It’s 5AM in the northern hills of Malawi where its tobacco is grown. Chifundo Ndilowe is awake and ready for the day. Dressed in grey shorts and a blue NBA vest, still filthy from yesterday’s long day on the farm, Ndilowe has hours of hard labor ahead. He is just 15 years old and has been planting and picking tobacco since he was 10.
“I came here in 2011 because rural life is hard. We were battling at home and I had to start contributing for us to survive. I stopped going to school to work. It is very tough working under these conditions because it is hot and we easily get tired and I am often sick,” he says.
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Ndilowe moved 567 kilometers from Mulanje to Mpherembe, 300 kilometers north of Malawi’s capital, Lilongwe, to work in a tobacco farm five years ago. It means long hours, missing school and breaking the law for little pay. He earns a little more than $140 and $280 a year depending on the harvest.  That’s less than $1 a day.
“We work for the year and only get paid after harvest. During the year, we get 20 kilograms of maize for 12 days because we don’t grow crops for consumption. They also give us salt and then we have to figure out the rest ourselves. I get to eat once a day and I take whatever is there,” he says.
Ndilowe is just one of an estimated 800,000 youngsters in the tobacco fields; voices that are seldom heard. One of an army of children who sweat for millions of cigarettes lit all over Africa.
A study on child labor in the tobacco industry in two areas of Malawi, Suza in the Kasungu district and Katalima in the Dowa district, found 57% of all children were being used as child labour in the tobacco fields.
George Kube, an adult tobacco worker, works with Ndilowe and two other children.
“There is no money for the children to go to school and if they don’t work to help we wouldn’t survive. We farm on two acres of land and the produce is auctioned to tobacco companies. You have to be very strong if you are going to do this job because sometimes we have to cut down trees and look for water,” says Kube.
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A study, published by the British Medical Association, says contract farmers, like Kube and Ndilowe, cultivating tobacco in Malawi, live below national poverty lines, while independent farmers operate at a loss.
“Even when labor is excluded from the calculation of income less costs, farmers’ gross margins place most households in the bottom income [groups] of the overall population. Tobacco farmers appear to contract principally as a means to obtain credit, which is consistently reported to be difficult to obtain,” says the study.
Tobacco farmers may struggle to make a living but tobacco manufacturers thrive. The world tobacco industry is worth billions of dollars. Cigarette retail values in 2014 were worth $744 billion and over 5.6 trillion cigarettes were sold to more than one billion smokers according to the Campaign for Tobacco-Free Kids. But, very few farmers make money from it.
The market is controlled by a few international companies; China National Tobacco Corporation, Philip Morris International, British American Tobacco, Japan Tobacco International and Imperial Brands. They buy tobacco from cheap emerging markets, like Malawi, for profit.
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For years, governments around the world have been trying to clamp down on smoking because of its health implications, through stringent laws and higher taxes, yet tobacco use is increasing in some countries, says Zambian economist Grieve Chelwa.
“African incomes have been rising over the last couple of years and we know that tobacco consumption responds to rising incomes. Further, tobacco companies have put in place strategies (subtle advertising) to take advantage of rising incomes.”
And they flourish.
This year, British American Tobacco (BAT) announced its revenue went up 8.1% at constant rates of exchange, cigarette volume from subsidiaries was 497 billion, up by 2.2%, cigarette market share in key markets increased by 40 basis points and its brands performed exceptionally well with cigarette volume up 9.8% year ending September 30.
BAT plans to merge with its US partner R.J. Reynolds Tobacco Company, the company behind the famous camel cigarette brand, in a deal valued at $47 billion. It hopes to create a stronger global presence and move into new ventures like e-cigarettes.
<div id="attachment_5471" style="width: 310px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-5471" decoding="async" loading="lazy" class="size-medium wp-image-5471" src="/wp-content/uploads/2017/05/Grieve_Chelwa_picture-300x300.jpg" alt="" width="300" height="300" />Grieve Chelwa</div>
In its third quarter, Philip Morris International reported net revenues of $19.9 billion, up by 2.6%, net revenues, excluding excise taxes, of $7 billion, up by 0.8%, operating income of $3 billion, up by 0.6%, and operating company’s income of $3.1 billion, up by 1.2%. In Africa, companies thrive because of weak regulation.
