A hearse arrives at 6AM on a chilly Wednesday morning in Paulshof, a suburb in the north of Johannesburg; relatives weep as the coffin is carried into the house. At the gate is a red carpet and cars galore. This is no ordinary funeral. It’s the burial of Peter Zulu, the man famous for his son, Gugu Zulu, a racecar driver who died while climbing Mount Kilimanjaro.
There are hundreds here and they have come to mourn at vast expense.
This is one of nearly half a million funerals that happen every year in South Africa alone. The business of death is worth an estimated R9 billion ($700 million).
It is thriving but plagued by the lack of regulation and crookery.
“There’s a lot of fraud that’s going on within the funeral industry. People are registered dead but they are not certified dead,” says Johan Rousseau, Executive Chairman of the Funeral Industry Reformed Association.
There is no standard pricing.
“The industry value hasn’t been even determined by Statistics SA because they only look at a small percentage of funerals and their contribution to the GDP but how can they do that when they don’t have the database,” says Rousseau.
“Why do you have to pay R1,500 for a grave site in East London, in the Eastern Cape and pay R400 in Gauteng? It doesn’t make sense to me. The insurance industry is using that unregulated market to sell their products and services, because they don’t have interest rates, by employing a funeral parlour as an agent to do all the work for them. The insurance industry doesn’t invest back into the funeral parlours at all.”
Rousseau says they want to create regulations that would set a standard and bring in investments to grow the economy, create jobs and assist emerging parlours.
“There are 25,000 parlours in the country, now we have to think how we advance them. We have to look at the laws because it excludes some of these guys from entering the market because they are renting facilities,” he says.
Stockvels are also not regulated.
The Tears And Fears Of Staging Funerals
Morongwa Broodie is one of thousands of entrepreneurs across Africa making a living from people dying. Dealing with dead bodies and grieving families isn’t everybody’s idea of making money – it’s her daily bread.
It’s a two-hour drive to the Broodie Funeral Parlour in Soshanguve, a small township north of Pretoria. Outside is a fleet of cars, down the road: a salon; a repair shop; a school and hundreds roaming about not knowing that the people who will carry them to their final resting place are just around the corner.
For a woman who deals with mourners everyday Broodie appears wearing a charming smile as she welcomes us to her office, where, on the wall is a CCTV monitor watching all the rooms.
She talks with her hands; she leans into the table to make a point. Broodie appears professional, clinical and tough – probably what this business needs. This is the queen of the business of death on her throne.
Little in her fiefdom fazes her.
“You want to start with the interview or should we go see the bodies first?” she says pointing at the CCTV showing a worker busy with a body.
Every morning, at 8AM, it is Broodie’s job to check the bodies and her premises.
“We have a meeting where we discuss previous funerals and how we can improve the business. Then I come to my office, I read my book, I Declare by Joel Osteen, it’s got 31 promises, this book keeps me motivated and it’s very relevant to every situation of the day. I then check my emails and do whatever needs to be done before closing at 4:30PM,” says Broodie.
Broodie bought the business in 2013, after quitting her job as a teacher her husband told her about the parlour and persuaded her to buy.
“I never imagined myself working in a mortuary, but when I saw the business, I realized I could do it. I worked with the previous owner for three months before I took over completely.”
Broodie describes the first time she saw a dead body as scary.
“The first time I saw a corpse it was an old man who was in a casket ready to go home. He was just sleeping peacefully. I touched him, he was cold. I tried to wake him up but he was still; that’s when I realized that he was dead. On that night I had a nightmare like there was a big casket next to my bed. I screamed,” she says.
“After taking over the business, the first person I saw was from a government mortuary, it was a gentleman. When they opened his body bag, his legs were literally on his chest, and the guy who was preparing the body just took the legs and was like here are the legs. I was so frightened,” says Broodie.
It didn’t take long to adapt.
“I went to the fridge every day; sometimes I’d go in the morning to see what they are doing when they pick up a body from home or at hospital so that I can have an understanding of everything. We are lucky that we see these people dead but what about doctors who do surgical operations, sometimes patients come with intestines out. With us it’s different, everything is just still. Then you understand that there’s no more pain here,” she says.
