The inauguration of a $3.2-billion Chinese-funded railway, linking the port of Mombasa to the Kenyan capital Nairobi with future extension to the border with Uganda, promises to be a game changer. But only if sticky issues, such as harmonization of procedures and charges, in East Africa are sorted out.
Being part of China’s “One Belt, One Road” initiative that targets to upgrade maritime and land trade routes between China and Europe, Asia and Africa, the potential benefits of the railway are huge – not just for businesses in Kenya but the region as a whole.
With offers of haulage charges of $0.08 per ton per kilometer on Kenya’s new standard gauge railway (SGR), there is hope for bigger returns for businesses. For years they have had to endure the pain of costly road transport and equally expensive and unreliable service on a dilapidated railway system built by British colonialists more than a century ago.
“Today, the cost of transport along the northern corridor accounts for up to 45 percent of the goods and services in the region. The high costs make it hard for businesses to compete effectively on both the global and the local markets. We expect these costs to reduce significantly with the SGR,” the Kenya Private Sector Alliance (KEPSA) says.
Industry estimates show that hauling a 40-foot container from the port of Mombasa to the Ugandan capital, Kampala, by truck costs about $3,030 exclusive of handling and clearing fees – which captures why businesses long for cheaper options, such as an efficient railway.
Neighboring landlocked Uganda and Rwanda also plan similar SGR projects that would boost efficient haulage of cargo to the various sea ports in Mombasa or Tanzania’s Dar es Salaam and Tanga.
Nonetheless, authorities in East Africa must address all bottlenecks being experienced at the various gateway ports to the region if the SGR projects are to succeed. The challenges due to bureaucratic port procedures and conflicting charges have been a thorny issue for businesses and investors in the region.
Kenya and Tanzania that host the gateway ports have been under the spotlight for dragging their feet in the harmonization of their port procedures and charges to ease flow of shipment to landlocked states in East Africa.
A recent audit of operations at the Mombasa and Dar es Salaam ports confirmed hitches for
traders from Burundi, Rwanda and Uganda, which affected the overall performance of trade in the region. The matter was in fact formally tabled to the East Africa Community (EAC) leadership in 2015.
“The two ports could consider harmonizing their port charges, grace period and penalties, in view of the implementation of the EAC single customs territory,” Burundi said in a report to the bloc’s secretariat.
“The two countries should consider allowing clearing and forwarding agencies to go to work at Dar es Salaam and Mombasa ports.”
The two ports are the main gateways to East Africa and also service markets in South Sudan and the Great Lakes Region, handling key items including fuel, consumer goods and other imports as well as exports of tea and coffee from the region.
“Dar es Salaam and Mombasa ports, should establish one terminal for all transit containers for EAC countries. For example, you will see at the Jomo Kenyatta International Airport in Nairobi that there is a window for EAC citizens only,” Burundi further said in its submission.
The effects of these bottlenecks have stirred other challenges for businesses in these landlocked countries in that they often resulted in accruement in storage charges by port authorities.
Uganda traders have particularly expressed their disappointment with the cargo clearance procedures at the port of Mombasa and accused Kenyan authorities of imposing a harmful non-tariff barrier by “selectively auctioning” Ugandan goods held at the key port.
Uganda also raised concern over increased impounding of suspected counterfeit goods, meant for its market, at the port of Mombasa.
“Lengthy, restrictive and unclear administrative procedures of licensing Uganda-owned container freight stations and warehouses in Kenya are non-tariff barriers (NTBs),” Uganda said in a recent audit report to the EAC secretariat.
The availability of key inland infrastructure along the SGR, such as cargo collection and drop-off points will also determine the success of the whole project. The container drop-off or collection points should be located strategically to make the railway competitive. &#8211; Written by Allan Akombo

Rapid Railway Yet Slow Ports

At independence in 1966, Botswana ranked as one of the 10 poorest countries in the world. Just over half a century later, with the help of a significant diamond endowment, the richest on the planet, government has managed to elevate the country from a low-income country to one with a mid-income per capita GDP, as it invested the proceeds of its minerals rent into physical and human capital, and into institutions.
The success of this responsible management is to be seen everywhere, as the World Bank elaborates,  “at independence, Botswana had six kilometers of paved roads, three secondary schools, too few healthcare facilities to mention, and a mere 1.5% of the population had completed primary schooling. Today, it has more than 7,000 kilometers of paved roads, more than 300 secondary schools and 95% of Botswanans live within eight kilometers of a healthcare facility, and primary school education is free.”
At a time when its southern neighbor has cold shivers running through its markets, in anticipation of whether or not rating agencies will downgrade the South African sovereign rating to a non-investment grade credit, Botswana has a ranking far from a junk credit. Its upper Investment grade is the highest in Africa.
Government acknowledges, however, that among the challenges it faces, a high HIV/Aids infection rate (the second highest in the World) slows growth. It recognizes it has to diversify the economy, away from an overdependence on mining – especially diamonds – to areas that can carry GDP growth forward. For this reason, it has rolled out the National Development Plan (NDP-11) into tourism, construction, energy and transport. In short, government has assessed that doing the same is not good enough, and to use the worn cliché, diamonds will not be forever.
It has not forgotten where the roots of its humble existence began, and has not forsaken the mining sector’s contribution to the growth in its output, for beneath its soil, lies some 200 billion tons of coal – an estimated two thirds of Africa’s total – a happy co-existence with the volcanic diamond treasures its fiscus holds so dear, and which government manages proceeds from in its public-private partnership venture with Debswana. With so much focus on mineral wealth, it is easy to forget where other areas of promoting economic growth exist. A good example is Botswana’s biodiversity of resources, such as the Okavango Delta, as well as the Kalahari and Chobe, which boost eco-friendly tourism uplift socio-economic conditions of rural communities.
<a href="http://www.forbesafrica.com/investment-guide/2017/07/05/timing-is-everything/" target="_blank" rel="noopener noreferrer">Timing Is Everything</a>
While the need to diversify the economy grows urgent, there is a frank acknowledgment that government cannot do this on its own. This land-locked country faces challenges from climate change, and has a critical shortage of water and electricity, which threaten any sustainable moves to diversify the economy. Also, government will not hesitate to engage the help of the private sector.
As controversial as the decision may have been to close loss-making copper and nickel mines, the government has indicated a strong resolve to protect its hard-earned fiscal integrity, making any adjustment it deems necessary which would shield the taxpayer, despite mine closures shedding jobs.
Another indication of this responsibility was the decision taken by the Botswana Power Corporation to shed its loss-making Morupule B power station. The drive to privatize the  state-owned enterprises theoretically embraces the concept of Public-Private Partnerships, structures considered to be generally successful.
<a href="http://www.forbesafrica.com/homepage/2017/06/27/cash-falling-fashion-will-disappear-forever/" target="_blank" rel="noopener noreferrer">Cash is falling out of fashion &#8211; will it disappear forever?</a>
Although 4.3% GDP growth in 2016 may not be high by historical standards, it remains a solid base against which key financial stability ratios can be monitored by credit rating agencies. A surplus of 16% of GDP on the current account of the balance of payments, and an almost negligible budget deficit of -0.7% of GDP, appear to have underpinned the decisions by the rating agencies to maintain the upper investment grade ratings by S&amp;P (A-) and Moody’s (A2) last April.
If there is a conundrum that policymakers have to solve, it is not that GDP growth must be diversified, and that a stronger export base will drive growth in output sufficiently to alleviate poverty and income inequality, but rather that the success of economic diversification will be reflected in economic intangibles, such as better levels of education, better healthcare, better institutions to manage the rents derived during times when economic cycles are more volatile and in better regulating private enterprise. &#8211; Written by Colen Garrow

