Carlo Van Wageningen’s working space is not his private office on the fringes of Nairobi , nice though it is, but rather a narrow corridor running between two high-range mountains near Kenya’s border with Sudan and Ethiopia.
The 250km corridor, along Lake Turkana and cutting through Kuala and Nyiru mountains, enjoys gusts of wind all-year round. It has a stunning 24,000 acre geography that lends itself to the newest obsession of generating wind power. Wageningen, the chairman of Lake Turkana Wind Power (LTWP), finds the space and wind quite inspirational, and has turned them into his working station for seven years.
“A good wind resource is tantamount to an oil discovery,” he says, clearly a euphemism for the lucrative nature of green and cheap energy in era of expensive oil. “It’s good to look for oil, but it’s even better to exploit the wind.”
LTWP, the company he founded seven years ago, will begin construction of 365 turbines in June in this arid region. The wind farm is valued at $775 million and is expected to produce 300 megawatts (MW) of power to be fed into Kenya’s national grid.
This will be Africa’s largest wind farm, dwarfing Morocco’s $300 million plant, with a capacity of 140 MW generated from 165 turbines. Wageningen says the wind farm is expected to begin producing power in 2014 at a threshold capacity of 50 MW, reaching its full capacity of 300 MW in 2015.
Like many great businesses today, the wind farm idea was mooted in the most unlikely way. In 2004, Wageningen and his Dutch entrepreneur friend, Vuillem Dollem, who had cut his teeth in agribusiness, were drinking coffee, from enamel cups, at a Nairobi café when wind became a topic.
“Dollem used to do sport fishing,” recalls Wageningen. “He was baffled by the amount of wind he was met with during his expeditions.”
Dollem had always been a fan of wind energy, if you will pardon the expression. In those days, oil prices were cheap at $20-a-barrel and wind technology was still rudimentary. Motivation for cheaper alternative energy was sparse.
In 2004, when prices rose, hitting $50-a-barrel in 2005, Wageningen started looking at the wind opportunity seriously. So, he got his two investment partners, Christopher Staubo and John Mwangi, to buy into the idea and soon they were six.
“I had little knowledge in wind but simply sensed it was a very good time to do it. I brought in partners and other entrepreneurs from Netherlands who were mature in wind energy,” he says.
Most of the partners liked what they saw. Lake Turkana was an impressive site with vast space and few people.
“We knew from an environmental point of view it would be easy,” he says.
Wageningen and his partners guarded jealously the project lest it be taken up by other cash-flush investors. For two years they did feasibility studies.
Then the dream turned nightmare.
The new company faced logistics challenges. Turkana is an investor’s version of hell on earth. For starters, it’s a semi-arid region and with no physical infrastructure–no roads, power or even water.
“It became clear that we would have to go large and spend really good money on constructing power lines&#8230; and roads to transport materials and turbines.”
Despite these costly troubles, there was one consolation: the wind was ideal for power production. It rates better than US and European wind farms.
The wind blows in off the Indian Ocean as a low-level jet and hits the Ethiopian islands. The thrust diverts part of it to the Far East, creating monsoons, the rest is attracted by the low pressure in the Sahara desert to blow through the Turkana corridor towards Sudan.
“When it hits the two mountains it’s compressed and creates a venturi effect that accelerates the wind. There’s no such phenomenon anywhere else in the world,” says Wageningen
The wind project proved a hard sell to Kenyan investors and private equity firms. “We approached a number of local investor groups who basically said, ‘Thank you very much, but no thank you,’” Wageningen recalls.
His first overseas stop was the Netherlands. The project needed lots of funds initially—around €5.5 million ($6.8 million)—for a comprehensive feasibility venture. They got €4 million ($4.9 million), thanks to two prominent Dutch wind investors who convinced others to invest in the Kenyan project. The initial investors raised the difference.
“As entrepreneurs we said we will not be scared because of the cost. We are looking at 300 MW and a yield of 50% to 65% of installed capacity. In the US on-shore wind farms average 26-27% yield, meaning for every one megawatt of wind power installed the actual power per year is 270KW. In our case we’ll get 500-600KW,” says Wageningen.
The company expects to reach a financial close for the project as soon as the World Bank gives guarantees to investors. The wind farm is financed 70% debt and 30% equity. The African Development Bank is arranging loans to cover 70% of the project cost, with the remaining 30% from private investment funds and co-developers.
Seven years later, €17 million ($21.2 million) has been spent for no energy. By the time of financial close, Wageningen reckons they would have cast €23 million ($28.7 million) to the wind.
This kind of investment is for those with a long-term view. It will take 12 years for the wind farm to break even though Wageningen says there will be a dividend payout to investors in between.
“This is normal for projects of this size if you consider that the six founding fathers of this project have been working for six years. It is a deferred salary, and we hope to get it one day. The passion has been more important than the money. To do something like this as a first case, we feel proud. We are driven a lot more by dedication; of course the money will be very welcome.”
On completion, the power generated from the wind farm will form 17% of total installed capacity in Kenya. Together with geothermal, the new sources of power by 2015/16 will represent at least 40% of power pool/mix and could halve tariffs.
Managing such a huge project is no walk in the park. Wageningen says he works with a construction management plan that identifies the various interfaces.
“Once construction starts, we know what starts and what follows. You need prudent management to ensure each one of these contractors works and meets targets.”
Wageningen, who holds a high school diploma and a number of specialized courses in personnel and project management, says success in business is about thinking big and outside the box.
“It’s about experience. I have been so diversified. And I don’t work alone. I have strong teams,” he says.
Wageningen has always been a trouble shooter, after the experience he gained working for the United Nations. He worked for Food and Agriculture Organization (FAO) for 12 years in Rome, Niger, Benin and then Zimbabwe until 1988 when he joined Fata European Group, an Italian engineering company, in Kenya.
Five years later, the parent company collapsed, but he decided to stay on in Kenya and went into entrepreneurship.
“I have had a number of businesses,” he says. “Some have been successful while others have failed. You can’t win them all.”
His first venture was Sally Days, a furniture maker, in 1993, which he exited after selling his stake to the local partner and went into technology.
“I have always liked innovation. Even with furniture we were doing it in a different way. We started garden furniture made of wood. Those days you’d only see metal furniture not even plastic and even shelter umbrellas were metal. That always bewildered me. Kenya was rich in wood and cotton, and we found a way to use it,” he says.
It turns out Wageningen is the serial entrepreneur who sets up businesses and sells. “I like seeing success and going for something new. That excites me,” he says.
Wageningen was the first to bring plastic cards, like credit cards, to Kenya. He sold the businesses when it had 70% market share, and went into telecommunications as a franchisee for Global Star in 22 African countries. But the US parent company collapsed and left him high and dry. In 1996/7 he invested in a small bank in Nairobi and today Chase Bank is a big player in the financial services industry.
“I’m not sure. Maybe when this wind farm is up and running something exciting may just come up,” he says.
Lake Turkana Wind Power has opened a whole new investment world for Wageningen and Kenya as a country. He is looking at expanding the project, technology allowing, to 2,000 MW. Before he came in there were only a handful of turbines in the country. Now there are at least a dozen projects awaiting approval. The government is developing a comprehensive wind atlas to attract more investors.It is very predictable wind, but the investor had to measure and observe its trends for close to six years–just to be sure.
“The wind pattern is predictable. We know when power will go down and maximum production, and so we can inform the power distributor in advance. We have no turbulence, something that turbines don’t like–gusts of wind at 29m/s, like a hair drier.”
In Europe wind can drop in 10 minutes by 50% , and if providers are not prepared you suddenly get blackouts. Lake Turkana Wind Power has entered into a contract to sell power to Kenya Power at a cost of less than $.10 per kilowatt hour, making it Kenya’s cheapest energy source, next to geothermal energy.
A 428-kilometer transmission line will also be built to link the wind farm to the national grid at an additional cost of $188 million. For a world slowly turning to wind power after being let down by hydro-electricity, gusts of high-speed winds have become a precious resource.

