Tara Fela-Durotoye, known simply as Tara, is the CEO of the largest and pioneering make-up company in Nigeria, House of Tara. In 2003, her bank manager assured her that a loan of N500,000 ($3,125) to set up her first store was on the way. She had paid a non-refundable deposit of N150,000 ($937) to secure the store with high hopes of the loan.
Tara’s university friends, who liked the way she did her make-up, encouraged her to start the business.
“I didn’t see any opportunity at that time for me, and because it wasn’t an industry that existed in Nigeria, it didn’t seem like something that was possible. I couldn’t understand why anybody would want to pay to have their make-up done,” she says.
All this changed when people she made up agreed to pay whatever she asked. The next step was to start a business.
“I was so passionate about building a company, I didn’t want to build Tara; I wanted to build people, who would then build the company, who would then build the industry. But I didn’t know how to go about it because I didn’t have experience. I have never worked in a big organization, but it’s something I want to live for: a company that Nigerians would be proud of, a company that Africans would be proud of.”
The banking system in the country wasn’t much help at the time. In those days, they would rather have lent to the oil and gas industry.
“At that time, the industry was new and the bankers didn’t understand what we were doing; they didn’t even believe that it was possible. They didn’t realize that in the US, for example, the cosmetics industry generates revenue of $150 million a year. The banking industry in Nigeria then didn’t have that understanding and hence if I came to ask for a bank loan, it was impossible for the banks to give me one because they didn’t understand my industry.”
On the day the bank said ‘no’ to the promised loan, Tara was devastated. Her resolve to win through came from an earlier disappointment. “I always wanted to be lawyer; my father was a lawyer… plans had been made for me to go study law at Cambridge University,” she says.
Before she could dream of flying to England, the plan was dashed. She came home from school one day and her mother told her that her father, a Cambridge University alumnus, had suffered a stroke and he needed to be flown out of the country.
“I know that you were supposed to go to school in a few months, but I don’t think that is still possible until we know what is happening with him,” her mother said. It meant she had to study law at the University of Lagos instead.
The painful experience made her the determined person she is. Before graduating as a lawyer, she pursued her business dream with a vengeance, and five years after graduation, Tara had a name. She was well known for doing the make-up for elite weddings in Nigeria. She created her own product line, “Tara”, but this was not enough for the feisty businesswoman, who wanted to expand—a desire that once again put her on a collision course with the bank managers.
Luckily, this time around she had strong weapons: a thriving business and a mentor who introduced her to a manager of another bank. Her mentor said: “I have heard your story many times and I know that it is a very compelling and very inspiring story to share. The MD will buy into it and I’m sure that you are not going to leave there without getting the finance. Make sure you don’t ask for N500,000 ($3,125)—this time, you are seeing the MD of a bank; open your mouth wide and God will fill it.”
With that, Tara went to the bank, made her presentation and God indeed filled her mouth, to the brim, with N15 million ($93,750).
“I did get the facility, I did pay the loan back and today the banks are chasing us,” says Tara, whose company started with just a box and is now worth $3 million.
Today, House of Tara is the official make-up company for the ARISE Fashion week. Apart from being first and foremost a make-up and beauty company, it also has a training institute which empowers young ladies to be independent by giving them all-round training in the business of beauty. To date, it has churned out 1,000 professional make-up artists and 2,000 trained women. The company has 11 branches spread across the country and 12 more will be opened before the end of the year. Maybe Tara could soon be looking for yet another bank loan.

A Loan Denied, Alone She Struggled

It was a phone call in the fast lane. The call on the highway told Ndaba Ntsele, co-founder of Pamodzi Investment Holdings and chairman of Rand Uranium and Foodcorp, that his company was soon to be no more. It ushered in his worst day and was the start of a long, tiring battle to save Pamodzi Gold Limited (PG). The call was from a journalist asking how he felt about his company being liquidated. A shock, especially when creditors had assured that liquidation was not on the cards.
With members of his management team calling to confirm the news, Ntsele knew he had his work cut out for him—you could call it his worst year.
At stake was a black-owned and controlled gold exploration and mining company, formed in 2004, and listed on the Johannesburg Stock Exchange (JSE) in 2006. With a market capitalization of more than R700 million ($112.5 million), PG was all set to be a success. The company acquired mines in the Free State and Gauteng that were no longer viable for the big mining companies. As not all the mines were bought with cash, share options upon listing were offered as compensation. The biggest shareholder was Harmony Gold.
“The mines were in a terrible state at first. We knew we’d have to raise cash to rehabilitate them. Thirty million rand ($3.9 million) would just about do it. You can’t play the game if you don’t have any marbles,” he says.
Ntsele is a self-made entrepreneur who started out selling apples for his aunt to earn money for the movies. He graduated to running busy street corners and hiring vendors to man them. Then he made it in property during the apartheid era and rose to be the CEO of Pamodzi Investment Holdings.
Following the mine deal, the company needed money. The R200 million ($24.5 million) secured from the Industrial Development Corporation (IDC) —a national development finance institution—with security of R800 million ($98 million) was not going to be enough and another R200 million was needed.
By 2009, the company had its Free State assets—a mining complex and plant, along with Orkney mines and East Rand assets, running well. Then the black cloud of liquidation descended, a mere four months after signing the five-year loan with the IDC. Five thousand three hundred jobs were on the line.
“People were gunning to liquidate us,” says Ntsele. He wanted more time. The Free State assets and Orkney mines were, on his account, valued at a joint R1.4 billion ($146.5 million). Nevertheless, the IDC applied for PG to be liquidated, to the surprise of Ntsele.
“We went to them, we asked them if they would do this and they said no,” says Ntsele.
Things were set in motion; the provisional liquidation of the mining company’s assets began and its shares were suspended from trading. The vultures were circling.
Harmony Gold became the front-runner for the Free Sate assets. The company and its assets, now under the authority of the provisional liquidators—headed by Enver Motala—steadily deteriorated and soaked up more and more money.
Everyone went to their corner and prepared for a fight. Ntsele went all over the world to secure funding, from North America to the Arab states, but the global meltdown proved a formidable opponent. Investors and countries were closing shop.
The company had a lot of support from its employees, one of whom introduced a company called Best Rock Investments to Ntsele during one of his mine visits. At first sight everything looked great.
“These were Americans. Americans are smart, they were speaking of places I knew, had fancy degrees on their walls, the funding was approved and all that was left was to wait for authorization codes.”
The deal came to nothing and it was back to the drawing board for PG’s management team. Time was against him.
The Chinese were not fazed by the meltdown, they had money to burn. Ntsele came out to say he had secured R626 million ($65.5 million) from the China Africa Development Fund. Nonetheless, skepticism was rife.
Ntsele still cannot understand why it was so hard to believe they were capable of this; they had managed to raise R1.3 billion ($140 million) for Rand Uranium, an independent resource company, before.
“I have the letter from the Chinese in my office. They had a balance sheet,” says Ntsele.
According to him, a meeting was set up at the PG offices in Melrose, a Johannesburg northern suburb, by the Chinese to negotiate a compromise with Motala. The Chinese were willing to cough up some interim cash.
While the Chinese and PG’s management waited in the boardroom, Motala was 10 minutes away at the CNBC Africa studios to announce that PG was to be liquidated in its entirety and Aurora Empowerment Systems’ interest in PG’s assests.
It was again an annoying telephone call that informed Ntsele of the company’s fate.
“They [CNBC Africa] gave me a chance to get there and be part of the show. I’ve known this boy [Zondwa Mandela, managing director of Aurora] his whole life. I told them that I don’t think that he has the money or experience to buy,” a trace of betrayal showing on his face.
Ntsele says he managed to have a private chat with Motala, who told him (Ntsele) his own brothers had told him to do it.
“These things happen. That’s the nature of this biz called business,” Ntsele says in all his philosophical glory.
As the whole saga played out, Ntsele went from saying: “We will try to retrieve everything. It will be a battle. It won’t be easy, but we will try to save jobs and everything,” to a final: “I’ve thrown in the towel.”
Why the drastic change of heart? you might ask. It’s simple: “It was difficult to fight all these people; the cost to the company would be too much. I asked myself: ‘Should I keep on fighting?’”
Ntsele’s biggest qualm is that people were blind to the fact that PG accounted for only 3% of the whole Pamodzi portfolio and chose to see it as one company.
A last word from the businessman, who sold apples for his aunt, is that this [PG] was not the only bad apple. It just happened to be the only publicly listed one.
<h3>What did he learn?</h3>
“Protect yourself, even if you think you know all the players very well. As an entrepreneur, the first job is to trust your gut. It’s got you this far, but always have something to back it up. Lastly, this is a money game, but most importantly, it’s an assets game. You need to have more marbles [money] than you need.
“Property taught me to always have a war chest, but we forgot that. There was no need to give the IDC R800 million ($98 million) as security; half of that would have been enough and we could have had some security of our own.
“You learn as you go. You need to see failures as good lessons and you don’t get that from business schools.”
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Hello?  Your Business  Is Closing

