Montego Foods is cradled in the fourth oldest South African town, where the Sundays River meanders through the Great Karoo—a semi-desert region in the Eastern Cape Province. Many youngsters leave this quiet idyll for the noise and money of Johannesburg. It is the largest privately-owned employer in the Graaff-Reinet area. These days many more decide to stay and work for Montego Foods.
When Hannes Van Jaarsveld, aged 60, bought the business in 2000 it employed 11 staff, today it employs around 250—220 of which are in Graaff-Reinet. The increase in employment goes hand-in-hand with production. In its first month in 2000, Montego Foods produced 65 tons. It took time to break into the market and after three years the profit began to roll in. Now the company produces up to 200 tons per day and more than 3,000 tons per month.
The company expanded faster than Van Jaarsveld expected. It is worth R100 million ($12,2 million) and is family-owned: Johan (30) is the international marketing manager; Marco (33) is the production manager and Morné (36) is in charge of administration in Graaff-Reinet.
<div id="attachment_1280" style="width: 229px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-1280" class="size-medium wp-image-1280" src="/wp-content/uploads/2017/04/Hannes-van-Jaarsveld-219x300.jpg" alt="" width="219" height="300" />Hannes van Jaarsveld</div>
This solidarity is the company’s greatest asset.
“There are no shareholders, it’s just the four of us,” says Hannes Van Jaarsveld.
“Our biggest advantage in the market place is that we’re a family-owned business, we can make crucial decisions on-the-fly. Each of us always knows what is going on in each department of the business. All four of us are very hands-on all the time. If there is a customer complaint it comes directly to Marco, who is one of the owners of the business, it’s not just a clerk who is a clerk or somebody. It goes directly to management,” he says.
“If we know a customer doesn’t have food on the floor, we will bend over backwards and get the food there because we know that every bag they don’t sell, is a bag we don’t sell. At the end of the day, that bag comes off your bottom line profit. We feel if you’re too big, you can’t do that. We would like to grow our business but we don’t want to lose that personal input and affection of the business,” says Hannes Van Jaarsveld.
At this stage, they are not looking at listing on the South African stock exchange.
The company, which holds more than 20% of the country’s pet food industry, supplies 1,000 South African stores and has 15 depots nationwide. It is looking to expand and exports to Botswana, Angola, Ghana and Zimbabwe. Their biggest competitors are Nola, Nestlé Purina and Royal Canine.
“If you don’t keep expanding your market, you might land up losing your market,” says Hannes Van Jaarsveld.
Montego Foods sells at veterinarians, pet stores and dog parlors. Supermarkets are not part of its strategy.
“Marketing-wise it would have been easier with regards to brand awareness, but logistically and sales-wise it’s easier to compete in the independent market than in the shark-infested waters of the grocery world,” says Johan Van Jaarsveld.
“The main reason being, mainstream retailers, when they start getting bigger, put so much pressure on you, as far as pricing is concerned at the end it’s not worth your while,” agrees Hannes Van Jaarsveld.
Five years after the Van Jaarsveld family purchased the company, they invested between R8 and 10 million (more than $1 million) in the extrusion and production side of the company. In 2010, they invested a further R18 million ($2,2 million) to increase production by 400 percent.
“Every time we increase capacity we go under pressure to meet the local demand. Now is the first time that we are starting to breathe a bit but we are still a bit restricted because the production side can handle a lot more than the milling side,” he says.
Earlier in the year, they approved further expansion, worth R25 million ($3 million), in the milling, grain storage and handling department. While still in the planning process, the project will take a year to complete.
“We could spend R2 million ($245,000) to cut around 30 to 40 jobs but that’s not what we want to do. We want to keep people employed,” says Hannes Van Jaarsveld.
A noble sentiment in these difficult economic times, from a company whose bite is bigger than its bark.

Aiming To Be  Top Dog

Samuel Kamau Macharia was among the first in his hometown to buy a transistor radio—villagers would congregate at his home to listen to the news or football commentary. This gadget would turn out to be the pillar of his businesses.
Nothing about the communications center hints at the secrets and wealth inside. Located in upmarket Nairobi, a stone’s throw from State House, one of the newest buildings in this neighborhood, is hardly worth a second glance. On the third floor, in an office the size of a swimming pool, sits an aging man simply known as SK—the initials of his first two cultural names.
SK Macharia, now in his early seventies, is the proprietor of Royal Media Services (RMS), Kenya’s most successful broadcasting media house valued at $500 million. It runs a television channel, Citizen TV, and 14 FM radio stations. Many agree that Macharia, balding but with a smooth face, is Africa’s answer to America’s Ted Turner—the founder of Cable News Network (CNN), the first 24-hour cable news channel.
Macharia has built his empire in less than 10 years, from one television and radio station in 2002, by thinking and acting local. RMS has a presence in six countries in East Africa—Uganda, Tanzania, Rwanda, Burundi as well as Zambia—where it broadcasts through transmitters and the internet. The company broadcasts 12 radio stations in vernacular, one in English, the official language, and another in Swahili. Most elitist media investors frowned upon this niche market since they believed that only English and Swahili speakers had buying power.
“What we have achieved is purely because of local productions,” says Macharia.
Nearly 70% of Citizen TV’s content is locally-produced, exceeding the 40% recommended by the government. This local thinking has helped Citizen TV overtake established private stations such as Nation Television (NTV), Kenya Television Network (KTN) and state-owned Kenya Broadcasting Corporation (KBC), which are now playing catch-up in local programing. According to a survey by Ipsos Synovate Kenya, a research and polling company, Citizen TV controlled 52% of the television viewership market in Kenya in the last quarter of 2011, leaving nearly a dozen rivals to the rest of the pie.
Only KBC had vernacular broadcasts and they were restricted to an hour a day. After Kibaki came to power in 2003, Macharia started providing each community with its own radio station and round-the-clock programing.
“The radios have played a crucial role in spreading information among the older generation,” he says.
These community radios have split the advertising market into niches, giving the national broadcasters a run for their money and offering marketers more targeted advert channels. And with 12 vernacular radios, the cumulative ad revenue is huge.
Former president Daniel arap Moi banned ethnic-based radio stations, except for KBC, for promoting ethnicity. Macharia has a different take on this.
“Anybody who says vernacular radio fuels ethnicity is foolish. Go to the UK, Russia or Canada and you will find radios broadcast in local languages. These are languages people understand. How do you get your grandmother to understand politics in Swahili and English? Even economic matters, they will understand better in their mother tongue. You can promote ethnicity in any language. Ethnicity is created and developed by politicians,” he says.
“Take the case of Rwanda—the radio that caused genocide was government-owned. If there is no private radio, the government can tell people to do anything. Our work is to entertain, educate and inform.”
Macharia’s love affair with the airwaves has not only helped increase radio listenership in the country, especially among the illiterate and semi-literate, it has also created 1,200 jobs.
While Macharia may find it hard to find political support for vernacular radio stations, Philip Ochieng, a leading columnist in the Sunday Nation newspaper vindicated him in a recent article.
“I know at least one Kenyan entrepreneur—SK Macharia of Royal Media Services—who seems to recognize the importance of tapping talent and expertise from all of Kenya’s ethnic communities and paying them well. In this way, SK understands capitalism much more than all our barons in the private sector and, especially, in the parastatal corporations. The talents help him to make money. But, in the process, he builds a company in which all communities invest at least some goodwill and trust. SK Macharia fights tribalism in this country much more tangibly than all our teachers, politicians and priests together,” he wrote on April 24.
In the radio world, RMS is the undisputed king—a broadcasting phenomenon renowned for a daring spirit, deft marketing and spectacular ad revenues. The company takes in more advertising revenue through its ubiquitous radio channels than any other group in Kenya, according to industry figures.
With transitional elections in March 2013, Macharia says RMS is sprucing up its news coverage and presentation, which blends a western style with an African human-interest angle. The imitation is sometimes comic—imagine a business reporter trying to copy Richard Quest of CNN or a weekend news anchor mimicking Zeinab Badawi of BBC.
“We hire the best presenters and anchors. If you are in broadcasting and you are top in the industry, we are ready to pay the price. You cannot maintain high quality unless you pay well and make them happy,” he says.
“For me to compete and beat NTV, KBC and KTN, I have to get the best raw material. If the competition works hard, I must work harder.”
Royal Media Service wants to continue leading the pack—it is one of the few media houses in sub-Saharan Africa to acquire a Ksh300 million ($3.5 million) chopper for news coverage.
Yet, barely a decade ago, Macharia was a non-starter. The airwaves had already been liberalized in the early 1990s, when he entered into radio. In the television market, KTN was market leader, followed by KBC and NTV. In just eight years, RMS has not only outrun its competitors locally but has a growing across the continent.
It hasn’t been an easy rise for Macharia. He tells the story of his life with a grin, relishing its effect on the listener. The FORBES AFRICA team arrived one chilly Tuesday in June only for him to turn us away, with a sad smile, in favor of a meeting with Kenya’s Prime Minister, Raila Odinga.
Macharia’s story starts in Ndakaini, a poor, central Kenyan village where he was born in 1944. When he was 10, he was separated from his parents due to a state of emergency and forced to herd cattle with nomads in Arusha, Tanzania. After things calmed, he trekked home to trace his parents. It was a life of struggle for Macharia’s family who worked on European settler farms for a pittance to feed and educate a family of five. Many times, he dropped out of school because of the lack of funds.
He did not attend high school and became an untrained primary school teacher, earning ten and a half US cents. Despite being an average student, his thirst for knowledge was insatiable. After teaching for some time, he decided to go to the US. Through the help of a clever travel agent, Macharia used a fake plane ticket to get a visa at the US embassy in Nairobi. He missed a government-organized airlift. Alongside other Africans and Indians he traveled by bus—through the thick forests of Uganda and the plains of Sudan to the scorching deserts of Libya—ending up in Benghazi, 50 days later, from where they took a ship to cross the Mediterranean to Europe.
“There was no bridge across the Nile, so passengers crossed the river on rafts—three logs tied together which floated and followed the current. Depending on how the log moved with the current, some people would find themselves far downstream.”
They then took a boat to Dover, where the group caught a train to London, from where he flew to New York. But he had underestimated the distance to the Seattle Technical College, where he was to study. So he took another bus.
“I did not have money to fly. I wandered around and ended up in a police station. The police had two choices: to incur the expense of shipping me back to Kenya or arrange for my transport to Seattle. They put me on a bus and we travelled for 10 days.”
Unbeknown to Macharia, the couple assigned to host him had divorced. He stayed at the bus station for nearly two weeks until the wife rescued him.
“I was given little food and had no heating—it was winter. Luckily the local priest learnt of my plight and took me to his house. I was later taken in by a volunteer family who did not have children,” he says.
Macharia cleaned supermarkets at night and worked manual jobs at manufacturing companies to make an extra penny.
After completing high school, he enrolled at the Seattle Pacific University where he graduated with a Bachelor of Arts in Political Science. He enrolled in the University of Washington for a Bachelor of Science in Accounting. Macharia returned to Kenya in 1969 with two undergraduate degrees, a Master’s and a Certified Public Accountant qualification to boot. Then he started toying with business ideas from establishing a toilet paper manufacturer to a pulp-producing factory and later a credit card financing outfit. The turning point came in 1992, when Macharia experienced a nasty discrimination by KBC and started plotting to run private radio and TV stations. He was among the young crop of politicians fighting the Moi regime and supported opposition leader Jaramogi Oginga Odinga at the time, in Kenya’s first multiparty elections.
“I was his political and economic adviser. There was only KBC and KTN [owned by President Moi and other ruling party Kanu men] at the time. I paid for Jaramogi’s campaign commercials, but they were not aired on KBC and they did not refund me the money. And we believed Jaramogi would win. When he lost, it was a calamity for me. He lost the elections because KBC did not air his commercials and I told myself nobody would ever do that to me.”
So he naively applied to KBC, instead of to the Ministry of Information and Broadcasting, for a TV license.
“The KBC MD called me back and laughed at me. I went to his office and he laughed at me again with his legs on top of the desk.”
He re-applied for the license, this time to the office of the president, but his request was rejected. He knew he was paying the price for backing an opposition candidate.
“I replied and gave them seven days to give me the license or I [would] sue,” he says.
They did not. So he went to court in 1993 and fought it out until 1996, when he got the license. He started Citizen Radio late in 1998. The government closed it down in January 2000 because the radio station was critical of it.
“We were telling a little more truth than the government was willing to acknowledge. We stayed for a year fighting the closure and reopened in 2000. In April 2001, it was closed again and our equipment was vandalized to ensure the station does not restart. We went back to court and reopened in November through a court order,” says Macharia.
The suffering has made Macharia a strong advocate of democracy and media freedom. He says democracy cannot work without press freedom.
“The media in Kenya is now fully protected by the new constitution. Now, we can play a major role in democratization. Everyone is born alone, with his or her little brain. You are supposed to be free to use it to do better for yourself, your family and your country.”
Macharia says success in media business comes from out-of-the-box thinking and having the best people. More importantly, he adds, being able to pick yourself up after falling and moving on. In short, turning any failure into success.
But age is catching up and Macharia plans to make the company public to spread its ownership and secure its future after he bows out. He is not a believer in perpetuating family business.
“Africans are not like Indians who hand over their businesses to their sons and daughters. I have two sons who run their own businesses and my daughter works with me here at Royal Media. For a huge organization like this, the easier way is to go public,” he says.
Some say he has used his political networks to have his way in business, but he retorts that he doesn’t have better connections than most people. Even then, it bothers him that African leaders still look down on African entrepreneurs.
“It’s sad that after independence, most African governments still treat us as second-class citizens. If a sweeper comes from the UK and uses a telephone booth to call a minister and speaks the Queen’s English, the minister will be waiting for him at the door. For a black man, it will take 10 years,” he says.

