<a href="https://www.sanlam.co.za/Pages/default.aspx">Sanlam</a> and the <a href="http://nasasa.co.za/site/">National Stokvel Association of South Africa</a> (NASASA) have launched NASASA Financial Services (Pty) Ltd; a brokerage catering to the financial services needs of the South African stokvel market. NASASA is a self-regulatory organisation with a database of 125 000 stokvel groups, reaching about 2.5 million individuals. The new entity will foster greater financial inclusion for all members.



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Jacqui Rickson, Chief Executive: Group Benefits at Sanlam Developing Markets Limited and Board member of NASASA Financial Services says, “For South African stokvels this is an opportunity to formalise their existence without having to forego their traditions. The peace-of-mind that each member of a stokvel will be protected in their time of need is invaluable.” “Stokvels are powerful financial services providers in their own right,” says NASASA Financial Services CEO, Mizi Mtshali “and have the potential to help grow South Africa’s economy once they enter the more formalised sector through appropriate product offerings”. Currently, there are over 800 000 stokvels in the country, aggregating an estimated R50-billion pa. They are, however, quite exposed, especially to liquidity issues that may render them unable to discharge benefits to their members, as well as scams that promise to resolve such issues. This results from a lack of accessible, relevant products that meet the needs of a more informal savings sector. 



As a result, some burial stokvels may not pay enough to cover funeral expenses in their entirety. By offering broad-based financial services to members, NASASA Financial Services will empower stokvels through greater socio-economic inclusion and security. Jacqui Rickson says, “This venture supports our client-centric focus by allowing financial inclusion to be extended to South Africans who are on the edge of the formalised insurance structures.  Through this, we can help families recover financially following difficult, unexpected events.” 



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NASASA Financial Services is currently
licensed as a Juristic Representative of Sanlam Developing Markets, with a
long-term plan to become a Financial Services
Provider (FSP).&nbsp; NASASA Financial
Services will distribute tailor-made products nationally via its
distribution force. Sanlam as underwriter, through NASASA Financial Services,
will initially offer group-based funeral benefits, tailored to each individual
type of stokvel. 
 
Products are competitively priced and start at R15 per
person. Once the stokvel has selected its option, the stokvel will pay
one premium for the whole group. For burial stokvels, Sanlam has designed a full product, covering up to nine family members and
all products have been created in partnership with NASASA. 



Currently, the product offering includes:



<ul><li>A Principal Member Only Funeral
Benefit</li><li>An Immediate Family Funeral Benefit</li><li>A Principal Member Plus Up To 9
Dependents Funeral Benefit</li><li>Grocery and Airtime Cash Benefits</li></ul>



NASASA is about educating their members
about wealth and more appropriately, financial health, which includes saving on
the expense of premiums through aggregation and paying group rates rather than
more expensive individualised rates. We’ve designed products as an extension of
this; as a tangible, affordable, non-intrusive offering that seamlessly blends
the required formal structures with community-based traditional structures. 
 
Mizi Mtshali, NASASA CEO, adds, “The research conducted during the build-up of our product launch saw the
solution being entirely built by participating stovels. As a result, we deliver
unmatched value by buiding a solution briefed in by our constituency.
Amongst the majority of South Africans, funeral
insurance fulfils an unmistakable need. While many are excluded from the formal
financial system, those who do interface with the sector largely feel
inadequately serviced. Burial Societies are formed as providers of such
services and have developed systems around the real needs of their members.
There are roughly 200&nbsp;000 active Burial Societies in South Africa, with
the majority being self-underwritten. 



Because such groups rely on their collective savings to
discharge their benefit to members, they often face liquidity problems that may
lead to their disbandment. This brings about the need for an underwriter who
will take on the risk on behalf of the group, as well as offer a set of
products and services built around the group’s needs. NASASA is tasked by its
members to solve this problem, and we have identified Sanlam as the most
suitable partner in this regard.” 



Mtshali says this venture will also facilitate job creation, which is key to socioeconomic inclusion, “For South Africans, this opportunity provides meaningful employment particularly in the township economy. Not only is this a step towards financial inclusion, but a giant leap towards societal transformation”



Down the line, NASASA Financial Services is aiming to extend its offering to include life cover as well as short-term products like household insurance and is investigating the potential of integrating other banking products. Content provided by Sanlam

sanlamImage 1

Sanlam & NASASA Launch NASASA Financial Services For Stokvels

African capital markets are increasingly adopting disruption to make investing more transparent and accessible to a younger, tech-savvy generation, and see an increase in trading volumes.

Oscar Onyema was appointed the new CEO of the Nigerian Stock Exchange (NSE) in 2011, having previously been senior vice president of the American Stock Exchange. The exchange needed to change to increase transparency and make investing easier, and for this, Onyema turned to technology.
The NSE’s X-GEN trading platform was launched in 2013, offering better access to real-time data, thereby improving governance and transparency. Onyema described it as the fastest-trading platform in Africa.
Its impact was immediate. The average daily value of trade increased by around a third, to over $14 million in 2017. Other capital markets across the continent are following suit and adopting tech to make investing more transparent and accessible. The Nairobi Securities Exchange, for example, rolled out its Automated Trading System in 2014.
<blockquote>&#8220;Technology has enabled stock exchanges to enhance their surveillance capabilities contributing to transparency in the market,&#8221;</blockquote>
The Nairobi exchange followed this up with the launch of its own mobile app, which its head of brand and corporate affairs Waithera Mwai-Ireri says would “democratize” access to capital market-related information in Kenya. The app provides quick and easy information for potential investors and allows investments to be made in real-time.
Mwai-Ireri said the move was designed to make investing on capital markets accessible to a younger, tech-savvy generation.
<a href="http://www.forbesafrica.com/entrepreneurs/2018/04/26/banking-on-technology-new-mobile-bank-set-to-launch/" target="_blank" rel="noopener">READ MORE: Banking On Technology: New Mobile Bank Set To Launch</a>
“The NSE app will enable investors to track market activity on a continuous basis enabling them to make real-time investment decisions. The app will spur interest in the capital market amongst the youth in the country, who make up over 75 percent of our total population,” she says.
The Nairobi exchange is a leader in Africa in terms of tech not only for its app, but its mobile-traded government M-Akiba bond. Mwai-Ireri said stock exchanges across the continent were seeing huge increases in trading volumes as a result of the use of technology.
“The use of technology has fast-tracked the development of Africa’s exchanges. Technology has enabled stock exchanges to enhance their surveillance capabilities contributing to transparency in the market,”
she says, adding she expected more exchanges across Africa to launch mobile-based applications in the coming years.
The younger, tech-savvy audience being targeted by exchanges such as those in Nigeria and Kenya may, however, have already found alternative ways of investing their money, away from traditional institutions such as exchanges and banks.
A platform tapping into a desire for alternative investments is South African company The Sun Exchange, which is also utilizing the increased uptake of cryptocurrencies. Using the platform, people use cryptocurrencies like bitcoin to buy solar panels, which The Sun Exchange then leases to businesses in Africa. Users earn income from these panels over a period of the next few years.
Founder and CEO Abraham Cambridge said improvements in efficient peer-to-peer payment systems and crowdsourcing has meant that entirely new investment models and platforms have become possible, solving problems that could previously not be solved. He said this trend will likely continue.
“Consumers are becoming increasingly skeptical of opaque and slow traditional banking. Modern day millennials will soon be the dominant investor group as they begin to inherit baby boomer wealth, and this group is used to instant gratification, transparency and a desire to change the way the world works,” Cambridge says.
“In addition, traditional financial institutions are becoming increasingly risk averse, which means that investments into startup businesses and innovative concepts, such as projects built around cryptocurrencies, find it extremely hard if not impossible to raise capital through these traditional means.”
He says the appeal of using cryptocurrencies for investments was that they are open and universal.
<a href="http://www.forbesafrica.com/technology/2018/05/16/are-icos-relevant-in-africa/" target="_blank" rel="noopener">READ MORE: Are ICOs Relevant In Africa?</a>
“This means that previously unbanked customers, of which there are hundreds of millions across the African continent, can now engage financially with the rest of the world. In the case of The Sun Exchange, this means we can transact with the whole world using a single currency,” he says.
Smaller, micro-investments are also possible.
“As cryptocurrency can be broken down into over eight decimal places, nano-transactions at lightning speeds can now happen. This means that an investor can choose to place very small sums into projects and earn nano-payments out, with ultimate security and transparency,” says Cambridge.
It is this kind of flexibility and transparency major capital exchanges across Africa are trying to match with their own use of tech. Time will tell if this will work or if the opportunity has passed them by.
&#8211; By Tom Jackson

