On a dirt road, outside the mining shafts of Lonmin, 120 kilometers north west of Johannesburg there are 34 white crosses.
Days before the first anniversary of Marikana, miners ripped them up and threw them among the nearby rocks. The beating sun and biting wind eats at their enamel sheen.
A South African opposition party put up these crosses to commemorate the bloodbath. A year on, rock drill operator Siphiwe Booi, who has worked in the depths of Lonmin’s mine for 23 years, is tearing them down.
“The DA [Democratic Alliance] put these crosses up, not us [the miners]. It was a ploy to win votes. We are going to surround this hill with a fence and put up a headstone with all the names of those who fell. Us. The miners,” says Booi.
<div id="attachment_2111" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-2111" class="size-medium wp-image-2111" src="/wp-content/uploads/2017/04/IMG_8437-300x226.jpg" alt="" width="300" height="226" />Head of the Marikana Commission, Ian Farlam, leaves after postponing proceedings again</div>
In many ways the rise and fall of the crosses is one of the precious few manifestations of change in the post-Marikana world.
Miners, such as Booi, want justice rather than memorials, for the 34 miners who died on August 16, 2012, in a wildcat strike.
“I woke up that day to find the verdict of the wage negotiations. Little did I know, I was waking up to death. I remember the line of police shouting: ‘Media get back’. The police stepped forward in a line. Then the sound came: ta-ta-ta-ta. The next I saw was a man in a Bafana Bafana shirt dropping next to me,” says Booi.
He fumbles in his jeans and pulls out a cellphone. He points to a picture.
“This was my friend, my work colleague, that was August 16,” he says.
Booi feels nothing has changed since that day. He is also one of the many witnesses who stood in the hallway of the Farlam Commission, an hour-and-a-half drive from his home in Marikana West. The commission, in Centurion near Pretoria, was charged by President Jacob Zuma to find out who was to blame for Marikana.
On the same day Booi was pulling up the crosses, the families of mine workers and police alike rubbed shoulders, a world away, at the commission. They sat, ringed by cameramen, united by the need for closure. Among suits, laptops and lever arch files the truth is expected to emerge.
The commission has sent a year sifting through 12,000 pages of statements, inspections, video footage and evidence. The end, expected on October 13, is nowhere in sight. The commission has not moved at the speed he wished, admits Ian Farlam, head of the commission and retired Supreme Court judge, days before the anniversary.
The delay has been hard for Lizy Maubane, sister of one of the policemen who was killed on August 13 2012.  Since his death she has been depressed, at times suicidal. All she wants is closure.
Accusations of unequal funding have also delayed the commission, admits Farlam.
Advocate Dali Mpofu, who represents the injured miners, walked out of the commission after he was not paid. The miners must pay R400,000 ($40,000) a month for Mpofu&#8217;s services. The tax payers collect a R36 million ($3.6 million) bill for the defense of the police.
Mpofu refuses to defend the miners until he has taken the matter to the South African Constitutional Court. Here, he hopes to be granted state funds.
The 12 parties at the commission are allowed to cross-examine each witness—testimony that has to be heard in several languages. This is an issue, says Farlam.
“With so many witnesses and cross-examinations it was inevitable that the process would not be rapid,&#8221; he says.
The good news is that the commission has been granted funds to install a simultaneous translation device, which will speed up the fact checking process, says Farlam.
In the interim, Farlam is eager to push through with proceedings, hoping a secret financial backer can pay Mpofu’s bill. A large scale walkout could spell disaster.
“I just want to say one thing to the government, please pay the lawyers,” says Booi.
The mining industry is also struggling, post Marikana. According to the Chamber of Mines, 60% of the gold mines in South Africa are unprofitable. Costs are rising amid the threat of more wildcat strikes. Even the time honored pay negotiations are in dispute and disarray.
For the miners, who sweat underground, the future of mining is a far away concept. They are too busy struggling to live. At the very least in Centurion, it’s the lawyers, wearing suits that cost more than a year’s wages in the mines, that have the job of unearthing the truth so that justice can be done.

Little Did I Know,  I Was Waking Up To Death

For most businesspeople the word ‘metadata’ means little. They should know. Simply put, metadata is embedded in every SMS and email and carries the telltale story of your business. This is the word from intelligence expert, Morne Walters, who has spent 15 years stopping snoopers.
Imagine you are a big-time CEO: you’ve gone into a private meeting to close a deal; you pitch a price; you leave. The first thing you do is get on the phone and tell somebody about how it went. But what you don’t know is that the person you are calling has had his phone tapped.