The TV Dreams Of Africa’s  Ted Turner

Wupperthal, in the Western Cape Province, is home to the oldest shoe factory in South Africa. And if a hall of fame for prominent sales agents were to be built, former President Nelson Mandela and musical legend David Kramer would arguably feature with the founder, and German missionary, Johann Gottlieb Leipoldt, who started the enterprise in 1836.
Leipoldt and a fellow German missionary of the Rhenish Missionary Society, Theobald von Wurmb, founded the town of Wupperthal in the remote Tra-Tra valley on the edge of the Cederberg Wilderness in that year.
The factory is still housed in the original building set up by Leipoldt. Some of the tools and lasts are originals brought from Germany in the early 19th century.
At the height of its popularity, the shoe factory created jobs for between 42 and 46 skilled cobblers to manufacture the famous Wupperthal handsewn veldskoene (traditional Afrikaans soft suede shoes), which are famous for their comfort and good craftsmanship. Kramer and his love for the red suede shoes, which were his trademark, made those veldskoene famous with his Volkswagen TV advertisements. The veldskoene were also immortalized by his song about ‘rooi veldskoene’.
Mandela and Geraldine Fraser-Moleketi, the then minister of welfare and population development, visited the Wupperthal shoe factory in the late 1990’s and Mandela received his leather shoes from Arnold Gertse, the manager of the factory.
Mandela promptly put his new gift to use by wearing it.
By faxing the outline of their feet to the factory, customers can still order the shoes for between R320 ($38) and R400 ($47).
Tourism is a growing industry for Wupperthal, particularly during the Namaqualand flower season in August and September. There is cross pollination between international tourism and the shoe factory. The shoe factory is arguably Wupperthal’s most famous export product, luring thousands of visitors from Europe and Asia to visit this secluded valley.
And when they come to Wupperthal, they usually ask for directions to the shoe factory, where many of them purchase a pair of individually crafted shoes, like Mandela and Kramer did before them.
This factor has become a pivotal one in the survival and growth of the shoe factory, which has survived 176 years of economic turmoil, hardships and several logistical challenges.Tourism minister Marthinus van Schalkwyk announced in April that 8,339,354 international tourists visited South Africa in 2011. One of the two most visited provinces was the Western Cape. The United Kingdom, the United States, Germany, the Netherlands and France were South Africa’s top-five overseas tourism markets.
Bishop Emanuel Temmers, a former minister at the Moravian Church in Wupperthal, who pastored the church from 1904 to 1951, was a major force in transforming the shoe factory to a thriving international business, according to Willie Strassberger.
Strassberger and his eldest son, Heinie, masterminded the idea of establishing sales agents in other parts of South Africa, Namibia and even Germany. The comfort of the shoes, their longevity and the fact that they are easy to wear, were major selling points. Successors to Strassberger and his son used the same marketing ploys.
Mark Densel, former manager of the shoe factory, marketed the Wupperthal shoes internationally with some success at the turn of the century. The shoe factory still has an outlet in Clanwilliam. Denver Grauman, current minister of the Moravian Church, said the Wupperthal Shoe Factory had outlets in many other towns and also in Namibia, where the shoes were extremely popular.
Gertse, though, bemoans the fact that challenging logistics is limiting their growth. The isolated village is 300 kilometers from Cape Town and only accessible by a gravel road from Clanwilliam over Pakhuis Pass.
“When we make one trip to Cape Town to buy leather, glue and accessories, it will cost us R2,000,” he says.
“It is vital for us to establish a shop in Cape Town,” he adds.
Apart from Colin Zimri, who has been at the factory for over a decade, most of the other workers are third-generation craftsmen, like Mervyn Valentyn and Gerhard Farao. Gertse, who has been at the factory for 37 years, started his apprenticeship at the age of 16 under the close scrutiny of a shoe-master of decades—his uncle Piet Gertse.
“The establishment of other cheaper competitors on a massive scale, like those produced by China, has become a threat to the continual growth of the Wupperthal-shoe,” says Gertse.
The factory building still belongs to the Moravian Church, but the proceeds from the purchases benefit the workers as well as a community trust that was set up to support the 1,500 inhabitants of the town.
One of the dangers besetting an entrepreneur in a secluded town is what one can call “Waiting for Godot-complacency.”
It is passively hoping for divine intervention without benefitting from a business plan and a marketing campaign, and without putting the proverbial nose to the grindstone.
But Gertse and the Wupperthal community have been proactive. They partnered with influential friends in order to grow the factory.
Bishop Temmers said a few years ago, Chris Nissen, a former Western Cape leader of the ANC, invested a few hundred thousand rand in expanding and growing the shoe factory.
Nissen’s father in law was Martin Wessels—a former administrative head of the Moravian Church in South Africa—and as a benefactor, Nissen assisted the factory in order to maximize its impact on job creation and sustenance in Wupperthal.
Bishop Temmers said the shoe factory has survived some potentially crippling setbacks. One of them involved the Strassbergers. There was a little-publicized fall-out between Willie Strassberger and the Wupperthal community. Strassberger left Wupperthal after the break-up with inhabitants, and Heinie established a shoe factory copying the Wupperthal template in Clanwilliam.
“That was a major setback for the Wupperthal shoe factory, partially because Strassberger’s shoe factory is much easier accessible than Wupperthal’s factory,” said Bishop Temmers.
Gertse is aware of the challenges, and therefore Wupperthal’s shoe factory has branched out to other forms of leather sales that includes handbags and purses. Most sales of shoes, handbags and purses are to foreign visitors.
Homesick ex-pats in England, Australia and Germany, regularly order shoes, part of the life blood of the famous factory. But that’s not enough.
Wupperthal’s greatest challenge is to ‘take the shoe factory to the people if the people cannot come to the shoe factory’.
They also have to embrace the change in the foreign tourism landscape by focusing a marketing drive on the new emerging markets.
The increase in the country’s tourism arrivals in 2011 was driven by a 14.6% growth from the emerging markets of Asia—with a 24% increase in arrivals from China and a 26% increase in arrivals from India.
Van Schalkwyk recently promised that South Africa would continue to invest in marketing the country to India and China, adding that South African Airways’ launch in January of direct flights between Johannesburg and Beijing would add to the growth.
Gertse says the greatest single challenge to the shoe factory is to improve its visibility amongst Capetonians and foreign tourists to the city.
They are contemplating plans to establish a ‘Wupperthal-foothold’ in Cape Town, an outlet where they can sell shoes in order to take the oldest shoe factory in the country to the global community.

