Many educated Zimbabweans are scattered around the world in search of greener pastures. Walk by factories in Bulawayo, a city once known as &#8216;KoNtuthu ziyathunqa&#8217; (the place that exudes smoke), you will see deserted sites. According to Godfrey Kanyenze, an economist, 4,610 companies closed down in Zimbabwe between 2011 and 2014, and 55,000 jobs were lost.
But, according to the Zimbabwean government, look closer and you will see investment opportunities.
At the Zimbabwe Trade and Investment Forum at the Hyatt Regency in Johannesburg, in July, ministers campaigned for foreign direct investment (FDI), which they believe is on its way.
“Zimbabwe urgently needs a significant amount of FDI to create employment, enhance technology, improve productivity, add value and beneficiate raw materials,” says Zimbabwe’s Minister of Industry and Commerce, Michael Bimha.
According to Bimha, Zimbabwe will review its legal framework to attract foreign investment. Government has a Bilateral Investment Promotion Protection Agreement (BIPA) which protects future investors from expropriation. He cites power generation, water and sewerage, transport, dam construction and ICT as areas of need.
One good sign is that huge African investor, PPC Cement, is ploughing in money.
“PPC Zimbabwe is a key player in all the big projects underway, and we are working hard to be involved in those still at the planning stage,” says Njombo Lekula, Managing Director of PPC Zimbabwe.
He says the country’s future growth will be centered on Harare and Northern Zimbabwe through housing driven by urbanization.
“It’s an expression of our confidence that the economy is on the up, and also in the growing amount of intra-regional trade, with South Africa, Mozambique, Malawi and Zambia particularly. Our total investment is $200 million in the country over the coming years,” he says.
On the flip side, the Zimbabwean government will soon be exporting skilled labor as the ruling party, Zanu-PF, lags on its 2013 election promise to create 2.2 million jobs in five years, with its economic blueprint; the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset).
Zimbabwe has signed job agreements with South Sudan, Namibia, Angola and Botswana. The government will be paid for recruiting. Zimbabwe’s Higher and Tertiary Education, Science and Technology Development Minister, Godfrey Gandawa, says a database of graduates is being set up.
“We are coming up with a policy as a ministry to help our skilled manpower to get jobs because there are countries with vacancies in various fields, but our people do not have access to those vacancies out there,” Gandawa told the state-controlled Herald.
Obert Gutu, the opposition MDC-T spokesperson, says the policy was an open admission that Zim Asset has failed.
“When a country begins to actively encourage its qualified personnel to get jobs in other countries, you can then appreciate that the wheels are surely coming off. Instead of creating jobs under the much talked about Zim Asset policy framework, the Zanu-PF regime has actually become an employment agent; eagerly recruiting young and highly qualified Zimbabweans to go and work in other countries. Under normal circumstances, this government would simply resign. They have totally failed the people of Zimbabwe,” says Gutu.
Maxwell Saungweme, an independent development economist, says it is unfortunate that Zimbabweans educated with state coffers will be working for the coffers of another state.
“Policies on education and human capital development should be demand driven and not just to supply labor and investing in education and skills you don&#8217;t need,” he says.
Political analyst, Rashweat Mukundu, claims this is a policy of desperation.
“If Zimbabweans have to move, it must be voluntary, but right now labor or economic migration is a desperate move by many who see no hope in Zimbabwe.”
The last word at the investment forum comes from a South African rail entrepreneur, Thabo Molamu.
“Investors should strongly consider investing in Zimbabwe, regardless of a wrongfully portrayed political situation in Zimbabwe, especially by some sections of the media,” he says.
“The policies put in place by the government of Zimbabwe, like the indigenization policy, will be understood by the targeted beneficiaries very late. The truth is, people want answers now; they want poverty eradicated now, and they don&#8217;t understand why redressing the past is central to the plan of African leaders. They misinterpret this to be meaning being self-centred when in reality it means putting Africa and the people of Africa first.”
So, where there is a will, there is always an investor and entrepreneur.

Money In, Skills Out

Apaltry rate of investment in infrastructure has dimmed the otherwise bright future for our continent.
Decades of self-serving economic policies, political agendas and some may say cynical or ‘feel good’ aid flows to Africa clearly have not delivered much. Yet, there is a new sense of enthusiasm and positive energy from Africa. The new generation of Africans is seizing the future.
The people are moving and the opportunities are endless for Africans. Entrepreneurs from around the world are engaged, but the picture has flaws; the story is oversimplified. The basic needs are still missing. Where are the ports and harbours, railways, roads, power plants and electrical and water distribution to support growth?
It is Africa’s diversity that makes it so rich, but it is also this diversity that remains the biggest hurdle to the growth that is eagerly expected.
Africa comprises 53 diverse countries – historically impacted by colonial era and cold war foreign ideologies; diverse languages, inefficient bureaucracy, nationalist inward-looking focus and economic protectionism. The continent often lacks experience when it comes to major infrastructure delivery and attracting private sector or foreign development investment.
Enter the World Economic Forum (WEF) and many other NGOs and Develop Finance Institutions (DFIs) who seek to usher in a better world.
WEF is a private institution respected as an influencer and incubator in helping the world understand the future.
The focus on Africa, in the last decade, has done good and raised the economic profile of the continent around the world.
WEF has no implementation resources or infrastructure delivery capacity but are good at investigation, evaluation and think-tanking. Ideas may abound but when does planning turn into delivery? Many highly qualified professionals with great ideas meet annually with apparently limited visible progress when it comes to the hardware on the ground.
In 2013, WEF stated that “with an expected annual growth of 5 percent in 2012-2013, sub-Saharan Africa continues its transformative journey from a developing continent to a hub of global growth. According to the World Bank, almost half of Africa’s countries have attained middle-income status. At the same time, the continent’s positive outlook is threatened by fluctuating commodity prices, rising inequality and youth unemployment.”
At that session, much time was spent on the identification of target and priority infrastructure projects and 51 were shortlisted. The work done on the projects list was commendable, but there were crucial missing factors preventing the realization of the funding and construction of these projects.
The ability to attract large scale DFI funding to the extent required, which is put at $75 billion by 2040, is still elusive due to three factors: the absence of upfront ‘at risk’ funding of early project feasibility studies that can attract full project funding from private, public and DFI sources; a lack of political will and technical knowhow.
At this year’s forum, it’s encouraging to see all three of these key factors firmly on the agenda. There is a realization of the need to have a regional integrated view and that non-returnable funds are made available, to enable project preparation to be effective which will lead to funding and implementation.
My birthplace in Zimbabwe and my own personal African infrastructure adventure, over the last 30 something years, has given me valuable first-hand experience of the immensely difficult task of getting major projects through to implementation, both from a private and public sector perspective.
My personal experience with WEF goes back to the event in Cape Town in 2010. I attended with a special interest in the economic growth drivers and capacity building within Africa’s infrastructure.
In a number of DFI forums, my colleagues and I stressed that while projects may be much needed, project financing funds will not flow unless there were crucial additional funds made available that paid for the early detailed feasibility studies, including the designs and accurate technical scoping, budgeting and funding mechanisms and ultimately project management.
At last, we may be seeing the DFIs and the many agencies seeking infrastructure solutions for Africa coming together to get the African vision moving.
WEF would have thus played a strategic role in unlocking the potential. Africa is waiting.