Tech scene in Cape Town, South Africa

Trading On Technology

It is fascinating that many entrepreneurs fail to formulate business models, while some don’t even know what a business model is.
A simple definition of a business model is a plan for the successful operation of a business, identifying revenue sources, a customer base, products, and details of financing.
A unique business model can be the distinguishing factor that will set you apart from your competition.
If your competitors have a bigger market share, are more capitalized and better capacitated,  how can a different business model push your business ahead?
Malcolm Gladwell’s book David and Goliath looks at how David avoided fighting Goliath on his own terms, with swords and spears; he rather used what he knew best, because he could not have won if he tried to play Goliath’s game.
History has shown how the mighty often end up falling – and you can be the one to take them down.
Today, Naspers is the largest company in Africa and seventh largest internet company in the world by market capitalization. More than 60% of their value comes from their 34% shareholding in Tencent Holdings in China, but they still want to dominate in media and technolgy.
If you decide to go head-to-head with this enormous company, do not try to beat them at their own game; rather compete with them using a different approach. If you look at Apple, Google, Facebook and Amazon in Silicon Valley, they started by being disruptors.
I highly recommend that you learn the art and science of coming up with business models. Corporate companies, on average have at least four business models to make money.
The Founder and Group Chief Executive of Discovery Limited, Adrian Gore, is reported to have all his personal investments in the company. Some might think it’s risky to have all his eggs in one basket, but Discovery has diverse business models, such as medical aid, short-term insurance, and investments.
There are various types of business models. Telecom and electronics companies often use a model of prepaid or pay as you go.
Others, like MultiChoice and Netflix, use subscription, where you pay a continuous fee to access services or content.
Product to service is one of the most powerful models and is often used by tech companies. Uber, the world’s largest taxi company, owns no vehicles. Airbnb, the world’s largest accommodation provider, owns no real estate. Facebook, the world’s most popular media provider, creates no content. Instagram, the most valuable photo company, sells no cameras.
Low-touch is another model used by many retail companies, such as Shoprite and Walmart. They lower their prices by decreasing services. A similar model is Freemium, which offers basic services for free, but charges for the premium version, as LinkedIn does.
An interesting one is a reverse auction, where businesses bid for the amount they are willing to be paid for their service. The seller with the lowest amount wins.. One usually used with cars, is Leasing, where you rent than sell.
The crowdsourcing model is currently popular. This is where you get a group of people to contribute content for free, while you make money from advertising revenue; YouTube has mastered this.
Africa is excluded from these pioneering models. Eighty percent of the world’s mobile money transactions take place in East Africa, while $148 million a day is transacted every day using Mpesa and 40% of Kenya’s GDP is transacted through mobile money. Africa is powerfully positioned in this area and needs to make the most out of it.
We are living in an age with unlimited access to information. As Africans we have no excuse not to be competitive on a global scale. But, there needs to be an economic revolution in our consciousness that allows us to stand tall on the world’s stage.

A Revolution For  Global Domination

The Kigali City Tower (KCT) in Rwanda’s bustling central business district is a shining example of the country’s rise from the ashes of conflict, the tragedy that killed 800,000 in the genocide against the Tutsi 22 years ago.
The elevators of the high-rise KCT are busy, going up and down without respite as the day progresses.
On the first floor, they open to the Rwanda Stock Exchange (RSE), which on any given day is a hive of activity: young men and women in red blazers indulging in light banter on the trading floor, still using marker pens and dusters on the white boards in front of the reception area.
But this stock exchange of seven staff members is on its way to becoming fully-electronic.
“By the end of the year or even before that,” says the RSE’s Chief Executive Officer, Pierre Celestin Rwabukumba, a Rwandan national, seated in one of the glass offices to the left of the reception.
At 42, Rwabukumba is perhaps one of the youngest stock exchange heads on the continent, but it does not take too long to know this is a man on a mission to contribute to the economic development of the country he came home to 12 years ago after a stint on Wall Street in the United States.
An economics graduate from the University of Buffalo in New York, he decided to return home to develop industry in his own country.
“I decided to chip in,” says Rwabukumba, simply.
And he wears many hats. Also Chairman of the East African Securities Exchanges Association, he is Co-Founder and Chairman of the Kigali Cement Company, which produces, markets and sells cement in Rwanda and neighboring countries. He is involved in investment projects ranging from real estate, poultry and agro-processing to energy.
Yet, when the RSE was incorporated in 2007, in a small office on the fifth floor of the Ecobank building, Rwabukumba was the only employee – all he had was a blank paper and a desk to start with.
“I did everything myself, I was running the whole thing,” he chuckles.
The RSE was officially launched in January 2011 when it moved to its current premises and started with four listed companies. Currently, it has seven (three local companies and four cross-listed from the region) including Bralirwa, Bank of Kigali, KCB Bank, Nation Media Group, Uchumi Supermarket, Equity Group Holdings and Crystal Telecom.
The RSE has a market capitalization of $3.6 billion. The Nairobi Stock Exchange, the biggest in the East African region, sits at $21.24 billion.
“We are small and efficient,” says Rwabukumba.
“We are young, flexible and that makes us different. We try to be as innovative and tech-savvy as possible… We have had a lot of milestones; there is a lot to be proud of.”
The RSE operates in financial markets, corporate finance, investment analysis and portfolio management, international finance and business laws. It aims to lead Rwanda to become a regional financial center.
Robert Mathu, Executive Director of Rwanda’s Capital Market Authority (CMA), echoes Rwabukumba’s optimism.
“Rwanda is a very young economy compared to the rest of East Africa. We had to start from scratch 22 years ago. The country has registered consistently high economic growth,” he says.
In addition to the stock exchange’s efforts, CMA is promoting the capital market by creating awareness among the public, also motivating institutional reforms and development.
Mathu says the services industry is Rwanda’s next avenue of growth, those like financial services, logistics, tourism and ICT.
“It is the plan of Rwanda to use the wider East African market as a platform to access long-term capital and diversify economic growth into the area of services, away from the traditional areas like agriculture,” he says.
“We need to develop skills capacity, but we have a long-term plan and are in the process of developing a master plan.”
And this fits in nicely with Rwanda’s own overall master plan.