It seems like it’s a story out of a movie but it’s becoming an everyday reality. Walters sits comfortably across the table sipping a cappuccino in Johannesburg. He’s a world away from James Bond, coming from a small town in the Free State, South Africa, and says he prefers the shadows to the limelight. What he does carry is three cellphones that have military-grade protection. Spying in business is on the rise, warns Walters.
Pieter Roux agrees. Roux who has spent two decades encrypting codes for cell phone companies says with more people using smart technology, ignorance is one of the leading reasons why viruses are on the up.
“People still think phones are used only for phone calls, a misconception. It’s more likely there will be security breaches on your android than on your computer because of the nature to think that you are immune on your cell,” says Roux.
Andrew McHenry, another sage with two decades in the IT business, says spying is the talk of programmers. So much so, that they believe everyone moving their data into cloud storage could spell danger. He has seen a rise in products designed to stop hackers like protected SIM cards and $60,000 HTC cell phones, sold to government security offices.
Roux believes the cost of protection will prove too much for consumers. The solution lies in software development, where apps can be screened for viruses. While there is an increase in espionage, Roux thinks many hackers have not yet tapped into the industry.
“Most hackers are not willing to spend the effort decoding something. It is far more common to receive a spoof email, than to have someone who wants to eavesdrop on your calls. It’s easier for fraudsters to scam people with false websites, it is more the trend. We have seen an increase in the one in a million being gullible enough to respond to an email than on phones.”
Most businesspeople cannot take the chance, says Walters.
“While your intentions are genuine, this is industrial espionage, industrial thievery. People get the upper hand. Companies can lose billions of dollars this way. If you and I tender for a deal, and you know that I am going to tender for a million dollars, you can come in at $990,000. Information is used to get ahead of the game,” says Walters.
In September last year, Walters came up with a smart device application to protect classified government installations—he thought he could do the same for business. Five months later, Seecrypt, a-state-of-the-art military-grade encryption app, was born, technology straight from the battlefield to the board room.
“Understanding security means you have to think like a thief. To protect people in privacy, you have to understand how people can access information,” says Walters.
The app works by dialling subscribed clients on a private internet network line. Behind the scenes of an easy-to-use interface, when you make a call the program generates a key by sampling audio noise and a random set of numbers. The key, which has a length of a number to the power of 667, is then re-encrypted a second time before being sent.
Interestingly, it was the Edward Snowden case that made this system popular.
Snowden is the former American intelligence analyst, who exposed American and British government mass surveillance programs to the world; secret programs that had been collecting metadata from millions of internet and cellphone conversations across the globe. His disclosure is said to have ranked among the most significant security breaches in American history.
The news broke when Walters was flying to Johannesburg from the Middle East. By the time he had landed in South Africa, the phone was ringing; including a call from a royal family.
“It was surreal. It was one article from one newspaper and people kept asking how true it was. If you go back to that night it was launched. It was so outrageous that people didn’t believe it at first. By the following Thursday, it was all over,” he says.
Since April, Walters has seen a 400% growth in subscriptions from owners of tens of thousands of phones, laptops and landlines being secured from Nairobi to Washington D.C.
“When we say to people someone is listening to your calls or reading your messages we were told that we were being paranoid. Well the evidence speaks volumes. The reality is that what has been shown in the media has been just the tip of the iceberg. Every country in the world does it. The time has arrived for corporate companies to protect their data,” he says
Walters gathered a number of what he calls ‘sages in the intelligence business’—some poached from the US secret services, the UK ministry of defense and the African Defense Force. Walters now has a team of developers, averaging 25 years of age, fueled by bottomless coffee and containers of jelly beans.
They run a tight operation, working around the clock broken by the odd siesta on a couch. Walters is an entrepreneur, who is likely to make millions out of paranoia, eavesdropping and the fall of Snowden.

Industrial Thief On The Line, How Can I Rob You?

The four gigantic clocks ringing the trading pit light up. The trollies squeak as they are wheeled under them.  A sweet scent wafts across the floor as the numbers count down.
This is the buyers chance to get the best price of the day. Hands hover above a small digital keyboard. Along the wooden benches, they line up with military precision. Cups of coffee are left steaming and forgotten.
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The aim of the game is to push the button at the last possible moment as the clock counts down to zero.
The clock counts down from R6 ($0.6). The auctioneers stare at the digits, oblivious to anyone around them. It hits R4.65 ($0.5) and stops. Every lily on the trolley is sold. The trolley squeaks away.
The chatter begins to rise again. Someone shouts: “Leave some for us next time boet, we all need to get lilies you know.” Then, heads turn to the next trolley.
Roses are wheeled in. The chatter stops. The game begins again.