Africa Is Building At Last

It was the dual meaning of a few words that tripped off the tongue of the Somaliland foreign minister as he talked about the economic future of Africa that turned my blood cold.
“Africa shouldn’t miss the boat,” says Mohamed B Yonis.
The stark image that stabbed into my mind was that of Africans risking their lives on leaky boats crossing the Mediterranean in the desperate hope of a new life in Europe – a journey that has taken 2,000 lives this year. A new life? The odds are against it; even the survivors are likely to end up as sweated labour at best; trafficked labor at worst.
I was even more upset to see a magazine at the conference with a survey suggesting a large number of Africans say they would risk the tricky crossing of the Mediterranean even if it cost them their lives; a sad statistic close to the weeping heart of Africa.
A sobering thought amid the gathering of the rich and powerful in Cape Town where there were many signs of light and growth in Africa. Among the 1,200 delegates were investment fund managers from across the world.
“We like what we see and are here to invest,” says one partner of a $68-billion New York investment fund.
Infrastructure is likely to be the big business of the future; in the past, the World Bank estimated Africa needs at least $93 billion a year spent in infrastructure. Those in the know in Cape Town say this is barely enough to touch the sides of the infrastructure gap.
Former head of South African intelligence, Moe Shaik, has been doing his bit with the pan-African investment operation he is running for the Development Bank of Southern Africa (DBSA). Shaik says he gathered $404 million (R5 billion) in investments into everything from roads to oil and gas pipelines in the last year. Shaik also says the DBSA contributed $150 million in raising $750 million for a sovereign wealth fund in Angola that will be used to build roads and infrastructure as well as making plans for a new coal fired power station at Mamba, near the Zambezi River, in southern Zambia. He believes state coffers can no longer afford infrastructure.
“Government needs to create an environment where capital can come in and build. But African governments also need to set up mechanisms where they can supervise infrastructure projects in their country so they can be done properly,” he says.
Patrice Motsepe, Africa’s 14th richest man, worth an estimated $2.3 billion according to FORBES, agrees.
“I have always emphasized that we need to bring the private sector in and that the partnership be a partnership between the government, the investment communities, both local and international, and that always gives me comfort that these projects make sense, that they are sustainable,” he says. “The environment has been put in place and we are making progress in Africa in comparison with various other investment countries.”
The head of state in the host country, South Africa, believes the continent is well on the way.
“There is the issue of infrastructure, all types of infrastructure that is actually changing the face and the landscape of the continent. This is what we are attracting. Those huge sums of money; we were therefore discussing the financing of these projects, how ready the projects are; some of the projects have been presented and are now ready to be financed and there is an interest of all financing institutions both locally and internationally,” says President Jacob Zuma.
With the optimism in Cape Town came caution. There are still doubts about political stability and corruption. Now, I have heard corruption compared to many things down the years, but never to crocodiles in the Kenyan bush.
“You know, when wildebeest migrate north to greener pastures in the Masai Mara game reserve, the crocodiles lie in wait for them in the rivers. So the wildebeest have to know where to cross otherwise they are going to lose a leg. The crocodiles are corruption,” says Bharat Thakrar, the head of East African advertising giant, Scangroup.
“It used to be limited to the police and small government offices, but now corruption is creeping into private business in Africa.”
Blair Glencorse, is fighting corruption with his NGO Accountability Lab in Liberia and was at WEF Africa.
“Where there needs to be enforcement, the key issue is to make sure it is part of a larger strategy to build transparency, open up information and build channels of exchange between citizens and governments – so it is not politicized. There are countries of Africa which are making some progress along these lines like Botswana and Ghana,” he says.
Hope and crocodiles collide; Africa has its work cut out before WEF Africa in Rwanda next year.
<h4>The Fresh Face of $2 Billion</h4>
Africa is changing fast and has a fresh face. Ten years ago, it would have been unthinkable; 20 years ago, unimaginable in an often patriarchal Africa. One of the freshest, not to mention powerful, faces at the World Economic Forum (WEF) on Africa in Cape Town runs $2 billion in investment at the age of 38.
Ngugi Kiuna grew up in Nakuru in western Kenya, the son of a managing director of a company selling tractors and a mother who sold animal feed. He went to boarding school in England and studied chemical engineering at Imperial College, London, before earning a PhD in composite structures of aerospace applications.
In August 2013, Kiuna became the head of investment banking for Africa at Rand Merchant Bank. He runs $2 billion in assets in Nigeria, Kenya, Namibia, Ghana, Lesotho, Swaziland, Tanzania, Zambia Angola and Botswana.
“Most of the countries we deal with are single B rated by the risk people. We also do a lot of work with private entities. The sovereign element is there and if you have it there is less of a risk. The sweet spot for us is three- to five-year investments. Off our own balance sheet, we can do longer, with the support of development finance, up to 10 years,” he says.
It means Kiuna oversees the financing of aircraft for Air Namibia, the building of roads in Angola and investment in locomotives in Mozambique. It is investing in Cenpower – a new 300MW gas power plant – in Ghana. In Kenya, it has helped tie up a deal, this year, to plough $350 million into a new 450-kilometer oil pipeline between Mombasa and Nairobi. It will take over from the old pipeline that’s been pumping oil since the 1960s.
Most of the people Kiuna meets, in his extensive travels across the continent, are old enough to be his father.
“I was with the minister of finance in Gabon, we were talking about the government infrastructure plan and strategy about borrowing, you could see all along there was something in his mind he wasn’t comfortable with. I said ‘minister, I know I look too young…’ He burst out laughing. I said I am not as young as I look, it broke the ice. After that, the nature of the conversation changed,” he says.
“I think people are generally embracing but obviously some are surprised by how young I am, but people are much more open minded to the younger generation. I think it is also a function of the technology age, you have younger people becoming billionaires these days.”
At WEF in Cape Town, Kiuna rubbed shoulders with many others with billions to invest.
“We saw there is continued buzz and interest in Africa; a lot of new people, new faces and new companies ready to invest. There is also a lot more intra-Africa dialogue; people talking about projects, people collaborating on projects. The amount of trade in Africa is nowhere near what it should be. Thirdly, power in Africa, we need to get that right and let’s hope we can. There have been power projects too big and too complicated to execute. So, we need to scale down projects to a size where it’s easier to be financed and done.”
His greatest fear for Africa?
“Political stability and transparency; these are all matters we have to get right… The biggest fear is around transparency around elections cycles in Africa. The recent elections in Nigeria, Kenya, Zambia and Namibia show we are getting there.”
“Wherever I travel on the continent, I am always inspired by the number of people who have started their own business. I dedicate what I do to them.”
Words wise beyond their years.
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Crocodiles,  Money And Hope