Casting Money To The Wind

On a small street off Tubman Boulevard, the main thoroughfare in Monrovia, five red and white umbrellas shade stalls tended by five young men, all of them university students. In between classes, they sell mobile phone scratch cards and exchange grubby Liberian and US dollars. One of the students, 27-year-old Lorenzo Garmonyou, wakes up at 6am every morning and retires at around 1am in a cramped room he shares with his five brothers who also toil on the same corner.
Garmonyou is an economics student at the African Methodist Episcopal University. Like many young Liberians whose education was delayed during Liberia’s long and brutal civil war that ended eight years ago, he is struggling to put himself through school. From his small earnings he puts aside $2 a day to pay for his tuition and keeps a dollar to live on. Garmonyou is uncertain about the future in a nation whose economy is yet to create jobs for the few Liberians who are trained and educated.
Many unemployed graduates like Emmett Chea, a 24-year-old with an economics degree, complain that a culture of “nepotism” makes it difficult for qualified graduates to attain experience and jobs. He says they are yet to really feel the benefits of the billions of dollars of investment that came into Liberia during President Ellen Johnson Sirleaf’s first term. Analysts and government officials say that while there is a lot of work ahead to make Liberia’s economy one that benefits ordinary Liberians, the future still looks positive for Africa’s first republic.
Since Sirleaf’s election victory in 2006, Liberia has been relieved of its $4.6 billion debt by the International Monetary Fund (IMF) under the debt waiver of the Heavily Indebted Poor Countries Initiative (HIPCI). The country has drawn close to $19 billion in investment mainly in the form of mining, agricultural and oil concession agreements, from major companies such as ArcelorMittal, BHP Billiton, Union Sime Darby and oil majors like Total and Chevron.
With single digit inflation, a projected economic growth rate of 9.4% for 2012, up from last year’s 6.9%, there is an upward trend. All the more remarkable, so soon after a war that saw Liberia suffer one of the severest economic collapses recorded by any nation.
Despite this significant economic growth, Liberia remains among the poorest countries in the world, according to the United Nations Human Development Index. This is underscored by the extremely low rate of employment: only 15% of workers are employed formally and 79% of those employed are without a steady income, according to the Ministry of Labor. With 70% of the population below the age of 30, youth unemployment is regarded as one of the biggest threats to Liberia’s future.
In the wake of last year’s tense election, Sirleaf, now into her second term, acknowledged the need to create jobs and development.
In her annual address to the 53rd Legislature, she asked:
“How, then, do we transform our old economy from a plantation or concessionaire economy perceived to run for the benefit of a few, to a modern, inclusive economy?”
This big question is one that alludes to the difficulties of the past. Liberia’s 14-year civil war killed 250,000 and left the nation’s infrastructure in ruins. It drew into sharp focus the role economic disparities play in fomenting conflict.
Critics of Sirleaf’s government emphasize that income distribution has remained virtually the same since Liberia’s Poverty Reduction Strategy was introduced in 2008, with recent World Bank figures showing three out of four Liberians are still living below the poverty line. While there have been reports of a growing middle class in Africa—a recent report by the African Development Bank estimated that 4.8% of Liberia’s population can be considered middle class—this is the lowest percentage on the continent. The government is currently undertaking a project called Liberia Rising 2030, to replace the Poverty Reduction Strategy, with the goal of making Liberia a middle-income country over the next 18 years.
Liberia’s economy has been plagued by inequality since the nation was founded by freed American slaves in 1822, known as Americo-Liberians, who returned to Africa to create a new land of Liberty. Instead they ended up subjugating the native population and subjecting them to forced labor on plantations. Under the leadership of President Winston V.S. Tubman during the 1950s, Liberia had the highest economic growth rate in the world through its exports of iron ore, rubber, coffee and cocoa; yet it also had an extremely high poverty rate.
Liberia’s rapid economic growth and lack of national development led Robert Clower to publish an economic study on Liberia titled Growth Without Development that is now a seminal text in the study of post-colonial third world economies. During this time, growth merely benefited the few Americo-Liberians living in major cities such as Monrovia and excluded the rest. Yet even today, Liberia’s recent infrastructural restoration and development—electricity, paved roads, hospitals and running water—can be seen mostly in the seaside capital, Monrovia.
“Liberia traditionally has been a concession-based economy,” says Chairman of the Liberian National Investment Commission (NIC) Natty B. Davis.
“It’s an economy that produces what it doesn’t consume and consumes what it doesn’t produce to a certain extent.”
Davis says that granting major concessions to multinationals is to fuel economic growth to help reconstruct the country’s shattered infrastructure.
The civil war destroyed an estimated 75% of Liberia’s infrastructure, and left behind a generation of lost youths with little education. The war saw the end of the Mount Coffee Hydroelectric Dam, Liberia’s only source of electricity, which looters later stripped. The Liberian Electricity Commission started running again in 2010, but uses costly giant diesel-powered generators and charges 54 cents per kWh: the highest rate in Africa and among the highest in the world. Next month, with the backing of European partners the government will begin a four-year project to restore the dam to pre-war status that will cost an estimated $180 million.
Matt Jones is the director of a USAID-sponsored project called the Sustainable Marketplace Initiative. It works alongside the NIC and focuses on creating entrepreneurs in post-conflict countries. Jones says that energy is key to diversifying Liberia’s economy and creating opportunities for local businesses.
<div id="attachment_873" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-873" class="size-large wp-image-873" src="/wp-content/uploads/2017/04/9-1024x683.jpg" alt="" width="474" height="316" />Ebeneezer T. Williams, 34, a university graduate and young entrepreneur who owns a profitable small printing business in downtown Monrovia, faces problems because of lack of electricity</div>
“It would be so much easier and cheaper to start a business here if you had access to electricity. People often rarely break even because their fuel bills are so extraordinary,” he says.
Jones argues that the major concessionaries will not necessarily create the jobs needed to cure Liberia’s unemployment problem, but will yield opportunity.
“Right now is a golden opportunity for Liberia. All of these big multinational companies are coming in and these local businesses have the biggest opportunity they have probably ever had to get contracts. These international organizations are actually very willing to talk to these businesses, work with them, try and get contracts with them, but they are still not going to bend on their standards,” says Jones.
Vaanii Baker, Program Officer for Investment Climate with the International Finance Corporation (IFC), says it is essential that Liberian businesses find a way to link up.
“If the country cannot figure out how to plug those small and medium enterprises (SMEs) into the growth that’s happening with the large concessions, they’re not going to realize the job growth that’s desperately needed in Liberia. The job growth is more than an economic issue in this country. With our recent history, I think it is more of a security issue as well,” says Baker.
Jones and those in government hope that increased levels of foreign investment will help fuel the rise of an entrepreneurial culture in Liberia, and in turn, economic growth. He sees signs of a more stable business climate emerging.
“The post-conflict situation has also played a role in this [lack of an entrepreneurial culture],” says Jones. “I think that people didn’t really have the opportunity to be an entrepreneur even if they wanted to and I think that people here are starting off on a basic level. But I believe that every single month and year after the conflict is just that much more positive for entrepreneurs and the commercial sector.”
<div id="attachment_875" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-875" class="size-large wp-image-875" src="/wp-content/uploads/2017/04/3-1024x698.jpg" alt="" width="474" height="323" />Students gather on the University of Liberia campus. University graduates are faced with a high rate of unemployment in Liberia</div>
Chid Liberty is a successful Liberian entrepreneur who co-founded a garment business called Liberty and Justice that exports its products to the States. He argues that entrepreneurship has a fundamentally important role to play in addressing poverty and rebuilding Liberia’s economy. Liberty’s father was the former ambassador to Germany under Samuel Doe, remembered by many as a brutal dictator. During the 1980s, Liberty and his family went into exile, but he returned to set up a business. The business employs 250 women in Liberia and Ghana, and is looking to expand. He says in order to meet his current demand, he would need to employ 2,500 workers.
“One of the core reasons we started our company is because we thought that what every developed economy has done so well is started really large industries that employ masses of people with low skills and education. There is no way that we are going to send all of these people back to university to get degrees to become journalists—give that up; the farm and the factory are the two places I think we need to place this lost generation of people,” he says.
Liberty says that Liberia needs to create an entrepreneurial class to generate jobs and bridge the deep economic divide in Liberia.
“Income inequality and people not having jobs are the biggest threats to Liberia’s security and all of our livelihoods.”
Building this class has become a focus for the Ministry of Commerce and Industry. Last year, the ministry officially launched its first micro, small and medium enterprises (MSMEs) policy called “Poverty Alleviation and Wealth Creation through Small Enterprise and Development” and is working with the NIC and its NGO partners to help entrepreneurs get their businesses off the ground.
Yuri Sobolev, the resident representative of the IMF, says that creating value-adding industries is the way forward for Liberia.
“Only the formal sector can create gainful employment opportunities, and value addition is the only way employment is going to be generated. For that you need better infrastructure,” says Sobolev.
“The government needs to create and enable environment [for the growth of businesses], physical infrastructure such as roads and electricity, to strengthen the rule of law with regard to business, contract enforcement and property rights.”
The government has made efforts to improve the business climate. With the help of the IFC it has set up a Business Reform Committee, with five committees focused on areas of the business environment that need to be reformed: electricity, finance, tax rates and procedures, customs and corruption. Liberia is also expected to connect to the Africa Coast to Europe (ACE) undersea cable system in October, which will bring its slow internet speeds up.
“While Liberia has many challenges ahead of it,” Baker says, “there is no reason it cannot become a middle-income country by 2030 and rival the booming economies of its West African neighbors.
“There is awesome potential for Liberia—it’s limitless. We’ve seen the development Ghana has had over the last few years… Within the next 10 years, if the government does the right things and puts in the right infrastructure, both soft and hard, in place, there is no reason why this country cannot surpass Ghana in terms of economic development and growth.”
Clair MacDougall is a journalist currently based in Monrovia, Liberia.
<div id="attachment_874" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-874" class="size-large wp-image-874" src="/wp-content/uploads/2017/04/Monrovia_1-1024x683.jpg" alt="" width="474" height="316" />Monrovia, Liberia</div>
<h3>Liberia’s Gold Rush</h3>
In Sinoe County, in south-eastern Liberia, a handful of companies are
exploring land which is known to have large gold deposits; but which, due to the 14-year civil war, has remained untouched except by artisanal miners. The exploration area falls within the Biriman Craton, which holds gold and diamond deposits and extends through Ghana, Côte d’Ivoire, Guinea, Liberia, Mali and Burkina Faso. While exploration is in its early stages, companies believe they could strike upon larger deposits in coming years. 
“We believe the gold potential here is enormous—just look at other countries that fall in the Biriman Craton. Our target is to be mining by the end of 2015,” says Tim Illingworth, manager of Hummingbird Resources, a company operating in the region. 
Hummingbird Resources was founded in November 2005 and was listed on AIM in December 2010, raising $40 million. Hummingbird has a land package of 7,000km2 in Liberia and has currently only explored around 1% of that. The company reported finding 1.765m oz gold in September 2011, which they say dramatically increased on February 1 after a find of 2.052m oz, bringing the current total up to 3.817m oz. The company, founded by Dan Betts, claims it has made the largest gold discovery in Western Africa in the last year. Hummingbird currently holds a three-year exploration license and is in the process of negotiating a 25-year mineral development agreement with the government.

