Building nuclear power stations in South Africa could benefit other industries that are in dire need of a leg-up.
South Africa’s cabinet has kicked off the Nuclear New Build Programme (NNBP) to get an initial 9,600MW of nuclear power which, according to President Jacob Zuma and Finance Minster Pravin Gordhan, “will be built on a scale and at a rate the country can afford”.
The cost of obtaining this much power will be around $40 billion to $50 billion over 15 years.
Contrary to the view of naysayers, the nuclear power lifetime cost is lower than most technologies. It is also the leading global baseload renewable energy source, topped up with hydro, clean coal independent power producers (IPPs), wind and solar.
The Department of Energy’s strategy has been to engage with nuclear vendor countries, and not only nuclear power plant (NPP) original equipment manufacturers, as they did in the failed 2007 process. Agreements have now been signed with five nuclear vendor countries – France, Russia, South Korea, China and USA/Japan.
These countries are able to supply modern pressurized water reactor (PWR) NPP technology, funding, construction and localization development strategies. Some offer fuel supply and fuel waste management support. These partnerships will last 100 years if you consider the full cradle-to-grave lifecycle of the modern NPP.
Government intends following a transparent procurement process, which will be placed into the IPP Office. This office is currently responsible for the successful renewable energy, baseload coal, and gas to power IPP programs.
“Only once nuclear vendors had entered their bids would South Africa have an understanding of what are the different cost levels [and] what type of technology is available… So it’s going to be a year, or two, or more before we can definitely say how long, how much and over what period of time we are going to be managing this program,” says Gordhan.
The principle vendor countries, and their own domestic technology companies, will look to share risk through international alliances and to embed a strong local content into their offering. This will provide support and funding for broad-based black economic empowerment (BBBEE), the construction and manufacturing sectors, and black industrialists.
Such Sino-Franco partnerships have been successful in building the Taishan NPP in China and the Hinkley Point C NPP in Britain, so watch this space.
South Africa’s nuclear readiness and localisation is an important issue for the initial 9600MW and could range anywhere from 20% to 40%, depending on how advanced the country’s readiness strategy is and its intentions for developing a flourishing nuclear knowledge economy.
South Africa has a proud heritage in power generation construction across all the primary energy technologies, but is now coming off a 2010 construction boom, with a big coal build now rapidly tailing off. The country’s embattled construction sector will be challenged to prepare for a nuclear build program without a well-thought-out and structured national strategy. We need to keep the momentum gained for the foreseeable future.
An early dialogue between the engineering and construction fraternity, the manufacturing sector, government and labor is therefore crucial to devise an incorporated plan for the NNBP. This plan will need to give South Africa about five years to ready itself to ramp-up into the investment and localization of the NNBP and will have to be sustained for at least the following 10 years.
The potential is for over 20,000 construction jobs to be created and a similar amount in the manufacturing and supply to the NNBP. Without a plan, the opportunity will be lost to foreign jobs and higher imported content for the NNBP.
Many industry players could be activated when the NNBP is announced. Supporting infrastructures will be a great stimulus for the local communities near the selected NNBP sites in the Eastern and Western Cape provinces. Currently the local talent pool is small. Group Five and Lesedi Nuclear Services are the only private sector companies currently fully active in the nuclear industry.
In the public sector, the South African Nuclear Energy Corporation (NECSA), Denel, Eskom and the National Nuclear Regulator (NNR) will have major roles in the establishment of the NNBP and in the supply to and execution of the projects.

Can Nuclear Power Up Other Industries?

As international investors became more familiar with the continent, international listings and debt offerings by African companies increased as the need for capital to power investments intensified. Record low interest rates globally created an issuer-friendly debt market over the past five years, while foreign equity markets also made it easy for African companies to list. By 2013, over 100 sub-Saharan focused entities were represented on the London Stock Exchange (LSE), with a total market capitalization of $70 billion which accounted for roughly 5% of Africa’s total market capitalization.
This year, the much anticipated listing of Dangote Cement on the LSE is expected to be the latest African-based issuer. As a result of this trend, many emerging market equity players have come to prefer gaining exposure to African companies via developed world exchanges as opposed to investing via the issuer’s local bourse.
Nonetheless, due to the increase in interest rates in the United States (US) and subsequent weakening of local currencies relative to the US dollar and other major funding currencies, this trend is likely to dissipate this year as repayment of foreign currency denominated bonds has become more expensive. Moreover, the implosion of developed equity markets means investor appetite for international listings may not be sufficient. For this reason, since raising capital is a continuous process, this could the perfect opportunity for Africa’s capital markets to rise up and lure more African companies from the grip of international bourses. London has remained a leading destination for African companies listing abroad for over 60 years, according to LSE. Needless to say, work is clearly cut out for the more than 23 African stock exchanges to improve their platforms to succeed in this.
Perhaps the place to start is solving the challenges of illiquidity, high trading costs and small-sized markets. In my view, the last two require the integration of regional stock exchanges, such as what has been done successfully by the BRVM in West Africa and what the East African Community (EAC) is seeking to do. In this regard, the Johannesburg Stock Exchange (JSE) could consider relaunching the Africa Board, implementing the lessons learned from the initial failed attempt in 2009. Considering the economic size of many African nations, it’ll be very expensive to operate such an exchange.
On illiquidity, there will be need for more investor education and more listings for change to occur. Surely, something is not right when the second biggest equity market in sub-Saharan Africa, Nigeria’s stock market, has a daily turnover of less than $30 million. The Nairobi Securities Exchange has 61 listings, but just 10 of those constitute roughly 90% of its annual markets liquidity. Further progress would also require African countries to harmonize their trading laws and accounting standards, set up convertible currencies and establish free trade among members.
Despite this, African capital markets have been growing and gaining recognition over the years. At the end of 2015, total market capitalisation stood at $1 trillion, up from $113 billion in 1992. African equities are now included in emerging frontier indices and Africa-focused benchmarks indices, such as the Russell Frontier Index (RFI), MSCI Emerging Markets Africa (excluding South Africa) Index, S&amp;P Africa Frontier, S&amp;P Pan Africa, and FTSE ASEA Pan Africa Index. According to PwC’s recent 2015 Africa Capital Markets Watch, over the past five years alone, there were more than 100 initial public offers (IPOs) and 336 further offers (FOs), raising a total of $41.3 billion. Furthermore, African equity markets have seen a surge in Africa-focused equity funds, such as JPMorgan’s Africa Equity Fund and the Old Mutual African Frontiers Fund, which invest directly in equity and equity-related securities of companies domiciled or listed on an African exchange.
Given Africa’s economic prospects and volatility in global capital markets, now is the time for Africa to establish its exchanges in order to offer its home-grown enterprises the services that they need, while also tapping into the growing portfolio allocations toward the continent. For Africa to emerge as an important player in the world of capital markets, a well-established capital market is necessary to provide a better alternative to its well-known rivals.
They say a journey of thousand miles start with a step – thankfully Africa has already made several steps and is closer to its destination.