The lights are out at the 1Time offices in Isando in Johannesburg’s East Rand. There’s no receptionist on duty and you can park in anyone’s parking spot.
It’s business unusual for the budget airline that went into provisional liquidation in November, leaving the airline with its wings clipped. But group CEO of 1Time Holdings Blacky Komani is trying not to flap and to keep his eyes on the horizon.
“It’s true I’m not sleeping at night, I keep thinking about what else I can do,” he says.
He’s sitting in the very boardroom seat where he made the decision to suspend all services that first Friday of November. He knows it was a Friday because the start of the weekend would be a critical factor in the perfect storm he says led to the airline being grounded.
“Once you’re in business rescue, which we were from August, you have to pay everything in cash and if it’s a weekend you have to pay for the whole weekend in advance. If you don’t have a proof of payment by 3PM on Friday for fuel and other expenses you’ll be grounded,” says Komani.
He says up until just 2PM that afternoon they were confident they’d make the deadline. Negotiations were looking good with UK-owned budget airline group Fastjet and creditors seemed likely to consent to a lifeline. But the storm got ugly, creditors baulked and Fastjet was sent scurrying.
At 2.23PM (he remembers the time exactly) he made the call for suspension of services, leaving hundreds of passengers stranded and his staff in tears and total shock.
“I didn’t believe it myself. I remember calling my wife, Pam, a little after we made the announcement. I phoned her but I couldn’t say the words ‘We’ve gone into liquidation’,” he says.
The 49-year-old from Kwelera, East London, had put up his Bryanston house as collateral when he, as one of six Mtha Aviation shareholders, went to the Industrial Development Bank (IDC) for a R49 million ($5.49 million) loan to buy a 25% share in 1Time. The deal went through in March 2011.
Komani, who lived in the States for 10 years, was in New York when the Twin Towers fell in the 9/11 tragedy. He says watching 1Time implode was like watching those towers crumble over 11 years ago. It was an emotional ground zero for him too. He shed tears publicly at the time and admits to being too overwrought to make media statements. He says he felt he let down his staff and members of public, who had come to trust the no-frills carrier.
“You feel so alone, like you’ve tried everything and it’s still not enough,” he says.
The abrupt halt to business could not have come at a worse time, just weeks before Christmas. This weighs heavy on Komani’s mind, and so too does the suicide of a pilot who was on 1Time’s payroll, just weeks after the airline was grounded.
It wasn’t supposed to turn out like this. For Komani entering into the airline industry meant merging his love for business and his passion for tourism. Giving travelers greater access to air travel across the continent had to be the next leap forward for tourism and business, he figured back in 2010.
But four factors created turbulence 1Time didn’t need.
“The World Cup didn’t deliver what we expected in terms of business opportunities. We acquired the maintenance facility Jetworx that came with its own problems. New player in the market Velvet Sky was taking a cut of passengers from us and when we’re talking about the low-cost arena, those last 10 passengers are what you need to stay in business. The final factor was that the oil price never dipped below $110 a barrel. Anything above that means you’re in a very tight position,” he says.
Critics—including trade union Solidarity, who had access to 1Time’s records during its period in business rescue—say 1Time was doomed with bad management practices. These included a glut of staff, especially at Jetworx, even when the airline was down to a fleet of seven aircraft; not clocking up enough flying hours a month; fat management incentive payouts when 1Time was floundering; and deficiencies in credit and cash flow management.
Komani doesn’t believe he fiddled while Rome burnt. He says they knew they were in trouble in May 2011. He says they started cutting costs and dropped three planes from their fleet of 10. Trimming the fat meant flattening their management structures, plugging leaks and stopping wastage and theft. They optimized flight schedules and Komani says he took a 10% salary cut and didn’t take bonuses.
“Ironically by October last year, just one month before we suspended flights, our records showed that the company had actually saved R30 million ($3.4 million) that year compared to the same figures from the previous year,” he says.
But it was too late. Even though they managed to sell Jetworx, saving around 250 jobs by February this year, liquidators were looking to divvy up the pie to creditors. Komani and his team’s big hope lies in UK-based Fastjet sealing the deal. Fastjet is the African version of Stelios Haji-Ioannou’s EasyJet venture in the UK. They will buy the company for R1 ($0.10) and inherit the R462 million ($52 million) debt. Fastjet’s designs are to broaden its pan-African flight route.
It’s a tricky deal. Fastjet, headquartered in Dar es Salaam, Tanzania, has been in dispute over unpaid leasing and maintenance bills to a Canadian aircraft leasing company. It’s also tangled up in an outstanding tax claim of around $2.4 million in the East African country.
Back in South Africa, the deal is still subject to the thumbs up by South African transport minister Ben Martins. 1Time will be hoping for a precedent-setting exemption to allow for more than 25% foreign ownership in a local airline to meet Fastjet’s majority shareholding aims. But other domestic airlines have objected to the application, saying it will erode the position of local aviation shareholders. A nod from the minister will give Fastjet international route rights without the company having to follow standard route license application processes, they say.
Komani sees it differently.
“I think the minister understands it’s an important decision around keeping the low-cost air travel model alive in South Africa, and also that there are over 540 jobs from the airline at stake,” he says.
Even if the deal comes through it could leave him out in the cold. He could be edged out as management structures are further pared down.
“I have a love of people and right now for me saving jobs is the most important box to tick. For me, I’ll come right one way or another.
“The lessons I learnt have been about implementing rescue measures early on and making sure they take effect as quickly as possible. Also that loyalty and leadership in tough times matters—anyone can be a good leader when things are going well,” he says.
Another worry on Komani’s mind is Skywise—brainchild of 1time founders Rodney James, Glenn Orsmond, Michael Kaminski, and Johan Bortslap, and more recently Wayne Duvenhage. The new budget airline is set to take to the skies in the second half of 2013, with three daily flights between Johannesburg and Cape Town and more destinations to follow. Skywise was granted an air service licence in March.
He may have lost his appetite for aviation right now but Komani’s trying to keep his focus and his sense of humor. So when asked the question: “Chicken of beef?” He says: “Right now, I think I’m on a diet”.

Clipped Wings

When 22-year-old Greg Maloka heard that YFM, a new youth radio station, was to launch in Johannesburg, he rushed to join the thousands of hopefuls vying for a spot on air.
Ever since Maloka was a young boy in the township of Diepkloof in Soweto, South Africa, he dreamed about being a charismatic, robed figure on stage, commanding an audience of thousands. In the early days of this longing, he determined that he was going to achieve this by either becoming a teacher or a priest.
<div id="attachment_528" style="width: 210px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-528" class="wp-image-528 size-medium" src="/wp-content/uploads/2017/04/322-259_1-200x300.jpg" alt="" width="200" height="300" />Kaya FM&#8217;s Greg Maloka, Johannesburg; 14 February 2012 &#8211; Photo by Brett Eloff</div>
So the young hopeful, then a final year student majoring in typing skills at the former Technikon Northern Transvaal (TNT), took a bus to the auditions. Just as he had expected, the snaking queue held hundreds upon hundreds of eager hopefuls.
“When I saw the very long queue, I immediately realised that there would probably be about 50 other people—if not more—who would be far better than me. Furthermore, I was all too aware that the station would be looking for between 10 to 15 people, maximum,” says Maloka.
That’s when the light-bulb flickered on.
“Realizing that I needed something that was going to make me stand out from the hundreds who had the same ambition, and probably some with more talent, I decided to put pen to paper and to list in bullet form the things that I thought were going to make this new station work.
“As I sat in the queue, I started observing and listening to the conversations of the eight or so guys who were processing the auditions. These guys were clearly earmarked for top positions in the station and luckily for me, I had been part of the TNT Campus Radio Station so I was familiar with the challenges that face a station [targeting] a youth market.”
The moment of truth arrived. Maloka walked into the sound booth for his turn to charm the judges. He paused at the door and handed over the handwritten “business plan” to the then music manager, the late Arabi Mocheke.
“He took those pages and disappeared. The notes on those pages were largely based on my own observations—what I thought they should do with the station; how they should position the brand; what kind of music they should play; and even the kind of DJs they should have on the station,” says Maloka.
Maloka’s audition was soon over. He waited around the station with the other young hopefuls, but he knew fate was on his side when Mocheke, the music manager, pushed through the crowd looking for him.
“He returned with the notes and started questioning me about the stuff that I had written. He asked me how I knew the things mentioned there and proceeded to invite me to a management meeting that was going to be held the next day.
“Needless to say, I was up at the crack of dawn and was on number 28 bus. By the time that fateful management meeting concluded, I was now in charge of auditioning the same people I was queuing with the day before,” he concludes joyfully.
So never stop thinking, or scribbling, if you want to get ahead.
<h3>Who Is Greg Maloka?</h3>
Greg Maloka was among the group that pioneered the launch and establishment of Johannesburg youth radio station YFM, in 1997. The station has been widely credited with bringing about a revolution in youth culture. YFM brought kwaito music to South Africa’s listeners and promoted the rise and infiltration of hip hop music. Most importantly, the station supported young entrepreneurs by giving them a radio and print platform to communicate their services. Maloka has held practically all the important positions within the station, with stints as program manager, music manager, station manager and then eventually, CEO and managing director. He left YFM in 2003 after falling out with the station’s board and went on to be partner in Instant Grass—a trends and insights agency that’s based in Cape Town. Maloka is currently the managing director of Kaya FM, one of the fastest-growing independent radio stations in South Africa.