‘Small And Efficient’

Competition in Africa’s leading stock exchange market is facing a difficult birth. Next year, South Africa could have three stock exchanges, but the Johannesburg Stock Exchange (JSE) has taken the fight against the competition to court.
The Financial Services Board (FSB) granted ZAR X a license to operate on the August 31, paving the way for the first new stock exchange in South Africa for over a century. In a Goliath versus David battle, the JSE filed an urgent application to the FSB Appeal Board to suspend its decision to grant ZAR X a stock exchange license. The Appeal Board dismissed the application.
In a statement, the FSB said Judge LTC Harms, Deputy Chair of the FSB Appeal Board, stated that there was no evidence that the JSE would suffer harm or prejudice.
“He said the JSE’s application was based on the possibilities of harm to the financial system of the country and its investors, which was speculative,” the FSB said.
As ZAR X prepares to launch, Etienne Nel is the man of the moment. He has the mammoth task of taking on Africa’s biggest stock exchange from a small office block in Bryanston, Johannesburg, far from the glamour and glass towers of the JSE in Sandton.
“I’ve basically spent my whole life as a stock broker and in 2011 I co-founded an OTC platform called Equity Express. The explosive growth that we had in that business showed us that there was a very distinct need in South Africa to actually have another stock exchange, away from the JSE, that gives investors another platform to transact on,” says Nel.
In many ways it’s a featherweight taking on a world heavyweight champion. The Johannesburg Stock Exchange is ranked among the top 20 exchanges in the world. ZAR X will have to box clever to survive.
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The competition at the dominant JSE has deep roots. It was formed in 1887 during the first South African gold rush. As the days when people chalked up the trades on a blackboard by hand disappeared, the JSE outgrew its former building in downtown Johannesburg. Today the JSE’s market cap is over a trillion dollars. In the last 20 years it has changed fast.
De-regulation swept away piles of paperwork. June 10, 1996, saw the trading floor become electronic and on July 1, 2005, the JSE became a company in its own right.
Today, the JSE handles over 300,000 trades a day, which are worth $1.4 billion.
As its Capital Markets Director, Donna Nemer is responsible for every trade.
“We just have to make sure that as we add new entrants in the market and, as the market evolves, that we don’t lose the standing that we have in the capital markets as a whole,” says Nemer.
An area that ZAR X believes it could steal a march on the JSE is its trade settlement system. An investor using ZAR X’s T+0 (trade plus zero) settlement model can get their money on the same day. It takes three days for an investor using the JSE’s T+3 settlement model.
“We operate on a T+0 model and there is no real reason for anyone to be operating on T+3 anymore. I mean, Australia is on T+2 and they already have plans to go to T+1. We just decided that T+0 is the way to go,” says Nel.
“Our trading regime that we’re accustomed to is one that is called DVP (Delivery Versus Payment) and in those exchanges you exchange the cash and the trade at the same time. In our case it takes three days and I believe our investors wouldn’t want it any other way,” says Nemer.
So how is this big fight going to play out? Owen Nkomo, the owner of an investment management and stockbroking company, is sceptical about the young contender. Nkomo doesn’t know how ZAR X will achieve its T+0 settlement model.
“I imagine it’s going to be very difficult. If they can do it, that’s going to be a very big advantage. People don’t want to wait for shares once they buy them. There are ways of achieving it and if they do then wow, it will work in their favor,” says Nkomo.
ZAR X’s T+0 settlement model helped win over one of the oldest and largest grain producers in Africa, Senwes, in the South Africa’s North West province.
For the last 107 years, Senwes has been growing its way to a sizeable turnover of about $750 million. It’s the biggest trader of white maize in the world and turns out 1.5 million tons a year. After more than a century of tradition, this company is trying something as new as its business is old. It’s taking a chance by listing on a brand new upstart stock exchange.
“An important factor for us in choosing the model that ZAR X has presented is the fact that the investment risk is low because of the trade plus zero rule that they apply. This means that any investor that wants to invest has to have the money upfront,” says Elmarie Joynt, the Group Legal Counsel and Group Company Secretary at Senwes.
So could the grains of Senwes be the grains of hope for South Africa’s first new exchange for a century, or will ZAR X end up being ground to dust by going through the mill of court cases? Investors across Africa will be waiting anxiously to find out.

Boxing In Africa’s Biggest Market

It’s bad news when a commercial bank collapses; it’s frightening when three of them go under within just eight months in a single market.
The back-to-back collapse of mid-tier Chase Bank, Imperial Bank and Dubai Bank sent chills across the Kenyan financial sector – eliciting a scramble for remedial measures, including consolidation and review of capitalization requirements for banks.
Chase Bank’s operations were taken over by the Central Bank of Kenya (CBK) in April after its management failed to declare KES8 million ($80,500) in insider loans, causing panic withdrawals and a run on the bank.
Imperial Bank was taken over in October after fraud was uncovered. Two months earlier, smaller lender, Dubai Bank, was put into receivership.
This state of affairs triggered anxiety on the health of the banking sector in Kenya even though regulators and the National Treasury have gone all-out to downplay the concerns, calling the bank closures “isolated cases”.
“I want to assure my fellow Kenyans that our financial sector remains strong and stable. The recent placing under receivership of three banks was due to specific factors related to these banks and not the whole banking sector,” says Finance Cabinet Secretary Henry Rotich, as he sought to calm nerves over the health of the East African nation’s financial sector.
But even with the assurance, Rotich and his team at the Treasury are not resting. They are planning a raft of strategies, including consolidation, in an attempt to clear weak lenders from the Kenya’s banking sector and help restore confidence through larger and better capitalized outfits.
Rotich plans to re-introduce higher capital levels for banks to guarantee their financial health.
“Last year, I did table in this house specific measures to increase the capitalization of banks in order to ensure we have a strong and stable banking system but our efforts were not successful,” Rotich told the Kenyan Parliament in June when he presented his budget speech.
In 2015, Kenya’s legislators shot down Rotich’s proposal to raise commercial banks’ minimum capital fivefold to KES5 billion ($50 million) within three years, after CBK Governor Patrick Njoroge said such a move would strangle smaller lenders.
Rotich, however, is keen to push through the higher capital requirements this time round and by extension trigger consolidation of weak lenders in an attempt to prevent further financial glitches among the 42 licensed commercial banks.
“I am seeking to introduce the proposals and I am hopeful that members will look at them more favorably in light of the recent developments in our banking industry,” says Rotich.
The impending changes in bank capitalization requirements have already triggered action among small lenders that are keen on complying.
Midsized lenders, presently feeling the pressure to consolidate to capitalize on economies of scale and remain relevant, have already taken to mergers or pacts with private equities to boost the asset position.
I&amp;M Holdings, which has stakes in banks in Kenya, Tanzania, Rwanda and Mauritius, is set to finalize a KES5 billion ($50 million) deal to merge Giro Commercial Bank with its subsidiary I&amp;M Bank.
“In our view, the acquisition will have minimal strategy disruption given similarities of the two banks – both have conservative balance sheets and mainly target middle- to high-income customers as well as SMEs (small and medium enterprises),” the listed lender said in a statement in June.
Small-sized Kenyan lender Oriental Commercial Bank formally rebranded to M-Oriental Bank in June following the acquisition of a 51% stake in the shareholding of Oriental by Bank M Tanzania.
The Kenyan banking industry has also witnessed several other acquisitions recently, including the 75% purchase of Spire Bank (formerly Equatorial Commercial Bank) by Mwalimu Sacco and Nigeria’s Guaranty Trust Bank acquiring Fina Bank.
In 2014, investment group Centum also completed the acquisition of K-Rep Bank (now Sidian Bank) in a deal that raised Centum’s shareholding from 7.54% to 67.54%, having been a minority shareholder in the bank since 2004.
Centum’s acquisition was effected through Bakko Holdco Ltd, a non-operating holding company, to conform to CBK guidelines.
Kenya’s largest bank by asset base, KCB Group, is also looking at medium-sized lenders to buy as part of an expansion plan and is building up capital to boost its acquisition war chest.
“We will look for businesses where there can be synergy, where there can be ability for us to scale up, so medium-sized banks will be areas that we are focusing on today,” KCB CEO Joshua Oigara told Reuters.
In May, KCB Group shareholders gave a nod to the lender’s plan to raise KES10 billion ($100 million) through a rights issue later this year to boost its capital levels. KCB’s total capital stood at KES79 billion ($795 million) at the end of 2015.
KCB Group is expected to acquire a majority stake in Chase Bank after it was recently appointed to manage the mid-tier bank that only re-opened after a brief closure due to liquidity problems following a run by panicked depositors.
The government is also considering merging National Bank of Kenya (NBK), Development Bank of Kenya and Consolidated Bank, which it owns, in a bid to take advantage of having a large lender.
“We are making progress on the issue of consolidation because we now have a consultant who will soon be advising us on how to move. We expect to consolidate the state banks into one or two banks very soon,” Rotich said in April.
The changes in bank capitalization have also seen an inflow of private equity to try and boost the books of Kenyan banks.
In March, Fidelity Commercial Bank announced British private equity and asset management firm Duet Group had acquired a significant stake in the small lender. In the deal, Fidelity Bank will receive KES1.9 billion ($19 million) from the sale and boost its capital position, which was narrowly above mandatory requirements following an increase in adequacy ratios in 2015.
Furthermore, Norway’s investment fund for developing countries, known as Norfund, in partnership with NorFinance, an investment firm created by Norfund and private investors, purchased a 12.22% stake in Kenya’s Equity Group Holdings for an estimated KES26 billion ($261 million) from private equity group Helios Investment Partners.