This is all in a day’s work for auctioneer Tjaart Kilian. For him, getting up at dawn is a breath of fresh, scented air. He knows the rising sun means it’s time to sell a million flowers.
In a large warehouse in the industrial district of Johannesburg, South Africa, 60% of the country’s flower buyers haggle over a business that sees a turnover of R380 million ($3.8 million) a year.
There are 600 growers and 300 buyers. On exceptional days Multiflora ,the company that runs this floor, can pack 90,000 stems within five hours of going under the gavel. Valentine’s Day and Mother’s Day brings in R2.5 million ($253,000) on average.
In the middle of it all is André de Wet the managing director of Multiflora.
“We are tiny compared to the larger auctions in the world. South Africans are per capita very small consumers of cut flowers compared to Europe,” he says.
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Tiny compared to Aalsmeer Flower Auction in Holland, the largest flower house in the world, where up to 20 million flowers are sold a day.
On a chilly Johannesburg winter morning, the Multiflora warehouse is ringed by frosty fields. It’s cold inside too, but the colours are warm. In the air is the sweet scent of daisies, roses and lilies. Kilian knows his way around a complex maze of flowers, trolleys and red crates that keep the flower business moving; he should know he’s been here for 13 years.
“First impressions are everything for a flower. When you are classifying flowers you are looking for consistency and for little variation in quality. You check the flower, you check the leaves you check the stems. The size of the stem is a factor, if you hold a stem outward it must be able to carry the weight of the flower,” says Kilian.
The perfect flower crate will be given the letter C says Kilian. Beware the grower who categorizes his flowers incorrectly. Multiflora inspects every sellers buds daily. Should your stems be below par, they get re-categorized and suffer the penalty of being sent to the back of the queue. In a business where freshness and time is of the essence the penalty helps keep the seller honest says Kilian.
Before he started selling daises Kilian worked for 20 years as a service technician in a laboratory. He says his passion for plants blossomed at home, through a hobby of bonsai trees.
“When I had the opportunity I took it. You get tired of maintenance after 20 years. It’s a different experience when you get here. In the morning, with the smell of the flowers, it’s a whole lot different from the steel industry,” he says.
For auctioneers, the first days on the job are tricky. Not only do they have to gain an intricate knowledge of flora, which takes about six months, they also need to learn how the computer system works. Even with a healthy knowledge of plants in his back pocket, Kilian remembers ending his first day exhausted.  Take him to any flower shop these days and he will guarantee you get the best for your money. Most of the people who find out he is a flower auctioneer think he is crazy.
“The first thing they say is: ‘Can you speak fluently? Can you speak quickly?’&#8230; And it’s a completely different system from a normal auction. So when you say you auction flowers, they have got absolutely no idea what you are talking about,” he says.
Deep in the heart of the warehouse is a room with four gigantic clocks. At precisely 7AM, the sound of a bell beckons a train of flowers that go on sale. This is not your average clock. It is a digital clock that counts down cash instead of time. Starting at a high price, the hand drops until a buyer, by pressing a button, stops the clock to bid for a crate of flowers.
The system was invented by a Dutch cauliflower grower in the 1870s to reduce the time growers spent at auction says de Wet.
“It frees growers from the price determination process and the task of bidding and allows them to focus on production. The auction also provides a central location for buyers to meet suppliers, allowing for efficiencies in the logistics of product redistribution and quality control,” he says.
With the clocks in action, the auction can handle one transaction every four seconds.  All the information required for a buyer, quality and quantity, is on screen.
If the clock hits zero, the flowers are taken off the auction and then shipped to a dumpster to be destroyed. The company used to give unsold flowers away, but stopped after too many people began to re-sell them.
Buyers have a set budget for the day says Kilian. They work on a credit system and this seems to fuel the bidding process.
“Some of the guys run a very tight budget; they go mad over one or two rand per stem,” says Kilian.
There are four people who manage the clocks. Their job is to watch for betting trends and monitor the demands.
“Sometimes if you get a big demand for flowers, instead of the price going down it will go up.”
On days like Mother’s Day and Valentine’s Day the bidding war can push prices through the roof says Kilian. The auctioneer has got the option, if he sees the demand for flowers is high, to raise the prices even higher and into the next day if they think it’s worth it. Other peak demands are Tuesdays and Thursdays, the best days for buyers to ship their flower bunches to the airport and the coast ready for the weekend rush.
“That’s the experience of being an auctioneer knowing on certain days when to set the clock higher and who’s going to be buying that day. You have to be on top of it all the time. You have to sit there and concentrate each and every second. You cannot blink. You cannot make a mistake on the price. You have to concentrate… until the flowers are pushed,” he says.
