It was one of the best performing companies in Africa and investors loved it. No other retailer has been able to do what Steinhoff did. In just three years, Steinhoff grew from a humble South African furniture retailer, with some European assets, into a global giant. It has more than 12,000 stores in 30 countries over five continents, employing 130,000.
It was the fruit of an acquisition spree that began with the purchase of pan-African Pepkor Holdings for $5.7 billion. Then came Poundland in the UK for $925 million, Fantastic Holdings in Australia at $275 million and Mattress Firm in the US at $2.4 billion. Steinhoff earned itself a spot on the top 50 global shares to watch in 2017 by Bloomberg Intelligence.
By the end of 2017, it all turned into a nightmare.
In 2017, Steinhoff International reported a 13% rise in half-year operating profit and a 48% jump in revenue as recent acquisitions sustained sales in 2017. Not even an investigation could derail the Steinhoff train.
“Excluding the recent strategic acquisitions, the company’s retail business achieved total organic revenue of 7.2 billion euros amidst volatile markets and currencies, translating to 9% organic growth,” Steinhoff said in a statement in June.
A mere five months later, it all came crashing down and the share price told the tale.
On Tuesday December 5, Steinhoff’s share price opened at R45.65 on the JSE and by Friday December 8, it had fallen to a R7.77; down about 80% in just three days.
The match that lit the fuse was the abrupt resignation of its multi-millionaire CEO Markus Jooste, on December 5; followed by its auditor, Deloitte, that refused to sign off financial statements, and the head of Steinhoff Africa Retail (Star), Ben la Grange, also calling it quits.
The fraud allegations, that began about two years before, had come back to haunt them.
The fuel for the fire was a report by Viceroy Research, a US-based investment company that has forensic accountants who probe into suspicious financial results. According to Viceroy Research, Steinhoff made some of its money through off-balance-sheet entities inflating earnings and obscuring losses.
The biggest red flag was its acquisition of poor and struggling companies whose performance appeared to quickly improve after acquisition.
Among them, according to Viceroy, are Campion Capital, controlled by Jooste’s associate George Alan Evans; Southern View Finance UK, controlled by billionaire and FORBES AFRICA cover Christo Wiese; and Genesis Investment Holdings, controlled by former Steinhoff CEO/CFO Siegmar Schmidt.
“Steinhoff has issued expensive loans to and booked interest revenue against Campion subsidiaries for the purchase of loss-making Steinhoff subsidiaries. These revenues will never translate to cash… Steinhoff has also moved two loss-making and predatory consumer loan providers to off-balance-sheet entities: JD Consumer Finance and Capfin,” says Viceroy.
“Given these loss-making entities, such as Southern View Finance UK, are being round tripped (a form of barter that involves a company selling an unused asset to another company, while at the same time agreeing to buy back the same or similar assets at about the same price) back to Steinhoff, Viceroy believes it is possible that Steinhoff are ‘repaying’ Campion’s outlays through acquisition premiums (i.e. losses are being capitalized through round-trip transactions with related parties).”
Byron Lotter, Portfolio Manager at Vestact Asset Management, agrees.
“They were creating off-balance-sheet entities and putting underperforming assets into those entities. For example, it seems like when they bought JD Group, they managed to find a buyer for the R10 billion debt book that came along with JD Group. It seems like that buyer was one of these off-balance-sheet entities that Steinhoff itself owned,” he says.
There are also allegations of tax manipulation cash flow trends that do not correspond to EBITDA, investigations into senior executives for tax-evasion, document forgery and fraud, and rampant and dilutive equity raising. It caused the Steinhoff stock to tank.
One of the allegations is from the 2016 annual report, where Jooste writes that the tax rate will remain around 15% and, according to Zwelakhe Mnguni, a Chief Investment Officer at Benguela Global Fund Managers, if you are a company that operates in a 28% jurisdiction, it’s impossible to maintain a 15% tax rate on an annual basis.
“You are not investing in capital expenditure which would have allowed you to get tax deductions which lowers your tax, so how do you get 15%? The net asset value of the business was also in the negative… there are a lot of things we don’t know and somebody somewhere knows the hole is bigger,” says Mnguni.
Steinhoff’s complex balance sheet blinded many investors with inflated earnings. There were many signs over the years but people missed them. Some analysts asked why Steinhoff’s accounts lacked important information about where it was generating revenue and why it appeared to focus on tax breaks rather than the actual business.