Exchange-traded funds (ETFs) are one of the greatest financial innovations in recent years. ETFs, which are essentially investment funds traded like other securities on securities exchange, much like stocks, have enjoyed remarkable success since being introduced in the 1980s. The global ETF industry, and its related products, is now estimated to have assets worth $2.6 trillion listed on 61 exchanges. Not to be left behind, Africa has steadily been growing its share in this burgeoning industry. Currently, there are six nations offering ETFs: South Africa, Botswana, Ghana, Nigeria, Egypt and Namibia. South Africa, a long-time leader in this area, has 34 ETFs ranging from those based on indexes to those based on commodities.
Kenya, through the Nairobi Securities Exchange (NSE), is seeking to become the latest entrant. In a bid to raise its profile, the Capital Markets Authority (CMA) of Kenya has been planning to launch the new product since July 2013. Partly aimed at attracting foreign investors, the expected launch comes at a time when the local equity market is increasingly attracting international investor interest. As the global markets become increasingly correlated, forcing portfolio managers around the world to become more familiar with frontier markets such as Kenya’s, it appears the new product is set to meet ready demand.
NSE’s Head of Market and Product Development, Donald Ouma, says that ETFs will be an affordable form of investment for retail investors as they give broad exposure to equities without having to spend a huge amount of cash. The new product promises to give investors the ability to track indices of various stocks spread out in various countries that would otherwise have been expensive or tricky to come by before.
Furthermore, ETFs are expected to improve liquidity of the overall market which currently spots turnover rates lower than 10%. The low fee structure also means benefits from the relatively lower expense ratios are passed to the investor. Locally, the average mutual fund charges an advertised management fee of 2%. The new product is also set to give easy access to alternative assets such as oil, gold and currencies. The latter could have come handy this year as the local currency lost nearly 5% of its value against the US dollar.
However, limited available exposure could leave potential growth opportunities out of reach of ETF investors. Since the NSE’s main index is still limited to a small number of stocks, ETF promoters may find it challenging to achieve a respectable scale. Another potential roadblock could be slow retail acceptance. According to the Ernst &amp; Young, EY Global ETF Survey: 2015 and beyond, outside the US, the ETF industry’s biggest long-term challenge is low retail adoption. With no way around this, acceptance by retail investors will certainly take time to realize despite huge potential for retail growth. Nevertheless, the benefits outweigh the challenges.
In the initial years, I see Kenya’s ETF industry dominated by very large funds and issuers such as the FTSE Group. The latter, which already has two off-shore NSE-based tradable indexes; FTSE NSE Kenya 15 Index and FTSE NSE 25 Index, plans to list its FTSE-based indexes. South African group, Absa Capital, is said to be in talks with CMA and NSE to list its gold-backed ETF, the New Gold ETF. More large-scale issuers are likely to enter the market. Ultimately, this will strengthen the industry’s outlook by giving investors a broader choice of ETF promoters and product range.
Moving forward, as the growing wave of international interest continues to focus on markets like Kenya, certain key factors will be crucial to ensure the success of the new industry; price transparency, education, investor engagement, patience, liquidity and technology. If ETFs are to fulfil their undoubted potential for long-term growth, all the stakeholders need to ensure that these building blocks are in place. If this happens, then NSE-listed ETFs could easily revolutionize the securities markets in the region.

Revolutionary  And Rewarding

A chartered accountant, by day, Paige Govender works as the group financial manager at WIPHOLD, a South African women’s investment company based in Johannesburg. By night, she changes hats as a yoga instructor. How does she do it?
“What I have here is the perfect work-life balance. Everyday I’m either at boot camp in the afternoons or doing yoga. WIPHOLD is a lovely environment to be in. When I come here, I am still me,” says Govender.
It is important to find time in the day to do things that make you happy, she adds.
“Even if it is for five minutes. I love doing the crossword puzzle, I make sure I do it every day,” she says.
Govender grew up in a small town in the South African province of KwaZulu-Natal. She surrounded herself with family, cousins, aunts and uncles. When she was 18, she moved to Cape Town to study. She didn’t know exactly what she wanted to pursue but knew what she didn’t want. Ruling out medicine and engineering, she was left with accounting.
“Like a good little Indian girl I took the CA route. I have always loved maths and problem-solving and being a CA has a lot to do with that. And now I have realized yoga is also all about balance just like accounting. It just ties together,” she says.
During her day job at WIPHOLD, Govender is responsible for investment evaluations, consolidations, financial audits and tax, tax, tax.
“I love numbers; it’s a language that I understand, I am a nerd and I am perfectly happy with that,” she says.
As a women’s investment holding company, WIPHOLD strongly believes in the employment and empowerment of black women and Govender shares the same values.
“I think every lady out there is brilliant and can offer something, and by contributing to something, you lift yourself up. I am very passionate about young girls coming out of their shell and into the workforce and not thinking that they can’t do it.
“I can see how happy I am in life in general, sometimes I meet friends and even family and they are so busy all the time. There’s good busy, that’s busy doing things you enjoy, and then there’s busy when you are just blank all the time. Finding something that you really love to do outside of work creates a good balance; too many people get caught up with work.”
Govender strongly believes that contentment comes from knowing you are not just defined by your job, and by allowing yourself to do something you love every day, you are creating the perfect harmony, which she deems her success mantra – in work, life and yoga.

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The  Balancing  Act

I missed my flight from Nairobi to Kigali. The airport shuttle should have taken no longer than thirty minutes on a Sunday morning, but Kenya’s First Lady had made plans for a charity marathon in a city that is already notorious for its traffic jams. Two and a half hours later I arrive at check-in.
Fortunately, I am not the only one. Also turning up late are two representatives of the Rwanda Development Board (RDB) &#8211; the Rwandan government entity in charge of business and investment.  I had a meeting scheduled at their offices the next day; now we have an opportunity to discuss doing business in Rwanda over an airport lunch and afternoon tea. “If you bring all your documents I can issue your business license in six hours &#8211; one day at the most,” says Kellen Abatesi, the official responsible for business licenses.
Her colleague, Karim Tushabe, is calling Kigali. Unimpressed by the handling of our flight rescheduling, he senses room for improvement. “It will damage the image of RwandAir and our country,” he says with concern.
At Nairobi airport I get a first taste of Rwanda’s widely praised central business administration. Effectiveness and an eye for detail are high on the list, and this does not go unnoticed. The World Bank ranks Rwanda third on the continent for ease of doing business, following Mauritius and South Africa. Last year, this small country was the best global reformer regarding business regulations. It is one of the safest countries on the continent, with a low level of corruption; worthy benefits for any investor, especially with a stable GDP growth rate of about 8.8 percent.
Arriving in Kigali from busy Nairobi is rather like a spa experience. The city is spread across a number of picturesque green hills; the streets are calm and extremely clean. The RDB has arranged a meeting for me with Remote Partners, a project management firm that assists foreign investors through planning and implementation. It is led by two dynamic young men from the US and Israel. They have seen numerous firms come to Rwanda and do extremely well. “Rwanda has introduced and clinically operated an ecosystem very conducive to investors,” Trevor Green, the CEO of Remote Partners, tells me. “Not just in regard to minimizing investor hurdles, but also looking at institutional credibility. “
Also creating value for industrial firms are Rwanda’s Special Economic Zones. Each area is physically secure and administered by a single body, the RDB. It offers reduced tariffs and infrastructure services, with many plots still available.
Green is of the opinion that investing in Rwanda is, above all, a powerful business strategy: “It makes total sense to invest in Rwanda,” he says. “The ease of doing business here makes it the perfect lab for multinationals moving into Africa. But increasingly, I believe that companies could not opt for a better location for their headquarters or manufacturing. Not only do you have the East African Community with a single market of 150 million people on your doorstep, but investors can use Rwanda as a strategic corridor to Central and West Africa.”
In Green’s opinion, energy, infrastructure, and agriculture are the top investment sectors in Rwanda. The country needs 563 MW of electricity, but only 120 are currently produced. It imports over 50  million eggs every year from Uganda alone, I am told. Estimated ROI in Rwanda? Fifteen to twenty percent.
Philip Lucky, a Senior Information Officer for Investment Promotion and Implementation at the RDB, suggests that investors will do best in telecommunications, the service industry, tourism, agriculture, real estate, mining, and energy &#8211; in that order. He finds it difficult to keep the list short.
As always, Rwandans seem overly ambitious in their endeavor to be at the top. The fact that they are surrounded by regional giants DRC, Tanzania, and Kenya does not intimidate them: “We want to become a food basket in the region,” says Philip Lucky. “Horticulture, tea, coffee, dairy, and maize corn flour do very well, and we have plans to start flower production.”
As for Trevor Green and his colleague from Remote Partners, Rwanda is a long-term choice. And although English was made an official language alongside French, they want to stay ahead of the game and are now learning the local language, Kinyarwanda.
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Harnet Bokrezion is a senior international development consultant, the founder and CEO of Africa Business Jumpstart, and a Partner for Africa at Strategic Business Alliance (SBA).