Hoping For More  To Bank On

Standing in a long queue of pedestrians in Surulere on the mainland of Lagos, Nigeria, Austin Somefun is waiting for an okada (motorcycle taxi). He is on his way to view a new flat for his family, which currently stands at five children and two wives.
“My second wife just had her third child and so we need a bigger space. I have been looking at properties all week but so far, I have not found the right size for my family,” says Somefun.
He is part of the growing population in a country, which according to Reuters, will increase from 188 million to 300 million people by 2030.
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“Population explosion definitely creates a demand for residential property. The Lagos State commissioner for budget and planning estimates that Lagos alone needs to spend $50 billion in the next couple of years to keep up with the 23 million residents in the state and a significant amount of that budget will go towards housing,” says Steven Brown, an economist working with Britain-based Integra Consulting.
According to the Real Estate Developer’s Agency of Nigeria, the country is lacking about 17 million houses with about 60-70% living in slums and informal settlements. The Centre for Affordable Housing and Finance in Africa, estimates that 700,000 more homes are needed each year to keep pace with the population explosion.
Kennedy Okonkwo is founder of Nedcomoaks, an indigenous real estate company vying for this growing market. The company focuses on Nigeria’s middle class who, according to Okonkwo, is underserved. Okonkwo had a brief stint in the IT and human resources sector before a missed opportunity changed his life.
“I was working as a strategic adviser for a company and my part time job in real estate had a deal that was worth N18 million ($90,000). The deal meant I was going to provide accommodation for expatriates and the company issuing the contract was waiting for me to come and see them but I was busy doing a strategy session so I lost the deal to a competitor. I said to myself it’s time to focus on the property business and I resigned from the job,” says Okonkwo.
His love affair with bricks and mortar began when he brokered his first deal as an estate agent worth N260,000 ($1,300). Okonkwo started from scratch; scraping together money for construction while selling Hawes &amp; Curtis shirts to tide him over.
“The landowners had signed over the land for 30 years and most of the families did not have money to build on the land and time was running out. So I approached them and got the land on leases. I got about 22 of them and started building four units of room and parlour self contains and doing resettlement schemes,” says Okonkwo.
Things were looking up for Okonkwo until the global recession hit him in 2008. Most of his clients who invested in the properties could no longer afford the monthly repayments and the banks clamped down on all credit to business. Luckily for Okonkwo, he secured a loan of N100,000,000 ($500,000), which added to the company’s working capital and proved a lifeline.
“Initially, we would look for money to develop one property and once we sold that, we would build three more properties because we would market and get other people to buy more. Once we got the loan from the bank, we were able to expand very rapidly.”
Part of the Nedcomoaks property portfolio is a 92-unit construction of three-bedroom terraces and a new build of 28 units of four-bedroom houses with average prices for his developments at N25 million ($125,000).
Similar to Brown, Okonkwo believes there are massive opportunities within the property market in Nigeria. The Nigerian property sector is valued at $39 billion according to a recent report by CBO Capital, an investment advisory firm based in Lagos.
“I went into the property business because I felt there is a real need for it. For everybody, when you look at your needs, it’s probably food first and then you think of shelter. So there is no way anybody that is providing shelter will get it wrong. I think there are enormous opportunities to tap into in the Nigerian property market today and the reputation of the developer matters a whole lot,” says Okonkwo.
The industry still has a long way to go to satisfy the growing demand. Like everywhere in Nigeria, the foreign exchange (FX) restrictions in the country have hit the property market.
“In the operational aspect of construction, it has a tendency to drive up the cost of the construction because most of the finishing materials are imported and so the restrictions of FX make it difficult to import these goods which drives up the price. On the other hand, a property that was selling at $150,000 can now go for $100,000 if the person has FX, so for these people, there is a higher advantage,” says Okonkwo.
As Africa’s largest economy continues to grow, Okonkwo is gearing up to be the go-to property developer for the growing middle class, one home at a time.

The Miss That Led To  A bullseye

Africa has 54 diverse countries, a billion people on the move, an abundance of raw materials, the largest new market for goods and services, a food for generations and an insatiable infrastructure market for a hundred years.
Despite fragmented infrastructure delivery, due to a lack of domestic fiscal strength, weak regional integration and inexperienced internal project delivery capacity, Africa’s foreign direct investment (FDI) inflows have quadrupled since 2000.
Although FDI projects in Africa fell 8.4% in 2014, the continent’s share of global capital investment and job creation hit an all-time high, attracting more FDI than North America, Latin America and the Caribbean, and Western Europe.
Despite claims to the contrary, European investors continue to dominate investment in Africa as American interest rebuilds, while the commitment from Asia-Pacific has weakened over the past decade.
Projects are getting more complex, with the average investment of $174.5 million per project in 2014, up from $67.8 million in 2013; a 68% increase that created 188,400 jobs.
Many of the basic public infrastructure contracts in poorer countries are implemented through diverse aid agencies, barter deals, or in rare cases, through public-private partnerships.
The more than 70 Chinese contractors in Africa benefit from barter deals in relation to energy and minerals, or aid-related projects tied to the State. Many smaller Chinese contractors battle with indigenization, and the interpretation of local contract specifications, leaving technical and socioeconomic problems and a legacy of unfulfilled expectations. Group Five were called to rectify a partly constructed commercial building in a neighboring country. It had been poorly constructed by a Chinese contractor, somewhat to the architect’s specification, but as the program became tighter and the cash flow ran out, innovation ran wild. The photographs amused us for years.
Government-funded infrastructure on open tender is the area where acquiring projects can be the most difficult, and then there is the matter of securing payment. These are highly contested bids where innovation in packaging the right mix of local resources, commitment to local communities and skills development make all the difference. In some cases, corruption rears its ugly head and staff come under duress in difficult locations. Zero tolerance is mandatory. Management needs to train employees to deal with corruption and to uphold the international standards by which a business should be judged. Contrary to popular misconception, it is possible to uphold ethical business values in Africa. Robust risk assessment of counter parties is a key factor in preventing corruption.
Foreign-financed-loan or aided-public-infrastructure projects favor their own contractors, providing a partnering or sub-contracting opportunity for the larger African-based contractors.
Projects funded by the World Bank and the African Development Bank are open tenders and often bureaucratic and highly contested, with strong competition from Asia and Eastern Europe. Often funding is inadequate – causing disputes. I remember a 10-year dispute where the specifications were completely at odds with the actual site, meaning additional work was required to build the road. The dispute ended favorably, but with significant cost and delayed payment.
Technically complex projects in power, oil and gas, mining and agriculture are available in the private sector.
The Independent Power Project market is exciting but requires time and resources to support the developers. My previous company built more than 1,200MW of power plant capacity across Africa with at least another 1,000MW now in construction in renewables and gas-fired power. Mining plant construction has provided a massive boon to local construction companies in gold, copper, cobalt, uranium and coal as far afield as Madagascar, Liberia, Mali, the Democratic Republic of Congo, Ghana, Malawi, Mozambique and Sierra Leonne.
Local knowledge, the best people, the right partners, efficient execution and innovation wins these bids.
Sites are manned by a multinational workforce, so there is substantial risk in the assumptions made at the bid stage on local manpower skills, rates of production and quality of work which will determine the cost and duration. The industry exists on incredibly low margins, yet takes on massive risk. One has to see through the complexity of a multi-year project to get your bid cost accurate. It’s a tough call, yet very rewarding when it comes off.
On the flip side, the most successful long-term client relationships have been born out of managing adversity and still delivering the project.

