Crossing Pont Félix Houphouët-Boigny in Abidjan, you get to see Côte d’Ivoire’s dichotomy clearly. In front of you, mid-rise buildings glow with neon lights through the darkness: Pepsi, Mitsubishi, MTN create a mask that hints at prosperity. But the queues of young men waiting on street corners and the cranes pecking at the drifts of garbage on the water’s edge tell a different story.
Once the region’s most sophisticated economy, Côte d’Ivoire is now a case study for the economic impact of conflict and political paralysis. But even though its election descended into violence and the country teetered on the brink of another civil war, the much-delayed completion of the transition from post-war junta to democratic state has put Côte d’Ivoire back on the path to regaining some of its former glory.
A shaky cease-fire, signed in 2003 to hold the country together after an attempted coup, led to a government that controlled the south—under Laurent Gbagbo—and a north run by Forces Nouvelles rebels.
During that limbo, investors talked about the country’s potential and the build up of money that was waiting to be released once the election finally passed. But it was delayed, then delayed again, until it seemed as though the delay would be interminable. While regional neighbors, such as Ghana, saw their economies boom and attract international investment, Côte d’Ivoire was in stasis.
In November 2010, there was one last twist. The incumbent old warhorse Gbagbo refused to yield, leading to a violent standoff. The victor, Alassane Ouattara, formed a government within the compound of the Golf Hotel in Abidjan, protected by a ring of UN peacekeepers while militias fought in the city around them.
Escalating international pressure and financial sanctions eventually led to the collapse of Gbagbo’s support. Ouattara, a former International Monetary Fund official, took over in April last year but not before the country had defaulted on its bonds by failing to make coupon payments to international creditors London Club, while its assets were frozen.
His early achievements—in reassuring investors that the arrears would be repaid and getting backing for debt relief from France—were encouraging, and today in Abidjan there is a cautious optimism. The city is not visibly transformed from two years ago, but construction projects are restarting and traffic is building. Though the change has not been dramatic, the lifting of the deadlock means that companies can finally plan beyond the short term.
“There’s a sense that a lot of things are possible,” says the director of the private equity firm Emerging Capital Partners’ (ECP) Abidjan office, Brice Lodugnon. The security situation has improved and there’s some certainty over the direction of the government, which has pledged to increase spending on infrastructure and agriculture.
The good news is that at least around Abidjan, infrastructure and utilities still function. There are good companies in many sectors and a relatively strong system of governance. Key industries, including financial services, are competitive and the country is still the world’s largest exporter of cocoa. But while Côte d’Ivoire has some of the political risk of a post-conflict environment, it does not have an abundance of underpriced opportunities. That’s a problem for investors.
Even before the crisis, there were tentative expansions into previously politicized industries, including cement making and flour milling, with companies from North Africa, as well as the country’s large French and Lebanese expat communities, moving into manufacturing and processing. Agribusiness group Olam has pledged a further $200 million in investments, while ECP is expanding its portfolio in the power sector. Rather than looking for a new cohort of investors, Ouattara’s government might find more support from those existing players, now free to make long-term plans.
Many businesses were battered by the 2011 crisis but now stoically downplay the human cost of that period, talking instead of the relief at their newfound ability to plan beyond the short term. Still, the scars are there. At the height of the violence, pro-Gbagbo forces executed one of the country’s largest foreign investors—Yves Lambelin, the former president and patriarch of Sifca. That story gets told regularly.
International investors speak highly of Ouattara. One CEO of a multinational operating across the continent said that the president—while his ability to create a government is unproven—is one of the most accomplished leaders in economic planning in Africa.
Politics are bound to be difficult. An hour’s flight north of Abidjan is Ouattara’s hometown of Bouaké, until recently the headquarters of the Forces Nouvelles. There, the difference in development is marked. The roads are in worse condition and the security presence, in the form of UN peacekeepers from Pakistan, are far more visible. People living there refer to the country’s “reconstruction”.
Further up country the situation is worse, with an entire generation denied access to education after the southern government abandoned schools. An executive in a cotton company, with an extensive presence in the north, called the state of some areas “appalling”.
Making sure that the country’s redevelopment is even and that the government—headed by a northerner—does not re-open divisions that are still fresh, will be a massive task for the new president.

Healing The  Divide Will Be  No Easy Task

It is tempting to see the KAZA Transfrontier Conservation Area (TFCA) as a country in the making. But reality falls short of this—at least for now.
The project is so breathtaking in both its scope and ambition that it does inspire dreams of a different tomorrow for a region that is still suffering the miseries inflicted by one of the most brutal wars in recent history. After nearly four decades, the anti-colonial conflict that turned into civil war and at stages involved South Africans, Namibians, Angolans, Cubans and, in surreptitious ways, even the Russians and Americans, came to an end 10 years ago when Angola’s Unita strongman Jonas Savimbi died in a hail of bullets.
<div id="attachment_621" style="width: 210px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-621" class="wp-image-621 size-medium" src="/wp-content/uploads/2017/04/IMG_2009-200x300.jpg" alt="" width="200" height="300" />Dr Victor Siamudaala program manager</div>
Part of the wonder of the project is that the vision for turning the area into a “peace park” started taking shape immediately after the Angolan civil war ended.
“KAZA” stands for the Kavango and Zambezi rivers, with the territory including adjoining sections of Botswana, Namibia, Angola, Zambia and Zimbabwe. Its map is practically a state in its own right.
The binding factor is the region’s exceptional natural beauty, including the Victoria Falls, the Okavango Delta and the vast elephant herds traversing its plains and swamps. The area’s relatively sparse communities are so distant from the heartland of their respective states that most of them probably associate more closely with each other than with their countrymen.
Of course, Zimbabwe and Zambia would not dream of ceding those spectacular falls thundering between them. Neither would Botswana consider letting go of the Okavango and the Chobe National Park. These are their countries’ signature natural wonders, and they are the geese laying those golden tourist eggs.
But it is to the credit of the five governments that they have agreed to join these adjacent portions of land in a transboundary scheme that comes to a mammoth 444,000 square kilometer chunk of Africa, with conservation at its heart and tourism as the economic objective for the 2.5 million people living there.
At last year’s Southern African Development Community (SADC) meeting in Luanda, the countries’ leaders issued a declaration when they signed the KAZA TFCA treaty, which came close to conferring a kind of satellite, if not colonial, status on their shared holding.
It said: “The KAZA TFCA shall become an international organization with a legal persona, capable of entering into contracts, and acquiring and disposing of property. Institutions established through the treaty to govern the TFCA, particularly its secretariat, will be empowered to ensure that the objectives of the treaty are realized and corresponding strategic plans and protocols implemented.”
The project includes a range of national parks, game and forest reserves and conservancies. Although these are in varying states of repair, many can be linked across boundaries and through corridors to become mutually supportive within a broader framework that will have nature-based tourism as its main industry. There is even talk of a “KAZA visa” to ease cross-border traffic within the territory.
The scheme has the backing of the German and Netherlands governments, the Swiss Agency of Development and Cooperation, the Peace Parks Foundation and the Worldwide Fund for Nature. Victor Siamudaala, the program manager, is a veterinarian from Zambia. His secretariat is based in Kasane, the charming north-eastern Botswana town where it is not unusual to see elephants wander through, or pedestrians casually step around warthogs scuffling on the sidewalk.
The secretariat is at the center of an intricate bureaucratic web that gives practical effect to the scheme.
As explained by Werner Myburgh, chief executive of the Peace Parks Foundation, each country made a development plan for its particular part of the greater territory with the help of various government departments, the private sector and affected communities. The five plans were then aligned under the umbrella plan for the scheme as a whole. The result is a detailed plan showing how the boundaries run, which areas are earmarked for conservation and which for development, and what the infrastructural requirements are.
Each country has a coordinator who, together with the central secretariat, reports to a committee of senior officials, which is in turn overseen by a steering committee of five ministers from the respective governments.
The wide range of factors that need to be taken into account, including security, customs, veterinary, agricultural and conservation matters, require the involvement of several government departments in each country. Generally, decisions are taken by consensus, which makes the process even more complex.
It explains why the central secretariat, which drives the program’s implementation, prefers to abide by the governments’ jointly approved statements.
But the transfrontier project has caught on since its initiation in 2006. The official launch function was held on March 15, 2012 in the Caprivi town of Katima Mulilo where, under the magnificent trees along the bank of the Zambezi, the South African Defense Force had its forward base more than two decades ago.
The occasion was attended by more than 700 people, including the environmental and tourism ministers of the five governments, SADC’s executive secretary, Dr Tomaz Salamão, and traditional leaders from the five countries.
Myburgh says the sense of ownership of the joint project was tangible. He quotes Botswana’s minister of the environment, wildlife and tourism, Kitso Mokaila: “… (We) have emphasized in the KAZA Treaty… that we will own and lead the planning and development process of the TFCA. We take cognisance of the fact that our land and other natural resources are a valuable heritage of the five partner countries.”
Dr Salamão spoke of the project as a commendable achievement and “a true symbol of regional integration”, which is one of SADC’s goals. He saw it as “a door to further milestones that have the potential to change the lives of communities who live in the KAZA TFCA area for the better”.
The project is not without challenges. Land mines left by the war are scattered around Angola’s Cuando Cubango province that adjoins the Caprivi in the south and southern Zambia to the east. The mines were planted despite the Geneva Convention’s requirement that such areas be mapped, which makes them hard to locate. But, according to Myburgh, clearing has been going on for some time and remains a high priority.
The area includes the Luiana Partial Reserve, which, like rest of the area, was left stripped of game by the fighting armies. But already the vast elephant herds of Botswana have started migrating across Namibia’s Caprivi strip through Zambia, back to the vast woodlands where their ancestors once roamed without fear of soldiers and their explosives.