Kilian enjoys playing mind games with the buyers by setting prices at higher costs when flowers are trending. Raising the prices keeps everyone on their toes and forces the bidders to think about how little they can pay before the flowers are gone.
Flower buyers are few. Auctioneers know everyone by name so they can guess who’s going to be buying what flower and adjust their prices accordingly. Nothing too overpriced, says Kilian with a wink.
Once the auction is complete, each bunch of flowers is tagged with a sale-sticker and then distributed to a buyer&#8217;s depot where they are repackaged and boxed for retail.
Every flower counts for Multiflora, who makes their money by charging 8% commission sales says de Wet. It knows competition is on the rise.
“Buyers for supermarkets and large retail store chains are becoming increasingly sophisticated, purchasing larger volumes and coordinating purchases across different markets and indeed, some large retailers are bypassing the auction and their commissions to source directly from growers,” says de Wet.
The journey of a stem can stretch from Nelspruit to Angola. Some customers fly their flowers across the continent; others sell them around the corner. All part of a million-flower-a-day business that gives off the sweet scent of millions of dollars.

The Sweet Smell Of Money

Arrivals and departures in Nairobi these days look more like a wedding venue than an airport. Huge white tents make up for the charred remnants of the arrivals hall.
Children sleep on chairs in the morning chill, as passengers crowd under canvas. This is Jomo Kenyatta International Airport (JKIA), in the wake of the crippling fire on August 7.
For five hours, flames tore through the fourth busiest airport in sub-Saharan Africa. It disrupted trade and travel plans for tens of thousands of people as Kenya heads for its tourism peak season.
The annual wildebeest migration alone draws thousands to the Maasai Mara in July and August.
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“We are going to put up a temporary terminal that will take about 2.5 million passengers at the same time. We will also fast-track terminal four, which was meant to be opened sometime in March next year. We need to think how we can bring it forward,” says the airport’s manager, Edward Kobuthi.
The fire was another blow to Kenya Airways. It has struggled through turbulent times after reporting a $7 billion loss in 2012. The fire forced the airline to cut international flights by 25%.
“Roughly in terms of revenue, not bottom line, we have lost about $4 million against our plan,” says Titus Naikuni, CEO of Kenya Airways.
“What has happened is that we have changed a number of things. We have moved our international flights to the domestic [terminal], which means all our departures are through domestic. That is very congested.”
“A simple fire gone bad,” says President Uhuru Kenyatta, who criticized the authorities for failing to modernize the airport and for their handling of disasters.
The International Civil Aviation Organisation (ICAO) stipulates that fire fighters should be at the scene of a blaze in three minutes. It took Kenyan fire fighters at least 40 minutes after the fire broke out at around 5AM.
The fire is also likely to slow the expansion of the airport, which has dragged for months following leadership and financial wrangles in the Kenya Airports Authority (KAA). The project—expected to break ground this year—may be delayed, hurt the economy and frustrate Kenya Airways.’
“Kenya Airways&#8217; expansion plan is entirely correlated to the successful and speedy expansion of JKIA. The airport experience has been suboptimal for a while and I am sure Kenya Airways is hoping that the fire is the catalyst for a more aggressive KAA,” says Aly-Khan Satchu, an independent analyst.
KAA plans to expand the airport, which is a regional link to Europe, the Middle East and Asia, in order to handle traffic of 17 million passengers per year by 2020 from the current 6.5 million. In the wake of the fire, it has its work cut out.

Tents, Tribulation And Complication After A Simple Fire Gone Bad

“We will not legitimize the illegitimate.”
This was the reaction to a questionable election victory in Zimbabwe from the loser, Movement for Democratic Change (MDC) leader Morgan Tsvangirai, the prime minister of the fragile power-sharing government.
After President Robert Mugabe’s win, on July 31, Tsvangirai accused the Zimbabwe Electoral Commission of rigging the poll and indicated that his party would take legal action. The MDC dropped the case as they felt they would not get a fair trial.
<div id="attachment_2094" style="width: 310px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-2094" class="size-medium wp-image-2094" src="/wp-content/uploads/2017/04/0000196003-300x200.jpg" alt="" width="300" height="200" />HARARE, ZIMBABWE &#8211; AUGUST 2: Morgan Tsvangerai on August 2, 2013, in Harare, Zimbabwe. It was announced that ZANU PF leader, Robert Mugabe has once more won the elections. (Photo by Gallo Images / Foto24 / Herman Verwey)</div>
Questionable electoral conduct has been cited in more than 100 constituencies, where thousands of voters were turned away. Names were not appearing on the voters roll, others found their names on the roll in far-flung constituencies. Intimidation was subtle, but rife, according to reports.