The World Health Organization (WHO) has a 75% benchmark of tax on the retail price, yet the African average is way below. Nigeria taxes cigarettes at only 20% of the retail price. Chelwa says ideally increasing taxes to reduce tobacco use should work anywhere because of the law of demand, increasing price reduces demand.
“But, the important point is the increases have to be real-inflation adjusted increments,” he says.
In Africa, high tobacco taxes are rare. WHO says only 33 countries, with 10% of the world’s population, have introduced taxes on tobacco products of more than 75%. Tobacco tax revenues are on average 269 times higher than spending on tobacco control.
Tobacco companies are also good at finding new markets, with new smokers and weak regulations. According to an article published by The Lancet, a UK medical journal, tobacco use is declining in higher income countries, but nearly 80% of the world’s smokers live in low and middle income countries.
“Tobacco control regulations are not strong across most of the continent. Countries have ratified the Framework Convention on Tobacco Control (FCTC) but that’s all they have done. And sadly the tobacco industry is an important player in the setting of tobacco control policy in most African countries,” says Chelwa.
For years, tobacco companies argue they market merely to convince smokers to switch brands, but evidence published by the National Center for Biotechnology Information shows advertising drives smoking.
<div id="attachment_5483" style="width: 310px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-5483" decoding="async" loading="lazy" class="size-medium wp-image-5483" src="/wp-content/uploads/2017/05/Christo-van-Staden-142-300x200.jpg" alt="" width="300" height="200" />Christo Van Staden</div>
According to a WHO study, smoking has increased in 27 countries over the past 15 years. Seventeen of these are in Africa. In Cameroon, smokers more than doubled from 7% in 2000 to 22% last year. Congo-Brazzaville has seen the biggest spike. Nearly half of Congolese men smoke. Last year, 22% of its people admitted to smoking regularly, up from 6% in 2000.
“Only 42 countries, representing 19% of the world’s population, meet the best practice for pictorial warnings, which includes the warnings in the local language and cover an average of at least half of the front and back of cigarette packs,” says WHO.
In South Africa, cigarette advertising is banned. There are also restrictions on point of sale product display, vending machines and sponsorship of events, activities, individuals, organizations or governments. Now, Health Minister Aaron Motsoaledi has pledged to take it further by strengthening the Tobacco Products Control Act.
Motsoaledi says there should be no branding, no logos and no colors on cigarettes to discourage smoking. If the law is introduced, all cigarettes will be in a brown package with graphics that show the damage they can cause.
This is worrying for the tobacco industry. Christo van Staden heads the only primary tobacco processing factory in South Africa, Limpopo Tobacco Processors, that processes 12 million kilograms of tobacco. He says the effects could be catastrophic.
“The biggest impact [of tougher regulations] is the increase in illicit cigarettes which is a huge dent in the business of BAT and in the whole market. About 20 to 30 percent of cigarettes in Gauteng are illicit and they are paid way below the price,” he says.
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As we meet, in Rustenburg, a two-hour drive from Johannesburg, Van Staden’s farmers have lost 30 hectors of tobacco to a passing storm. On this day, the sun blazes down from a cloudless azure sky. A sprinkler keeps the glossy lawns and flowers alive. Inside the factory, it is dark and you can hear a pin drop. The silence is almost tangible. There is no bustle and machines that usually crackle stand still. It is not tobacco season. All employees are upstairs in the offices working. Dressed in khaki shorts and shirt, Van Staden says tobacco farming is hard.
“For every hector, you need two people to work there and pick it by hand, it is very expensive. One hector costs about R130,000 ($9,500) to plant and the farmer needs to make at least 20 to 25 percent profit. Last year was a very tough year. There were very tough conditions and an average farmer did not make any profit at all.”
“Now they are supporting the local market but if they don’t get any benefit out of that, they have to compete with everyone else in plain packaging, then there is no reason for them to buy South African tobacco, they will literally walk out of here overnight and source their product from Brazil, India and China where they can buy a lot cheaper. We are not ready for that. We would close these doors,” he says.
