could afford to hand out shirts to supporters. The South African team – struggled to get time off to play.

One of these working South African players is Lonwabo Owen Mvimbi, a recruitment consultant for Mindcor group, a midfielder with 40 caps for his country. While the Belgian professionals were taking ice baths and putting their feet up inbetween matches, Mvimbi was sending emails, going to work and catching up on missed training in the dark of night.

“I was lucky that work was 10 minutes from the hotel, and five minutes from the field. I was doing that trip constantly, at least three times a week,” says midfielder Mvimbi.

“On the days I wasn’t playing a game, I would be at work the whole day. When people were doing video sessions [studying opponents] in the day, I would be doing it at night, when I was done with work for the day.

On match days I would spend maybe an hour in the office, and then do work emails from the hotel. It wasn’t too bad, I could come and go to the office, everyone at work knew what I was doing and they were very supportive of it.”

Over 16 days, Mvimbi and the rest of the stressed South African squad fought it out with

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the elite of the world game on the astroturf at the University of the Witwatersrand (Wits) in Johannesburg. Here 10 countries competed in the semifinals of the International Hockey Federation Hockey World League (HWL), one of the largest international hockey tournaments on the globe.

Up for grabs was a coveted qualification spot for the 2018 World Cup and a ticket to the 2017 HWL finals in India.

For the South Africans, this was a rare chance for amateurs and semi-professionals – teachers, students, and real estate agents – to take on top players, who do this for a living, in their own backyard.

“Most of us are students or working. I’d say seven out of the squad are professional players,” says Mvimbi.

It was never going to be easy.

South Africa (rank 15) needed to finish in fifth place; a single win against the likes of Belgium (5), Ireland (10), Germany (3) and their African rivals Egypt (19) would have put them in good stead.

“The difficulty in this is there is pressure from both sides; to perform at work and to perform on the field,” says Mvimbi.

The 29-year-old Mvimbi is playing hockey by chance.

When he was 15 he broke his collarbone playing rugby at school and had to change sports.

“I’ve made a lot of financial sacrifices. Because of my hockey, my career grows slowly.

I’m more focused on my sports career, even though my hockey career is going to end soon, maybe in the next five years, whereas my work is going to continue,” says Mvimbi.

South Africa was underprepared. The team had a year to build a side to beat the best.

Yet, team selections were held a mere three weeks before the tournament and the squad got together three days before kick-off.

This is not new. In the last two years, South Africa has managed to hold a mere three training camps.

“With the pace of world hockey at the moment, if you miss a two-year cycle, then you fall off the pace quite a bit. Due to funding issues, it’s been hard to stay together as a squad. People are staying at other players’ houses to save [money],” says Austin Smith, a senior South African player who reached a milestone 150 caps during the tournament.

“For a whole year, our squad didn’t even see each other, we didn’t do anything together.

Then you see the differences when you meet up again, the connections just aren’t there.

You need to re-grow those connections from player to coach all over again,” says Smith.

Smith is one of a handful of South African players to play overseas. With 12 years’ experience, the former captain Smith lives and works in Amsterdam, The Netherlands, where he is contracted to Dutch side HC Den Bosch and the Hockey India League’s Delhi Waveriders. The Dutch league is considered to be one of the strongest leagues in the world; here it is usual for clubs to run with hundreds of members and some clubs have as many as eight astroturf pitches. In Africa, you are lucky to have one.

“Our club side, at junior level, is going to train four times a week in addition to mental training and conditioning work. The level of professionalism goes all the way down,” says Smith.

When Smith first sent his CV to Europe, clubs weren’t interested.

“Initially, when I went to Den Bosch, I was too arrogant.

I had just become the national captain, I had 50 caps. I thought surely I will be able to get a contract in the Netherlands. I wrote to all the hockey clubs and they all said no.”

“A month later the Den Bosch coach wrote back and said we could maybe use you as a defender and you would basically be playing for free. So I had accommodation and a few Euros and that was it. I had to go and prove myself.”

Smith believes Africa needs

Lonwabo Owen Mvimbi

to catch up.

“In South Africa we can be guilty of choosing players who can do flashy things at a young age. In my opinion, we should be identifying players who we think are going to be able to become professional. If you look at the stats of players going from the under-16 national team to the men’s national team, it is actually small,” says Smith.

There is latent talent in South African school hockey which is growing thanks to more astroturf pitches. Most of the senior South African players, like Smith, grew up playing hockey on bumpy grass.