At The (Trans)frontier Of Conservation And Tourism

Africa has experienced stellar growth over the last decade. This growth has been supported by improved political stability, prudent macroeconomic policies, robust commodity demand and a growing consumer base. These factors are set to continue propelling African growth in years.
In the next couple of years, Africa is expected to be a key driver of global growth. The International Monetary Fund (IMF) expects sub-Saharan Africa to grow by an average of 5.4% between 2012 and 2013, compared to average growth of 1.6% in advanced nations over the same period.
Africa’s contribution to global growth is not going unnoticed. Cash-laden investors, benefitting from developed economies’ loose monetary policies, are looking towards the continent for investment opportunities as markets in developed economies offer less attractive returns.
Many reckon that Africa can capitalize on the economic and fiscal woes of the developed world to claim a bigger share of global growth. This argument is highly plausible. Europe, given its fiscal austerity measures which will constrain growth, is expected to remain in the doldrums for the next decade.
<div id="attachment_617" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-617" class="wp-image-617 size-medium" src="/wp-content/uploads/2017/04/Kofi-Anan-300x182.jpg" alt="" width="300" height="182" />CAPE TOWN SOUTH AFRICA, 05MAY11 &#8211; Kofi Annan, Secretary-General, United Nations (1997 &#8211; 2006)</div>
The opportunity is undeniable for Africa, but with opportunity comes responsibility. As such, WEF’s theme this year could not be more appropriate. Africa is on the brink of major transformation and how this transformation is handled will shape the future of millions of hopeful Africans.
To attain the aspirations of the continent will require out-of-the-box thinking; generating creative ideas that can propel Africa to greater heights. However, ideas, no matter how grand, will remain just ideas if not coupled with bold and visionary leadership. There is no better time than the present for Africans to become doers as opposed to merely talkers.
With the flood of ideas, it is up to African leadership to come to the fore—only when African leaders realize this fact and accept the honor and responsibility of leadership, will these ideas translate into tangible results on the ground.
Unfortunately, Africa leaves a lot to be desired in the leadership category. Political developments in some parts of the continent are evidence of this. This mentality could change with the memories of the Arab Spring still fresh. Recently, the masses in Mauritania protested against President Abdelaziz and his government’s ‘anti-democratic policies’. There is a real risk for unrest in sub-Saharan Africa as people grow increasingly frustrated with poor leadership, which perpetuates underdevelopment and poverty.
Strong leadership is the foundation of Africa’s transformation. Africa needs to invest heavily in both social and economic infrastructure. In terms of social infrastructure, Africa needs to direct significant resources towards health and education. Growth and development will only occur in conjunction with a healthy and skilled population.
According to the World Bank the number of people living in extreme poverty halved in 2010. But more needs to be done, especially in Africa where the challenges are greatest. Robust investment in health and education will go a long way to achieving the United Nations Millennium Development Goals (MDGs).
Equally important to social investment is investment in capital infrastructure. Africa needs to direct enormous resources towards infrastructure development to ensure economic growth in years to come.
Regional economic integration has also been highlighted as key to the growth of the continent. According to a 2010 McKinsey &amp; Co. report, intra-African trade accounts for just 12% of the continent’s total exports. By comparison, regional trade in Western Europe accounts for 61% of exports. African leaders need to take the opportunity to boost economic ties between their counterparts and work towards enhancing trade networks to take advantage of the continent’s growing consumer market, thought to be worth at least $860 billion.
African governments have already taken heed. Almost each and every country on the continent has earmarked significant resources in their budget for infrastructure development. South Africa, the continent’s biggest economy, has budgeted R845bn ($108 billion) over the next three years for capital expenditure.
Infrastructure development will be wasted if not accompanied by regulatory enhancements that improve the ease of doing business on the continent. Africa lags behind the rest of the world in terms of the ease of doing business and governments need to eliminate red tape to ensure that their economies are conducive for business. This will ensure that business invests in that economy, which will translate into job creation, in turn denting the continent’s worryingly high youth unemployment.
The fact that 2012’s WEF on Africa being held in Addis Ababa, Ethiopia, is in itself significant. Ethiopia is the second most populous country in sub-Saharan and a prime example of Africa’s fastest growing economies—according to Ernst &amp; Young, Ethiopia is set to grow an average of 7% over the next decade; well above the average growth of 5% predicted for the rest of the continent. WEF Africa will attract global and pan-African leaders who will help shape Africa’s transformation to ensure that the continent takes its rightful place in the global economy.

