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Tear Down Africa’s Walls

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For much of 2017, two of Africa’s biggest economies, Nigeria and South Africa, have struggled. Nigeria is only just stuttering out of a recession, while South Africa’s economy has just returned to stability following several quarters of turbulence. Against this background, there is a need to ponder the implications of such periods of economic turbulence for entrepreneurs in these countries.

I have always said that Africa is the business frontier of the future, the market that holds out the most promise for investors. However, in Nigeria, where the bulk of my business takes place, I have watched entrepreneurs struggle since our economy took a dip. I have seen promising businesses closed down. Some of these could have survived if there were avenues for entrepreneurs from different African states to exchange ideas and collaborate.

As an entrepreneur that operates a real estate business in Nigeria and South Africa, I have never found a more important moment to reflect on my own experience, and to highlight how a transnational collaborative platform can offer entrepreneurs from these two African economic powerhouses an opportunity for substantive engagement.

READ MORE: How Tech Can Close The Gap In Africa

I have come to appreciate the peculiarities of the Nigerian and South African business environments, with each presenting their own challenges and opportunities.

In Nigeria, I have to rely on wealthy individuals to pay the full sum on any of my buildings. Yet, in South Africa, anyone with a good credit rating can acquire a payment plan and get backing from a financial institution.

In Nigeria, the challenge of not having a reliable and standardized database system and inability of banks to offer a payment plan for clients makes it harder to trade a property. It also means that more Nigerians were willing to pay a full once-off sum.

The downside, however, is that when there is slow growth in the economy, fewer people buy properties. With a payment plan, there could be adjustments that allow them to continue the financing, or in the worst-case scenario where they cannot make payments, the bank repossesses. Either way, the entrepreneur’s business is never in serious jeopardy.

I feel that many businesses in Nigeria would’ve survived the country’s economic stutters if opportunities for a payment plan existed. Invictus Real Estate, for example, has like many other Nigerian businesses suffered the pinch of the time. The company had to rely on its energy offering, Invictus Energy, to weather the storm.

READ MORE: Why Nigeria Needs A New National Carrier

Meanwhile, uncertainties about the South African economy have led to a lack of confidence from entrepreneurs to start new ventures. But there is no entrepreneurship if one isn’t prepared to take some risks. What these periods of economic volatility emphasize is the need for a platform for entrepreneurs to cross-pollinate ideas and enrich each other’s perspective.

The transnational entrepreneurship collaboration would set the agenda for a promising Rwandan entrepreneur to learn about the resilience of their Nigerian counterpart; the Nigerian entrepreneur would be able to tap into the experience of their South African colleagues in attracting venture capitalists, and so on. Each would bring their knowledge, experiences and expertise to bear. With this, there is an opportunity for important ideas to be shared and joint ventures to happen. The Forbes Under 30 Summit in Israel in April introduced me to forward thinking young entrepreneurs. One in particular was interested in doing business in Nigeria, and we discussed establishing a joint venture. Unfortunately, we discovered that the Nigerian Central Bank had imposed restrictions on outbound dollar transactions, making it difficult for foreign firms to repatriate their profits.

This could have proven an end to our project until I suggested that there might be a way to establish the venture with my company in South Africa. But, if I had no registered company in South Africa, wouldn’t it have been an opportunity to pitch the venture with a South African who would also take into account my own interest? This would be some of the opportunities a transnational entrepreneurial collaboration would create.

The time to create a transnational collaborative platform for African entrepreneurs, one that provides a guided approach for sustained collaboration, is now.

This transnational collaboration would guarantee a broadening and enriching of the imagination of the African entrepreneur. It would free the African entrepreneur from the shackles of borders, time and space. It would redefine business for the African entrepreneur. – Written by Obinwanne Okeke

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Fashion, Fame and Finances With SA Designer, David Tlale

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How would you say the African fashion market is growing?

We are starting to understand the business of fashion; how to create brands that are custom-made in Africa, which is what we need to be doing and I think more than anything else, we need local customers supporting local designers. Another thing we need to start seeing is retailers supporting proudly ‘made in Africa’ or ‘made in South Africa’ products because that’s the only way for us to become game-changers in the fashion industry. When you look at big brands in the US, Europe or anywhere else in the world, they work very closely with their local designers.

Your most expensive indulgence?

Fabric! When I go to a fabric store, locally and internationally, I am like a kid in a candy store. I would rather buy expensive fabric different to whatever is available locally [South Africa], to make sure I can still sell that to my clients. When it comes to fabric, I go all out.

David Tlale. Photo by Karen Mwendera.

What do you mostly spend your money on?

Shoes and handbags.

How have you maintained your brand over the years?

The only way for us a brand to grow is to continue reinventing ourselves every season. As a designer or as an artist, you are only as good as your previous collection. Also, don’t try and compete with anyone, but do and believe what ‘brand David Tlale’ stands for. It happens that from time to time we keep serving them the same thing, like the white blouse. Our customers also want it, but the question is, how do we reinvent it for the next season or the next collection?

The significance of grooming young African designers…?

It is realizing they are the future…the ones going to take the fashion industry to the next level making sure we still have brands from Africa to the global markets…It is important to expose them to the business of fashion because when I grew up, no one took me by the hand and said ‘David, this is how the business of fashion is’. We were told we have to showcase at fashion week but beyond that or before that, what happens? Now we understand that.

What was your first job and what did you learn from it?

I was a lecturer at Vaal University for four and a half years, just before I graduated. I was able to buy my mom new furniture and I bought myself some sewing machines. I am proud to say that my investment into that machinery has made us who we are as David Tlale. We now have a studio and a brand that is growing.

How do you diversify your investments?