On The Right Path

As revenue dwindles from Nigeria’s foreign exchange reserves, calls for the government to find alternative export revenue sources have never been as loud. A return to agriculture, once the biggest industry before the oil boom of the seventies, has been touted as the most viable solution. Mining has come to the fore as another potential revenue earner, though the drop in global commodity prices will have a bearing on investor appetite.
These alternatives can generate significant revenue for the nation but, as seen with oil, a robust and watertight system will be required to ensure that all revenue from mining is redeployed into states where there is mining activity.
There are many factors that have prevented mining in Nigeria being considered a real growth earner. Whereas Nigeria’s oil is internationally recognized, the grade and quality of the country’s minerals are not recognized as meeting international standards. This has led to questionable practices being carried out by miners and traders to ensure that they make a profit on their substandard material. Furthermore, testing centers and labs are few and far between, diluting the viability of finding a buyer.
The recently installed Minister of Solid Minerals and Mining, Kayode Fayemi, has already begun to develop strategies to ensure the development of the sector is maintained from federal to artisanal level. The fragmented nature of the mining sector in Nigeria allows for local cartels to take advantage of what is seen by many as a hostile business. Due to the lack of legislation, locals prefer to sell ores for quick gains to foreign buyers, rather than dealing with the bans and restrictions that come with the legal channels. Foreign buyers are able to get more for their money by capitalizing on the porous laws. The government in Congo is aware that the trace minerals, associated with the ores, amount to something valuable and have made it illegal to export them.
Confidence precedes investment and, with the global mining sector experiencing a downturn, the lack of protection given to mining in Nigeria risks deterring potential investors. Abundant natural resources should be a gift, not a curse. The lack of policy presents an opportunity for the ministry to develop the legislation that governs the sector. This will give confidence to mining companies who want to invest in a robust system. As with the Local Content Act in the oil and gas sector, there are policies that can protect the mining sector to keep the wealth in Nigeria. A ban on importing raw materials that could be mined in Nigeria is a start.
Today, a lot of Nigeria’s mining is at artisanal level. A workforce is usually made up of locals from surrounding villages. Armed with a spade, they get to work using crude techniques to extract the ore. This exposes toxins, leading to poor health and damage to the environment.
When visiting a mine, it is not uncommon to see the landscape punctuated by parcels of land ransacked for their minerals. In countries where mining is prominent, there is a synergistic approach with environmental and mining ministries working together to ensure that the environment and surrounding communities are not negatively affected by the excavation.
Unofficial tax collectors are also known to plague the routes on which the mined material is transported. While  companies have come to expect this in Africa, business will increase if this practice is eradicated in Nigeria. The mining ministry must engage with states and local governments to ensure that royalties and taxes reach federal accounts. With idiosyncratic systems catering to minorities, the fact that no major international mining companies are established in Nigeria is indicative of the lack of confidence they have in the country’s mining sector.
The general perception among Nigerians is that Minister Fayemi has the skills and intellect to successfully navigate his challenging post. During his term as Governor of Ekiti State, he attracted international finance. He is now expected to be just as bullish in Nigeria’s potentially lucrative mining sector.

Natural Resources A Gift Not A Curse

Ferrari, Lamborghini, Maserati. There is an exciting ring to those names, but that ring comes at a price.
And you can expect to forfeit a dowry of more than $200,000 to marry into the top-end of these Italian families.
But there is a classy cousin with style, performance and the badge that turns heads… coming in at around a third of the asking price – a shade over $80,000.
The Maserati Ghibli is offering Italian supercar style and status in the luxury executive car segment after an absence of nearly two decades.
Clearly in the sights of the new entry-level Maserati are the Mercedes Benz E-Class, BMW’s 5 Series, Audi’s A6, the Jaguar XF and a host of other sporty saloons which have a slightly leaner price tag.
If the name Ghibli seems familiar, it was originally a V8 Grand Tourer released in 1967 and then a four-seater coupe in 1992.
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It seems that Maserati, now nestling under the massive Fiat Chrysler empire, decided a few years ago to do something special for its 100th birthday and build a scaled-down Quattroporte limo for the moderately well heeled.
And, like the wind it is named after, the Ghibli has blown apart all the tired sales figures for the brand.
In automotive terms it doesn’t really make sense, especially in recent years of conservative global growth, and at times decline.
It’s hard to comprehend that Maserati sold a mere 6,200 units in 2012 and almost seven times that number last year – with the Ghibli clearly leading the charge for growth.
And that’s before the next major model release, the Levante luxury SUV arrives to cross swords with the Porsche Cayenne and Range Rover Sport.
Heady days for the assembly line at the new Giovanni Agnelli plant in Turin and also some extra shifts for Ferrari, in Modena, crafting the Maserati-designed engines.
It’s a belated tribute to the Maserati brothers, Alfieri, Bindo, Carlo, Mario, Ettore and Ernesto, who were all involved with automobiles from the beginning of the 20th century.
It was all about racing in the formative years. Then in 1926 the production of two-liter Grand Prix cars for Diatto was suspended and the first Maserati was engineered bearing the now famous marque.
When you see the Ghibli in the flesh you may want to give Marco Tencone, head of design since 2009, a pat on the back.
It may be called an entry level Maserati, but it lines up against the big guns on the showroom floor without any reflection of the smaller dent in your bank balance.
Its eye-catching, flowing lines which radiate from the iconic, but rather daunting, grille hold your breath all the way to the menacing exhausts without ending in a disappointing Panamera-like rear.
What I like about the interior is the classic simplicity. Essentialism rules in this design, where no controls are there for the sake of fashion, the dials are stark and clear and the multimedia screen and system is superbly logical.
But don’t mistake a lack of frills with a lack of exclusivity and craftsmanship.
“The fact is that, with Maserati, you bespoke your car. The combinations are endless and it’s not a luxury car unless you can personalize and tailor it for the specific customer,” says Rens Rademeyer, General Manager at Maserati Johannesburg.
“The focus is on the quality of workmanship and materials.”
To be honest, I was expecting a rather sedate drive in the Ghibli S. But the acceleration is rampant and at times it’s difficult not to wheel spin at the lights.
All the Ghibli models, including the ground-breaking diesel, are powered by V6 3-liter twin turbo engines. The five-second S gets that extra boost thanks to some fine engine mapping and components.
On the negative side, there was a perceptive turbo lag which seemed to be minimized in manual and the rather sturdy oversized paddles are a lot more fun to communicate directly with the eight-speed ZF transmission.
That’s possibly why the gear selector seemed a tad finicky and seemed to stray into manual if not closely monitored.
The ride is superbly smooth and the Ghibli glides over the plethora of city speed humps without the neck-jarring suspension of some competitors.
And, on a rather personal level, my ungainly two-meter frame felt ever-so snuggly cosseted on those painstakingly padded and stitched seats.
Even if you’re not behind the wheel of a Quattroporte, there is a distinct brand cachet. Without being too esoteric, beyond the nuts and bolts of manufacture, there is an element of prestige riding behind the trident badge. You notice it in the attention of a petrol pump attendant or even the nod of acknowledgement from a fellow motorist at the lights.
But here’s the rub. Even with projections of a ceiling of 75,000 models (across the range), Maserati will battle to keep up with the fast developing technology of the major German luxury trio.
To put it blatantly, you may look like a million dollars in your Ghibli but you will be missing many standard features of the mass produced rivals.
That is the trade-off.
“A lot of these so-called features are gimmicks,” says Rademeyer. “We are giving our customers a pure driving experience, we are not selling smartphones.”
Rademeyer extends the same personal service to the new showroom, in the plush Johannesburg suburb of Bryanston, where he pilots the Italian coffee machine to turn out a pretty mean cappuccino. All the staff have to train as baristas.
But maybe they should offer customers a Foster’s lager after hours. That’s because the franchise holders for Maserati in South Africa are now European Automotive Imports (EAI), who are aiming to build on their success with the brand in Australia.
“Our goal is to transform Maserati’s position in the South African market to offer a new benchmark for exclusivity and customer service,” says EAI Chief Operating Officer, Glen Sealey.
“We have been very successful in Australia and our appointment in South Africa is an outstanding vote of confidence and a clear acknowledgement that we have the people and expertise to succeed.”
What this means is that Maserati is no longer under the wing of Ferrari and is flying solo.
Maserati re-enters South Africa with its complete model offering of the Quattroporte, GranTurismo and GranCabrio ranges.
A Maserati dealership has just opened in Cape Town, on the foreshore near the International Convention Centre, and plans are underway to find a partner in Durban.
Perhaps the critical element of the expansion is to ensure that the resale values stabilize and servicing standards are up to scratch.
“Globally, the brand is ramping up all the dealer management and customer relationship systems,” says Rademeyer.
“But the systems are there to help us manage relationships with our customers, so we don’t depend on automation. But it helps us to manage the personal interaction with our customers. We have volume aspirations but will never be a brand-considered mass-produced [car].”
It’s a swaying tightrope that Maserati have to walk between the prestige of the trident badge and bidding for a bigger slice of the market segment.
As the Italians say to wish good luck: in bocca al lupo!