The Time For Africa To  Cash In Is Now

The South African Reserve Bank (SARB) has admitted that not all required quality criteria were met in the production of krugerrands by the South African Mint—which is wholly owned by SARB.
Tests on certified krugerrands have been carried out in the presence of FORBES AFRICA journalists. The results show that some contain less than the required amount of gold. The highly-valued collector’s items make up an industry worth billions of dollars. Depending on the gold price a one ounce, proof krugerrand is worth around $2,000.
<div id="attachment_613" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-613" class="size-large wp-image-613" src="/wp-content/uploads/2017/04/IMG_2917-1024x683.jpg" alt="" width="474" height="316" />Patrick Willis</div>
Patrick Willis, a South African gold investor of 12 years, is behind the claim. He noticed that a number of his krugerrands were losing their lustre—often a sign of too much copper and zinc. These are base metals used to strengthen the gold and decrease wear and tear.
“The issue is that they are under spec. I made the discovery about the colour. It has not happened anywhere in the world, where a national mint produced coins for sale that are under spec,” said Willis.
Tests on several krugerrands found that some were “under specification”—as they say in the trade. By law each krugerrand has to contain at least 91.7% gold. This measure is so important that international gold mints often include a small amount of ‘extra’ gold to ensure they reach the stipulated requirement. A gold assay test proved that one of the coins in question had merely 87% gold. That is nearly 5% less than it should be.
“If I see such a result, I will panic. I’m not pointing any fingers. This is quite anomalous [referring to the 87% result]. I’ve never seen something like that on a coin before. It cannot be explained by sample prep [the margin is too large]. That is a big red flag right there,” says Jaco le Roux.
He is an employee of Spectromed—a company which sells and conducts tests using Niton XRF analyzer guns—who tested multiple krugerrands using the Niton analyzer in front of FORBES AFRICA journalists to verify the results.
The disgruntled krugerrand owner took up the issue with SARB. Natanya van Niekerk, acting head of numismatic coins, at the SA Mint replied:
“As the krugerrand is the flagship of the South African gold industry and has reputational value to South Africa, we will leave no stone unturned to rectify the situation. I am of the opinion that the coins in question are now strictly speaking illegal and that the Reserve Bank has the right to demand all the coins to be returned.”
Hlengani Mathebula, head of group strategy and communications at SARB released an updated media statement on April 13, claiming: “…investigations into the matter have revealed that some of the proof krugerrand coins casted between April 2011 and May 2011 may not meet all the required quality specifications.” Early investigations show that of the 1,500 krugerrands minted in this time only six have, so far, have been found to be under spec.
The SA Mint called a meeting with a number of local and international dealers. They explained that the April and May 2011 batches were under spec. In his most-recent statement Mathebula continued, “…should any of the dealers have reasonable concerns that some proof krugerrand coins may not comply with all required quality criteria, they could return such coins to the SA Mint.”
At stake is the reputation of the gilt-edged SA Mint which created an optimum way in which to market South Africa’s gold. Kruggerrands are one of the safest and most effective ways to secure assets against uncertain markets. They are called ‘liquid gold’ since there’s never a shortage of buyers who can easily turn them into cash.
Willis risked devaluing his investments by performing Niton XRF tests and destructive fire assays on proof krugerrands. The SARB is threatening FORBES AFRICA’s anonymous source with legal action for “destroying legal tender” in order to conduct the fire assays. During a fire assay test, the metal object is smelted to determine its composition. However the concentration of gold would not be accurately proven, without such procedures. This is because the Niton analyzer is not a certifiable method of testing gold quantity. It is not as accurate as a fire assay. However results can be proved against known certified materials.
“The Niton analyzer gives a chemical analysis within a couple of seconds. It quantifies content and concentration in metallic objects. The results are shown onscreen. Its limiting factor is that it depends on the sample prep. If the sample is not clean, or flat or contains impurities on the surface, the results may be misleading,” says le Roux.
The same sample underwent a fire assay at two independent refineries. The results from First Refinery showed it was 87.40% gold while the results from Rand Refineries showed 87.46% of gold concentration. These results prove that the Niton analyzer was fairly accurate in comparison to the fire assay. When the SA Mint was alerted to the results on October 25, it collected the samples and test results to conduct their own investigation.
“Our assay indicated that this batch was in spec when we casted this. If we are at fault, we will make it good to the customer as we followed our procedures and something could have happened. We want to know what happened to ensure it is not repeated in the future,” wrote Tom Davel—while he was still in office—in correspondence with our source.
There is no proof that this is linked to the suspension of both the managing director, Andile Mvinjelwa, and the general manager of Numismatic Coins, Tom Davel on December 8. Their press release stated: “The board has become aware of certain technical issues within the operations of the South African Mint Company. Investigations into the matter have been instituted and are ongoing.” No results from the pending investigation have been produced.
In the statement related to the two suspensions at the SA Mint last year, Mathebula said, “The Mint is a high-security area for SA and I cannot reveal any details of the operations. There are no irregularities. Technical operational issues are being investigated.” He maintained that the suspensions could “never be related to fraud.”
A disappointed Willis said, “Surely, that kind of company would want to be transparent with everybody, seeing as it is a touchy subject and a worldwide distributed product from South Africa. If I were a dealer in South Africa or any other country, and I had coins which were part of the batch that is said to be under spec, I would certainly want to return them to the SA Mint and say ‘give me back my dough.’”

All That Glitters  May Not Be Gold

It was a phone call in the fast lane. The call on the highway told Ndaba Ntsele, co-founder of Pamodzi Investment Holdings and chairman of Rand Uranium and Foodcorp, that his company was soon to be no more. It ushered in his worst day and was the start of a long, tiring battle to save Pamodzi Gold Limited (PG). The call was from a journalist asking how he felt about his company being liquidated. A shock, especially when creditors had assured that liquidation was not on the cards.
With members of his management team calling to confirm the news, Ntsele knew he had his work cut out for him—you could call it his worst year.
At stake was a black-owned and controlled gold exploration and mining company, formed in 2004, and listed on the Johannesburg Stock Exchange (JSE) in 2006. With a market capitalization of more than R700 million ($112.5 million), PG was all set to be a success. The company acquired mines in the Free State and Gauteng that were no longer viable for the big mining companies. As not all the mines were bought with cash, share options upon listing were offered as compensation. The biggest shareholder was Harmony Gold.
“The mines were in a terrible state at first. We knew we’d have to raise cash to rehabilitate them. Thirty million rand ($3.9 million) would just about do it. You can’t play the game if you don’t have any marbles,” he says.
Ntsele is a self-made entrepreneur who started out selling apples for his aunt to earn money for the movies. He graduated to running busy street corners and hiring vendors to man them. Then he made it in property during the apartheid era and rose to be the CEO of Pamodzi Investment Holdings.
Following the mine deal, the company needed money. The R200 million ($24.5 million) secured from the Industrial Development Corporation (IDC) —a national development finance institution—with security of R800 million ($98 million) was not going to be enough and another R200 million was needed.
By 2009, the company had its Free State assets—a mining complex and plant, along with Orkney mines and East Rand assets, running well. Then the black cloud of liquidation descended, a mere four months after signing the five-year loan with the IDC. Five thousand three hundred jobs were on the line.
“People were gunning to liquidate us,” says Ntsele. He wanted more time. The Free State assets and Orkney mines were, on his account, valued at a joint R1.4 billion ($146.5 million). Nevertheless, the IDC applied for PG to be liquidated, to the surprise of Ntsele.
“We went to them, we asked them if they would do this and they said no,” says Ntsele.
Things were set in motion; the provisional liquidation of the mining company’s assets began and its shares were suspended from trading. The vultures were circling.
Harmony Gold became the front-runner for the Free Sate assets. The company and its assets, now under the authority of the provisional liquidators—headed by Enver Motala—steadily deteriorated and soaked up more and more money.
Everyone went to their corner and prepared for a fight. Ntsele went all over the world to secure funding, from North America to the Arab states, but the global meltdown proved a formidable opponent. Investors and countries were closing shop.
The company had a lot of support from its employees, one of whom introduced a company called Best Rock Investments to Ntsele during one of his mine visits. At first sight everything looked great.
“These were Americans. Americans are smart, they were speaking of places I knew, had fancy degrees on their walls, the funding was approved and all that was left was to wait for authorization codes.”
The deal came to nothing and it was back to the drawing board for PG’s management team. Time was against him.
The Chinese were not fazed by the meltdown, they had money to burn. Ntsele came out to say he had secured R626 million ($65.5 million) from the China Africa Development Fund. Nonetheless, skepticism was rife.
Ntsele still cannot understand why it was so hard to believe they were capable of this; they had managed to raise R1.3 billion ($140 million) for Rand Uranium, an independent resource company, before.
“I have the letter from the Chinese in my office. They had a balance sheet,” says Ntsele.
According to him, a meeting was set up at the PG offices in Melrose, a Johannesburg northern suburb, by the Chinese to negotiate a compromise with Motala. The Chinese were willing to cough up some interim cash.
While the Chinese and PG’s management waited in the boardroom, Motala was 10 minutes away at the CNBC Africa studios to announce that PG was to be liquidated in its entirety and Aurora Empowerment Systems’ interest in PG’s assests.
It was again an annoying telephone call that informed Ntsele of the company’s fate.
“They [CNBC Africa] gave me a chance to get there and be part of the show. I’ve known this boy [Zondwa Mandela, managing director of Aurora] his whole life. I told them that I don’t think that he has the money or experience to buy,” a trace of betrayal showing on his face.
Ntsele says he managed to have a private chat with Motala, who told him (Ntsele) his own brothers had told him to do it.
“These things happen. That’s the nature of this biz called business,” Ntsele says in all his philosophical glory.
As the whole saga played out, Ntsele went from saying: “We will try to retrieve everything. It will be a battle. It won’t be easy, but we will try to save jobs and everything,” to a final: “I’ve thrown in the towel.”
Why the drastic change of heart? you might ask. It’s simple: “It was difficult to fight all these people; the cost to the company would be too much. I asked myself: ‘Should I keep on fighting?’”
Ntsele’s biggest qualm is that people were blind to the fact that PG accounted for only 3% of the whole Pamodzi portfolio and chose to see it as one company.
A last word from the businessman, who sold apples for his aunt, is that this [PG] was not the only bad apple. It just happened to be the only publicly listed one.
<h3>What did he learn?</h3>
“Protect yourself, even if you think you know all the players very well. As an entrepreneur, the first job is to trust your gut. It’s got you this far, but always have something to back it up. Lastly, this is a money game, but most importantly, it’s an assets game. You need to have more marbles [money] than you need.
“Property taught me to always have a war chest, but we forgot that. There was no need to give the IDC R800 million ($98 million) as security; half of that would have been enough and we could have had some security of our own.
“You learn as you go. You need to see failures as good lessons and you don’t get that from business schools.”
&nbsp;