Calm and clean Rwanda  Is Worth every penny

There is a Swahili saying that goes; ‘a good day is known in the morning’. Is 2015 a good year for the Kenyan investment environment? All indications suggest it is.
The World Bank has reviewed its prediction about Kenya, predicting GDP growth at 6%. While I am happy that the New York-based economists think so highly of the country, I highly doubt if this will be the case.
The World Bank has missed its growth predictions for Kenya for three consecutive years, being forced to adjust mid-year from 2012. Beyond that, the country’s economy is still not out of the woods and growth will remain slow.
For this year, I would trust their adjusted statement given in June 2014, stating that the economy would grow at around 4.7% both in 2014 and 2015. I would place the figure at between 4.9% and 5.2%, two to four percentage points above Mckinsey’s growth figures for Africa.
To make accurate predictions, you need to look at the past.
The Nairobi Securities Exchange (NSE) performed averagely in 2014. The NSE 20 Share Index delivered price gains of 4.9% compared to 19.2% the previous year. On the flipside, the NSE All Share Index (NSEASI) delivered a price gain value of 19.9% compared to 44.1% in the previous year.
It’s worth noting that the NSEASI is driven by speculative trading on the smaller counters, mostly in the agricultural sector. The large caps in the NSE 20 are mostly attractive to large investors who prefer long term to short term benefits, hence minimal price gains.
While the price gains were average, most of the companies registered the anticipated major profits. Safaricom reported a net profit of $256 million, a 31% increase, while Equity Bank reported a profit of $211 million for the year ended December 31, 2013. Better news arrived when the bank announced its third quarter results in October to stand at 124 million, a 26% rise from the previous year.
It was not all rosy though. Kenya Airways reported a loss of $87.9 million, which coincided with the rising insecurity in the country, the Ebola pandemic in West Africa and poor tourism numbers driven by travel advisories in the west. The other companies that reported losses were Mumias Sugar, suffering the after effects of dishonest management, and Transcentury which posted a half year loss of $17.8 million.
The country’s economy grew 2.7% in the first quarter, 5.8% in the second and 5.5% in the third. While better performance is expected for the fourth, I believe Kenya’s growth figure for 2014 is still within the region of 4.7%.
With this information, one can authoritatively talk of a better performance in 2015.
I expect continued activity from the traditional movers like Safaricom, Equity Bank, KCB, EABL and Kenol Kobil. I also expect Mumias Sugar to make a comeback after shedding off 33% last year. There will also be significant activity from the growth counters; Centum Investment, Britam, and Car and General.
In essence, the sectors to watch will be agriculture, insurance, banking and oil which will benefit from the lower crude prices. We may even see a breach of the 6,000 mark for the NSE 20 Share Index, with the risks being poor implementation of the capital gains tax and insecurity.
The decision by the ICC to drop charges against President Uhuru Kenyatta is good news for the country, but terror attacks are derailing progress in Kenya, having eroded the robust tourist industry last year. While there is confidence in the government efforts to curtail the attacks, the risk still lingers in 2015 and might affect business significantly.
I expect government economists to take a conservative approach in setting both the fiscal and monetary policy. The Vision 2030 flagship projects will offer liquidity to the economy and spur growth, thus there will be no need to induce additional government spending in the next budget. In addition, the spending will send interest rates downward and the Monetary Policy Committee is likely to lower the Central Bank Rate when the economy has responded positively to the aggressive fiscal spending.
With this in mind, I can say it’s a good year to invest.

Expect Better Things

Coal mines are the rock upon which South Africa’s power parastatal, Eskom, has been built. They mine 120-130 million tons for Eskom to burn every year. In 2015, the rock that supports 83% of South Africa’s power is crumbling.
The power utility is facing a dim future, through a decline in coal investment.
A senior coal analyst at XMP Consulting, Xavier Prevost, says at least six big coal mines could close down or decrease production by 2020.
“A decline in coal production calls for creation of more mines and failure to do so means all coal-fired power stations will have to close down which will affect electricity output,” said Prevost.
Prevost, who has more than 30 years experience in the coal sector, says too much coal in the market has driven down the prices as demand has fallen.
Countries, like the United States, exporting coal into the international market has also brought down prices, he adds.
Some of the big coal companies in South Africa include: BHP Billiton; Xstrata Coal; Glencore; Anglo American Thermal Coal; Sasol Mining and Exxaro Resources. Their costs rise as coal prices fall.
They supply Eskom with low-quality coal known as middlings, a by-product of the coal washing and beneficiation process. This coal contains about 35% of ash, resulting in low energy output.
Last year, South Africa’s Minister of Mineral Resources, Ngoako Ramatlhodi, said there was coal for export and coal of a lesser quality, which stays in the country.
“[The low-quality coal] we would want to keep for our power stations,” said Ramatlhodi.
Ramatlhodi, however, does not seem to acknowledge that cheap coal means lower electricity output.
To make matters worse, new mines are scarce. In the past six years, there have been fears over mining legislation, the decline in prices, increased competition from the United States, Indonesia, Australia and India and also lingering political rhetoric around nationalization.
Prevost says it’s not too late for South Africa to avert the coal crisis.
“Government has a 90 percent chance to make this better or worse through collaborative efforts between the departments of energy, finance and mines,” he says.
Addressing the media at the Eskom offices in Johannesburg in January, the new Chief Executive Officer, Tshediso Matona, painted a bleak picture saying the power utility can’t cope.
“New generating capacity and other levers are needed in order to ease the pressure on the system,” he said.
Matona says Eskom is like a car running on empty.
“We have arrived at a point that does not allow us to ignore the health of our plants. Our reserve margin is so thin, that every incident creates a major systems issue and could also have safety implications for the plant.”
According to Matona, the problem with Eskom is delayed maintenance and he says most of its ageing power stations face breakdowns.
“We know the problem and we know the solution,” he says.
The big question can be put in one word: When?