These Shoes Are Made For Walking And Walking

It is one of the great economic stories of Africa. When Mozambique gained independence from Portugal in 1975 it was one of the world’s poorest countries. Two years later, it was even poorer in the grips of a civil war which ended in 1992.
Thirty seven years after independence, the southeast African country is booming. Joana Prata Dias Teixeira Duarte, her husband, João Alberty and his cousin Miguel, are three entrepreneurs who are taking advantage of this by putting their shoulder to the wheel in the country’s grassroots growth.
The trio, of Portuguese descent, started up Sociedade Moçambicana de Participações (SMP), based in downtown Maputo, in November.
Already SMP holds stakes in several companies from construction to furniture and media to telecommunications. Mozambique is abound with investment and business opportunities. The country’s GDP is increasing and 38% of its population lives in cities, with this number growing every day. Maputo, the capital city, has a population of 1.5 million.
For the first time in decades, Maputo’s skyline is dominated by swinging construction cranes. New buildings are going up on every corner. If Mozambique needs anything more than food and water, it is bricks and mortar. This hunger to fill Mozambique’s infrastructure gap has seen a dramatic increase in foreign investment. In 2005, foreign investment in Mozambique was worth $108 million, by 2007, this figure more than trebled to $427 million. In 2010, foreign investment stood at $789 million.
This trio of spring entrepreneurs are doing their bit to contribute to this urbanization through construction company Mozago. They have built offices for Millennium bim Bank among others.
“Mozago is our money cow,” says João Alberty.
It’s not just new buildings. João believes that there is also a lucrative market in renovating buildings. This is for posterity as well as profit.
Mozago is renovating a building by the famous Portuguese architect Pancho Miranda Guedes, who designed hundreds of buildings—hotels, schools, colleges, churches, banks, restaurants and apartments—in Mozambique between 1950 and 1974.
João believes that there is a market in renovating the buildings of Guedes. The one they are working on at the moment will be a hotel. They are also renovating a warehouse in central Maputo, on the way to the airport, which will be their new headquarters.
They provide a service where there is a demand. Alongside the construction and renovation side of the business, SMP also focuses on interiors through another branch of the company—Intersection. The company specializes in office design and furniture and represents Haworth, a worldwide office furniture company. Intersection recently designed the interior of and furnished Nestlé’s new offices in downtown Maputo and will do the same for Mimmos—a nationwide chain—at the new Zimpeto shopping mall.
Mozambique’s growth and development is the company’s playground, while it is still a young company itself, it hopes to expand just as quickly. The company is also powering up and connecting the country through Antolux, which specializes in the installation of low and medium tension power networks, where they are most needed, in the provinces. Its focus also lies in telecommunication networks and solutions.
The trio sees opportunity where others might see despair. The coastal nation is often plagued by floods through tropical cyclones, which often sees the country divided and certain cities cut off. In 2000, Mozambique was declared a disaster zone that led to a major aid operation. Many towns were submerged completely and a mother was forced to give birth in a tree above the rising flood waters.
This is one of the perennial problems of Mozambique that these entrepreneurs hope to do business by easing. Many of the country’s bridges are flimsy and poorly maintained.
Edgar Cardoso Mozambique, of which SMP now has a major stake—is a company that specializes in maintenance and rehabilitation of bridges.
Then there is media. Exame Mozambique is yet another of their ventures. This Lusophone business magazine reports on the macroeconomics of the country as well as financial issues, business ventures, investments, consumption, technology and marketing. While the brand belongs to Editora Abril, a major Brazilian publisher and printing company based in São Paulo, SMP owns the project in Mozambique. This monthly magazine, which was launched in June and recently published its fourth issue, is sold in Maputo and Portugal—a large number of Portuguese nationals still seek employment in the country.
Duarte, of Portuguese descent, was born in Mozambique and is the driving force behind the magazine as regulations says media companies can be opened by Mozambican nationals only.
The Alberty cousins had visited Mozambique, from Portugal, on many occasions, before finally making it their new home.
The company sees this investment in the media as prestige to go with the building bricks and mortar.
“We have gotten really good feedback from our readers and the CEOs of companies we have featured. It is bigger than our expectations were for it in the beginning. The people here are looking for something that we offer. We use technical information and put it in a way that everyone can understand it,” says Luis Leitão, editor of Exame Mozambique.
João says that the magazine is forward looking and very deliberately chooses to cover the success of businesses.
“We are perceived by the readers and other businesses in a positive way,” he says.
As Meticais changes hands with the rise of their current enterprises, there is another new company in the making. João said it has got nothing to do with the other ventures and hinted that it is related to the beauty and wellbeing sector.
When Duarte isn’t doing business, she is trying her hand at golf. According to João, her mother’s side of the family has quite a reputation at the Maputo golf course where their trophies are on display. Duarte wants to maintain that proud tradition.
On the golf course trophies are the reward for Duarte reducing her handicap. In the business world contracts are the reward for her part in helping to rebuild the country of her birth.

Development To The  Power Of Three

It’s a scorching afternoon in the busy commercial hub of Osu, in Accra, Ghana. Nelly Hagan Aboagye is at her flagship outlet, working dilligently on her exclusive collection for the upcoming Ghana Fashion week, to be held in the first week of October. It is every Ghanaian designer’s dream, but for Aboagye, there is more to it all than meets the eclectic eye.
It all started a few months ago, when Aboagye—a trained surgical nurse, with a love for fashion— heard an advertisement for young, creative entrepreneurs in fashion, on the radio. After being shortlisted as one of the finalists, she worked on a few pieces, which were showcased at the final runway show. The judges awarded Aboagye the title of Young Creative Entrepreneur of the Year in fashion.
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The timing couldn’t have been more perfect. In recent years, she had hoped to monetize her skills in making bespoke fashionable pieces, which are dinstinguished by her trademark beading work. Each bead is delicately woven, by hand, into the fabric in a variety of elegant designs. This isn’t so much a time-consuming process as it is, the bane of a designer working on a shoestring budget with limited time. She made her first two pieces with only 30 Ghanaian cedis.
“I am a self-taught designer. Everything I know, I taught myself and I keep striving towards learning more to improve the quality of my work,” she says.
Runways welcomed Aboagye as she went on to showcase her pieces at the Young Creative Entrepreneurs tour of London and Africa Fashion Week in Johannesburg.
Following an astounding response to her collection, Aboagye, returned to Ghana to employ some man power and invest time in her fashion label—Duaba Serwa.
“Duaba Serwa, is simple sophistication. I prefer understatements to extravagance and believe there is beauty in simplicity. This is what you see, in every piece I make,” she says.
At 26 years old, this half Fanti, half Akuapem, high fashion enthusiast is very optimistic about the future of her infant business.
“I have always been against the idea of angel investors and believe in growing my business organically. Every item purchased for my work is drawn from money that has been re-invested into the business from my own funds, which are generated from sales,” she says.
At the moment, Aboagye and her team have at least 20 dress orders a week with each bespoke, hand-beaded piece, costing nothing less than $300.
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“My clients just love the beading work—the quality and attention to detail you get, when you buy any of my pieces—and are willing to pay for it. The sewing itself, takes about 15 hours. It’s the beading that occupies the bulk of my time and requires the most of my creativity. I take great pride in my work and devote all the time I can give to each piece.”
Months after her break, Aboagye, still finds it somewhat hard to take in.
“I was a nobody just a few months ago and now, the response to my work is just amazing. I’m working round-the-clock with my team and there is no room for anything else but taking Duaba Serwa to newer heights and I want to do it differently.”
She is already planning for the future of her brand. Aboagye, who currently runs a small team of six, is working towards having a bigger factory, stores in major fashion hubs around the continent and opportunities to showcase her unique, contemporary African work on more international platforms.
“I’m thankful for my opportunities. I welcome new challenges and hope to be competing with much bigger names in fashion in the near future and I know it is possible,” she says.
Aboagye’s label has a thriving market on the ground. Ghanaian women are very fashionable and brand-conscious. The streets of Accra lend credence to this with beautiful fabrics and tailored garments visible in most of the metropolises. With her new recognition, aesthetically-pleasing work and business acumen, domination of the Ghanaian market could be as easy as threading her needles; however, Aboagye has fine intentions of bursting through the seams of her home country.
“I hope to have my brand doing just as well in many other countries very soon,” she says.
“On entrepreneurship, I believe in the future of any society that helps empower its youth. This is more than just making clothes,” says Aboagye.
She has employed a couple of orphans in her workshop, teaching them bead weaving.
“I want them to learn this skill and be able to run their own businesses in the future,” she says .
On her background in surgical nursing, she says: “Nursing has taught me to be very humble as it gave me a good perspective on how to treat and handle different people respectfully. This has translated quite well for the manner in which I run my business and deal with my clients”.
From holding scalpels at the cardiothoracic center, to turning heads at international runway shows, Aboagye is weaving her way into fashion aficionados’ hearts, one stitch at a time—all from a little outlet in the heart of Accra.

There’s Something About  Threading The Needle

Whenever Lynne Odhiambo and her husband, Harold, are out for dinner, one of her rituals includes holding a bottle of Heinz ketchup and caressing it passionately. For a moment she gets lost in thought, imagining what Henry John Heinz, the American founder of the H.J. Heinz food company must have felt knowing that his products were, and still are, a must-have item on many tables around the world. By the time the waiter interrupts her thoughts to take her menu, she knows that with each day that passes, she is a step closer towards becoming the Heinz of Africa and perhaps the world.
Lynne has a big dream, which started in her kitchen two years ago.
“We had been experimenting with different sauces that we [her and her husband] made in our kitchen and which we would often share with friends and family over meals. The sauces were always very well received and we were often asked why we were not selling them. The same friends and family became our first customers!” she explains.
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That is how H&amp;L Ventures (Harold and Lynne Ventures) was born.
The couple runs their business from their home located in the Kenyan coastal city of Mombasa—around 600 kilometers from the capital city, Nairobi. The husband and wife business is still at a humble start. They produce 100 bottles a week, each weighing 250ml, under the brand name Rojo.
“We started with a few hundred shillings to buy the ingredients and everything else was borrowed from the kitchen!” jokes Harold.
Why chilli? I ask.
“We love chilli on food, it is something we both grew up with, but as fast food has become more and more prevalent, we realized that the traditional condiment offerings that were common place in Mombasa, are no longer available. There was a time when if you went to a number of eateries in Mombasa, your food or snacks would come accompanied by a choice of a green chilli, red chilli, sweet and sour sauce and in most cases coconut chutney,” says Lynne.
The couple often wondered why the condiments were missing and realized it was because of the mix of cultures along Kenya’s coast. Mombasa was a major port in the European spice trade route.
“Our sauce draws on the coastal cuisine which is a mixture of Arab, Asian, European and African influences.”
H&amp;L Ventures involves the production of  the chilli sauces, their marketing and distribution. They have outsourced the cultivation of a variety of chilli peppers to a group of local farmers in Rabai, a historic area that is around 20 kilometers northwest of Mombasa.
Lynne uses a rare kind of chilli pepper, the Scotch Bonnet, which has a very unique bouquet—it is fragrant and very hot.
“Despite being one of the hottest chillies in the world, one only feels the heat after experiencing the taste. We chose Scotch Bonnet because we thought it had character and would add something distinctive and extra to our sauces,” says Lynne.
The couple admits that it is still too early in the game for them to feel like giving up. They are so passionate about Rojo that they have no time to worry.
“We have not felt like that but financial backing has been a major setback,” says Harold.
One of the major challenges has been the sourcing of the chilli peppers and the main reason why they decided to work with farmers in Rabai.
“It (Scotch Bonnet chilli) was only available in Uganda. Packaging was also another problem, we had wanted to package the sauce in glass bottles, and however, local manufacturers only supply bottles for liquor, so we had to settle for plastic bottles,” says Lynne.
Quality control issues are also a challenge as they are still operating from their kitchen at home.
“It has taken two years for us to settle on the right formulations, because we had to work with meagre funds.”
The business has a long way to go, like Heinz which started in 1869, Harold knows one day Rojo will compete with Heinz and may not take a century that it has taken the Heinz brand. Africa has a rapidly growing population and middle class. The rising concern about processed foods, which is leading to an increasing demand for organically grown food, is encouraging for their growing business.
“We envision that once we are operating at optimum capacity, the business will be realizing good margins. Our strategy is to remain an artisanal manufacturer, by getting into a niché in the market,” says Harold.
The food industry in Kenya and most of East Africa is largely dominated by international food brands and this is the segment the Rojo chilli brand is eyeing. In a years’ time, they would like to be the condiment brand of choice at every barbeque, table, in every household and restaurant. For now, the business has three employees including the couple who are part of the H&amp;L Ventures. Lynne and Harold know that their business is growing and is hot—literally!  <img loading="lazy" decoding="async" class="alignleft size-medium wp-image-1258" src="/wp-content/uploads/2017/04/dreamstime_l_2958187-300x200.jpg" alt="" width="300" height="200" />