For Van Staden, closing doors means 10,000 farmers lose their income. He thinks there should be more education about the dangers of tobacco and efforts to keep youngsters away from smoking.
“I am a non-smoker and will not advise anyone to smoke. Most of my staff members don’t smoke. Unfortunately, people smoke everyday but see the warning on the packets and turn a blind eye.  Because it’s such an unhealthy product, the governments around the world will try and eradicate it but I don’t think it will happen in the next 20 years. There are laws in this country that allow people to smoke and to close down the primary sector is not going to stop smoking overnight,” adds Van Staden.
South Africa will follow the UK, Ireland, Australia and France in banning branded packaging.
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In Uganda, 4,800 kilometers from South Africa, it’s even tougher. If you light up in bars, restaurants or hotels, you will be fined $60 or jailed for up to two months. Smokers must be at least 50 meters away from public spaces, such as schools, hospitals and taxi ranks.
Uganda’s new laws also ban the sale of electronic cigarettes, flavored tobacco for water pipes, the sale of single cigarettes and tightened rules on labeling, advertising and selling tobacco to under-21s.
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“We are strongly opposed to plain packing as we feel that there hasn’t been enough consultation and research on it. Our concern is the serious adverse consequences that it will have on the economy, jobs and investment; as well as potentially making counterfeit easier. It trounces fundamental intellectual property rights and freedoms guaranteed by the constitution,” says Joe Heshu, Acting Head of External Affairs at BAT.
According to Heshu, counterfeit cigarettes are a bigger issue. In 2015, South Africa’s Treasury lost R5.1 billion ($373 million) due to illicit trade. The trade accounts for about 24% of the market.
South Africa has been increasing tobacco taxes since 1994 and the big impact has been the reduction in consumption and prevalence, but Chelwa agrees there has been a minimal impact of the taxes on illicit trade.
“Illicit trade often has to do with tax administration and not taxes. Even if taxes were a cent, you’d still have illicit trade showing that it is not a tax level or tax rate issue but a tax administration issue,” he says.
On jobs, Chelwa argues “there are very few tobacco manufacturing jobs, very few given how mechanized manufacturing of cigarettes is.”
The big worry he says is in the field.
“Governments have to consciously find ways of transitioning tobacco farmers into growing other types of crops. This will require a lot of work,” says Chelwa.
Asked if he thinks cigarettes are killers, Heshu argues his company has launched e-cigarettes, which are supposedly less harmful products, in the UK, France, Germany, Italy and Poland.
“We are committed to the research and development of Next Generation Products (NGPs) and globally have invested over half a billion pounds during the past five years. There is a growing body of evidence that NGPs do pose significantly fewer risks than cigarettes.”
For now, tobacco companies continue to thrive. Only 29 countries, representing 12% of the world’s population, have completely banned all forms of tobacco advertising, promotion and sponsorship, according to WHO.
Some of Malawi’s tobacco, grown by the likes of Ndilowe and Kube, is shipped 2,000 kilometers south of Mpherembe. In South Africa, 19% of the population, over the age of 15, smokes according to the World Bank. That’s almost one in five people and it is dangerous.
Tobacco is responsible for six million deaths each year. Of those, 600,000 die from the effects of second-hand smoke. This number is expected to increase to eight million by 2030 if current trends continue, says WHO.
Alexandra chain smoker, Mpho Ndlovu, knows this, yet he goes through three packs of cigarettes a day.
“I have been smoking since I was 15. It started as just playing with friends at school because we knew we weren’t allowed to. It was a way of being cool. I got hooked and have been smoking for 40 years,” says Ndlovu.
What started as a game became a habit and then an addiction.
“Smoking helps me when I’m nervous and I just enjoy it. I have tried to stop many times but have failed. I know this might one day kill me but, at this point, there is nothing I can do.”
Ndlovu spends R110.50 ($8) per day on cigarettes. That’s R766.50 ($56) per week and R3,066 ($225) per month and R36,792 ($2,700) per year and R183,960 ($13,500) in five years. If he continues smoking the same number of cigarettes per day for another 40 years, at this current price, he will spend around $100,000 on cigarettes. If invested, he could buy a house.