The Coal Hole

Miss South Africa 1996 Peggy-Sue Khumalo started her life cleaning houses before training to be a beauty queen, and finally ending up as an investment banker in Johannesburg.
How so? For this, we will need to rewind to her past.
Born to a single mother in the northern region of KwaZulu-Natal, Khumalo grew up on the farm where her mother toiled as a domestic worker. Her greatest desire was to be educated and be able to turn around her fortune one day.
<img loading="lazy" decoding="async" class="size-medium wp-image-29952 alignleft" src="http://www.forbesafrica.com/app/uploads/2017/05/IMG_1991-280x300.jpg" alt="" width="280" height="300" srcset="https://cms.forbesafrica.com/wp-content/uploads/2017/05/IMG_1991-280x300.jpg 280w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/IMG_1991-300x322.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/IMG_1991-600x644.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2017/05/IMG_1991.jpg 768w" sizes="(max-width: 280px) 100vw, 280px" />
While she was still a young child, her mother moved to Johannesburg leaving her in the care of her grandmother, and in search of greener pastures to finance her only child’s schooling.
“It was not a private school education but it was a good education,” says Khumalo today.
After primary school, she was sent to boarding school, where for the first time she experienced running water, electricity, tar roads and the city life. But the family was still poor. After high school, Khumalo joined her mother in Johannesburg, to help clean houses with her.
“I hated every moment of that and I think I was reminded every day that life can’t repeat itself. And every day my mum kept telling me ‘don’t mess this up, take it as an opportunity, because if you mess this up, where do you think we are going to live’?”
After two years of this drudgery, Khumalo headed to town to find a ‘proper’ job. She started out washing hair at a salon. Atleast that provided an entry point to other more glamorous endeavors. She soon found herself doing small modeling jobs and finally, taking part in – and winning – local beauty contests.
“At that moment I thought to myself ‘life can’t get any worse, it can only get better’.” Not long after, she enrolled for the Miss South Africa pageant.
“I didn’t think I had a chance, I met the most amazing young ladies, some well-known, I thought there is no way nobody knows who I am,” says Khumalo.
She was wrong. She made it to the finals and won Miss South Africa that year.
It was a joyous, tearful moment.
“I didn’t even know how to present myself, I just cried and ran on to the stage.” The very next day, she received a call that changed her life.
“The following morning, Doreen Morris [former owner of Miss SA] said to me, ‘Mr Mandela has called and would like to see you for tea at his house’. I thought no way!” President Mandela opened doors she didn’t know existed.
“I got a call from Zelda [his assistant] saying ‘Tata would like to see you’. It was a Sunday, when I got there, he said to me, ‘Sue, we are waiting for our guest’. I thought Tata was trying to marry me off. And in walked Stephen Koseff, the Chief Executive Officer of Investec.”
Mandela persuaded Koseff to send Khumalo to the UK for higher studies., which he did. On completing her studies in finance abroad, Khumalo started her career with Investec as a credit analyst. Today, she sits on the executive board for South African businesses and manages some of the top names in corporate South Africa. From cleaning houses to donning tiaras to running the boardroom, Khumalo couldn’t have asked for more.

The Magic Wand Named Mandela

It’s a multi-billion-dollar business that is struggling, with millions of lives on the line.
The business of food is a major industry in Africa, but the lack of investment is threatening it.
Grain SA expects that South Africa will, this year, need to import about 770,000 tons of maize, its staple.
Speaking at the 6th African Grain Trade Summit in Kigali, Rwanda, Michael Hailu, the Director of the Technical Centre for Agricultural and Rural Cooperation (CTA), said Africa spends at least $25 billion on food imports, according to reports. Nigeria alone ate 5 million tons of rice in 2013, while importing 2 million tons of this. It spends over 350 billion naira ($1.78 billion) a year importing rice.
“To decrease imports, we need to solve the problems we have in the agricultural sector so that the continent can be a bigger agricultural investment option,” says Dennis Matangira, Senior Managing Partner at Databank Agrifund Manager, which invests in African agriculture.
It is risky, according to Matangira, because of poor rainfall, a lack of technology, support and seeds, expensive inputs and uncertainty around land tenure in many countries.
“African agriculture productivity is way behind the rest of the world. Investments in technology and modern farming methods are what made the difference in high productive regions. If Africa has to be food secure, adequate investments will need to be made. It’s not so much about the size of the land, but the productivity of the land under use,” he says.
African entrepreneurs want to solve this problem and make money from it.
Fertilizer companies, like Avison, are taking the bull by the horns. It has created a semi-organic fertilizer in which Databank has invested. According to Matangira, this fertilizer enhances soil fertility.
“Increasing yields from currently utilized land is the only solution for necessary, sustainable, production increases,” he says.
Databank invested in Avison in 2014 and has helped build three fertilizer plants.
“When you apply semi-organic fertiliser, you introduce macro- and micro-nutrient elements to the soil. That gives life back to the soil, making it productive. After years of using 100 percent chemical fertilisers, micro elements are depleted, the soil gets damaged by the fertiliser and yields are reduced. This fertiliser counters that,” he says.
Avison mixes organic material and chemical fertilizer which returns higher yields that Databank claims tripled revenue in 2015.
“If you use purely organic fertilizer, like bird manure or chicken manure, without blending with chemical fertilizer, the yields are not as great. There is less work with this because you only apply it once before planting and there is no need for boosters,” says Matangira.
“We use satellite technology to map the soil and use 13 years of historical data to determine the production capacity of the soil. In conjunction with this we do comprehensive soil classification and soil potential maps. Armed with this information we can pinpoint the specific needs within each hectare. Now we can fairly accurately estimate how much the farm can produce each year. If you know the soil can never produce more than 5 tonnes a hector you won’t fertilise for more and can save time and money.”
Below the empty road to Jasper van der Linden’s farm in Mookgophong, a two hour drive from Johannesburg, lie healthy crops as far as the eye can see. There is a vast field of wheat waving in the wind.
Van der Linden says his farm is an agricultural paradise. He claims his yields have increased by around 40% since he began using Avison’s fertilizer.
“The protein levels in the wheat have also increased. The top grade is 13 percent but now I have it at 15 percent. I grew up on a farm and I have been farming my whole life. I farmed two years in the US and in Sudan and many parts of Africa and I have never seen a combination like this that has such great outcomes,” he says.
“Too many yields are lost in the continent and we need such inventions to improve it. This puts a smile on my face because it means I will make more money than most farmers.”
The World Bank estimates that food production and processing in Africa could generate $1 trillion a year by 2030. All it needs is investment, innovation, rain and canny, hardworking farmers.

Satellites And Sweat Coax Wealth From The Soil

With the range of investment options available for the individual investor, it can be difficult to determine which investment is right for you. With stock markets up one day and down the next, many investors face the dilemma of whether to invest directly in stocks or to use mutual funds as their investment tool. In order to decide which approach best meets your needs, it is important to consider the pros and cons of each.
The solution will vary from person to person, depending on how much risk you are comfortable with, how much money you have to invest, how knowledgeable you are about financial matters and how much time and effort you are willing and able to devote to this task.
Do you have the knowledge, time or inclination to build your portfolio and monitor your investments yourself? Mutual funds are managed by experienced professionals who are well acquainted with the risks and opportunities that come with investing; they will make the day-to-day, buy and sell decisions about which stocks, bonds, or other securities to invest in, thus relieving the investor of that responsibility. As with all investments, mutual funds will not perform to expectations all the time. To have the best chance of success, it is important to select a fund manager with a quality management team and a good track record, but even then, only a few funds will consistently outperform the market.
If you decide to buy stocks on your own, you will have more control over your investing. It is important to make a realistic assessment of your ability to handle that responsibility as you will also have to devote more time and attention to your investments.
You should have a sense of how to analyze a company to be able to arrive at your own independent judgment of its value and how that compares to its current market price. You should certainly be prepared to spend time reviewing your portfolio periodically. The alternative is to manage your own portfolio of individual stocks and bonds. If you do not have the knowledge, experience or inclination then this is may not be a good idea.
Do you have enough money to be able to create a diversified portfolio? How much do you have to invest? Mutual funds offer a clear opportunity for smaller investors who do not have a lot of money to invest.
Mutual funds can reach a wider diversification than can be reached by individual stocks. Dividing up your funds among a few stocks isn’t usually enough to cushion you against a severe market downturn but by pooling several stocks as an equity fund does, the risk of loss in investing is reduced. If one company or sector performs badly, it tends to be balanced by other companies that may be recording better performance.
There are different types of mutual funds to choose from including money market funds, bond funds and equity funds to suit different objectives. It is important to note however, that individual stocks tend to have a greater potential upside than most mutual funds; as with all investing, you trade some risk for greater potential reward.
Mutual funds are considered to be among the most liquid investments. As shares in a mutual fund can be bought and sold any business day, it is easy for investors to have access to their money, as the fund is always available to buy its own shares. When you invest in individual stocks, you have to wait for a broker to find a buyer for your shares; this could take several days or longer particularly if the stock is not widely traded.
The overarching consideration must be to adopt a long-term investment strategy and to ensure that a diversified portfolio is built with clear financial goals and objectives in mind.