It’s Heinz Time  We Become Millionaires

Out-of-home advertising, such as billboards, is big business worldwide and is growing each day. The figure sits at $26.4 billion—an increase of 8.3%—in 2011 alone. Pinto saw a gap in the market when he watched thousands of unbranded delivery trucks sitting in traffic: why not use their perfectly unmarked platforms as a moving billboard?
Most trucks have Global Positioning Systems (GPS) that track their routes and location, which is the perfect tool for targeting local and national consumers.
“We have GPS units in all our advertising trucks so we know where they are at any time. Every month we produce an operational report that provides details of all the travel times of the advertisement on the truck.”
Pinto said that the advantage of this medium is that companies can choose which areas they wish to target such as the East Rand specifically or a road such as the M1 between Johannesburg and Pretoria or the whole city. Advertisers can choose the area they want to target and later move the same signage to another area, which allows them to monitor any change in consumer behavior. He points out that South African retailer Woolworths has taken advantage of their national distribution to brand themselves.
In South Africa, billboards dominate the outdoor advertising landscape. Primedia Outdoor, a leading South African media group, owns 15,000 advertising panels across the country and claims that motorists and commuters spend around 30-45 minutes daily, in weekday traffic and weekly peak hour traffic volume is as high as 277,726 commuters. This is a large market.
Pinto researched the outdoor advertising market in countries such as the United States and the United Kingdom and discovered a gap for the African advertising landscape.
Securing the rights to prime spots for billboard advertising is expensive. But trucks on the road are already using the routes and he believes that commuters will be drawn to an eye-catching billboard on the move.
“We have a large, varied fleet available, so whether the customer needs a print space of six meters wide or 15 meters wide we have three different size options for them to choose from,” he says.
“They are billboards without a fixed steel infrastructure and are very cost effective at about a third of the traditional cost of fixed billboard advertising,” says Pinto.
While street pole advertising can also be effective, Pinto said that it is becoming another piece of “street furniture” that is severely cluttered.
The concept doesn’t add to a carbon footprint as the trucks he uses are already on the road for commercial carriers.
“Given that trucks are already on the move, one may as well make use of them. They go everywhere,” he says.
He lists the advantages of truck-side advertising after conducting market research:
<ul>
<li>85% more reach and 20% more frequency than conventional media</li>
<li>91% of people report that they notice fleet branding</li>
<li>52% successfully record the adverts</li>
</ul>
Although the business is just getting off the ground—it was launched on September 1—advertising agencies have expressed interest and he has signed a number of business agreements with them and trucking logistics companies. For the trucking companies, it is another source of revenue and means little down time as the boards can be fitted within a few hours.
The key to managing the operation is the ease of construction and safety features. It takes two to three hours to fit the trucks with the tension frame that holds the signage.
“A truck can travel at 160 kilometers an hour with an 18 meter panel and it won’t come off,” says Pinto.
These can be fitted over the weekend when most trucks are not being used. It takes only an hour to switch one panel for another on a fitted truck. The panels are manufactured by local printers. The advantage is that the panels can be removed and displayed at different locations or routes depending on the needs of the campaign. The client also retains ownership of the panel as opposed to painted signs on trucks.
As for the threat from social media platforms, Pinto believes that the way to go is to integrate OOM advertising with social media platforms such as Facebook and Twitter to enhance the product offering rather than seeing them as competitors.
“We plan to work with those platforms. Their success is our success.”
He has agreements with companies in Johannesburg and Cape Town but says that within a year he will be offering the service in three cities using at least 100 trucks. Pinto admits that starting a new venture is difficult.
“Starting anything is really difficult but if you believe in your product, and you can get another 100 people to also believe in it, then success will come.”
Although born in Johannesburg of Portuguese decent, Pinto speaks with an American accent and has visited 22 countries after studying business management and philosophy at the University of Pretoria.
“I guess I just watched too much TV when I was young,” he says.
He is a firm believer in global entrepreneur Richard Branson and is an enthusiastic member of his Centre of Entrepreneurship in Johannesburg. He quotes Branson as saying: “Do good, have fun and the money will come.”

Moving  The Message

Since its return to democracy in 1999 with the election of Olusegun Obasanjo, successive administrations, that have led this West African giant, embarked on a series of economic reforms that aim to increase the role of the private sector in the process of economic development. The current administration, headed by the fedora-wearing President Goodluck Jonathan, has made the reform of the country’s power sector the anchor program in its “transformation agenda”. The power sector reform program aims to substitute the hitherto government-controlled model—which is widely agreed to be one of the greatest impediments to its development—with a wholesale competition model that is private sector driven. Power supply in Nigeria is abysmally low, leading most households and businesses to rely on power generators and other alternatives to supplement the shortfall in supply from the public grid. At present, Nigeria generates around 4,000MW for its population of more than 160 million. The ambitious plan for power generation as contained in its Vision 20: 2020 national development blueprint, is a tenfold increase from the current level of power generation to 40,000MW by 2020. Despite the power shortage, the country has recorded an impressive rate of Gross Domestic Product (GDP) growth, which averaged 6.8% over the past five years. The minister of finance, Ngozi Okonjo-Iweala—who was the former managing director at the World Bank—recently predicted that an improvement in power generation will lead to double digit GDP growth for the country.
Nigeria possesses substantial oil reserves—estimated at more than 37 billion barrels—in the vast mangrove swamps of the Niger Delta. Since the discovery of oil in 1956, at Oloibiri village in present day Bayelsa State, the government has generated more than $600 billion worth of revenue from daily production, which peaked at 2.7 million barrels per day in August. However, much of this revenue had been frittered away over the years by corrupt government officials. The country has also been unable to leverage this abundance of oil to the benefit of its populace as it has often encountered challenges in ensuring the availability of petroleum products despite subsidies on fuel. A recent attempt by the federal government to do away with the subsidies, ostensibly to free up funds for re-investment into critical areas of need, was met by stiff opposition from the citizenry.
One positive factor that contributed significantly to the strong growth that has recently been recorded by the country was the successful deregulation of the telecoms sector in 2001. This led to the shift from government domination of the sector to a market-driven system. The effect of the policy reform was instant as teledensity rose from a mere 0.73% in 2001, to over 68% in 2012. The mobile subscriber base grew at record rates to over 95 million at present. The revolution in telecoms has also unlocked opportunities in mobile banking as the financial sector seeks to leverage mobile technology to further deepen banking among the country’s population. It is reported that an estimated 46% of the population do not have access to formal financial services.
In terms of its macroeconomy, the International Monetary Fund notes that Nigeria’s economy will grow at an estimated 7.1% in 2012. This growth, it says, will be driven by high commodity prices. Regarding sovereign debt, the country has a relatively low debt profile with its debt to GDP ratio estimated at 17.8%, a figure that is below the 30% target set by the government, and well below the global benchmark of 60%. International ratings agencies, Fitch and Standard &amp; Poor’s, rate Nigeria respectively at BB- and B+, with both maintaining a stable outlook for the country. In terms of the country’s sovereign bonds, the annual yield on Nigeria’s 10 year Eurobond which was issued in January of 2011 has been fluctuating around 5% for most of the year. The minister of finance recently announced that the country may consider issuing another Eurobond in 2013 to raise funds for the power sector and gas sector reforms, following indications that J.P. Morgan could include the country in its emerging market index. Nigeria has also recently launched a sovereign wealth fund after concerns by state governors, who had initially opposed the idea of the fund, were allayed. With the constitution of the board and the appointment of the CEO, the fund, which has a start-up capital of $1 billion, is expected to become operational in the coming months.
Consequently, it is apparent that the Nigerian government is taking commendable steps towards developing the country’s economy and effecting a redistribution of income among the country’s citizens. In a country where public officials are known to lack the political will that is required to see policies and programs through, it remains to be seen how the current chapter in this dominant nation’s history will play out.