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Ndlovu spends close to half of his R7,000 ($500) salary he makes working as a driver for a logistics company in Sandton.
“By the last week of the month, I would be out of money and sometimes I have to ask people if I can borrow or take some on credit from the spaza shop,” he says.
“When I smoke, especially on weekends, I drink as well. So the money I earn is never enough. My children get angry because they think I should be using the money on them. I don’t know how to stop.”
Ndlovu buys his cigarettes from Ntando Debeza, a hundred metres from his home.
Debeza’s spaza shop sells cigarettes, pipe tobacco, snuff, chewing tobacco, hookah and shisha.
“I make about R6,000 ($440)  a month from this small shop. Most of the money comes from tobacco sales but I also sell other day-to-day products like bread and milk. People come to buy and sometimes on credit and I collect money at the end of the month,” says Debeza.
This means Ndlovu’s debt grows. But, that’s not all. Smoking does not only affect the smoker. High levels of nicotine exposure from handling tobacco leaves may cause nicotine poisoning called Green Tobacco Sickness, with symptoms including nausea and vomiting.
Back in Mpherembe in Malawi, Kube says he is aware of the dangers of working in a tobacco field without protective clothing, and mostly its effects on minors. “I know children can get sick but what can we do? We need a lot of hands on the farm because this isn’t an easy crop to plant and prepare. It needs three times more people than corn but we don’t make enough money at all,” says Kube.
He is one of the few rural farmers who know this. And it gets worse. A 2009 survey in China revealed that only 38% of smokers knew that smoking causes coronary heart disease and only 27% knew that it can cause strokes.
“Among smokers who are aware of the dangers of tobacco, most want to quit. Counseling and medication can more than double the chance that a smoker who tries to quit will succeed. National comprehensive cessation services with full or partial cost coverage are available to assist tobacco users to quit in only 24 countries, representing 15% of the world’s population,” says WHO.
Cape Town-based entrepreneur Gareth Carter saw this crisis as an opportunity. He founded WeDoRecover, a company that helps patients who suffer from psychiatric and addiction problems.
“Finding the right addiction program to meet someone’s specific needs is a complex process. The crisis and chaos synonymous with active addiction are overwhelming and the multitude of choices in the marketplace adds to the confusion,” says Carter.
According to Carter, people who smoke are more likely to drink alcohol and vice versa. He says alcoholics frequently present with a co-morbid nicotine addiction.
“As many as 80 percent of people addicted to alcohol and other drugs are frequent smokers, but the bulk will die of smoking-related disease rather than alcohol and drug-related disease…”
The damage doesn’t stop there. Carter adds that major depressive episodes among adults are highest in those addicted to nicotine and lowest in those who have quit or never started smoking.
“With nearly 80 percent of the world’s one billion smokers living in low- and middle-income countries, this is a very real public health care problem for us in Africa. Making nicotine addiction prevention and treatment readily accessible to the youth counteracts a wide range of potential mental, physical and mood-disorder problems with far-reaching ramifications to families, communities and our economy,” he says.
Carter thinks if tobacco was “invented” today it would be classed with other illegal drugs. That’s not the case. The lucrative industry in Africa puffs on unfettered.

The Price  Of Puff

It’s the third month of 2015; some people are still trying to find their footing while others already feel the need for a holiday. Some are chief executives of companies who are trying to stay abreast with economic activity to maintain the status quo, or go one better, and increase profits.
Many are not rosy over this year’s economic growth, but there’s still a bit of confidence in their ability to keep the performance of their companies stable. They believe global economic growth will decline more than twice. The International Monetary Fund (IMF) has cut South Africa’s growth forecast to 2.1%.
According to PriceWaterhouseCoopers’ (PwC) Global CEO Survey, only 29% of South African chief executives, compared to 37% globally, anticipate global economic growth will improve in 2015.
PwC’s Senior Partner for Africa, Suresh Kana, says chief executives are facing a multitude of challenges and uncertainties in global markets, which is affecting global growth.
“The government’s response to fiscal deficits, debt burdens and social instability are more concerning than a year ago,” he says.