Italian Beauty Back In Africa

In his lifetime, Vincent van Gogh created 900 paintings and 1,100 drawings and sketches, but only ever sold one painting, a few months before his death. A century later, a song has been written about him; a museum dedicated to his work; and cafes are covered with his signature blue and yellow pieces. Van Gogh would have probably enjoyed a few stories over beers with Louis Chamane. In 20 years of sculpting, after 11 years of sweating and working his fingers to the bone in the mines, living hand to mouth and relying on his wife as the bread winner – Chamane has just made his first sale late in life.
His face is hardened by the years of toil but he has a cheeky grin as he tells his story. Chamane traveled to ‘Egoli’– the city of gold as Johannesburg is known – in the 1980s. He worked as a lasher and later as an electrician; it’s grueling work underground. Egoli’s fortune wasn’t his by 1995, he was one of hundreds of miners from rural KwaZulu-Natal who were retrenched.
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“I enjoyed mining. When they retrenched me I was so cross. I thought they would call me again, but nothing. All the people from KwaZulu-Natal, they didn’t want them here in Transvaal (the old name for Gauteng) anymore,” he says.
He poured his anger and frustration into sculpting a series that tells a story of the goldmines – tracing every aspect meticulously. The Mineworkers Investment Company (MIC) celebrated 20 years by paying tribute to South Africa’s fallen mineworkers with his collection, which will be permanently displayed at Constitution Hill in Johannesburg. It hasn’t been easy.
A solid block of wood carved into figures of miners is given life with clay, rock, chains, wire and tubing. Chamane is a man of few words but his sculptures speak volumes.
“The story of the sculptures is the underground. The theme of these works is ‘abasebenzi’ (workers). The helmets are different colors. It’s not decorative, I’m showing the different work. The yellow is the shaft department, the red is the electrician, fitting, rigor, blue is lashing, white is team leader,” he says.
“I’ve decided to stick with the mine. Because I know exactly what happens underground, if I stick with the underground, I tell people something that I know. It’s not imagination, it’s based on my life.”
On a hill, overlooking the whole of Johannesburg, in the heart of the city – Constitution Hill Precinct is one of the city’s heritage sites. As the country transformed post-apartheid, the precinct signified the change. An old prison, where Mandela and Gandhi were jailed, became the site for the Constitutional Court and three museums. While the court boasts an art collection, that could rival the Tate Modern, Chamane’s sculptures are just the start of a large permanent collection.
“I’ve never been to Constitution Hill before. I don’t know this place. You can see the whole city from here,” he says timidly.
He taught himself how to sculpt by watching his father and learning from other artists. In spite of his hardship, Chamane is finally living out his dreams.
“I was an artist before I was a miner. Not professionally, naturally,” he says proudly.
“What I like so much in art is that you do what you feel. If I’m asked to do something and if I do something that I feel – it can never be the same,” he says.
He’s one up on Van Gogh with an exhibition, but it’s just the start of a legacy that the Dutch painter probably would have taken an afternoon to view.

Van Gogh With A Pickaxe

When he was selected to travel to the United States (US) to take part in the second edition of the Young African Leadership Initiative (YALI), otherwise known as The Mandela Washington Fellowship, Jean Bosco Nzeyimana knew that the sky was the limit for him.
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Last year, US President Barack Obama’s Mandela Washington Fellowship invited 500 of Africa’s brightest minds to learn new skills and see innovative entrepreneurial trends. For Nzeyimana it was invaluable.
Having grown up in the rural village of Gikongoro, in the Nyamagabe District of Rwanda’s Southern Province, from parents of humble origins, Nzeyimana’s journey to the top was out of the ordinary; especially when you consider he used trash to get there. Garbage is Nzeyimana’s calling.
In August last year, Nzeyimana met Obama, and other US state department officials, in Washington DC immediately after the US president visited Kenya to host the Global Entrepreneurship Summit in Nairobi.
A few months later, Nzeyimana presented his business ideas at St James’s Palace, in London, at an African business event called Pitch@Palace in the presence of Prince Andrew. This event, which Nzeyimana says changed his perspective on green business, takes place twice a year and involves more than 300 CEOs, angel investors, mentors and the event’s business partners.
Nzeyimana became an entrepreneur in challenging circumstances. His neighborhood was gripped by poverty and poor sanitation bedevilled the community.
Firewood was used to cook every day. This was problematic as finding wood was daunting and burning it led to health problems. Nzeyimana felt a need to do something about it.
“I needed to be part of a sustainable solution to address lack of power and affordable sanitation and to fight poverty at my rural village in Kitabi, in Gikongoro. My solution was to try composting trash into cleaner cooking fuel and, if possible, to produce other green products too,” he says.
This led to Nzeyimana starting Habona Ltd, a company that produces 20 tons of briquettes per month, in 2013. He did when he was barely 18 and still studying at the University of Rwanda’s College of Business and Economics. Habona currently employs more than 100 people.
“I studied business administration because I needed to lead a private enterprise that could solve myriad problems that my folks faced, especially hygiene and lack of fuel,” says Nzeyimana.
While at college, he researched how waste could be turned into green products, such as biogas, compost or briquettes. He was particularly interested in new approaches that could displace firewood or help his parents access cleaner and cheaper fuels during the rainy season, when access to firewood – the primary source of cooking – was more difficult.
With time, the knowledge he acquired from university helped him to draw up a comprehensive business plan for his project.
With barely any capital, Nzeyimana formed a small team to set up waste collection points in Nyamagabe town. The team gathered waste from people’s homes and hired vehicles to transport them to a central processing point.
Here the waste is categorized and the degradable materials are processed into manure, briquettes and biogas, while the non-degradable are turned into ornaments or sold for further recycling.
“You don’t need money to start off successfully,” he says. “A lack of funds did not discourage us in any way. Instead we needed to think out of the box in order to raise capital to enable our idea to take shape.”
When the African Innovation Prize, a continental business competition for start-ups called for entries in 2014, Nzeyimana entered and won, receiving Rwf2 million ($2,700) in valuable capital for Habona.
Nzeyimana also scooped the 2014 Young Innovator Award in Rwanda and was among 10 Africans who participated in training in New Delhi, India, on running a start-up.
By August last year, while attending the YALI fellowship, Habona was granted around $25,000 from the United States African Development Foundation(USADF)  to support Nzeyimana’s waste project.
“The grant will boost our capacity substantially going forward. We intend to employ 10 more workers and increase our briquette making capacity from 20 tons to 50 tons per month,” he says.
Habona sells a kilogram of briquettes for Rwf200 (around $0.30) to people fighting the vicious circle of poverty in Nzeyimana’s rural village.
“There is more value in that the briquettes last three times longer than charcoal of the same cost. This is not only cost effective, but is environmentally sustainable.”
Nzeyimana’s experiences in the US and Britain have led to bigger and bolder ideas.
Since his fellowship in the US, Habona has scaled up its capacity in renewable energy management. Consequently, the company was contracted to run an integrated waste management plant owned by the Nyamagabe District authorities.
At St James’s Palace, Nzeyimana learned to introduce a broader vision of his business.
“I came back charged and armed with a better vision of the potential of my abilities, including where I want to be by the end of 2016.”
The event opened his eyes to the big world of green business.
“I am in the process of setting up an office in Kigali. As an entrepreneur, it is important to spread my wings. My company is in talks with a group of local, regional and international investors to set up something with the same business model, but very huge in Kigali while expanding our operations in Nyamagabe.”
Support for Habona is flooding in.
Nyamagabe District’s Deputy Mayor for Finance and Economic Development, Immaculée Mukarwego, is a firm supporter of the company.
“The project started by Habona Ltd is very good, with a very bright future as it seeks to deal with the issue of waste in a sustainable manner and, in the process, it has a high potential of improving the overall wellbeing of the entire district,” says Mukarwego.
As part of the district’s long-term plans, a plant and dumping post was built at a cost of more than $500,000 to help Habona to increase its activities.
It’s a good start for a rural village boy who started off with nothing but an ambitious dream to fight poverty.