Liberia:  It Could Be Awesome But…

It’s no secret that South Africa, the biggest and most power-rich country in Africa, faces an energy crisis. It has left the country’s growing industry and mining sector lagging. Government says the 485 tcf (trillion cubic feet) shale gas reserve, could be an answer.
Hydraulic fracturing, also known as fracking, involves horizontal drilling to create fissures. The insertion of pressurized water, sand and fracking fluids release the gas. The tight-rock shale gas reserve is compared to extracting small pockets of gas from cement. Conventional fracking requires a high volume of water, up to 20 million liters per well. The process is heavily criticized for its potential environmental damage such as water usage and contamination; the pollution resulting from the production process and spoiling the biodiversity and aesthetics of the Karoo—a vast, largely untouched, landscape just to the north of Cape Town.
“The focus has been on the bad things, but there are many good things,” says Rob Jeffrey, managing director of Econometrix, who presented their economic predications for fracking at the Fossil Fuel Foundation conference on May 29, in Johannesburg. Organizers were disappointed that no government officials or policy-makers attended.
“South Africa is an energy-intensive country… If we want high growth, we need more energy. Fracking will encourage local industry development and create many jobs because the gas industry will be built from the bottom up, unlike in the States. It will result in poverty alleviation, by building downstream and upstream industries,” says Jeffrey.
The National Energy Regulator of South Africa (NERSA) is in charge of licensing; Petroleum Agency South Africa (PASA) is in charge of gas production and the government would be in charge of distribution. The time is now, says Ethel Teljeur of NERSA.
“South Africa [might] miss the window of low gas prices if it doesn’t invest in gas infrastructure,” she says.
Teljeur gave the example of missed opportunity in South Africa when home-grown energy company, Sasol, bought shale gas interests in Canada (Talisman) worth over $2 billion and would invest R10 billion ($1.17 billion) over the next five years; money that could have been invested at home.
An argument for fracking could find favor with the government. Dipuo Peters, South Africa’s Energy Minister, was one of the cabinet members who placed a moratorium on fracking. She says fracking should go ahead, if it can be done in a safe and responsible manner.
“The government is cognizant of the controversies associated with shale-gas extraction processes such as ground water and soil contamination, however with on-going developments I am confident that these challenges will in the not-so-far future come to pass,” she said in late March.
In her budget vote speech at the end of May, Susan Shabangu, Minister of Mineral Resources, said the investigation into the feasibility of shale gas in the Karoo will be presented to Cabinet in July.
“We should not have to sue the minister [Shabangu] to get the information which each citizen is entitled to know,” says Jonathan Deal—chairman of the Treasure the Karoo Action Group (TKAG). He took legal action, when in spite of letters and applications, little information was forthcoming. The TKAG won the case.
“When it was being established we needed to know who was on the task team; what they were investigating; who they were consulting; what reports they were considering; whether they had visited America or not or anywhere where fracking was happening. And essentially, what their activities were. We were concerned that it was being manipulated, or orchestrated. We wanted transparency, in revealing the information,” he says over a telephone interview from his Karoo farm.
Deal is an entrepreneur who is not opposed to economic development, as he has often been accused; on the contrary, he supports it, if it is done in a sustainable and responsible manner. He notes that there are more than 140 places worldwide, where fracking is under a moratorium, restriction or a ban.
Deal claims he has attended more public participation meetings than any other South African. He has sat with lobbying gas companies and their consultants.
“They are misleading and side-step the real issues. They have obfuscated and clothed it [public participation meetings] in technical details. And then they are allowed to tick a box to say they have visited wherever and consulted with the local community,” he says.
“One of the fatal flaws gas companies face is the millions of people in this country who will be directly affected by fracking but know nothing about it. They are the rural people that work on the farms, who do not have email, cellphones, telephones or a car to the nearest library to digest Shell’s technical English EMP [Environmental Management Plan].”
The energy industry is trying to get around these fears, with new technology. Andrew Kinghorn, of Shava Mining Enterprise, spoke about GasFrac’s Liquid Petroleum Gas (LPG) gel. The American-based company has eliminated conventional fracking fluids and the use of water for fracking. They pride themselves in being friendlier to the environment.
The waterless LPG gel remains liquid throughout the stimulation process. After the frac closes the gel returns to a low viscosity and supports sand in the fractures. When using water, around 20% to 50% of the fracture never contributes to gas production because it is in contact with water.
“Nearly 100% of the LPG gel is returned with the flowback in a much shorter time, 10 to 15 days, than conventional fracking methods,” says Kinghorn.
The gel’s properties include low surface tension; low viscosity and low density. It is soluble in hydrocarbons, which enables 3 to 5 times longer fracs; higher long-term production and quicker time to the market.
“It results in the elimination of water, water wells, ponds, handling facilities, frac tanks, additional cartage, disposal costs and the reduced flowback cost due to quick clean up. By using LPG, we are able to realize a higher yield of oil or gas and we don’t take water away from other uses or have the demanding logistics of transporting millions of gallons of water to a well,” he says.
Another positive advancement in the industry, as pointed out by Doug Bentley, of Schlumberger, is that all hydraulic fracturing chemicals are biodegradable. The only question which remains is, are gas companies willing to pay for the more expensive, environmentally friendly fracking fluids? Bentley emphasizes that: “Well placement is the number one issue for improved production. Drilling needs to be planned in 3D as soon as possible.”
There are numerous factors to be considered: the social, economic and ecological. Philip Lloyd, research professor at the Cape Peninsula University of Technology refers to gas as the “beautiful fuel” which provides an opportunity to develop our power system in a clean, relatively low-carbon way.
The reserve might be overestimated, due to the disappearing of gas through volcano-like cone escape structures over billions of years, according to Professor Maarten de Wit from Nelson Mandela Metropolitan University. Scientists are unsure of the amount of escaped gas and how much remains.
“The South African landscape differs vastly from that of the United States because of the dolerite outcrop and needs to be assessed in a different way,” he says.
For now, gas companies and South Africans, alike, are holding their breath ahead of the outcome of the task team’s findings later this month.