The Right Notes,  Right On Queue

It was 2001. Billions and billions of dollars were up for grabs in what South Africans call “black economic empowerment” deals. That is, swift deals, selling black South Africans equity, often at a discount, in a bid to redress the imbalances of the past in white-dominated industries like mining. They are worth a fortune and were taking place right under Sipho Nkosi’s nose.
Standing by, while others prosper, is not quite the mark of a man who is ambitious by nature. Growing up, he says, he never thought he would do any job other than that which was the preserve of blacks at the time—being a clerk, teacher, priest or something like that. It took other people to persuade Sipho Nkosi to throw his hat in the ring.
<div id="attachment_430" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-430" class="wp-image-430 size-medium" src="/wp-content/uploads/2012/03/AV_00014794-300x200.jpg" alt="" width="300" height="200" />Sipho Nkosi, CEO of Exxaro Coal at Inyanda Coal mine in Witbank, South Africa</div>
Once he made that decision, though, he never looked back. Eleven years later, he is an astute, if not shrewd, captain of industry leading a cash-flush $9 billion conglomerate. To say nothing of the estimated R1.6 billion ($208 million) personal fortune he has amassed in the process.
It all started when Anglo American, the mother and father of mining in Africa, together with Anglo-Australian multinational BHP Billiton—the biggest miner in the world—put some of their South African coal assets up for sale.
Having occupied some of the most senior positions a black person could occupy at both companies, at the time, Nkosi thought he was the ideal person to lead a consortium, a diverse group that included some of the best black brains in mining, among them the country’s foremost nuclear physicists, geologists and mining engineers.
Months later, Eyesizwe Coal—Nkosi’s company—would win an open tender for an assortment of underground and open cast coal operations.
The consortium would quickly raise R600 million ($78 million) for the business, but as Nkosi and the company would soon discover, raising money was only the beginning.
The hard part would come when he had to appease disbelievers, including “rebel” white workers and their “skeptical” black counterparts.
“They all thought black folk, no matter how educated, would find it extremely difficult, if not impossible, to run a mining company,” says Nkosi.
The FORBES AFRICA team meets media-shy Nkosi in his makeshift office, at the Mining Indaba in Cape Town. More than 7,000 delegates, including the richest and most famous names in mining, are here for the annual gathering, where major decisions are made.  In between deal-making meetings and the consideration of proposals from prospective suppliers, Nkosi recalls how he got here.
He still vividly remembers Eyesizwe’s first strategy session, after taking over the Anglo-Billiton assets. He was chairing the company’s SWOT analysis session when one of the (white) mine managers stood up and said: “Sir, with all due respect, you guys know nothing about mining. We suggest that you go to Johannesburg and allow us to run the mine for you.”
It was the first time in the new environment, that Nkosi’s trademark calmness was put to the test. While his partners thought the white guy needed to be reminded of who was the boss now, Nkosi didn’t think it was the time, or the occasion, to take offense. So he didn’t.
Months later, at a year-end function, Nkosi was standing next to a (white) CEO of one of the vendor companies when a (black) worker approached, proceeded to greet the other CEO and asked him: “How could you give this business to these guys? What do they know?”
<img loading="lazy" decoding="async" class="alignleft size-large wp-image-428" src="/wp-content/uploads/2012/03/TTS1922-1024x680.jpg" alt="" width="474" height="315" />
In both instances he didn’t take offense, but said to himself: “My job is to win these people over. I will focus on excellence. All the time.”
Nkosi first silenced his critics in 2006 when, a mere five years into the challenge, he was one of the chief architects of the successful merger of Eyesizwe Coal with Kumba Resources’ non-iron ore assets to form Exxaro. The transaction was hailed as the deal of the year, singled out for being head and shoulders above the rest in terms of black management participation, the level of economic interest held by black people, as well as the extent of voting rights held by black people.
The following year, Nkosi took over the running of the merged entity and, five years on, it is not only the second largest coal producer in South Africa but also the biggest diversified domestic mining company in the country. Yet Nkosi is still not satisfied.
He now wants Exxaro to be up there with the world’s mining greats: Rio Tinto; BHP Billiton; Xstrata and the Anglo Americans of this world.
Ambitious as he admits all this is, he wants to start by growing Exxaro—which already has a presence in the continents of Europe, America, Asia and Africa—into a $20 billion market cap world player by 2020.
He already has shareholder approval for spending R9.5 billion ($1.2 billion) on a mine in Limpopo, in the north of South Africa. The Grootegeluk mine will supply over 14 million tons of coal a year to Medupi, a new coal-fired power station being built by the country’s electricity utility, Eskom, in response to the electricity shortages of recent years.  That’s apart from another R2.4 billion ($313 million) power station project in South Africa’s east coast province of KwaZulu-Natal, as well as a handful of beneficiation projects and new coal mines.
Nkosi wants to double Exxaro’s coal output to 80 million tons a year, while increasing the company’s portfolio of non-coal interests.
In January, Exxaro announced that it intended to pay $338 million in cash for a takeover of Democratic Republic of Congo iron ore company, African Iron.
Suggested to him that he seems to be moving, well… rather aggressively, he quickly retorts: “I used to have a boss, (former Kumba Resources CEO) Con Fauconnier, who used to say ‘Sipho, don’t ever grow yourself to death. At the end of the day you must cut your cloth to fit you.’”
Nkosi, it would seem, has indeed taken Fauconnier’s advice. Last year he closed down the company’s zinc plant, Zincor.
“It was not making money at all,” he says. The unions, and the government, were not impressed.
South Africa-based mining research company Avior’s senior analyst, Clinton Duncan, is one of those who believe that Exxaro is in fact “undervalued” and is “bullish” in terms of its share performance. Hence, he doesn’t think Nkosi will have a problem fulfilling his driving ambition.
Coal accounts for 33% of Exxaro’s earnings, the analyst points out. Nkosi’s battle plan, on the other hand, includes doubling Exxaro’s coal output to 80 million tons a year—a good move, Duncan says, considering the fact that about 77% if South Africa’s primary energy needs are provided by coal.
The day after our interview, Susan Shabangu, South Africa’s minister of mineral resources, announced that coal was a strategic resource for the country and that the government would do everything in its power to help its miners. Days later the president of South Africa, Jacob Zuma, announced a range of support initiatives his government had come up with, including the provision of rail transport connecting coal fields to power stations.
Add to that the fact that populous nations like India and China’s ever-increasing energy demands are going to continue for some time, and you will certainly realize that Nkosi’s plan makes a lot of sense, says Duncan.
But what about environmental concerns, I ask? Put to him that the marked rise in environmental awareness and activism, across the globe, could restrict the world’s use of coal, Nkosi responds: “We know that at some point the world is going to insist on clean energy.”
So what’s the plan?
Exxaro’s venture into solar, wind and methane gas was only a matter of time, he says, although all he’s prepared to disclose, for now, that the outcome of the company’s commissioned feasibility studies into the possibility of Exxaro setting up renewable energy companies has pointed in one direction: that Exxaro would be able to “make huge sums of money in renewables”.
“By the way, South Africa’s search for alternatives started a long time ago,” Nkosi says, relating the story of how, back in the seventies when faced with an oil crisis, the country started manufacturing oil from gas. Worldwide too, mining has been constantly evolving, he adds, citing examples of countries like Japan and France, which had long started moving away from coal to gas.
Looking into alternatives, though, does not mean Exxaro will abandon coal anytime soon, Nkosi says: “South Africa will, for all intents and purposes, continue to use coal. We don’t have gas. We have coal in abundance, and it’s cheap.”
Reminded of recent incidents where Greenpeace activists upped the ante with Eskom and mounted a campaign against the electricity utility, Nkosi is unperturbed. Exxaro is hard at work trying to find environmentally friendlier ways of mining and utilizing coal, he says calmly, insisting the business was working hard at ensuring that it was carbon neutral and would be able to mitigate its carbon footprint.
It’s all part of Exxaro’s commitment to doing business differently; by showing that it cares as much about profits as it cares about its people and the environment.
In December, Exxaro paid out R1 billion ($130.5 million) in bonuses to 9,694 members of its staff, 90% of whom were black low-level workers and managers. The employees were rewarded because they “worked very hard and pushed the company to where it is today”, Nkosi said at the time, adding that the company wanted to debunk the myth that “the fat cats at the top” only cared about making money for themselves.
Frans Baleni, the general secretary of South Africa’s National Union of Mineworkers, is at the head of South Africa’s most powerful union with hundreds of thousands of members, which has had many industrial disputes with Exarro. He says there aren’t many captains of industry out there who are able to stay true to themselves and be as mature, tactful and down to earth as Nkosi.
“You can’t fault him on that,” Baleni says, “unlike other mining bosses who can be abusive, arrogant and self-absorbed”.
“Nkosi makes you wonder whether you are not the one who is wrong—even when you know you are so right. Even when he says go to hell, he says it in such a manner that it doesn’t hurt,” says Baleni.
Nkosi is not so gentle about saying it in a gentle manner when it comes to the belligerent pro-nationalization lobby that is the ANC Youth League. When Nkosi once commented that nationalization was “antiquated” and “discredited”, the governing party’s youth was very hurt, publicly berating him for his “misleading, pathetic” lies. But Nkosi, who was president of the Chamber of Mines of South Africa at the time, took the rebuke in his stride.
If it so happens that he crosses paths with the youngsters again, he would still tell them.
It has got a lot to do with his mantra, the one that carried him through those first days, weeks and months of his foray into the tough life at the top of mining, where reputations can be lacerated in the board room.
“People had quite a lot of nasty things to say about this Zulu boy who knows nothing about this industry,” says Nkosi.
“When there’s negativism, always kill it by massive success.”
And there are few companies on the African continent that can claim to be as massive and successful as Exxaro.