For Broodie it’s the death of children that upsets her.
“I become affected the most when it’s children, because seeing a small body lying there vulnerable is devastating. With older people we kind of already know they cannot live long,” she says.
Through all the stress the business is booming. Last year, they made over R7 million ($540,000) and employ more than 30 people.
“The way people are dying these days, there’s no week that goes without burials. Just in Soshanguve we have more than 40 funeral parlours and every week we meet at the gravesite burying people,” says Broodie.
Broodie Funeral Parlour buries five to eight people a day. Their caskets cost up to R580,000 ($45,000).
“We have five-star packages; we do elite funerals and have a number of burials we do per day. If there are more funerals, we move them over to the next day.”
“Death is more expensive than living. Let me tell you that we can run a funeral of R110,000 in a four-roomed-house. The way people plan for death is so amazing; they even take policies, excluding the groceries and the catering. We also did cremation with an expensive casket of R90, 000 ($7,000).”
The job isn’t easy.
“Sometimes we’re delayed because families don’t pay on time. We organize funerals within four days; we must get the programs, clothes, etc. On the day of the funeral they tell us that they don’t have money or policies, only to find that they’ve bought new clothes and catering is there, but when it comes to paying us they come up with excuses. We don’t do a funeral if clients haven’t paid for services in full,” says Broodie.
“When families enter the gate, and pass my office, I’d see them crying, sometimes they come in groups hurt and confused, I also become so emotional. This is a business that needs emotions and we have to be with the families until the end and give them comfort.”
Broodie feels safer with dead bodies than people.
“I usually say to my employees that the people at the back are kings and queens, in this business we need to treat them well. Those who give us problems are human beings who can ruin everything,” she says.
“I do routine check-ups; the people working at the back can put a lot of bodies in the fridge that aren’t even my clients. They can give other funeral parlours space and I wouldn’t know it,” she says.
Broodie has survived the tears and fears of the hard-headed business of death; she is capitalizing and plans to turn her business into a franchise.
‘I Couldn’t Even Look At The Face, I Was Too Scared’
At the Broodie mortuary, we are welcomed by a man in a white coat who looks like a professor. His name is Charles Khomo and his game is death.
Khomo, a morgue officer, has been in the business of death for three years. Every day he collects bodies at crime scenes, hospitals and homes.
“When I get here, I have to wash it and put it in a fridge,” says Khomo.
“Every morning I have to check on the bodies and whether the temperature is still on 0 degrees, not 10 or 20. It has to be cold all the time so that bodies don’t rot and smell. If the body smells, I have to take it out, wash it with chemicals so that it can kill the smell and put it back in the fridge,” says Khomo.
“Sometimes bodies come in a bag and full of blood, I have to clean and rinse it before putting it in the fridge.”
On this day, inside the mortuary, it is cold and quiet except for the hum of a ceiling fan. I get this strange fear and so does the photographer. We prefer the land of the living.
Khomo is busy with a body that’s going to be buried the next day. “You want to see, come and see,” he says.
A man is lying in a casket as though he’s sleeping peacefully. It is a surprise how comfortable Khomo is, considering he spends his day with dead bodies.
“When I first started working here I was scared. I remember they wanted finger prints of the dead for a death certificate. I was given a stamp and I couldn’t even look at the face because I was too scared. There was a time when a body came in a bag and the person was in pieces, he was run over by a train. I had to open the body bag; I couldn’t even tell if it was a man or woman. I had to do it because this is what puts food on my table.”
Psychologists counsel the more than 30 staff who work here. The most important thing here is cleanliness – they have to wear gloves, overalls, big white boots and a mask. The fan has to be on at all times.
“My biggest challenge is picking up an overweight person from a four-roomed house alone,” he says.
Pain often comes with the job.