Fracking At Face Value

How times have changed. When I covered my first African Development Bank annual meeting nearly 20 years ago, development conversation was often dominated by apartheid—how the last bastion of white rule was impeding the progress of the continent.
Dominant, too, were the other issues frustrating African progress: political instability in the west and east; soldiers in power; corruption; poor governance; poverty etc. Back then aid flows were certainly bigger than foreign direct investment; fewer countries boasted positive real growth rates, let alone expansion at near double digits; elections were at a premium and even rarer—peaceful change in government. It was so dark that five years later The Economist magazine weighed in with its now infamous ‘Hopeless Africa’ moniker.
Now, not only do opposition parties assume power from a ruling party like they did in Zambia last year but you can count on your two hands, the number of countries where democratic elections have become the norm. According to The Economist, all but Mauritius peacefully changed a government or president at the ballot box in the three decades since independence in the 1960s. However, once Benin set the trend in 1991, it has happened more than 30 times.
“We are here to tell the world: African investment opportunities are the ‘low hanging fruit’, part of the solution to today’s global problems,” said Donald Kaberuka, the head of the African Development Bank, at the opening ceremony of the 2012 meetings.
Global consultancy McKinsey &amp; Company in its much lauded Lions on the Move research says 27 of the continent’s 30 biggest economies have been expanding at a faster pace since 2000. These days, The Economist says that between 2010 and 2011, seven of the world’s 10 fastest growing economies were African.
The reforms of the 1990s—the same ones The Economist didn’t see—are beginning to pay off. To be fair they did change tune—in December 2011, that headline had changed to ‘The Hopeful Continent’. The reforms bore fruit at a most opportune time with the rise of the dragons in the east—China and India—happening at the same time that Europe began to decline. All this, illuminated Africa’s investment credentials.
“I have no doubt in my mind that Africa is poised to become the world’s new economic powerhouse for the 21st century,” says Tanzanian president, Jakaya Kikwete. “With its endowment in both natural and human resources, the pursuit of sound economic policies, and with democracy, good governance, respect for the rule of law and human rights being entrenched, nothing will stop Africa from getting there.’’
The 2012 meetings demonstrated just how far Africa has come. It was hosted by Tanzania’s tourism capital, Arusha, at the foot of Mount Kilimanjaro. The theme was taking advantage of the here and now; ‘Africa and the Emerging Global Landscape:
Challenges and Opportunities’. Over five days, seminars, bilateral discussions and workshops discussed everything from the lessons learnt from civil wars, droughts and food security to good financial governance. Here was the evidence, if any more was needed, that Africa’s time has come. The bank’s financials themselves tell the story. While the bank was near collapse in 1995, the AfDB’s financial health is now strong. It remains Africa’s sole AAA-rated institution by all three global rating agencies—meaning it can borrow at lower costs than France, Spain and Portugal.
Last year it approved $5.66 billion in loans, grants and equity investments etc., up 42% from the prior year. But the bank’s value cannot be measured in the money it lends alone. It is an important player in building African institutional capacity and technical capacity which plays a role in fragile states and is also helping the continent to achieve food security. In short, the mandate has moved beyond the original focus on infrastructure envisaged by its founding fathers in 1963.
But caution remains a watchword for Kaberuka, who is now serving his second and last term.
“There are heavy dark clouds on the horizon—the lagged effects of the recession in Europe, the uncertainty about how the BRICs will fare in 2012, and hence the implication for investment flows and demand for our exports. Also, in 2008 when the financial crisis was at its apex, Africa was in a much stronger position to withstand the external shocks. This time round, the resilience is not as robust, the shock absorbers, the fiscal space is weaker,” says Kaberuka.
However, with projections of a near doubling of the continent’s combined GDP to $2.6 trillion by 2020, with consumer spending forecast to increase by 62% to $1.4 trillion over the same period, in key sectors like consumer products, construction, telecoms, financial services and mining; it’s hard to temper optimism that the diamond in the rough may be ready to shine.
“While Africa’s challenges are well-documented, there is an increasing recognition that the continent is on an upward trajectory; economically, politically and socially,” says Ernst &amp; Young in its 2011 Africa attractiveness survey.
From hopeless to hopeful, I wonder what The Economist’s headline will be a decade from now?

From Hopeless To Hopeful

There was one issue at the Hotel Investment Conference Africa (HICA) that had everyone shaking their heads. The big question was: why isn’t there one visa that can get you across Africa? Its lack is choking business and progress.
If you have ever wondered why travelling in Africa is often so expensive and painful—blame it on rigid government policies.
Even though it makes business sense, the idea of a visa that will get you across many borders is as far away as a single currency in Africa, or Europe for that matter.
They call it the UNIVISA—the passport to an entire region—but not even the SADC region (Southern African Development Community) has managed to get one, the conference in Durban heard.
In 14 years there have been many talks, but no fruit. In that time, North Africa has seen three revolutions, East Africa has forged an economic community and Mozambique has built a gas industry.
The first countries which took up the gauntlet were Botswana, Mozambique, Namibia, Swaziland and Zimbabwe. South Africa—the most powerful country on the continent—has joined in, but hesitancy all round is leaving the industry frustrated.
According to Marthinus van Schalkwyk, South Africa’s Minister of Tourism, the issue is close to being settled with merely a few countries—which he could not disclose—still needing to sign the agreement. He said that 80% of the countries were for it. Fernando Sumbana, Mozambique’s Minister of Tourism agreed.
There is more business travel than ever on the continent, so why is it still so difficult to navigate Africa? It is cheaper and simpler to fly to London than it is to Addis Ababa.
Elize Petersen, Namibian Airways’ Manager of Government and  Protocol Relations, says government process is very slow when it comes to expanding regional routes. Allan Moore, CEO of Board of Airline Representatives (BARSA), says getting politics out of aviation is not easy as government policies are rigid.
When it comes to accommodation it is even worse. Hotels are scarce and expensive. Investing in new ones is often prone to fears over political instability and the high cost of infrastructure.
“Expanding out of South Africa is not easy, it is expensive, but it is not impossible. It is a different environment,” says Graham Wood, Managing Director of Tsogo Sun.
South African economist, Chris Hart, says if Africa was an easy place to invest, people would have done so years ago.
“Political risk in Africa is coming down and rising in the western world. Difficult obstacles are not nearly as bad as uncertain ones,” says Hart.
It is a sign of the times that Lonrho Hotels, which has hotels in Botswana, DRC, Mozambique and Zimbabwe, are also stakeholders in a Kenyan airline.
“Hoteliers are more optimistic than airlines, aviation is not moving fast enough [and] we want to boost regional business travel,” says Ewan Cameron, Lonrho Hotels CEO.
One of the biggest stumbling blocks is likely to be the absence of a UNIVISA. Last year there were reports that a SADC UNIVISA would be established by 2013. Most people at this conference hoped there would not be subsequent reports predicting 2020.