An African Darling For Investors

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A moment too soon or a moment too late, you lose in business. Furthermore, if you wait for everything to fall in place, your wait might end up with nothing.
The underlying message is that timing in business is crucial.
Industrialization really took off in the 20th century &#8211; it was also the same time in history when the population explosion occurred, with more than 4.4 billion people born during that time.
If you look back at some of the most successful entrepreneurs, it seems as if they knew it was the perfect time to launch their business, but maybe some of them stumbled upon their circumstances unknowingly. Maybe their success owed a lot to luck.
<a href="http://www.forbesafrica.com/investment-guide/2017/02/01/uneasy-partnership-may-necessary/" target="_blank" rel="noopener noreferrer">An Uneasy Partnership That May Be Necessary</a>
In the world of investments and forex trading, timing is everything. It can be the difference between making a profit or a loss.
Patrice Motsepe, one of the most revered African entrepreneurs, timed his approach perfectly. It led to him becoming a billionaire in a relatively short period of time. He went into mining at a time when gold prices were high and South Africa’s Black Economic Empowerment policies were in their first phase of implementation; corporate companies were actively looking to partner with capable black entrepreneurs and professionals.
In Nigeria, it was the right time to jump into business as the government was privatizing state-owned companies in the 2000s. It might still be the right time.
Some of the world’s most famous tech titans, such as Michael Dell, Steve Jobs and Bill Gates, founded their companies between 1975 and 1984. The 70s and 80s proved to be best time for computer companies and Dell Technologies, Apple and Microsoft are giants today. Between 2002 and 2009, most of the successful social media companies, like LinkedIn, Facebook, Twitter and WhatsApp, were born. The key for entrepreneurs is seeing the writing on the wall and knowing how to take advantage of it.
<a href="http://www.forbesafrica.com/politics/2017/06/05/agriculture-behind-africas-health/" target="_blank" rel="noopener noreferrer">Agriculture Behind Africa&#8217;s Health</a>
The dot-com bubble in the late 90s was the opportune time to start a technology company as money was readily available. However, that time has returned. Tech ventures have a tremendous amount of money ready to be deployed as long as conditions are met; the validity of the business and which market you raise the money from is important.
The tech capitals of Africa are Nairobi, in Kenya, and Cape Town, in South Africa. The tech capitals of the world are Silicon Valley in the United States, Tel Aviv in Israel, and Seoul in South Korea. However, this doesn’t mean you won’t succeed if you are not from these places.
Africa is a virgin territory in a few sectors. The time is now to go full force into infrastructure development, energy generation and beneficiating raw material produced on the continent. Most of our technological products and services are from countries outside Africa.
Europe and China have a tendency of tailor-making Silicon Valley technology to fit their local users. In China, they have WhatsApp rival WeChat, eBay rival Alibaba, and, before they merged, Didi Chuxing rivalled Uber.
Timing is multi-faceted; it can be when to go into business, when to expand, or when to close a deal at a particular time with favorable conditions.
But, how do you determine when the time is right? You can’t merely be excited by the vision of what could be.
It helps to be well-informed about the sector you are in; study the previous trends, patterns and circles which tend to repeat themselves; and engage as many people as you can in that field.
Just remember, if you wait too long, you might miss the opportunity. When Gates founded Microsoft, he was not necessarily sitting down and realizing the timing was right. He just moved as he saw a niche in the market.
My advice is to wake up and get back to the grind. If you need to, fail a few times until you get it right. As Abraham Lincoln once observed, “Things may come to those who wait, but only the things left by those who hustle.” &#8211; Written by Paul Mashegoane

Timing Is Everything

Entrepreneurship leads to a robust economy as it creates jobs and contributes to a country’s GDP. Entrepreneurs are brave people that influence a stable and growing economy. For this reason, it is essential to ensure that entrepreneurship is on the rise.
To promote growth, it is vital for government to provide assistance to established and emerging entrepreneurs.
To ensure that entrepreneurs are more likely to be successful, and subsequently influence job creation, it is important that they have access to the markets in which their goods and services will get the most benefit from. Currently, in South Africa, the government has a hand in the main challenges entrepreneurs face when trying to access markets – inflexible and unaccommodating taxes and bureaucracy, as well as a lack of entrepreneurship programs.
Business owners will only thrive in an environment that recognizes the need for entrepreneurs to be supported and nurtured. In South Africa there is a desperate need to teach entrepreneurship at an early stage of education.
With this promotion, and increased knowledge, youth will view entrepreneurship as a viable option for themselves rather than getting a conventional education so that they can be an employee. Furthermore, once someone has made the decision to pursue entrepreneurship, they need to be nurtured. This will allow them to use their knowledge and hone their skills to develop a viable and structured business venture.
Another challenge faced by South African entrepreneurs is getting finance to turn their ideas into a transacting business. It is also important to note that one can curb this by offering your service or product to other businesses, which will get some money flowing in. This revenue can be used to build a reserve and grow the business.
Cultural and social norms are also a contributing factor to the unwelcoming environment that entrepreneurs find themselves in. The ability of SMEs to penetrate existing and monopolized markets is hampered by internal market burdens as well as entry regulations.
Adding to this is the notion of established businesses that SMEs are not able to provide desirable goods and services due to the lack of experience they have. The government needs to promote the SMEs to established companies in accordance to the level of service that they are capable of providing. This will allow entrepreneurs to showcase their skills and products, which will change the perception that they are too amateurish to make an impact in business.
In our personal journey through entrepreneurship there are a few lessons that come to mind in relation to how others can thrive in South Africa today.
There is a lot to be gained from remaining focused on your goal.
Your success stems from relentlessly trying different avenues to expose your business and making the necessary sacrifices.