The reports states that the emergence of digital technology has completely changed how companies do business. Mobile technologies are seen by 90% of South African CEO’s as most important to their company, including data mining and analysis, cybersecurity, battery and power technologies as well as cloud computing.
Information technology affects many organizations and they will be left behind if they do not keep up with the changing trends, says Hitachi Data Systems’ Executive Vice President of Global Services, Hicham Abdessamad. He says there is a huge shift happening in the market of cloud transformation not seen before and it is happening quickly. Companies should take advantage of this change and adjust with the market.
“It’s about staying relevant,” says Abessamad. “By 2015, 35 percent of IT spend will be managed outside the IT department’s budget.”
Kana says that chief executives know that they must adapt to disruptive changes in technology and in their markets.
Many chief executives see technology as a key vulnerability for their organizations. Technological change saw the second biggest increase of all the threats. The PwC report states that the pace of change is inescapable: less than a decade after its initial public offering, Google’s revenue soared from $3 billion to $60 billion.
“[CEOs] need to put technology at the core of their business to create value for customers. Finding new ways of thinking and working in this new competitive landscape is critical to success,” says Kana.
When technology is a strength, there are significant opportunities for growth.
Business leaders are increasingly aware that fundamental forces of change will affect their industries over the long term, according to PwC’s report. Technological advances, demographic changes and a shift in global economic power are some of the disruptive trends that companies need to be aware of. The interplay between them is transforming the macroeconomic landscape.
But challenges remain in other spheres of their businesses. Sixty eight percent of South African CEOs plan to implement a cost-reduction initiative over the next nine months. This includes cutting their workforce.
According to the report, about 22% of chief executives plan to cut their workforce. Retail company, Edcon, announced job cuts in February. In November, Edcon reported a loss of $94 million in the 26 weeks to September 27, from $111 million a year earlier.
To be able to build for success in 2015, the report suggests that companies should focus on what they are good at. They must re-evaluate the business they are in; anticipate policy issues; build diverse yet aligned partnerships; transform through digital and also develop a good mix of talent. Only 39% of the head of companies expect to increase their headcount, compared to 50% globally.
To stay in the game, business leaders must think strategically and
be adaptable.

Keep Up  Or fall Behind

A hasty expansion to South Africa’s most popular tourist destination brought about some of the early business challenges entrepreneur Sola Owoloja had to face. After a successful launch of a concierge business, West Chauffeurs, in Johannesburg in 2008, opportunities for expansion to various cities in South Africa soon presented themselves to the company.
West Chauffeurs, based in Johannesburg’s swanky suburb of Sandton, was ready for business in Cape Town. In 2009, it secured the highly sought after travel desk contract to provide full concierge services to the African Pride 15 On Orange Hotel and African Pride Crystal Towers Hotel and Spa. It would offer concierge services from booking spur of the moment transportation, dinner reservations, impossible to book theater tickets, finding presents in a hurry and doing deliveries among many other things to guests of the prestigious hotels.
But it was a hasty expansion and move to South Africa’s international tourist city of Cape Town that turned Owoloja’s world upside down, ushering in his worst day.
“The Cape Town operations were not profitable and we didn’t see the possibility of that trend changing for the better,” says Owoloja.
Nigerian-born Owoloja, started his entrepreneurial endeavours in his early twenties in Lagos. It was here that he learned that there is no structure in doing business, even having a 20-hour working day becomes the norm.
He moved to South Africa with the hope of receiving a contract to run an oil services company, but that did not go well. He moved back home, but later returned to South Africa to complete his studies in business administration.
During his studies, Owoloja established the concierge business with little entrepreneurial experience.
It started off with only two luxury vehicles in May 2009, but soon added another five through financial assistance from the National Empowerment Fund. West Chauffeurs was doing well, servicing clients through a global luxury lifestyle company, Quintessentially. They’re known to have very high net worth clients who travel around the world and often stay at the best hotels. And they trusted West Chauffeurs with their clients, Owoloja says.
The empowerment fund and the vehicles West Chauffeurs had purchased bore fruit which helped the business make more than R1 million ($96,000) after only two years in the concierge industry.
They bought new cars for the expansion and even got into lease agreements to finance the rest of the cars to meet the requirements of their contracts in Cape Town.