Very few people saw this coming. David Shapiro, Deputy Chairman at Sasfin Securities, is one of them.
“What we were seeing with former CEO Markus Jooste was that he will go for one company, miss it, and the next day he goes for another and that’s how he ended up with Mattress Firm, Poundland and other smaller businesses in Europe and an acquisition in Australia,” he says.
Shapiro says he stayed away from Steinhoff because he could never get to grips with what the company was doing.
“It was a moving giant making it never stable enough to make a comparison. I told myself I’m holding back from investing until I understand what the business is. I also found out that they were very opportunistic. They would do a deal then form a structure against it. The strategy kept changing.”
Retail analyst Syd Vianello concurs.
He says Steinhoff’s European operating companies have operating margins that appear to be realistic but the income they are declaring from the internal and external supply chain look “a bit on the high side”.
“I don’t know to what extent they could have been manipulated. The income on the properties also appear to be a little on the high side but there are properties which are rented out to third parties, therefore there is a level of income from the properties,” says Vianello.
“The figures I think are questionable are the interest income that they get from these loans they have been making appear manipulated. The American operations like Mattress Firm, I don’t think are making money at all.”
Vianello says Steinhoff will need more money to service debt. Steinhoff has debt worth about $13 billion on its balance sheet.
“My personal opinion is that the banks are going to demand that they sell Mattress Firm. My gut feel is that the management there will try to do a management buyout (a transaction where a company’s management team purchases the assets and operations of the business they manage) backed by some venture capitalists,” he says.
It would possibly mean Steinhoff wouldn’t get money they put into Mattress Firm back – a devastating loss.
Steinhoff is already scouring for liquidity to keep itself alive. It has sold its 2006 Gulfstream G550 private jet and has also sold a stake in South African investment holding company PSG Group, raising about $345 million.
The big question is how did Deloitte, an auditing firm that has been in operation since 1845, sign off on Steinhoff’s 2016 results?
According to Lotter, one of the reasons may be that Jooste was a powerful bully who many were afraid of.
“He was very smart and managed to convince a lot of people that what he was doing was within the law,” he says.
Jooste and Wiese are part of South Africa’s so-called Stellenbosch Mafia – a group of billionaires who own winelands and control markets.
The Independent Regulatory Board for Auditors (IRBA) says, for this, it is investigating Deloitte South Africa.
Deloitte has refused to comment on the matter stating confidentiality obligations and the ongoing investigations as a reason.
The JSE, Africa’s biggest stock exchange, headquartered in Sandton, also appears to have missed the accounting irregularities at Steinhoff.
Even after the cat was out of the bag, the JSE did not suspend Steinhoff’s trade. It says it would be unfair to investors for them to do so as the Frankfurt Stock Exchange has not suspended trading in Steinhoff International shares and would place investors trading on the JSE at a disadvantage to those who are able to trade the Steinhoff International share in Frankfurt.
“We believe that under the circumstances where Steinhoff International has disclosed as much price sensitive information as it is able to, it would be detrimental to the interest of investors to prevent them from trading Steinhoff International shares on the JSE,” says the exchange.
It, however, was detrimental to many investors and hit many more people in the street.
The Public Investment Corporation (PIC) – which manages pensions of government employees – is one of the biggest investors in Steinhoff. It has already lost billions in retirement savings. At the time of going to press, the PIC’s 8.56% stake was just R3.6 billion ($290 million) compared to R20 billion ($1.6 billion) a week before scandal broke.
“The specific mandate of the FSB in this area, according to the FMA (Financial Markets Act) is to investigate cases of insider trading, price manipulation, and false reporting. This engagement with the JSE will determine what case, if any, the FSB ought to look into,” says Tembisa Marele, Communications Specialist at the FSB.
The billionaire who lost the most is Wiese. Between the night of December 5 and the afternoon on December 6, he had lost $2.1 billion. His total net worth has dropped from $5.5 billion, one the FORBES’ 2017 African billionaires list, to $1.1 billion on this year’s.
“This is the most dramatic that I can remember. There was a guy in Brazil who was worth $30 billion and then eventually had a negative net worth but it took a longer time for that to happen. This is the fastest drop I have ever seen in the two decades I have been looking at billionaires at FORBES,” says FORBES Assistant Managing Editor, Kerry Dolan.
Lotter says its doubtful Wiese knew what was happening.
“I’m of the opinion that Wiese didn’t know. Who in their right mind would go and build what he built with Pepkor and Shoprite and then go and put it all in a company where the CEO was cooking the books. He is a smart guy and he wouldn’t purposefully do that,” says Lotter.