Treading  A Difficult Path

As my car comes to a halt at a red traffic light, the newspaper vendor approaches, waving the latest broadsheet.
“Take one,” he pleads. And when I decline: “How about some change so I can eat tonight.”
Thabo Dube has been selling newspapers on one of Cape Town’s main traffic intersections for more than a decade. But in the past couple of years, he has fallen on hard times.
“I used to be able to make a living from this job, but now I also have to beg to make ends meet,” sighs the lanky father of three, as cars speed past.
As a newspaper salesman, the 43-year-old doesn’t earn a fixed salary. Instead, he buys a stack of newspapers at a reduced vendor price each dawn and takes home whatever profit he makes from sales that day. If he can’t sell the whole stack, he barely cuts even. Some days, he makes a loss. Dube is feeling what many international media experts have been preaching over the past few years—print is becoming an endangered species. The future of news is digital. Instead of buying a daily newspaper or taking out a subscription, more and more people read news on the internet, tablets or their mobile phones.
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It all began in the United States and Europe where the growth of the internet and mobile media access has already sparked the demise of the news industry as we know it. Traditional print media are struggling to make profits. Countless newspapers and magazines have had to lay off staff. Some publications have gone out of circulation. Although African print media have not yet experienced the same slowdown, they are on a straight path towards digital media consumption, experts say.
“The way people consume media in Africa will change dramatically,” predicts Justin Arenstein, manager of the African News Innovation Challenge (ANIC), an internationally-funded initiative that sponsors digital media projects on the continent and consultant to the world’s top search engine provider, Google, as well as the Knight Foundation, a US-based foundation that supports innovative journalism.
What is a fact in the States and Europe is becoming equally true for Africa. Today’s consumers don’t go to a single place for their news. They prefer to access information in ways most convenient to them: by scanning through different sources of content digitally, reading bits and pieces from various publications instead of reading one newspaper indiscriminately from front to back. Readers don’t want editors and journalists to tell them what’s pertinent any longer; they would rather search for specific sites and content that is relevant to their lives, depending on what topics or geographic areas interest them most. That’s especially true for the tech-savvy, digitally literate young generation that demands content to be audio-visual rather than printed black on white.
Print publications in Africa have started to feel the pinch.
“Newspaper and magazine sales are dropping. Publishing houses need to understand why and come up with alternative solutions to maintain a healthy revenue stream,” suggests Dawn Rowlands, CEO for sub-Saharan Africa at digital communications group Aegis Media. There is only one solution to prevent losses, she says: “Print needs to evolve to content provision.”
That means getting content to people should take priority, while the platform used to reach readers is secondary.
That’s easier said than done. The convergence from print to digital has been, and still is, a difficult road for most print media houses. Although newspaper owners realize they have to expand their business model to include digital media, they are not too sure how to make it work and how to monetize it. There is also a great reluctance to change, despite the fact that profits are tumbling. Most publications’ attempts to keep up with the digital revolution have been half-hearted, defensive and often even arrogant.
“It’s a head-in-the-sand approach. Although many African newspapers have developed an online presence it has financially not been that successful,” says Rowlands.
The focus remains on print, with online editions being the poor, low-quality cousins.
In the long run, ignoring the digital trend will not pay off, Rowlands warns. Although people may continue buying a newspaper on a weekend for a leisure read, she is convinced that print media as we know them will vanish within the next decade. The lesson for many print media houses will therefore be a tough one: those that don’t adapt will die.
“Eventually we will see the death of traditional print media in Africa, maybe in the next 10 years,” predicts Rowlands.
Only media houses that reconsider how they approach consumers and that reinvent themselves on the internet and on other new-media platforms, such as mobile phones and portable electronic devices, will have a chance of survival. Learning from the progressive downfall of print media in the States and Europe is a good way to stay ahead of new developments, experts suggest. No need to reinvent the wheel.
“If African media take heed of what’s happening up north, of what hasn’t worked and where the pitfalls are, they have a good opportunity to build something great,” says Arenstein.
Unsurprisingly, owners of print media hold a more moderate view. Print is far from being dead, insists the World Association of Newspapers and News Publishers (WAN-IFRA). Contrary to conventional knowledge, newspapers remain a large and thriving industry worldwide, despite the rise of digital media: between 2005 and 2010, daily newspaper circulation in Africa rose a whopping 30%, according to WAN-IFRA statistics.
Another study on “The Future of Print Media”, conducted by US publication Capstone Report, states that the “death of print” remains a limited phenomenon in Africa… for now. In 2011, print circulation in many markets on the continent was stable or slightly up, in part because of rising literacy levels. Literacy—which increased by more than 12% in the past decade among African adults—usually leads to a boost in disposable income and this creates potential new newspaper audiences.
But despite relatively upbeat current data, experts warn the respite won’t last long. Even though African news markets have not fully matured yet, they will be faced with similar challenges to the States and Europe in the next 10 to 20 years, cautions the Capstone Report. Already, African audiences are moving online at a remarkably high speed. The common challenge for print media hence becomes trying to keep up.
The good news is that the predicted death of print does not equal the death of journalism or quality content. People will always want to read good content. What will change is where and how they want to read it. In Africa, mobile news delivery—and not website-based delivery like in the States and Europe—appears to be the medium of choice.
“Consumers in Africa leapfrog. They don’t follow the same path as Europe and the United States,” agrees Rowlands.
She believes the next few years will show huge change on the continent as prices of internet connectivity and technology come down, with smartphone penetration on a rapid increase. This means that people all over the continent have more access to digital news and social networking tools.
Platforms like smartphones and tablets are the future of publishing in Africa because they allow people to look beyond national borders and access the content they want, when they want.
“The appetite for online content is growing because people like to go online to find alternative content that they can’t necessarily buy at their local newsstand,” says Susan Hansford, business development manager at South African publisher Primedia Online.
“People love technology. It’s going to move really quickly. Some experts predict smartphone prices will drop to $20 within the next five years,” says Rowlands. In countries like Kenya or Nigeria, China-produced replicas of Apple iPhones are on sale for a mere $40—nearly half the price of an original iPhone.
Although $40 is a lot of money for an ordinary person living in Africa—in Kenya, for example, the average monthly income is about $60—increasing numbers of people save up for a mobile phone with advanced functionality, especially as prices for 3G and data bundles drop.
“Comparatively speaking, smartphones are not that expensive anymore. For someone living in a rural area, for instance, using a smartphone is often a more affordable and effective way to communicate with the outside world than the money and time it would cost to use public transport [to meet someone in person]. The argument that technology and connectivity are too expensive is a red herring,” says Arenstein.
In some parts of the continent, the digital revolution has already started. Kenya and Nigeria are fast becoming hotspots for digital media uptake and development. In both countries, mobile phones are increasingly used as the primary transactional device for news gathering, communication and banking. Mobiles are also used for other data sharing, like news and information about election monitoring, disease outbreaks, stock exchange fluctuations or weather forecasts for farmers.
Being at the forefront of the digital age has not happened by chance. Both the Kenyan and Nigerian governments have invested in digital development as part of their economic growth strategy by opening up competition in their telecoms and data sectors. This has forced mobile providers to lower the cost of their services, thus ensuring that larger parts of the population can access them. Both governments have also pumped resources into IT skills development so that their own population can develop new platforms, instead of having to hire foreign skills or relying on innovation buy-in from the developed world.
Private businesses in both countries have become keenly aware of the need to invest in digital content. Kenyan media houses, for example, formed a national digital journalism task force earlier this year aimed at developing a nationwide data-driven digital news model that will help the country’s media industry stay up to speed with new technologies.
The impact of what is happening in Kenya and Nigeria reaches beyond their borders. Kenya, for instance, is building a regional hub of technology and media innovation with its east African neighbors Uganda, Rwanda and Tanzania. Nigeria is doing the same in West Africa, to a lesser degree, by cooperating with Ghana.
“Change is coming, and we must be prepared for it. Technology always wins, no matter how much you fight it. So instead of resisting it, the print media must devise a way of embracing it. When television came, we all thought it would sound the death knell of the radio, since it is capable of capturing sound and picture. But television has not displaced the radio. Instead the two have been complementary,” says Nigerian Broadcast Production Services CEO, Tolu Ajayi, at a recent panel discussion about the future of the country’s print media.
At a slightly slower pace, Egypt, Tunisia, Ghana, Senegal and Tanzania are developing into digital hubs. Angola, Mozambique and Zambia also experience massive digital growth, even if those countries are still at the infant stages of digitization.
“They are big markets that navigate away from print, even though their media mix is currently less focused on smartphones,” says Rowlands.
For now, people here consume news mainly via mid-range mobile phones, such as WAP-enabled phones with internet access or handsets with radio access. They also increasingly use text-messaging services to access news and information.
“From Zimbabwe in the south to Senegal in the north, using mobile for content exchange, for business or private use, is starting to have a massive impact on people’s lives,” says Arenstein.
Only countries with poor IT infrastructure, like those situated in central Africa that remain without direct access to undersea cables, such as Chad or the Democratic Republic of Congo, continue to lag behind.
Surprisingly, Africa’s most developed nation, South Africa, is not at the forefront of media digitization with most of the country’s newspapers lacking investment in new technology.
“I don’t see the same degree of creativity in South Africa [than in Kenya or Nigeria],” says Arenstein, who consults media houses all over the continent. “South Africa needs to catch a wake-up call. It is lulled into dismissive complacency, believing that their [well-established] print media market is too big to fail. Yet [being a developed economy], South Africa almost falls victim to the same market conditions as the US and Europe.”
Arenstein is convinced that Africa’s most southern nation is at a tipping point at which it needs to make a massive switch to mobile media—and it needs to do it fast if it doesn’t want to miss the bus. “Convergence is definitely happening, with or without South Africa,” he warns.
Latest statistics prove Arenstein right—sales of some of the country’s daily newspapers decreased by up to 17% in the past year, according to the South African Audit Bureau of Circulations. This is just the beginning, the bureau warns, as the newspaper industry will further lose to digital products in the next few years.
“We are seeing print publishers either struggle with circulation or circulation is flat,” says Hansford.
But not all is doom and gloom in the South African news market. There is one paper, which has not only kept up with the times but been at the forefront of convergence. The weekly Mail &amp; Guardian (M&amp;G) was the continent’s first news website when it launched its online edition 19 years ago. Today, the M&amp;G is Africa’s first newspaper available on Kindle, apart from the fact that it can also be downloaded onto a rage of other mobile platforms—a tenth of the M&amp;G’s subscriptions are currently for Kindle and iPad users.
“Our strategy is ‘digital first’,” says M&amp;G online editor Chris Roper.
When the M&amp;G launched a new version of its website a few months ago, Roper said its readers increasingly demanded and made use of its multimedia elements, partly because bandwidth constraints are being eased.
“We didn’t do it as a response to slowing circulation figures [of the print publication], but because we believe in innovation, in getting content to people. It’s the news that’s important. The platform is less important. We provide whatever the content demands,” he says.
Multimedia has become a vital component in the creation of news. And so have social media.
“Journalism is becoming more inclusive. The audience also contributes. Today’s readers want much more than simply being presented with content. They want to engage intelligently with the publication, be able to comment, contribute and influence the choice of content,” says Roper.
On the M&amp;G website, readers can comment on articles, are invited to contribute content to a news story or join conversations and debates with journalists on Twitter. As its next move, the paper plans to run an ‘open newsroom’ by making its weekly news diary available online so that readers can make suggestions for what stories should be pursued. The M&amp;G is one of the few South African newspapers whose print circulation numbers have increased.
For many print media owners, one of the biggest stumbling blocks of the digital revolution has been their struggle to come up with new ways to make a profit. Traditionally, print publications make most of their money from advertising—much less from subscriptions and individual sales. But the advertising-driven model is becoming outdated fast as more readers consume digital content. And a new, equally profitable way of attracting advertisement revenue still has to emerge. Initiatives to put up paywalls to protect content have only shown moderate success.
In the meantime, advertisers go where the money is: they are quickly moving from print to online. It’s a vicious cycle. As more readers consume content online, print circulations decrease, followed by losses in ad spending and a slump in profits.
There is an upside, though. Internet advertising is growing rapidly for many and beginning to offset some of the decline in print. The internet is an attractive medium for advertisers because it allows them to match ads more carefully to different audiences and measure accurately how well their money is spent. Websites can track the exact number of people who have visited the site, clicked on an ad and bought the product. Internet advertising is also seductive because online ad rates are far cheaper.
That’s another reason traditional media are losing out. The ad revenue loss experienced by print is nowhere near making up for the ad revenue gain made by online.
“At no time in the foreseeable future will digital advertising revenues replace those lost to print, making the search for new business models, including paid-for online access for news, a key goal for many newspapers,” says Riess.
Print owners will have to figure out many aspects of their business in a media world where only one thing is certain right now. No matter how long they manage to hold on to their old ways of doing business, sooner or later, they will have to say goodbye to print and hello to digitization.