More Freedom, Fewer Visas, Please

A bunch of archivists set out to capture the life of one of the world’s most famous people when they launched the Nelson Mandela Digital Archive in March 2012.
The archive took 18 months from conceptualization to launch. It is a joint venture between the Nelson Mandela Centre of Memory (NMCM) and Google’s cultural institute, which supplied a $1.25 million grant in 2011. The archive includes 12,000 documents, photographs and sound and video clips of Mandela. These were from Mandela himself, who would constantly go to Verne Harris saying: “I think I’ve got something for you”; as well as through donations from his former lawyers and comrades. Harris refers to these as “the cherries”, offering us a taste of what’s in store. He hopes to get more content from the National Archives, the ANC archives, Fort Hare and Mayibuye archives.
<div id="attachment_849" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-849" class="size-large wp-image-849" src="/wp-content/uploads/2017/04/Obama_002_reduced-747x1024.jpg" alt="" width="474" height="650" />US President Barack Obama greets Madiba</div>
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A recent acquisition is a diary by Mandela’s former warder at Victor Verster Prison in South Africa’s Western Cape, where he was kept in a private house for three years before his release. Days were spent alone and the diary notes every visitor, meal and notes left to him by Mandela.
Verne Harris is the head of memory programing at the NMCM. His biggest fear is that there are pieces of history rotting away in boxes, sitting in dark dingy rooms. His toughest job is telling the fish from fowl.
Lifting up boots, Harris says: “Now these boots are supposedly his [Mandela’s] boots and they were brought in by a family who claimed that their father, who’s dead now, trained Madiba to be a guerrilla and these are the boots Madiba wore during the training. We showed these boots to Madiba and he said, ‘wrong size’.”
There are a great many chancers, one of whom claimed to have Mandela’s phone from when he was on Robben Island. This, despite the fact that Mandela had no phone
on Robben Island.
There is a white, long-term prisoner in Johannesburg who sends a gift every year. He once made a papier mâché bust that he painted gold and wrote Mandela’s name on it, despite the fact that it looked nothing like the icon.
One of Mandela’s most treasured gifts is a photograph with US president, then senator, Barack Obama that sits behind the desk in his old office. Mandela was visiting the country and the moment was captured using a cellphone after Obama rushed over to meet Mandela. It is a beautiful image of Obama’s silhouette as he stood over Mandela, shaking his hand.
<div id="attachment_848" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-848" class="size-large wp-image-848" src="/wp-content/uploads/2017/04/Madiba-1024x640.jpg" alt="" width="474" height="296" />Mandela&#8217;s first legal passport, issues on February 19, 1990</div>
Also in the office is a large picture of Walter Sisulu. Harris explains how Mandela once looked over to him and said: “I want Walter in the office.” They ran around and found a Peter Magubane photo and had it framed. Mandela didn’t know and so one day he walked into the office, saw it and said: “Huh, I see Walter is here today.”
The digital archive houses a warrant of committal from when Mandela was sentenced to five years in prison, noting his release date as November 1967. He was then whisked off to the Rivonia Trial and a red pen crossed out “1967” and wrote “life” in its place.
There is a room at the NMCM filled with small treasures, like his first legal passport, issued on February 19, 1990—a week after his release. He filled it up in four months. There are desk calendars with detailed notes about his blood pressure, staff issues and every movie he saw—including six reels of a film called Reds. This is all written in a handwriting that seems neat from a distance but is hard to read close up. The same handwriting wrote long notes on miniature slips of paper, which were smuggled out of Robben Island.
The earliest photograph of Mandela is a class shot at Healdtown. Harris recalls how they enlarged it and showed it to Mandela, who said: “This young man improved with age.”
In a packed room in the NMCM there are piles of souvenirs and gifts from all over the world—from a soccer shirt signed by Maradona to a Nobel Peace Prize to bottles of wine and homemade cards from children.
Setting up the NMCM was no easy task and necessity proved the mother of invention. When Mandela’s term in office ended in 1999, it did not mean retirement for him. He is said to have kept calling his old staff to give them instructions. Eventually, fellow activist Professor Jakes Gerwel reminded him gently that there was a new sheriff in town and that the staff no longer worked for him.
No one had thought ahead to what Mandela would need once he stopped running the country. A foundation was set up as a trust to allow him to continue with his work.
By 2002, the foundation outgrew Mandela’s old 13th Avenue house in Houghton, in Johannesburg’s northern suburbs. Two years later, the veteran called a memorable ‘don’t call me, I’ll call you’ press conference announcing that he would be “retiring from retirement”, something that took five years to actually happen. It raised more questions about life after Mandela, leading to the idea of a centre of memory in 2004. The plan is to turn the NMCM into a public facility and create a permanent exhibition that includes a reading room for researchers.
“The legacy belongs to everyone,” says Harris.
The preservation of the legacy is overseen by the eight members on the board of trustees, chosen by the man himself. Mandela had initially appointed 27 members to sit on the board, but unfortunately, hardly ever attended any meetings. So when the transition and restructuring process came about, it was time to clean house and choose members based on their level of commitment. The board includes some old friends, struggle veterans and former colleagues such as Ahmed Kathrada, Dr. Mamphela Ramphele and Professor Gerwel.
The Centre of Memory aims to make an integrated information resource available to ensure that Mandela’s legacy is a living one and accessible to everyone, and to use dialogue as a way of finding solutions to social problems.
Harris says the Dialogue for Justice “uses Madiba’s legacy’s capability to create a space for people to talk to each other that don’t want to and for that space to be safe enough for them to say the unsayable”.
This is in line with Mandela’s work during the critical negotiations between the National Party (NP) and the African National Congress (ANC) for a transitional government.
Mandela’s living legacy is the internationally celebrated Nelson Mandela Day, his birthday, on July 18. It’s a day the center feels people should feel free to interpret any way they like, whether it is helping someone cross the street, painting a school or donating food.
The legacy lives on and the Nelson Mandela Centre of Memory invites you to discover the man behind the legend.

