Corporate Africa has to urgently pandemic-proof itself with new ideas, innovations and emotions, to merely stay alive fighting a marauding virus.
The verdant vineyards of Stellenbosch, a charming wine town in South Africa’s Western Cape province, offer breath-taking, panoramic views of the rolling hills, valleys and mountain ranges fringing them.
Only that there are no tourists to marvel at them now – and perhaps will not be for a long time to come.
Like good wine, these views will stay but who will savor them?
Like every other industry on the planet, South Africa’s wine industry too, which produces some of the finest wines and spirits globally and employs millions in its tourism collaterals, has been severely impacted by the Covid-19 pandemic.
Even with the President Cyril Ramaphosa (whose leadership at this time was commended by world leaders and media) easing lockdown restrictions to Level 4 on May 1, liquor and wine sales are prohibited, and the big players say the local industry has taken a hit.
Former banking CEO and wine entrepreneur Michael Jordaan speaks about the effects the crisis has had on business.
“Local sales represent 50% of industry turnover,” says Jordaan. The export ban was lifted five weeks after the lockdown but by then, he feels “precious sales and rack space” in export markets were lost to foreign competitors. “Related wine businesses such as wine tourism or restaurants are suffering the most as income has gone to zero while many costs remain.”
The wine industry is already a high-cost, low-margin business, he adds, with industry surveys showing that only 28% of wine grape producers made a profit in 2019.
Most wineries were cash-strapped to start with, and the pandemic has left a bitter after-taste.
“It is inevitable that many of the 290,000 jobs in the industry will be lost…” he says.
Premium wine houses are now looking at offbeat ways to sell and deliver online.
Jordaan’s Bartinney Wines – in the Jordaan family since 1953 – is produced from a 28-hectare farm in Stellenbosch, and he says he has made it a priority to look after staff using savings and income from non-wine businesses.
“We’re also exploring new export markets but struggle as this usually requires trips to sellers which are obviously not possible,” he adds.
The wine-drinking wealthy across the continent are also not immune to the crisis. Some South African billionaires, listed by Forbes every year, made announcements to help fight Covid-19 even before the government announced the lockdown.
Billionaire Johann Rupert and family, worth $4.6 billion (as of mid-May according to Forbes), announced R1 billion ($54.73 million) through the Sukuma Relief Programme “consisting of grants and low-interest bearing loans with a 12-month repayment holiday, given to formal sole properties, closed corporations, companies and trusts”. On April 6, the program closed the application platform on account of the overwhelming response. Ben Bierman, administrator of the program, told CNBC Africa the relief program received applications in excess of R2.8 billion ($153 million). Nicky Oppenheimer and family, worth $7.5 billion (as of mid-May according to Forbes), made two contributions towards Covid-19 relief. The first made by Nicky and son Jonathan, pledging R1 billion ($54.73 million) to the South African Future Trust (SAFT). Following in her brother Nicky’s footsteps, the second pledge came from Mary Oppenheimer-Slack and her daughters who pledged R1 billion ($54.73 million) to the state’s Solidarity Fund, stating it’s “most aligned to our concerns about basic needs, food, medicine, general care and gender abuse”.
The Motsepe family pledged another R1 billion ($54.73 million) to the country’s coronavirus Solidarity Fund and said the pandemic has shifted the priorities of the Motsepe Foundation. The Founder and Chairman of the foundation, Patrice Motsepe, with a net worth of $1.5 billion (as of mid-May as per Forbes), said: “The Motsepe family and companies we are associated with, will continue to do everything possible to assist health workers, poor rural and urban communities and all South Africans to prevail over the current coronavirus pandemic.”
Other established South African businessmen such as Douw Steyn and family pledged R320 million ($17.5 million) through the Douw Steyn Family Trust.
Globally, tech billionaires such as Jack Dorsey, CEO of Twitter, worth $4.7 billion, announced on April 7 that he was moving $1 billion of his Square stock to support various causes including Covid-19 relief efforts. The tech billionaire didn’t specify how much of the $1 billion donation would be going towards the pandemic.
Chinese billionaire and Alibaba co-founder Jack Ma donated protective equipment to all 54 countries in Africa through his Jack Ma Foundation and Alibaba Foundation. The donation includes a total of 1.1 million test kits, six million masks and 60,000 protective suits.
Global tech billionaire Bill Gates and his wife Melinda committed more than $250 million through their foundation. According to Forbes, much of it will be spent on vaccines, treatment and diagnostic development.
“Covid-19 has essentially become a catalyst for the shift which was bound to happen,”– Sipho Maseko, CEO, Telkom Group
Whilst the big dollar signs bring hope, the numbers for Covid-19 continue to bring gloom as worldwide statistics rise.