“It’s a huge farce,” said Tsvangirai as counting began.
Harare, the capital, went quiet when the result emerged. There were no celebrations.
Tendai Biti, MDC secretary general, lashed out at the ruling party, questioning its conduct during the elections.
“We live in horrible times surrounded by horrible men—men we have always assumed human, rational and real—they are not&#8230; The thing is, we always assume that revolutionary parties (ZANU-PF) have a conscience or a limit. They do not. For power, they will do anything. When dealing with them, always budget for the irrational, for the insane. Any assumption of sanity is wrong and naïve. They have stolen this election to the extent that they themselves are embarrassed,” says Biti.
“[Since the election date] we have been walking like zombies, drowning in dark shadows of pain and disbelief, hoping that this is just a nightmare. I’m afraid it’s real. Can someone in Borrowdale Road show me hands and say we voted ZANU-PF? Maybe you are at Sam Levy (a popular shopping center). Please get in touch if you are out there,” pleads Biti.
Economic commentator Jonathan Kadzura says: “There is nothing abnormal or controversial about the election. The losers must eat humble pie and let the nation move ahead. A Zanu-PF government is going to have people-oriented policies that are geared towards job creation. Agriculture is the backbone of our economy [which] we are going to revive [to] get the economy kicking, whether people like the results of the election or not.”
But President Robert Mugabe appears to be a hard sell for business—as trading resumed after the election win, the bourse took a nosedive, losing 11% of its value in one day. The Zimbabwe Stock Exchange is valued at around $6 billion and experts predict troubled trading times ahead.
Talk is rife about the manipulation of the voters roll, which was only made available on polling day. It was made available to the MDC after a High Court order was granted, but there wasn’t any previous commitment to make it open for inspection, even to international observers present.
“So far, we haven’t dispatched our observers, we don’t have a copy of the voter roll,” said Bernard Member, of the SADC Observer Mission, before the poll.
President Mugabe apologized for what he called “hitches” that kept the voters’ roll under wraps. He denied that his party was working in collusion with the registrar general’s office to manipulate the electoral register in favor of his party.
“We don’t do such things,” he says.
Unexpectedly, strongholds of the MDC in the cities were won over by Zanu-PF, making many voters suspicious.
After suffering an electoral setback in the 2008 polls, in which Mugabe gathered a mere 43% of the first round of the presidential vote, he turned the tables, and garnered 61% five years later. The miraculous setback of his main rival Morgan Tsvangirai, garnering 34%—against 47% five years earlier—is an electoral trend that has defied analysis.
As the country limps into another term with Mugabe at the helm, without the full support of western capital, analysts warn of economic stagnation.
“There is hope, if there is a shift in economic policies,” says Eric Bloch, an economic commentator. “There is need for foreign direct investment [and] curtailing of government expenditure. They will have to [have] the courage to make fundamental changes, that can boost the confidence of the market.”
“The win by Zanu-PF is sending shivers in the market, considering the mainstay of the party’s slogan on indigenization of foreign owned companies. The policy has no takers going forward. With the liquidity crunch hitting the world, we will have investors, especially foreign investors with little appetite to try to engage the market, which is risky—like Zimbabwe,” says Christopher Mugaga, of Economiter Global Capital, a financial consultant group in Harare.
“The onus is upon Mugabe to set up a cabinet, which is not military or militant, but rather made of technocrats.”
The cry from both parties during the campaigns was for job creation, resuscitation of industry and health. If Mugabe fails on this front, the chances of his party surviving another vote are slim, given the restless and growing number of youths without jobs.
The indigenization policy—where foreign-owned companies are being forced to sell stakes—are said to be benefiting a mere handful of close associates of Mugabe’s party. Foreign-owned companies have to be approved by the Ministry of Indigenization and Economic Empowerment. The policy is legally questionable as it affects the enshrined freedom of association and interferes with guaranteed property rights. The legal experts call it a broad legislative framework, prone to many legal interpretations, which can be abused for political expediency.
“This scares investors leaving them with no option, except to stay away,” says Mugaga.
“Zimbabwe is not going to die&#8230; The MDC-led Treasury in the previous government did not want agriculture to succeed, but this Zanu-PF government is going to invest more in agriculture, making the availability of inputs to new farmers a priority so that they will produce sufficient raw materials, leading to the production of locally produced products, which will substitute the imports that we have seen on our supermarkets. Industry will expand. Zanu-PF government is going to focus on job creation, resuscitation of closed textile industries, [and] provide loans for the youths to start their businesses. Our market is awash with Chinese products. We want locally produced goods that with a reasonable price range for locals,” says Kadzura.