Tech scene in Cape Town, South Africa

The Relentless  Journey Of Entrepreneurship

As a fellow human being, I hated watching President Robert Mugabe shuffle to the umpteenth world stage for his umpteenth appearance in his 94th year. It seemed to take an age for the ruler of Zimbabwe, for more than 37 years, to struggle to his seat; it looked painful.
In my mind was the President Mugabe, then 72, who bristled physically and verbally in a tough interview I held him to at State House, in Harare, in 1994, when Zimbabwe had a thriving  economy. On that long sunny autumn day he had the clipped eloquence and mental agility of a university professor. Even as an open-minded new arrival, it was clear he was spinning his answers to questions about the economy and opposition, but at least he did it with polish and a dash of mischief.
“Who told you that?” he asked professorially whenever I caught him out.
<div id="attachment_31381" style="width: 1034px" class="wp-caption alignnone"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-31381" class="wp-image-31381 size-large" src="http://www.forbesafrica.com/wp-content/uploads/2017/05/GettyImages-631829258-1024x683.jpg" alt="" width="1024" height="683" srcset="https://cms.forbesafrica.com/wp-content/uploads/2017/05/GettyImages-631829258.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/GettyImages-631829258-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/GettyImages-631829258-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/GettyImages-631829258-768x512.jpg 768w" sizes="(max-width: 1024px) 100vw, 1024px" />US actor Forest Whitaker (R) delivers a speech, flanked by Chairperson of the Schwab Foundation Hilde Schwab, during the Crystal Award ceremony on the eve of the opening day of the World Economic Forum, on January 16, 2017 in Davos.</div>
For a moment forget the criticism surrounding Mugabe; here was an elder of Africa, who spent 10 years in prison, dropping off now and again, before a thin crowd at WEF Africa on an early panel on fragile states.
First question: did he consider troubled Zimbabwe a fragile state? Mugabe mentioned his country’s vast resources, 14 universities and a 90% literacy rate.
“Zimbabwe is one of the most highly developed countries in Africa… We are not a poor country, you can’t call us fragile, I can call America a fragile state,” says Mugabe to chuckles from the audience.
“And yet my people back home are crying!” says one of the hundreds of Zimbabweans working in Johannesburg’s petrol stations when we discussed the story a few days later.
Mugabe blamed rival political groups for conflict in his country and had sharp words for Islamic states.
“If you look into the Islamic world and talk about Isis and various other groups, it will appear the belief is the more violence you inflict on the population the greater the people will listen to you and join your side. That is a dangerous one and I do not know how it is still to be remedied.”
At the other end of the age spectrum was idealistic fellow panellist 35-year-old Victor Ochen, the youngest African nominated for the Nobel Peace Prize. The former cobbler and charcoal burner grew up amid war in Lira, in northern Uganda, a fiefdom of the rebel Lord’s Resistance Army.  In FORBES AFRICA, in April 2015, the year he was nominated, Ochen told us how he wept and threw stones at soldiers as they tore up charcoal beds that he hoped were going to pay for his education. The shocked guerrillas let him live to speak truth to power at WEF Africa 2017.
“When young people complain it is called a protest; when leaders speak it is called an excuse,” he says.
<div id="attachment_31380" style="width: 1034px" class="wp-caption alignnone"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-31380" class="wp-image-31380 size-large" src="http://www.forbesafrica.com/wp-content/uploads/2017/05/HMcClintock_VU0D13181-1024x682.jpg" alt="" width="1024" height="682" srcset="https://cms.forbesafrica.com/wp-content/uploads/2017/05/HMcClintock_VU0D13181.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/HMcClintock_VU0D13181-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/HMcClintock_VU0D13181-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/HMcClintock_VU0D13181-768x512.jpg 768w" sizes="(max-width: 1024px) 100vw, 1024px" />Victor Ochen</div>
“Every year, hundreds of Africans die in the Mediterranean Sea trying to escape Africa. Why do they leave, what is wrong? It is because of the lack of integrity of power.”
Sharing the stage was Hollywood star Forest Whitaker, a UNESCO Special Envoy for Peace and Reconciliation,  who played former Uganda President Idi Amin in the 2006 film The Last King of Scotland. Unlike other Hollywood stars, he helps African children on the ground, rather than adopt them.
“The people of South Sudan are resilient, they want to stay in their country, they don’t want to leave but they are forced to leave their crops because of the conflict.”
Whitaker, born in Texas and bred in California, has been working quietly in the dust of warring South Sudan where 50,000 have been killed and more than half the people have no food. No one knows him there, he says, which helps in his work. This includes helping child soldiers lay down their weapons, giving them a sense of purpose, by teaching them how to deal with conflict instead of perpetuating it.
“The youth are now negotiating conflicts in their communities. They are dealing with everything from negotiating with the army to stolen cattle,” says Whitaker.
Many African leaders could do well to listen to the passionate voices of Ochen and Whitaker.

Robert Gabriel Mugabe

The Pain Of Mugabe

As soon as I graduated from university there was an invitation from the managing director of a top Nigerian engineering company to join the organization. There I learned the business of construction and after four years of strategic support work I left to start my own building engineering service firm with a partner. It looked easy!
In Nigeria, starting a new enterprise seems like a piece of a cake and it’s very convenient for people to suggest you should “start something on your own”.  Lagos, where I live, has an annual government revenue one of around $1 billion. With this kind of cash seemingly flowing through the streets, it is assumed it is easy to finance one’s start-up.
My partner and I started our business with our tiny fund – around $320 – and within a few months, had invested most of it on marketing. We didn’t have a car to drive around Lagos so we used taxis to get to meetings. We pushed on until we eventually landed a construction site deal. This process taught us how unsupportive financial institutions in our part of the world can be.
The average entrepreneur in Africa finds it difficult to get their idea to market because of ridiculous interest bearing loans. As we began to talk to our banker for financial support, it became clear that the banking sector was not going to be of much help. We did not have a property, in a choice part of the city, to guarantee the loan which in itself attracts over 20% interest.
With time running out, and needing to get our workers and equipment to site, we resorted to a desperate measure. Desperate people do desperate things. In this case it was a ship sinking decision for us. A private investor offered us a short-term loan with a monthly interest of 15%. We assumed all would work out; we had millions to get people and equipment to site, and substantial work could be done to impress our client. Within 30 days, we would be paid and refund our creditor. It was unrealistic.
In an environment where uncertainty is high, relative to other part of the world, such a straight-line strategy requires many back-up plans. Our company defaulted and the loan extended to a third month, with an accumulated interest of 45% on every million naira. We defaulted because our client delayed payment. He couldn’t pay us because his funds were not released. That circle of failure is the undoing of many businesses.
In a society where moneylenders and investors place an emphasis on the reputation of an entrepreneur, one needs to have a plan to protect this. The harshness of the African business environment triggers desperation and keep entrepreneurs focusing on short-term plans. This needs to change; the longer a business’s plans are considered, the better it will be. There are other strategies that work with raising fund. In south-western Nigeria, Yoruba parlance says that “it is from home that treasures are taken out”. The interpretation is that success begins at home.
Many business owners that I have had the opportunity to talk to use their relationship with family and friends to raise funds, equipment and other resources. The benefit of this is that family is more willing to forgive you and this type of loan usually comes without interest. However, this strategy is limited on a continent where around 70% live below the poverty line.
This provides a huge opportunity for capital ventures and angel investors. It provides opportunities to bridge the poverty gap and create wealth on a continent that is thought to be the next global investment destination. To truly realise this opportunity, the purse of an entrepreneur shouldn’t be bullied.

Desperate People Do Desperate Things

As Nigeria continues to grapple with its worst recession, two pressing concerns revolve around its struggle to diversify – the state of the local manufacturing industry and the level of government’s commitment towards industrialization.
Nigeria is sub-Saharan Africa’s largest economy which boggles my mind when I consider the abject decline in the real GDP, income, employment, manufacturing, and retail sales.
The Nigerian economy is chiefly governed by oil and natural gas. While the oil sector provides almost 30% of the GDP and accounts for 90% of the total export capacity, the manufacturing sector provides around just 4%.
The sector is undergoing industrial collapse. The Manufacturers Association of Nigeria (MAN) reported that 272 companies shut down in 2016, 50 of those were manufacturing companies. Other reports claim that more than 1,500 of the 2,500 registered manufacturing companies folded up while millions of employees have lost their jobs.
At the forefront of this decline is Nigeria’s reliance on oil and the failure to make hay while the sun was shining. This focus on oil derailed Nigeria’s progress to becoming an industrialized nation. The government’s recklessness is to blame for the industrial failure, such as power problems, infrastructural deficit, economic mismanagement, taxation discrepancies, policy uncertainty, weak investor confidence, restriction of foreign capital inflows, affixation to irrational importation, and, notably, the low income of consumers.
As commodity prices plummeted, the manufacturing sector has impressively emerged. Despite challenges, the huge demography and being the largest African market makes Nigeria ripe for investment. The United Nations had projected that Nigeria’s population will rise to 240 million by 2050. Also, Renaissance Capital and Frontier Advisory forecast that the country’s economy will grow to $1 trillion by 2025. These are signals of the potential of industrialization.
All that is needed to harness this potential is the willingness of the government to act. A robust manufacturing sector and a willful program for industrialization are equally crucial for the dream to be realized.
It is, therefore, unsurprising that the present government is jumping on the industrial horse to achieve economic reform that will replace the oil and gas with manufacturing and agriculture.
“My engagements with the organized and informal sectors has been mutually affirmative that we should work harder in partnership and disagree less, grow confidence with greater transparency by government, and accelerate actions rather than words, to build our capacities and secure development,” said Nigeria’s Minister of Industry, Trade and Investment, Okechukwu Enelamah, at the Nigeria &amp; Entrepreneurship Summit &amp; Honors in December.
Since then, however, not much has changed. Private businesses are still hindered by unfavorable laws. To this end, the National Assembly is working on legislative economic reform – with 30 bills, including the Petroleum Industrial Bill, Infrastructure Investment Protection and Regulation Bill, Railway Sector Reform Bill, and Tax and Revenue Law/Bill. If successful, such a revolution would be a shot in the arm for industrialization.
The hopes of entrepreneurs and local manufacturers are also bolstered by the Made in Nigeria campaign, which is receiving encouraging support from top to bottom. President Muhammadu Buhari has reassured Nigerians that his administration is working on enhancing the support of locally made goods as well as improving access to finance for small and medium-sized enterprises across the country.
Despite enduring hardship at the moment, Nigeria can be reassured that greater opportunities lie ahead.

