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The South African Horse Industry: A Potential Billion Rand Market

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The gentle sea breeze, the glint of classic cars, swaying sugarcane plantations, and horses trotting around – while this might seem like the description of a picture postcard, this is the everyday life of Viju Gowreesunkur, an entrepreneur in the island nation of Mauritius.

This sugarcane planter, who has a vintage car collection that is the pride of the island, also knows a thing or two about horses. He grew up with them, and today, even owns a few.

Mauritius occupies a significant place in Africa’s horse industry. The country boasts an average racing population of 450 horses, and has an important equestrian link with South Africa. All of the nation’s racehorse imports – 150 every year – come from South Africa.

“A lot of South African jockeys ride in Mauritius. The traveling time to Mauritius is only three hours by air. The horses adapt well with our climate. A lot of South Africans are immigrating to Mauritius, and horse racing can be a main social activity for the expatriates,” sums up Gowreesunkur.

READ MORE: Racing Into History

In South Africa, the horseracing industry contributes R2.71 billion ($226 million) annually to its GDP. Efforts are on to ramp up those numbers.

And as with the expatriates taking to horse racing in Mauritius, here too, it’s no longer the pastime of only the privileged few.

“These days, horse racing is no longer the domain of royalty, and with this shift came the glorious possibility that anything is possible and that the richest races could be won just as easily by a working man as by a multi-millionaire,” says Adrian Todd, Managing Director of SA Equine Health and Protocols NPC, in South Africa.

Mick Goss, the CEO of Summerhill Stud in South Africa’s KwaZulu-Natal province, says while owning racehorses can be an aspirational endeavor, it can also arise from a deep-seated connectivity with animals in general, or horses in particular.

“The result is that racehorses are owned by people from across the social and economic spectra, from the wealthy to the determined,” says Goss. In its 40th year, Summerhill Stud is one of the country’s top horse breeders, and it has produced several champion racehorses.

Approximate annual cost to maintain a horse on a styud farm in South Africa: $5,000. Photo supplied.

Goss had humble beginnings starting the stud farm. He came from a family of generations of horsemen and was previously a lawyer, when after 17 years, he gave up law to start out with nothing in the horse business but “a deep-seated will to make it work”.

“I inherited the horse ‘disease’, for which there is no known vaccine,” he jests.

Today, his farm runs a school of management excellence in equine studies, the only one of its kind in the southern hemisphere, he says, and the results have been “extraordinary”.

Goss says South Africa is set for a record year.

“2018 will be a game-changing year,” he says, with respect to the efforts now being made to rejig the racing and breeding industries “with substantial investments towards the normalization of export protocols with international trading partners”.

There is significant demand for South Africa-based horses in the international market for their quality and affordability. A case in point being that in the past, at the $10 million Dubai World Cup, the richest day in international thoroughbred racing held in March every year, South African-trained horses have won at many levels.

“We have produced winners at the highest level in almost all of the major racing jurisdictions of the world. It is little surprise that our horses are as sought -after as they are internationally, more so as they cost a fraction of their counterparts from other major racehorse-producing countries,” says Goss.

But there are challenges, including strict export restrictions, quarantine controls and prevalence of the African Horse Sickness (AHS).

“The current onerous export restrictions make it difficult for the racing and breeding industry to expand and very hard for our horses to travel and compete internationally,” says Todd.

The country has been severely curtailed in its ability to export horses due to AHS.

South African horses have to endure a quarantine of up to six months before they reach their country of destination.

“Compare this with the delivery of 30 days of horses acquired in countries like Australia and New Zealand, destined for South Africa,” says Goss. “From this, you can deduce the obstacles South African horse people face in the export of their products.”

AHS is a vector-borne viral disease, and has affected South African horse exports since the 1960s.

Goss says he has only suffered one loss to AHS in 40 years on his farm, but says, if properly managed, the losses can be avoided.

“Proliferation of game farms around the country has meant concentrations of zebra in close proximity to horse farms, which has exacerbated the problem,” says Goss.

“The reason is many zebras are carriers of the virus, though they have an inbuilt immunity against it, and while the disease itself is not contagious, it can be carried from one animal to another by a vector.”

Thankfully, there have been breakthroughs in its detection.

“The latest technologies mean that we are able to detect AHS within a matter of hours nowadays and with the quarantine protocols we now have in place, we can guarantee we are unlikely ever to export infected horses,” says Goss.

READ: Love The Mountain Hate The Horse

“With new scientific developments and a new Polymerase Chain Reaction test to detect AHS within hours, South Africa is busy working towards a much shorter period of quarantine of possibly 16 days. This will obviously open the door to the world market and allow the entire horse industry to grow to its full potential,” says Todd.