Everyone is waiting to see what Wiese and Jooste are going to do next. Whoever dared invest in a share?
Why The High Number Of Employees Quitting Reveals A Strong Job Market
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.
“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.
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.
“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
No Seat At The Global Table For Indigenous African Cuisine
Gastronomic tourism based on African food could easily increase and create new value chains that unlock billions in untapped wealth for the continent, but what is stopping us?
Food and tourism are an integral part of most economies, globally. Food is undeniably a core part of all cultures and an increasingly important attraction for tourists. To satisfy their wanderlust, contemporary tourists require an array of experiences that include elements of education, entertainment, picturesque scenery and culinary wonders. The link between food and tourism allows destinations to develop local economies; and food experiences help to brand and market them, as well as supporting the local culture and knowledge systems.
This is particularly important for rural communities, where 61% of sub-Saharan Africans live, according to the World Bank last year. These communities have often felt the brunt of urbanization, which has resulted in a shift away from rural economies. If implemented effectively, Africa could get a piece of the gastronomic tourism pie, which was worth $8.8 trillion last year, according to the World Travel & Tourism Council.
However, there is currently very little public information to pique the interest of tourists about African food. World-renowned South African chef Nompumelelo Mqwebu sought to remedy this with her self-published cookbook, Through the Eyes Of An African Chef.
“I think where it was very clear to me that I needed to do something was when I went to cooking school. I trained at Christina Martin School of Food and Wine. I thought I was actually going to get training on South African food and, somehow, I assumed we were talking indigenous food.
“I was shocked that we went through the whole year’s curriculum and we didn’t cover anything that I ate at home; we didn’t cover anything that my first cousins, who are Sotho, ate in Nelspruit (in South Africa’s Mpumalanga Province); we didn’t cover anything that would come from eSwatini, which is where my mother is from,” Mqwebu says.
By self-publishing, she has ultimately contributed to a value chain that has linked local food producers and suppliers, which includes agriculture, food production, country branding and cultural and creative industries.
“I am a member of Proudly South African, not only my business, but the book as well. Part of the reason is that the cookbook was 100% published in South Africa. So, everybody who worked on the cookbook, and printing, was all in South Africa, which is something quite rare these days because authors have their books published abroad.”
The Proudly South African campaign is a South African ‘buy local’ initiative that sells her cookbook on their online platform as its production adheres to the initiative’s campaign standards. Self-publishing has allowed Mqwebu to promote her book for two years and to directly communicate with her audience in a way she thought was best, while exposing her to a vast community of local networks. She recalls her first step towards creating her own body of work.
“I was in culinary school when I wrote the recipe for amadumbe (potato of the tropics) gnocchi. We were making gnocchi and I thought, ‘so why aren’t we using amadumbe because it’s a starch?’ and when I tasted it, I thought, ‘this could definitely work’. I started doing my recipes then.
“And there was talk about, ‘we don’t have desserts as Africans’. I did some research and found we ate berries, we were never big on sugar to begin with. That’s why I took the same isidudu (soft porridge made from ground corn) with pumpkin that my grandmother used to make and that became my dessert. “I also found that when I went to libraries looking for indigenous recipes, I couldn’t really find something that spoke to me as a chef. I found content that looked like history books. It was not appealing. It was not something, as a chef, I could proudly present to another chef from a different part of the world, so I knew I had to write my book,” Mqwebu says about the award-winning recipe book that chronicles African cuisine.
Financial and health benefits
According to the World Travel & Tourism Council, in 2018, the tourism sector “contributed 319 million jobs, representing one in 10 of all jobs globally and is responsible for one in five of all new jobs created in the world over the last five years. It has increased its share of leisure spending to 78.5%, meaning 21.5% of spending was on business.”
To narrow in on how lucrative food can be, the World Food Travel Association estimates that visitors spend approximately 25% of their travel budget on food and beverages. The figure can get as high as 35% in expensive destinations, and as low as 15% in more affordable destinations. “Confirmed food lovers also spend a bit more than the average of 25% spent by travelers in general.”
However, there is a widely-held view that the African continent is not doing enough to maximize its potential to also position itself as a gastronomic tourism destination, using its unique edge of indigenous knowledge systems (IKS).
“We are not a culinary destination and we will never be while we are still offering pasta as the attraction for our tourists,” Mqwebu says.