Nigeria Needs Industrialization now

Over the past decade, Kenya has taken considerable steps towards deepening financial inclusion. This is reflected in the 2016 FinAccess Household Survey which shows that slightly more than three-quarters of Kenyans are now formally included by the financial system, which is a 50% increase over the past 10 years.
According to the report, the percentage of Kenyans relying on informal services providers decreased from 32.11% in 2006 to 7.2% in 2015. Thanks to technology, 18% of Kenyans now use new mobile banking services such as M-Shwari and M-Pesa, a scenario that has pushed the proportion of bank account users to 38%, up 10% from 2013, while traditional bank accounts have decreased.
Despite the significant progress seen towards enhancing financial inclusion, there is much less success in the use of investment products, such as shares, mutual funds and treasuries. The study showed that the use of investment products decreased to 10.6% in 2016 compared to 11.6% in 2013. Findings by the same survey also revealed that the number of Kenyans familiar with the Nairobi Securities Exchange (NSE) stood at only 38%. It seems that a lack of awareness could be why less than 30% of daily market transactions at the NSE are attributed to local individual investors.
But there is hope. Mobile phone platforms are being used to increase awareness and participation. Data shows that 26% of Kenya’s adult population own a smartphone or other smart devices. The uptake of mobile banking services has led to an increase in the banks’ penetration in the past 10 years, from 14% in 2006 to 38.4% in 2015. Investment managers, stockbrokers and insurance companies will also be buoyed by market studies that show that 71% of the population uses financial services provided by mobile financial service providers. This is a clear sign that mobile phones are the best way to encourage investments.
In light of this, the Kenyan government is launching the mobile-traded government security, M-Akiba. Kenyans with as little as $30 will be able to bid for the upcoming five-year income tax-free bond using their M-Pesa accounts. Investors will rejoice; M-Akiba returns are expected to be better than the current fixed deposit rates and most money market accounts. Stockbrokers have not been left behind either – at least three of them have recently launched mobile apps aimed at retail investors looking to buy shares, monitor their portfolio holdings and check account balances via their mobile phones.
But, the road ahead is not without obstacles. One is the low incomes among Kenyans. According to household survey, 75% of adults earn less than $150 per month. This may hinder most Kenyans from taking up financial products. A lack of trust among women towards formal financial institution is another major challenge. According to the latest quarterly report by the Capital Markets Authority (CMA), women account for merely a third of the total number of investors. Low levels of education in the country are also an issue, with 60% of the population not completing a secondary level of education. With this in mind, it could be daunting when it comes to selling sophisticated financial products, such as derivatives and exchanged traded funds. Even among the educated, stakeholders will have to fight to shake off the persistent fascination with real estate.
At least Kenya is showing resolve to deal with the challenges. There is a big chance to make real changes to how people invest; all that is needed is a phone.

More Phones more finance

It’s a big claim and these two entrepreneurs are sticking to it. Fernando Pinheiro and Michael Muller started an online shop to sell your secondhand car – that they say will take you 30 minutes – after they got screwed over trying to sell their own.
“Mike and I both had really really bad experiences and that’s why we wanted to start this business,” says Pinheiro.
Hence CarZar was born. Their business model is simple; fill an online form which uses national data and CarZar’s very own algorithm to find a price. If you accept the price, CarZar sends over an inspector and 30 minutes later, you have cash in hand.
It all came the hard way.
“I was moving from Cape Town to Johannesburg on a new job. I tried to sell my car privately online to get a higher price,” says Muller.
“It was a BMW 3 series, a 1996 model – I called it White Lightning. It had at some point overheated badly, and according to my mechanic it had put strain on the whole cooling system. So every month or two one of those parts would break,” says Muller.
It took weeks of wheeling and dealing online until Muller was willing to meet a buyer for R25,000 ($1,800).
“We met outside in some car park in Milnerton, with a dicey pub and an internet café. When we got there, he offered me R5,000 ($360) less, which was 20% of the car value. I rejected the offer.”
At this point Muller was in a fix. He was leaving for Johannesburg the next day.
“I didn’t have more time to go and find more people. He was an ugly guy. He was rude to me and then he had offered to pay less than what we had agreed upon. I really didnt want to sell him my car. As I stood on the pavement watching this guy pull off, I flagged him down and said fine.”
“We walked into the cafe where we made the transfer. I watched him do it, and at the time I hoped he was doing it. You still never know. I had to take the risk. It was really ugly. But the transfer went through. It was the biggest transaction I had made in my life and it had been a complete failure.”
Pinheiro too had trouble getting anyone to buy his car. Having moved to South Africa from Brazil, he bought a secondhand Chevrolet from a dealer when he worked as an engineer consulting for firms Engevix and Passarelli.
“I remember the smile of the dealer who I bought the Chev from. His face lit up. Once I bought it I remember looking at it covered in dust and thinking I had paid a good price for it. But, when I tried to sell it, I visited eight dealerships and none of them wanted to touch it. One would maybe accept it as trade-in. I’m still driving it to this day,” says Pinheiro.
With their bad experiences fresh on their minds the two teamed up to look for ways around it online. Pinheiro looked back to Brazil.
“I saw the same business model being implemented in my country, Brazil. I knew one of the founders and it seemed to me like a very good idea,” says Pinheiro.
Muller, who had quit his corporate chartered accountant job at McKinsey &amp; Company, in Johannesburg, and returned to Cape Town, was now designing a hotel app in the same building as Pinheiro. Pinheiro convinced Muller that cars and online sales were the better option.
“We did some basic market research. We noticed a huge space for innovation and space for improvement in trade in the auto trade industry. I needed a bigger pool of qualification which is where Michael came in,” says Pinheiro.
“South Africans are getting more used to online internet services to buy stuff. In our specific case, we noticed most of our traffic is coming the age between 18 and 35 years, which is quite expected. What we also want to achieve is those ages between 35 and 65 years old, normally unused to selling cars in different ways, those that don’t use the internet or don’t care.”
With a R3-million ($220,000) investment from Silvertree Internet Holdings, a tech startup company based in Cape Town, CarZar launched in April. It saw 6,000 inspections in just eight months.
“You need to sell the cars quickly so you don’t need such large amounts of capital. If you can turn over that car in three days then you can turn over the capital quicker,” says Muller.
“There is one group of customers who think this is a great product. Then there is another group that aren’t satisfied with the price. What people often forget, the dealer needs to recondition the car. Fix it up. In a private sale you don’t need that. Then the dealer needs to house this car on their floor and get someone to come and buy it.”
Their first hurdle was dealing with the dealers.
“When we started out we struggled to sell the cars. Car dealers are particularly nervous guys; it took a while to gain their confidence. When we first did the market research they tell you they are desperately short of cars. But then you take them a car and they look at it and say it’s not so great,” says Muller.
Their first experience selling a car was also a learning curve.
“We thought it looked nice, we had no idea what we were doing. It was a 2009 white Polo. The guy didn’t want to give us the documents of the car. Once we tried to sell the car to the dealers, we had a horrible surprise. We were actually trying to sell ‘lemons’ to the dealers. The car was totally f***ed,” says Pinheiro.
They call them lemons in the car industry – cars so bad they leave a sour taste in the mouth.
“After the dealers pointed it out to us it was clear. You can get a car that looks really neat and if there is structural damage it’s worthless,” says Muller.
“You can pay top-dollar price for a car that’s worth half of it,” says Pinheiro.
Other than cars that leave a sour taste, the two entrepreneurs also have the challenges of building an online business. They complain there aren’t enough qualified programmers.
“We’ve had job recruitment agencies looking for a year and we just can’t find guys. It’s been a real strain. We need web developers. It’s a huge gap. This will be a trend for the future and it could make South Africa a really power internet space if you get to the source and solve the lack of developers. There are a lot of entrepreneurs who want to do a lot of stuff, they even have access to capital but they can’t find the helpers,” says Muller.
“In the past when I was a kid normally would go to specialized English schools, after school. What’s happening in Brazil now is parents are sending their kids to learn how to code. These kids are 10 years old and it’s the future. Learning how to code is just as important as learning how to speak English,” says Pinheiro.
Experience talks. Tyre kickers and time wasters walk.