“Last year, it was tough when I lost my mother in September to diabetes, my niece died while giving birth, my uncle and cousin died from illness in December. All four of my family members were lying in that fridge, at the same time. I hated this place but then I asked myself, if I can’t do this job who’s going to do it?” he says, shaking his head.
Khomo opens the massive fridge with three bodies, neatly tucked in cream body bags, each with a tag on the left foot.
“The toe tags are very important to avoid confusion and mixing up the bodies. On these tags we write the name of the deceased, who picked them up, where we picked them up and contact numbers,” says Khomo.
Just another day in the morgue.
A Funeral App? From Coffin To Amen In 30 Minutes
There is an app for everything these days. Now there is an app for funerals that takes you 30 minutes to arrange a burial.
This is the work of South African entrepreneur Lebohang Khitsane, CEO and founder of Bataung Memorials. The app was launched at the end of July. He named it The Jacob’s Bridge after his late father.
“It’s a portal where people can google funerals and coffins. It will lead them to our page which has a display of coffins and tombstones. We are also in partnership with different undertakers and we connect them with people depending on their preferences. We also connect people with clothing designers and psychologists,” says Khitsane.
“It is very convenient, they don’t have to go to mortuaries, we connect them with caterers, tents, decors, tombstones everything that has to do with a funeral. We want to save them time; people should spend more time mourning than running around searching for suppliers.”
It took Khitsane two years to build the app.
“A friend asked me to connect him with an undertaker that I know, I did. We did a checklist and managed to organize everything within 30 minutes, including tents, caterers, coffin. I said to myself this could be a lucrative business,” says Khitsane.
Entrepreneurship was always in Khitsane’s blood; his first business was a printing company, then he imported clothes from Germany. Khitsane was born and raised in Katlehong, a township east of Johannesburg; his father was a welder.
“I never thought I’d be in the business of death industry. My mother died when I was six and I hated going to the graveyard. But now I go there literally every day,” says Khitsane.
In 2004, Khitsane overcame his fear to found Bataung Memorials.
“The tombstones are characterized according to the personality of the deceased. If you are a musician your tombstone will have a stage and a microphone. A soccer player will have a pitch and a ball. Each and every stone has a story behind it.”
Khitsane’s work goes beyond the ordinary. He created a statue for former South African President Thabo Mbeki and Archbishop Desmond Tutu. In 2013, he created a braille tombstone for blind people and a barcode epitaph.
“People wanted long messages written on a stone and it wasn’t always possible, so we created a QR code that can be placed on the tombstone. When you scan it with your tablet or phone it immediately takes you to the photos, history and videos of the deceased. You can also leave a message of condolence for the family,” says Khitsane.
At a time when many businesses are struggling, the business of death is flourishing. Bataung Memorial’s annual turnover is $3 million. Their tombstones can cost up to R1 million ($77,500). Clearly death is as expensive as living.
“At the moment we are working on a tombstone that cost R2.6 million ($200,000). It’s huge, four meters high; it’s sitting on a 16-square-meter space of the grave. Its weight can be 34 tons. The foundations and concrete work is over R400,000 ($31,000) because we need to put proper foundations, beams and steel.”
Bataung Memorial has made 15,000 tombstones for African families living as far as Australia, Botswana, Zambia, Zimbabwe, Lesotho and Swaziland and Malawi.
His design of late South African actor Joe Mafela’s tombstone (a giant stone which is a portrayal of a lounge, with a TV and couch/sitting bench) was trending on social media, with many arguing over it.
As long as the deceased’s family is at peace, Khitsane is content. “It is a very sensitive business because we deal with emotional people and sometimes people tend to be unreasonable, but we have to redo the design until they are happy.”
(Photos by Motlabana Monnakgotla)
Lifting The Heavy Veil On Wedding Costs
With pockets as deep as gold mines, how far are couples willing to go to have the picture-perfect luxe wedding?
The lagoons overlook the snow-white beaches with its swaying coconut trees, embraced by the turquoise waters of the sea in the island nation of Mauritius. It’s a scene straight out of a movie, with a couple cavorting in the distance.