At the time of going to press, the number of cases globally was over five million, with the death toll over 325,000. So far, almost two million worldwide have made recoveries. Africa has over 90,000 cases, with 2,900 deaths and over 35,000 recoveries.
But the big global bodies overseeing the crisis say the world’s youngest continent, Africa, may suffer heavily if the disease is not contained.
The World Health Organization said in a statement released early May that “83,000 to 190,000 people in Africa could die of Covid-19 and 29 million to 44 million could get infected in the first year of the pandemic if containment measures fail” as per a new study based on prediction modeling, looking at 47 countries in the WHO African region with a total population of one billion.
According to the International Monetary Fund (IMF), “sub-Saharan Africa is facing an unprecedented health and economic crisis that threatens to throw the region off its stride, reversing the development progress of recent years and slow the region’s growth prospects in the years to come”. It predicts the region’s GDP to contract by 1.6% this year, making it the worst forecast on record.
On its part, the African Development Bank (AfDB), led by president Akinwumi Adesina, is supporting the continent through the Covid-19 crisis with $26 million for the Africa Centers for Disease Control and Prevention, for the procurement of critical medical supplies. The bank also launched a $3 billion ‘Fight Covid-19’ social bond, with bids exceeding $4.6 billion. It also launched a $10 billion Crisis Response Facility to support Africa to address the pandemic.
Because Africa’s financial markets are less developed than many of its global counterparts, Gary Booysen, Director and Portfolio Manager at Rand Swiss based in Johannesburg, says: “They often struggle with liquidity. As the world grapples with the economic fallout of the lockdowns and Covid-19, risk appetite will almost certainly diminish. This will likely see money initially flowing out of more speculative frontier markets. This, in turn, could potentially result in undue pressure being placed on African financial assets.”
With these forecasts, what is the way forward? Corporate Africa is grappling with the hard reality and is in the process of re-strategizing itself. The only hope is if big businesses realize that they have to not just come up with forward-thinking views but also unlock much-needed solutions and even their balance sheets to help all in these times of uncertainty.
And technology and interconnectedness should be the forces driving these collaborations.
Makhtar Diop, the World Bank’s Vice President for Infrastructure, states on the bank’s website: “Governments, regulators and the telecom industry must do all it takes to deploy affordable, reliable, and safe digital technologies… to work together to achieve the promise of new technologies for all and keep the world connected.”
On their part, telecom companies such as Vodacom have stepped up. Shameel Joosub, CEO of Vodacom Group Limited, says it plans to donate 20,000 smartphones, 100 terabytes of data and 10 million voice call minutes to South Africa’s National Department of Health to collect and transmit data in real time for resource planning purposes as the government accelerates its Covid-19 testing campaign. Vodacom recently entered into a partnership with Discovery Health to offer free virtual consultations with doctors for the general public. The telecoms company has experienced a significant increase in fixed and mobile network traffic since the lockdown, attests Joosub. As a result, Vodacom has accelerated its investment spend.
“As the world becomes more online and more digital, it would make fiber and 4G-investment ready for that. This has always informed our investment strategy. Covid-19 has essentially become a catalyst for the shift which was bound to happen,” says Sipho Maseko, CEO of Telkom Group, to FORBES AFRICA. The telecom provider delivered a tracking and tracing system for Covid-19, “in record time”, working with the National Institute for Communicable Diseases (NICD) and the Council for Scientific and Industrial Research (CSIR) in South Africa. Maseko believes that as big businesses face an economy and society that has been changed fundamentally by Covid-19, they will need to find innovative ways to adapt, deliver services, and drive growth in a challenging economic period.
“Tech innovators will find business opportunities in the difficulty,”Darlene Menzies, CEO, Finfind
Megan Pydigadu, Group Chief Financial Officer of EOH, a technology services provider in Africa, believes the company is systemic to South Africa’s IT backbone, and as a result, creates significant responsibility for the company as an organization during the pandemic.
“We have implemented short and medium-term cash flow forecasting which pre-warns us of anything we need to deal with,” says Pydigadu. On potential opportunities and trends coming out of the industry, Pydigadu believes that EOH needs to develop product solutions that will last beyond the company’s current circumstances.
“The ‘new normal’ is here to stay and is going to change the ways of working. There will be an increased need for virtualization and the effective use of information, AI and data to reduce costs as we face an ongoing recession in the medium-term,” says Pydigadu. The CFO says the company is looking at opportunities to accelerate digital transformation for its clients.
As companies continue to look for solutions, one thing is crystal clear.
Corporate Africa is reiterating the need to future-proof businesses through new innovations – and they have to act now.
For years, the question of whether businesses are prepared for the fourth industrial revolution (4IR) has been posed. The pandemic has no doubt now answered that question. Perhaps what we need to ask is how quickly companies must now adapt to 4IR.