“If I look at the ability of

Austin Smith

the squad coming into the side, compared to when I was entering the squad in 2004, the guys now are far more skillful than I ever was. It’s hugely positive and it shows now that most schools have a strong influence. Schools, these days, have access to an astroturf. For half the hockey population, when I was growing up, that definitely wasn’t the case.”

Back on the astroturf at Wits, as many as 14,972 fans braved cold nights to watch the best of the best. For such a critical tournament, an unprepared side

was the last thing South Africa wanted.

“Being forced to choose between work and life over playing what you love the most is hard. If it was paid, everyone would be here,” says Mark Sanders, a National Selector for South Africa.

“It’s highly frustrating. I can understand [coach Fabian Gregory’s] frustration levels, when you can only have a team meeting at this time because some players who are Joburg based are working. Even the guys who aren’t working, you’ve

I’VE MADE A LOT OF FINANCIAL SACRIFICES. BECAUSE OF MY HOCKEY, MY CAREER GROWS SLOWLY.

got students who need to study.

It’s not the easiest time being in a professional sport,” says Sanders.

On the field, the difference was brutal. Against the slick and salaried Belgium, who picked up a silver medal at the Rio 2016 Olympics, South Africa lost 9-1.

“It boils down to how long a camp scenario is. Our last camp was three days, whereas if you look at the Belgium camp it was 21 days,” says Sanders.

In other games versus Germany and Ireland, South Africa showed signs of promise.

The team had many chances but couldn’t come home with a win. The team lacked the consistency and confidence needed to win.

“When you are in a highpressure moment, you don’t SEPTEMBER 2017

FORBES AFRICA | 93

FORBES AFRICA

SPORT – HOCKEY have time to think, you need to move instinctually. You see a ball move in a direction and your body knows it’s got to run to a certain place, because you have done it 10,000 times before,” says Smith.

“When those things don’t come naturally, especially with how fast the international level has become, you don’t have time to react. That’s the biggest difference between the top teams and everybody else, they can play far quicker than the lower teams can.”

Money is a more difficult opponent. There is next to no budget for South African hockey and the men’s side has failed to secure a major sponsor for years.

The players have to chip in for the millions needed to play overseas.

“I’ve spent R12,000 this year to play for my country,” says Jethro Eustice.

Eustice, who has 80 caps for South Africa, was also working over the tournament.

When he wasn’t on the field playing for his country, he was designing an app for generic drug company Aspen. In addition to completing a master’s degree in IT commerce, Eustice also coaches the women’s team at the University of KwaZulu-Natal, in Pietermaritzburg.

“You would think I would be sitting around in front of a computer, rather than on the hockey field. If you want to be a professional hockey player, you can’t do it South Africa. I am coaching to keep my playing profession going,” says Eustice.

Eustice believes that televising university hockey has helped.

“That’s what’s nice for the under-18 guys. They are finishing matric and looking to go to university to play hockey and continue their studies. High performance programs have changed the university level.

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That’s why the standard has been raised. We are looking at athletes.

When we were around, there were maybe 14 athletes and then the other four were just there to enjoy the party. Now it’s 18 athletes that have to be physically ready and technically ready to play. The sides that don’t have that tend to fall short by the end of the week.”

Overall most say hockey is struggling. In the high-pressure match against Egypt the lack of experience showed. Egypt, South Africa’s nearest rivals, should have been an easy win. Instead they lost 3-2.

“There needs to be a wake-up call and we need to be cognizant of it. It’s frustrating times,” says Sanders.

“Has hockey progressed in the last four years? To be honest, I’m not sure I’m a firm believer it has. We’ve had some good results at the summer series against the

likes of Germany and Belgium, our result against Germany [lost 4-3] the other night was incredible. But it’s once every now and then, and I think that’s the frustrating part. If we cannot consistently beat a side like Egypt I think we’ve got to seriously have a look at ourselves, from selection to player performance, to management performance, the whole lot.”

There is also the task of finding a new national coach.

Gregory resigned to take up the position of Head Coach at the Valley Hockey Club in Hong Kong.

“Playing overseas doesn’t help us. It may help on an individual basis, the players that go overseas go over and learn a lot and play to exceptionally high standards. But we don’t get to have them here for all the major competitions here. If we could manage our calendars, we could put our best players

I AM COACHING TO KEEP MY PLAYING PROFESSION GOING.