Hello?  Your Business  Is Closing

In Aliko Dangote’s new book, Dangote’s Ten Commandements on Money: Lessons on How to Make Money from one of the World’s Richest Men, Nigeria’s richest man pays a visit to Kings College, Lagos. While there, signing autographs for a crowd of students, he notices a quiet 12-year-old student called Mike. In a manner reminiscent of Jesus selecting his disciples, Dangote reaches out to the boy and decides to mentor him. Young Mike spends the next four years combining school with keeping up with Dangote’s punishing cross-continental schedule, taking lectures from the billionaire, based on the ten commandments of the book.
<img loading="lazy" decoding="async" class="alignleft wp-image-599 size-medium" src="/wp-content/uploads/2017/04/136731838-194x300.jpg" alt="" width="194" height="300" />
That tale, albeit pure fiction, is an attempt to illustrate something that lies at the core of Dangote’s personality: his strikingly unassuming and down-to-earth nature; as well as his commitment to bettering others.
Those privileged enough to meet Dangote like to trade stories of his self-effacing manner: the billionaire walking unaccompanied from his jet into Abuja Airport’s arrival hall or mingling at the exclusive Ikoyi Club in Lagos.
Dangote is something of a folk hero among the powerful of Nigeria. At a recent event in Lagos, a federal minister spoke in awe of the billionaire; describing Dangote as a man who, if woken in the middle of the night, would effortlessly reel off numbers pertaining to his numerous businesses. The lesson there—this is a man not too big for the boring details of his businesses.
For a man who runs such a large empire, there is no hint of a harried existence. Newspaper and internet images reflect a man with a shy smile, framed by a trimmed salt-and-pepper beard. More often than not, he is dressed in a suit; a rarity among Nigeria’s billionaire-entrepreneur class, who generally tend to favor national dress over the colonial look. He keeps his family life very private.
Dangote is a football lover, a long-time Arsenal supporter. In 2010, it was whispered that he was considering buying a stake in the London club, but Dangote denied this.
<img loading="lazy" decoding="async" class="alignleft size-large wp-image-601" src="/wp-content/uploads/2017/04/Governor-Amosuns-visit-to-Ibese-Cement-Plant-1024x687.jpg" alt="" width="474" height="318" />
It is tempting to believe that his acquisition, in 2010, of a $45 million Bombardier jet to celebrate his 53rd birthday was less an act of ostentation, more a desire to make his frequent long-haul flights more comfortable.
No doubt, beneath the calm, almost carefree, exterior is a restlessness that drives a relentlessly expansionary business instinct. He has, within the last few years, built the two largest cement plants in Nigeria and is at the moment on a continent-conquering factory construction spree.
Another interest is philanthropy; Dangote is often in the news for doling out sometimes mind-boggling sums of money to governments and charitable causes across Nigeria.
Between September and November 2011 he gave out more than N1 billion ($6.3 million). Six hundred million naira ($4 million) of this went, via the Dangote Foundation, to Nigeria’s north-central state of Kano for its Women Empowerment and Free School Feeding program. Another N500 million went to beneficiaries in at least five states drawn from across Nigeria. In 2011 the Dangote Group donated $6 million to Nigerian universities, as part of its corporate social responsibility initiative.
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He has a knack for building close, intensely beneficial relationships with governments, and the ruling party, yet generally stays away from frontline politics. His closeness to former Nigerian president Olusegun Obasanjo brought many benefits his way, including an honor. Dangote stirs up heated debate in Nigeria. To some, he is a cold-blooded capitalist and ruthless monopolist. To others, including most who work on the Nigerian Stock Exchange, he is the best thing ever to happen to the country’s economy. US diplomatic cables, released by Wikileaks, describe him as having “taken on the aura of an economic folk hero for some, villain for others.”
What everyone agrees on is how significant he is to the Nigerian economy. His cement company single-handedly accounts for a third of Nigeria’s stock market capitalization. Last September, Dangote’s name came up in a statement President Goodluck Jonathan made; one that would become famous.
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“Aliko Dangote told me that by December 2012, we would be exporting cement here. I am quoting him,” the president said, on national television.
Nigerians on social networking sites quickly adopted “Aliko Dangote told me…” as a catchphrase.
In reality Dangote is a man of few words and has little time for flamboyance but when he does speak, we would be foolish not to listen.

The Economic Folk Hero Behind A Shy Smile

Struggle songs pierced the air to the sound of marching feet. Protestors jabbed sticks and steel poles to the skies.
One of them was petrol attendant, Thabo Moloedi, who makes the 80km journey from Sasolburg to Johannesburg along the N1 every day. He says tolls will hit millions like him in the pocket.
“Let’s ban them all,” he says.
Roads are the artery of every country and in Africa they are like gold dust. South Africa has spent R20 billion ($2.6 billion) on 185km of spanking new highways that would be welcome from Harare to Cairo.
The problem is now the government wants the people to pay for them. That will mean motorists forking out R14.2 billion ($1.85 billion) day by day. Every time motorists drive up or down the N1, N3, N12 R21, near Johannesburg, from April 30, they will  have to pay 30c for every kilometre calculated by sensors in huge overhead gantries. Those who buy a so called e-tag will pay directly from their bank account —those who don’t will be sent a more expensive bill through the post. If you don’t play ball, you could be prosecuted and new laws are on the way to cover this.
The plan has led to months of grumbling and accusations that the car-driving class is being used as a cash cow. It has also sparked one of the biggest protests seen in democratic South Africa. The Gauteng province protest was one of 34 across the country, which called on more than two million union members. Tens of thousands marched in Johannesburg alone.
“Tolls are a big burden and are going to fuel inflation,” says Lesiba Seshoka, the national spokesperson for the National Union of Mineworkers—the most powerful union in the land.
“We are still a developing country yet government is subjecting us to pay tolls. Whose pockets are going to be filled with this money?” says Dikshi Patel, a 45-year-old worker in the airline industry.
“The government has put the cart before the horse on this issue. A reliable, affordable and safe transport system should be a priority. If you start with the e-tolling system without ensuring that people can move freely from one place to another, you are disadvantaging these people, says Zingiswa Losi, the second deputy president of Cosatu the country’s trade union federation.
The South African Road Agency Limited (Sanral) is building through borrowing on local capital markets. It claims that if roads were funded purely by tax, citizens would still be waiting for their smooth highways.  Sanral calls the e-tag a “user fee” and denies it is double taxation for those who already pay car tax and fuel levy. During his annual budget speech, in Cape Town, on February 22, Finance Minister, Pravin Gordhan, assigned R5.8 billion to Sanral to help pay for the roads. This money allowed Sanral to cut toll fees from 60c to 30c per kilometre for cars in a bid to silence the howl of outrage. It appears to have failed.
Gordhan defended the cost of the toll roads saying they will ease traffic congestion. “Users benefit through lower vehicle operating costs, time savings and improved safety,” he says.
South Africans will also have to dig deeper to pay an increase in the general fuel levy on petrol and diesel, which will rise by 20c a liter on April 4. The money will go to pay for the new highways and motorists are not happy about that either.