One Man’s Trash  Is Another Man’s  Treasure

Struggles, rejection, heartache, backstabbing and an empty bank account &#8211; Lebo Gunguluza endured it all and never gave up.
He claims his net worth is more than R300 million ($19.5 million).
We meet Gunguluza at a barbershop in Sandton City, a plush mall in Johannesburg – a world away from where he was born, in a shack behind a funeral parlour in Port Elizabeth, Eastern Cape. He had a tough upbringing.
When Gunguluza was six, his father died leaving his mother to provide for three children.
“I grew up with an uneasy upbringing. There’s one thing that my mother pushed for us, in all the difficult times in our lives, she pushed for us to be educated, even today she continues to teach us certain values; respect, love and gratitude,” says Gunguluza, the Founder and Group Chairman of the Gunguluza Enterprises &amp; Media (GEM) Group.
In those lean days he had plans to make his first million at the age of 25, at 35 he wanted to be a multi-millionaire and at 45 a billionaire.
“I grew up so impoverished, admiring and envying other people who had better things than me. I set those financial goals because I wanted to put myself under pressure so that I don’t waste my time on things that will not take me to those goals.”
Gunguluza matriculated in 1989 and studied for a Bachelor of Commerce at the University of KwaZulu-Natal. In his final year, he began his business career by selling accounts for a clothing store on campus, for commission.
Within a month, he was hired as the store’s trainee manager. It meant he had to make up for missed lectures.
Soon after completing his degree, Gunguluza was hired as a sales executive for South Africa’s public broadcaster, the SABC. A year after, at the age of 25, he was promoted to marketing manager of the broadcaster’s radio station Metro FM.
He left the broadcaster to join advertising mavericks Herdbuoys. Here, he decided to start his own business.
“At 26, I realized that I haven’t reached my goal of being a millionaire so I decided to change my strategy. I did what I did but at a higher level. I approached one of the new radio stations and proposed to activate them, that’s how I got to make my first million at 27.”
“Success is not a destination, it’s a journey. Every milestone or obstacle you encounter you have an option to learn from it. I always say to people I have failed so many times I feel like failure is tired of me,” he says.
Gunguluza has had his fair share of ups and downs.
“I was making so much money, I bought my office cash. I then started employing people the wrong way, instead of employing people who are competent. Every girl who was pretty that came looking for a job, I would hire them. My office was not filled by competent people; it was full of pretty people. For me, if you were a sexy girl with a short skirt, you would be employed. And that was my downfall,” Gunguluza says.
At the end of 2008, he was embroiled in a messy divorce with his wife of eight years. He lost everything; his cars and their restaurant.
Because of his financial immaturity and no mentor, within a year of making his first million, Gunguluza found himself running out of cash.
“I never knew how to run a business. I never knew how to manage people. I never knew how to set systems and structures at a company and I never had a mentor. I had to sell one of the cars and ended up squatting at my cousin’s place.”
He then went to read about how businessmen acquire their successes and did some soul searching. Three months later, he learned a powerful lesson.
“Whatever business that you are going into you must know it in and out,” says Gunguluza.
“I was thinking to myself, ‘how come I couldn’t build a company whereas people like Richard Branson and Donald Trump had built successful businesses?’ So I thought to myself that it can only be what’s in my mind.”
Once he had found his seat on the rollercoaster of business, he founded the GEM Group – an integrated media and hospitality group, which boasts 12 print publications, stakes in numerous hotels and a car hire business.
“I decided that I’m going to build one entity that can generate enough cash flow, and then use it to acquire stakes in already existing companies. I didn’t want to start a company from scratch because I learned the hard way.”
The 46-year-old, from humble beginnings, is a turnaround strategist, business speaker and mentor to young entrepreneurs.
What is clear is that whatever he has, he has struggled.                 “In business you will never go anywhere without good contacts. The most important thing is to remain with the person that you are working with because there is a lot that you are going to go through together. There are lots of disagreements, misconceptions, and backstabbing, you have to go through all those things in order for you to mature into a great entrepreneur.”
He spends his time mentoring up-and-coming entrepreneurs through his Izani 12-12-12 Enterprise. Through this initiative, he earned himself a spot as one of the judges in the Dragons’ Den television show – where young entrepreneurs have the chance of getting funds and mentorship.
In the next five years, he plans to go into the software development business and to meet his goal of making his first billion. He also wants to travel the world.
After poverty, a messy divorce and business failures, Gunguluza has suffered on the road to success. He is proof that if it doesn’t kill you, it makes you stronger.

‘If You Were A Sexy Girl With A Short Skirt, You Would Be Employed’

It was a warm day in Sandton, Johannesburg. As we meet, Vital Sounouvou crouches, leaning heavily on his cane, as he greets us. It is a bad day for him, he is in pain. Pain has played a big part in his journey to entrepreneurship.
“When I was six years old, I had malaria and the doctors gave me an injection that cures it but it also attacked the bones and killed the nerves. I was almost paralyzed on my left leg and had to use a walking stick since then,” he says.
Treatment didn’t help. Life was never the same; his peers mocked him and his elders pitied him.
“I had to go to school with metals attached to my body. This had a positive side though because instead of playing outside I was forced to be indoors, read books and daydream. This had an impact on the man I have become.”
Time opened his eyes and he saw opportunities for entrepreneurship. He graduated from high school at 16. A year later, he opened his first business.
“I feel I was blessed to be born in Benin. Poor country? Yes, but it is the most stable in the region. All our neighbors were in war but not us. We are blessed by nature. Trade is part of our culture. There is a shop in front of many houses and most people from my city (Porto-Novo) become entrepreneurs of some sort,” says Sounouvou.
The 25-year-old says 85% of the youth in Benin are unemployed.
“When I started college, the first thing the professor told me was that I won’t find a job after completing my studies.”
The gloomy professor’s sobering words spurred him on. Sounouvou founded Exportunity, a site that promotes export opportunities for Africans by connecting producers with traders. It allows a farmer in Benin to sell his produce to a buyer everywhere from South Africa to the United States through a cell phone.
“There was a huge information gap between the offer, demand and the market. We wanted to promote products made locally. It was very hard to find producers but it was even harder to compete with international brands locally,” he says.
Sounouvou built a mobile application that works on all types of devices, including non-smartphones. Farmers are the target.
“Almost 70 percent of whatever crop is produced in Africa is wasted because the producers have no way to get the product to market. There are many problems ranging from the costs of locating a buyer, to dealing with middle men in cash, to suffering losses due to scams,” he says.
The computer science graduate was inspired by eBay.
“We are like eBay for wholesale. Imagine if Alibaba conducted a proper due diligence on every stakeholder before accepting them on the platform. People don’t just come on Exportunity and just register and start trading, they apply and we do due diligence before allowing them on. We had to adapt to the producer in Africa because some don’t use a lot of technology. We had to create Exportunity trader tablets for people without access to high technology so they can have access to international trade,” he says.
Buyers and sellers pay a membership fee to trade.
“People traditionally have to travel with large sums of money to trade but this site cancels the travelling costs and the risks associated with carrying large sums of money.”
Exportunity has externalized most of its management to Temple Corporate Services in Mauritius and has 17 permanent staff.
“In May 2014, global rice prices plunged to a historic $403.59/metric ton, the lowest since January 2008’s 393.48/metric ton. Jumping on an unprecedented opportunity, Exportunity-Benin, acting as a middle man, helped Neodis Trading-Benin buy from an Indian-based supplier 1,672 metric tons of rice at a price of $413.59/metric ton, filling 727 20-foot containers. We made a net profit of $69,150 out of the deal,” says Sounouvou.
Through the trade events, Sounouvou claims Exportunity has engaged with over 750 clients, and built a database of 85,000 companies globally trading with Africa.
“There are currently 13 transactions in the pipeline, over 450 suppliers trading on the platform, over 120 buyers  and over 2 million others are immediately reachable through our deal with UBA Bank.”
Running a successful business is not Sounouvou’s only pride. He was one of 500 young African leaders chosen to be part of President Barack Obama’s Young African Leaders Initiative in 2014, he was selected for the inaugural group of the Tony Elumelu Entrepreneurship Programme with a $10,000 grant, and has been recognized as the Ambassador of the Global Youth Innovation Network by the International Fund for Agricultural Development.
“Every time my leg hurts, I remind myself that I shouldn’t let it be my story. My story is to be great. My disability does not define me,” he says.
If nothing else, Sounouvou’s story proves that what hurts you can make you.