I Want $20 Billion  And The World By 2020

As far corporate dreams go, Titus Naikuni’s is a grand one. The group managing director and chief executive officer of Kenya Airways (KQ) wants to become the British Airways of Africa by doubling its fleet and destinations in the next five years.
“We want to expand our fleet from 33 to 68 in the next five years, then to 170 in the next 10 years,” he says. “And our destinations from the current 55 to slightly over 100.”
The airline flies to 45 countries in Africa, and if you throw in South Sudan, Kenya Airways has nine countries to go before its deadline of 2013. From those 45 destinations the airline rakes in 60% of business from the continent, carrying more than 1.8 million passengers a year. “We still have a lot to do in terms of frequencies. We have more than one frequency only in East Africa and South Africa. I want to be in a position where every city has more frequencies. Right now you can fly from here to Jo’burg in the morning and come back in the evening. See what that has done to business.”
In Naikuni’s top drawer lies an A4 printout of an economic analysis of Africa by The Economist and the International Monetary Fund, titled African Opportunity.
According to its figures, the continent is among the fastest growing economies in the world. In the 2001-2010 decade, six African countries—led overall by Angola at 11.1%, then Nigeria, Ethiopia, Chad, Mozambique and Rwanda in that order—were among the world’s 10 fastest growing economies alongside China, Myanmar, Kazakhstan and Cambodia.
But what has caught the eye of managers at KQ headquarters lately is the 2011-2015 projections of global economic growth. While it puts China number one overall, with 9.5% average annual growth during the period, it lists seven countries from Africa among the top 10, led by Ethiopia at 8.1%, followed by Mozambique, Tanzania, Congo, Ghana, Zambia and Nigeria.
“That tells you where the money is,” says the Harvard Business School graduate and qualified mechanical engineer from the University of Nairobi.
“Africa has the biggest potential for business in the world. African routes are profitable, if you don’t look at a route on its own but the network created. You could lose money on one route but feed into others to make up for it.”
It has not been all rosy for Kenya Airways, though.
There have been bad moves, like flying to Malabo, Equatorial Guinea, where government restrictions led to the airline closing.
For close to four years, airlines have been on tenterhooks after demand fell during the financial crisis. The latest forecasts are not a pretty sight.
While the International Air Transport Association (IATA) upgraded its net profit forecast for the global airline industry in September from $4 billion to $6.9 billion in full-year 2011, it still projects a lower net profit of $4.9 billion for 2012 due to sluggish growth and weak profits.
Yet with the rise of Africa’s economic power, airlines are often times dealing with the opposite: moments when there are too many travelers for a few planes to soak up.
So, those who can afford it are increasing frequencies and routes to draw in excess travel demand when it happens.
“Amazingly, Africa is starting from a low base in economic growth. Many of the things that affect other major airlines globally like SARS, the 9/11 recession, don’t affect Africa. What tends to be common is fuel,” says Naikuni.
Kenya Airways, listed on the Nairobi Securities Exchange in 1996, has managed to survive fuel cost volatility which it hedges by taking long-term fuel contracts at a fixed price. “Three years ago, we didn’t get it right. We hedged top end, at a higher price, and when it came down it was so much, we really suffered. Now we hedge top and bottom but you can’t hedge everything,” he told FORBES AFRICA.
Naikuni joined KQ in February 2003 from a mining company, and talks of competition with the spirit of a Moran, the name given to the ferocious warriors of his Maasai community.
“Competition will never kill you, it is healthy,” he says.
Naikuni has arguably turned around Kenya Airways to be one of the most profitable airlines in Africa. It remains a top performer on the Nairobi Securities Exchange, where it listed in 1996 through an IPO.
Brought in from February 2003, after revenues started slowing down in 2000, Naikuni introduced what he called “shock therapy”. It included streamlining management and reducing waste—some managers were fired and new faces brought in.
“You must focus on people and lead them in the right direction. Give them hope and pay them well, though no one has been satisfied with money. I also give people space, but it doesn’t mean I won’t come down on you,” he says.
The same year that Naikuni took the helm, Kenya Airways bought a 49% stake in regional Tanzanian carrier Precision Air, to counter South African Airways’ 49% buy-in in Air Tanzania.
Later, he closed down Flamingo Airlines, which had been set up in 2000 to provide feeder services for domestic fleets. Now, he is reviving a similar model next year through Jambo Jet.
“Abandoning the domestic circuit was a mistake. We let our rivals dominate but we are regaining the market,” he says.
The other strategic move was to pull out of Kencargo, the cargo firm jointly owned by KLM, to form KQ Cargo, which has proved profitable.
His tactic of offering lower prices on domestic routes, which has turned Kenya Airways into a virtual monopoly, is deeply unpopular at Jomo Kenyatta International Airport, the region’s airline hub where rivals like JetLink, Fly540 and Air Kenya also operate.
Many view the move as tantamount to grounding its competitors, to which Naikuni replies: “If you go in the kitchen, be prepared to face the heat and if you are not, open the window and jump out.”
Then, there’s the issue of the Douala accident, in which a Kenya Airways Boeing 737-800 crashed in a swamp in Cameroon and killed all 114 people on board. As the African opportunity expansion unfolds, that incident remains etched  in Naikuni’s mind.
“We have recovered from it,” he says, but the impact is still evident in his tone.
It’s a sobering thought as Naikuni reaches for the skies.

Sky High— Where The Money Is

Herman Chinery-Hesse is piloting an orange Porsche sport utility vehicle around the hairpin bends leading up a mountain to his house in Aburi, in the misty hills just outside of Accra. “Put your seat belt on,” he warns, and screeches the tires.
These days, Chinery-Hesse’s racing hobby mirrors his life in the fast lane. He is the founder and CEO of SOFTtribe Limited, a company that provides business development software to African companies. On the Accra business scene, he’s known as the “Bill Gates of Ghana”—a title the 47-year-old shrugs off. The unabashed Pan-Africanist would likely prefer a Ghanaian nickname than one borrowed from an American software developer.
<div id="attachment_343" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-343" class="size-large wp-image-343" src="/wp-content/uploads/2017/04/Bill-Gates-1024x757.jpg" alt="" width="474" height="350" />Herman Chinery-Hesse</div>
“Africa is it,” he says. “It’s the next big wave. It’s waiting for development—every place else is so saturated, and people are finally spotting it. And they’re coming to us.”
Chinery-Hesse’s goal is to ensure Africa doesn’t miss the global information technology (IT) boat. His client base includes Nestlé and Unilever, and he has a regional development partnership with Seattle-based technology pioneer Microsoft. But despite the influx of global companies coming into Africa, he says there’s not yet a homegrown technology brand name synonymous with the continent and hopes that his company, SOFTtribe, working from offices in an understated two-level house near Accra Airport, could be the first. The company has just launched what it calls a “virtual mall”: an online hub where you can buy everything from a cinema ticket to a sweater from Angola.
“We want an African Google, an African Facebook. And it’s possible,” he says.
Despite Africa’s weak technology infrastructure, Ghana, at an estimated 20%, boasts the highest penetration in the region. He sees more potential in Africa than any other technology market in the world.
“Africa is where the richest need is,” he says. “If we get even 1% or 2% of African companies to buy our products, we [will be the next] Google.
“You should be able to access Africa from wherever you are in the world,” says Chinery-Hesse, mentioning his company as being “the gateway, the highway. I want something stable that makes people money.”
At SOFTtribe’s headquarters, there’s a decidedly mellow vibe—in his trademark khakis, rubber sandals and bright button-up, Chinery-Hesse maintains the casual style of Silicon Valley. Staffers mill on the balcony and walls are adorned with large canvas paintings of the beach.
On a recent day, the boss was in his favored work position—lying down on the sofa, four computers humming on the nearby desk. He dictated to his Hong Kong-educated Ethiopian assistant as she typed on a small pink laptop.
Chinery-Hesse paused to answer calls on his wireless mobile headpiece, a confusing move that causes his colleagues to joke: “Is he still talking to me?”
The space to sprawl is an achievement for Chinery-Hesse. When he first founded SOFTtribe in 1991, its programmers sat side-by-side in an outhouse—remodelled as a cramped office—behind his parents’ house in the same neighborhood.
“We were doing an international contract with Nestlé’s head office, and we would say ‘don’t come visit’ because they wouldn’t believe that this [cutting-edge software] was coming from the bush.”
A few years later, when the team had swelled to 28 people, Chinery-Hesse, unable to afford rent on the kind of space he needed, bought a freight container and piled in his operation. It housed the entire team and two air-conditioners for six years.
Today, from the comfort of its new home, the company is expanding at a clip that rivals one of the orange Porsche’s tight turns. By providing the internet bandwidth, hosting and software development capabilities to African companies—and the regional branches of multinationals—it has amassed more than 250 clients.
Chinery-Hesse is an unabashed Africa enthusiast who hopes to use technology and the internet to aid the wide spectrum of African business, from the Ford Foundation to a craftsman in Mali looking to sell his work overseas.
“We help clients with delivery, logistics; we make sure the merchandise is working. A lot of the time, we’re dealing with ordinary folks who may just have a mobile phone. We’re hand-holding,” he says. “My team is from everywhere—here, Ethiopia, Kenya. We see Ghana as a springboard to expand further into Africa.”
He speaks from experience—his home country provided the springboard for his own ambitions.
Born in Dublin, Herman’s mother is Dr Mary Chinery-Hesse, the former deputy director general of the International Labor Organization and the vice chairman of Ghana’s National Development Planning Commission. Her son was schooled in both Ghana and the United Kingdom and attended Texas Tech University, where, with the first computer boom underway, he discovered a talent for software coding.
Ever the pragmatist, he began his professional life as an engineer at a UK plasterboard manufacturer.
“If everything went wrong, I’d have a fallback,” he says.
The pay packet from the plasterboard manufacturer helped buy a computer costing 800 British pounds, and Chinery-Hesse began tinkering with it at home. At work, bosses took note of Chinery-Hesse’s interest in technology, and his American education, and moved him from mechanical to computer engineering.
Returning home for Christmas in the late 1980s, inspiration struck in an unlikely spot – an Accra nightclub, where friends were complaining that they didn’t have jobs.
“I made a 100 pound bet that I could find a job here by Monday morning,” he says. “Monday I woke up, jobless, and said ‘ouch.’ Then I remembered I had done programming in the UK, went onto the street, found a travel agent with a broken computer, fixed it, and…”—as word of mouth spread in a society that knew next to nothing about technology—“… I was inundated with offers.” A few years later, he founded SOFTtribe.
If the company’s original hurdle was to introduce software to a nation that didn’t know what it was, today its challenge is a bit more complex—figuring out how to incorporate traditional software with the growing influence of the internet.
In a sign he’s been successfully able to navigate Web 2.0, Chinery-Hesse was invited to speak at tech conference TEDGlobal in Tanzania in 2007, where he introduced SOFTtribe’s most advanced venture, Black Star Line (BSL), an e-commerce business which coordinates trade carried out via mobile phones and the internet, a model “combining transaction brokerage and a virtual marketplace”.
Funded by an angel investor, it’s a system of technology that’s a cross between eBay and PayPal, both of which are scarce in Africa, but are booming in the US, Europe and Asia.
“Africa can’t trade with the world, hence our poverty,” he says. But before it can open its gates to the world, the tech czar would like to see a businessman in his country transact with someone in Nigeria or the Congo or Malawi—without the usual red tape. “We can use technology to bypass borders and bureaucracy and unleash inter-Africa trade,” he says, “where someone in Kenya would be able to buy something from a man in Ghana.”
SOFTtribe is being recognized globally. The TED platform was a sign of acceptance from the international tech community, as were invitations to speak at the US’s top two business schools, Wharton and Harvard, and at Cambridge in the UK.
Chinery-Hesse’s profile in Ghana continues to rise; he is currently an Assessor at Ghana’s Commercial Court and his homes—and office balcony—are more popular among Ghana’s elite than nightclubs.
On a misty September night at his weekend home in Aburi, the deck was filled with the usual motley crew—business associates, locals, friends in from London. Everyone drank good wine. Mist swirled in the distance. Someone asked about road directions, inciting a spirited discussion. Chinery-Hesse, of course, was ready with the only answer that made sense—maps, after all, are for a world before technology.
“Use GPS,” he said, and the discussion was over.