This test has been developed by Professor Alan Guthrie and colleagues at the Faculty of Veterinary Science’s Equine Research Centre in the University of Pretoria, which has improved the lab diagnosis of AHS by increasing the sensitivity of detection and shortening the time required for the diagnosis.

Equine experts like Todd are optimistic the strides taken by the industry will make this year more successful for the horse industry.

Currently, horses are exported from Cape Town’s Kenilworth Racecourse, which serves as a quarantine, transit and export station. The horses are required to serve a three-month quarantine period in Mauritius on top of the three weeks already spent in quarantine in Cape Town, before going on to their final destination.

“The opening of export protocols will allow the industry to unlock a potential billion rand market. This in turn will lead to an expansion of the industry and a significant increase in rural employment…,” says Todd.

The platforms and opportunities are plenty.

In December, FORBES AFRICA visited the Turffontein Racecourse in the southern suburbs of Johannesburg for the glitzy Gauteng Sansui Summer Cup. Dating back 128 years, and along with the Durban July and the Sun Met in Cape Town, it’s one of the big three races on the South African horse racing calendar, with a prize money of R1.25 million ($104,373) up for grabs.

In South Africa, horse-lovers come from all walks of life.

“From rural communities who use horses for transport, to families who buy ponies for their children to ride for fun, to show jumpers and wealthy [South African] businessmen like Dr Richard Maponya who loves horseracing,” elaborates Peter Gibson, the CEO of Racing South Africa.

Prices range greatly depending on the breed and what it will be used for, but buying a thoroughbred racehorse could set you back by an average of over R300,000 ($25,000).

Furthermore, it takes R50,000 ($4,000) to R60,000 ($5,000) a year to maintain a horse on a stud farm.

“Thoroughbred studs are cash guzzlers, and you need to surround yourself with people that are capable of contributing towards the capital needs of the business by way of their support as clients, as well as developing strong relationships with the financial institutions that support you,” says Goss.

“The horse breeding and racing industries by their very nature are among the most labor-intensive activities in South Africa, and according to a recent audit of the industry by Grant Thornton, it employs in excess of 100,000 people, either directly or in those businesses that provide services to racing and breeding.”

Hopefully, in the years to come, the “cash guzzlers” will repay the favor, in leaps and bounds.

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Economy

What’s Brewing In Tokyo?

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Japan, a tea-drinking nation, is one of South Africa’s biggest importers of rooibos tea. In 2018, a record high of 2,000 tonnes of the homegrown blend was shipped off to the land of the rising sun.


A tea room filled with reverence for the traditional Japanese tea ceremony.

But first, the facts. To understand tea-drinking in Japan, it is important to go through the following motions, starting with the communal practice known as chadō (the way of tea) that is older than 800 years, in which, in a hand-decorated cast iron bowl, green powder, known as matcha, is whisked to make a dark green tea to be offered to guests.

Tea was first brought to Japan from China in the seventh century for medicinal purposes, and was regarded as a commodity that was exclusively accessible to the noble and elite.

According to Japanese historical beliefs, Myōan Eisai, a Buddhist priest who introduced the school of Zen Buddhism to Japan, was one of the first to inculcate the culture of tea in Japan.

He wrote a book on the health benefits of drinking tea, as well as the cultivation and preparation of green tea.

By the thirteenth century, the tea drinking culture grew in popularity among warriors and the elite, and by the sixteenth century, tea had become a favorite for all social classes.

Tea schools opened and the art of making tea gradually evolved to more than just being a spiritual practice in Japan.

It became one of respect with shared peace and friendship.

The tea room is traditionally surrounded by a garden with a tranquil atmosphere, emphasized by dull flowers without strong scents, to avoid distraction.

A low entrance into the tea room suggests that guests are to bow as a gesture of respect for the ceremony.

Every movement, gesture and aesthetic, from the preparation to the enjoyment of the tea, is designed to express friendship and harmony.  Guests watch on as the host shares the moment and finally presents it to them, kneeling on cushions.

Once the bowl has circulated among the guests, it is handed back to the host.The tools are cleaned and the ceremony is closed.

The Red Bush

Over 14,000kms away, across the Indian Ocean, a South African enjoys a hot cup of ‘red tea.’

Its preparation may not be as dramatic as it is in Japan, but it evokes the same sense of calm and serenity. It’s simply made by adding tealeaves or a tea bag into a cup of boiling water, a few teaspoons of sugar and having “a date with time”, as Swaady Martin, the founder of Yswara, an African tea and teatime company, puts it.