Tough Calls Are  worth it

The once thriving Zimbabwe Stock Exchange (ZSE) is a shadow of itself. It has declined as sharply as the economy.
Last March, the African Development Bank ranked the country’s bourse as the worst performer in the region due to a lack of investor confidence. The trend is down.
At its peak, the ZSE had 79 counters, now it has 52 – with 90% of trade concentrated on the top market capitalization companies.
The ZSE saw turnover value fall from $66 million year-on-year in August 2014 to $17 million in September this year.
According to analysts, President Robert Mugabe’s inconsistent policy and controversial indigenization laws have pushed even the most resilient investors from the exchange.
The ZSE’s Chief Executive, Alban Chirume, says the country’s bourse was also suffering after the global financial crisis.
“Most companies on our exchange are failing to raise capital with foreign investors having somewhat withdrawn participating on our market,” says Chirume.
He added that international investors were wary of investing in Zimbabwe because of the country’s risk.
The exchange lost more than $1.7 billion in value for the 12-month period ending August 31, 2015.
“The bourse’s market capitalization stood at $5.2 billion in August 2014 but has been in free fall since then and is now valued at $3.5 billion, a 32.69 percent decline,” reported a South African business news website.
The decline in disposable incomes is also believed to be forcing large capitalization companies from the bourse.
Momentum SP Reid Securities’ Pan-African Sales Trader, Sebastian Gumbo, says large capitalization companies, like Delta Corporation, have not been spared economic hardships. He says the beer and soft drink company has seen a drop in volume, especially with high-margin products.
“The beer and soft drink company saw a sharp drop as consumers’ base has been moving to cheaper lower margin products, like opaque beer and Maheu,” says Gumbo.
In an attempt to stem losses, Harare has been revising some of its controversial laws.
Mugabe’s deputy, Emmerson Mnangagwa, in July, said government was working on reform to win back investors.
Leading economist, John Robertson, blames Mugabe’s Zanu–PF party for the decline.
“At the core of Zimbabwe’s economic malaise is the controversial and disastrous land reform program, rising costs of production and the indigenization policies driving away investors,” says Robertson.
“Zimbabwe should also have reduced the wage bill costs as the country does not have the leverage of devaluation of the US dollar.”
Twenty seven counters stopped trading on the ZSE since the economy was dollarized in February 2009.
Robertson says the country’s woes have been worsened by rising labor costs. He says this is a result of the strengthening dollar, since 2011, as commodity prices fell.
“Due to rising production and labor costs, the country has seen no more production as companies now import goods they used to produce, the factories are now warehouses. We have become a nation of buyers and sellers and we have turned consumers into dependents of people working in the diaspora.”
Big companies are cutting back. Analysts say this is a sign of the tough trading conditions.
“Most companies are either retrenching or changing their business models in an effort to sustain operations,” says one analyst.
The Division Chief of the Reserve Bank of Zimbabwe, Simon Nyarota, said in June, activity on the local bourse was a reflection of the slowdown in the economy.
“Since 2009, a total of 14 counters were suspended and 15 counters were delisted from the stock exchange,” he said.
It all means more uncertainty for an exchange that used to be the jewel of Southern Africa.

how Zimbabwe stocks lost $1.7 Billion in a year

As democracy gradually spread around the world, capitalism was favored over the more repressive feudal system. It meant that those who were not born of royalty, nor had genetic ties to nobles, could amass their own fortunes through innovation, hard work, perseverance and a bit of luck. It finally meant that peasants could elevate themselves from the depths of poverty to unfathomable heights of wealth.
Many would argue that there has never been an economic system in modern civilization that has liberated more people from poverty and created more millionaires and billionaires than capitalism. However, in some circles, particularly among the socialists and labor unions, there is an argument that this wealth has been accumulated through the exploitation of others. They argue that the bearers of capital offer workers lower than acceptable compensation and they in turn receiving preposterous amounts in profits.
We ought to bear in mind that no one is forced to work; every individual in the free world has the choice to be a part of the labor market and join an organization to work for in exchange for remuneration. A major proponent of capitalism is that it provides an environment for entrepreneurship. After all, all the colossal corporations of the past two centuries started small and over time grew. Today, they consistently post higher annual earnings than the entire GDP of smaller nations.
At the helm of capitalism lies the CEO, the captains who steer their companies. CEOs bring vast knowledge and experience to the party – many having studied in some of the most prestigious universities and business schools around the world.
The reality is that the CEO has one of the most challenging jobs. They are tasked with the laborious task of driving revenue for shareholders; representing the firm as its head; ensuring that all the divisions of the company function effectively, notwithstanding defining the corporate culture of the firm and instilling it in its employees.
Then there’s the socialist ideology that affirms that capitalism is a modern form of slavery masqueraded as the archetype economic system that was founded in principle on human liberty. Evidence has shown that socialist states have failed to address inequality and have compounded the issue by creating elitist factions who benefit at the expense of the majority.   It is almost paradoxical that CEOs are viewed as employees of the organization when there is a level of self-interest at play. CEOs are often granted equity in the firms they represent as a part of their remuneration packages. They then have the added incentive to protect their stake by enacting management policies and tactics that will drive profitability, sometimes at the expense of the ordinary worker. The mining sector is a prime example: when the price of commodities such as gold and platinum rises, the shareholders benefit from the increase in profits. However, when demand subsides and prices fall job cuts become the order of the day.
Several years ago, my management lecturer said the compensation that CEOs receive ought to be globally competitive.
“Great CEOs are in high demand and as such their remuneration should reflect this, but more importantly should perturb them from seeking better opportunities abroad.”
This is the world that the capitalist system has created. Instead of asking whether it is fair that CEOs earn vast amounts of money compared to others, the question should be whether this system of self-interest masqueraded as capitalism is one that is just and equitable, especially in South Africa, where there are skewed levels of income between low-income and high-income households.
Despite capitalism’s faults, there has never been a system that comes closer to benefitting all. Until such a system is conceptualized, we will continue to debate the exorbitant salaries of CEOs and why capitalism continues to fail us.