Life In The Fast Lane With The Bill Gates Of Ghana

When Sunil Joshi took over as Neotel MD and CEO on April 1, 2011, misery was written all over South Africa’s second national fixed line telecommunications operator. Five years after its establishment—amid fanfare and incredibly high hopes—the experiment looked destined for the doldrums, facing one public relations and marketing nightmare after another.
<div id="attachment_319" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-319" class="size-large wp-image-319" src="/wp-content/uploads/2017/04/308-367_1-1024x683.jpg" alt="" width="474" height="316" />Neotel CEO Sunil Joshi in the corporation&#8217;s Telepresence Suite, Midrand, South Africa; 1 December 2011 &#8211; Photo by Brett Eloff.</div>
A couple of months earlier, auditing firm, Deloitte, had declared that “the company’s recurring losses from operations and shareholders’ deficit raise substantial doubt about its ability to continue as a going concern”. This after Neotel had reported losses of $188 million and announced to staff that some of them faced retrenchments.
The revelations were a big blow—not only to the government’s concerted effort to liberalize a sector long held to ransom by the previously state-owned monopoly operator, Telkom—but also to the country’s 48 million people. Expectations had been high that the new provider would help bring down the costs of telecommunications, offer a much better service than the complacent incumbent operator, create employment, as well as facilitate numerous business opportunities.
Although analysts blasted Neotel management and shareholders for, among other things, lacking vision and leadership, they sympathized with the new entrant in instances where they felt it was a victim of circumstance. For example, two years after Neotel got its operating licence, a technology group challenged the government’s “managed liberalization” process in court, and won. This meant that privileges initially reserved for Neotel would now also be enjoyed by the country’s mobile phone giants, as well as by numerous other players.
On the day the FORBES AFRICA team is visiting Neotel’s Johannesburg headquarters, it’s exactly seven months since Joshi took over after a big management shake-up that saw founding CEO Ajay Pandey return to India.
Joshi quietly asserts that numerous realities were ignored when the story of Neotel’s perceived failure was being told—though he maintains “that’s no excuse”. One such reality, he says, is the cardinal truth that a business has to make an investment before it can reap rewards.
He points out that five years ago, Neotel started from a zero base—with no infrastructure, no employees and no customers—in an industry that grows at about 4% annually.
Neotel has had to invest over R4 billion ($485 million) in the business, he says, most of it spent laying out about 7,000 kilometers of optic fiber. The company has had to employ more than 1,000 people and build more than 400 base stations.
Joshi has spent the past seven months “integrating” the business—something he believes will result in much better offerings. He has called on his parent company, the India-based Tata Group, who are 68.5% owners of Neotel. The other shareholders are South African consortium Nexus (19%) and Namibia’s CommuniTel (12.5%).
“Tata Communications are the world’s largest owner and operator of submarine cable systems. They have about 207,000 kilometers of submarine cable assets on the sea bed,” Joshi boasts, with a lot of glee, “so as we integrate our domestic capability and our submarine cable into Tata infrastructure, we now have the unique capability to enable customers to expand at any geography across the Pacific or Atlantic, on primary or secondary parts on our own infrastructure, giving us the ability to provide resilience,” he says.
What that means for Neotel business clients is that one public room in Midrand, Johannesburg, is connected to 36 others across the world. The facility enables local customers to hold meetings with other people who are based in other parts of the world, without having to travel. Two new data centers that Neotel has built in Cape Town and Johannesburg are now seamlessly connected to 42 other data centers across the world. So if, for example, a business in South Africa wants to expand into Asia, and wants Singapore as a hub but also wants a single point of service for network and data services, Neotel can provide that with ease.
Joshi says Neotel is also serving its consumer portfolio with competitive voice and internet solutions.
The biggest news came in November when, for the first time, the company announced that in the previous quarter it had reached positive earnings before interest, tax, depreciation and amortization (Ebidta).
Last year, Neotel raked in R2.3 billion ($279 million) in revenue, which Joshi reckons is “significant in such a short time”. But was it the best Neotel could do? “There’s always room for improvement,” Joshi quips, before adding: “Revenue streams will only come once critical mass has been achieved. Our revenue streams are growing 30-35%, year on year, enabling us to grow between six and seven times industry growth rate, albeit off a small base.”
Market share stands at 5%, while business customers grew by 23% and consumers by 40%. Neotel now has more than 50,000 retail customers.
Joshi believes the worst is now behind. He is turning his attention to four “strategic imperatives” he’ll be pursuing this new year: profitability, increasing market share, improving customer experience, and training and empowering his “ambassadors” (staff).
But, he says, he will also do with a little bit of help from the country’s national regulator, the Independent Communications Authority of South Africa (ICASA).
Decades ago, South Africa’s then state-owned telephone company laid out copper wires throughout many parts of the country so that it could be easy for telephony to reach homes and offices. For now, only formerly government-owned Telkom can use the infrastructure. Others have to rent from Telkom at significantly high rates. For years now industry players have been trying to convince ICASA to regulate the use of underground copper infrastructure so that other service providers can use it too—not just Telkom. The industry players’ argument is that by making the local loop available to all service providers, telecommunications will reach more people and bring down costs.
“What we are asking for is a fair, competitive and affordable price that industry can bear. We are certainly not asking for it to be free. The investment was made decades ago,” says Joshi.
The second area Neotel would also like to see government paying attention to is the pace and rate of approval in local municipalities. Companies have to get municipal approval for their fiber footprint layout plans, and Joshi says the process is often fraught with delays.
If the relevant South African authorities could attend to those two obstacles, Joshi reckons, there would be no stopping Neotel.
And how does he think history will judge him when his contract ends in three years’ time? “We will all look back and say we made history—by bringing a second operator to  South Africans, and making it successful.”