Martin, who has been in the tea industry for seven years, with a focus on gourmet African teas, has tasted and sourced blends from Malawi, Kenya and Rwanda but the South African rooibos is her favorite.

“Rooibos is not a tea, it is a plant. I find it a miraculous and wonderous plant. The fact that it only grows in one region of South Africa, and that it has all these incredible properties, makes it a plant I love dearly. I drink rooibos almost every day,” she says. 

Located in the heart of Johannesburg’s central business district (CBD), Martin’s tea room, which is currently being refurbished, embodies what she calls a meditative appeal that coincides with the tranquil properties of tea.

Tea lovers step into a room filled with silence and walls done up in light pink hues representing a sunset in the desert. 

This is to encourage focus on the tea, as it represents the removal of  barriers between the different social classes.

“We have suffered in South Africa and also around the world, with so much exclusion, the one thing that was important for Yswara was to give inclusive luxury. For me, inclusiveness means being in a place where everyone could have access.

“Being in town (CBD) was just that expression of being in the midst of everything and everyone; and at the junction of what represents the new South Africa,” Martin says.

A South African Rooibos Council (SARC) industry fact sheet published in 2018 states that the country’s geographical areas provide the perfect environmental conditions for rooibos cultivation.

The plant can be found in the Cederberg and Sandveld regions of the Western Cape and the Bokkeveld area of the Northern Cape.

“The vital characteristics of this environment are the Mediterranean climate with a winter rainfall between 200mm and 450mm per year; deep, coarse and acidic sandy soils; and temperatures that can range from zero degrees Celsius in winter months, to up to forty-five degrees Celsius in summer,” the report says.

Due to the indigenous properties of the Rooibos bush, industry regulations stipulate that the term ‘rooibos’ be used responsibly.

“The terms ‘Rooibos’, ‘red bush’, ‘Rooibostee’, ‘Rooibos tea’, ‘rooitee’ and ‘Rooibosch’ may only be used when the dry product, infusion or extract is 100% pure rooibos. Furthermore, the notice stipulates that the above terms (referring to rooibos) can only be used when the product was grown in the geographic area as described in the application, i.e., the winter rainfall area of South Africa,” the SARC report states.

This uniquely-grown product is becoming  a big deal across the globe, and the tea-drinking nation, Japan, has fallen in love with the health benefits that the South African tea provides.

In 2016, rooibos exports increased to over 30 countries across the globe; with Germany, Netherlands, Japan, the United Kingdom and the United States (US) being the biggest importers.

In 2018, one of the largest tea-drinking nations recorded over 2,000 tonnes that were shipped into the Japanese shores, making it the largest export since rooibos was first introduced to the Japanese 39 years ago.

For Martin Bergh, the Managing Director of Rooibos Limited and the Chairperson of the SARC, the tea has been up against competition in the Japanese tea market, which has over 26 different types of teas to consume, ranging from the traditional green tea varieties to Jasmine and Barley, or the sacred Mugicha.

“The general trend toward natural health and wellness products continue to exert a growing influence on purchasing patterns in the region and as more of Rooibos’ health benefits become known in the East, we anticipate the demand for the product to grow,” says Bergh.

Bergh points out that the Japanese are purists and therefore prefer to drink rooibos tea unflavored, without milk or sugar.

“In the past, rooibos was consumed more in summer for hydration, but has now become an all-year-round tea product consumed by all age groups. A market as big as Japan’s 126 million-strong tea-loving population, is always eager to experiment with new products.

“Local retailers like Peacock Coffee & Tea Traders have adapted to the experimental flavors to quench the insatiable thirst of the local and international market.”

Kelebogile Monyaysi, the manager at Peacock Coffee & Tea Traders in Rosebank, Johannesburg, attentively prepares a cup of tea when we visit.

The loose tea leaves are cautiously stirred in a tea pot and served at a small coffee table.  

One half of the store is dedicated to coffee and the other for tea.

The smell of freshly-brewed coffee overpowers the aromatic smell of tea.

Tea sets range from vintage English style ceramics to Japanese cast iron teapots.

A selection of rooibos tea blends with various flavored options, ranging from organic rooibos to creamy caramel, as well as herbal blends.

This includes a Nelson Mandela range.

The caffeine-free tea, according to Monyaysi, is popular in the Japanese markets because of its natural healing qualities.

Despite coffee being a popular beverage for sit-in customers, rooibos tea is the most sought after locally too.

“It (rooibos) is the center of attraction. This is a word that they (tourists) can grab and not forget, so when they walk in here, it is all they ask for,” she says.

It took some time for Monyaysi to be stirred by tea. 