From Newsstand  To The Palm Of Your Hand

The South African government has taken a big step towards fracking in Africa’s biggest economy that is likely to lead to months of heated debate and court battles.
Hydraulic fracturing, or fracking, involves extracting natural gas from shale rock layers deep within the earth. The process requires vertical and horizontal drilling and the injection of pressurized fracking fluids, water and sand to extract the gas.
Oil companies see fracking as a potential boost for energy exports, jobs and foreign investment. Conservationists argue it will destroy ecosystems found in the semi-desert landscape of the Karoo, where much of the shale gas is located.
On April 29, 2011, the minister for mineral resources, Susan Shabangu, placed a moratorium on applications to explore fracking in the Karoo while her department conducted investigations. That ban on exploration was lifted on September 7 and the Investigation of Hydraulic Fracturing in the Karoo Basin of South Africa report, which the cabinet based its decision on, was released four days later.
Derek Light, an attorney for farmers in Graaff-Reinet, was unhappy with what he called a hasty decision to lift the moratorium.
“The task team could not have effectively performed its function in such a short a time. It should have performed a strategic environmental assessment in the broadest possible terms which would have enabled them to make a well-informed decision that would be in the best interests of the people of this country,” says Light.
Light was pleased to see that the report recognized the importance to revise the country’s regulatory framework, in order to control fracking.
Jonathan Deal, chairman of Treasure The Karoo Action Group—the official opposition to fracking in South Africa—says that the country’s first reaction was “let’s frack” instead of investigating other forms of energy.
“There is natural gas, offshore, in reservoirs which do not need to be fracked in order to remove it,” he says.
“We plan to lodge an appeal if and when exploration licenses are issued,” Deal says.
Ferrial Adam, a Greenpeace Africa climate and energy campaigner, also believes that the country should consider other forms of sustainable energy.
“Greenpeace’s research on ‘Advanced Energy Revolution’ scenarios shows that it is possible to create 50% of electricity from renewable energy by 2030, if we have the same political determination that government seems to put into fossil fuels,” she says.
Adam says that in a dry country like South Africa this decision by government is short-sighted.
“Contamination of groundwater aquifers and surface waters can occur due to fracking operations and through the disposal of waste waters. Small amounts of carcinogenic hydrocarbons are harmful to humans. In some cases, this waste water is minimally processed before being dumped into surface waters feeding public water supplies, or is held in ponds that may lead to releases of the chemicals into the environment.”
The head of Living Planet Unit, WWF South Africa, Saliem Fakir, says we can only see the outcome of fracking by looking at extractive industries at present. The track record for communities is rather dismal. The national coffers and private industry may benefit but the problem of impoverishment could be the inheritance of the local setting. Fakir pointed to countries like Nigeria, a country where Shell is active, to show how countries that are rich in oil can be poor.
“Extractive industries have boom and bust cycles. They often attract lots of labor and people from outside that leads to conflict, social pressure and displacement of local interests, the truth is that resource rich countries tend to have high levels of inequality. Elites tend to capture the rents and leave out the poor. We may see a similar phenomenon with shale gas if the extractive process suffers from poor governance and oversight,” says Fakir
Bonang Mohale, chairperson for Shell South Africa, was pleased with the details of the report.
“The suggestions made by the task team are in line with our exploration plans for the Karoo Basin,” says Mohale.
“South Africa needs energy now. Approximately 10 million people in South Africa do not have access to electricity. At the moment, South Africa is a net importer of energy. This means that South Africa needs the full range of energy sources. In combination with other energy sources, including renewables, gas could help secure South Africa’s energy future, while creating sustainable and permanent jobs for South Africans.”
Shell is preparing to submit a comprehensive environmental, social and health impact assessment (ESHIA) that is in line with the National Environmental Management Act. Shell promises to continue working closely with the people of the Karoo and South Africa to address concerns and ensure that they benefit from shale gas exploration.
Group Media Manager for Sasol Limited, one of the biggest energy companies on the continent, Alex Anderson, says that Sasol gave up its fracking license last year.
“We concluded an extensive technical study of the area and then decided not to pursue further exploration activities in the assigned TCP area. The decision was based on subsurface technical and operational considerations and was unanimously taken by the partnership,” said Anderson a few months back.
“Sasol has taken note of the decision by the South African government to lift the moratorium on shale gas exploration in the Karoo region. We continue to be very interested in the upstream oil and gas business landscape, which includes the shale gas in the Karoo and elsewhere. As a consequence we continue to monitor these developments with interest and if new opportunities present themselves we will actively evaluate and pursue if they are attractive from a technical and commercial perspective,” says Anderson.
The report commissioned by the department of mineral resources indicated that during the exploration phase, only normal exploration, would be allowed. This excludes hydraulic fracturing but instead includes a process whereby drilling, geophysical and geochemical mapping can take place.
The report spoke of the economic potential fracking would bring to the country. According to the United States Energy Information Administration there is an estimated 485 trillion cubic feet (Tcf) of gas in the Karoo Basin, which could reduce the national dependence on other fossil fuels. It mentioned the environmental and socio-economic implications of water use. and the disposal of the fracking fluids. The task team said that due to the high volumes of water to be used and the possible contamination of water with the fracking fluids, they would need to conduct further research into water sources.
The report called for aa re-evaluation of South Africa’s regulatory framework to ensure that any possible negative impacts would be alleviated. A monitoring committee will be appointed to ensure a comprehensive and coordinated framework and the supervision of operations.
Now the conservationist and protestors await the application for the first exploration license and will see the applicant in court.

Between A Rock  And A Hard Place

Ghana was thrown into the international spotlight just months ago with the sudden death of President John Evans Atta Mills. The nation’s peaceful handover of leadership to the former vice president, John Dramani Mahama, underlined why the nation has long been regarded as an exemplar of democracy in the region. While the official mourning period has ended, campaigning is underway in what is expected to be one of the closest election races of the year between the two main contenders, the ruling National Democratic Congress (NDC) and the rival New Patriotic Party (NPP).
Social welfare provision and economic policy, coupled with the traditional emphasis on party politics and personalities will define the upcoming presidential and parliamentary elections to be held in December.
Boasting one of the fastest-growing economies in Africa and having achieved (low) middle income status last year according to Word Bank figures, the continent’s newest oil producer is among the few Sub-Saharan African countries likely to achieve the United Nations Millennium Development Goals by 2015, according to leading economist Jeffrey Sachs.
“[The government] has been investing for a long time in health and education, gender equality, and it has made a lot of progress. But there are parts of Ghana that are extremely poor and really need a lot of accelerated investments,” said Sachs in an interview earlier this year.
This is the challenge that lies ahead of presidential candidates Mahama and opposition candidate Nana Akufo-Addo: managing the economy in a way, which ensures that growth stimulated by oil, mining and cocoa production, benefit all Ghanaians.
But with oil production far lower than projected, Ghana’s economic growth rate, which skyrocketed last year, is expected to halve to 8.2% this year, slowing further to 7% next year, according to a Reuters poll. This coupled with the sharp depreciation of the Ghana cedi against the greenback by 18% over the past year; a failed multi-billion dollar government housing project deal and millions of cedis paid in judgment debts, will mean the NDC government will have to work hard to prove it can drive the economy forward.
The 58-year-old incumbent Mahama, fares from Ghana’s northern region, served as the minister of communications for the government of Jerry John Rawlings and has supported development initiatives in Ghana’s poor and deeply underdeveloped northern region. Mahama will come up against opposition leader Akufo-Addo, 68, a British-educated lawyer turned politician who served briefly as the attorney general and the minister of foreign affairs under the NPP government of John Kufuor. Both candidates have picked senior officials in Ghana’s central bank as running mates for the vice presidency to bolster their credibility.
Akufo-Addo was defeated in 2008 in the second round vote by less than 1%. While tensions were high during the run-off, Ghanaians accepted the results and there was a peaceful handover of government. But civil society groups have expressed concern that acrimonious debate between rival candidates—for which Ghana’s political culture is notorious—could flare up conflicts, particularly in the north of the country where tribal, ethnic and land disputes persist.
“My biggest concerns are the politics of insults and vindictive language, at all levels. We are afraid that might influence people to act violently,” says Justin Bayor, the national coordinator for the Ghana Network for Peacebuilding.
While the distinctions between the major political parties are minor—the NDC is generally regarded as more social democratic, placing a greater emphasis on the role of state institutions, than its counterpart, that is regarded as more “business friendly”. Both parties have the goal of lifting Ghana out of its economic dependency on revenues generated by natural resource concessions and creating a middle-class industrialized society through using oil revenues to jumpstart the manufacturing sector.
The NPP has kicked off campaigning throughout the country and has outlined its goals for industrialization and trade policies that will encourage the growth of domestic business and industry. Mahama just finished a tour of the region and has hit the campaign trail, but the NDC is yet to release its policy document. With only two months left it is either party’s election.
“We are expecting a very close race. At this stage it’s difficult to know who will win,” says Selorm Branttie, a researcher at the Accra-based policy think tank IMANI.
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Clair MacDougall is a journalist who is based in Monrovia and covers West Africa.