We’ll Buy Your Car  In 30 Minutes

You might be the most charismatic entrepreneur since noodles were invented, but recruiting the best talent, and retaining it for at least seven years, is a complicated task in today’s world where professionals are hopping from one company to the next. For many millennials in particular, staying four years at one company for four years is not desirable.
Who you bring into your company, can make or break its reputation. It can either be a disaster or glorious journey.
Jim Collins, in his book Good to Great, uses a bus to illustrate this. Before the bus starts driving, you need to find the right people, put them in the right seats, and only then can you decide where you want to go.
When the US government was breaking up John D. Rockefeller’s company, Standard Oil, he asked that he identify certain people he would like to retain. He did this because he knew he could put together another successful company with the right people.
Recruiting the same high-minded people, that share your ambitions, can be challenging. You end up with the scenario of leaders leading leaders, which can lead to friction.
I hear many entrepreneurs saying you should hire people more intelligent than you. This should be done with caution because you might find yourself in a position where your leadership is undermined. However, you also don’t want to be working with people that are incapable.
Some employees in your company may be entrepreneurial – they’re called intrapreneurs. They need to be enabled, rather than suppressed. Give them the freedom to come up with new ideas in your company, like Alphabet, which owns Google. This is a company that is innovative by nature and has a culture of enabling such restless souls – otherwise they will resign and start their own thing.
If you are, or ever have been, an entrepreneur, you will know that finding a right match for your company can be arduous. It is for this reason that numerous hedge fund companies, like Citadel and Bridgewater Associates, still interact with new candidates and recruits.
The conundrum we face is that we don’t always keep those recruits, no matter how much we value them. It has been found that, on average, only one out of 16 employees will remain for an extended period of time at a company.
Some companies, once they have shortlisted eligible candidates, try to talk them out of wanting to be employed there. They do this to ensure that they only hire people that are passionate about working for the company. The reason for this is that it is better, and more cost effective, to lose a candidate than an employee.
Goldman Sachs has one of the most vigorous recruiting processes. They will ask candidates to come at a certain time, then when they arrive, the senior personnel from Goldman Sachs won’t be there for the appointment, or will arrive late. The candidates who leave before the manager arrives will not go further in the process; those that remain are told the moral of the experience is to learn to wait for someone who is higher than you in business hierarchy.
In your company you have three groups of employees who roughly make up these percentages, the 20%, 60% and 20%. The first 20% are the unproductive people you wish to fire at the first chance you get; the second 60% are average employees, who are  and consistent, and who form the core of any company; the final 20% are your top-notch employees, who generally over-perform. The problem with this group is that everyone wants them; competitors are continuously trying to snatch them. For this reason, they tend not to stay long at a single company, instead moving to the highest bidder in the market.
That middle group – the 60% – is who you need to nurture. They will stick with you and their loyalty will produce the best results.

Hang on  to your stars

The long delayed signing of a new trade agreement with the European Union further exposes the chaotic state of integration within the East African Community (EAC) bloc.
The pact, known as the Economic Partnership Agreement (EPA), was originally set for ratification on October 1, 2016, but, five months later, that is still to happen.
The impasse has split the EAC bloc. While Kenya and Rwanda signed the agreement in September last year, Tanzania, Uganda and Burundi are yet to do so, citing the need for more time to analyse the deal.
The stance taken by Tanzania, Uganda and Burundi means that the pacts signed by Kenya and Rwanda are inconsequential – a new agreement with the EU must be endorsed as a bloc.
Tanzania’s President John Magufuli and his Uganda counterpart l have remained vocal against a rushed deal with EU, even as Kenya’s frustrations deepened given the risks of not concluding a deal with Europe.
“It is better if the signing of the deal is shelved until further consultations are made,” Museveni told a media briefing while on a state visit in Tanzania at the end of February.
Kenya stands to lose the most if the deal falls through. The other EAC member states – Tanzania, Burundi, Uganda and Rwanda – would continue to get duty- and quota-free access under the EU’s Everything But Arms (EBA) initiative, since they are classified as the least developed countries.
This whole quandary shows how shallow the EAC integration has been, despite the bloc attaining the critical customs union status way back in 2005 and a common market in 2011. Integration goes beyond just having such structures; other aspects, such as trust and solidarity, are critical to moving things forward.
A review of recent key events in East Africa reveals massive levels of negative rivalry and mistrust which doesn’t augur well for the bloc. Things have not been well since 2013 when Tanzania fell out with Kenya, Rwanda and Uganda following the formation of their short-lived ‘coalition of the willing’, ostensibly to push for faster integration.
The now collapsed initiative was a terrible diplomatic mistake by Uganda, Rwanda and Kenya because it weakened the spirit of consensus and teamwork in the bloc. Since then, the chaos and mistrust triggered by this wild experiment has been evident in key issues involving the bloc. For instance, a new infrastructure and energy partnership between Tanzania and Uganda has left Kenya frothing at the mouth, especially after Kampala pulled out of an initial deal to build a joint crude pipeline with Kenya in favor of a route through Tanzania.
Kenya clearly feels slighted by the latest dalliance between Dar es Salaam and Kampala as was shown during the recently held election of a new chairperson of the African Union Commission. When Kenya’s candidate in the elections, Amina Mohamed, was defeated, Nairobi promptly pointed accusing fingers at Tanzania and Uganda for allegedly sabotaging its efforts to clinch the position it had highly campaigned for. Both Tanzania and Uganda denied the claims.
“Uganda wishes to state categorically that our support to the candidature of Amina before and during elections was unequivocal. Uganda wishes to reassure the government and the people of Kenya, and Amina in particular, that we remain a reliable ally and partner given our warm and close relations and our commitment to the EAC integration,” Uganda’s Foreign Affairs ministry said in response to Kenya.
Tackling the mistrust and clandestine power rivalry will be critical in putting the EAC back on a clear path to full integration which would help address challenges such as those being experienced in the elusive EPA deal. The big brother syndrome has no place in regional integration and all partners must inculcate a spirit of comradeship to excel.
Kenya and Rwanda must not been seen to be bulldozing the rest to sign a pact with Europe. Their decision to sign the deal ahead of the rest sent the wrong signal to other EAC partners who read mischief in the whole process.
Concluding the deal with Europe is critical for the EAC as it would help settle anxiety among investors. Business loathes a vacuum and efforts must be made to clear all hurdles to find a deal that would be favorable to all.