Over 100 guests from South Africa have also gathered on these sands for the weekend wedding of businessman Lebo Gunguluza and his long-term girlfriend Lebo Mokoena.
The total cost of this union: almost $300,000.
“I didn’t mind exceeding the budget, because you only do this once,” says new bride Mokoena.
The couple flew over 30 guests and provided them with five-star accommodation at the LUX* Grand Gaube. Part of the guest contingency included the behind-the-scenes crew for the wedding, as well as the speakers who had to spend four to seven days in Mauritius to prep up.
“We did not want to have a local wedding because we wanted our guests and family to have a different experience. We also wanted our family members who did not have passports and have never flown out of the country to experience a different country,” Gunguluza says.
The weekend celebrations started on a Friday last September with a cocktail meet-and-greet party. Belly dancers who were dressed in floral red and yellow danced the evening away with guests, with a local band taking them to the all-white party on Saturday.
This was just a build-up to the romantic wedding reception with shades of blush, ivory, and gold which was to take place on Sunday at 4PM.
“Every time I think about that day, I want to do it again,” the new bride says.
The couple chose not to have bridesmaids and groomsmen and the guests were encouraged to dress in black and white.
“I didn’t have bridesmaids because it makes you choose between your friends. I felt that if you got an invite to our wedding, you were worthy enough. So, we wanted everyone to be bridesmaids and groomsmen. I think we made it intimate and everybody felt like they were VIPs,” says Mokoena.
Everything fit perfectly as the bride’s two white wedding dresses were designed by Antherline Couture.
For the ceremony, she wore a white ball gown with a diamanté top heavily embellished with beads; while the groom looked dapper in a white tuxedo jacket designed by Master Suit SA.
The color white was indeed conspicuous.
“I have always felt that white is pure and because I was signing my life away, I felt I needed to be pure, hence I said my husband needed to wear white as well,” she adds.
The lavish white wedding was organized by renowned wedding planner Precious Tumisho Thamaga who ditched her seven-year career in Public Relations & Marketing to become an event planner.
Thamaga organizes events and weddings for affluent clients such as the Gunguluzas.
“They are busy people and they don’t have time to do the administration and the back and forth of vetting in suppliers,” Thamaga says, as she takes over the pain of wedding planning.
While working in the corporate world, she had attended many weddings that she felt were put together in a way that created a disconnect between the guests and the wedding couple.
“So I saw an opportunity in the fact that there were not a lot of wedding planners that were black,” Thamaga says.
She decided to focus on corporate clients in order to turn her passion into a profitable business.
“A lot of people did not expect a black person to be professional and take the business seriously.
“It was not just a hobby or someone helping out a family. It was an actual business and I made sure that I got taken seriously from the onset,” Thamaga says.
In order for Precious Celebrations (the name of her company) to prosper, she had to have a business strategy in place.
“I made sure that I put a lot of time and effort and strategized properly what it was that I wanted to actually focus on, and find a niche [in]. I believed that would separate me from somebody that was already in the industry,” Thamaga says.
However, her job is not always alluring.
“When I started in the industry there weren’t so many wedding planners and now it is a different story and everyone thinks it is easy-peasy and it is glamorous,” she says.
Planning a luxurious wedding takes eight to 12 months and can cost anywhere between R300,000 ($20,813) to R4.5 million ($312,203).
The most expensive wedding Thamaga planned was for a public figure she cannot disclose the name of.
“It was a destination wedding and the experience from when the guests arrived to the wedding day was memorable. When they arrived, we had a cocktail party and we had activities like canoeing and on Sunday we had an all-white party. [This is] so that people don’t depart on Sunday and may leave on Monday.”
Only the affluent sign up.
“The smallest wedding that I have had to plan had 80 people and it cost R2 million ($138,000),” Thamaga says.
She has turned away some clients in the past because their budget was insufficient for the type of wedding they envisioned.
Thamaga organizes 26 weddings, on average, annually, from countries such as Mauritius, Zimbabwe, Swaziland, Botswana and now she plans on taking her bespoke company global.