Despite this promise of better days, there is more anxiety and hopelessness in Harare these days, than celebration and hope.

“We Live In Horrible Times Surrounded By Horrible Men”

Everyone knew Lindani Dhlamini and Ndumi Medupe’s daily routine. Every morning the two would sit behind a closed door laughing and sharing stories, as old friends do, before launching into the day. On a cold winter’s morning in July 2007, the laughter stopped. Nothing could have prepared Dhlamini for what was to come. Medupe walked into the boardroom, sat across from her and calmly said: “You know Lindani, I’ve decided to pursue a different route”.
The silence was unbearable as a shocked Dhlamini took in a setback she never saw coming. She tried to talk Medupe into staying but there was no hope. It was merely a month before, during an interview with a magazine, where the two women gushed about how great it was doing business together. By the time the article made it into print, Medupe was long gone.
“We’re shutting this thing down,” Dhlamini thought as Medupe left the boardroom.
With her head bowed, she thought back to 2003, when the two eager young women set out in the market.
“At the time there was a lot of talk about empowering black owned businesses, women owned businesses and youth owned businesses. We felt we met all the criteria and we started,” Dhlamini says.
With a staff of 30 and R1.7 million ($170,000) seed capital from the Umsobomvu Youth Fund, the two women hit the ground running with their auditing firm, Xabiso.
“[The capital] got finished within six months of us starting… we had to go back many times,” laughs Dhlamini.
From the beginning the two women were inseparable. They depended on each other for everything and consulted each other on every decision made. But Medupe wanted out.
The days following Medupe’s departure were filled with turmoil and uncertainty. On the cusp of shutting the business down, Dlamini was overcome by sweet reason.
“I realized I had invested four years of time and energy into the business and I wasn’t willing to give it up that easily. I was going to see if I could do it by myself…and if it didn’t work out, well at least I tried.”
But before the silver lining; a dark cloud. After half the staff left with Medupe, Dhlamini stayed behind to calm the fears of those who remained. There was great uncertainty among clients but Dhlamini reassured them that there would be no shortcomings in service delivery.
“I had to go to each and every client and explain the situation. My partner has decided to pursue other interests. I’m still here; I’ll still be able to deliver what you need. If you have any issues whatsoever, call me directly.”
As the storm broke, Dhlamini was relieved that she had lost only one client.
“It was a difficult time for me, it really was&#8230;I’ve never been depressed in my life but I think I was depressed during that time,” she says.
After Xabiso recovered, Dhlamini set her sights on bigger projects and knew that in order to gain bigger clients she would have to merge.
In September 2012, Xabiso merged with auditing firm Sekela to form SekelaXabiso. Together they have a 20 years of auditing experience and their revenue at the end of February was close to R220 million ($22 million).
“We just got awarded the biggest internal audit contract by Transnet. It’s a R1.3 billion ($130 million) contract over a period of three years. We are the lead firm on this account.”
Looking ahead, Dhlamini sees only blue skies and hopes of fulfilling her Vision 2020 project to be a R1 billion ($100 million) company.
As for grudges and regrets? Dhlamini has none.
“You get to a point in time when you want different things. [Medupe] was here when she was supposed to be here and she wasn’t when she no longer needed to be here.”
Since Medupe’s departure, the two women have worked together on various projects.
“We are such a small community. You see there are 30,000 chartered accountants in the country, less than 3,000 are black and even smaller is the pool of black women. So you cannot afford not to like or not to get along with anybody in the small pool. Because more often than not sometimes you’ll find them sitting on the other side of the table being your client, which happens quite often.”
A lesson in life and a lesson in business: No matter how bad things get, don’t burn your bridges because you may find yourself shaking the hand of a familiar face.

Don’t Burn Your Bridges  Over Troubled Waters

Even when he was a 12-year-old sitting in a church pew, Laurie Dippenaar was thinking about numbers. The sermon bored him so he would guess how much each person would put in the collection plate; then he would work out the total. This was how deeply the roots of people and money run in his life.
Fifty three years on from the church pew, Dippenaar sits in a more comfortable chair, in a well upholstered boardroom in Sandton, the business district of Johannesburg. These days, his collection plate is worth $625 million; a fortune he has built carefully over the last 30 years. He is the father of FirstRand, a financial investment company, and the grandfather of First National Bank (FNB), Rand Merchant Bank Holdings (RMBH), OUTsurance, and Discovery Health; all of which are pillars of South African business. Dippenaar has built an empire on old business, but is more interested in the new. It has been some ride.