Ghana, Make Your Mark

Peaceful, organized and quiet on a Sunday afternoon. That was election day in the otherwise bustling and chaotic seaside capital of Luanda.
“I’m so proud of my country right now. Angola has shown it can organize itself, if it wants to,” says IT engineer Jose Tomas.
The August parliamentary elections were Angola’s second since the end of the civil war (1975-2002) and the third since independence. UNITA (The National Union for the Total Independence of Angola) almost doubled its 10% take from the 2008 elections, while new coalition CASA-CE won 6% of the votes. The MPLA is down 10% from its 82% landslide victory in 2008. Voter turnout at 60% was low. The African Union (AU) deemed the elections free, fair, just, transparent and credible. European observers were also positive.
“The margin of the MPLA victory, the AU observer mission’s judgment and the continued presence of Dos Santos as president spell continuity. The MPLA still has an absolute majority in Parliament. The increase in opposition MPs will have little impact on law-making and is unlikely to affect international business interests,” says Markus Weimer from independent think tank Chatham House
South African managing director of telecom company MCS Angola, Ryan Ellerker, thinks the peaceful elections and MPLA’s victory will have “a definite positive effect” on Angola’s business climate. He has already seen projects previously on hold being restarted.
“That shows confidence in the market, in the country and its political stability,” he says.
Managing director of insurance broker AIBA Rupert Weterings, who grew up in Zimbabwe, echoed Ellerker’s view.
“The positive political climate combined with the fact that Angola is one of Africa’s most resource-rich countries makes one realize that Angola is open for business.”
In the run-up to the elections, Angola’s largest opposition party UNITA held nationwide street protests twice against perceived fraud, lack of transparency, unequal funding and lack of media space. Other opposition parties have voiced similar grievances.
But Unita’s protests took the shape of cheerful campaign gatherings and a healthy wake-up rather than a threat to the status quo. Opposition parties may contest the election results within the framework of the law, but Weimer does not expect a different outcome.
The street protests of Angola’s budding revolutionary youth movement and disgruntled war veterans, which unlike the political opposition protests were forcefully repressed, dwindled as the elections drew near. Many of the veterans—who demanded long overdue social subsidies—were paid last-minute. The youths, who have suffered physical violence and threats, generally chose to voice their discontent in the larger and safer framework of opposition party’s manifestations.
In other words, time does not seem ripe for change.
According to Weimer, the government’s goal for the next five years will be to empower the Angolan private sector—particularly the small- to medium-sized businesses—agriculture and to increase formalization of informal businesses.
“After 10 years of national reconstruction, the top government priorities are now job creation and the reduction of poverty and inequality, which are crucial for medium to long-term stability,” he says.
The key to achieving these aims, according to Weimer, is the “colossal task” of diversifying the Angolan economy. “Colossal” because a staggering 97% of Angola’s exports are currently petroleum products, while the oil sector only employs around 1% of the population. In order to achieve all this, mass education is crucial, Weimer warns.
One essential factor must not be forgotten: President Dos Santos turned 70 three days before the elections and is widely expected to retire within the next few years. Vice-president Manuel Vicente, the former CEO of Sonangol, is equally widely expected to follow in his footsteps. But for that, Weimer said, “Vicente will have to develop his own support base and popularity.”
“The transition process may well take a few years still, but a smooth presidential succession is essential for continued stability.”
For now

Business As Usual  After Polling Day

When Her Royal Majesty, Queen Mother Semane Bonolo Molotlegi of the Royal Bafokeng, woke up one morning to the news that miners were refusing to go underground demanding higher wages from one of the mines in which her 300,000-strong community owns shares, she immediately called the Royal Bafokeng Holdings CEO.
South Africa had made world headlines on August 16, when 34 miners in the small mining town of Marikana, in the North West province, were mowed down by police in the most brutal shootings to have hit the country since the days of apartheid.
For someone who says she’s not only unfamiliar with the workings of the corporate world, but is not involved in the family’s business affairs, didn’t it occur to her that she was crossing the line when she made that call?
Clearing it all up during our interview, she insisted that she was merely sharing a concern as “our mines are in the villages. If something like that [Marikana shooting] could happen, things would be worse in our case.”
Hers was to merely advise the CEO: “Try to be proactive. Maybe you should consider giving it [the wage increase] to them.”
Whatever the CEO was going to do with her advice, she would maintain, was entirely up to him.
As the nominal head of the royal family—their net worth is estimated at more than $5 billion—Queen Molotlegi presides over a range of mining, telecommunications and financial sector assets.
Their investment arm, the Royal Bafokeng Holdings (RBH), has substantial investments in platinum mining companies, Implats and Royal Bafokeng Platinum, and in ferrochrome miner Merafe. It also owns 1.97% of Vodacom SA, a cellular communications company with a 54% share of the South African market. RBH’s financial sector investments include a 15% interest in diversified financial services holding company RMB Holdings, as well as a related 15% interest in RMI Holdings, a company that owns stakes in some of South Africa’s largest and wealthiest insurance companies.
Royal Bafokeng also owns Platinum Stars, a team that plays in the richest football league on the African continent, South Africa’s Premier Soccer League.
“It’s all on behalf of the Bafokeng, whatever we get from the assets is of community benefit,” she says.
And it’s been like that at least from the day she joined the family after tying the knot with her children’s father in an arranged marriage back in 1963.
“My husband would get the royalties, then use the money to build infrastructure like schools, roads, bridges and clinics. When he passed away, and our eldest son took over, he continued from where his father left. And when my eldest died, too, his younger brother, who took over, followed from where his brother left.”
The Queen Mother insists she doesn’t get treated differently. She gets a salary and, like everybody else, has to work for it.
She has to submit to her boss, Kgosi Leruo Tshekedi Molotlegi, her third son and the present King of the Royal Bafokeng, who is currently running all royal affairs.
“He is in charge, I don’t meddle. I respect the fact that he is in charge,” the Queen Mother says.
What, then, is your role? I ask.
“Do I have one? I don’t think so. I jump from one role to another. I’ve ended up advising. If something is brewing, I intervene,” she says.
The Bafokeng Nation, as they prefer to call themselves, is a tight knit community, which Queen Molotlegi says has one of the most advanced political and administrative systems around.
The highest decision-making body is the Supreme Council, a kind of Parliament comprising of 92 representatives.
Twenty members of the council are elected regional representatives, while 72 are from the hereditary council of herdsmen drawn from the 72 villages that make up the Setswana-speaking nation.
The council sits at least twice a year, ostensibly “to discuss the needs of the people” and then take decisions either by consensus or through voting. The CEO of the nation’s investment company is often invited to attend the council and to report back.
Before the Supreme Council sits, the various regions hold public meetings called “makgotla”, where they thrash out matters to be taken up by their herdsmen and regional representatives to the Supreme Council.
It was at one of the Supreme Council meetings, more than 10 years ago, that the Queen Mother says the Royal House took a decision to move away from taking royalties and to get into owning mines as well as other forms of active investments. Years later, this would be followed by diversification into financial services and telecommunications.
“Knowing that mines are going to deplete at some point, does it mean we would also perish as Bafokeng? That’s when we formed RBH, realizing we can no longer have our eggs in one basket.”
As would be expected of a traditional leader, the Queen maintains the Royal House has done very well to keep its subjects—or rather, the nation—together and happy.
Not that it’s been easy.
“You are never able to please everybody”, the Queen Mother says, citing times when some “bad potatoes” from the kingdom would ask “Why don’t we take all the money and share it among everybody?”
“Some people came forward to say, ‘We know that land can secure bank loans, so can we please get our piece of land’.”
A staunch Christian, she says she “prayed and prayed”—until everyone saw sense in her and her family’s point of view.
“We had to unfortunately say we can’t do that because this is communal land. We had to ask: ‘What if you don’t pay, when the banks would have gotten in?’ The bank would take over your land.”
The land issue hasn’t come up again, leaving her with enough time nowadays to focus on her charity work, which she does through her own foundation and educational trust.
She also spends a great deal of her time going to schools to encourage learners to study.
A patron of South Africa’s national women’s football team, Banyana Banyana, she often goes to some of their matches to encourage them.
She is also the patron of Girl Guides Association of South African—the voluntary, girls-only organization, which teaches good citizenship, practical skills and moral values.
Like the girl guides, she finds herself wanting to do good, but in a world that is full of contradictions and competing priorities.
While, for example, she believed workers should just be given the wages they were asking for, to avoid a bigger crisis, her fellow investors at Impala Platinum and Royal Bafokeng thought it was something they could not afford—if they were to keep the mines sustainable and preserve the thousands of jobs their mines provide.
There is little doubt, though, about the fact that one of the things that motivate her—apart from her professed primary objective of wanting to do all things good for her nation—is the urge to stave off danger and to avoid seeing fingers pointing at her family.
And for that she relies on her own deep sense of pragmatism, and her apparent adroitness at handling conflicts—something that is missing in South Africa’s mining industry at the moment.
But that’s not to suggest she isn’t aware of her family’s privileged position and her particular place in it.
It was when I walked into the room where the Queen Mother and I were going to do the interview, that I almost immediately formulated an impression, a positive one at that. I even murmured to myself: “Mothers don’t come as simple, warm, graceful and mature”.
It was after our hour-long conversation that I realized, that beneath this benign, seemingly unsophisticated, naïve look, in fact, lay a royal who—while not oblivious to fact that she’s privileged and occupies a place in society that’s high above most—has found a way of juxtaposing humility and pride, and of looking well after her family.
Isn’t she good at her role? Whatever that role is.