The Road To Penury

Eleven years ago, a 25-year-old Indian from Gujarat came to Kenya seeking greener pastures. He found a job as an accounting clerk in an Indian-owned polythene manufacturing company for Ksh18,000 ($230) a month. In his spare time, he decided to write software for an extra buck; but his employer discovered his private project. The penalty was costly. He reported to work one morning and was handed a one-way air ticket back to India. His former employer drove him to his house, ordered him to pack, drove to the airport and made sure he boarded the plane. As the plane roared above the suburbs of Nairobi, Kamal Budhabhatti looked wistfully through the window and made a silent pledge. He came, he thought, had seen and he was going to conquer Kenya.
Eleven years later, Budhabhatti can claim to have conquered, as he is one of Kenya’s youngest multi-millionaires. He pioneered the business of software development in East Africa and plans to create a Silicon Valley in Africa. Budhabhatti runs one of East Africa’s fastest growing software development companies—Craft Silicon—with its head office in Nairobi.
Budhabhatti is a techie through and through. He graduated with a BSc degree in Physics and describes himself as a hands-on programmer who makes money out of what he enjoys. “Nobody in my family is a business person and it was not really in my cards to get into business. However, the only link I may have to entrepreneurship is that I come from a region in India that is considered very entrepreneurial,” he explains.
India’s Gujarat state is the home of famous entrepreneurs—among them, Dhirubhai Ambani, the founder of Reliance Industries, that was ranked 134 in the 2011 Fortune 500 list.
Wealth is a far cry from Budhabhatti’s lean first days in Kenya in a clerical job.
“All I used to do was input invoices in the system. It was not what I had expected, and I developed a great dislike for the job. Every day I used to say I needed to do something better. I had a friend where I used to stay who was the IT manager of a local bank. He was looking for someone to come up with a system that would automate the check clearing system. I asked him if I could write something and he said, ‘why not?’”
Budhabhatti had landed his first job as an entrepreneur.
A decade ago, Kenya’s ICT sector was in its infancy. Internet and computers were a luxury few could afford. There was little investment or infrastructure and companies like mobile operator Safaricom were just setting up shop. When it came to technology, Africa was not taken seriously—the US, home of Microsoft, HP, IBM, Symantec and Oracle, largely ignored Africa.
Budhabhatti knew he was onto something.
“These problems that Africa has are the greatest opportunity because if you go to some of the developed economies, they have lesser problems. Because of all these problems that we have here, they present a lot of opportunities to come up with solutions. It’s like playing computer games: if there are no challenges in the game, then it becomes boring. Challenges push you to the limit in terms of thinking and innovation,” he says.
After his forced return to India, Budhabhatti spent 72 hours brooding at home before flying back to Kenya.
“I asked my sister to pay for my ticket back because I felt there was an opportunity here and just had to come back. I had Ksh23,000 ($295) in savings which I survived on for one-and-a-half years!”
Budhabhatti returned to where he was staying as a paying guest, explained his situation to the landlady and she allowed him to stay without paying rent. He says he survived on the good humour of his friends, who often paid for his meals.
“I went back to the bank, but the bank realized I was desperate and took advantage of me by renegotiating the price we had agreed on. Every time I went to follow up on the status, they would say come back tomorrow. I finished making the software after one-and-a-half years and was paid Ksh200,000 ($2,550).”
Budhabhatti used the money to settle his debts and set up Craft Silicon. From there, he embarked on an entrepreneurial journey that saw his company win $100,000 at the 2010 Africa Awards for Entrepreneurship.
Craft Silicon sells software to banks and micro-finance organisations in 40 countries around the world, including China and India.
“Banks talk to each other and since I was cheap, a lot of the small banks thought there was no point investing a lot of money in buying an expensive product.”
As word got round, banks like Equatorial Commercial Bank, KRep and Equity Bank asked Craft Silicon to develop software for them. That led to the making of Craft Silicon’s first solution—Bankers Realm—an automated banking operating system.
Like Steve Jobs at Apple, Budhabhatti rolls up his sleeves and gets his hands dirty. In 2011, he launched his brainchild, Elma, an online way to move cash and transact.
After a decade of doing business, Budhabhatti has created a multimillion-dollar empire.
“To calculate software valuation, you look at a company’s annual turnover in terms of how many licensed softwares you are selling, then multiply by 20,” he says.
In 2010, Craft Silicon’s turnover was $6 million, which translates to $120 million. Budhabhatti’s bet on technology has paid off.
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<h3>Kamal Budhabhatti’s Investment Tips</h3>
Planning to invest in a technology business in Kenya? This is what to keep in mind: 
• Understand the emerging economy, especially if you are coming from a developed economy, as you may not understand solutions required in these countries. Understand local solutions and provide them. 
• Keep in mind the governance structures, especially legislation about intellectual property (IP). These are things you will have to keep fighting every day. Laws here are still not strong in terms of IP. 
• Don’t expect a very high return. Most people think since they are investing in a high risk environment, they will get a high return—manage your expectations from day one. 
• Currency fluctuation is a major risk. Ensure you have a way to manage that.

He Came, He Saw,  He Got Thrown Out

In a rundown street in the center of Mombasa, Kenya, a short walk from the port, I sat down in a Chinese restaurant for a meeting with an infamous man of whom I had heard many talk about. Waiting for him to arrive, watching the door, I saw him enter the restaurant, his eyes flitting across the empty room. He beckoned to a table more secluded and out of the view of most patrons.
As I sat down, extending my hand to greet him, he looked me up and down with suspicion. “Who are you?” he asked, seeming very wary of me despite the fact that we had been in email contact for about a month before my arrival in Kenya. I pulled my papers and business cards from my bag, by way of introduction, only for them to be taken from me. He made off, papers in hand, to conduct an inspection and make copies.
“It’s a very sensitive business this, Miss Otto,” he elucidated upon his return, staring at me intently, still clearly unsure of my intentions.
Piracy, the topic that I was there to research, is a complex affair, and now also an industry that costs the global economy between $7 billion and $12 billion a year.
Andrew Mwangura, the man I met that day, is a famed piracy negotiator at the heart of this industry, which has spawned an underground economy generating hundreds of millions of dollars in illicit profit every year.
Mwangura has been dealing with piracy for nearly two decades, spending most of his time running the East African Seafarers’ Association. The rest of the time he negotiates ransom deals between pirates and shipping companies for vessels and kidnapped crew.
Mwangura has found a degree of notoriety in this line of work. Indeed, modern-day piracy, particularly the Somali version, has captured the attention of the world through reports that could be straight out of a big-budget movie about growing organized crime plaguing African waters. These are tales of desperate, young, armed men in fishing boats; capturing vessels, kidnapping crews and holding them for months claiming multi-million dollar ransoms.
The 21st century face of piracy is a world away from the adventurous romance of Blackbeard 300 years ago. It is a slick and nasty trade.
Since the turn of the century, piracy has been on the increase and shifting from Southeast Asia to Africa’s north-eastern coast. Maritime piracy is now a well organized and sophisticated industry where young Somali men, armed with automatic weapons and rocket-propelled grenades, carry out attacks on specific targets and collect roughly $240 million in ransom money each year.
According to the latest figures released by the International Maritime Bureau, on January 19, Somali pirates held 151 hostages to ransom; worth roughly up to $90 million. A study released by Oceans Beyond Piracy in 2010 illustrates that the cost of ransom payments only makes up a small portion of the total cost that the global economy incurs.
While these costs are being carried worldwide, countries in the Horn of Africa region are suffering even more, especially Kenya. The Kenya Shippers Council estimates piracy costs the Kenyan economy $400 million every year.
Piracy surcharges, which are now applied as an additional tax to shipping tariffs, have increased the costs of both imports and exports in Kenya. These surcharges are now commonplace, as a result of the rising cost of insurance, owing to the risks they take in pirate-infested waters. Inchcape Shipping Services says piracy surcharges have added around $100 million to the cost of container imports, and roughly $260 million to the costs of dry bulk and liquid cargoes.
Tourism, a cornerstone of the Kenyan economy, has also been suffering. Cruise ship calls, for example, which brought in around $300,000 a year, have declined from 35 in 2008 to none because of the pirate threat.
Despite so much money being at stake, the fight against piracy has been ineffectual. Why? There are a number of reasons: the lack of the political will to galvanize money and people into action. One of the biggest problems has been that piracy, having arisen from the failure of the state in Somalia, has been fought on one front alone—the ocean. In reality, piracy must be tackled in a two-pronged approach—also in the land from which it emanates.
Somalia suffers from acute instability. It is under these conditions that piracy carries relatively low risk and high reward. It is this element that counter-piracy ventures seem to ignore.
“Piracy must stop naturally,” Mwangura would say. “You can’t fight poverty with guns.”
How can Africa fight piracy? Some gung-ho types have argued that international law can be interpreted to allow forces to ‘blow’ pirates out of the water—perhaps using private armies onboard. Other more peaceful methods include: following the flows of pirate funds; attempting to bring stability to Somalia; improving the quality of life in Somalia for those who otherwise may be seduced by piracy; prosecuting pirates and strengthening the laws against them.
As Captain Jack Sparrow, the fictional buccaneer in Hollywood’s Pirates of the Caribbean, said: “The only rules that really matter are these: what a man can do and what a man can’t do.”
According to the latest figures released by the International Maritime Bureau (updated on February 29, 2012), Somali pirates are currently holding a total of 12 vessels and 177 hostages to ransom; worth roughly $120 million, assuming that top ransom settlements are attained.
Up until now, the Somali piracy debacle has been overwhelmingly characterized by what the pirates can do and what international forces cannot.
<h3>Pirates Punish With The Pain Of Captivity</h3>
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Twelve gunmen wielding AK-47s stormed a South African yacht en route to Richards Bay, on the coast of KwaZulu-Natal, on October 26, 2010. They took hostage Bruno Pelizzari and his girlfriend, Debbie Calitz. The pirates turned the vessel around and set sail for Baraawe in Somalia.
In the 16 months since then, armed groups have bought and sold the couple like a commodity. First Pelizzari and Calitz were sold to Al-Shabaab, a radical Islamist group associated with al-Qaeda. The group then sold the couple to Somali traders.
In the quest for freedom, a complication has arisen—the South African government does not pay ransom demands. Defense Minister Lindiwe Sisulu dispatched the Navy frigate, SS Mendi, to patrol the Mozambican Channel in a bid to curb piracy.
The Gift of the Givers Foundation, the largest African disaster relief organization on the continent, has been in Somalia to negotiate their release. It has managed to bargain down the ransom price from $10 million to under $1 million. The ransom was increased to $1.5 million when negotiators met with the captors on February 27, who alleged that a third party had matched the amount.
Dr Imtiaz Sooliman, founder of the Gift of the Givers Foundation, hopes the hostages will be home in Durban before the end of April.
“We know where they are. The time is now… We are telling them take it, leave it, or keep them forever,” he says.
Vera Hecht, Bruno Pelizzari’s sister, raised money for the ransom through an online and SMS campaign. She said car guards and petrol attendants reached for their cellphones to SMS when they saw a campaign poster on her car. Small businesses have also come up with thousands of rands, along with South African-based Somali communities.
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Pirates of  the Indian Ocean