The Elusive Trade Deal  that split east africa

Life in Nigeria today is like living in a dilapidated caravan, or driving around in a fancy jalopy.
When this sort of accommodation or transportation is your daily reality, then your long-term ambitions become hobbled by the pragmatic quest to simply make it to the next day’s hustle, the next salary, the next windfall or gift from that well-to-do cousin, and perhaps, for businesses, waiting for that large order that may never come. Under these faltering conditions, a balanced diet, quality education, satisfactory healthcare, comfortable and safe transportation, and strategic focus become luxuries.
For most folks, simply existing has become a risk; and for businesses and corporate citizenship, a wasteful pleasure. Phrases like “the economic growth and recovery plan” begin to sound somewhat pretentious. Another government mirage perhaps. Sadly, the disdain for diligence is rife and few Nigerians seem convinced that patriotism has its rewards. The paradox of hoping for affluence has become a pandemic, with citizens, companies and communities prowling around for scarce resources and opportunities like a herd of famished goats. Even government’s uptake of loans – $1 billion from the African Development Bank (AfDB) and $1.3 billion from China’s Exim Bank for rail projects – has not restored confidence in the shaky polity. Another $1 billion World Bank facility is expected to flow into government’s coffers in 2017, says Nigeria’s Finance Minister, Kemi Adeosun.
“The economy is on the path to recovery and confidence in the macro-picture is key,” Adeosun told CNBC Africa anchor Wole Famurewa in February. “Government is focused on investing in the priority areas of power and infrastructure… even as we continue work on payroll clean-ups and efficiency at the state level…”
The dire economy will not stop government from taking its statutory pound of flesh from companies, as oil revenues now represent only 10% of GDP. So, tax reforms will take center stage. At 6%, Nigeria has one of the lowest tax to GDP ratios in the world, with Ghana at 15% and South Africa 24%, Adesoun cautions, warning that “we should be very careful about getting excited about recent crude oil price recovery.”
At the micro level, pervasive poverty, disdain for Abujanomics and the proliferation of dodgy pyramid/Ponzi schemes is the new social order. Camouflaging as financial literacy, network marketing or empowerment programs, they represent on one side, the quest for overnight wealth and absolute disregard for government’s agenda and promissory notes, and on the flip side, the emergence of a new breed of professional charlatans peddling crafty concepts in an increasingly sophisticated economy.  Somebody needs to commission a poll to measure Nigeria’s social desperation index.
In a risk-averse, reward-hungry society such as this, contemporary concepts and capabilities like coding, digital literacy, big data analytics, cybersecurity, the Internet of Things (IOT) and artificial intelligence (AI) are farfetched ideas. Non-profits like the Lagos-based Book Club, which has been promoting the altruistic pleasures of reading books and advocating for a return to the culture of heuristics, seem largely ignored, their activities lost in the babble of personal, communal and corporate survival.
The nation seems to have lost a large portion of its liberal ethos. The number of pepper soup joints and event centers has now surpassed the number of libraries and bookstores in the land. Clearly, the pursuit of leisure and lucre has overtaken the quest for the wealth of knowledge to be found on books – or e-books.
But it is difficult to grow a culture of reading and research when citizens go to bed every night with hunger in their bellies and hyperinflation on their minds. Consumer price inflation peaked at an 11-year high of 17.9% in September 2016 and had neared 19% by February. “2016 was defined by politics and policy spats… our currency and foreign exchange issues led to the economy catching cold. But as we entered 2017 the forex issue moved from being a cold into financial pneumonia stage,” Kayode Oguntayo, a Lagos-based entrepreneur told this writer.
Notwithstanding these issues, Nigeria’s $1 billion Eurobond was eight times oversubscribed during its early hours of trading on the London Stock Exchange last February. The 15-year bond offering 7.875% in trading is the first Nigerian offering since 2013 and the 2015 change of government. Nigerian legislators had last year rejected government’s plan to raise $30 billion through loans.
Could Nigeria be flirting with a new era of economic rejuvenation?

Risks, Rewards  And Eurobonds

When you first meet Sanjeev Kumar, you do not expect the kind demeanor from his serious stature. The Founder of Bank M stands tall in blue jeans, a black Lacoste dress shirt and a black jacket. He breaks into a small smile as we exchange greetings and lets me know that he is ready for anything I may throw at him.
Although he is behind one of Tanzania’s most successful banking institutions, Kumar’s background is very far from finance. Born and raised in India, he graduated with a degree in law, specializing in taxation law, and was selected to join the management-training program at State Bank of India, the biggest bank in India about 35 years ago. It is here that his love for banking was born; Kumar says it grew on him and he wouldn’t go back to law today if given a chance.
So how does a man of Indian descent end up in the coastal city of Dar es Salaam? Call it perfect timing. Kumar built his banking experience with State Bank of India and soon after moved to the French bank BNP Paribas before making the calculated move to Tanzania in 2001 to become the Chief Executive Officer of Diamond Trust Bank (DTB). His time here showed him the challenges his corporate customers had with managing large cash collections that would not get delivered to the bank in time due to the early closing times most institutions enforced.
“When I came to East Africa, banks here were fat cats and customers didn’t have a choice and had to take what was given. Banks used to open whenever they liked and closed promptly at 2PM,” says Kumar.
This gave him the idea to provide customers with better service by extending operating hours during the day and keeping the bank open over the weekend.
“There are banks in Asia who have done the longer working hours strategy and it has worked for them, but they couldn’t incorporate the service standard guarantee so when I saw that, I knew this new model would work very well in Tanzania and Kenya as well.”
Bank M was an idea formulated by Kumar, and five other investors, after he left DTB in 2004. Kumar had a desire to do his own thing and create an institution that provided the type of service customers were looking for.
“We started with focus. I believe focus is the key for good customer care, so right from the word go, we were focused on wholesale banking and within wholesale banking we concentrated on large business families. We don’t do anything else. We don’t do savings accounts, no ATMs – nothing except wholesale banking,” says Kumar.
Since opening in July 2007, Bank M has grown steadily with paid-up capital now reaching TZS73.06 billion (around $33 million) and balance sheet and profitability growing at a compound annual growth rate of 45% over the past decade. The company has since won the heart of the Tanzanian corporate sector with its longer working hours and customer service guarantee. It is the only financial institution in Africa that is open 12 hours a day, from 8Am to 8PM, seven days a week. It also won the Best Commercial Bank Tanzania 2015 award and is the sixth largest bank in the country in terms of profitability.
Kumar claims that this new style of banking has helped Tanzania’s economy in various ways. Many of Bank M’s customers are supermarkets and restaurants that deposit their earnings for the day in the late evening hours. The bank also does cash collections and deliveries from their customers’ offices.
Bank M started at the right time in Tanzania. The country’s GDP has consistently grown since then, at an average of 7 to 8%, but there is uncertainty for the private sector, according to a Stanbic Bank report on African markets.
“Prospects are looking good for Tanzania’s economy as it grows closer to the 7% mark, making it stronger than both the Kenyan and Ugandan economies. The jury is still out though on the various reforms mandated to enhance productivity in the region,” says Jibran Qureishi, Regional Economist for East Africa at Stanbic Bank.
Jesse James A’ruwa, Co-Founder and Senior Investment Advisor at SMA Capital Limited,  however, says banks can still do more.
“There still remains a huge gap to fill in the financial sector to ensure that the public has access to the full array of financial services, including access to money markets and investment funds etc. I believe that for the financial sector to really take strides towards advancing the economy, the stakeholders within the financial sub-sectors need to adapt their products to the reality of the Tanzanian people and their mindsets,” he says.
Kumar has since opened a variant of Bank M in Nairobi, Kenya.  The majority shareholders of Bank M have set up a Bank Holding Company, M Holdings Limited, which has been licensed by the Central Bank of Kenya as a non-operating bank holding company. M Holdings has been licensed by CBK to acquire a minimum 51% stake in local Nairobi bank, Oriental Commercial Bank – now rebranded to M-Oriental Bank. With this new acquisition, the bank will focus on large family businesses in Kenya. Kumar says there is a big difference in finance management between Kenya and Tanzania.
“In Kenya, $1 is just KSH102 while in Tanzania it is TZS2,235, so the circulation is much less in Kenya. In Tanzania, if you change $100,000 you’ll need a suitcase to carry it, but in Nairobi that is still manageable cash. So Kenyans don’t need as elaborate a structure but we will definitely still offer cash pick-up and delivery.”
Bank M plans to expand in eastern and southern Africa, to countries such as Mozambique, the Democratic Republic of Congo, Zambia and Malawi.
Kumar is an avid runner but finding time for this can be difficult. He spends about 14 hours a day in his office in either Tanzania or Kenya, but says it does not feel like work as he enjoys his job immensely. He credits the company’s success on its customer service.
“Our focus on clients is the main factor that determined our success. Giving them the kind of service they wanted, delivering what they need to them at the time and place of their choice,” he says.
Kumar left India to advance in his career as a banker and ended up doing a lot more than that. He has found a new home in East Africa and is playing an important role in developing the constantly growing financial sector here. Fat cats beware.