Mutual Funds Or Stocks?

Art can pull you in deeply. Expressive and raw, it can be believably real, and not. Just like life, it has a fascination; it shows us that it goes on all the time, in straight lines, or abstract.
For all our over-civilized attitudes toward art, our relationship with it is still primal. We are consumed by its emotional involvement with us, constantly wanting to understand its intuitive physical movement in all that stillness, captured on canvas, paper or stone. No wonder it is known as an ‘investment of passion’.
But art is turning out to be more than an unthinking love affair with the aesthetic. It is a tangible investment, and the numbers do not lie. In 2011, the European Fine Art Foundation estimated the global art market was worth $60 billion, a six-fold increase over the past two decades. In 2012, sales at Christie’s auction house were more than $10 billion, up 10% from 2011. And the Citadel Art Price Index, which looks specifically at the South African art industry finished 2012 on a high, at 12.2%.
True, in the past, art was considered a high-end collectable, available only to extremely wealthy individuals. But thanks to the emerging market, trends are finally changing and art acquisition is far more transparent, less guarded and opaque.
Like most investments, buying art requires thought and consideration – it is not only about what is pleasing to the eye. FORBES WOMAN AFRICA spoke to the CEO of Business and Arts South Africa, Michelle Constant, to get a clearer understanding of what you need to get started.
“Let’s face it. Investing in art is a dual investment – both emotional and
financial. Once you invest, you’re stuck with the work as a long-term investment. So first and foremost you must love it. It’s an incredible relationship, owning but also loving the piece of work you’ve bought,” Constant says.
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<h4>WHERE TO BEGIN</h4>
Art is not that much of an enigma. Sometimes it is best to keep it simple. According to Constant, it is useful to visit “galleries, auctions and art fairs, they are good places to get a feel for art and the type of artwork you might want to buy”.
It is also about being informed; you have to learn how the market operates. Sometimes it is best to take at least a year to wrap your head around the ins and outs of the creative space of the industry, before you set out to choose your first artwork. Most importantly, you need to understand your aesthetic, Constant advises. What kind of art do you like? Do you lean more toward painting, sculpture or print, to name just a few?
“Read art magazines and websites (The SA Artist Magazine or www.arttimes.co.za) to find out about openings,” she explains. If you are inte-rested in learning the basics or the history of art by studying a formal course, there are several on offer in South Africa. A good place to start is probably the online directory: www.art.co.za/training.htm. “A great book to read, which will give you wonderful insight, is Seven Days in the Art World by Sarah Thornton,” Constant suggests.
Once you have a feel for what you want to buy, engage.
“Go to galleries, auctions, talk to curators and collectors, the market’s expert consultants, so that when you buy your first piece, you are competent in the subject matter.” Try to attend the annual FNB Joburg Art Fair in South Africa, or the Affordable Art Fairs, which take place in America, Asia, Europe and the UK.
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<h4>WHAT TO BUY</h4>
“When it’s time to buy, buy according to what you love, because the return on investment is not guaranteed. What is guaranteed is that you’re going to have to wait at least 10 years, so you really should love it,” Constant advises.
“Remember, once you’ve bought your first work you need to grow your knowledge and become informed in your participation. The more you know, the more you like or don’t like, the more astute you will be in your buying.”
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<h4>WHERE TO GET ADVICE</h4>
You are looking for the kind of company that can offer a range of services – from helping you choose your art, to helping you avoid buying fakes, or stolen goods. Remember that even with all the advice that comes your way, there is no guarantee that you will make queenly profits on any work that you acquire.It is best to book an appointment with auction houses.
Some of the most well known in South Africa are:
Stephan Welz &amp; Co. (<a href="http://www.stephanwelzandco.co.za">www.stephanwelzandco.co.za</a>) Strauss &amp; Co. (www.straussart.co.za)
Artinsure (www.artinsure.co.za) Russell Kaplan Auctioneers  (www.rkauctioneers.co.za)
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<h4>HOW BEST TO INVEST</h4>
Consortiums, an art fund, or as a lone buyer? “As far as I know, there are no real art funds active in South Africa, so you would have to invest in one primarily in the UK or North Ame-rica. The problem with art funds is that they’re set up like private equity funds… but that doesn’t align with the 10-year plan. Their track record is apparently not that brilliant, in general. There are successful consortiums in South Africa. It’s a bit like a ‘stokvel’ (rotating credit unions) and it also provides excellent opportunity for emerging buyers. Importantly, though, all the individuals in the consortium must have the same long-term view.
“For me, lone ownership has been the best way to go. It has meant I can go out and buy smaller works and build my collection. It’s a much more personal process and ties into the concept of a dual investment – emotional and financial,” Constant says.
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<h4>HIDDEN COSTS</h4>
“If you buy from a gallery they will be sharing 40 to 50 percent of the sales price. The work then takes a long time to sell at that or a higher price in the secondary market (auctions, etc). In essence, you need to account for dealer costs, maintenance costs – such as archival and framing – insurance and security. This is why you need at least 10 years. In that time your artist is also building his or her brand, thus growing the value.”
Keep in mind that your artwork must remain in perfect condition. Many experts will advise you to rent proper storage facilities. South Africa is not known for major natural disasters such as earthquakes, tornados or floods, but if your pieces are stored under suitable conditions, they will not deteriorate.
For those storing art at home and on the wall, specialist insurance is key. Barrington Insurance Brokers in Johannesburg is a good place to start:
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<h4>HOW LONG TO HOLD ON</h4>
“A common argument is that for contemporary art you hold on for 10 to 12 years, whilst with modernist art  (a Pierneef or an Irma Stern) it’s around five to seven years. My personal opinion? If you love the work you hold on forever.”