Darlene Menzies, CEO of Finfind, an online finance solution platform that brings together the providers and seekers of SME finance, believes online businesses will thrive as traditional forms of business grind to a halt.
“Tech innovators will find business opportunities in the difficulty, and we will see many new businesses birthed that provide solutions to address the gaps that this challenging time has presented,” says Menzies. She believes it’s important every business uses the lessons learned from the pandemic to ensure they are better prepared for any future disaster.
She reckons the world will see a lot of change with more firms deciding to move to a hybrid of virtual and physical work, and many transitioning to an entirely virtual operation. Menzies says the pandemic has also exposed the need to increase the accessibility of the digital economy to people at the base of the pyramid, in order to ensure that everyone can take full advantage of the benefits.
As the world finds itself at the mercy of the digital economy, perhaps more can be achieved through partnerships?
Kweku Bedu-Addo, CEO of Standard Chartered Bank in South & Southern Africa, says the pivotal lesson during the pandemic has been the need for greater collaboration.
“It’s clear that we need better collaboration globally to be able to identify a developing crisis sooner, to enable the world to react faster to minimize the fallout,” says Bedu-Addo.
Speaking on digital technology, Bedu-Addo believes that many in the banking industry, and other industries, have had to quickly and safely expand access and capabilities in the area of technology.
“If it [digital technology] is fully integrated into a company’s strategy, it can benefit all employees and help businesses thrive in a time like this.” Standard Chartered has committed $1 billion of financing to support companies that provide goods and services to help in the fight against Covid-19. In addition, the bank has launched a $50 million global fund with donations from colleagues and the bank to provide assistance to communities affected by Covid-19.
“We have seen a 650% increase in alternate channelsin the last two weeks of March alone,”– Robin Bairstow, CEO, I&M Bank Rwanda
Similar examples abound in the rest of the continent. In East Africa, more banks have responded to the pandemic.
The CEO of Rwanda’s largest commercial bank, Bank of Kigali, says the bank’s staff set up a fund to support the most vulnerable in Rwanda’s communities affected by the health crisis. “We have provided relief measures to our clients, waived various transaction fees as well as penalties for late payments. We have also designed loan products to support both retail and SME clients going through this difficult period,” Diane Karusisi tells FORBES AFRICA. The CEO’s forecasts for the medium-term are that economic growth will be significantly affected and all stakeholders will have to coordinate efforts to support speedy economic recovery.
“The Bank of Kigali’s excellent liquidity and capital position pre-Covid will allow us to weather the shock and remain a champion in financing the economy,” says Karusisi. On the opportunities she sees for the industry, she says that clients have had to shift their behavior toward digital channels, and cashless means of payment. For this reason, she believes digital transformation in the industry will be accelerated. Should the worst happen, Karusisi believes the bank’s most pessimistic stress tests show that it would withstand “a shock implying large business and retail defaults as a result of our strong capital position”. She adds: “Rwanda recovered from the war and the genocide against the Tutsi only 26 years ago. Our resilience has been tested and Bank of Kigali was the only bank to avail clients’ balances and savings after the tragic events…”
Another bank in the country is I&M Bank Rwanda Limited. Robin Bairstow, the bank’s CEO, tells us its top priority during the pandemic is to maintain operations, protect the workforce, and keep customers safe and informed. Bairstow mentions the bank has anticipated changing customer needs, and has agreed to allow interest and principle deferrals for three months, and in some cases, longer for all affected customers. They have also reduced lending rates to provide support to clients. He believes that social distancing has given an opportunity for banks in terms of shifting customers to digital channels.
“We have seen a 650% increase in alternate channels in the last two weeks of March alone (when the lockdown began). If this trend continues, we would have changed behavior and the cost of serving customers will reduce in the industry and the momentum will continue due to the convenience of digital offerings,” says Bairstow.
“My team and I are trying to find or create new projectswhere we are able to work with people remotely,”– DJ Fresh
In South Africa, internet group Naspers, one of the largest technology investors in the world, was one of the first, alongside the Ruperts and Oppenheimers, to announce funds for Covid-19 relief efforts. The company contributed R1.5 billion ($82 million) in emergency aid to the government’s response; of that, R500 million ($27.3 million) was allocated to the Solidarity Fund, and it’s buying R1 billion ($54.7 million) worth of personal protective equipment (PPE) and other medical supplies.
In an interview with FORBES AFRICA, Naspers South Africa’s CEO, Phuti Mahanyele-Dabengwa, says: “We have a strong and liquid financial position to navigate uncertain times but we are not immune to the impact of Covid-19 and like all other businesses in the global economy.”