The Tiger Taking On The Fat Cats

We wait 20 minutes before Siphile Buthelezi walks into his offices in Sandton sporting a tailored suit. On his table is a pile of documents and files of more than 20 clients of his law business. Not too bad for a young man who grew up in a squatter camp, in Clermont, in the South African province of KwaZulu-Natal.
“I start my day by going to the gym, then come to the office to check emails, draft legal opinions and, if it’s a day for litigation, I go to court. If I have board meetings I don’t even come to the office, and once I’m done I come and work until midnight,” says Buthelezi, Co-founder and Managing Director of Buthelezi Vilakazi Inc, a corporate and commercial law firm.
Buthelezi talks fast, with his hands, and has many stories to tell of his short but eventful 34 years of life.
“I’m the eldest of three children and we stayed in a one-roomed shack. So, we’d sleep on a mattress on the floor and my parents slept on the bed. So we would hear everything that happened at night,” he says.
His mother, a domestic worker, desperately wanted her son to be educated, and his father, a construction worker, walked him to school.
“My dad didn’t go to school at all. Even today, he can’t write; for him to write his name he needs to look at his ID but what I admire about him is he valued education,” says Buthelezi.
“My mom would come home, and it still pains me that she’d come with what was supposed to be her lunch at work, four slices of bread, and say this was supposed to be my lunch I brought it for you guys.”
According to Buthelezi, the environment made him want to be a gangster.
“In the squatter camp environment; you get exposed to different people and things, for example there’s a sheeben next door and sometimes you find that your understanding of a successful person is a thug who drives a nice car,” says Buthelezi.
Instead Buthelezi left school for music.
“Growing up I did music and danced for kwaito stars, Mzambiya and Msawawa. I enjoyed it but I knew I couldn’t do it for free,” he says.
This led to him buying a bus ticket to Johannesburg.
“I remember at the time a ticket was R100 (around $7.50), so my group and I came here for more gigs and at some point I wanted to be a full time musician.”
Johannesburg changed his mind.
“What was interesting is that when I got to meet more celebrities I realized their lives are not as glamourous as they make it out to be. There was a group called Tribe, one of the members asked us for R5 and for me that was a shock because I’d see these people on T.V. and then one of them was asking us for money. It was a wake-up call,” says Buthelezi.
Buthelezi went home and toiled at a construction company where his father worked. He used his money from music money to register at university. Luckily his mom’s employer also helped.
“My mom packed my bags and took me to the bus station, she gave me R20 and these are the words I’ll never forget, ‘my son this is all I have but there’s one thing I know, God will be with you’. She had tears of joy that I was starting at varsity but also because she couldn’t give me more,” says Buthelezi.
For Buthelezi, going to university was a dream. He knew he’d be better off at campus than at home.
“In the squatter camps people play music until the early hours of the morning. How are you going to study?”
It was four years of struggle, especially with English.
“Having studied at a public school, and not a model C school, there was a culture shock.  And I had to learn everything in English and some of the professors were foreigners who didn’t pronounce words the way they should have,” he says.
As a result, he failed his first test in constitutional law with just 8%. It took him a few months for his grades to improve. Meanwhile the study loan didn’t cover everything.
“I didn’t have money to buy clothes, food and books. I also got a bursary from Cecil Reynolds charity bursary for outstanding academic performer which covered part of my fees,” says Buthelezi.
In his second year, Buthelezi had a plan up his sleeve.
“My plan was to take part of the [student loan] money, get a driver’s license and a professional driving permit. I approached one of the taxi owners; I asked him if he could give me a chance to drive on weekends. I put it in a way that I’d be relieving drivers then I started driving from Friday ‘til Monday. The owner started rotating his drivers and one driver would be off on certain weekends and I’d take over, they’d even bring the taxi to me on campus.”
“In my first load there’s a lady whom I won’t forget, a classmate, when I got into the taxi, she said ‘are we ever going to get where we’re going’.” Buthelezi shakes his heads and grins.
He’d make about $20 a day. His fellow drivers called him Sfundiswa – loosely translated: the learned one.
“I’d carry my books to the rank, and while waiting for my load I would take it out and study and when the taxi is full I’d put it away and drive off to my destination,” he says.
Hardship was just around the corner. It hurt so much when a girlfriend dumped him that he wanted to kill himself.
“I can tell you now I’ve never been heart broken by anyone but that lady. I loved her with all my heart, I wrote her name on each and every book I had.”
Buthelezi met his wife Slindile, a doctor, on Facebook through a friend and realized that their families knew each other.
The years of struggle paid off – a law degree from the University of KwaZulu-Natal. Fresh out of university, Buthelezi was hired as a candidate attorney at Bowman Gilfillan, a large firm based in Johannesburg.
“In my first year of doing articles I paid off the study loan, I did not wait to build a home for my parents, or take care of myself because I knew the difference it made in my life. I knew my first obligation was to think of another Siphile who needs the loan to study,” says Buthelezi.
He spent a year in New York working for Davis Polk &amp; Wardwell LLP, a law firm where he worked in the Credit and Capital Markets Departments and at Morgan Stanley, an investment bank.
Later, he built his family a five-roomed house.
In 2015, he started Buthelezi Vilakazi Inc, with Amanda Vilakazi, the company’s Head of Litigation and Dispute Resolution. It has another office in Umhlanga Ridge, in Durban.
“I wanted to do other things, not just law, but get into business that I couldn’t do at the time and to also serve our government in audit committees.”
Buthelezi is also the Co-Founder at RadioVybe, a social media app; Non-Executive Director at South African Airways (SAA); Board Chair at SAA Technical, and Deputy Chair at KZN Growth Fund.
“As a boss, I expect the best from anyone who works for the firm. I expect the best documents to go out to clients.  Clients of the firm are my clients and anyone who works for me needs to treat me as their client. They need to impress me as I impress my clients,” says Buthelezi.
“Never even once undermine any type of work, another person would have said no to taxi driving. Many young people say no to doing odd jobs. In those jobs you meet interesting people; when they see you’re focused, they open doors for you. Opportunities given, grab them with both hands, run and never look back.”
Unlike his first taxi passengers, Buthelezi is certain he will get where he is going.