equity and  equality

The FORBES AFRICA Person of the Year for 1324 could very well have been a certain flamboyantly wealthy King of Mali, says Martin Meredith, the celebrated British historian of Africa.
“The richest man, that the world has ever seen, was Mansa Musa. [He] makes a Hajj to Mecca, arrives in Cairo and literally hands out gold bars to the waiters. He wrecks the money market for ten years or more&#8230; that story of his arrival eventually finds its way to Europe&#8230; the first European map, the Catalan map of 1376, has a portrait of [him] with a caption that says, ‘this is the richest man that the world has ever known.’”
<div id="attachment_3417" style="width: 226px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-3417" class="size-medium wp-image-3417" src="/wp-content/uploads/2017/04/Martin-Meredith-216x300.jpg" alt="" width="216" height="300" />Martin Meredith</div>
His gold-dishing arrival in Cairo inspired the first Spanish expedition to the continent, hunting Musa’s gold. The expedition set out for West Africa, searching for the fabled ‘River of Gold’, but the crew got lost and all were presumed dead.
At his death, Musa was worth around $400 billion, which make’s Bill Gate’s $81.8 billion look paltry.
As his empire fell, so did Africa.
“I discovered the extraordinary parallel themes of African history, compared to what is going on now. It has always been that Africa has been this enormously wealthy continent and yet it is the poorest continent. There’s a paradox about it,” says Meredith, who examines this 5,000-year paradox in his latest release, The Fortunes of Africa.
Meredith has had two careers in Africa, far from gold bars; first as a journalist, then as a historian. After fulfilling his boyhood dream of navigating the Nile, when 21, he moved to Lusaka and became a journalist.
“The first president I ever interviewed was Julius Nyerere of Tanzania, at the age of 22. He was a sort of giant intellect. We were sitting out in the State Palace in Dar es Salaam, looking out across the sea and there was Nyerere, hoping for real intellectual debate. Instead, he was faced with a green, inexperienced reporter who wasn’t giving him any argument!”
After 15 years reporting on the continent, he left to become a research fellow at Oxford University which spawned a shelf of books.
“I am essentially a story-teller, which is what journalists are, but the stories I tell have a very large dimension,” he says.
His first book, 1979’s The Past is Another Country, was a story of a soon-to-be independent Zimbabwe. Since then, he has written on everything; from elephants to Nelson Mandela. His most successful was The State of Africa, a contemporary history.
His latest title came after a year’s research. He calls it a standard history of Africa, which picks apart the economic roots of conflict and poverty on the continent, drawing on years as a foreign correspondent.
“This extraordinary World Bank figure [says that] 40% of Africa’s private wealth [is] held outside Africa which [contrasts] with the Asian experience. They have levels of corruption which are pretty high too but what happens there is that wealth is ploughed back into businesses, they might be mafia-type organizations, but they build factories and industries so the money is ploughed back.”
On the other side of the gold coin, Africa has a penchant for vanity projects like the Pyramids of Giza right to Mobutu Sese Seko’s ruined Gbadolite Palace, which had a private concord airstrip so he could fly off shopping.
“The money in Africa is taken out by the ruling elite and the growing middle class, so it’s safe and secure and they can enjoy buying properties in Europe. London is awash with Nigerian millionaires! Corruption happens everywhere, you expect a certain level of it. Where the focus of ambition lies in making as much money as possible, regardless of the circumstances, that is when it becomes dangerous. It affects so many African countries.”
The greed-inspired accidents of history are at the root of Africa’s woes. The Spanish expedition, inspired by Mansa Musa’s riches, led to centuries of extraction of African wealth for foreign gain. Hence, the birth of the infamous resource ‘curse’.
If in the last 5,000 years of this continent, the past has become our country, then, as the old adage goes, those who do not learn, or remember, their history are condemned to repeat it.
Meredith is certain to write it.

Person Of The Year For 1324

Kerryne Krause-Neufeldt was on a roll. She founded her first beauty product business at 23 and was turning over $45,000 in the dying months of her company. But she lost it all on her worst day.
“I never thought in my wildest dream that anybody would steal my company from me. Seriously, how would they get that right?” she says.
Born in Pretoria, she was raised by a single mother who ran a hairdressing salon.
Krause-Neufeldt worked odd jobs while paying her way towards an Honours degree in marketing at the University of Pretoria. From working as a sales lady at a small outdoor store, she packed her bags and left for London on a two-year working visa, to toil for a sandwich making store, Pret A Manger. She was training to be a manager for one of the stores the company was going to launch. It was here that she learned how a well-oiled, structured company functioned. But after three months, she returned to South Africa on the promise of a job.
“The difference in having worked for Pret A Manger in London and coming back to work for this company was a culture shock of note and it was a defining moment for me. I realized there was no vision. I was never going to see this marketing position,”
she says.
She resigned after five weeks and decided to start her own business – a distribution company, supplying cheap eye masks that rejuvenated the skin and removed puffiness. She called up the principle office for the eye masks in Switzerland which did not have a market in Africa.
They offered 10,000 eye masks to sell in South Africa but Krause-Neufeldt needed funding to start this business. One of her mother’s customers was a lawyer who dabbled in business from time to time. He wanted to start his own business but Krause-Neufeldt convinced him that her business idea was more viable. But he wanted 51% of the business.
“He knew I was caught between a rock and a hard place. He said, ‘I’ll give you the money but its 50/50 for the business,’ and in that moment I was relieved I could get started on the business but somehow I knew it was the beginning of the end,” remembers Krause-Neufeldt.
The lawyer funded the first 2,000 units. She hired around 12 sales reps and did all the training and focused on the administration. She also hired Peggy, her best friend, who would distribute the units to the sales reps from a factory. The sales reps earned commission on all the stock they sold, while she earned a mere salary of $275, which she felt was too little.
Business picked up and more stock was brought into the country and South Africa became one of the biggest markets for eye masks.
After running the business for close to two years, Krause-Neufeldt told her business partners that they had to inject more money into it to meet their side of the deal. They were reluctant and felt she was becoming a problem.
Then, at peak season during November, three of her sales reps picked up units worth $91,000. Peggy counted the stock and gave it to the sales reps. They should have delivered the products and returned with the cash, but they never came back.
When Krause-Neufeldt approached her business partners about it, they said that the sales reps gave them the money and that they were investigating her for fraud.
“I asked them how much the reps were giving them and they said R30,000 ($2,740). I said they have R1 million ($91,000) worth of stock. I told them they were getting nailed, but I was the enemy,” she says.
Her boyfriend was a director in the company.
“I was fighting with my boyfriend at the time and I told him he can’t be playing golf all day and take a salary. I told him to do something and he said he’d be a sales rep.”
While in a meeting a few days later, the partners asked Krause-Neufeldt’s boyfriend whether he was earning commission. According to the contracts, it was illegal for directors to earn commission as part of their pay package unless the board of directors approved it.
“We went into a meeting and that’s the only dirt they could find on us,” says Krause Neufeldt.
The partners said they were going to open a criminal case against her and the boyfriend unless she signed over her shares and released the company to them. She tried to get lawyers in but had to fork out around $3,600 upfront. Krause Neufeldt couldn’t afford this with her small salary.
“I signed my shares for nothing and handed my company to these people. I didn’t have a choice in the matter,” she says.
Krause-Neufeldt lost everything. She also signed a restraint of trade agreement. She lost her distribution agency and a local market she had personally grown.
“It was the biggest trauma of my life. To be betrayed by everyone and you know I’d get calls from salons that would complain about my reps and I wouldn’t believe them. I lived for my staff. It was devastating.”
Krause-Neufeldt, however, refused to lie down.
“I just believed failure was the inability to get up again. So I resolved to get up the next day and start another company to show them,” she says.
She immediately started working on her next business, I-Slices Manufacturing. She had come across an Italian eye mask but it wasn’t in line with the quality she wanted. So she decided to develope her own product.
She needed the technology that would make the base of her product, Eyeslices. A friend introduced her to the Council of Scientific and Industrial Research (CSIR), a research and development organization. Here she found the department that worked on a hydrogel treatment pad for burn wounds but the idea was shelved in 1993 because it couldn’t be developed further.
One day, Krause-Neufeldt met Avie Kruger, a scientist who had worked in the CSIR polymer department, and helped her to develop her products.
She started her own laboratory in a cottage on a plot in Midrand, outside of Johannesburg, but there were no standard manufacturing methods or equipment available to produce the product she wanted.
Her mentor suggested she look into the food industry and she came across a machine which had oval cut outs, similar to those of Eyeslices. She contacted Ulma Packaging Solutions, a company that packages products such as yoghurts and meat. The next morning, they arrived at the cottage and started to help Krause-Neufeldt customize her machine.
It took about one and a half years to create the perfect Eyeslices products following the seven years of research. Today, Eyeslices is a reusable stable water-based hydrogel eye mask manufactured through a physical process of freezing and thawing.
Instead of placing cucumbers on your eyes, Eyeslices does that job better and it’s a product many beauty salons have stocked on their shelves.
The United States was I-Slices Manufacturing’s first distribution country. Today, the company boasts 19 other export markets including and hopefully followed by Morocco, Kenya and Nigeria.
Krause-Neufeldt says the challenge with exporting products on the continent is that Africans want brands to be successful in the overseas market before they buy. Regulations can also be a problem.
“Every single country in Africa, the regulations are different and they’re very onerous. They’re incredibly expensive,” says Krause-Neufeldt.
But she is not giving up just yet, she plans to grow the product and take it to many countries on the continent. She hopes it will be one in the eye for cucumbers.