What we have done as David Tlale, over the years, is to build the brand and invest everything into this brand. We are now starting to look at other investment portfolios so we are able to get different sources of income, not only from clothing; making sure we invest in the brand, as a lifestyle brand, it be accessories, handbags or perfume. We are working on a lot of things because we want to ensure that in the next few years, David Tlale is a holistic fashion brand.

READ MORE: Lessons To Learn From The Rich And Famous

What is your most recent acquisition?

A printing machine. It is a huge investment we have made for our business making sure that we are able to look different in the industry and can print our [own] fabric.

Your worst investment decision?

To believe in someone who did not believe in my brand…I suffered dearly from it but today I am better. We are on the journey to reposition David Tlale, ensuring we become a luxury brand proudly made in South Africa by South Africans [and selling to] the international markets.

 

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Investment Guide

A Serious Investment For A Funny Man

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How do you keep the crowd interested in your comedy?

Be honest, because they need to realize you are one of them.

What is your business strategy?

You need to be open to what is going on in the industry. There was a time where we were able to plan a year in advance, but we can’t do that anymore. Social media platforms are evolving so fast. You can’t drop the same images and messages on Twitter, Facebook and Instagram. You have got to do it differently… So stay current and on top of things. It is also more than just about the technology; there are networking opportunities springing up.

What is your investment philosophy?

I am a conservative investor. I go for short-term investments rather than long-term investments. I would like to keep it to the medium range of risk.

Financial discipline means…?

Knowing when to say no, no matter how good it feels.

How do you remain financially disciplined?

I struggle a lot.

How have you diversified your investments?

I own a couple of classic cars. I also have a couple of properties.

Your most recent acquisition?

I bought a piece of property on Long Street, Cape Town.

You most regrettable financial blunder since you entered the industry?

Starting the comedy club! It was difficult making a concept like a comedy club work in a conservative space five years ago when I started.

However, it became the best decision I ever made. At the time, it was a huge investment of energy and time to get it started. On one or two occasions, I remember thinking this was too hard. It has been a very bitter-sweet thing but in the end, the advantages are huge and the disadvantages just as staggering…The theory of business is basically failure till you reach the point of success. But failure is a very important part of success. You can’t have the one without the other.

Kurt Schoonraad. Photo by Casey Bertie

How do you decide your fee?

My personal fee is affordable. I think it is important to stay within range. It is very easy to price yourself out of the [market]. We need to understand that the universe has not made all comedians equal. My fee is about R35,000 ($2,600) for a 45 minute-to-an hour set.

How much is it to start a comedy club and what does it entail?

More money than you know how to come up with but you figure it out. It is [just] one of those things. There was no comedy club in Cape Town yet there was one in Johannesburg. It is a no-brainer that comedy needed a home in Cape Town…I had to sell one or two classic cars and my partner also invested heavily in my business. It is at the V&A Waterfront [in Cape Town] so the rent is extremely high. It was worth it because at least 30 percent of our audience is not from Africa. We would have not been able to call on that market had we not been situated where we are.

How do you strike a balance between being an entrepreneur and a comedian?

This must be the thing I am struggling with the most. By just opening up the comedy club, people assumed you have taken up the other side. In the early stages, I found out that there are very huge demands on the business side of things. I work during the day and I perform at night.

Money or fame?

Most definitely, fame.

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Investment Guide

Me & My Money: Izak Smit

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What is the one investment you wish you had made?

One of the best investments anyone can make is to invest in him or herself. There are the formal qualifications, yes, but in my experience the real important one is the informal personal development throughout one’s life. It takes effort and discipline. There are so many excellent books that I have read, and courses that I have attended later in my life, on strategy, innovation, leadership, selling and persuasion, presenting, time management, and a host of other soft skills that I wish I could have made earlier in my life.

What are your investment tips for 2018? 

The biggest tip of all is to first create the capacity to invest. Open a gap between what comes in and what goes out, and the tip here is not to focus on the income side, which is often, over the short term, not so much within your control, but rather on limiting expenses and waste, which is much more controllable. Try to find your happiness outside of consumption, instead of trying to buy bliss.  There is no independence quite as important as living within your means. Then, focus on building a fund that will preserve your lifestyle for life. This is a firewall that should ensure that you are not one day old and poor.

What do you invest in and why?

My investments have mostly been in boring, diversified unit trusts in retirement fund vehicles. But over time it starts accumulating when compound growth starts doing its magic. Luckily I am not much of a wheels person, I have only replaced cars twice in my life, although I do have a motorbike and have made some sizeable ‘investments’ into road and mountain bikes. I have never sold a property in which we have lived, so we have three now, renting out two, but from an investment perspective it has performed very poorly. I believe the house in which you live should rather be seen as a lifestyle possession, not an investment. I do ‘invest’ quite a bit in the liquid asset category called wine – but find that it does not last that long in the cellar before it is consumed. Another investment that has eroded quite a bit of our family’s lifestyle preservation fund is travel and experiences.  I would like to believe these are investments with internal value – these adventures bond families and shape character.

What investments have worked best for you?

One of the best things one can do is to make full use of retirement funds and other tax free vehicles. The state does not tax you when you make the investment, there is no tax on interest, dividends or capital gains, no estate duty, and some of the withdrawals might even be tax free. It is also difficult to touch it, which is a good thing; it protects you from your short term gratification weaknesses.

What investment strategy do you recommend? 

It is often said that the best investment is to pay off debt. I agree, but only after you have first made contributions to hedge against catastrophes and after you have made investments in a diversified portfolio of quality financial assets. I have seen too many people who have paid off debt first, throughout their lives, and ended up with still nothing in an investment portfolio in their fifties. Then make sure that the risk-return trade-off of your portfolio allows you to sleep well.

READ MORE: Me & My Money – Dion Shango

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