A Ride From A  Taxi Driver  To Legal Eagle

Ali Resting, the pioneer of Swaziland’s internet, chuckles when he speaks of failing first-year computer science at university. As a tech entrepreneur and university drop-out he is in esteemed company. He follows a well-worn path walked by Apple’s founder Steve Jobs through to Twitter’s Jack Dorsey and the most famous drop-out of them all, Microsoft’s Bill Gates.
Resting’s parents did not quite see their son through that prism of the failed graduate set to blaze new frontiers of technological advancement. He returned from South Africa’s Rhodes University in 1996, aged 18, and got the silent treatment.
His university studies at a premature end, Resting began work at his father’s civil engineering company in Swaziland’s capital Mbabane, which shared offices with an architectural firm. At a younger age, Resting had ambitions of becoming an architect, attracted by its “visual aspect”, and drifted unconsciously to that side of the offices.
He found the architects somewhat bemused about how to network their 20-odd office computers and took on the “pet project” and successfully built an intranet system. It was a pivotal moment for Resting as he realized then that his passion was his vocation.
Resting had failed his university year through the distraction of Rhodes University being one of the earliest among South Africa’s tertiary education institutions with access to the internet and he soon went walk-about from his studies.
“I would spend a lot of time fiddling in the labs (at university) and I learned and understood about the internet, which at that stage was just known as the World Wide Web. I found out about an internet research project, which had nothing to do with the curriculum perse, and I soon became well acquainted with it.”
An only child, born in 1978 to a Welsh father and Swazi mother, he was exposed to rudimentary PCs at an early age and quickly became astute with DOS and other programs. His academic primary school progress saw him accepted as a weekly border at the Sisekelo High School, initially established by sugar milling companies to provide well-resourced education for the children of their expatriate employees.
“It was very strict. We were not allowed to hold hands with the girls, we were not even allowed to be within five foot of a female,” says Resting.
The school on the banks of Usuthu River in Swaziland’s Lowveld region, however, had a couple of computers and Resting spent leisure time writing computer programs and a 3D version of the game Minesweeper. He became so proficient he assisted in teaching computer studies to his classmates.
His maths teacher advised him: “Maybe I should think of IT as a profession and not architecture. So he got me thinking about IT as a career. But back then the only company that anyone had really heard of was Microsoft… I didn’t see it as a skill then; just a passion.”
Following Resting’s intranet installation, the “pet project” quickly established a momentum of its own. Working with Lachezar Karadjov – an architect fascinated by the concept of global connectivity and who was to become his business partner – he created a basic gateway to CompuServe, the first major US commercial online service provider. Swaziland joined the internet age.
Real Image’s formative years saw the door-to-door selling of internet dial-up email services, initially signing up five subscribers who remain on the books today. The fledgling company built the country’s first internet website portal and claimed some prime digital real estate with the ownership of the legend swazi.com. But income remained elusive and Karadjov shared some of his architect salary with him.
“We had no idea how we were going to make money at that stage,” says Resting.
His partner was 30 years senior to the teenage tech entrepreneur. Resting acknowledges, although at the time it went unrecognized, the benefits of Karadjov’s mentoring of him in the ways of business. Karadjov was to retire from Real Image a few years later in 2004 and Resting bought him out to become the company’s majority shareholder.
In the early days Real Image’s office space was a cubicle in the architect’s offices. As the business expanded, so did the computer hardware which began to spill out and display tangles of electrical wiring and connections.
“It was damn hot, and it never looked good, as we had customers walking in and seeing all these things.”
At 19 years old, Resting’s company, Real Image, became Swaziland’s first internet service provider (ISP).
The financial gravity of Johannesburg pulls the bright and the talented to it from throughout southern Africa. Resting’s lack of a degree would not have handicapped him from employment in South Africa, where the IT industry’s rapid evolution thrives on the innovative.
But he never considered it as an option.
“I want to leave a legacy behind and I want to be known as the guy who brought connectivity to this country and I continue lobbying to bringing proper connectivity.”
“To go to South Africa is about making a quick buck and a substantive living working in those markets. In Swaziland I get to experience all the challenges there are to rolling out a network, be it terrestrial or wireless. Money will come in due course, I am not worried about that. But what we are doing is building value.”
“Our (Real Image) rate of growth used to be 6 or 7 percent. Now we are hitting the 15 percent mark compounded, which is 17 to 20 percent year on year. We may be doing R30 million ($2.3 million) [annual turnover] today, but in five years we may be beyond the R50 million ($3.8 million) mark and it is an organically grown company.”
As a dominant player in connectivity, employing 40 full time staff, Real Image hosts 80% of the country’s internet content, and provides a range of services, including internet or intranet, through to website development and tailored software.
“One of the ways to quickly grow your numbers is buying up the small operators. But then what are we trying to achieve. We are very much driven by quality of service and believe that we provide a superior product.”
The geographical triangle of Mbabane, Manzini and Matsapha, about 20 kilometers apart at their furthest apex, forms Swaziland’s industrial base and hosts its manufacturing and finance industries, some of King Mswati III’s myriad palaces and the seat of government.
Swaziland’s comparatively much higher internet costs to neighboring South Africa is a consequence of a government parastatal acting as the gatekeeper for importing bandwidth and able to charge monopoly prices in an uncompetitive arena. Within this constricted operating environment, Resting is on a mission to reduce data costs and increase connectivity speeds by making the epicenter of the Swazi economy a WiFi zone.
Owing to Mbabane’s mountainous terrain five WiFi towers have been built to service the capital, each structure costing R500,000 (around $38,000) before the installation of the electronics, but fewer are required in Matsapha and Manzini as the landscape gives way to shallow undulating hills.
In October last year, communications minister Dumisani Ndlangamandla cut the ribbon to open Real Image’s Mbabane headquarters. The double–story, open-plan offices has a public internet cafe – with limited free data access – and amid the workspace’s rows of computers a tabletop football game. The architecture firm that provided him a small cubicle for his initial foray into the digital world is now a tenant at the new offices.
Resting says he has the “ear of government,” and continues to lobby for the liberalization of the sector, including the removal of the “exclusivity clause” that makes the import of bandwidth the sole preserve of a government parastatal.
“My hope is that by the end of this year (2017) the pricing of the internet is going to drop dramatically in the country. Dramatically,” Resting predicts with a smile.

Category: Investment Guide

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