When 22-year-old Greg Maloka heard that YFM, a new youth radio station, was to launch in Johannesburg, he rushed to join the thousands of hopefuls vying for a spot on air.
Ever since Maloka was a young boy in the township of Diepkloof in Soweto, South Africa, he dreamed about being a charismatic, robed figure on stage, commanding an audience of thousands. In the early days of this longing, he determined that he was going to achieve this by either becoming a teacher or a priest.
<div id="attachment_528" style="width: 210px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-528" class="wp-image-528 size-medium" src="/wp-content/uploads/2017/04/322-259_1-200x300.jpg" alt="" width="200" height="300" />Kaya FM&#8217;s Greg Maloka, Johannesburg; 14 February 2012 &#8211; Photo by Brett Eloff</div>
So the young hopeful, then a final year student majoring in typing skills at the former Technikon Northern Transvaal (TNT), took a bus to the auditions. Just as he had expected, the snaking queue held hundreds upon hundreds of eager hopefuls.
“When I saw the very long queue, I immediately realised that there would probably be about 50 other people—if not more—who would be far better than me. Furthermore, I was all too aware that the station would be looking for between 10 to 15 people, maximum,” says Maloka.
That’s when the light-bulb flickered on.
“Realizing that I needed something that was going to make me stand out from the hundreds who had the same ambition, and probably some with more talent, I decided to put pen to paper and to list in bullet form the things that I thought were going to make this new station work.
“As I sat in the queue, I started observing and listening to the conversations of the eight or so guys who were processing the auditions. These guys were clearly earmarked for top positions in the station and luckily for me, I had been part of the TNT Campus Radio Station so I was familiar with the challenges that face a station [targeting] a youth market.”
The moment of truth arrived. Maloka walked into the sound booth for his turn to charm the judges. He paused at the door and handed over the handwritten “business plan” to the then music manager, the late Arabi Mocheke.
“He took those pages and disappeared. The notes on those pages were largely based on my own observations—what I thought they should do with the station; how they should position the brand; what kind of music they should play; and even the kind of DJs they should have on the station,” says Maloka.
Maloka’s audition was soon over. He waited around the station with the other young hopefuls, but he knew fate was on his side when Mocheke, the music manager, pushed through the crowd looking for him.
“He returned with the notes and started questioning me about the stuff that I had written. He asked me how I knew the things mentioned there and proceeded to invite me to a management meeting that was going to be held the next day.
“Needless to say, I was up at the crack of dawn and was on number 28 bus. By the time that fateful management meeting concluded, I was now in charge of auditioning the same people I was queuing with the day before,” he concludes joyfully.
So never stop thinking, or scribbling, if you want to get ahead.
<h3>Who Is Greg Maloka?</h3>
Greg Maloka was among the group that pioneered the launch and establishment of Johannesburg youth radio station YFM, in 1997. The station has been widely credited with bringing about a revolution in youth culture. YFM brought kwaito music to South Africa’s listeners and promoted the rise and infiltration of hip hop music. Most importantly, the station supported young entrepreneurs by giving them a radio and print platform to communicate their services. Maloka has held practically all the important positions within the station, with stints as program manager, music manager, station manager and then eventually, CEO and managing director. He left YFM in 2003 after falling out with the station’s board and went on to be partner in Instant Grass—a trends and insights agency that’s based in Cape Town. Maloka is currently the managing director of Kaya FM, one of the fastest-growing independent radio stations in South Africa.