“I was not much of a tea-drinker. I only started to enjoy tea when I began working here. Now, the first thing in the morning, I have to drink a cup of tea and in the evening, before I go to bed. It is a habit – if I don’t drink tea, I get a headache,” Monyaysi says, preferring the original rooibos blend.

Jessica Bonin, the founder of Lady Bonin’s Tea, a Cape Town-based company that sources, blends, packages and distributes full leaf teas, either loose or in biodegradable tea bags, offers more on the world’s fetish for rooibos.

Lady Bonins’ teas and herbals are sourced locally and internationally from farms that are organic without adding additives or products that harm the environment.

The rooibos is sourced by using a method known as “wild pickings” – the process of collecting the rooibos that grows naturally in the mountains. Due to the increase in demand for rooibos and rooibos products globally, commercial farmers have scaled production unsustainably, leaving environmental and societal damage in their wake.

Bonin says that in countries like Japan and Thailand, black tea is preferred, and it is predominantly used for the health benefits – making it a herbal infusion.

“They are buying it solely on the principle that it is a caffeine-free, non-tea beverage. People are buying it as an alternative and they are transfixed by its health properties.

“It is enabling people who naturally use plants as medicine for many years. In any Western country, you will need to justify the health benefits, but in the Asian countries, it is the medicine they are interested in. People are very healthy in Japan,” she says.

 Although Bonin is facing difficulties  entering the export market in Japan due to the high number of monopolies and conglomerates in the industry, small amounts of exports also go to Germany and the US.

Rooibos is a unique product that has infused the signature South African taste and its ambience with the rest of the world.

The Japanese may have their unique tea-drinking ceremonies and traditions but in Germany and the other countries that import the plant in millions, rooibos offers a cupful of experience that is incomparable and uniquely South African. 

Gypseenia Lion

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Sanlam & NASASA Launch NASASA Financial Services For Stokvels

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Sanlam and the National Stokvel Association of South Africa (NASASA) have launched NASASA Financial Services (Pty) Ltd; a brokerage catering to the financial services needs of the South African stokvel market. NASASA is a self-regulatory organisation with a database of 125 000 stokvel groups, reaching about 2.5 million individuals. The new entity will foster greater financial inclusion for all members.


Jacqui Rickson, Chief Executive: Group Benefits at Sanlam Developing Markets Limited and Board member of NASASA Financial Services says, “For South African stokvels this is an opportunity to formalise their existence without having to forego their traditions. The peace-of-mind that each member of a stokvel will be protected in their time of need is invaluable.”

“Stokvels are powerful financial services providers in their own right,” says NASASA Financial Services CEO, Mizi Mtshali “and have the potential to help grow South Africa’s economy once they enter the more formalised sector through appropriate product offerings”. Currently, there are over 800 000 stokvels in the country, aggregating an estimated R50-billion pa. They are, however, quite exposed, especially to liquidity issues that may render them unable to discharge benefits to their members, as well as scams that promise to resolve such issues. This results from a lack of accessible, relevant products that meet the needs of a more informal savings sector. 

As a result, some burial stokvels may not pay enough to cover funeral expenses in their entirety. By offering broad-based financial services to members, NASASA Financial Services will empower stokvels through greater socio-economic inclusion and security.

Jacqui Rickson says, “This venture supports our client-centric focus by allowing financial inclusion to be extended to South Africans who are on the edge of the formalised insurance structures.  Through this, we can help families recover financially following difficult, unexpected events.”

NASASA Financial Services is currently licensed as a Juristic Representative of Sanlam Developing Markets, with a long-term plan to become a Financial Services Provider (FSP).  NASASA Financial Services will distribute tailor-made products nationally via its distribution force. Sanlam as underwriter, through NASASA Financial Services, will initially offer group-based funeral benefits, tailored to each individual type of stokvel.

Products are competitively priced and start at R15 per person. Once the stokvel has selected its option, the stokvel will pay one premium for the whole group. For burial stokvels, Sanlam has designed a full product, covering up to nine family members and all products have been created in partnership with NASASA.

Currently, the product offering includes:

  • A Principal Member Only Funeral Benefit
  • An Immediate Family Funeral Benefit
  • A Principal Member Plus Up To 9 Dependents Funeral Benefit
  • Grocery and Airtime Cash Benefits

NASASA is about educating their members about wealth and more appropriately, financial health, which includes saving on the expense of premiums through aggregation and paying group rates rather than more expensive individualised rates. We’ve designed products as an extension of this; as a tangible, affordable, non-intrusive offering that seamlessly blends the required formal structures with community-based traditional structures.