On the opportunities ahead, Mahanyele-Dabengwa believes in the longer term, Naspers’ payments and fintech business is expected to benefit across its markets from large sectoral trends, including more customers transacting online and more online transactions being executed through alternative forms of payment, instead of cash.
Moving to the travel and lifestyle sector, tourism has been hit the most. The International Air Transport Association (IATA) estimates that industry passenger revenues could plummet $252 billion or 44% below 2019’s figure for the world.
“Airlines need $200 billion in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit,” says IATA’s Director General and CEO, Alexandre de Juniac, in a web statement.
In South Africa, Marc Wachsberger, Managing Director of The Capital Hotels & Apartments, a luxury hotel and apartment room provider that also offers conference venues and meeting spaces, believes travel will change dramatically in the future.
“As social distancing becomes the norm, hotel groups that will survive will be sure to go the extra mile in cleaning and sanitation protocols, while giving guests the room they need to maintain sufficient physical distance.”
With approval to operate during lockdown, Wachsberger says the company helped a few businesses to remain open during this time. It pivoted its business and implemented steps to offer safe spaces for guests and their staff, through ‘self-isolation hotels’ for anyone needing to isolate for approximately 14 days, or until they have been cleared; and ‘sanitized sanctuaries’ for families and corporates who want to live and work freely during this time. The company has partnered with Discovery Health in operating The Capital Empire in Sandton in the heart of Johannesburg as a Covid-19 isolation recovery facility called ‘The Get Well Hotel’. He adds that occupancy is expected to increase as more industries return to work and need to isolate or quarantine. He reckons hotels that can offer contactless check-ins, room access, check-outs and payments will be the way forward.
Wachsberger believes the meetings, incentives conferences and exhibitions (MICE) industry is feeling the ripple effect of the virus and will continue to struggle as business travelers stay away. Many venues will flounder as large meetings and gatherings can only possibly convene again in Level 1 of South Africa’s ‘risk-adjusted strategy’.
Another company steering itself for the future is Bolt. The app, formerly known as Taxify, offers services from ride-hailing to food delivery. Gareth Taylor, Country Manager for Bolt in South Africa, says the company now offers free sanitization liquid refills at all its driver centers on a daily basis.
The ride-hailing company has launched several new services to provide alternative ways for drivers to continue to earn an income. One such is the ‘Bolt Isolated Car’, featuring a physical barrier between the front and back seats, limiting the risk of exposure between drivers and passengers. Taylor says there will be a bigger focus on businesses connecting and assisting one another through partnerships.
“Businesses that can collaborate the most effectively and to the greatest mutual benefit, will win,” says Taylor. On the future of the transport industry, he says it is likely to evolve as electric vehicles become more available. “Electric vehicles are cheaper to run and maintain than petrol or diesel vehicles, which could in turn make transport more affordable, particularly for the more cash-strapped.” Taylor reckons that as more people and businesses have become accustomed to a work-from-home labor force, it’s likely that car ownership will decrease.
With the cancellation of movie premieres, concerts and big ticket events, those in the entertainment industry are also feeling the heat. And this includes actors and celebrities.
In a recent Instagram Live session (which seems to be the order of the day), Hollywood actress Gabrielle Union told her fans that a number of black entertainers are grappling to pay their bills as they are getting fewer gigs during this crisis, and that “this stoppage of work and money is impacting marginalized ‘celebrities’ the most”.
Over the last few months, people working in the entertainment industry have had to look for other alternatives of making money.
Closer home, as a DJ who travels for shows around the world, Thato Sikwane, known as DJ Fresh, realizes that DJing is one of the jobs that has definitely taken a knock.
The DJ says he’s fortunate to have work outside of his DJ career. “Radio being one of the biggest mediums and forms of entertainment and information providers, we are marked as essential support workers. I still have Fresh on 94.7, Monday to Friday,” he tells FORBES AFRICA.
Whilst the entertainment industry has been rattled by the lockdown and travel bans around the world, DJ Fresh says players in the music industry will need to carry on finding new windows of opportunities to keep generating personal incomes.
Furthermore, he states that they will need to have bold ambitions to change the way in which they previously applied their minds, in order to survive.
“I am working on new music and excited for it to be released. I have live streams every Sunday on my Facebook page where I work with Oskido and a few other industry mates to create sets called Legends Live. My team and I are trying to find or create new projects where we are able to work with people remotely and that will help some of the unemployed people.”
The South African DJ believes those that fail to fully utilize and exploit their digital presence during this period, will have wasted a crisis.
Through trial and error, big business and big names are re-evaluating, re-strategizing, and trying innovative ways to face the disruptive virus and rebuild themselves sustainably for the future, knowing only too well, that if they don’t adapt, they will surely die.
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