The Right Notes,  Right On Queue

The sun was unusually hot as guests enjoyed a sumptuous lunch in Diani, the sprawling coastal town in Mombasa, known for its beaches and coral reefs. Lunch time in Diani in February could almost be a scene from paradise—the wide blue Indian Ocean lapping against a pristine beach; European tourists, escaping freezing temperatures back home, sunbathing lazily.
The guests from Nairobi clearly knew their way around. Dressed in smart casuals and resisting the urge to pull off their shirts to catch a welcome breeze, they sighed with relief as they walked into the air-conditioned five-star hotel.
Among them was Atul Shah, the managing director of Nakumatt Holdings, the family-owned company that runs Kenya’s largest retail chain. With a number of his managers, he was on a mission: to supervise construction of a new Nakumatt store in Diani. They talked politics and did the sums for the new investment.
When his phone rang Atul Shah, like businessmen do, excused himself and stepped a few yards away. From a distance, witnesses say, you could see his face turn ashen and panic set in on what was to be his worst day. The caller with bad news was the manager of the downtown branch in the heart of Nairobi.
“It sounded like a dream,” says Shah. “Then I saw it on TV.”
<div id="attachment_524" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-524" class="size-large wp-image-524" src="/wp-content/uploads/2017/04/RTR242EP-1024x608.jpg" alt="" width="474" height="281" />Kenya&#8217;s President Mwai Kibaki (C) and Police Commissioner Hussein Ali walk past the burnt-down Nakumatt supermarket in downtown Nairobi, January 30, 2009. At least 22 people died and more than two dozen more were missing after a fire destroyed a supermarket in downtown Nairobi two days ago. REUTERS/Stringer (KENYA)</div>
It was a day that would haunt the owner of Nakumatt for the rest of his life. With 36 stores spread across the region, Nakumatt is the big brother of retail in East Africa. The majority of its stores, 30, are in Kenya, three are in Uganda, two in Rwanda and one in Tanzania, giving it a 15% market share of a crowded retail market where the big five supermarkets control over 80%. In the world of retail where numbers count for much, big is beautiful. Nakumatt has taken this maxim seriously and dotted the big towns with its elephant symbols. Nairobi is Nakumatt’s hub, with more than 10 stores tapping billions of shillings in disposable income from the rising middle class.
On this day, January 28, 2009, as workers broke for lunch, one of its city center branches went up in flames, turning stock and assets, worth Ksh250 million, to ashes. Eighteen shoppers and staff, perished in the inferno.
Shah went into crisis mode. He cancelled his three-day tour of Mombasa to fly back to Nairobi to handle the disaster, but all planes were fully booked that day. He had to manage the situation on the phone, with eyes glued to a TV, until the following day.
“We had lots of communication with my managers in Nairobi. We were all confused and focus was on rescue efforts to save lives. We knew we would overcome the fire but the loss of human lives is what broke us down. We had to do whatever it takes to minimize deaths.”
The blaze took fire fighters from the Nairobi City Council four days to contain. The flames were fed by exploding gas tanks.
“The first day was total confusion. On the second day we established a disaster team to manage the situation. The government also created its own team. We worked together well to make sure the families of those people who perished were taken care of. I was part of the team and was on the ground for four days,” says Shah.
The loss was even more painful as it came just a month after the retail chain’s other branch was flattened by bulldozers to clear the way for the construction of the Thika super highway through Nairobi. In the process, the company was caught unaware and lost most of its stock to looters.
Shah sets his loss from the fire at Ksh400-250 million in stock and Ksh150 million in furniture and other assets. To make matters worse, the supermarket management was accused of locking shoppers in the supermarket in the shop when the fire alarm went off to prevent them from running away with unpaid goods, but Atul denies this charge.
“There were all manner of accusations from sabotage to arson. But it emerged it was Kenya Power to blame because it had had power outages. It’s unfortunate that it’s us who were affected,” Shah said.
What most of the accusers did not know is that Nakumatt had three fire marshals at the branch, one of whom sadly died in the fire as he tried to rescue customers. When the fire broke out, the man in his thirties swung into action to do what he was trained to do. He lunged into the smoke to rescue one person; a second time to save another soul; the third time the brave fire marshal did not return.
“It surprised us because the fire happened just two weeks after we had undergone a thorough fire audit by the Nairobi City Council. The company has since then enhanced its fire safety by training staff on emergency response and employing experts to beef up its compliance above the industry benchmarks. The quick-spreading fire was blamed on the presence of LPG gas cylinders and now the government has decreed all supermarkets not to stock cooking gas on their premises.”
Shah says Nakumatt spent Ksh40-50 million in managing the situation, including financing forensic tests to identify those who died in the fire and compensating those who lost their loved ones.
To make a bad situation worse, Kenyans looking to make a quick buck faked the deaths of their relatives in the fire. Nakumatt’s forensic analysis has already discovered three fake claims and has flagged two more for investigation.
“Some people claimed they lost relatives who had come to shop but produced death certificates of people who died a long time ago. Only 18 have been found to be genuine.”
The disaster did not end with the clearing of the ashes. The fire scared many shoppers and it took them months to come back to Nakumatt.
These were sad days for the company founded in 1978 by Shah’s father in the Rift Valley town of Nakuru. From a single shop dealing in mattresses; Nakumatt, short for Nakuru Mattresses, now has an annual turnover of $500 million. The first supermarket opened in 1982 and the company employs 5,100 workers.
Despite the setbacks, Shah is still betting on finding new markets.
“The retail market has opportunities. Organized retail is growing and especially with government recognition, the market space is expanding.”
In his office, on the wall facing him is a quote by Haku Shah, his father, which says: “In a day when you don’t come across any problem, you can be sure that you are traveling on the wrong path.”
These words sustained Shah through his worst day—January 28, 2009—a tragic day that will haunt him for the rest of his life.

Trial By Fire

When Daphne Mashile Nkosi woke up one day, she was told by her lawyers that she had been removed as a director and wasn’t even a lowly shareholder of the multi-billion dollar company she had built from scratch, she thought someone was playing a joke on her. A sick joke at that, for not only did Kalahari Resources have billions in the bank, after securing loans to develop a manganese mine, executive chairperson Mashile Nkosi was still in mourning after burying her husband—who was also her business partner—just a few days earlier.
In one of the most bizarre stories in South African business history, Mashile Nkosi’s name, and those of her fellow directors, had been removed from the database of the Department of Trade and Industry’s Companies and Intellectual Property Registration Office. Things were made even more surreal by the fact that the group laying claim to the assets was led by the late Sandile Majali, a dubious character and controversial businessman who was well connected in the upper echelons of the ruling African National Congress. Majali had never been in any way connected to Kalahari, so his move was not preceded by any hostile takeover bid or shareholder revolt, or anything like that.
Mashile Nkosi brought an urgent interdict before the Johannesburg High Court.
Outside court, radio, television and newspapers were all keen to hear her side of the story. But the more she told of her hitherto unknown rise and rise in the mining industry, she says, the more doubts there were about whether she was indeed the real power behind her growing empire.
“I listened to some of the comments. The more I told my story, the more certain people doubted whether these assets belonged to me.”
Rumors and conspiracy theories started flying thick and fast.
“Some were saying nasty things like ‘you send a thief to catch a thief,’” Mashile Nkosi says. “Others thought, ‘she’s either corrupt or slept her way up to the top.’ I said to myself: ‘what did you expect? You got into a man’s world and changed the course of history. You have to go through this pain to make your gains. Stay focused.’”
About a month after the filing of the interdict, the court ruled in favor of Mashile Nkosi. Majali was arrested for fraud, and was also asked to pay Mashile Nkosi’s legal costs.
Mashile Nkosi’s foray into the male-dominated and often dangerous world of mining started long before the 2010 corporate hijacking incident.
In 1999, as a community development activist leading a women’s rights NGO at the time, she was invited by current Exxaro CEO Sipho Nkosi (no relation to her or her late husband) to form part of the Eyesizwe consortium that was to bid for four South African collieries belonging to multinationals Anglo American and BHP Billiton.
“Sipho said he wanted a very strong structure,” Mashile Nkosi remembers. “We put the structure together, went for presentations to Anglo and BHP, and got the business.”
As soon as she was in on the Eyesizwe deal—she is still a shareholder and serves on its board and those of its subsidiaries—she started being courted by other consortia. She soon discovered that many of these syndicates just wanted women “tag alongs” so that they could show that they had women in their midst.
“The men would have their own discussions and reserve 3-4% for women. I sat back and thought, ‘it’s not going to help if all I do is just scream and shout. What is it that I need to do?’
I decided to look for an opportunity that I would start from scratch, control and own, and be the one who would bring in the men.”
In 2001, the relatively unknown Mashile Nkosi applied to the government for manganese prospecting rights. She got them four years later.
Together with her husband, Dan Nkosi, they raised R12.5 million for a pre-feasibility study that confirmed the existence of manganese in the Kuruman area of the Northern Cape province of South Africa.
The following year state financier, the Independent Development Corporation (IDC), granted the company R60 million to do a feasibility study.
Once the feasibility study was successfully completed, the IDC took 20% of Kalahari, and the two entities began to search for a strategic equity partner. After receiving expressions of interest from 19 companies from all over the world, they chose Arcelor Mittal. The world’s leading steel producer now owns 50% of Kalagadi Manganese, Mashile Nkosi’s Kalahari Resources has 40%, and the rest (10%) is owned by the IDC.
Kalagadi is sitting on just under a billion tons of manganese, a commodity tipped for rapid growth in South Africa. The manganese in South Africa is of high quality, with low carbon, making it sought after by steel makers. The country holds a quarter of the world market and its manganese mines are found in the Kalahari Basin in the Northern Cape. Analysts are saying it is likely to be a boom year for manganese this year.
The Kalagadi project includes a R4.2 billion smelter that will be based at the Coega industrial development zone in the South African coastal city of Port Elizabeth. The smelter is part of an R11 billion project that includes a mine and sinter plant.
By June, Mashile Nkosi says, the company should start producing three million tons of manganese ore, 1.7 million tons of beneficiated sinter, all to be shipped to the Coega smelter for beneficiation.
While the journey has not been easy—water and electricity supply problems meant Kalagadi had to buy generators and truck in water while it negotiated with state utilities—the project is already helping to revive the local economy.
The mine employs 1,600 people, while a further 1,600 are employed by sub-contractors who are engaged in a variety of services ranging from laundry and food to engineering and other specialized services. The water pipeline currently being installed, as well as the tarred roads being erected, will assist farmers and the community.
“The difference between me and other people is not that I’m intelligent. I put in extra hours. I push. I work very hard. And as long as I am making a difference, I’m happy. When you see Africa on CNN or the BBC, it’s hungry kids with flies on their mouths. We should be using our minerals to build our countries, to build our continent. Not what some people do—get a license and then sell it to Australians or Europeans.”
Mashile Nkosi’s life has been lived through breaking rules, banishing stereotypes and confounding expectations. The youngest of four children, two boys and two girls, she says she was always different.
Growing up in the former gold rush town of Pilgrim’s Rest, in Mpumalanga, where she was born, she was inspired by her grandmother, who brought up 13 grandchildren single-handedly from proceeds of traditional brew, cakes and everything else she could lay her hands on.
When she was four or five and taken to Johannesburg to join her biological parents, she learnt just how tough and unfair life could be when she saw how her “never satisfied” father treated her “beautiful” mother—“like a second class citizen, even though she did so much for him.” Mashile Nkosi was incensed. “I told myself I will never be abused in a relationship. So in my choice of people I would later go out with, I was clear that I would never be abused.”
Any man who thought he would abuse her would have had to think twice anyway, for when she was younger she was always her “weak” older brother’s keeper, fighting for him against other boys and beating the male species in their own game.
You could argue, in mining, she is doing the same.