They say when Dippenaar is involved in a deal, it’s always a big deal. It’s one reason why he’s listed at number 23 on the FORBES ‘Africa’s 40 Richest list’. Try telling him that.
“To me it’s senseless. Success is not money; there are thousands of things that people are very successful at that don’t involve money. In business it’s one of the measurements, but it’s not the only measurement of success. People can say how they built a business, but it’s irrelevant what the founder’s net worth is,” says Dippenaar.
From a humble middle-class home to Menlo Park High School in Pretoria, South Africa, to riches. It was a journey that was helped by being at the right place at the right time. In his case, that meant working with GT Ferreira and Paul Harris, the men with whom he would build the FirstRand Empire, the second largest financial services company in South Africa.
Dippenaar grew up talking about kidneys and livers around the dinner table. Of his family of six, four are doctors. But he says the calling to save lives was not his. He knew he was different. He recalls reading the Financial Times from an early age, something he does to this day. Dippenaar always likes contextualizing numbers.
“Any person who has a business, I am intrigued at how it works, what its key things are. Some guys might like cars, I like business. Any business,” he says.
Success did not come overnight. It took 30 years of hard work—waking up at 4AM and leaving at 8PM—with a lot of tough decisions over hard business facts.
It was a difficult choice for young Dippenaar when he went to university. He wanted to be a lawyer, but ended up a chartered accountant.
Dippenaar saw his chance during his only three years of working for someone else. He worked as an investigating accountant at the Industrial Development Corporation (IDC), a South African government institution that bankrolls companies.
“That’s where the big idea came. They had a structure called leverage leasing and I used to work with it a lot. I thought this has got huge applications in financial services,” says Dippenaar.
In a leveraged lease, the lending company, in this case IDC, holds the title to the leased asset, while the lessor creates the agreement with the lessee and collects the payment. The payments are then passed on to the lender.
In 1977, Dippenaar left. With leverage leasing in mind, he teamed up with Ferreira and Pat Goss, with whom he worked at the IDC, and created Rand Consolidated Investments (RCI). All they had was a secretary and R10,000. At the time, the rand was worth a dollar, says Dippenaar, even so, in today’s context, the seed capital would be worth around $9,000. It meant that they did not draw a salary for nine months.
Goss left the company after three months when his father died. Dippenaar and Ferreira bought him out, in a trade-off for shares in the Goss family business and a racehorse called Scoop. Goss left with a R500 ($50) stake in RCI. Today, Goss’s current shareholding with the company is worth R740 million ($74 million). The racehorse did not do as well.
Harris, another university friend was called to fill the gap. The company grew from R10,000 to profit after tax of R657,000 in four years.
It meant RCI borrowed money on long-term capital markets off the balance sheet of its clients. In effect, they were able to become their own bank.
In 1983, six years into the business, RCI was approached by Johann Rupert, the second richest man in Africa worth $5.3 billion, who wanted to sell his bank, Rand Merchant Bank (RMB). Rupert was going back to the family business, Rembrandt Group, and needed to offload.
The opportunity was too good to pass up, says Dippenaar. RCI sold into RMB and got a controlling stake of the company, which they named Rand Merchant Bank Holdings Group (RMBH); while RMB remained a subsidiary. The deal gave Dippenaar and his crew a banking license and a chance to diversify. By 1988, RMBH was making profits of R13 million ($1.3 million) a year.
“We decided you have to operate under some sort of regulatory regime, you can’t just be out there if you are financial services. So, we explored different regulatory regimes and we decided on banking,” says Dippenaar. This was the first of three massive company takeovers.
In 1992, the company decided it needed an entity that could yield a steadier flow of income. The answer was Momentum Life, a life insurance company. Dippenaar carried a reverse takeover and sold RMBH to Momentum Life for a majority share and formed Discovery Health, now the largest private healthcare company in South Africa.
By the time democracy came in 1994, Dippenaar was just getting into his stride. He could see that a number of big international investment banks would be looking to the country. The company needed a retail bank strategy.
“Our next move as a sort of defense mechanism, we bought 20% of the old Natal Building Society (NBS) bank. We wanted a controlling stake but they decided against it. We sold the shares.”
“In 1998, we identified Southern Life. It was ailing at the time, so we decided it was a target we could take over and fix. We approached Anglo-American and they said if you want Southern Life, you have to take FNB [First National Bank] as well. It fitted into our strategy, it was a retail bank, but it was a massive deal. It was beyond our size. But we took it as a massive opportunity, the next very large deal,” he says.
RMBH needed to raise R5 billion ($500 million) in new capital, in a day or two, in order to seal the deal, according to Dippenaar.