One of the unique aspects of her business is that she has maintained a good relationship with the suppliers she has in each country, and has kept her expenses to a minimum.
“The wedding planning-event planning industry is quite lucrative if you do it right. I am not the type that would have too much inventory because I want to feel like the inventory belongs to me; that would limit my creativity,” she says.
“I make sure that I don’t have a lot of expenses, I have coordinators that I have worked with for years and they have full-time jobs.”
Thamaga’s greatest challenge so far was whether or not to outsource other wedding planners when her business was increasing.
“It can be a bit daunting to realize that your business is growing,” she says.
But she opted to remain boutique.
“I had to decide that it is not about the money. I am building an empire where I want a legacy and an ongoing relationship with my clients.”
She involves her clients every step of the way to bring their vision to an unforgettable reality, and believes that weddings are expensive because of the growing aspirations of the young.
“It is not just in South Africa, it is worldwide,” she says.
Despite the tangible costs of conducting these dream events, the wedding industry in South Africa is largely unregistered as it is a fluid market where services and costs are difficult to track and document accurately.
Africans, no doubt, spend millions per year on costs associated with marital ceremonies. This is the reality of the unregistered wedding industry. Despite the recession and slow economic growth, the wedding industry continues to attract many entrepreneurs to its lucrative opportunities.
As, people never stop getting married.
The Marriages and Divorces report released by Statistics South Africa last May shows an upward trend in civil marriages. Civil marriages increased by 0.6%, from 138,627 marriages registered in 2015 to 139,512 in 2016.
A wedding dress is an important part of a celebration and the bridal couture market continues to show growth.
Wise Guy Reports Database Global Wedding Dress Market Insights, forecast to 2025, states: “The wedding market demand grows continually, and the wedding garments market has notable increase every year. In this case, the competition is also very intense among companies. The involved companies should seize the opportunities to expand the gold mine.”
A previous client of Thamaga’s has spent R200,000 ($13,876) on two wedding dresses and this is nothing for Fred Elu Eboka, a Nigerian designer who dresses delegates as well as the rich and famous.
He moved to South Africa in 1992 at a time when African designs were not being celebrated globally.
Twenty years ago, Eboka sold wedding dresses for R15,000 ($1,041) a piece, and now sells for R250,000 ($17,344) a piece, depending on the design.
“A designer of my caliber in South Africa is undersold because there are people in the United States selling wedding gowns for $250 and I am here selling them for maybe $80, it just doesn’t make sense. It shows that our economy is really bad because a designer of my caliber should be operating on the same level as them, or very close,” Eboka says.
He is a luxury designer.
“When you think of luxury, it is not just the product, it is not just the textile – it is the whole experience from when you drive in, to when you sit down and have the designer talk to you and learn about your life. The whole artistic process contributes to the cost value of the gown.”
He says that the reason wedding gowns are expensive is because they are meant to be timeless pieces.
“Traditionally, wedding gowns are classical couture. It is not like the normal evening dress that you wear to look beautiful on one night. A wedding dress is like training for the Olympics. You train for them for the rest of your life,” he says.
Eboka also says when designing a wedding gown, you need to take time to know the client, family and their fancies in order to meet the clients’ need.
The material of the wedding gown is usually expensive because he sources the textiles from across the world, and he takes two to three months to create a gown, depending on the embellishments.
“My designs have a lot of artistry,” he says.
Eboka is a wealthy man but he still believes that the industry is not as lucrative as it could be.
“But we do well, without being arrogant about it… You have to be fully aware of the industry and have the intellectual capacity to understand the potential of the market,” he says.
Pictures are an important element of a wedding because they capture the moment for life.
International award-winning photographer Daniel West meets his clients in a restaurant so he can get to know them better and learn the history of their relationship.
“We, as photographers, need to click with each couple, it is actually vital because we are going to be in their space from the beginning to end.
“So, when we do not gel, we are going to find ourselves in an awkward situation on the day because we, as photographers, are also problem-solvers. We don’t just take pictures on the day,” West says.