Dr George Sedupane, who is the Coordinator of the Bachelor of the Indigenous Knowledge Systems program in South Africa’s North-West University, echoes Mqwebu’s sentiments.
“I often cringe when I go to conferences and there are guests from all over the world and we serve them pasta. Why would they come from Brazil to eat pasta here? They can have pasta in Italy. Why don’t we serve them umngqusho (samp and beans)?
“We need to be creating those experiences around our culture. We are failing to capitalize on our strengths. There is a lack of drive to celebrate what we have,” says Sedupane, who also teaches modules and supervises research in indigenous health and nutrition.
Writer and historian Sibusiso Mnyanda says current innovations in African food technology are born out of necessity, rather tourism and cultural ambitions.
“Food security is becoming an issue that is leading to IKS around farming being prioritized. In Nigeria, they are innovating dry season farming, because of deforestation and soil being de-cultivated.
“So those indigenous knowledge strategies are being used in countries where it is a necessity and where there are enough advances related to the fourth industrial revolution. The traditional ways of producing food are not only much more organic, they are also crop-efficient,” Mnyanda says.
Nigeria may have inadvertently innovated a health solution related to colon cancer through its diet. Sedupane tells FORBES AFRICA an anecdote.
“There was a study where the colons of an African country that did not consume a lot of meat was compared to Europeans. The Africans had a much better profile as a result and there are people who want to buy African stool to get that kind of rich bacteria, that you get on an African plant-based diet.”
The study Sedupane is referring to was conducted in Nigeria and it states that: “Nigeria showed the average annual incidence of colorectal cancer was 27 patients per year. This shows that even if it seems that incidence rates are increasing in Nigeria, such rates are still about one-tenth of what is seen in the truly developed countries.”
In a bid to find reasons for this rarity of colon and rectal cancer, the study concluded that, among other reasons, the protective effects of Nigeria’s starch-based, vegetable-based, fruit-based, and spicy, peppery diet, and geographical location which ensures sunshine all year round, played a role in the country’s colon health.
Interestingly, it seems the potential value of African food could not only be based on what goes in but what also comes out as healthy faecal matter is big business globally. In 2015, The Washington Post published that one could potentially earn $13,000 a year selling their poop.
The American-based company OpenBiome has been processing and shipping frozen stool to patients who are very sick with infections of a bacteria called C.difficile. It causes diarrhea and inflammation of the colon, leaving some sufferers house-bound. “Antibiotics often help, but sometimes, the bacteria rears back as soon as treatment stops. By introducing healthy faecal matter into the gut of a patient (by way of endoscopy, nasal tubes, or swallowed capsules), doctors can abolish C. difficile for good… And yes, they pay for healthy poop: $40 a sample, with a $50 bonus if you come in five days a week. That’s $250 for a week of donations, or $13,000 a year,” the publication stated.
Sedupane is of the view that a diet which includes indigenous foods could vastly improve one’s quality of life.
He says small changes could be made, such as including more of indigenous greens, namely sorghum and millet, to breakfast. The grains are gluten-free and produce alkaline which boosts the pH level of fluids in the body and reduces acidity.
“Moving to our legumes, we have indlubu (Bambara groundnut) which is very rich and helps in the secretion of serotonin in the brain. This so important nowadays with the increase of depression. It’s easy to digest, and is great for cholesterol and moderating blood sugar,” Sedupane says.
Mnyanda is also of the view that food is imperative to health and medicinal properties. He says traditional healers primarily use natural herbs in their practice. “These are used in pain relief and healing. Things like cannabis, camphor, African potatao and red carrots. So, food is not just used for nutritional purposes.”
Other African superfoods include, Baobab fruit, Hibiscus, Tamarind, Kenkiliba, Amaranth, Moringa and pumpkin leaves.
Cultural and historical benefits
Gastronomic tourism also includes the promotion of heritage sites that are known to revolve around dishes that are of historic importance. They enhance the travel experience, they encourage the acquisition of knowledge and a cultural exchange.
There is a unanimous view that vast amounts of knowledge have been lost to history and there is a huge knowledge gap in African societies as a result of colonization and urbanization.
“Part of the colonial agenda was to make sure food security did not belong to indigenous groups. Therefore, archiving of these knowledge systems was not a priority. Especially during industrialization, where people moved from their villages to the city you found that the knowledge got left behind,” Mnyanda says.