‘I Never Thought Anybody Would  Steal My Company From Me’

Positive news is flowing out of Africa these days. The global consultancy Ernst &amp; Young, now EY, ranks Africa as the world&#8217;s second-most attractive market after North America.
If anyone had asked me, I would have pointed at China as the world&#8217;s second-most attractive market after the United States (US).
Okay, forgive me. China is the world’s biggest factory yard. Can Africa be a base for a global factory and one day rival China’s manufacturing might? Yes it can.
Let’s start with the obvious. African governments certainly need to invest more in healthcare, education and innovation. They need to promote more public and private capital into infrastructure – roads, modern railways, power plants etc. These steps should – all things being equal &#8211; further facilitate intra-Africa trade which also needs to grow. Presently, African nations conduct only about 10% of their trade with each other, according to the World Bank, which also reports that the continent’s share of global trade in value terms currently stands at less than 5%.
A substantial share of the world’s timber, diamonds, gold, cobalt, copper and platinum come out of Africa. Transforming Africa’s raw materials into finished goods before exporting them to the rest of the world would also help.
South Africa already exports German technology (BMW sedans) to the US. Ethiopia has excellent leather and coffee. Kenya produces world-class tea and horticulture. Beyond its crude oil and liquefied natural gas (LNG) exports to international markets, Nigeria’s movie and music industry has practically displaced European and American pop culture across the continent, helping to rekindle African pride, local talent industries and worldwide appetite for indigenous African content.
Foreign firms are all over Africa, scrambling for opportunities. In China’s case, its direct investment in sub-Saharan Africa has jumped from virtually nothing in 2002 to $18.2 billion in 2012. The EYs and McKinseys of this world are only stating the obvious: Africa is a very safe bet for Western and Asian companies, European private equity firms and fund managers from Silicon Valley looking for superior return of investment (ROI). The counterpoint to this fact is to ask how well Africa will harvest its ROI delivery capabilities.
Will Africa take advantage of its unique spot in global trade to improve its society and environment?
Africa’s business and political leaders attending the US-Africa Summit in Washington last August came away with more than $14 billion in investment pledges by American firms.
According to the Brookings Institution, cumulative foreign investment in sub-Saharan Africa grew from $33.5 billion in 2000 to $246.4 billion in 2012. Former New York City mayor, Mike Bloomberg, says it is now factually incorrect to refer to Africa as an emerging region.
“Africa has finally emerged,” he says.
We all, however, need to look beyond the continent’s sweet and sour stories to see this emerging reality. The harsh reality of life in Africa for so long has been one of stagnated growth and arrested development fueled by endemic graft, penury and scarcity in the midst of affluence, painful and unprogressive politics, career militants, religious and ethnic strife, wars, cross-border epidemics, currency constipations, illicit trade, human trafficking and the sheer reluctance of Africa’s elite class to confront the bogey of nepotism.
Thankfully, these harsh realities are being attenuated – at national and sub-national levels – by positive exemplars of economic and social progression and by a new wave of afro-centric thinking which seeks to locate and redefine Africa’s role and position in the evolving global polity.
Practically every corner of the African continent today is adding value to Africa’s new growth story. A McKinsey report released in August 2014 states that the continent is home to eight of the world&#8217;s top 15 fastest-growing economies between 2000 and last year, with growth topped only by East Asia, which includes China.
Several sectors – the entertainment, financial services, telecommunications, information technology and agriculture sectors – have helped to galvanize this growth spurt.
Responsible for most of the foreign investment streaming into Africa, their cumulative contributions to social and economic transformation will continue to spur growth and new jobs. They have been the most receptive to the disruptive influence of innovation. They have helped to define the new picture of Africa rising out of the development woods.

Africa Is A Safe Bet

Success stories in South Africa’s clothing industry are few. They are about as rare as finding a standard white T-shirt in your local mass market retailer without the ubiquitous ‘Made in China’ label attached.
The clothing industry has lost around 150,000 jobs since 1996 as it valiantly fought, and lost, the tornado of imports of fast, cheap and disposable fashion from the Far East. It’s estimated that 90% of the clothes hanging on rails in South Africa today have made their way to local shores in vast container-loaded cargo ships chugging across the Indian Ocean.
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It’s the eulogy of a globally uncompetitive economy. And yet, the patient shows signs of life.
Keedo Clothing, a children’s clothing company, is thriving 21 years after its inception. All items are manufactured by a team of 100 seamstresses in Cape Town’s industrial belt and sold in company-owned stores around South Africa as well as exported to 16 countries worldwide.
“Keedo has weathered the 2008 global recession, a flood of cheap Chinese and other clothing imports, a disastrous cotton harvest in 2010 and the collapse of the local textile industry,” says Nelia Annandale, Keedo’s founder.
Keedo began to take form in 1991, shortly after the birth of Annandale’s twins.
“After they were born, I realized that there was not much available in South Africa in terms of children’s clothes which was fun and one hundred percent cotton and good enough for my beautiful offspring.”
Necessity is the mother of invention, as they say, and Annandale created clothing patterns, dyed fabric and stitched up tiny t-shirts, shorts and dresses – all on her kitchen table. But it wasn’t until two years later, in 1993, that inspiration to sell the garments commercially struck.
“I was involved in a near fatal skiing accident which left me in a hospital bed for weeks. During one of my sleepless nights, I realized I had to do something to combine my passion for children, my passion for clothing, for nature all in one and create a brand,” she says.
Annandale had no funds, no formal business training and no experience to speak of but she did have clothing samples; which she took in a brown paper packet to her bank manager’s office and asked for a loan.
“Luckily, my bank manager was a woman so when she touched the clothing she knew it was special. I was granted a little loan and that was what I used to start my business.”
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The first Keedo store opened in 1994 but the company was still very much a one-woman show with Annandale making patterns, cutting, sewing and hand-drawing pictures of animals on the fabric which are core to the company’s nature conservation identity. The shop was tucked away in Cape Town’s sleepy northern suburbs – a good 30-minute drive from the city’s flashy tourist attractions and coastline. This is why it came as a surprise when a Swiss tourist wandered into the store with her small child and bought up a good portion of the merchandise on offer. She returned a little later with a proposition to take Keedo to Europe.
“She called me the day before she was due to fly home and asked if she could take my clothing to Switzerland. She bought a box full of samples and tried it out at an informal market. Three months later, we opened the first international Keedo store in Baden, Switzerland.”
Annandale has spent the two decades since then completely immersed in her company; although these days, she spends less time cutting and sewing and more on conceptualizing new product lines and driving strategic decisions. She is still inspired by children and nature.
Annandale won an award at the International Women’s Entrepreneurial Challenge; the 9th Annual Award for Top Women Successfully Leading Business: Top Gender Empowered Company: SMME; the Cape Chamber of Commerce Exporter of the Year Award in the design category and was named the Business Woman of the Year at the Black Business Quarterly Awards in recognition for her role in transformation.
Woman make up 85% of Keedo’s workforce and the majority of them are single mothers. Annandale says the defining moments in her career are those in which she has had the opportunity to witness women grow from being shy and uneducated to confident individuals in charge of their own lives and jobs.
Her dream for Keedo is that it remains a South African-manufactured product and continues to create jobs in her homeland.