From The Wrong Boots  To Barack Obama

Adrian Gore, South Africa’s undisputed king of health insurance, has done pioneering stuff before—as a matter of fact that’s all he has done since the day he founded Discovery 20 years ago—but none as daring as his latest venture.
In a world where Africa has become China’s happy hunting ground, Gore is hunting in the opposite direction.
Discovery recently bought 20% of Ping An Health Insurance, a wholly-owned subsidiary of China’s biggest, and the world’s second largest, insurance company.
“It could have been a much bigger stake, were it not for the strict Chinese foreign ownership rules that prescribe that outsiders can own a maximum of 20%,” says Gore.
Discovery is hungry for global expansion. It surpassed expectation in their forays into the United States of America and Britain, buying up Destiny Health in the US and 50% of Prudential Health in London.
China offers a compelling opportunity and a vast number of customers. China has more than 1.3 billion people, compared to the 50 million in Discovery’s home territory of South Africa. China spends R2 trillion ($237.6 billion) a year on health, South Africa’s R250 billion ($29.7 billion) pales by comparison.
Gore is the first to admit, though, that medical insurance is not something the Chinese do, or know, but all this is about to change.
“The health market in China is going to be huge, one gets a sense that if you get in early you can help shape the system,” says Gore.
His confidence stems from the Chinese government’s plan to introduce major health reforms, including health insurance.
“Chinese private companies are already buying health insurance in huge quantities, while individuals are already starting to buy what they call social health insurance. There are many Asians that understand this stuff. It’s more effervescent.” And sure to help the situation is the strong culture of self-medication and check-ups among the Chinese, what Gore says is an established “prevention mindset”.
Discovery’s entry into China is through its flagship Vitality product, which according to Gore, is the world’s largest incentive-based wellness program.
Vitality encourages healthy behavior that reduces long-term healthcare costs by rewarding members who do things that improve their health by going to the gym, eating healthier and getting regular health assessments. Gore believes Vitality helps to reduce both the occurrence and severity of diseases like obesity, diabetes, heart disease and cancer.
“I feel very strongly that business must have a social purpose. I don’t mean that in a soft, CSI [corporate social investment] way. Business is about progress. We try to create progress for society. A business must straddle innovation and prudence at the same time.”
“I actually think—and I’m not drawing parallels—the Apple obsession with products, is similar to ours. When we started out, our competitors in the medical aid space used to go to boardrooms. We sold our products on the road. I’m a product junkie. I find that inspiring. I’m an actuary by training, but I’m not inspired by money, but by progress.”
Also, he says, gone are the days where people put money in, and never got something out. In China, Discovery and Ping An have already struck deals with China Airlines and fuel retailers for discounts.
“Health and life insurance are typically grudge purchases. Our fundamental success in this market has been making health insurance sexy, cool, accessible and different,” says Gore.
To mark their entry into the market, Discovery and its partners are targeting in excess of 100 million Chinese who are in the middle to affluent bracket; 80% of whom pay for healthcare out of their own pocket. The good news is that Discovery is not going to do the on-the-ground slogging; the potential risk may come with vast cultural differences.
Ping An—which has 70 million customers and is serviced by close to half a million brokers—will do all the selling. Discovery will focus on building the underlying insurance company.
Gore maintains there’s no pressure to make this venture immediately profitable.
“Our approach, generally, is that you don’t bet family jewels in any one transaction. So, at end of the day, if something goes wrong, it doesn’t dramatically affect us. We haven’t committed huge amounts of capital. It’s as aggressive as we can go, but on the other hand, if it’s a complete and total failure, it doesn’t dramatically affect us.”
“If you’re building the underlying insurance company, that takes time. We’ve grown our earnings per share at 25% a year for 20 years. If China takes time, I won’t be concerned.”
Put to him, that his shareholders may have gotten used to quick gains and may no longer be the patient bunch they once were, when they started, Gore maintains: “Our shareholders—and I’m one of them—are long-term focused.”
One of few African successes in China has been Tencent, an internet business owned by South African multinational Naspers. Last year, China alone contributed R2.1 billion ($251 million) to Naspers’ core headline earnings of R5.3 billion($634 million). Interestingly though, Naspers CEO Koos Bekker could only attribute his company’s success to “simply, bloody luck.”
Gore says his industry “is slightly different. You’ve got to do the basics well, build quality relationships with your partners, regulators, and so on. It’s a tough market, and you’ve got to be brilliant”.
“We’ve spoken to a lot of people. We’ve done a lot of work. We’ve got a good feel for all the issues. In China, the relationships and trust are very important. The advantage of being an African company is that you do those things anyway.”

Gore The Mandarin

When businessman Wandi Nzimande was a Wandi Nzimande student in Johannesburg back in the early 1990s, he and his boyhood best friend, Sechaba ‘Chabi’ Mogale, had to help out at Nzimande’s parents’ second-hand clothing store to earn extra pocket money. The job was pretty uncool, and in a bid to find ways of making this unfashionable chore bearable, they got into the habit of changing and redesigning some of the old rags to better suit their personal style. When more and more fellow varsity students started buying the reworked wares off the two friends’ backs, the duo discovered that they were onto something big.
It was 13 years ago that the brand, Loxion Kulca, was born, and through incredibly trying times—due to the competitive nature of the fashion and leisure industry, the counterfeit trade and their own internal wrangling—Loxion Kulca lives and is sold by over
1,000 retailers across Africa.
“Getting into fashion had actually never crossed my mind,” says Nzimande. “I was at university studying mathematics and preparing for an academic career,” he explains.
It was only when he started spending more time with Mogale that he started developing an interest in black ghetto culture and how fashionably edgy it was. “Chabi had lived most of his childhood in the States as part of a family who had been in exile. Upon his return, he brought with him a wealth of magazines, videos and vivid stories and images of how the culture was where he came from. As a young boy who had never been outside South Africa, I was hugely fascinated, and I shared with him my own ghetto stories from having lived in Soweto all my life,” he says.
After their peers started buying more and more of their brand, they decided they were going to turn this into a business, after all. “We started coming up with fresh designs, as opposed to amending the second-hand stuff from my parents’ store. We took the money we were making and started producing beanies and light-knit jerseys, and those sold as quickly as we could make them. We hired seamstresses and sooner than we knew it, we started becoming inundated with orders as word of mouth about our brand spread like wildfire,” Nzimande remembers.
In 1997, their partnership with popular youth radio station YFM catapulted their popularity to dizzy heights. Hot kwaito artists and anybody who was considered to have any kind of street-cred was sporting their label. “At that point, getting celebrities to endorse our brand was important to us. We were on red carpets, we were in newspapers and on television, but we were clearly missing someone with a long-term strategy who would help us move from being just a fad into a fully fledged fashion empire,” recalls Nzimande.
The duo approached the late Brian Abrahams, the man who was then one of Johannesburg’s most experienced clothing franchisers. Abrahams had been responsible for licensing brands such as Wrangler Jeans and Caterpillar to South Africa in the 1970s. “Abrahams had his doubts about our brand and if it would have longevity, but he put his doubts aside and taught us everything we needed to know about the corporate side of running a fashion business. Chabi and I were the creatives; Abrahams became the third partner and came with an incredible network of contacts,” says Nzimande.
With Abrahams’ vision and support, Loxion Kulca became a national retail operation. They grew their range and from just beanies, T-shirts and jerseys, they ventured into shoes and eyewear. Then in 1999, former fashion house Sales House commissioned them to supply 150 of their chain stores. By 2003, their annual turnover was reported to be around the R80 million mark ($10 million at the time). Then trouble set in. “Abrahams died unexpectedly after being involved in a motorcycle accident and that deeply traumatized us. A legal battle between us and his family over his share of the business ensued, and then Chabi and I began having serious differences regarding how we wanted to move forward with the business,” says Nzimande.
Mogale decided to resign from the business, adding more uncertainty to the future of the fashion label. “The Abrahams family and I reached an understanding out of court, and it was agreed that Abrahams’ son, Gideon, was to take over where his father left off,” says Nzimande. But it would be an uphill battle to restore the label to its former glory. Newer, fresher labels had come up, and the business was not making anything near what it used to generate in its heyday. “We had serious trouble with counterfeiters. Many of our retailers backed out of our contracts because at any point, there would be five or six hawkers outside their shop doors selling fake Loxion Kulca items for a song,” says Nzimande.
Realizing that winning the war against the counterfeit trade was not likely to happen, Nzimande and the younger Abrahams decided on a revamped business model for the brand. “We are now fully a licensing business. We have a global copyright to our brand, so what we basically do is license our brand out, and the ‘licensee’ becomes responsible for the research and development, the design, manufacture and distribution. Once they collect the money made from the merchandise, they then pay us our royalties. We decided on this model as a way of making sure that the brand does not die and that it gets consistently revitalized and energized.
“Right now, our brand is carried in over 1,000 eye-wear stores across the continent and in over 500 clothing and shoe retailers. As Loxion Kulca, we also help develop new fashion enterprises and partner with up-and-coming fashion designers. We have decided to step away from any campaign driven by popular culture as we feel the brand has stood the test of time. That is proving to work as 2011 was our biggest financial year to date,” concludes Nzimande.