His packages start from R18,000 ($1,248) to R60,000 ($4,163) and he says it is because the couple is paying for the quality of the work. His packages include waterproof genuine leather-bound photo albums that he says last a lifetime, as well as 500 images that are both edited and unedited. He also arranges the location for the photoshoots.
“It is more than about taking pictures on the day, anybody can take pictures but the work that I do has more of a boutique feel,” he says.
“You pay to have something like this on the table that will last you a lifetime,” West says.
He does not only take pictures on the day but the photoshoots can take up to three months.
“Each couple that I take pictures of has a different story and that is where I draw my inspiration.”
West says that it takes a while for the business to get to a point that is profitable because photographic equipment is expensive.
“In the beginning, it is unfortunately not lucrative because you have to look into getting the equipment that is up to standard, however, it took me about seven years where I could get to a point that I could make a business out of it,” West says.
His annual turnover before expenses is R800,000 ($55,502) and he has about 25 clients a year.
He believes that the industry is regarded as valuable in South Africa and it is growing because people are becoming more enlightened about the photography industry. And social media has become an important motivator driving this industry.
“It is vital to have a good photographer for your wedding, because you as a bride are not quite educated of what is out there and what is not [in terms of photography].”
A good photographer needs to have foresight.
“The quality and charisma of your photographer is really one of the most important things you pay for because if something were to go wrong on your wedding, like rain, what does your photographer do? Do they stand back or make a plan?” he says.
Other luxe services associated with weddings include limos and chauffeur services, and florists, live music bands and gourmet caterers flown from around the world. The more money you are willing to throw, the more sparkling the champagne, crystal and caviar on the beach
Why Science Matters So Much In The Era Of Fake News And Fallacies
Democracy and social progress die without science and fact-based knowledge. Science and facts are the foundational basis for rational and logical disputation and the possibility of reaching some truths.
Fake news, on the other hand, is a calculated assault on democratic freedoms.
The power of the notion of fake news and of its practitioners is demonstrated by how we have all quickly come to accept that there is a category of news called fake news. By doing so, we are running the real risk of being complicit in its legitimisation. My point is: if it’s fake then it’s not news. There is news, and then there is fake stuff, dodgy facts, distortions and lies.
So what’s the connection between science, knowledge and facts?
What makes good science
Science is one important means of producing knowledge and getting to what approximates the truth. Good science results from rigorous processes. Part of the rigour in science and knowledge creation is the peer review process, which is a means of ensuring not only the correctness of facts, but also transparency.
Science must generally also meet the test of replicability. These days data used in scientific experiments often also has to be preserved so it can be assessed or analysed if results are disputed. Ethical norms also govern scientific experiments to prevent harm.
Science is not the absolute truth. Scientific findings are the beginning, not the end, of the quest for truth. Empirical data used in science that can be verified forms a sound basis for robust discussion, debate and decision-making. Science brings a degree of rationality that creates a higher probability that the best interest of society or the public interest will be taken into account in, for example, decision-making.
Science, then, is the habit of exercising the mind to help think through especially difficult and complex phenomena.
This makes science important in the exercise of democracy. This isn’t possible without facts and information that enable – or aid – voters to make an informed choice in elections, for example, or help the making of sound policies that best promote the public interest. Science also enables discerning members of the public to make sense of their worlds and the world.
So-called fake news
Fake news, on other hand, is a set of at worst, manufactured or concocted facts that are a perversion of reality. It is the direct antithesis of science.
But fake news isn’t new. It’s as old as news itself and has a variety of aims, including propaganda and spin doctoring. It can be argued that the growth of spin doctoring in the 1990s is the precursor to the exponential growth of fakery. It has also been enabled by the decline of content that enriches public discourse in the context of commercialisation and concentration of media since the 1980s.
These developments led to a decline in the influence of public interest media or media that strikes the balance between commercial enterprise and the public good. And this has led to the reduction in the kind of news and media content that focuses on science.