Jethro Eustice

forward,” says Sanders.

The tournament could have been the wake-up call South African hockey needs.

“We’ve got a lot of competitions coming up. We’ve got the All–Africa Games, we’ve got the Commonwealth Games, we’ve got Olympics 2020 to look forward to. The decisions need to happen right now,” says Sanders.

It can be done. As a last thought, Belgium did not participate in world class level hockey before 2008, the year they qualified for the Olympics for the first time in 32 years.

Nine years on, thanks to salaries and better organization, they are a superpower at the top of the hockey heap. Maybe Africa should take note.

South African Hockey Team

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SOMETIME IN AFRICA

An Awesome,

AWKWARD, African Night

A

frica has never been short of avant-garde, maverick and daring writers – one of them is a Kenyan Binyavanga Wainaina. In contemporary literary circles, Wainaina is respected for his eloquence, wit and love for the continent. It was for the same reasons he drew a full house at the auditorium of the University of the Witwatersrand (Wits), in Johannesburg. It turned out to be a bizarre winter evening with the writer and gay activist.

It was awkward and excruciating to listen to Wainaina, who struggled to speak without breaking mid-sentence. Sitting there, in front of his loyal admirers, he was a shadow of himself. Wainaina, with a cleanshaven head, in black kaftan adorned with an elegant necklace, sipped beer between sentences in this hour-long conversation with Wits literature lecturer Danai Mupotsa and Indian writer Achal Prabhala. Wainaina was the guest at the event titled ‘How To Write About Everything’, which echoed his essay ‘How To Write About Africa’.

In 2015, at the age of 44, Wainaina suffered a series of minor strokes that impaired his speech. I don’t know how many beers he had, but sitting in the second row, I noticed his head lolling at times.

Like many in the audience, I had admired his work since childhood. We could have walked the same streets when I was growing up in Port Elizabeth, Eastern Cape, where he lived for nine years. He stayed in Mthatha, the small town where Nelson Mandela was born, while studying accounting. He dropped out and earned a living copywriting on his way of becoming a

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renowned essayist.

In 2014, Wainaina was named as one of TIME’s 100 most influential people but he refused to attend the function. Similarly, in 2007, the World Economic Forum Binyavanga Wainaina acknowledged him as a young global leader but he declined again.

He said the organizers should have Ngozi Adichie, in her message. asked him first before publishing his name.

Wainaina knew at the age of 10 that he At the time of writing his memoir, One was gay but he refused to talk about it until Day I Will Write About This Place, Kenya Chimamanda asked. was going through violent elections and “Of course, I said no. But she liberated Wainaina was home during his recess at something in me, already, just by asking Union College, in the United States. He said me. Because normally the skies will fall if the book made it difficult for him to return you say yes,” says Wainaina, overwhelmed to the college. with emotions in a continent that often “This affected the book very immensely misunderstood him. because it was supposed to be personal. I Chimamanda’s question led him to pen must tell you, many African writers face the his popular essay ‘I Am a Homosexual, same thing, where you say, ‘I believe in art Mum’, which was published on his birthday. for art’s sake, I believe I am supposed to just “It’s hard to describe the kind of effect write this book about my life’, and then shit it has had. It sort of stopped the world in happens that politicizes the thing. And that a little while in a great way. Binyavanga, is beautiful, but it doesn’t feel like that at the ironically, was very keen to produce this time,” said Wainaina. essay as a conversation he wanted to have Wainaina is well known for his scathing on the African continent with people that reviews of fellow writers but has also he felt close to, rather than be published fostered talent all over the world. in the New Yorker, which he could have “…He has a kind of yearning for utopia, an easy access to do. Ironically, of course, an Africa utopia. It’s because of his glorious the New Yorker had a headline ‘Binyavanga heart, his capacity for love. Once we had Comes Out’ a week later. Binyavanga had a fight and I was in the wrong but I didn’t to deal with the world press. There’s not a acknowledge it then. He taught me with single publication anywhere in the world grace what real friendship means and for that didn’t cover this event,” says Prabhala. that I will always be grateful. I love him, I Wainaina and his bizarre, bombastic respect him, I admire him, and I am glad world, is likely to write more headlines he finally listened to me about the cut of his yet. kaftans,” said Nigerian author, Chimamanda

Photos by Cynthia Edorh / Contributor via Getty Images

BY THOBILE HANS

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