“It would have ranked, at the time, as one of the bigger merger deals in the world,” he says.
Out of this, FirstRand was born. It was to become the second largest financial services company in South Africa, with normalized earnings of R12.7 billion ($1.27 billion) in 2012.
It’s all about being rational. The golden thread that binds FirstRand together is a 30-year-old pay-off line.
“I know what made us successful. You can almost capture it in four words: ‘Traditional values, innovative ideas’. Our companies have very strong value systems.”
Dippenaar says this makes for a culture of entrepreneurs.
“FNB, under Michael Jordaan—who was steeped in this culture—has made the bank one of the most innovative in South Africa. We spawned Discovery which has reshaped the whole of the medical insurance industry. We spawned OUTsurance, which has rewritten short-term insurance. We like to think we are no holy cow. There is no space where a junior cannot challenge his boss, in fact we encourage it. As long as you are polite about it,” he adds.
It was Dippenaar who gave Adrian Gore, today the guiding spirit of Discovery, his shot.
Gore remembers their first meeting. As a young actuary in 1991, he says he was taken aback by Dippenaar’s intelligence and strong thoughts of what he needed to grow his idea. When Gore and Dippenaar meet, it’s business over the breakfast table.
“It’s a good time in the day to have an intense discussion. There is always some deep issue he wants to talk about and it’s always a treat. Even when he has breakfast he’s thinking. Dippenaar has the ability to build businesses that are based on real social values and real nation building&#8230; it’s not fair to call him a businessman; he’s much more than that,” says Gore.
It’s a partnership that has lasted 20 years and is responsible for the health of 2.5 million people. Gore is planning to expand into Asia, and Dippenaar is likely to be along for the ride.
So what did Dippenaar do when the recession hit like a flash flood in a desert?
The global financial crisis hit FirstRand hard. Dippenaar and the crew lost R1.4 billion ($140 million) in overseas earnings. It was the biggest loss since the company began.
“It was an Armageddon of unbelievable proportions in financial services… there may be a few who hedged a bet, they might have foreseen something, but not what finally happened,” he says.
The United States had a housing bubble, built on subprime mortgage-backed securities against property price estimates. It popped. Dippenaar had planned for everything, but he never thought the bubble would deliver such a blow.
“No one had any idea of the knock-on effect of the popping of that housing bubble. When the property prices started collapsing, that’s when people started discovering the banks had extended credit in the most irresponsible manner and no one had any inkling of the effect on massive banks.”
The company weathered the storm, thanks to a strong balance sheet and copious reserves. It was a storm that forced banks around the world to tighten their belts with stricter regulation.
“The thing that has hurt them [the public] and angered them is that the tax payer, in many countries, has had to bear the brunt of failed banks. So, poor decision-making in banks, which were too big to fail, had to have the state inject capital at the tax payers’ expense. It’s a very legitimate gripe,” he says.
In business, says Dippenaar, risks change all the time and the key is to stay confident.
“If you had an ounce of doubt that we would not be able to pay you back, you would be gone. It’s that confidence; it’s the customer’s confidence in your product,” he says.
One risk of the day in South Africa is unsecured lending. The South African National Credit Regulator shows that this risky lending has grown from $711 million to $2.9 billion in five years.
Unsecured lending has opened the way for banks to boost their interest margins as home loans, one of the mainstays of banking, have tightened following the global financial crisis.
It means that more banks are offering loans without collateral. In return, the borrower must pay more interest. The risk is that if the borrower runs into trouble, banks must go through a costly process to claw back the loan, without any assets to help them.
The growth in unsecured lending has spooked international credit rating agencies such as Moody’s Investors Service, which threatens further rating reductions. This could lead to higher interest rates for borrowers.
“We reflect the increased risk of such shocks occurring in our negative outlook on the South African sovereign [rating]. This outlook also reflects the country’s extreme socio-economic challenges, which, in turn, threaten its longer-term economic and political stability,” according to investors from Moody’s.
Even giants such as FirstRand are trying to surf the unsecured lending wave. Last year, FirstRand increased unsecured lending by 27% to $467 million, while home loans grew a mere 2%. In May, African Bank Investments wrote off $45.2 million of bad loans and registered a 26% drop in first-half profit this year.
“It’s a problematic area. And there is going to be a lot of pain,” says Dippenaar.
Through the pain, is a legacy of FirstRand entrepreneurs. Dippenaar says they sold $40 million of their shares to entrepreneurs whom they believe will be the next generation of FirstRand top dogs; this will give the entrepreneurs some skin in the game.

Tag: September 2013

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