The Worst Is  Now Behind Us

Richard Pike remembers February 19, 1981 as the worst day of his life. It was the day a motor accident left him paralyzed from the waist down.
Pike, his brother and four friends were driving to East London to compete in a university rowing regatta. They drove a pick-up truck, hauling a trailer laden with rowing boats. A short drive out of Johannesburg, the trailer jack-knifed. It threw Pike and his fellow passengers from the vehicle.
<div id="attachment_307" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-307" class="size-large wp-image-307" src="/wp-content/uploads/2017/04/Amollo-028-1-687x1024.jpg" alt="" width="474" height="707" />Richard Pike during the Cape Argus</div>
“I found myself lying on the ground, unable to move, for hours; I remained in the same position, waiting for a helicopter to airlift me to a hospital,” says Pike.
The helicopter took Pike to the Milpark Hospital in Johannesburg, where even the most seasoned specialists were horrified at the sight of his broken back.
“My lower spine had developed a curious s-shape,” says Pike.
It meant, at just 18, Pike faced life in a wheelchair – a sentence he refused to accept.
“I would not be who I am today, if it were not for that fateful day,” says Pike.
Nearly 30 years on, Richard Pike, through sheer determination and medical miracles, has the full use of his legs and a thriving career. He has worked his way up through the ranks of South African business to become the CEO of the country’s largest staffing and recruitment agency, Adcorp Holdings.
It was a long, painful journey from despair on the side of the road to East London. It took almost a year of operations and hard work to work his damaged legs back to life. During this difficult time, he spent many nights lying in his hospital bed asking himself: “Why me?” The nurses, who tried to help him, bore the brunt of his anger and arrogance.
It was so bad that years later, Pike felt the need to apologize to the nurses in his book, Tangled Toes, Pins and Needles.
“Eventually, I decided to live like a poker player and play the hand I was dealt. It was hard, but it was about how I played the hand. I had to constantly talk to myself and visualize the end result; where I was going,” says Pike.
Pike’s stubbornness almost undid the good work, as he defied doctors’ orders to rest and limit movement. Looking back, Pike admits this was a big risk. He wore a heavy body brace for many months. It was hot and uncomfortable, but crucial in easing his spine back into place. Often, he fell to the ground or became frustrated at being helped like a child to do simple things. All the while, he refused to give up.
“I hate living in the past. I soon realized that the regret and speculation around my back was futile.”
Three decades on, Pike admits he doesn’t go into crowded rooms for fear a slight push may send him crashing to the ground, but this hasn’t stopped him living life to the full.
“I know it’s a cliché, but it’s true: only when you realize what you’ve lost do you appreciate what you have.”
Pike expressed this by becoming an adrenalin-relishing sportsman. He competes in triathlons, the annual Argus Cycle Tour, plays golf and is learning to fly helicopters. He is married with three daughters.
Pike began his corporate career at Deloitte and Touche, five years after the accident. He moved on to HL&amp;H, where he became finance director.
In 1995, he formed his own company, the Morgan University Alliance. The company focused on skills training and development. He then sold the company to Acumen Holdings in 1999. The merged company, now known as Adcorp, has a turnover of $785 million. Since taking on the role of CEO in 2001, Pike has grown the business in South Africa and on the continent. It has 90,000 contracted staff on its books.
Pike concedes that South Africa is facing a huge problem of job creation. His tenacious, outspoken personality often opens him up to harsh criticism, but he refuses to be silent. He often engages in heated debates with the unions.
According to his research, unemployment in South Africa is almost double the official statistics of 25%. “We can fix this; send students who have just matriculated into the services sector where they will receive on the job training. With a monthly stipend, at least they will have dignity and self-worth and from there they will use their skills to move into higher earning jobs,” he says.
“We need to deregulate the labor market, introduce youth wage subsidies and cut all the red tape for small and medium business. If we do this now, we may make a dent on the growing unemployment rate.”
In the meantime, Pike is focused on growing Adcorp on the African continent. He wants to grow the business and extend its reach. But he also wants to embrace technology. He’s already working with partners to develop new systems that will advance the recruitment process. He says technology will make the employment business more efficient. Some argue that the rise of social networks could see the demise of recruitment agencies, as information is spread at lightning speed. Pike believes the industry needs to embrace the fast pace of the world or risk being left behind. It’s pretty much how he felt 30 years ago, on that fateful day.
<h3>What did he learn?</h3>
“It’s not what happens to us that defines us, it’s how we respond to adversity that teaches us the most valuable of life’s lessons. The fateful events of my accident of 19 February 1981 were without doubt the most definining for me in terms of the way I live my life and the way I run my business. I regard myself as a very goal-orientated individual who is both extremely resilient and highly tenacious. I also regard myself as an optimist and look forward to the future with enthusiasm. All of these character traits I trace back to the invaluable lessons my life changing accident taught me. There is no doubt that these character traits have served me extremely well in my role as the Chief Executive Officer of a publicly listed company. Although I would not want a repeat of those fateful events of 1981, I have no regrets and regard my accident as the best experience of my life.”

Crushed But Not Broken

There is no point in speculating as to what Russell Loubser, the outgoing Johannesburg Stock Exchange chief executive officer, will be doing next year—because Loubser himself does not know. He could take the route of a hands-on CEO position at a financial institution, as did previous JSE president, Roy Andersen, at Liberty Life. There is also the option of several independent non-executive directorships, for a quieter life after many years of revolutionizing Africa’s biggest exchange. Another possibility is—corporate governance and Companies Act requirements permitting—to perhaps sit on the exchange board itself as a non-executive director or eventually as chairman.
<div id="attachment_262" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-262" class="size-medium wp-image-262" src="/wp-content/uploads/2017/04/CTX7294-300x199.jpg" alt="" width="300" height="199" />Russell Loubser and Nicky Newton &#8211; King</div>
“I am not entertaining any thoughts as to what comes after life at the JSE,” says Loubser, who originally comes from Slurry, near Mafikeng.
“Until the end of this year, I remain completely focused on my work at the exchange. To prematurely assess opportunities could give rise to conflicts of interest. People are approaching me and my response is to come back at the end of the year, if still interested. Nothing is going to distract me in these last few months.”
A few things are certain for Loubser, regarding life after the JSE. As a member of the South African Airways board, the link will continue. So, too, will his three-year ministerial appointment as a member of the Takeover Regulation Panel, previously the Securities Regulation Panel. But as for the rest of it, Loubser says there is genuinely nothing definitive. “It’s not as if I have something planned and will reveal it at the last moment.”
An initial five-year contract, starting early 1997, ended up being 15 years of leadership. When Loubser joined the JSE, trading volumes in that first year were 17,854 billion shares, and 2,3 million deals. For 2010, volumes were 71,252 billion shares from 23,8 million deals.
Loubser always credits his team: “It has been an absolute pleasure to work with people who have been so dedicated to improving the exchange and developing themselves. The early days were extremely difficult. The press was relentlessly critical, the exchange at that time was wholly owned by the stockbrokers, it was not offering value, and was viewed as a necessity in order to trade equities. At that time, no one could imagine demutualisation, listing and creating value for the financial community. With this committed team, we proved our critics wrong.”
Loubser’s management style is to surround himself with smart people and give them lots of space. “You then get the best out of them.”
When Loubser took over, the JSE had an extremely poor reputation at home and abroad. Despite being the largest emerging market at that time, and surprisingly highly ranked by size in world terms, it was seen as an inefficient boys’ club plagued by insider trading and front running. Roy Andersen had made a start with transformation, such as implementing new software and trading systems, and the Big Bang deregulation which included allowing corporate membership of the exchange.
“The criticism we received in those initial years was fair and completely justifiable,” says Loubser. “But even when we started demonstrating our progress, the taint persisted. We had a difficult audience to win over and the first few years were very testing.”
With the JSE clearly demonstrating its ability and achievements, and cleverly diversifying its income stream, attitudes started to change and criticisms became compliments. However, brokers would still like to see lower trading prices. “We are fully conscious of this,” says Loubser, “and are benchmarked against other exchanges by independent parties to see how competitive our pricing is. Trading revenues are a simple function of volumes and pricing, and if volumes grow, there is certainly scope to reduce pricing.”
Despite having accomplished so much at the JSE, there is one huge task that Loubser regrets he will not be able to see through to the end—the complete overhaul of the bond market, which the JSE acquired in 2009. This particular market comes in for much criticism regarding its antiquated telephonic trading, selective pricing, and operating on a foundation of personal connections and relationships. The wish list for this market is a digital, visible, transparent central order book that promotes price discovery and improves liquidity, especially for languishing corporate and municipal bonds.
“My trading career started in the fixed income market, so I would have liked to have been on the ground and involved when the JSE cleans up the bond market, as it did with the equity market,” says Loubser, who represented the banking sector during the formation of the Bond Market Association, now the Bond Exchange of South Africa. He has no doubt that incoming CEO Nicky Newton-King will be able to achieve this. “It will be quite a challenge for her, but she has a fantastic executive committee on which she can rely, and she will need their talents. Severe changes as to how the bond market works are imperative and will be good for South African financial markets.”
One disappointment—despite much effort—is that other exchanges in Africa have not taken up offers to use the JSE’s technology and platforms in order to make their own markets more efficient. When Loubser took over at the JSE, he looked to exchanges in countries such as Australia and Singapore. “We were shocked by our glaringly obvious poor services and huge inefficiencies, and this kicked us into action. Exchanges in the rest of Africa should go through this same self-examination and take a good look at themselves and the potential they have to play in transforming their markets and economies. As yet, they are not seeing the urgency and benefits of an innovative exchange. A good exchange is a strategic national asset.”
Unlike many CEOs in South Africa, Loubser is not afraid to make political comment when appropriate. He has addressed issues such as government spokesperson Jimmy Manyi’s accusations that blacks do not own enough of the companies listed on the JSE board, and he supported Trevor Manuel, South Africa’s Minister in the Presidency in charge of the National Planning Commission, for taking Manyi to task on racism. “At present, South Africa does ‘work’. But this does not mean our leaders can simply stop at this point. It can be so much better and we should not settle for mediocrity,” says Loubser. His frankness also extends to the tragedy of Zimbabwe under the Mugabe regime.
As the JSE grows increasingly more attractive as a takeover target, Loubser says this type of decision would be for the shareholders. “But my recommendation at this point in time would be to wait a few more years. The exchange is presently working on many things that would add value. At a later stage, a tie-up with an appropriate party would be beneficial to shareholders, and would help take the exchange to the next level.”
Loubser says that despite persuasive efforts from his staff to throw him a huge goodbye party, that would not be his style and he prefers a quiet exit. “I would rather get all my staff together in the auditorium a few days before I leave to say my farewells and thanks.” Leaving the JSE after an incredible 15 years will no doubt be heart-rending for Loubser.
“I will miss the JSE a lot. Let’s just say it will be a very difficult and emotional time for me.”
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New JSE CEO—more than well prepared for the role
Nicky Newton-King has been the JSE’s deputy CEO since 2002, joining the exchange in 1996. Her professional qualifications and experience are legal, whereas Loubser is a chartered accountant with a merchant banking and trading background. Prior to this, Newton-King was a partner at legal firm Webber Wentzel, specialising in the securities and financial services industry, with the JSE as a client.
As the JSE is regarded as one of the best regulated exchanges in the world, Newton-King feels strongly about the development of financial markets across the rest of the continent.
“It is time for African exchanges to stand up and make some brave choices if they want to harness emerging market appetite and attract significant international investment. They run the risk of missing out on the emerging market story if they do not focus on building large and sustainable exchanges.”
African stock markets are now at a point of critical inflection, as was the JSE in the early 1990s. “The JSE has been through its much-needed development, and has the battle scars to show for it,” says Newton-King. “It is now by far the largest exchange in Africa and internationally respected. African exchanges need to similarly decide on their strategies for the future. Are they going to stand alone and individually compete for business, or will they work together to leapfrog stock exchange development in Africa?”
Newton-King says that African stock markets must realize that no one owes them a living. “They are not there to serve themselves. If they do not provide offerings of an appropriate and international quality to investors and issuers, they will be bypassed.”
One route would be to regionally harmonize the rules in African capital markets, as seen in the European Union. However, Newton-King highlights the problem of which markets would be willing to concede to the rules of others. Another possibility for African exchanges is to promote cross-listings, in which a company is listed in more than one country, as dual-listings generally increase trade in the home country. Newton-King says that ideally, the dual-listed companies should come to the JSE for their secondary listing—rather than go offshore to London or other such markets. “African companies should preferably stay on the continent.”
Yet another possibility is to create African technology hubs that allow execution in multiple venues through a single channel of access. Newton-King notes that exchanges must then be willing to collaborate and resolve issues such as hub ownership and operational responsibility. A fourth route would be to establish Pan African stock exchanges, by collapsing existing individual exchanges into regional ones. However, Newton-King again highlights the potential problems of ownership and location, and believes this way is more suited to environments which are starting from nothing and have no legacy exchanges to deal with.
Newton-King recommends a combination of cross-listings and technology hubs to promote African stock exchange development. “This would lead to meaningful and accelerated change which would best serve the interests of issuers and investors. African stock exchanges should not go it alone. They should have the courage to work together to create robust capital markets across the continent.”
Looking to the JSE, Newton-King says one important strategy for the exchange in the near term is to decide on a trading model for the bond market. “We have now owned this market for two years and are focused on determining a model which promotes transparency and hence liquidity.”
She anticipates an exciting future for the JSE. “This environment is constantly changing. New regulations, technological developments and innovative products keep us motivated in our aim of linking South Africa to global markets and maintaining our position as a world-class exchange.”
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Farewell The King Of The Exchange… Long Live The Newton-King!