Science journalism and investigative journalism, in particular, have seriously declined. This has meant that the ability to shine a light on the dark areas of lack of knowledge, superstition, and myths has seriously been diminished.
Specialist reporting is now confined to the content-rich ghettos of those who are highly educated or interested.
Another reason for the growth of fake news and its increasing influence is the loss of confidence in public institutions, including media institutions and the profession of journalism. Fakery has risen to fill the vacuum, driven by individuals and political organisations who position themselves as messiahs with instant solutions to multiple social crises. In their discourse knowledge institutions, science, facts, evidence, experts and reason or rationality are thrown out of the window as the sophistry of the elite.
The role of social media
Digital technologies and social media have made it much easier to produce and disseminate fake news. It is a paradox: unprecedented scientific advances and technologies are enabling us to transcend traditional constraints of distribution and literally place information at people’s fingertips. Yet these same technologies seem to facilitate more fake news and information that doesn’t necessarily advance the public good.
In addition, social media largely exists outside the professional norms of fact checking and the use of evidence to support assertions, arguments and positions taken in relation to social phenomena.
Fact checking and peer review are more important than ever because of the reality that false information now flows freely. This can be extremely harmful, particularly in public health campaigns.
The attraction of fake news is its apparent simplicity. It has a ring of truth around its claims, even when these are outlandish, and its ability to seem to resonate with what people think are their life-worlds or everyday life. Its ability to reinforce stereotypes, including prejudices, makes a bad situation even worse.
Science, facts and knowledge will save humanity
Science journalism and investigative journalism which seek to pursue the truth rather than just the reporting of events, are critically important in this age of fake news and fallacies.
It is not an exaggeration to say that the sustainability of the idea of humanity and the environment in the broadest sense of the word depends on science – or the respect for facts, evidence and experts.
Science that allows the public to have a nuanced understanding of life is important to building inclusive, open societies that enable public participation in decision making and progressive social agendas. Science disseminated in ways that are understood by the public and resonate with their life-worlds is important for building trust in reformed institutions and creating new forms of social cohesion in diverse societies.
–Tawana Kupe; Vice-Chancellor and Principal of the University, University of Pretoria
Entrepreneurship Funds In Africa: Distinguishing The Good From The Bad
Entrepreneurs have a pivotal role to play in Africa’s unemployment crisis. Today over a third of the continent’s young workforce (those aged 15-35) are unemployed. Another third are in vulnerable employment. By 2035, Africa will contribute more people to the workforce each year than the rest of the world combined. By 2050 it will be home to 1.25 billion people working aged.
To absorb these new entrants, Africa needs to create over 18 million new jobs each year. Governments need to put in place policies that drive economic growth and competitiveness. These in turn, will enable the growth of small and medium-sized enterprises (SMEs). This is important because they currently play a significant role in low-income countries, representing nearly 80% of jobs. They are also responsible for 90% of new ones created each year.
The challenge for countries is how to support the growth of SMEs. Various African governments have experimented with ways to help address the US$140 billion funding gap for startups and SMEs. For example, one approach has been to set up entrepreneurship funds.
Based on my experience of watching their performance over the past 18 years, I would issue some words of caution. Some entrepreneurship support models work better than others. And how they are set up – particularly the governance structures put in place to manage them – is key to their success, or failure.
Access to financing is consistently listed as the biggest obstacle to business for SME’s in African countries. They often face double digit interest rates from local banks. And venture capital penetration is still extremely low. Top end 2018 estimates put it at about $725 million for the whole continent.
To tackle the problem, African countries continue to start new entrepreneurship funds. In July 2017 Ghana launched the National Entrepreneurship and Innovation Plan. The aim is to provide integrated national support for start-ups and small businesses.
Almost a year later, Rwanda secured a $30 million loan from the African Development Bank for the establishment of the Rwandan Innovation Fund. This will focus on investments in tech-enabled SMEs.
As new funds are started, African countries must look to the successes and failures of both global and regional funds to replicate best practices and avoid common pitfalls. African governments should explore replicating models similar to Small Enterprise Assistance Funds and the USAID backed enterprise funds. Both include robust investment selection criteria for funds.