Pain, Pity, Opportunity

When Mike Lawrie fretted and sweated to connect Africa to the internet he expected a handful of dusty academics to use it. A quarter of a century on, African truck drivers, domestic workers and office clerks can’t live without it – the internet in Africa is as much a part of living as is breathing for millions.
“We know internet use in most of the continent has been growing. But it’s not even. So you have countries like South Africa and Kenya on the one hand where many people are using the internet. Then you have Ethiopia, the second largest population in Africa, and very few use the internet,” says Indra de Lanerolle, head of the South African Network Society project at the University of the Witwatersrand (Wits), in Johannesburg.
De Lanerolle is the author of The New Wave, a paper released in 2012 that looked at the internet users of Africa.
“The internet has grown, but there is one thing that hasn’t… fixed lines. Traditionally you would connect with a PC. But only two percent of households have a fixed line. PC penetration hasn’t been going up much. In that context it’s not surprising that it leaves us with mobile and mobile devices.”
“It’s a success story in one way that this infrastructure works. But it’s also evidence of a failure in another. Many African countries have failed to deliver those other networks, or they are way too expensive.”
Internet on the move is expensive. Net costs are high, which means the poor, without PCs, surf less.
“You are buying data in sachet size bytes, 5MB at a time, and you are rationing yourself. Our research shows you are very biased against services when you know how much data they use. One of the good things about Facebook is lowering the data consumption in order to use it.”
Internet means economic growth, says Ibrahima Guimba-Saidou, Senior Vice President Commercial Africa at SES.
“According to our research, if a developing nation has 10 percent more broadband connectivity, it results in a 1.38 percent GDP growth for that country. It is expected that Africa’s population will double to 2.4 billion people by 2050. In 20 years, the number of cities in Africa with over 10 million inhabitants will double. Remote areas are pulling African economies down. Today, over 300 million Africans live more than 50 kilometers from the nearest fiber or cable broadband connection – 400 million people have no internet access at all, that’s 700 million unconnected people. This equates to 60 to 70 percent of the African population living in remote areas, cut off from the bigger cities without access to information and the necessary facilities required for sustainable growth. These people, by no fault of their own, are pulling their country backwards as they are not able to contribute to the economy, as much as they no doubt would want to,” says Guimba-Saidou.
Language is also a barrier, says De Lanerolle. The language of technology tends to be in English, French or Portuguese, making it difficult for those who don’t speak them to navigate on their phones.
“At a bank machine you can get numerous languages but on an app its less. In general e-commerce is generally English in South Africa. If I am a Sepedi speaker in Polokwane, and I go to a shop, I can probably speak Sepedi to a shopkeeper. I can use Sepedi to transact. I can go to a post office and do the same thing,” says De Lanerolle.
“There are a lot of people in South Africa who do not read and write English easily. It’s a significant barrier, but is a solvable one. People, who design services and content, need to take account of that, especially when you have got these limits when you have reached the limit of your clientele.”
Internet users on the continent may be on the rise, but almost half the population lives below the poverty line. According to De Lanerolle’s research, in 2008, one in seven people in South Africa were online. In 2012, this grew to one in three. By 2016, there could be as many as two out of three, he says.
The research bears out that the younger you are, the more likely you are to use it. Almost 50% of those under 25 are internet users, while less than 20% older than 45 use the net. Businesses need to be cautious when it comes to developing apps.
“When people are launching the business they say let’s design an app for an IOS system. First, ask why do an app? If your target market is a low-end income user, they are most likely using a BlackBerry. Why use smartphones?”
“Research, from the US, shows that most users use only 10 apps. It’s quite hard to develop an app that is quite easy to use. More seriously, it’s harder to make an app absolutely necessary that will be in that top 10. Most apps will be used and then dropped in a very short time, like games,” he says.
For those who have dreams of becoming the next Mark Zuckerberg and designing a multimillion-dollar app in their garage in Africa, the road may belong and rocky. There is a shortage of developers in Africa, for a start.
“By far our biggest constraint is developers. I was speaking to a CEO of a fairly big company in Sandton; they alone have a hundred vacancies for developers. The problem is we don’t have enough, especially at an entrepreneur level. Because they have such shortages in Sandton, they are offering pretty good salaries. You have to be pretty brave and pretty confident to say ‘screw that I am going to do my own thing and hope I score.’”
Social media is the king of the internet. Seventy five percent of users have at least one account on Facebook, Twitter, Mxit or LinkedIn or other social platforms.
Dinesh Balliah, New and Social Media lecturer at Wits, has taught students to use the internet in journalism for four years. The growing generation of internet users are far less computer savvy than they are made out to be, she says.
“Students these days don’t even know how to burn a CD. I feel like the generation we have now, that deals in apps, don’t learn how to troubleshoot on a computer. Back [in 2000], if you stuffed up on a computer you had to fix it. Even a software error, you had to fix it. Now you just try something else, or reinstall. The way in which we learn about computers has completely changed.”
“I think social media has changed the game for everyone. What’s shifted drastically is initially when the internet came out it was very top down. Those who had power, money and influence were the people producing content. So you had very exclusive content producers. Then you shifted to Web 2.0, where internet users were producing internet content of their own. Now you have moved to a situation where it’s not very clear what production content is. Is a tweet content? Is a Facebook comment content? The individual matters now more than ever.”
The language of computers could be more important than learning Mandarin, she says.
“With me, my general rule with my kids is that they need to read and write properly first and then they can have access to a computer. If you look at people who became tech innovators, they played computer games. People have this aversion and get scared of games and computers, but we should be teaching our kids how to code through games,” says Balliah.
It may be for a privileged few, but it’s clear Africa is set to be changed even more by the growing, dynamic power of the internet.