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<h3>SANUSI LAMIDO SANUSI</h3>
<img loading="lazy" decoding="async" class="alignleft size-medium wp-image-221" src="/wp-content/uploads/2017/04/FA-2011-Dec-Jan-OFC-229x300.jpg" alt="" width="229" height="300" />
<h3>Governor of the Central Bank  of Nigeria</h3>
In a country plagued by corruption, fraud and money laundering, no-one had expected such a radical, and by his own admission, “sudden” and “very risky” move. A mere two months into the job of Nigeria’s Central Bank Governor, Sanusi Lamido Sanusi fired, in one fell swoop, five CEOs of the country’s leading banks for mismanagement and corruption.
In a place where those who end the careers of others get theirs abruptly ended too, Sanusi, as some of his critics retorted at the time, had gone too far; he had overplayed his hand. His answer: “Well they should tell me exactly where I should have stopped. People have stolen money and run banks to the ground. Was I supposed to leave them?”
Considering the fact that he knew some of the executives personally, and the initial five institutions that were affected by his action accounted for a big chunk of the country’s bank deposits—his move was to be a litmus test for the resilience of Nigeria’s financial services industry, to say nothing of his own character and principles. But when further investigations revealed that at least a third of the country’s banks were being toyed with, he was given more reason to put public interest before his and “stand for those who couldn’t stand for themselves”—even if that meant “taking difficult decisions that were painful” to him personally.
Sanusi would later tell pan-African television network, CNBC Africa, that although the three weeks he spent arduously contemplating the axing of the bank executives was “the most difficult part of my life”, he was “pleasantly surprised” at the amount of support he subsequently got from the people of Nigeria, across the board and including the country’s politicians, many of whom are known to be weak-willed and dependent on business people to bankroll their lives.
But if politicians and Bretton Woods thought that because they had supported Sanusi, he was in their pockets, they were so wrong. In Sanusi’s book, it soon became apparent, there are no permanent friends.
The legislators discovered this some months ago when Sanusi told a public gathering that 25.4% of the nation’s overhead cost was spent on Parliament, something many surmised as a veiled criticism of the way the country’s budget was allocated. Furious with him for “deliberately inciting” the populace, the lawmakers summoned him to Parliament and after a lot of tongue-lashing asked him to apologize.  Sanusi stuck to his guns. He told the politicians: “If I do not believe that I am wrong, I do not apologize.”
A month later Sanusi butted heads, again. This time with the International Monetary Fund (IMF) for a suggestion that Nigeria should devalue its currency. He slated them for advice that was “simply not based on sound economic logic”.
When the FORBES AFRICA team informed Sanusi that he had been short listed for the Person of the Year, we asked him whether, after having stepped on so many toes in such a short space of time, there was ever a time he considered, well… er…taking it easy?
“No, I never did,” he said pointedly, “on the contrary—I sometimes thought I didn’t step on enough toes. I think that part of my responsibility as a Nigerian is to ask what are the things wrong in our society and that need to be changed and what can I do in my position to change it.”
Change has indeed come to Africa’s most populous nation—thanks, in no small measure, to Sanusi among others.
“His quick and firm actions likely prevented a systemic banking crisis,” the IMF notes in its latest report on Nigeria.
“The core function of a central bank is to provide financial system stability, exchange rate stability, and price stability. Therefore, to have been able to provide stability in the last two years when the rest of the global economy has been in turmoil has been the principal achievement,” Sanusi says.
“Everything we’ve done in terms of the recapitalization of the banks, mergers and acquisitions, governance reforms etc are all aimed at financial stability. We’ve been able to do that while achieving stability in the exchange rate and keeping inflation relatively under control. Obviously, we’ve had volatility in interest rates and exchange rates because you can’t have price, exchange rate and interest rate control at the same time. But I think we’ve achieved our core mandate.”
Business confidence has surged and Africa’s third-largest economy is expected to grow above trend, with favorable medium-term prospects. A 7% real GDP growth is relatively high, even though it is below the double-digit levels the country requires if it is to become one of the world’s top 20 economies.
“It’s just an arithmetic fact that at current growth rates we’ll take over from South Africa in terms of share size. But this is a country of 167 million people and growing and 7% growth at the moment does not improve the welfare of the people of Nigeria and we need a higher rate of growth than we have at the moment,” Sanusi says: “The focus should not be on GDP, but GDP per capita, human development indicators and the quality of life of the population. Inclusive growth is the challenge.
Double-digit growth will be a function of the right policies, he says: “We already have 7% growth without power and infrastructure. Growth that has come largely from telecoms, wholesale and retail trade and the good fortune of rainfall for agriculture. It’s a no brainer that if we begin to move, for instance, agriculture production towards global averages we can probably double growth in that sector and build manufacturing by fixing power and infrastructure, moving from 7% to 12 or 13%.”
Born on July 31, 1961, of a public servant father who headed the Nigerian Ministry of Foreign Affairs in the 1960s, Sanusi has BSc and MSc degrees.
Between 1983 and 1985 he taught economics at his alma mater, Ahmadu Bello University, before joining the private sector.
He was the CEO of First Bank when, some day in late February 2009, he received a call from the then Nigerian President, Umaru Yar’Adua.
“We spent about 15 minutes chatting about family,” Sanusi recalls. But it wasn’t until May 8 of the same year that Sanusi got another call, this time the head of state informing him of his wish to make him the Governor of the Central Bank of Nigeria. It came as a big shock to Sanusi, who had never met his president before and thought you had to lobby to get such jobs.
Little did he know that two years on, he would have behind him such accolades as World Central Bank Governor of the Year 2011, Sub-Saharan Central Bank Governor of The Year 2011, African Central Bank Governor of The Year 2010 and People’s Person of The Year 2010.
He is most likely to arrive at the Forbes Africa Person of the Year awards ceremony in Lagos wearing a bow tie, for he refuses to wear a conventional tie. A bow tie, he says, is “cute” and speaks to his “instinctive sense of being different”. What else would you expect from a banker who never runs with the herd.

“I sometimes thought I didn’t step on enough toes”