How The Feisty Queen Of Manganese Lost Her Crown

Recently, I asked a diplomat attached to one of the Western embassies in Pretoria whether the Arab Spring had been predicted in a scenario by his government. The answer was no: it came out of the blue and surprised everybody. In the words of Nassim Taleb, it was a Black Swan event.
Next, I asked him whether a retrospective analysis had identified any flags that they should have picked up on in researching the future of the countries affected by the Arab Spring. He said most definitely yes: in all the countries concerned, there was a high rate of youth unemployment, coupled with a sense of alienation from society. Furthermore, the advent of social networks like Facebook had brought a new dimension of organization to young people in terms of putting together mass demonstrations and filming them.
In South Africa, we have all those conditions. We have an unemployment rate among young people aged 18-24 which is estimated to be somewhere between 40 and 50%. Although most of them are ANC supporters, they are highly frustrated by the lack of progress since 1994 in creating a participative and open economy with an emphasis on economic freedom.
Moreover, the vast majority are up to speed on the latest communication gadgets and the internet.
In order to avoid our own version of an Arab Spring in South Africa, we need to call upon the negotiating skills of our leaders and citizens to put together a blueprint for a new economic order. Codesa I and II in the early 1990s demonstrated that South Africans can pull the iron from the fire through negotiation and avoid the slippery slope into chaos and a civil war. These two conventions for a democratic South Africa fashioned a new constitution and paved the way for the fully open election, which went ahead peacefully on April 27, 1994.
We now need a Codesa III, which I call an ‘Economic Codesa’, because there was unfinished business in the first two Codesas. While we have a political democracy, we certainly do not have an economic democracy in South Africa. There is no way the government alone can achieve the latter. It will require a partnership between the principle economic actors and the government. In the category of economic actors, I would put the CEOs of the top 50 companies in South Africa, representative business bodies, leading entrepreneurs, community champions, the unions and others chosen by civil society.
The Economic Codesa I have in mind would not be a summit or talk shop, but a genuine negotiation, with give and take on all sides. One of the most important outcomes would be to create the conditions for instilling a new entrepreneurial culture in the country, giving small business owners the space and support systems to grow their firms from start-ups to companies that may one day be listed on the Johannesburg Stock Exchange. It is common cause among leading thinkers in government and business that the largest percentage of jobs to be created in order to bring South Africa’s unemployment rate down to an acceptable level, will be in the small business sector.
Indeed, one of the key targets of an Economic Codesa would be to establish an environment within which one million new businesses of a viable nature are likely to be launched by 2020. That is the only way to create five million new jobs and give gainful employment on a widespread basis to young people, either as entrepreneurs or employees. Not everyone has to be an entrepreneur, but on the assumption that the average small business has five employees, the percentage of entrepreneurs in the nation has to be around 20%. The figure is quite achievable with economic freedom in our time.

Business Must Negotiate  Or Face Another Arab Spring

Russell Loubser rose from humble beginnings to take over the sleepy Johannesburg Stock Exchange, turning it into one of the world’s top 20 bourses and the best regulated exchange on the on the planet.
Loubser grew up in a small town near Mafikeng in South Africa’s North West province, a million miles from the rapid international trades of the JSE.
“No-one in those days, black or white, ever mentioned stock exchange or shares,” he says.
Loubser was the youngest of four boys and admits life was not easy. Both his parents were uneducated and struggled to bring them up. His father was a boiler maker in a cement factory and they never owned a share or property in their lives.
“They were good, hard-working people and smart, despite not being educated,” he says.
The way up, Loubser, decided was to pursue what he calls “hard degrees” that is, qualifications with practical use. He was good at mathematics so he enrolled for a Masters in Statistics at the University of Pretoria. After completion, his rugby friends convinced him to train as a chartered accountant.
Following a successful career in investment banking, where he was highly critical of the JSE, he was approached by the exchange and offered a five-year contract. Five years turned into 15 and Loubser oversaw the transformation of the JSE into a modern exchange.
Loubser is concerned about South Africa’s high youth unemployment rate and warns of the consequences.
“This country is  good at talking and researching, but does too little implementing,” he says.
Solutions? Firstly, he believes South Africa has enough leaders but those leaders need to be placed in the right roles. Secondly, he recommends, a better education system which can produce graduates with his so called “hard degrees”. He adds getting graduates work-ready and trained should be left to employers. Lastly, he points out that instead of jobs, the focus of governments should be on creating a conducive environment in which entrepreneurs and business can thrive.
Following his retirement from the JSE, on December 31, this respected executive is keeping himself busy with three non-governmental organizations and three boards that he sits on. We have not seen the last of this battle-hardened executive from Mafikeng.

Pearls Of Wisdom  Born Of Struggle

At the beginning of last month, social networking giant Facebook filed for a $5 billion initial public offering (IPO) with the Securities Exchange Commission (SEC). Facebook is earmarked to raise about $10 billion from the offering, making it the biggest technology IPO ever. In 2004, Google managed to raise $1.9 billion and was valued at $23 billion. Only three companies have breached the $10 billion barrier: Visa Inc, General Motors and AT&amp;T Wireless.
Facebook is being valued between $75 billion and $100 billion, and if all goes to plan, the stock is expected to commence trading in May. The offering will make many of the internet company’s 3,000 employees Silicon Valley’s newest millionaires.
Chief executive officer and founder Mark Zuckerberg, aged just 27, owns 28% of the company. This IPO will propel him into the multi-billionaire league, making him the fourth-wealthiest man in the United States—remarkable for a guy who started the company in his Harvard University dorm room in 2004. Despite going public, Zuckerberg will retain effective control of Facebook through his holding of 57% of voting shares.
Investment banks will also be laughing all the way to the bank. They stand to make $100 million in fees, which will be a welcome boost for revenues, given the currently tough trading conditions being experienced by banks around the world. Morgan Stanley, the number one underwriter of US IPOs for three consecutive years, will lead the offering and will share the spoils with Wall Street’s usual suspects: Goldman Sachs; JP Morgan; Bank of America; Merrill Lynch and Barclays Capital.
Facebook boasts more than 845 million active subscribers, with over 10% of the global population using the platform to chat, play games and swap 250 million pictures daily. In 2011, the company reported revenues of $3.7 billion, 85% of which was generated from advertising. In the same year, the company reported profits of $1 billion. In a letter that accompanied the filing to the SEC, Zuckerberg said: “There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future.”
The Arab Spring, which started in 2011, is testament to the transformation Zuckerberg talks about. Protests were co-ordinated through Facebook and social networking sites.
In the aftermath of the Arab Spring, many African leaders and governments are only too well aware of the power that the electorate wields through social media. In fact, China blocked Facebook in 2009 following riots in Xinjiang which the authorities attributed to Facebook.
African governments will be wary of social unrest following the Arab Spring and their broken promises to their electorates. However, African governments are unlikely to go the China route and block Facebook and other social networking sites.
South Africa’s president, Jacob Zuma, recently opened a Facebook page to allow voters to communicate with him directly to voice service delivery concerns, which were taken into account during the state of the nation address last month. This was a welcome development and hopefully, many more African leaders will follow suit.

Category: Focus

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