Eat, Pray, eMail

Accra’s central business district, located at Ring Road, is popular with start-ups because everyone walks past it, from tourists to townsfolk. This doesn’t count for much if Ghana’s economy continues to stumble.
Felix Oppong runs a small printing business in this bustling area. He has a staff of five who serve around 10 companies, mainly from the telecommunications and financial sectors.
The company prints posters, fliers, banners and office documents. In the past year, Oppong has lost two of his biggest clients, telecoms giant, MTN, and Fidelity Bank, due to power cuts, known here as dumsor. He has also had to increase his prices to break even.
“Our business has really taken a hit, the dumsor situation right now means we cannot service a lot of the orders we get from clients. We are relying on the generator every day to make sure we can meet demands and the cost of petrol is very high as well,” says Oppong.
“We cannot continue running the business like this. Our clients are complaining about the increase in prices and I had to sack three staff, there have been at least two petrol shortages last year which meant we had to close our business for a week and that is when we lost MTN.”
Ahead of elections on November 7, the Ghanaian economy is facing several challenges. Once a shining light of economic prosperity, the country, according to the International Monetary Fund (IMF), is now experiencing a decline in growth from 8% in 2012 to 3.5% in 2015. The current woes are largely due to the protracted energy dilemma and what many industry experts believe to be poor macro-economic management.
With elections coming, a restrictive IMF program has been implemented to prevent previous bouts of excessive spending. The organization has disbursed a third installment of $116 million, which amount to a total of $900 million over three years, to aid economic recovery in the West African country. Consequently, Consumer Price Index (CPI) inflation is forecast to rise to 8.7% in 2016, up from 8.3% in 2015.
Franklin Cudjoe, the Founder and CEO of IMANI Center for Policy and Education, a leading think-tank in Ghana, says the plight of the Ghanaian economy is not specific to one sector.
“I would say all the industries in the country are having some challenges, all emanating from production costs that have gone high over the last couple of years. One of the sources of the high production cost for almost all the industries is because of the energy challenge that we have,” he says.
“If you take it on a per capita basis, the cost of energy, for instance, has tripled over the past few years alone and that significantly affects the budget for food. The disposable income for the household has significantly been reduced. The Ghanaian economy has also suffered from the global shocks because most of our products depend on them and there has been plummeting oil prices. Cocoa production also hasn’t quite matched this, not to mention a decline in gold as well.”
Cudjoe says the country’s woes are also self-inflicted. Ghana is borrowing more money but, according to some experts, these funds are not utilized well. The currency, according to Reuters estimates, has plummeted by around 20%, with a corresponding total external debt of $24.3 billion in 2015.
“Austerity measures being used at the moment are all fiscal and based on levying tax on everything. The government has incurred so much debt and the only way it can service those debts is to increase taxes. There is no sensible government that will be seen introducing taxes in an election year, but it seems the only way the economy can sustain itself… because, quite frankly, the coffers are empty,” says Cudjoe.
Nigeria’s fiscal challenges have also led to the country banning some imports, which significantly affected Ghana’s agricultural sector. Farming contributes around 19.9% to the economy, according to the Ghana Statistical Service (GSS).
“This also has a way of affecting our balances. It is similar to 2005 where Nigeria banned close to 93 products from Ghana and I think we are seeing echoes of that sentiment again. I don’t think it is right to erect barriers, especially with both countries belonging to the Economic Community of West African States (ECOWAS) which is supposed to lead to deeper economic integration,” says Cudjoe.
He, however, believes that the services sector, together with technology, will drive growth in Ghana. According to GSS figures, the sector contributes a whopping 50.2% to the economy.
“Ghana at the moment is doing $900 million a month, that is 24 million transactions, in mobile money. Ninety nine percent of these transactions are peer to peer, which simply means one takes and transfers money to the other. We are so far away from creating a cash-lite economy in Ghana, which is what mobile money is supposed to do. So we sat down and looked at how to create a platform that enables us to use the mobile money for retail payments. Zeepay’s idea is to be able to move from predominantly peer-to-peer transactions into retail payments as well,” says Andrew Takyi-Appiah, Co-founder of Zeepay, a mobile payments company.
He has, so far, invested just over $500,000 in his new venture and is hoping the growth in the Ghanaian services sector will help boost his mobile app service. Takyi-Appiah’s major challenge in scaling his business is the lack of funds. Financial institutions, who are traditionally apprehensive about lending to start-ups, have taken an even tougher approach to mitigate risk against bad debts. The government, however, has set up the Ghana Infrastructure Investment Fund (GIIF), to provide resources and attract investment. But Cudjoe says the approach of the government in implementing this leaves little to be desired.
“I know for a fact that the Ghana infrastructure fund that is being set up is being funded by the country’s oil money as seed capital, instead of using private funding from abroad. You ask yourself if this is the most prudent way of utilizing resources in an austere economy. I don’t really believe that austerity measures are the [solution] but I think the way we are going about it is to use the tax to solve it, and I think taxation is the last measure you want to resort to in a time like this,” he says.
As voters prepare to make their mark, the Ghanaian economy is on shaky ground. Business in the country is still firmly in the grips of the energy crisis, which has reduced output from the manufacturing and agricultural sectors, while increasing production costs.
The recent growth in the economy has achieved certain goals – such as reducing poverty – but ballooning costs and debt has left many wondering if Ghana’s progress is about to be stunted.

The Coffers Are Empty

Banks and investors are reluctant to risk money in untested projects. Start-ups are left penniless and broken across Africa. Nairobi-based entrepreneur Erik Hersman struggled for capital from banks unwilling to take a risk. Crowdfunding was the answer.
“We had to make sure that we made this innovation come alive and crowdfunding made it easier. Although the process of marketing the idea while being funded is hard, it is worth it,” he says.
Through online crowdfunding platforms, people pledge small amounts of money to projects for 90 days, for a reward.
Hersman turned to crowdfunding and met people that gave his new business a lifeline.
“It wasn’t just about raising money for the project but we also wanted to test out if anyone else wanted this product. Sometimes something sounds great in our heads but no one else would be interested,” he says.
Using Kickstarter, one of the many crowdfunding sites in Africa, he raised over $160,000 for BRCK – a device that helps people go online where electricity is scarce. It can hop between Ethernet, Wi-Fi and 3G and 4G.
“We looked at the market and we were asking ourselves, why are we trying to connect to the internet using devices that are made in Europe and the US when we have a different infrastructure in Kenya; so we started designing and developing a new way to connect to the internet.”
BRCK began shipping units in July 2014. Thousands had been sold to 54 countries by February 2015. The company employs 40 people.
Hersman is grateful for crowdfunding and says entrepreneurs should use it.
“It is not currently well used and understood in the continent but I wish more people could make use of it,” he says.
Entrepreneur Patrick Schofield, co-founder of Thundafund, a crowdfunding site based in Cape Town, says many businesses fail in their first year and good ideas rarely see the light of day.
“Crowdfunding is the most powerful mechanism we have in Africa. If you have a really good idea and people like it, they will support it. People can put $100 for a good idea, for example, but they are sceptical to put down $5,000 for something that hasn’t been tested,” says Schofield.
“Through the process of the campaign, we test if the idea is viable and if there is a market for it. The entrepreneurs say how much they need to execute their plan. If the target is not reached, the donated funds are returned to the funders.”
Thundafund claims it has funded 170 projects worth R6,123,843 ($550,000).
“There are a lot of ideas around how you can thank or reward backers. This is a very important part of crowdfunding because it will determine how well your campaign will do. For example, you can offer the product you want funding to create as reward, early access to the product or service for example when looking for funding for an album, you will offer signed CDs, VIP access to shows; you can make your backers part of the project and much more,” says Schofield.
Crowdfunding platforms like Malaik, AngelList, EarlyShares, and Seedrs offer equity.
Malaik spokesperson, Vias Lustig, says equity crowdfunding is great, but has drawbacks if not well managed.
“An early-stage company that has raised financing from a hundred different investors through an equity crowdfunding platform will have more trouble getting follow-on investment from venture capitalists,” says Lustig.
Malaik, based in West Africa, acts as a nominee. All the crowdfunded money is channelled through a special purpose vehicle (company formed for investing in equity) that appears on the entrepreneur’s books as a sole investor.
“Smaller investors that participate in equity-crowdfunding are also less likely to contribute and help the entrepreneurs with their business plan, since they have smaller incentives. Malaik also thought about curbing this when developing its model by adopting a lead investor format, this way the lead investor takes at least 25% of the equity round, thus ensuring the company has a larger, more invested individual that can possibly act as an advisor,” says Lustig.
Lustig claims equity crowdfunding could take advantage of the $140 billion to $160 billion gap in finance for African SMEs, because they enable many investors to commit small amounts of capital that would usually be out of the question.
The founder of London-based The Crowdfunding Centre, Barry James, says crowdfunding has not had a massive impact in Africa because of a lack of awareness.
“The UK lagged far behind the US four or five years ago until we started to tackle this. Even now, only a small percentage of people in either country are getting the help and funding they could from crowdfunding, so it has a long way to go,” he says.
“If you’re writing a book, the best advice is to write about what you know. The same is true with crowdfunding and entrepreneurship. That said, campaigns in the tech category tend to raise the most money, while games and comics have the highest rate of success – around 50 percent.”
In South Africa, Schofield says consumer products, arts and entertainment projects are the most supported.
The future could be brighter for struggling entrepreneurs, if you have a dream that draws a crowd.