Aspirant young leaders are often given the following exhortation: “It’s the attitude, not the aptitude, that determines the altitude.” Aptitude here may be somewhat underrated, but attitude is pitch-perfect. As for the altitude, it needs an exemplar to give the exhortation schtick. Suresh Kana, CEO of PricewaterhouseCoopers (PwC) Southern Africa, springs to mind. He’s proved as adept at climbing the corporate ladder as he is at scaling some of the world’s highest mountains.
<div id="attachment_51" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-51" class="size-large wp-image-51" src="/wp-content/uploads/2017/04/kana53_1-680x1024.jpg" alt="" width="474" height="714" />CEO of PriceWaterhouseCoopers Southern Africa, Suresh Kana, Johannesburg; 3 August 2011 &#8211; Photo by Brett Eloff.</div>
If you think he’s an adrenaline junkie, you’d be wrong. A lifelong vegetarian and adherent to Gandhi’s principles, Kana exudes a quiet confidence. “In my personal time, I enjoy a good challenge,” he says. “Climbing and trekking are a passion and a hobby.”
In his 35 years at PwC, he has risen through the ranks from being the first black professional to join the firm in 1976 and its first black partner in 1986, to being the only South African appointed to the board of the International Audit and Assurance Standards in 1995, serving for nine years. He currently serves on the King Committee on Corporate Governance and other regulatory boards.
Yet despite reaching the pinnacle of success, for Kana there are always mountains to climb, professionally as well as recreationally.
Like his career, there’s been an interesting trajectory to his outdoor adventures. In August 2000, he climbed Mount Kilimanjaro; in December that year, he walked 400km in 10 days across India to commemorate Gandhi’s Salt March, which was undertaken in the 1930s to protest the colonial Salt Tax. Kana has subsequently led two groups—22 people in December 2004 and 15 in December 2009—to Everest base camp. Both groups comprised mainly young adults under the age of 23 with some school kids.
“It’s a huge responsibility,” he admits, “but these expeditions are my way of mentoring young people and setting them on track towards developing into the leaders of tomorrow. They are taken out of their comfort zones and encouraged to think differently and innovatively, and to learn about themselves.”
Their trainer is Kana himself. “We train for about four months. The kids have to be at my door at 5am and show they’re disciplined and committed (do they know that their trainer is up at 3:08am precisely, six days a week, doing yoga and meditation?). You can’t simulate high-altitude conditions – it takes a lot of physical and mental preparation to enable you to face what’s there. By the time the kids write their exams in October and November, their parents tell me how focused and fit they are.
“We start the trek in Lukla, and once we’ve reached our destination at Kala Pattar, we’re 5,600m above sea level—that’s three times South Africa’s highest altitude and at freezing temperatures of about minus 20 degrees. We walk for about eight hours a day.”
All four of Kana’s children have joined these expeditions; two of them have gone both times.
So what happens on the trek? “Organization is key. The children are divided into groups of four and we operate according to certain acronyms. There’s the WAR (Watch and Review) Committee, whereby the sherpas ensure that the children are hydrated, are eating their meals and generally coping. ICU refers to any problems that arise—if so, steps are quickly taken to resolve the problem. For example, a weaker child is placed at the front and stronger climbers behind.”
What about the risks? “There are always risks, but we measure them in relation to the circumstances. This does not stop me as I believe there’s enough in place to assist when I need it.”
And measured against the rewards, “it’s a hugely satisfying experience—with a stunning view. On a deeper level, it centers me. Unlike the boardroom, mountains are vast areas of peace where all is still and nothing matters. It’s about pushing one’s limits.”
Yet he also draws distinct parallels between climbing and corporate life. “Both demand teamwork, risk and knowledge management, excellence, leadership and resilience. Both require you to master your emotions and focus on the task at hand. You have to determine how you are going to react to people and circumstances.”
How does this define his managerial role at PwC? “People rank high on my list of priorities and I have an empowering management style.” He’s not paying lip service; he has, at different intervals, headed up the HR, transformation and corporate social responsibility arms of PwC. “The firm invests heavily in skills development programs, and it shows: our students consistently rank among the country’s top 10 achievers.”
<div id="attachment_52" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-52" class="size-large wp-image-52" src="/wp-content/uploads/2017/04/kana12_1-680x1024.jpg" alt="" width="474" height="714" />CEO of PriceWaterhouseCoopers Southern Africa, Suresh Kana, Johannesburg; 3 August 2011 &#8211; Photo by Brett Eloff.</div>
Kana’s other enduring passion is promoting good governance. The double dips of corruption and unemployment are of great concern. “Our credibility is at stake at a time when we desperately need foreign direct investment for growth and jobs. Corruption is nothing but a burdensome tax on the poor; it’s unacceptable.”
Nevertheless, he remains upbeat. “I believe that wisdom and truth will always prevail. It’s incumbent on a leader to be optimistic while recognizing what challenges you face. You become an authentic leader when you’re accessible and engage with people, aligning them to a common vision.
“At the World Economic Forum in Davos last year, South Africa came out tops for having the best accounting, auditing and corporate governance standards, as well as the best stock exchange regulations.
“We need to have this mindset of excellence all the time. This means planning for crises and having structures in place for disaster recovery—not unlike the WAR Committee and ICU processes that occur on our mountaineering expeditions.”
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What would he say to other CEOs who merely play golf? “Whether it’s chasing a little white golf ball or a little white tip of a mountain, it’s what makes you wake up in the morning and look forward to your day.”
He’s looking forward to going to the South Pole next: any takers?

The Attitude And The Altitude

He tells his investor relations teams to discourage “the wrong kind of investors”, wants more global environmental regulation and taxes and believes that companies have an overwhelming responsibility to their supply chains. Sunny Verghese has an unusual outlook on business.
The Olam CEO has overseen the remarkable growth of the agricultural producer and processor from a sideline operation in Nigeria to a global business spanning 65 countries. The company’s success has come in part by turning social responsibility into a competitive advantage, making a solid business case for the kind of social investment that is only now finding its way into mainstream corporate culture.
Olam began with modest goals in 1989 as an offshoot of the Kewalram Chanrai Group, which had been operating textile factories and cotton spinning operations in Nigeria since the 1960s. When the oil price slumped in the late 1980s, the country began to suffer from an acute shortage of foreign exchange, and businesses struggled to find hard currency to buy inputs and spare parts. In response, the Kewalram Chanrai Group looked for a sector with quick export potential. They began with cashews, and expanded from there.
“When we looked at what was required for us to win in this business, it became evident that the large players were already very well entrenched and we were late to this game,” Verghese says from the company’s Ivorian headquarters in Abidjan. Despite the fragile political situation in Côte d’Ivoire over the past few years, Olam has continued to invest, opening the world’s largest automated cashew processing factory in February in the northern city of Bouaké.
In the late 1980s and early 1990s, the industry was undergoing huge change, as West African economies liberalized and broke up the state monopolies overseeing their commodity exports. The cocoa and cotton boards disappeared and were replaced by a fragmented, poorly structured industry of traders and license-buying agents, who had previously bought at the farm gate on behalf of the government. The rules of the game were changing, and Verghese saw an opportunity to take on the existing players.
“[Before] they could sit in London or New York or the major commodity trading hubs and source their raw material from the government monopolies, without really having to come here, dirty their hands or manage the emerging market risk,” Verghese said. “When the government monopolies started dismantling and disappearing, they started facing significant counterparty risk issues.”
The new traders were not able to manage pricing risk, so when the markets turned against them, they would default, leaving international customers without supplies.
“It was difficult for the customer overseas to come and enforce his contractual obligations in these markets. So counterparty performance and forward selling premiums became big issues under those circumstances,” Verghese explained.
“That’s when we realised that we had a significant opportunity to develop supply chain infrastructure and build counterparty credibility that was very high, so that in other countries, given the volatile pricing environment, we were still able to deliver reliably on a contract.”
Olam thrived in the new African markets, spreading across the continent and into major commodities, such as rice, cocoa and cotton and in niche products, like cashews. To do that, he explained, “we started at the origin and we resorted to buying at the farm gate, or as close to the farm gate as possible.”
But this was only part of the struggle. Creating supply security meant building loyalty and improving the lots of the smallholders that make up the majority of growers.
“Buying from the farmer directly, helping him improve his productivity, providing him [with] microfinance—in terms of loans—or agricultural inputs and market access, helping him to upgrade the quality he was producing, allowed him to dramatically raise his income and his livelihood, and therefore become a loyal supply partner for us.”
Verghese talks in terms that are becoming common in emerging markets and agribusiness. Companies, from brewers to traders, have begun to articulate what the Olam CEO calls “mutuality” to their investors and shareholders.
The reasons, he says, are relatively straightforward. Beyond it simply being “the right thing to do”, being welcomed into a country and being sensitive to its context is fundamental to being able to work there unimpeded.
“We believe in emerging markets it’s relatively easy to get a license to operate from the government but it is tougher to get a license from the community to operate in those markets,” he says. “You can only build a sustainable business in these markets when the community gives you license to operate. If they see you as a foreigner, as an exploiter of their resources, as not adding any value, they don’t want you there.
The growing trend towards consumer activism and responsibility has added momentum to the requirement.
“Our customers, like Nestlé or Unilever, in turn have demand from their consumers who are not satisfied in snacking on a bar of chocolate or drinking a cup of coffee without asking searching questions about where this coffee or cocoa is coming from. Is there any child labor involved? How environmentally sustainable is the supply chain for this product being used in their chocolate or their coffee?”
The company is creating its own “Olam standard” of sustainability, and is in the early stages of an environmental footprinting exercise to work out the carbon impact of its individual products and supply chain.
Verghese can rattle off statistics about the threat that climate change poses to the world’s population, and the links between global energy, water and agricultural supply. He talks about the water requirement per kilogram of meat in the same terms that most CEOs talk about their financial statements. His sense that there is an imperative to act, despite the high cost, is strong, although he acknowledges that to do so alone risks unilaterally imposing a drag on the company. The competition could gain short-term advantage by avoiding unlegislated “obligations”.
“It’s a catch-22 situation,” Verghese says. “We believe that the long-term solution is that carbon should be priced and carbon should be taxed because you cannot influence behaviour if that is free.
“I think stakeholder pressure will intensify to a level where everybody will have to comply with the minimum standard. So we are taking the view that it is the right thing for the sustainability of our business so we should do the right thing here, because if you want a business that is enduring, then we can’t take [that] view.”
The issue of “enduring” business, and the kind of long-term view that encourages corporate responsibility, is difficult in the current funding environment. Olam listed on the Singapore Stock Exchange in 2005 and the demands of “typically transient” shareholders with short-term investment horizons frustrates the strategist in Verghese.
“When we are investing in plantations, say a rubber plantation, the first yield is [after seven years]. The first maturity is [after] 12 years. The cash flow break-even is in 14 years,” he said. “As a CEO there is very little incentive for you to think that far ahead, because analysts are looking at the next quarter and getting upset if you [deliver] below expectations.”
“The problem with the current capital market structures and CEOs and their time horizons persuade people to be very short-term in their outlook.”
Despite this, he has no intention to change tack.
“I tell my team your job is not to go and market the company, your job is to go and de-market the company,” he said. “You have to tell them ‘are you sure you want to invest in us? Because here is the deal: we’re going to be cash flow negative for five years’. Most people would fall off their chair.”
Continuing with the heritage of the company’s early days and trying to improve its footprint “from seed to shelf” is going to become a competitive advantage all over again, as best practice in sustainability becomes more widespread and pervasive.
“One of the reasons why we have succeeded is the way that we have innovated our business model,” he says.
“We feel that benchmarking best practice is an important first step, but is lousy strategy, because at the end of the day, everybody is trying to follow best practice, so if you achieve that goal, you will at best be at the middle of the pack.
“You can never be a leading company, or a very successful company, by just being middle of the pack. If you want to be exceptional, you need to create the next practice.”

Tag: CEO

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