“We hoped that the expansion to Cape Town would afford us the opportunity to scale the business and as a result be able to increase revenue and profits,” Owoloja says.
But they had entered into unfamiliar territory, an international tourist city that already had well established hotels and services. West Chauffeurs struggled to find its place in the market, and because it relied heavily on the hotel’s guests for business, the company experienced relatively low sales as the hotels were new and in the process of growing their own client base.
“For a small company, expansion should be managed very carefully. We were profitable in our first year, but we did not think that move carefully. We expanded very quickly without the structures to manage the expansion in terms of cash flow, record keeping, etc,” says Owoloja.
The revenue from the Cape Town branch was very low in comparison to the cost of running it. At the end of every month, West Chauffeurs was short by about 65% which they had to source from the profit made during the previous year.
“It dried up very quickly. We tried to get overdrafts to pay salaries, but it was quite difficult. We picked up heavy losses in Cape Town, but those are lessons learned. They were painful,” he adds with a chuckle reminiscent of the tough times.
“It was a very difficult time for me and as a matter of fact, all of us, including employees. I reckon it is so much more difficult to run a business that doesn’t make profits than one that is profitable.”
West Chauffeurs lost millions. Their biggest mistake, Owoloja says, was for the company to go without management accounts and financial statements for nearly a year.
“With the benefit of hindsight, negotiating better terms with our clients could have saved us the considerable losses we incurred in Cape Town,” he says.
But that’s all in the past now. In early 2011, West Chauffeurs packed up office in Cape Town after 16 loss-making months to focus on the business in Johannesburg.
“We decided to focus on our Johannesburg operations which were profitable. It remains profitable and we plan to make it more effective and hopefully be able to make a little more money without additional investments,” he says.
They relocated from Sandton to the affluent suburb of Melrose Arch to run African Pride Melrose Arch Hotel’s travel desk. It is one of Johannesburg’s trendiest hotels. The guests of the hotel are typically discerning travelers who are accustomed to world class services and that became an opportunity for the company to recover from the Cape Town setbacks and also further its growth prospects.
From then onwards, things started to look up.
“We went from nothing to quite a bit. There’s this very nice feeling that comes with making things work,” says Owoloja.
West Chauffeurs currently has 17 employees including drivers and consultants.
Their client base includes companies who use their services for visiting dignitaries. They include Commonwealth Bank of Australia, First Bank of Nigeria, Liberty Life, Musa Capital, Openwave, Union Bank, clients from Barclays and many other private patrons.
Now that Nigeria has bragging rights as Africa’s largest economy, after overtaking South Africa following the West African country’s rebasing of the gross domestic product data after 24 years, West Chauffeurs’ expansion plans can be accelerated.
“Many doors have been opened especially in the hospitality industry as a spin-off from our hard work and dedicated approach to tasks we were entrusted with. In the not too distant future, we will be partnering with an international hotel group on their expansion efforts into Africa, starting with Nigeria,” says Owoloja.
This time, he’ll be armed with the lessons learned from Cape Town.

The City Of Leisure That Brought No Pleasure

They grew up in different worlds: he in a Nigerian palace; she in Accra. Together, through their media group, this multicultural couple proves that inter-African relations are lucrative. An $8,000 investment has multiplied into millions in profits. Now, they have set their sights beyond Ghana.
Theresa and Iyiola Ayoade met in Accra, the Ghanaian capital, 17 years ago. Those were tough times—politically and economically in West Africa—with most of the sub-region under military rule or boiling with civil strife. Today, West Africa is an emerging economic bloc and the Ghanaian-Nigerian couple has found favor, fame and fortune in the land of Ashantes.
Theresa and Iyiola’s alliance began with friendly chit-chat, lunching and discussing business ideas, politics and football; they fell in love and got married. Today, these seasoned entrepreneurs exemplify the geo-political dynamics of their respective homelands.
“I saw a big potential in him. I liked his sense of discipline, his approach to work, the way he applied himself. I saw a lot of promise. Doing business with him was actually a gamble because we were just friends. I don’t think it was just because of love that I got involved with him,” says Theresa.