If you want to get Ahead Draw A Crowd – But Be Careful

It had been a long hot Friday afternoon. As I drove home, towards the shacks of Zandspruit in Johannesburg, I could see black smoke. The voice on the radio warned of a service delivery protest as I drove into it. Women and men chanted and blocked the road. Words flew; then rocks, then bricks. A rock smashed into the face of one of the police officers, blood poured.
This is one of the many faces of discontent across Africa. Poor and rich alike feel short-changed in these tough economic times. The poor fight with rocks; the middle class with their bank accounts. People no longer want to pay. Their hard-earned cash, they complain, is wasted by politicians.
A tax revolt is rising. It may be in its infancy, but in South Africa, the threat is being taken seriously enough for Judge Dennis Davis to issue a warning.
In many ways, Davis is Mr Tax. He is head of the Davis Tax Committee, appointed by the Finance Minister to examine how revenue generated by the South African Revenue Service (SARS) can be used to improve the economy. He was a Technical Advisor to the Constitutional Assembly where the negotiations for South Africa’s interim and final constitutions were formulated and concluded.
“It’s a question of where government spends the money. People want to see results with their taxes. If they are not satisfied, they may choose to just stop paying. The greater the level of corruption, the less we will have tax integrity and the greater the possibility of a tax revolt,” says Davis.
Expenditure is through the roof in South Africa. According to Auditor-General Kimi Makwetu in his report for the 2014/2015 financial year, irregular expenditure amounted to R5.68 billion ($355 million). The report says 45% of this was spent by the Education, Health and Public Works departments. Irregular expenditure more than doubled from the previous year in Mpumalanga, a province in eastern South Africa, bordering Swaziland and Mozambique.
“Of the R936 million ($58.5 million) in fruitless and wasteful expenditure incurred in the year under review, R32 million ($2 million) was incurred to prevent further fruitless and irregular expenditure or losses. This normally relates to the cost of cancelling irregular contracts or contracts of non-performers,” says Makwetu in the report.
Due to overspending the budget, unauthorised expenditure amounted to R1.64 billion ($100 million). This is money emptied from the already lean pockets of people in a country where 12 million live in extreme poverty and top earners pay up to 41% in tax. On top of that, over the past decade, residents have been burdened with increases in property, electricity, toll and vehicle licencing fees; yet, potholes and power cuts persist. This is laced with accusations of corruption, an issue which has drawn the ire of veteran champion of the people Wayne Duvenage. He made his name standing up against Gauteng’s infamous e-toll tariffs. He is chairman of the Organisation Undoing Tax Abuse (OUTA), which says its aim is to challenge unfit taxation or the squandering of money.
“The public have become justifiably angry over the squandering and waste of their taxes. [A tax revolt is likely] but is however not a situation I would want or wish for our country and we should do everything possible to prevent such a situation from developing. This is why the Minister of Finance is calling for a positive and participative approach to resolving our problems. The issue, however, is that while a corrupt leadership remains prevalent and connected to the head of state, and other key positions within government and its state owned entities, very little can be done to mobilize a positive approach to addressing the key issues of corruption, cronyism and service delivery. This is what is driving the negative sentiment,” he says.
It appears many other people have also had enough. A survey by  NGO, AfriForum, says  none of the respondents say they are getting their tax money’s worth; 24% say they only pay tax because they are compelled to and 42% question why they should pay tax at all. AfriForum runs a viral #whatarewepayingfor campaign to hold government responsible for the misappropriation of money.
Monique Taute, National Campaign Coordinator at AfriForum, says the government promised to improve education, yet the national pass rate for Grade 12 students declined from 75.8% in 2014 to 70.7% in 2015. It promised to improve security, public order and safety, yet the crime rate increased by 0.09% from 2014 to 2015. It promised to decrease unemployment, yet the International Labour Organisation (ILO) announced in January 2015 that South Africa has the 8th highest unemployment rate in the world. The unemployment rate stood at 25.5% in the third quarter of 2015, an increase of 1.2% from 2014.
“It is clear that the government failed in all three objectives. Taxpayers should have the right to know what they are paying for. From what we see, in the consolidated general report on national and provincial audit outcomes as well as from 2015 statistics, it is clear that government once again failed to fulfil its responsibilities in the 2015/2016 fiscal year. Government is abusing taxpayers’ money. Even though taxes are increased, government does not fulfil its primary responsibilities,” says Taute.
CEO of the SA Institute of Tax Professionals, Keith Engel says people are at a breaking point.
“It is more about expenditure than anything else. People are saying, ‘yes we are paying tax but what are we getting for it?’” he says.
According to Engel, if entrepreneurs reach breaking point, they could play hide and seek with the revenue services.
“[You] won’t do that with the attorneys or accountants, because you will [lie] to your accountants and give them a different set of books to work from. So people can keep two sets of books. In small businesses, the employer might make a deal with you were he says ‘I am going to give you R300,000 but I will give you another R200,000 that we will not tell the revenue services about,” he says.
Alex Poole* (not his real name) who runs a tax revolt Facebook page, followed by 21,000 people, says: “Most people can sense that they’re being [robbed]… I believe all forms of mandatory income taxation are theft. The things its being spent on is so obviously not in the best interest of the country’s needs, people feel more and more ripped off. It now feels like the theft that it is. And the people are rightfully angry about it.”
Engel, however, commended Minister of Finance Pravin Gordhan for his 2016 budget.
“The budget was more about expenditure than it was tax. You can see very clearly they didn’t want to break the backs of the taxpayer. He spoke about cutting wages and a lot of government expense which made people a bit at ease,” he says.
SARS doesn’t think a tax revolt is likely. It says its compliance model is designed to foster voluntary compliance and says there is high tax integrity in the country.
“SARS has found the vast majority of taxpayers are fully tax compliant. This is testament to the patriotic and compliant culture of South Africans. In the very odd cases of intentional non-compliance, SARS recoups the taxes, as per the provisions of tax and customs legislation,” says an employee at SARS who asked to remain anonymous.
If Gordhan’s budget cuts don’t show in the numbers, South Africans may think the best form of defence is no tax.