Investing: The New Art Form

It’s no secret that the Empire State’s inimitable energy, relentless pace and pulsating drive have led to the creation of some of America’s (and indeed the world’s) most famous and enduring commercial and cultural institutions.
This dynamism coupled with an effervescent melting pot of people of diverse nationalities and ethnicities has also given rise to a newer trend—an African one. In the past few years, the New York eye on Africa has gone from strength to strength, resulting in what we have today: a veritable community of business leaders—some African, some not—who are using New York as a base for building, showcasing and investing in African ventures and opportunities.
Not long ago, doing business in Africa was the preserve of die-hard Afrophiles in New York. Most New Yorkers had little interest in or connection to Africa; on the contrary they stayed away, discouraged by media depictions of Africa’s various crises. In 2013, this has changed dramatically as the metropolis has become the de-facto hub for much Africa-related activity on this side of the United States (US).
A slew of successful investment firms, PR agencies, fashion companies, media houses and various other businesses now operate out of the city, having laid firm foundations in recent years, all culminating in what appears to be a New York-based Africa boom.
A growing number of people, both African and non-African, are opening and investing in businesses and business-related activities focused on the continent. These people wish to deepen and strengthen the relationship between Africa and the US from their New York City bases. They are positive that they can take
Africa by storm. And, they are doing it. In fact, a New York location allows them to take advantage of the constant comings and goings of international colleagues and clients, who may be easier to access in the US than when further afield, while technology allows them to stay in constant communication with Africa.
You can see the shift by looking at the media’s portrayal of Africa. Major news outlets such as The New York Times and The Daily Beast are now willing to extol Africa’s virtues, while towards the end of last year, The Daily Beast’s editor-in-chief, Tina Brown, hosted an invitation-only breakfast panel to discuss ‘Africa’s burgeoning media sector’.
You also know that change is underway when Google’s chairman Eric Schmidt returns from a trip to Africa and pens a thoughtful blog post, in which he describes Rwanda as a ‘jewel’ and admits his surprise that Nigerians are entrepreneurial, stylish and educated in addition to laying out some of the major opportunities that he has seen for Google’s growth on the continent.
International PR agent Claudine Moore, a British expat who is based in New York and spends a good proportion of her time working on African projects, counts the Nigerian airline Arik Air as one of her clients. She uses her British, American and African connections to advance business on both sides of the world. She is currently gearing up to present the first Social Media Week in Lagos (the first to be held on the continent) in February.
They say that art imitates life, and the city’s art world has not been shy in its current embrace of Africa. Currently showing at the Walther Collection is ‘Distance and Desire’ an exhibition of contemporary African art and photography. The Walther Collection is extraordinary in that it is owned by Artur Walther, a German man who has one of the largest collections of contemporary African art in the world.
Africa Fashion Week, which has become a regular feature of the global fashion week circuit, will return to New York once again this summer.
ARISE media group has also just announced the launch of a new Africa-focused 24-hour global news channel. Guess where its first US-based hub is? New York City of course.
New York finance firms have also been encouraged by President Barack Obama’s open desire to encourage US businesses to invest more heavily in Africa and are looking forward to attending the Africa investor summit later in the year which will once again bring together over 250 investors from around the world at the New York Stock Exchange.   FL
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<h2>The city of dreams</h2>
<h5>By Farai Gundan</h5>
From Wall Street, Tribeca, SoHo, Harlem, Brooklyn, Queens and the rest of the boroughs that make up the 8.2 million-resident metropolitan city, Africans are quietly but steadfastly building their empires and pursuing their diasporan dreams.
Charles Dickens famously wrote, “It was the best of times, it was the worst of times,” and indeed it is the best of times for Africans in the United States. Particularly in New York, a global city, where the residents are constantly in an empire state of mind. This is not surprising given that New York yields tremendous influence in fashion, finance, technology, art, film and media, and music and entertainment. International organization, the United Nations, is headquartered in the Turtle Bay neighborhood of Manhattan overlooking the East River making the mega-city an epicenter for international diplomacy.
Navigating around New York City on the subways, buses or yellow cabs; Africans in New York typically use HopStop, an app that provides optimal directions and was founded and developed by Nigerian-born tech entrepreneur, Chinedu Echeruo.
Africans can also experience home cooking right in New York. From the renowned Africa Kine, a restaurant that serves West African cuisine in Le Petit Senegal, a neighborhood of Harlem, to the popular Madiba, a South African eatery in Fort Greene, Brooklyn, or Buka’s, an authentic Nigerian restaurant and bar in Clinton Hill, Brooklyn.
From the electrifying musical performances of D’Banj, Lira and Oliver Mtukudzi during the summer months and the fireside readings of authors Chimamanda Ngozi Adichie and NoViolet Bulawayo to Nollywood movie premieres, colorful traditional weddings, baby showers, graduations and family celebrations, Africans always find a reason to gather in New York. We celebrate our entertainers at the Nigerian Entertainment Awards, our African models walk the runways and fashion designers show off their talent during Mercedes Benz Fashion Week. You find Africans working diligently in corporate America on Wall Street, choreographing hit musicals on Broadway or being cast in the popular play, Lion King.
Like the rest of my fellow Africans who left their beloved countries for greener pastures, I came to the United States fresh out of high school to pursue my tertiary education. I had two options: the United States of America or Japan. The United States offered a generous scholarship to a private liberal arts college in the mid-western state of Wisconsin. I was so determined and focused that I graduated in three years instead of the usual four. I also worked full time to financially support my mother and younger sister who were still in Zimbabwe at the time. Never easy but an “African girl’s gotta do what an African girl’s gotta do”. Fast forward to my graduation, my family stood proudly on the well-manicured lawn at college congratulating me on obtaining a Bachelor’s Degree: a first in my family.
Of course, I had my eyes on even higher goals—a joint law degree and M.B.A. But law school is expensive, so I opted for the M.B.A with the goal of one day returning to get my law degree. That day is still to come. I attended Florida Agricultural and Mechanical University, a historically black university, where I learnt about the works of W.E.B DuBois, Langston Hughes, and other great black men and women. Graduate school was a turning point for me. I embraced my culture and realized who I am as an African woman. I even went natural with my hair, sporting a short Afro. It was the beginnings of a coming of age of an African girl.
I received great training in corporate America, however, after a defining moment with Oprah Winfrey, I left to pursue a career in media. From covering red carpets to the fashion runways and everything in between, I have been able to travel across the United States. Yet New York remains the place that can turn an African girl with dreams of being a media mogul into reality.   FL
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newyork-city-with-flags_Audrey-Anderson

I’m an african in new york

In an allusion to the disruptive impact of the internet on business, former American senator John Sununu said: “Not since the steam engine has any invention disrupted business models like the internet.” 
The internet has spawned new industries and has changed the nature of human interaction. Digital marketing pervades the internet; all of its users are potential targets of online marketing campaigns. It offers more return on investment on marketing spend, with positive implications for corporate profitability and growth. 
Since the dotcom bubble, firms provide marketing services online, with email marketing and search engine optimization constituting the earliest forms of digital marketing. With time, these services have come to include: affiliate marketing; display advertising; search marketing; and social media platforms. 
In the United States, companies allocate sizeable portions of their marketing budgets to digital marketing activities. Technology research firm Gartner, reports in its 2013 US Digital Market Spending Report that $25 million was spent on digital marketing for every $1 billion in revenue. It claims that mobile marketing, commerce experiences, social marketing and content creation are top priority digital marketing investments for large companies in 2013. 
In Nigeria, digital marketing is on the rise. Companies seek to take advantage of the growing online population, which is estimated at more than 45 million, according to the International Telecommunications Union (ITU). Events in the Nigerian online space reflect this growth, while pointing to prospects for online marketing and the way companies carry out business. 
The vast number of internet users means that companies can leverage the intenet to execute more effective marketing campaigns that reach larger audiences than conventional mediums. Social marketing—such as Facebook and Twitter—allows for targeted marketing to demographics whose population sizes are known or can be determined. More Nigerian companies are placing advertisements online, especially on heavy traffic websites. 
Advertising firms are establishing digital marketing units, alongside specialized digital marketing agencies. One such agency is House of Kaizen, created by a merger between US-based Net X and UK-based Web Liquid. The firm’s managing director, Dayo Elegbe, previously worked with companies such as Ericsson and News International, in the United Kingdom, to execute digital marketing strategies. He observes that the growth in digital marketing in Nigeria has been impressive. 
“Quarter one last year, when you looked at the mobile internet traffic off Inmobia’s ad network, we [Nigeria] were on something like 1.6 billion impressions, while South Africa was doing 2.1 billion impressions. By the third quarter, we were on 4 billion impressions and we are still growing. So, we went from being, literally, the second largest mobile advertising internet market in Africa, to the largest in two quarters, and we are still growing.” 
Elegbe adds that the potential for further growth is underscored by consumers’ attraction to digital technologies. 
“The thing that really stands out for me is the excitement that people still have about digital. I’m not just talking about practitioners here; I’m talking about people in general. The excitement that people display when they see new forms of advertising online—and we know this based on the comments that they give or the level that they interact with it—I still think it’s way above anywhere else in the world that I have experienced. That, to me, is good because it means our population is still highly engaged and responsive [to] the medium.” 
Similarly, the marketing manager of OLX Nigeria, Adeyemi Okanlawon, notes that digital marketing can measure the effectiveness of campaigns, unlike traditional marketing approaches. 
“Businesses, especially SMEs, have found that digital marketing works because you can track leads and monitor campaigns with tools that are available online. With traditional marketing, you can’t track as much; especially in a country where data is very hard to find, this is invaluable for smaller companies, some of which don’t have marketing budgets.” 
Consequently, there are positive implications for the growth of local businesses as a result of digital marketing. As more Nigerian companies embrace digital and subsequently allocate more resources to online marketing, to the detriment of traditional methods, a new vista of opportunities will be created as the industry takes shape.