Mizi Mtshali, NASASA CEO, adds, “The research conducted during the build-up of our product launch saw the solution being entirely built by participating stovels. As a result, we deliver unmatched value by buiding a solution briefed in by our constituency. Amongst the majority of South Africans, funeral insurance fulfils an unmistakable need. While many are excluded from the formal financial system, those who do interface with the sector largely feel inadequately serviced. Burial Societies are formed as providers of such services and have developed systems around the real needs of their members. There are roughly 200 000 active Burial Societies in South Africa, with the majority being self-underwritten.

Because such groups rely on their collective savings to discharge their benefit to members, they often face liquidity problems that may lead to their disbandment. This brings about the need for an underwriter who will take on the risk on behalf of the group, as well as offer a set of products and services built around the group’s needs. NASASA is tasked by its members to solve this problem, and we have identified Sanlam as the most suitable partner in this regard.”

Mtshali says this venture will also facilitate job creation, which is key to socioeconomic inclusion, “For South Africans, this opportunity provides meaningful employment particularly in the township economy. Not only is this a step towards financial inclusion, but a giant leap towards societal transformation”

Down the line, NASASA Financial Services is aiming to extend its offering to include life cover as well as short-term products like household insurance and is investigating the potential of integrating other banking products.

Content provided by Sanlam

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Why The High Number Of Employees Quitting Reveals A Strong Job Market

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While recession fears may be looming in the minds of some, new data from the Bureau of Labor Statistics shows that the economy and job market may actually be strengthening.

The quits rate—or the percentage of all employees who quit during a given month—rose to 2.4% in July, according to the BLS’s Jobs Openings and Labor Turnover report, released Tuesday. That translates to 3.6 million people who voluntarily left their jobs in July.

This is the highest the quits rate has been since April 2001, just five months after the Labor Department began tracking it. According to Nick Bunker, an economist at the Indeed Hiring Lab, the quits rate tends to be a reflection of the state of the economy.

READ MORE | 5 Things You Should Do The Night Before A Job Interview

“The level of the quits rate really is a sign of how strong the labor market is,” he says. “If you look at the quits rate over time, it really drops quite a bit when the labor market gets weak. During the recession it was quite low, and now it’s picked up.”

The monthly jobs report, released last week, revealed that the economy gained 130,000 jobs in August, which is 20,000 less than expected, and just a few weeks earlier, the BLS issued a correction stating that it had overestimated by 501,000 how many jobs had been added to the market in 2018 and the first quarter of 2019. Yet despite all that, employees still seem to have confidence in the job market.Today In: Leadership

The quits level, according to the BLS, increased in the private sector by 127,000 for July but was little changed in government. Healthcare and social assistance saw an uptick in departures to the tune of 54,000 workers, while the federal government saw a rise of 3,000.

READ MORE | 5 Questions You Should Never Ask During A Job Interview

The July quits rate in construction was 2.4%, while the number in trade, professional and business services, and leisure and hospitality were 2.6%, 3.1% and 4.8%, respectively. Bunker of Indeed says that the industries that tend to see the highest rate of departuresare those where pay is relatively low, such as leisure and hospitality. An unknown is whether employees are quitting these jobs to go to a new industry or whether they’re leaving for another job in the same industry. Either could be the case, says Bunker.

In a recently published article on the industries seeing the most worker departures, Bunker attributes the uptick to two factors—the strong labor market and faster wage growth in the industries concerned: “A stronger labor market means employers must fill more openings from the ranks of the already employed, who have to quit their jobs, instead of hiring jobless workers. Similarly, faster wage growth in an industry signals workers that opportunities abound and they might get higher pay by taking a new job.”

Even so, recession fears still dominate headlines. According to Bunker, the data shows that when a recession hits, employers pull back on hiring and workers don’t have the opportunity to find new jobs. Thus, workers feel less confident and are less likely to quit.

READ MORE | South Africa’s Informal Sector: Why People Get Stuck In Precarious Jobs

“As the labor market gets stronger, there’s more opportunities for workers who already have jobs. So they quit to go to new jobs or they quit in the hopes of getting new jobs again,” Bunker says. He also notes that recession fears may have little to do with the job market, instead stemming from what is happening in the financial markets, international relations or Washington, D.C.

So what does the BLS report say about the job market? “Taking this report as a whole, it’s indicating that the labor market is still quite strong, but then we lost momentum,” Bunker says. While workers are quitting their jobs, he says that employers are pulling back on the pace at which they’re adding jobs. “While things are quite good right now and workers are taking advantage of that,” he notes, “those opportunities moving forward might be fewer and fewer if the trend keeps up.”

-Samantha Todd; Forbes

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