Getting It On With  Edgy Ghetto Styles

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

Forty-five years later and now among Africa’s 30 richest people with a net worth to match–he is worth more than $545-million–Raymond Ackerman still bears the scars from the worst day of his life. The day still gnaws at his mind, fresh, like it happened yesterday. It has driven and defined his life.
“It was a Monday morning in 1966,” Ackerman, now 80, recalls. “Norman Herber, the chairman, called me in and just said you are out.”
The least Ackerman thought he deserved was an explanation. Certainly, for someone who had served the company with distinction, for the previous 15 years–at least as far as he was concerned. He had joined the retail group, Greatermans, as a 20-year-old trainee, rising through the ranks to become MD of its struggling groceries division, Checkers. He had built the besieged subsidiary from three stores to 85 by the day of his firing.
<div id="attachment_827" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-827" class="size-large wp-image-827" src="/wp-content/uploads/2017/04/AV_00020165-766x1024.jpg" alt="" width="474" height="634" />SOUTH AFRICA &#8211; Date unknown: Pick &#8216;n Pay Chairman, Raymond Ackerman (Photo by Gallo Images/Sunday Times)</div>
To Ackerman’s shock and horror, Herber was in no mood to explain, nor did he seem to think he owed anybody anything, least of all his underling.
“I said Norman, what went wrong? He wouldn’t explain. He just said ‘Raymond, I know we are close. But from today, you are out.’”
With his last paycheck, off went Ackerman to his wife, Wendy, who was at the time heavily pregnant with their fourth and last child. Although equally devastated, she would give her husband the best advice he ever got.
“Raymond, this is the best chance of your life–open your own business.”
But where was the capital going to come from?
As Ackerman pondered the question, he remembered an American businessman he had met during the time he was learning the ropes at Checkers. He had told him: “Business is 90% guts and 10% capital.”
For the next few months Ackerman and an accountant friend would go around speaking to a wide range of potential investors trying to convince them to buy into their business idea. About 40 backers would line up and the following year, 1967, a new retail group, Pick ’n Pay, listed on the Johannesburg Stock Exchange.
Ackerman and company would start out by buying four small Cape Town stores, laying the foundations for what is today a US$6.76-billion turnover company.
Pick ’n Pay is now South Africa’s second largest food, general merchandise and clothing chain. The group boasts 775 stores, mainly in South Africa but also in neighboring countries: Botswana; Zimbabwe; Zambia; Mozambique; Namibia and Swaziland. The company is also in Mauritius. According to the latest annual report, 100 more stores are due to open over the next financial year. The company employs more than 38,000 people.
With that kind of achievement many men of Ackerman’s age would probably want to spend the rest of their lives in peace–traveling the world; looking after their grandchildren or simply tending the garden. The last thing you would expect from such an achiever is appetite for a new, if not hazardous, struggle.
Well, like an old war-horse sniffing gun-powder, Ackerman is bracing himself for a new war. In it, he wants to gallop ahead of younger stallions, including his eldest son Gareth, whom he anointed as his successor and chairman in 2010.
Ackerman discloses, during our interview, that he has drafted himself into a select and close-knit team that is working hard and spending a fortune on a battle plan to fend off marauding United States invader, the world’s biggest and ruthless retailer: Walmart.
Walmart–a multinational both feared and respected–bought a majority stake in Massmart, South Africa’s third largest retailer. It was an acquisition opposed by unions that went through a turbulent hearing at the Competition Commission in Pretoria. Many in the unions feared the company’s rough-and-ready approach to labor relations. Other South African retailers feared they’d be undercut and shoved out of the market by Walmart.
<div id="attachment_828" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-828" class="size-large wp-image-828" src="/wp-content/uploads/2017/04/0000139705-821x1024.jpg" alt="" width="474" height="591" />CAPE TOWN, SOUTH AFRICA ñ 28 May 2011: Businessman Raymond Ackerman receives an honorary doctorate from the University of South Africa (UNISA) in Cape Town, South Africa on 28 May 2011. (Photo by Gallo Images/Foto24/Nasief Manie)</div>
In the aftermath of regulatory approval, the US outfit made no secret of its intention to capture a much larger market share in South Africa by starting a price war with the likes of Pick ’n Pay.
“With Walmart coming, we want to be the best in every part of our business. We’ve redone our buying; we’ve redone our warehousing; and we’ve redone every aspect of our business. We are gearing ourselves for the fight, a very big fight.”
And fighting, it must be said, is something Ackerman is used to. After all he has spent a lifetime fighting his South African rivals OK and Checkers in the cut-throat world of supermarkets–where the cheapest baked beans can be a shot to the jugular.
I put to Ackerman that Walmart, with its deep pockets and huge operations around the world, could prove to be the toughest, if not most formidable, opponent he has ever faced.
“We’ve done our homework and will fight a good fight,” he says.
“I’ve studied deeply what they’ve been doing but I don’t want to get into that. I don’t think they’ve succeeded everywhere. We are looking at the weaknesses that we’ve picked up around the world, what countries they’ve done well in, what countries they’ve failed in. We are gearing ourselves to fight a good fight, not against a ruthless guy, but against a company that has shown that it’s got weaknesses.”
It also turns out that Ackerman’s much-publicized retirement, announced two years ago, never really was. Or, as he prefers to put it, he is “technically retired.”
Ackerman still goes to work everyday. He still arrives at 8am. In addition to attending to social responsibility programs, he advises the executive management team on administration and merchandising.
What happens when his son, Gareth, and his team don’t take his advice?
“I try not to interfere with the day-to-day running. They listen to some of my advice and sometimes they don’t. When they don’t take my advice I get upset but I don’t take offence. If I took offence, then they would feel that I’m interfering. It’s not easy, by the way. It’s not easy retiring when you’ve built a business from scratch.”
What some may call meddling or refusing to let go, Ackerman merely calls passion.
“I’m passionate about what I do. I want to build a company that will last forever”.
The only way to make a business last forever, Ackerman advises, is by sticking to good values–something he says he tells everyone who cares to listen to the story of his success, including the scores of entrepreneurs, business leaders and students he always gets invited to inspire and motivate.
It all goes back to advice a Professor gave Ackerman and his class back in 1949, at the University of Cape Town, where he graduated with a Bachelor of Commerce degree. The lecturer asked all those who wanted to go into business so that they could make money, to put their hands up. Almost everyone raised their hands, including Ackerman. The professor then advised the class: “If you think making money is the purpose of business, you are going to fail.”
Ackerman took the advice and it is his motto to this day. It is something he says analysts always miss, whenever they examine his business performance.
“Analysts are meant to analyze a company by this triple line and corporate governance–but analysts will never ask me about what I do on social responsibility, what I do for my people. They just want to see profit…profit…profit. I want to build a company that will last forever. The analysts just want profit growth, profit growth, profit growth.”
“South Africa, in my opinion, needs desperately more businesses involved with triple line reporting. You must give back to the community. The more you give, the more you will succeed.
By giving, Pick ’n Pay removed an albatross from around its neck.
When Nelson Mandela came into power after South Africa’s first democratic election in 1994, one of his first moves was to ask the country’s white business establishment to sell a stake to their black counterparts, in a program now known as Black Economic Empowerment.
Ackerman says he grabbed the opportunity with both hands, by creating franchises for black entrepreneurs. The result was a win-win solution that helped both black entrepreneurs and Pick ’n Pay grow. Ackerman converted some of his underperforming grocery stores into franchises and has been building scores of new stores in townships. Many of the franchise stores are owned by black entrepreneurs.
“It was a major shift for Pick ’n Pay, now half our stores are franchised. I thank Mr. Mandela for influencing me,” he says.
Ackerman’s relationship with politicians, though, has been strangely ambivalent–at best.
In the dangerous days of apartheid South Africa in the 1970s and 80, when the country was in flames; many well-off whites were emigrating.
“Sure, I had misgivings about our decision to stay. Thank God we decided to stay with it,” he says.
In those difficult days, Ackerman met politicians. He vividly remembers a talk with Prime Minister, B.J. Vorster, who was in power when black students took to the streets and were mowed down in Soweto in 1976. It was on Vorster’s watch that more opponents of the apartheid regime were detained in a climate of racial conflict.
“It was quite an amazing thing, we wanted to promote black managers but it was against the Group Areas Act, [the legislation that apportioned land by race]. I went to see him [Vorster] and said we are doing it. He said, ‘I know you are doing it, and it’s against the law’. I said, ‘here are letters from ministers’ wives saying how courteous this or that manager is’. I showed him these letters that my wife had prepared. He turned around–I won’t forget that day–and said, ‘Mr. Ackerman, go ahead, even if you are breaking the law I won’t arrest you’. I asked, ‘do I have your word ? Can I have it in writing?’ He said, ‘go ahead, I won’t arrest you’. I said, ‘give it to me in writing’ and he said, ‘I won’t but you must do it’.”
In 1980, Ackerman went to see Vorster’s successor, P.W. Botha, a very stubborn man–who was called ‘Die Groot Krokodil’”, Afrikaans for ‘the big crocodile’, who oversaw the most violent years of apartheid rule. Ackerman wanted to discuss several issues, including a housing scheme he was contemplating for his black managers: “I asked him why we can’t have houses for blacks? Why not have a 99-year lease like they have in Sweden and Finland. He called in one of his ministers. I think it was Connie Mulder. After about a week of discussions, Botha came up with a 99-year-lease-hold, which was later changed to full ownership.”
Ackerman would also meet F.W. de Klerk, who was a senior Cabinet minister at the time.
“There was such a breath of fresh air about him,” Ackerman says of the man who would go on to succeed Botha, and later, release Mandela from prison.
“I’m not trying to say we played an enormous role,” Ackerman adds quickly, “but we played a role.”
Even in the so-called “new South Africa”, where there’s “tons of things going wrong,” Ackerman says he will, in his small way, continue to play a very positive role. That’s not to say he’s happy with everything that’s going on in the country.
For example, he wouldn’t mind being taxed more–a call that has been made by such people as Nobel Peace Prize laureate Archbishop Desmond Tutu, in part as a gesture towards reconciliation and redress. “I’d be happy to pay an extra tax to uplift and help entrepreneurs help businesses start,” Ackerman says, “but we’ve got to deal with corruption.”
He adds, however, that he always reminds people that corruption is not just in government, but also in the private sector, and that inequality and unemployment were “twenty times worse in the sixties and seventies.”
As a believer in entrepreneurship, in a free economy, he was delighted to hear South African President, Jacob Zuma, reject the calls for mine nationalization.
“You can’t create jobs through government. You need to excite the entrepreneur to invest capital and to invest in new things. I respect the fact that the government has by and large left a free economy.”
He is also delighted that government is not agreeing with the Congress of South African Trade Unions–the biggest workers union which is also an ally of the governing African National Congress–that labor brokers should be banned in South Africa.
“Unions hate labor brokers because when there’s a strike, the labor brokers come in and soften the strike and we can run the business without them. I hope he (President Zuma) doesn’t listen to labor unions. If he cuts out labor brokers he’s going to play into the hands of labor unions for strikes,” Says Ackerman.
So, when all’s said and done, what would this doyen of retailing and grandfather of 12 like to be remembered for?
“I’m not saying I’m different. I’m not saying I’m clever, I’ve just worked my whole life to rebuild myself after I was fired.”
The lesson for entrepreneurs?
“Find something you are passionate about, and make it your life’s work.”