Nothing For Nothing

You just got paid: your aunt asks for $50 for her routine medical check-up; your cousin needs an extra $30 for her tuition fees; your mother needs $20 for a new dress; your landlord is knocking on your door for his $500. Your remaining $200 is not enough for your car and insurance, young brother’s school trip and for many others who yearn for a better life through your bank balance.
This is the story of black tax that millions across the continent live with. The question is, with economies worsening, is this family support tenable, archaic, or an important part of modern African culture?
Either way, many of those fortunate to be working end up in debt because of the demands of their families.
In these tough times, debt is a growing problem. In South Africa alone, 6,000 people apply every month for debt counselling – simply put, lessons on how to get out of debt.
The South African Human Rights Commission (SAHRC) confirmed over half of South Africa’s consumers are carrying too much debt. For many young, rising professionals, black tax may not be the sole reason – but it doesn’t help.
Paul Egan, Managing Consultant at UCT Unilever Institute of Strategic Management, says black professionals are suffering more than most in these difficult times.
“Compared to their white counterparts, who felt less pressure at an early age of their working lives in terms of responsibility beyond oneself, black middle-class are exposed to much responsibility earlier,” says Egan.
Not everyone believes they have to pay.
“Just because you are my extended family doesn’t mean I owe you anything. The only person I can send money to is my mom and that’s it. Finish. Other people can go and make their own money, at the end of the day I work hard to earn my money and I won’t just give it away to people because they’re family. In other words, black tax is a definite no from me,” says Yonela Mgwali, a journalist and South African graduate.
Many share his sentiments but say nothing for fear of family backlash. Many comply privately.
If you google black tax, a name from Zimbabwe will come up: Gerald Mwandiambira, from the South African Savings Institute, who is seen as an expert. He warns that in African families, where everyone claims to have raised you, the bills can weigh heavily.
“Giving back to the community that helped raise you is not black tax, it is one’s moral responsibility that is deeply entrenched in our values as Africans,” says Mwandiambira.
“There was a time when I had no salary as every cent went to black tax,” he chuckles.
“You look after ageing parents, siblings and your own children and this leaves one financially constrained at the end of each month as 80 to 90 percent of your salary goes towards black tax.”
Mwandiambira is one of many who believe financial instruments should be designed to foot the bill.
“Of all financial products in the market today, funeral policies are the only products designed with this in mind. This is a uniquely African situation.”
Single parent homes make it worse. Then there is the allure of success which brings with it the mantle of lender of last resort.
“We put ourselves under pressure once we have vestiges of success,” says Mwandiambira.
Nozipho Mbanjwa is an anchor at CNBC Africa. She has a master’s degree from Stellenbosch University and many family responsibilities.
“I am the eldest of the three girls in my family, I have helped send some to university and I am currently building a house at home. We have a sense of pride when we plough back to our families, we have an understanding of ubuntu (humanity to others) and we are who we are not because of whom we are,” she says.
Mbanjwa believes it is a hangover from apartheid and agrees with Mwandiambira that there is need to work on investment strategies.
“We need to create sustainable structures that allow our families to be entrepreneurial and self-dependable. We need to innovate so we continue upholding our values.”
Tshepo Maota, a young accountant in Johannesburg, calls for improved financial literacy.
“We need to start teaching our people models of investments,” he says.
“Black people need to put in extra hours, compared to their white counterparts, to remain competitive and meet family obligations.”
Lebogang Mokgethi, a postgraduate anthropology candidate at the University of the Witwatersrand in Johannesburg, is also a supporter.
“I don’t want to be the only graduate in my street; it does not mean anything to me. I am playing my role by empowering my family members and high school learners with career guidance and leadership,” she says.
“We have the Italians, the Greeks and the Jewish racial groups who work collectively to help lift families from poverty. Instead of giving money to buy a microwave, we need to invest in small businesses.”
Zweli Mabhoza, a tax advisor and founder of Premier Priority Tax Solutions, sees black tax as a way of managing resources.
“A lot of people complaining about black tax are products of black tax themselves,” he says.
“Sometimes you don’t have to give anything to people who helped raise you but simply replicate what was done for you.”
Black tax, love it or hate it, if you are a young African professional, you are mostly likely to have to pay it.

Black  Taxed

It was the moment a golden-haired young fan fought his way through the crowd to touch a genius. One of the few moments, frozen in time, that captures the short and ill-fated career in African football of George Best.
The career of the 1968 European Footballer of the Year was on the slide when Johannesburg team Jewish Guild was looking for stars. In 1974, Jewish Guild, now defunct, had been promoted to the top flight of the then segregated South African game and approached Best with a handful of pounds hoping to secure at least a handful of games.
<div id="attachment_4820" style="width: 273px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-4820" class="size-medium wp-image-4820" src="/wp-content/uploads/2017/05/GettyImages-79020026-263x300.jpg" alt="" width="263" height="300" />Football, 1970+s, Manchester United+s George Best jumps up for the ball (Photo by Bob Thomas/Getty Images)</div>
“In the seventies, British players were not making a lot of money, so some came to South Africa in their club’s off seasons to play a few games for the local clubs. This had its advantages for the National Football League, the stadiums were filled up and the game improved,” says Mark Gleeson, a prolific South African football writer and television commentator.
On the day Best was to make his debut in Johannesburg, 14-year-old Herby Opland, a Manchester United fan, woke early determined to meet the star he had merely read of in the newspapers. As young as he was, Opland hitchhiked from Hillbrow, a suburb in Johannesburg, to the Johannesburger Hotel, in Joubert Park, where Best was staying.
“It was late morning, I remember walking into the lobby of the hotel, people being rebuffed because they were keeping George Best away from the press. I remember being very excited when the doorman showed sympathy to me; he offered me a place next to him on the bench,” says Opland.
Apparently, Best had invited the doorman to the Jewish Guild bench. The doorman told Opland he should come to the Rand Stadium, in western Johannesburg, for the game in the afternoon.
“I loved every minute. Best was not highly active that day but every time he touched the ball it was like magic. I remember one moment he made an incredible move on the touchline, he chipped the ball straight over a guy and he went around him and headed towards the goals,” remembers Opland.
“I pretty much watched the game from the stand but, minutes before it ended, I jumped over the fence and went up to him, I patted him on the shoulder and walked away. He was not really interested in the fans and media, I think at the time he was doing it for money, his career was in a bit of a dead end.”
A few days after a chance encounter, Opland was surprised to find his picture with Best on the sports pages of The Star newspaper in Johannesburg.
“The photo was my Facebook profile for a long time. I first saw it in the newspaper and because I was such a fan of his, I phoned the newspaper office to say and I would love to have it and the photographer gave me the Kodak photograph,” says Opland, a sub-editor at a Johannesburg television station.
<img loading="lazy" decoding="async" class="size-medium wp-image-4823" src="/wp-content/uploads/2015/04/GettyImages-85788895-204x300.jpg" alt="" width="204" height="300" />
While Best brought excitement to South African football, the Jewish Guild officials were not impressed by missed training sessions. He drank his way out of the club after a mere five games and one goal.
Gleeson asserts Best was at the zenith of his game and refutes allegations Jewish Guild was unhappy with Best’s conduct. It was normal for the export starts to last a few weeks before returning home. Most British footballers did play only a handful games before flying back home.
Best died in November 2005 in London after a lifetime of alcoholism. He was mourned by many fans around the world, including Opland.
“George Best was always a hero, to this day he is still probably my favorite footballer. When it comes to skill, there was no greater genius or

Tag: April 2016

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