He offers a contemporary example of how modernization continues to push African practices to the fringes: “To this day, abathwa (the San people) hunt their meat, but you find that because of changing agricultural practices and land reform on the Kruger National Park, they are being forced to move into the cities and industrial areas, therefore they are no longer able to practice their culture of hunting. As a result, their diet is changing.” Sedupane shares the view that the fundamentals of farming and astrology have also been exiled from public knowledge.
“The fundamentals of IKS were based on the understanding of the laws of nature – how and when things were done. Harvest cycles were linked with understanding astrology. They would not harvest until certain stars were visible in the sky. There was a dependence on nature.
“With industrialization, rather than working with nature, humans are seen as being above, as controlling, as directing it. The natural cycle is often tempered with rather than trying to work with it.”
Not all is lost however. There are historical practices that have stood the test of time and continue to be a part the few foods that are internationally associated with South Africa. Mqwebu says that, “historically, we ate more plants than meat because our ancestors had to hunt and the game back then was not tame. So, there were no guarantees that you would return with meat. And that’s where things like umqwayiba (biltong) come from. They had to preserve the meat, because wasting was not part of the culture”.
According to a 2015 exploratory research project conducted under the guidance of research institute Tourism Research in Economic Environs and Society director Professor Melville Saayman, biltong contributes more than R2.5 billion ($163 million) to the South African economy.
Perhaps, like the faecal transporting company, Africa will soon realize the ‘wasted’ opportunity and that there is loads of money to be made in gastronomic tourism for all its inhabitants, whether they are rural or urban, technological or indigenous.
Side Hustles: The Entrepreneur Employees
The economy is changing, and so also the way people work. A singular income is not enough, and employees are finding creative, lucrative ways to work for themselves beyond the nine-to-five.
A bearded man, wearing a pin-striped grey duckbill cap, stands behind a bar counter.
To his right adorning the counter is an array of empty cylindrical canisters. To his left, a contrasting set-up presents glass bottles filled with a transparent, salmon pink liquid. Next to them are gin chalices filled with a cornucopia of berries that are to be served to connoisseurs of the popular spirit.
Queen Nandi Pink Gin and Zulu Dry Gin are experimentally infused spirits distilled by Gologo Spirits, a business venture that merges African tradition with a contemporary outlook on alcohol brewing.
Mzwandile Xaba, an accountant by day and distiller by night, is the founder of the experimental distillery.
Nine years ago, the entrepreneur and employee would not have imagined that a childhood pastime would one day become a secondary source of income.
At 5PM, when most South African corporates are closing off the business of the day, Xaba’s two-hour journey to the warehouse begins, where he often spends hours losing himself in the craft.
Once the boiler goes on, it is down to work.
Cleaning distillation columns, labeling, bottling and blending various infusions until the odd hours of the morning, ironically, rarely feels tedious for the hustler who, in the next few hours, needs to make his way back to his assigned office cubicle.
How does an accountant from the East Rand, in the Gauteng province of South Africa, end up, not only distilling spirits for commercial use, but juggling two jobs in industries that are worlds apart?
Growing up in a household with a father who pursued two careers; one in music and the other as a mechanic, influenced Xaba’s work ethic.
Xaba, who was good at mathematics and accounting, pursued a career in the financial sector. However, his childhood preoccupation of distillation has remained with him through the various stages of transitioning into adulthood, and recognizing that he needed a stable income.
Brewing umqombothi (African beer), in time for the weekend traditional celebrations with his father, is what he owes the success of Gologo Spirits to.
Although the process of brewing and fermenting the African beer is predominantly done by women, without a matriarch in the household, the men used to distill the beer themselves.
Xaba says umqombothi distillation also taught him to recognize the various cultural environments and the greater role his practice played in ensuring the success of those events.
Xaba expands on the use of spirits in celebrations.
“You normally have those when you go to traditional ceremonies. At home, it is also used during lobola (traditional engagement) negotiations, and when young men come back from initiation school in the mountains. Spirits are used for different functions and purposes from a cultural point of view.”
Xaba’s fascination with biochemistry and spirits was unrelenting, so in 2010, while working as an accountant, he decided to teach himself the delicate balance of creating the drinks that were impactful to him.
Within three years, the first drops of alcohol were ready for commercial use.
“It was just something I wanted to do. I thought it was quite interesting and I was really passionate about it.
“I don’t know why because I have never set foot in a physics or science class but I was drawn to it,” he says.
He started with vodka, experimented with brandy and whiskey, and at a later stage he tried gin distillation.