The Platinum Queen

“Finally, after a turbulent seven years, we are on the brink of making history,” enthuses Zwelakhe Sisulu, a journalist-turned-magnate who believes manganese will eventually “do for South African mining what gold and diamonds did” back in the heyday.
The chairman of Kudumane Manganese, one of South Africa’s newest mining companies, makes the remark at a time when one of the doyen families of South African mining, the Oppenheimers, is exiting amid plummeting revenues. In November, Nicky Oppenheimer put an abrupt end to his family’s century-old hold on the diamond industry. He sold his 40% stake in De Beers, the world’s leading diamond company, to Anglo American for $5.1 billion.
Sisulu is finding it difficult to contain his excitement. And it’s not because his company is making money, just yet, but because when it does, it will make bucket loads, for thousands of years.
<img loading="lazy" decoding="async" class="alignleft size-medium wp-image-1237" src="/wp-content/uploads/2017/04/Kalagadi-12-4-2812-300x200.jpg" alt="" width="300" height="200" />
South Africa is one of the most resource-rich nations on earth, with mineral reserves estimated at more than $2.5 trillion, according to Business Insider. Manganese makes up a big part of that wealth, with the country known to have between 85 and 92% of the world’s high-grade manganese ore reserves. However, there’s something anomalous about how South Africa benefits from world manganese trade. It produces only 15% of the world’s manganese, compared with China, which produces more than 35%, a lower grade at that, and has less than 5% of the world’s manganese reserves and resources.
Most of the country’s reserves are found in the Northern Cape, in part of the Kalahari Basin, a large area covering 2.5 million square kilometers and straddling South Africa, Botswana, Namibia, Angola, Zambia and Zimbabwe. Most famous for having the biggest mineral deposits in the world, the basin is home to diamond, manganese, iron ore, zinc, copper and a host of other minerals. It also has a significant presence of limestone, gypsum, granite, verdite, mica and rose quartz.
South Africa’s new, albeit slow, manganese rush began more than seven years ago when Sisulu’s Kudumane Manganese—as well as several other consortia including Kalagadi Manganese and Tshipi é Ntle Manganese Mining—were granted prospecting rights that were later converted to full mining rights.
Thanks to the country’s policy of Black Economic Empowerment (BEE), the mines became post-apartheid South Africa’s first green fields projects to be commissioned on such a grand scale and with significantly higher local black ownership.
Three years before, the South African parliament adopted the Mineral and Petroleum Resources Development Act in 2002, which compelled all existing mining houses, including world leaders like Anglo American and De Beers, to cede at least 26.1% of their shareholding to blacks as a means to redress apartheid. The government then promised to ensure that henceforth, any new rights issued would be even better for the locals—guarantee them larger stakes, skill greater numbers of indigenous people, encourage innovation and find more sustainable ways of mining.
Collectively, it is estimated that the new mines have enough reserves to last the next 5,000 years. They are all also building sintering plants so they can participate more meaningfully in the mineral’s value chain—something old mines didn’t do much of.
<img loading="lazy" decoding="async" class="alignleft size-medium wp-image-1238" src="/wp-content/uploads/2017/04/Kalagadi-12-07-8213-300x200.jpeg" alt="" width="300" height="200" />
Delighted that theirs are “genuine deals”, Sisulu says “there was a lot of paper shuffling” and complacency in previous mining BEE transactions. “Blacks did not care about running a mine. One thing I’ve learnt is that you’ve got to dirty your hands in this business.” Insisting he’s “not reading a political catechism”, he says the new manganese dispensation has given Africa’s biggest economy “a golden opportunity for genuine ownership of assets by blacks, as well as a genuine rise of black professionals. If you look at gold and platinum mining, they remain exclusively white.”
When FORBES AFRICA talked to the budding oligarchs, they had all achieved critical mass. Some are now readying themselves to transport ore to their customers across the globe, while others are about to go into full production.
But it hasn’t been an easy road.
Over the years, the new miners lost a great deal of time and energy in bun fights over the “arranged marriages” the government forced them to enter into with international partners. None were afforded an opportunity to choose their foreign investors.
“The issue of forced marriages was a serious one,” laments Tshipi é Ntle Manganese Mining chairperson Sakumzi Macozoma, “besides the issue of compatibility, there were issues of investment horizons and simple diligence in doing the work that needed to be done.” He considers himself “lucky, in that our consortium worked well from day one”.
Sisulu admits to having it rough in the beginning, but is now pleased that “reason ultimately prevailed” and the relationship between them and their Japanese strategic equity partners is “working like a charm”.
Daphne Mashile-Nkosi, who heads Kalagadi Manganese, has not been as fortunate. The single-biggest shareholder and chairperson of Kalahari Resources has been in constant disputes with the bigger of her two strategic equity partners, giant steel maker ArcelorMittal International which owns half of Kalagadi. It took a High Court order to force ArcelorMittal to meet a R241.3 million shareholders’ agreement with Kalagadi. ArcelorMittal had expressed unhappiness with the way the business was being run by the local partner, claiming that certain material obligations under the Kalagadi Manganese shareholders agreement had been breached and that corporate governance was found wanting in the mining firm. ArcelorMittal also wanted to appoint a joint CEO. The High Court also ordered the company to pay the costs of the legal proceedings and ruled that ArcelorMittal discharge its financial obligations in the future, pro-rata to its shareholding in Kalagadi Manganese.
<div id="attachment_1235" style="width: 210px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-1235" class="size-medium wp-image-1235" src="/wp-content/uploads/2017/04/AV_00012786-200x300.jpg" alt="" width="200" height="300" />SOUTH AFRICA &#8211; 6 August 2009: Saki Macozoma is the chairperson of financial institutions STANLIB and Liberty Life, deputy chairman of the Standard Bank of South Africa and a director of the Liberty Group. (Photo by Gallo Images / Financial Mail / Robert Tshabalala)</div>
Other stumbling blocks remain. Transport, over which they have little control, is one of them.
Transporting manganese by road would cost the mines around 75% more than rail, the miners say. But they may not have to go that route, if the government delivers on its promise. After years of shirking its responsibility, the government has finally decided to come to the party.
In February, President Jacob Zuma announced that government-owned transportation utility Transnet would spend R300 billion ($36.7 billion) to increase railway capacity, build and improve port facilities and upgrade fuel pipelines. The plan is specifically aimed at speeding up resource shipments and includes a new railway line to transport 16 million tons of manganese to Coega, a new development zone that’s at the center of the world’s main trade routes, being equidistant from American, European and the Pacific Rim regions.
“It’s going to take time but we are happy it’s finally going to happen. The imponderable here is why did we wait? We knew it had to be done. But it’s not too late,” says Sisulu.
In a country where most leaders of mining consortia are, or were, politically well-connected, some may find it strange that Sisulu and Macozoma would not have been able to do something about the situation they are now finding their companies in.
Zwelakhe Sisulu’s father, Walter, recruited Nelson Mandela to the ruling, 100-year-old, African National Congress. The two went on to become close friends and each other’s confidantes when they were both incarcerated for close to three decades for political activism. When Mandela was released in 1990, Zwelakhe went on to become his press and private secretary.
“No-one would see Madiba if I didn’t want them to see him,” is how Sisulu best describes his role in Mandela’s life at the time.
When Mandela retired from active politics after serving a five-year term as head of state, Macozoma became one of the most powerful men in South Africa. A close confidant of Mandela’s successor, Thabo Mbeki, Macozoma formed the nucleus around whom Mbeki’s inner circle was built. Like Mandela, although much younger, he is also a former Robben Island prisoner.
But transport is not the only challenge the new miners are facing. Across the South African mining industry, output has dropped. Unrest and wildcat strikes have reared their ugly head. And the country is facing stiff competition from fellow African countries like Gabon.
All this is happening at a time when worldwide demand for manganese has slowed. South African Chamber of Mines figures show that primary manganese ore production increased by 57% in 2010 to 7.1 million tons, coinciding with the global economic recovery. Of the total production, 5.9 million tons were exported while 17% was consumed locally. Total sales amounted to R10.6 billion and the industry contributed 1.5% to the country’s total merchandise exports.
Right now the figures are nowhere near there. But when that upward curve comes again, Sisulu says, they will be able to take advantage: “For as long as you produce steel, you are going to need manganese.”
Manganese is widely used for steel production, to give it strength, hardness and durability. The metal’s demand is being driven, in the main, by the infrastructure, transport and other development needs of the world’s nations, especially the most populous and resource-hungry ones, like China, which accounts for half the world’s steel and iron production and consumes 676 million tons a year.
Imara SP analyst Stephen Meintjes says: “Short- to medium-term consolidation is likely until steel prices and consumption turn up again. This might dislodge some high-cost Asian producers facilitating more realistic prices in due course.”
South African manganese will eventually perform to its full potential in the world market, he reckons, and “nothing, except our vexed mining jurisdiction problems” will stand in its way.
Macozoma says: “Conservative estimates of world production of steel, in which manganese is a key ingredient, suggest that, barring the usual economic cycles, is going to be strong for the next 50 years or more. This is based on the urbanization rate in the world, which requires extensive infrastructure.”
So, will manganese be as good as gold, as Sisulu surmises?
“Way too optimistic, something like iron ore, which of course is still very good, maybe,” says Meintjes.
“Manganese is different from gold in that the latter was a store of value worldwide and was viewed as wealth in itself. Manganese is an industrial mineral so it depends on the levels of steel production in the world,” says Macozoma
That said, he quips: “Manganese is not a 20/20 game for South Africa. It is a five-day cricket test.”

The Slow Rush

South African mining is in tatters after weeks of spreading violence and chaos that has cost R4.5 billion ($544 million) in lost production and threatened many of the country’s erstwhile prosperous mines.
More than 1,000 soldiers have been posted to Marikana and a tight police cordon thrown around the operation.The Lonmin strike has seen one shaft mothballed and 1,200 contract workers sacked.
This is the bitter aftermath of the shootings at the Marikana operations of Lonmin, near Rustenburg north west of Johannesburg, in which 45 people were killed. In the weeks that followed, the wildcat strikes and wage demands spread. It is a sign of dangerous times that Anglo American Platinum (Angloplats) decided to suspend its Rustenburg operations, on September 12, to protect its workers from intimidation—a blow to the international image of South African mining.
“Well, it has been hurt, it has been damaged. You can’t have such a serious incident during a democracy. We have to work towards making sure that we bring back the image and the sanity of the industry,” says Susan Shabangu, South Africa’s minister of mineral resources.
Then there were more wage demands at nearby Implats, strikers stopped workers going underground at Royal Bafokeng Platinum, there was a wildcat strike by 15,000 workers at Gold Fields in Carletonville, 79 kilometers west of Johannesburg; at Marikana 28,000 thousand workers refused to go back and marched with weapons as peace talks failed and wage offers were rejected. The workers want a minimum of R12,500-a-month—triple the current wage.
The unions couldn’t call the workers back and the management appeared powerless to dismiss—often a swift way of squashing an illegal strike—for fear of even more unrest.
The biggest upshot of all this is the highly regulated labor relations procedures—which has helped keep the number of mine strikes down over the years—has been bypassed, at best, mocked at worst. In the past, under the eye of independent mediators, the Commission for Conciliation, Mediation and Arbitration, wage demands went through extensive talks and delicate mediation. Only an irrevocable breakdown would lead to a strike certificate and a legal walk out. Even then, at best there would be at most a day or two of posturing on the picket line, or even a last minute deal before a drill was downed.
“They are opening up the entire mining industry to pay demands and illegal strike action, you are not going to be able to control illegal strike action&#8230; My biggest fear is that we are not working towards a long term solution,” says the national spokesman of the National Union of Mineworkers (NUM), Lesiba Seshoka.
The first bitter legacy of Marikana is growing distrust and animosity between workers and management in an industry where the deeper underground you work, the less you get paid.
“Let’s be fair, when CEOs get millions we say nothing, when miners ask for twelve thousand Rand everybody make a noise. The manner the economy is structured doesn’t benefit everyone,” says the president of the Association of Mineworkers and Construction Union (AMCU), Joseph Mathunjwa, on August 31.
During question time in Parliament in Cape Town, on September 13, President Jacob Zuma blamed Lonmin for the unrest at Marikana saying the living conditions in the hostels left a lot to be desired and the company should have built family homes instead.
“Lonmin acknowledges that living conditions are not ideal but it is working towards better living conditions. We accept the criticism, but improving living conditions is a long process,” says Lonmin spokeswoman Sue Vey.
The second legacy of Marikana will be higher costs for mining companies, at a time when they can ill afford it, as workers appear to have proved they can ask for more wages when they want. In mining, most pay negotiations are run, in an orderly fashion, through the Chamber of Mines every two years. Gold and coal miners do this; there are proposals to bring platinum into these pay talks, but it may be too late.
Peter Major, a mining analyst with Cadiz Corporate Solutions, who has studied South African mining for more than 30 years, believes costs in platinum mining are likely to soar.
“Profit margins have fallen from 50%, a few years ago, to 10% now, quite simply the industry is running out of rope… We are getting to a point where people won’t be able to make money even at these platinum prices&#8230; It is terrifying, costs have been going up around 20% a year and these wage demands are likely to send these costs soaring even higher,” says Major.
In the angry chaos of South Africa’s mine, costs may prove the least of its problems.

Tag: October 2012

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