In doing so, African government-backed entrepreneurship funds would operate as fund-of-funds – where a fund invests in another private equity or venture fund rather than directly in businesses themselves – as do many development finance institutions globally such as the UK’s CDC or FMO of the Netherlands.
The what and the how
The fund of funds structure creates an arm’s length relationship between the government agency that houses the entrepreneurship fund and the businesses that eventually receive investment. In between, sits a professional fund manager that earns the majority of its income from making good investments, growing companies and exiting them after a period of five to seven years. In this way, there are natural disincentives for corruption and market-based selection criteria for the entrepreneurs who receive investment.
How the fund managers are selected also matters. To ensure true investment independence from the government, fund managers and board members must be chosen in a transparent and competitive process. And once selected, representatives of the government entrepreneurship fund agency can sit on the investment committee for oversight purposes but should respect the fund managers’ independent decision-making.
There are examples of funds being set up without the necessary independent, accountable fund managers. One is the YouWin program in Nigeria. Created in 2016, it was set up to help youth entrepreneurs grow businesses. But senior civil servants handed out awards to friends and relatives.
Government supported fund managers through the FoF model can also catalyse additional investment. By operating in markets and sectors often ignored by traditional private equity funds, Small Enterprise Assistance Funds and enterprise funds have mobilized additional capital for investment-starved companies. African government-backed entrepreneurship funds could do the same by participating in blended finance deals with development finance institutions, social-impact investment funds, local banks and other market players to back growing firms.
While not actively managing the funds’ portfolio investments, governments have a key role to play in guiding the funds priorities. Priorities may vary by country and given Africa’s growing rates of unemployment, funds should prioritise job creation by evaluating investment on key performance indicators. These would include the number of jobs created per dollar invested, indirect jobs created per dollar invested, and average salary of job. In addition to job creation, governments can direct funds to focus on specific sectors either in need of increased capital or high-growth areas in local economies.
Beyond establishing investment criteria, government-backed funds should prioritise rigorous measurement of investment results and long-term data tracking to inform future investment decisions. The UK British Bank regional growth fund found the cost per job created varied considerably by project from £4,000 to over £200,000. It concluded that a better allocation of funds could have led to thousands more jobs created for the same resources.
Data driven investments can not only lead to a better results, but further curtail issues around potential mismanagement of funds.
Tackling Africa’s job creation challenge requires innovative thinking and initiatives that support private sector-led growth. Looking to the model of Small Enterprise Assistance Funds and enterprise funds, African governments can spur local ecosystems and drive new private capital to regions today seen as unfriendly or too risky to outside investors.
Properly structured investments today could yield much larger dividends tomorrow.
-Aubrey Hruby; Senior Fellow, Africa Center, Georgetown University
World’s Highest-Paid Athletes 2019: What Messi, LeBron And Tiger Make
Beyoncé And Jay-Z’s Combined Billion-Dollar Fortune Makes Them One Of The Richest Self-Made Couples
Lionel Messi Claims Top Spot on Forbes’ 2019 List Of The World’s 100 Highest-Paid Athletes
Mysterious Object Under Moon’s Largest Crater Found By Scientists
‘There Will Always Be A Need For Live Art’
Arts2 weeks ago
Artist, Icon, Billionaire: How Jay-Z Created His $1 Billion Fortune
Wealth2 weeks ago
How Rihanna Created A $600 Million Fortune—And Became The World’s Richest Female Musician
Opinion4 weeks ago
Why Now Is The Time To Invest In African E-commerce
Lists4 weeks ago
The World’s Most Reputable CEOs 2019
Featured3 weeks ago
Executive Protection: Big Bucks, Bullets And Bodyguards
Wealth2 weeks ago
The Big Bank Theory: South Africa’s Banks Of The Future
Woman2 weeks ago
Rallying Young Africa
Billionaires3 weeks ago
MacKenzie Bezos Will Donate Half Her Fortune To Charity