The Pain That Put  The Fight Into A Tycoon

Our roads are peppered with potholes; hijackings are a way of life; wildlife sometimes seems to have a vendetta against moving vehicles; traffic jams can rival the migration in the Serengeti, and all this is when we have roads to begin with! And let’s not forget the plight of the minibus drivers; having to furiously shuttle their sardine tins full of people, who are sometimes laden like hermit crabs with their personal belongings.
What is to be done about the seemingly Sisyphean mountain of obstacles that befall us as regular road users, you ask? Extreme all-terrain vehicles are, in my humble opinion, the obvious answer to Africa’s daunting road conditions. Take for example the Russian-built Viking-2992 from Aton Impulse (brought to you by the people who built some frighteningly effective submarines, so why not surface-dwelling amphibious vehicles too?). This road-legal behemoth is capable of conquering not only the worst tarmac, but it’s just as comfortable in more aquatic climes.
Looking, for all the world, like a bullfrog on steroids, the Viking’s high-flotation boat frame allows it to traverse the water at speeds of up to 15km/h. Equally suited to that leisurely weekend trip across the Vaal dam in South Africa (imagine the stares from those overpriced boats packed with scantily clad women and cigar-chomping businessmen), or those unscheduled flash floods, the car boasts pneumatic front and rear suspension and balloon tyres—equipped to “minimize environmental impact and soil damage”. Exactly what we were concerned about. And, should the humanitarian bug ever bite, the Viking makes a superb search-and-rescue vehicle; coming in a 6&#215;6 wheel configuration that can transport 12 people. Enough to make any taxi driver flush with envy; especially considering the car’s got climate control and a rear-view camera for ease of parking.
Another contender, in our bid to conquer Africa’s unforgiving terrain, is the Mercedes-Benz Zetros. The towering Teuton comes in either a four-liter six-ton payload or seven-liter, ten-ton variety. This truck is perfectly suited to hosting those pesky, end-of-month shopping expeditions with parking posing no problem—that Hummer’s roof will do nicely, thank you. Hijackers will stare agog, contemplating how on earth to scale the sides so they can point their quivering gun at the safely ensconced driver. Twin axles mean the cabin and payload move independently (like a belly dancer working her way through college)—helpful when encountering potholes the size of Australia, as we do after a brief cloud burst. Water reaching up to a height of 1,100mm (with the additional modifications) holds little fear for this übertruck. Let’s see someone try to push in front of one of these at the next intersection.
When it comes to sure-footedness though, nothing beats the insanity of the Chainlink extreme 4&#215;4. Powered by a fuel-injected five-liter V8 engine sourced from a Ford Mustang, the unique feature of this vehicle is that its one-meter-high tires dangle off the end of hydraulically controlled swing arms that can work independently or as a team. This unsurpassed articulation (two meters in total travel) means the Chainlink virtually bounds over boulders, seemingly negating the need for roads at all. While disturbing to look at, and its gait is reminiscent of a drunkard at a twisting competition, the Chainlink gets the job done.
Ever wary of expenditure, we’ve managed to uncover a more cost-effective manner of taming the African wilderness. It comes in the form of the Desert Fox conversion. Designed to fit your existing Toyota Land Cruiser or Nissan Patrol (chosen specifically for their impervious nature and easy access of parts), the kit comprises of a fully galvanized platform that simply bolts on (housing eight molded seats protected by three rollover bars) and transforms the ‘bakkie’ into a light infantry patrol vehicle. In addition, the suspension undergoes some radical reworking thanks to new leaf and coil springs, gas-powered shock absorbers, a heavy-duty steering damper and anti-sway bar.
Criminals stand no chance against the Desert Fox’s optional armor plating, and it even comes with its own water supply (100 liters) and dual battery with charging system. Making this kit a must-have for those expeditions to war-torn territories is the optional gun turret. A handy feature, to keep the masses at bay; especially if you’ve opted to purchase another product from the same company—the mobile field kitchen. Simply throw this contraption onto the tow hitch, and you can almost literally make food for Africa; 300 people at a go, and up to 1,000 in total. The kitchen uses diesel to power its hot plates (switching over to solar when hot) and can pump out 24 loaves of bread in 20 minutes. That’ll satisfy the biggest appetite! No wonder military brass, from numerous countries, are showing interest—and it’s exactly what a hungry, take-no-crap, sick-to-death-of-traffic road user really needs.
If the Desert Fox has piqued your interest in military grade vehicles, take a gander at www.milweb.net—apparently they are “the world’s largest and busiest military marketplace for military vehicles”. Nothing says “get the hell out of my way” quite like a tank, which is why we’d simply have to opt for one if we inadvertently won the Lotto. While owning and driving a tank on public roads might be completely illegal, such technicalities haven’t stopped a host of drivers in our laissez faire continent, thanks to the pliability of our cash-strapped authorities. Ah, Africa—the cradle of mankind. We might not have invented corruption, but we’ve certainly come close to perfecting it. And yet, this is our land—diverse, unique, challenging and exciting. If you don’t like it—well, you know the rest&#8230;

Tag: July 2012

FORBES AFRICA SOCIAL MEDIA

Casting Money To The Wind

Liberia: It Could Be Awesome But…

Fracking At Face Value

From Hopeless To Hopeful

More Freedom, Fewer Visas, Please

From The Wrong Boots To Barack Obama

Gore The Mandarin

Getting It On With Edgy Ghetto Styles

A Loan Denied, Alone She Struggled

The Pain That Put The Fight Into A Tycoon

Conquering Africa’s Roads With More Than Passing Fun