<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;Success is not final, failure is not fatal: it is the courage to continue that counts.&#8221;<cite>&#8211; Winston Churchill, British Politician</cite></blockquote>

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Quote Of The Day

As Winston Churchill said, ‘to improve is to change’. Arise West Africa! Endowed with mineral wealth, if it is to improve economically the region must change and begin to aggressively develop and industrialize the sectors at its disposal.
Current economic ramifications in Nigeria are predicated on the 60% drop in the oil price. Sierra Leone too has suffered with the price of its biggest export earner, iron ore, falling 50%. As global demand for iron ore slows, the commodity has traded at record lows and has seen mining companies in Sierra Leone enter administration or close down.
When you consider the dependency these countries have on the resources and the lack of industry to develop them, governments are effectively playing Russian roulette with their economies. How then can countries learn from these lessons? The impact Ebola continues to have on West Africa is still prevalent. The mining sector saw many casualties, both human and economic, with the closure of several mines seen as an effective way to reduce the spread of the disease.
In Nigeria, a lack of refineries operating at maximum capacity proves that even if mineral rich countries are successful in extracting their resources, their ability to develop the infrastructure needs to be made a priority. In order to attain maximum value, every facet of the value chain in the industrialization process must be fully operational. The added value from the finished products made from the mined minerals will be greater, not only in terms of export value but also from the job creation and socio-economic development aspect. There is a widespread belief that the falling oil price makes a mockery of the Nigerian economy. It is rather an opportunity for diversification. However, there is a fervent danger of getting caught up in economic theory without implementing it.
To progress, the mining sector needs to solve infrastructural challenges. West African Exploration, a subsidiary of Sable Mining Africa, recently signed an infrastructural development agreement with the Liberian government. This will create employment, development and significant tax income. We are seeing the inner workings of getting it right. Africa, once seen as blank canvas for foreign companies to paint their pseudo-colonial economic activities, is now beginning to take a stand.
Mining opportunities in Nigeria are vast. The high costs involved present a barrier to entry and with those high costs patience is required. Exploratory costs are not always recouped. Therein lies an opportunity for any shrewd investor to assemble a team of competent geologists to determine the value of the vast mineral reserves. Notwithstanding the current security issues in the northern Nigeria, there are a growing number of opportunities for investors to pursue. The mining sector is crucial to Nigeria realizing its true economic potential.
Many western mining giants maintain a stranglehold on the continents mineral resources. Ghana’s success with its mining sector is partly due to an effective framework that involves paying a 5% mining royalty to the government. For many other countries in the region, a lack of technical expertise remains the biggest problem, thus there is a tendency to worship Western companies instead of seeing them for what they are; partners in achieving a common goal – economic development. A symbiotic relationship is required between investors and governments. Governments need assurance that investors are ethical and responsible and investors need confidence that governments will provide the necessary support in terms of regulation and licensing as well as attractive tax breaks and more importantly reduce the bureaucratic bottlenecks.
Despite the lack of geological data, there is growing rhetoric from representatives of governments for investors to engage in the development of the sector. Policy reformations are a step in the right direction. However, one sincerely hopes that this translates into practical, hands-on solutions. Only then will we see the sector really take off. If industry is the lifeblood of an economy, the mining sector is the transfusion needed to keep Nigeria PLC going.

Nigeria needs a  blood Transfusion

For 127 years, the Rand Club, in the heart of downtown Johannesburg, has been home to the rich, ambitious and gentlemanly. It was born in 1886 when Cecil John Rhodes, the colonialist extraordinaire, walked from the mine diggings, marked a small dusty spot and said ‘This corner will do for the club’.
In those days, £10 bought you membership and in flocked the Randlords, the millionaires who mined Johannesburg’s gold and turned it from bush to the biggest city in Africa. On raucous nights, behind its oak doors, Rhodes would walk in and roll handfuls of rough diamonds like dice on the green baize of the billiard table to show everyone the fruit of his mines.
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There could be few clubs who can claim to have accomodated Rudyard Kipling and Winston Churchill, when he was a young journalist.
Conspirators met in the Rand Club to hatch the Jameson Raid in 1895. They plotted for a bunch of armed horsemen, lead by Leander Starr Jameson from Pitsani, in Botswana, to stage a coup against Paul Kruger, President of the Transvaal Republic, who controlled the gold mines. The Afrikaaner rulers raised taxes and controlled the treasury but refused foreigners, who worked the mines, the vote. Jameson hoped to ride in and foment an uprising in Johannesburg among disgruntled mine workers but only got as far as Krugersdorp where marksmen captured them.
These days, the membership is $1,200 a year. But down the years fewer have taken it. With an aging membership, the welcome is getting warmer. The club is changing to attract a new generation to liven it up.
“In 125 years, much has changed in the business center. Most of our core members have moved out of the city center of Johannesburg going to Sandton or closer to their mining operations. As a result, there are not enough people using the club anymore. In 10 years, the club has not made an operating profit. We want people to use the club, especially with the inner city revival, but we haven’t had the outsource capacity to do that,” says David Williams, Rand Club deputy chairman.
Williams announced in August that it would sell the catering business for $0.01. A new private banqueting company will operate from within the club. It will try to rejuvenate a tired marketing strategy for a building, as much a museum as a club, with Africa’s longest bar.
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Every second Thursday evening, you’ll find David Lobban taking new members around the club to learn its history. But, unlike a lot of museums, the building has changed little since 1904. Not even a fire in 2005 changed it, says Lobban.
“I remember that day so well. As the building was burning, we had two of our oldest members at the bar. I remember them saying ‘we’re going down with the ship’, they refused to leave ‘their spots’ at the bar. In the end we convinced them to finish their drinks on the balcony, whilst the smoke was coming out the windows,” he says.
It was a sign of meaner times when the club was forced to increase its security after a $205,000 book was stolen from its library.
Lobban has worked for the club for 15 years, after he left his old job as a bodyguard for the most famous Rand Club member, Nelson Mandela.
“He was one of the hardest people to look after. I used to hate it. The man had no sense of security. Often he would stop in the middle of a street to get out and talk to people,” says Lobban.
A painting, donated by the great man, hangs above the stairwell, to commemorate his membership.
As the club struggles to survive, surely Rhodes would approve of the one last roll of the diamonds.