What To Do When You Cheat Death

Stars are still out as Dirk Schlebusch starts work at 4AM. It is the busiest time of day for him as truckloads of potatoes arrive at the Joburg Market. In the next few hours, they will be traded as commodities worth millions.
The market’s 10 halls, that span 64 hectares, are piled high with pallets of every kind of fruit and vegetable. This is the primary fresh produce exchange of South Africa as well as destinations across Africa. It is also the largest of its kind in the world.
Before noon, the dynamics of supply and demand, of middlemen’s mark-up and the whims of what nature offers up on the day, merge to determine the first price tag on fresh produce as it exits the market. Food price inflation and food security issues are becoming more and more important as population numbers explode and demand soars. It puts the links in the chain, like the passage of food through the market, under increasing scrutiny.
Schlebusch is a buyer with Wenpro, one of the most established agents at the market. They serve as middlemen between producers and buyers. He specializes in potatoes, like his father has done for 40 years.
Potatoes and onions are big sellers at the Joburg Market and together fill out their own hall. An average day sees around 1.4 million kilograms of potatoes traded.
Schlebusch has standard daily orders from big retail chains, wholesalers and the companies that process vegetables for frozen food products. He also sells to restaurants, hawkers and walk-in buyers.
“We have potatoes for everything and potatoes with every kind of price tag to suit whatever buyers are looking for.”
When determining a daily price, Schlebusch checks the quality of physical stock that arrived on the day, examining stats from previous days and pulling up stock sheets that detail the availability of potatoes throughout the market.
With fresh produce you don’t have the luxury of stockpiling for extended periods to influence the market in the hope of fetching a higher price. It’s too much of a gamble &#8211; fresh food perishes or loses quality and there’s no saying what hand nature will play.
Schlebusch says it’s ultimately down to supply and demand, the best produce still fetches the best prices and the highest bidder still wins. It’s how the market has functioned for 120 years, from the days of its origins in Newtown. The market is just a few years younger than when the city of Johannesburg itself was founded.
Schlebusch’s ear is glued to a phone, communicating with buyers and farmers throughout the day.
“It is about relationships. If you don’t give your farmers the service they expect they’ll go to another agent and if your buyers don’t get the produce at the prices they want they will also go somewhere else,” he says.
As he chats, a call comes through from an anxious farmer. A lorry has been delayed; it never made it to market on time to join the sample displays. It means an instant drop in price for the farmer as his potatoes become day-old stock.
It’s the middle of July, and at the market the bulk purchase price of Grade 1 bananas is worked out at around R4.45 a kilogram (R1=$0.10). They will end up in the mid-range supermarket upwards of R8.99 a kilo. The top-grade potatoes are selling at R46 for 10 kilograms. The price almost doubles at retailers.
The price gap from market to retail comes with everyone along the value chain taking their cut. Tracy Davids, an analyst at the Bureau for Food and Agricultural Policy (BFAP), says day to day market prices are more volatile than what end consumers see at retail level. The price hikes come from transport and labor costs, repackaging, labeling and operational and distribution overheads that retailers incur. Added to this is the rising fuel and electricity costs in South Africa.
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Davids says managing food inflation ultimately comes down to having a more robust economy.
“Food security will always be a critical issue and at the end of the day it’s the consumer who pays more and more as costs in the value chain increase, which is why we need effective value chains,” she says.
Piet van Zyl, who runs Wenpro’s fruit section, outlines some of the unique challenges of handling fresh produce. Although the value chain comes with mark-ups, disruptions can cause even more hikes. Wenpro has seven cold rooms, each runs at around $470 to $560 a month. It makes load shedding and power cuts his biggest nightmares. Agents are responsible for the upkeep of their own pallets and fleets of forklift trucks that criss-cross the halls in urgent beeps. Agents are also responsible for the health, safety and general cleanliness of their halls. It adds up to operating costs that run into the millions.
“Agents must perform and grow or the market will start taking away your floor space,” he says, waving his gloved hand, protected against the early morning chill, across the expanse of the hall that is Wenpro’s terrain.
Agents must be able to offload produce fast enough, retain the integrity of the product on the warehouse floor and sell as quickly as possible at the best price possible.
“Sometimes the agent’s buyers resort to salvage sale, it means they will make up the loss from their profits to make sure that the farmer still gets his base asking price. It keeps the farmer loyal to the agent and opens up floor space. Good buyers know where they can afford to take a loss and where they can make a profit,” says Van Zyl.
Agents take up to 7% on any deal, 4% goes directly to the agent’s buyers. The market takes a 5% cut.
It’s something that’s top of mind for Gugu Hadebe. She is the director of Egoly, the newest of the market’s three Black Economic Empowerment agents.
Hadebe says breaking into the market as a black woman was not easy. Her advantage is that she was previously employed by the Joburg Market. She understands the role of agents as well as the cultural, political and historical nuances attached to farming in South Africa. Another significant insight she had was to team up with old hands in the business, which plainly put, meant white males.
“I knew I had to have the right partners, people who have been in the game longer than I have been, people who have built relationships with farmers and buyers,” she says.
Egoly currently has eight sales staff. They concentrate on selling to hawkers rather than competing at this stage, with the likes of Wenpro, with its 350 staffers, who target bigger fish like retail giants.
“There is a big hawkers market out there that’s still growing in South Africa. People still buy from the [old lady] on the street where they pay less, where they may know the seller and they pick and choose as they like,” says Hadebe.
Each of the market’s 14 agents has to find its niche to deliver a value-add. Some do specialty items like sourcing exotic dragon fruit from South East Asia, or making sure there’s enough ginger for the explosion of sushi bars across the country. Others offer pre-packaged produce or some, like Egoly, target specific sectors within the pool of buyers.
“We don’t sell anything as a market. It is a free market system, we are just a platform where anyone can come here to sell through an agent or to buy from whomever they choose,” says Simangele Sekgobela, CEO of the Joburg Market.
Sekgobela adds that the market has had to respond to changing demands, like the key issues of traceability of produce and minimizing human handling of food.
“We’ve also had to adapt to meet international standards, which includes things like maintaining an unbroken cold chain and following standards for pesticide limits,” she says.
The adapt or die principle applies to the market, like it does to almost everything else.
“We have seen a decline in the stock that comes through the market in the past few years. Retailers are doing more direct sales from farmers and developing their own storage facilities. In the future, there will also be more virtual sales that will mean produce will not physically come through the market. It’s the reality of a free market, but you’ll never replace the market completely. You will still need the market for its facilities, its quality control and convenience of having everything under one roof,” says Sekgobela.

Tag: market

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