HOW THE INTERNET CAN MAKE YOU MONEY

It was a hot summer’s day, just after midday in November 2003. John Field was sitting at his office in the wealthy suburb of Sandton, South Africa, when the phone rang.
“The Scorpions are coming!” said a colleague from Investec.
The Scorpions were the country’s feared anti-corruption investigative unit, now known as the Hawks. The word was that the Scorpions were coming not only to raid his company, FedGroup Holdings, but to close its doors.
The Scorpions never came, but it triggered years of turmoil. They left FedGroup to the Financial Services Board (FSB)—the regulator for the financial service industry.
“It was four years, but that first day was terrible. It’s hard to actually put it into words,” says Field.
The writing had been on the wall a week before. Field had received a letter from FSB saying it had found irregularities in his participation bond company, FedBond—a subsidiary of FedGroup Holdings, a family-owned investment and trust company.
If the Scorpions or FSB closed down FedGroup, Field would lose everything he had built since 1990. He founded the company; a participation bond company, FedBond and later FedTrust, which dealt in trusts, wills and estates. His investors, including around 10,000 pensioners, stood to lose everything.
It was a sorry chapter in a company Field had been working towards since 1984. In that year, he applied for a participation bond license from FSB, but it took six years, longer than he had expected. In 1989, Field bought the smallest participation bond scheme in the country at the time, Haley’s Trust—later renamed FedBond—for R100,000 ($39,000). It was the simplest way he could get a license to manage his own company. He registered the bonds at R340,000 ($133,700) and grew the investment to R1.6 billion ($271.6 million) in 10 years, to become the largest participation bond scheme in the country. A participation bond provides investors with the certainty of capital preservation, coupled with the consistency on interest.
All was going well until the letter from FSB stated that the company should stop receiving new investments. The inspectors from FSB said the company appeared to be cash-strapped and that the scheme did not qualify as a participation mortgage bond scheme.
A few days later, Field and members of his board were summoned for a meeting at FSB’s offices. The FSB registrar told them that, based on a report by inspectors, FedBond was terminally ill and declining in financial soundness. This was mainly because the properties bonded by the scheme were unsound or not generating sufficient income to be able to pay participants their interest and capital payments. FSB said FedBond had a net shortfall of R4.3 million ($584,200) in August 2003. The registrar concluded what the team dreaded: that FSB would apply for curatorship. This is a way of guiding an ailing company back to health, under the stewardship of a new management team.
“To this day I cannot understand what the rationale was to try to close us down. It just did not make sense,” says Field.
Prior to its court appeal in support for curatorship, the FSB had called Field to take over management of around three poorly run participation bond schemes. In every case, not a single investor lost any capital and all continued to receive monthly interest on their investment.
While Field was trying to grapple with how to handle the situation, Investec made an offer to FSB to purchase FedBond out of curatorship.
On December 3, 2003, FedBond was informed of a court application for curatorship. Not knowing his fate, Field withdrew R250,000 ($39,500) from his account to give to his wife and four sons, while preparing for the worst and the possibility of arrest.
The court turned down FSB’s urgent application for curatorship. Field’s lawyer told him that they had agreed on a joint management agreement, whereby a monitor would be appointed to oversee the operations of the company. The judge wanted to give FSB time to prove its claims, by postponing court proceeding to January 2004.
These court proceedings were then postponed to February, when a monitor was appointed. The monitor would  look for any reason FedBond should be out of business.
In June 2004, the monitor submitted his first report to the court. It was positive. He recommended that the company be allowed to make capital repayments to its participants. Following this, the FSB registrar submitted an affidavit saying the company would not be able to cope financially and that it should remain under curatorship. The court extended the monitorship to January 2005. The agony for the company would continue, but Field refused to go down without a fight.
January came around, when Field worked on an affidavit with his legal team to apply for dismissal of FSB’s application for curatorship, because he believed there was no good reason for it. Having heard counsel from both parties and read documents submitted, the judge agreed to postpone the application again, to June 2005.
To make matters worse, Investec applied to join FSB’s application for curatorship of FedBond, claiming that it had a R344 million ($60.5 million) stake in Field’s company. When Investec bought out Fedsure, FedBond was one of the subsidiaries, of which Field was sole shareholder. Field had pre-emptive rights to the FedBond shares and Investec reluctantly parted with them. As part of the deal, Investec left the R344 million ($60.5 million) in FedBond as bridging finance to serve as security for non-performing bonds. Field maintained that the funds were never part of the scheme. Investec now claimed it was a participant and should therefore be secured and ranked equally with all the other participants in the scheme.
During the same period, Field became aware that confidential information relating to the company’s business was doing the rounds in the financial sector. A private investigator was called to scan their offices for surveillance equipment. A bugging device was found in Field’s office. He couldn’t find the culprit and had to be careful about what he said in the office.
Following months of negotiations with Investec, a deal was reached in July 2005. Field gave up R150 million ($21.8 million) to Investec. They agreed that it was the end of the bridging finance and also agreed to withdraw their request for FedBond to go under curatorship.
Investec was off his back, the remaining challenge was to get rid of FSB’s application for curatorship.
After numerous bad days, it wasn’t becoming any easier. At every court appearance there seemed to be a postponement. While Field was fighting FSB, his business was suffering. He attended another court hearing in October 2005, but judgment was reserved until December 2005. FSB’s application was dismissed.
Early in 2006, Field’s lawyers requested permission for FedBond to take in new investments from the public, but FSB refused. Without the funds, Field would not be able to make capital repayments.
Following a meeting with Field and FSB, a new monitor was appointed in November of the same year. He would do the same job as his predecessor. The back and forth between FSB and FedBdond would continue for nearly four years, meanwhile FedBond was losing money and clients. Of the 15,000 FedBond participants, 12,000 remained. Around R70 million ($9.3 million) was paid out to those who left.
“We had people ask us for their money. We repaid them and then a week or a month later they put the money back into the scheme. They just wanted to know if we had sufficient money to do that capital repayment. And we did. Every single cent,” says Field.
By June 2007, the company was still unable to accept new funds. Field approached FSB, but without success. Two months later, two weeks before an appearance at the Supreme Court, where an appeal was to be heard, FSB requested a meeting with Field.
FSB was thinking of withdrawing the appeal. It was reported in newspapers that the minister of finance intervened, because it was not in FSB’s interest to continue depleting their budget indefinitely in the pursuit of an application for curatorship that was going nowhere.
Once the dust settled, three months later, FSB granted FedBond permission to take in new funds and continue its activities. Though, it was not easy for Field to kick start the company. By the end of October 2007, after four years, seven court hearings and court appeals, his company had lost around R400 million ($57.8 million) worth of investments. The company’s reputation was damaged, but Field and his team worked hard to win back trust and survive.

Tag: Investment

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