They make a succesful team.
“She is not a shareholder in the business because she is my wife. I tell you, even if we were not married we would still have been in business together. She made a cash investment and that obviously made me take her more seriously,” he says.
Iyiola left Nigeria for Accra in the early 1990s. He started his business with $8,000, years later. His lucky break came via two companies—Coscharis Automobiles Ghana, the Ghanaian subsidiary of the Nigerian-owned Coscharis Group, and the Agricultural Development Bank of Ghana (ADB).
“I had delved into management consultancy along the way and Coscharis had asked me to give them a market penetration strategy. They liked my plan, and I organized the first auto fair in Ghana in 1997.”
It was while organizing the auto fair that he met Theresa, who was then a marketer at Joy FM radio station, in Accra.
The ADB opportunity, in 1999, required him to present audio-visual content for a campaign. He delivered the winning concept—a television game show, the first of its kind in Ghana—within two days. Soon after, he opened Charterhouse Productions, a television production company and launched the Ghana Music Awards. His staff payroll grew from six to 18. Theresa quit Joy FM in 2000 to join him.
By all accounts, Iyiola, Theresa and their Ghanaian business partner Philip Ayensu, have done well. They have created jobs promoted cross-border business ties and built a multi-million dollar business that straddles the marketing, advertising, entertainment and media sectors in Ghana, Nigeria, Sierra Leone and Liberia.
The trio own Multiple Concepts Group—it includes Multiple Concepts, a marketing company; Charterhouse, an events management and audio-visual production firm founded in 1999; MediaEdge-gsm, a mobile content provider founded in 2006; and GhOne, a television channel launched in 2011.
Their story is one of risk, resilience and taking advantage of opportunities. Their reputation and bank balance are healthy.
“Those guys are involved in almost every event happening in Accra,” says Ben Arthur, a Ghanaian business journalist.
“We do about GHS15 million [$743,000] in revenue per annum averagely, I believe this is large for our industry,” Iyiola says.
The group employed around 120 people by December, and opened another office in Cape Verde earlier this year.
Iyiola was born and raised in Ife, in south western Nigeria.
“I grew up in the palace. My mum was the ninth born of the late king, the Ooni of Ife, Oba Adesoji Aderemi. I had over 500 cousins, so many role models to choose from,” he says.
Among his cousins were lawyers, bankers, accountants, doctors, lecturers, thespians and intellectuals. He studied economics and statistics at the University of Benin, in Nigeria, and worked as an investment and financial analyst in Lagos.
“I came to Ghana with almost nothing. But, at least, I knew I was not going to fail. I had my brains and I was lucky that a few people I’d met in Accra, during my early years in the city, believed in my ideas, my work ethic and my judgment,” he says.
He credits his success to strategic decision making, clients’ goodwill and Ghana’s tranquil environment.
“One thing, I think, I did very well is that I didn’t paint this business green-white-green. A lot of businesses come here from Nigeria and they are so Nigerian. There is market resistance, however subtle, to that kind of thing, but then again, Nigerians are not very easy people to deal with also. The average Ghanaian is somewhat reserved. They are generally peaceful people and it is that peace that gives us the security that we enjoy here.”
He is bullish about Ghana-Nigeria trade and the subject of Africans investing in Africa.
“We have a 250 million market in West Africa and the market is open to everybody, not just Nigerians and Ghanaians. In fact, I really don’t get it when people talk about Nigerian companies coming to Ghana to take away business from the Ghanaians. Then I ask, ‘Excuse me, is Standard Chartered bank a Nigerian company? Is Barclays bank Nigerian? Is Ashante Goldfields Nigerian? Is Goldfields Nigerian?’”
He says that while Ghanaians accept foreign companies doing business in their country, they resist Nigerians.
“Meanwhile, they stand to gain more from Nigerians because we are one of you, our cultural and geographical affinity should be a plus. There is plenty of opportunity for us all to grow and try to unify the West African market. We need to do more [business] between ourselves. That’s the only way we will develop and grow the region.”
Sometimes success comes when you look beyond your borders and team up with your African neighbors.

Love And Business  Across The Divide

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.

Tag: Profits

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