“For the past five or six years, almost every day there is something that I am doing that is in line with Gologo. If I am not literally making something I am reading on up on something.”
Finding a balance
Xaba views his side job as an enhancement rather than his primary source of income or a necessity.
“The day job is something I understand and something that I need to do in order to do what I want to do. It covers some of my operational costs. The business is something that I funded from my pocket.
“Some of the loans I have taken to set Gologo up are what I am paying off through Gologo,” he says.
“As the projection is, there comes a point where I am really making money to expand the distillery and cover some of my personal costs. It is a blend of both, a blending and a calling and it is financially viable. Doing both, keeping the day job and operating Gologo as a side-hustle is probably one of the best decisions that I may have taken financially, and also in terms of testing myself.”
When presented with the burden of choosing one job over the other, he is quite clear that financial stability is an imperative.
“I would only quit my day job once it starts costing me more money,” Xaba states decidedly.
An online platform, Hustle South Africa, is an ongoing project managed by Dana, who is in marketing, and her husband, Justin Arnoldi, also the Head of Digital Transformation at Blue Turtle Technologies.
The Facebook page was created in response to the high unemployment rate in South Africa which currently is peaking at 29% in the second quarter of 2019.
According to StatsSA, this is the highest unemployment rate recorded since the first quarter of 2003, the number of unemployed citizens rose by 455,000 to 6.65 million.
A problem Hustle South Africa hopes to decrease with this challenge is by providing a platform for users to promote and acquire side-hustles. Through the platform, hustlers are able to upload the services or products they have on offer, whether it is through text, video or images.
“The way of working has changed, people want autonomy and flexibility. They do not necessarily want to be tied into one job; they want a couple of jobs so that they can do different things.
“We wanted to create a central platform where people can interact and sign up for side work relatively easy,” Dana says.
Hustle South Africa defines the gig economy as a series of freelance or part-time work assignments.
On the platform, hustlers now can not only advertise their business, but build a public data-base. Is it safe?
“From a security perspective, we are going to have a checking system where people can put their ID number in and they will be checked for a criminal record; if they are a South African citizen; or if they can be employed,” Dana says.
Credibility is built through references, and referrals.
This model has proven effective with Uber as they provide clients with a driver-rating system.
If Bryan Davey, a diesel mechanic and baker, chose to use the Hustle South Africa page to market his side job, he would not only receive the deserved exposure for his business but would also add to the database.
The self-taught baker, who has been a mechanic for seven years, decided to bake on the side to take his mind off the noise at the workshop.
Doing something completely different takes the pressure off when he is not at his nine-to-five as a power generation field technician at Cummins South Africa. The balance between the two is a tightrope walk for Davey.
“I do try and go straight home and start baking, hopefully if I have an order for the week. It does take a toll on you, I won’t lie it is difficult but if you want to make something work, you will do it,” he says.
“It does have an impact on your mental and physical health, but it also depends on how you are managing it, so if what you are doing is a form of stress-reliever for you, it will not impact you negatively but if you are doing it in a way where you just want income, it will affect you.”
Davey, nonetheless, does both jobs with a smile.
Based on research published by Henley Business School Africa, nine of 10 people in Africa have taken on extra work to survive.
The South African study uses the Henley Business School UK in 2018 as a framework to explore local trends, which shows that 71.3% of the 1,158 respondents in their African network have side-hustles for additional income.
According to the study, the top three side-hustles in their South African networks are professional business services at 25. 7%, real estate at 20.1%; teaching, lecturing and tutoring at 13.3%.
The lowest three being providing building/DIY services, running a shop/tuck-shop/food truck, and waiting/bartending/ hosting.
Jon Foster-Pedley, Dean of Henley Business School Africa, says the demands for the highest three industries are caused by the job descriptions.
Side-hustling as a real estate agent would not require as much time and attention as a food truck. The time and effort required, according to respondents on the network, would demand them to learn a new skill, which would take up too much time.
“The bottom ones mean that you have to be good with your hands, they are skills-based.
“Running a shop or a tuck-shop, you need to adapt to a lot of the things which take a lot of your time.
“You need to do that with your hands, you can’t scale waiting and bartending,” he says.
With the top three, on the other hand, a hustler can employ other people to manage the operations of the business while focusing on their day job.
The economy is changing and so also the way people are making money.
Side-hustles can be as lucrative as the hustler wants it to be, but finding a balance on the tightrope, is the ultimate challenge.
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