The Last Roll Of The Diamonds

The early twentieth-century South African educationist and writer, Davidson Don Tengo Jabavu, was no stranger to irony. Responding to news of the outbreak of the First World War, he commented wryly in September, 1914 that Africans had been ‘taken by surprise that the European nations who led in education and Christianity should find no other means than accumulated destructive weapons to settle their diplomatic differences’.
Like many others at that chilling moment, this pacifist viewed the war as a distant European catastrophe. As we reach the centenary of the cataclysmic Great War of 1914-1918, images of the Western Front and of the conflict as a bloody European affair continue to dominate popular historical memory, and not solely in Western countries.
Further back in time, significant figures grasped that it was a dramatic global struggle, far-reaching in its destructive and transforming impact on Europe’s enormous imperial territories overseas and their hundreds of millions of colonial inhabitants. British Prime Minister Winston Churchill was just one of those observers. With Britain the major colonial power in Africa, for Churchill it followed that British Africa would be at war with Germany, just as night followed day. Italian leader Benito Mussolini observed that every continent was engulfed by the same crisis and not a single part of the world had been able to avoid being shaken by what he called the cyclone of 1914 to 1918.
In that sense, the war experiences of imperial Britain, imperial France and imperial Germany were as much about the fortunes of Africa as about the fate of men in the trenches of Europe. Aside from anything else, even those soldiers were by no means all European. In all, the French recruited almost 400,000 West African and North African colonial troops to fight German invaders. Many others who were pulled into Europe kept their heads down, serving the war effort as military laborers. Even crops exported from its African territories helped keep France on its feet. Africans thus became an inseparable part of the war.
Another perspective points us towards Africa itself. After all, it was there that the war actually started. The very first shots were fired by West African infantrymen of Britain’s Gold Coast Regiment early in August, 1914 when British and French colonial forces invaded Germany’s colonies of Togoland and Kamerun. That extinguished the delusions of some local colonial administrators that Africa might have been left to remain neutral. What they feared was the unsettling effect of European hostilities on the security of white rule.
Africa was also where the war finally ended. It was still simmering on the continent after it had ended in Europe. In the week following Armistice Day, November 11, 1918, East African askari &#8211; guerrilla fighters under German command &#8211; picked off a British motorcyclist in Northern Rhodesia. Among his scattered papers was a notice that the war had ended. It came as a rude surprise to the German commander, General Paul Emil von Lettow-Vorbeck. Now obliged to surrender, he did so grudgingly, moaning that he was only giving up because his country had been defeated in Europe.
Some of the war’s quirkier stories were as good as any fiction, if not better. In the Union of South Africa’s conquest of German South West Africa in 1915, they included General Louis Botha’s decision to swop his horse for a motorcar for his triumphal entry into the enemy capital of Windhoek. With an eye on awaiting war correspondents, he had been keen to shed his rural Boer commando past in favor of appearing as a modern industrial soldier. Unfortunately for the prime minister’s dignity, his driver had possibly had one brandy too many on the way to victory and drove into a ditch. A year later, the obsessively fit and healthy Jan Smuts, commander-in-chief of the large Allied campaign in East Africa, was not exactly popular among his more idle and chubby generals. At the sound of their commander’s approaching Buick car, officers ducked out of their tents and tried to hide away, desperate to avoid having to accompany him on some strenuous mountain walk.
Meanwhile, lower down in the ranks, ordinary soldiers and army laborers enduring arduous tropical bush conditions faced another kind of daily menace. On top of malaria, typhoid, dysentery and other parasitic diseases which toppled many thousands, there was the aggravation of wandering elephants, giraffe and rhino getting in the way, the threat of venomous snakes around tents and the danger of hungry lions and leopards prowling near campsites.
Of course, the real human costs of the war in Africa were not inflicted by wild animals. Forming a grim undercurrent, these losses were immense. On one hand, it is true that Allied campaigns to deprive Germany of its West African and South West African ports and wireless facilities by conquering its colonial territories involved little effort and minimal loss. Pretoria, for instance, gained control of a huge south western territory at a cost of a little more than 100 troops.
On the other hand, German East Africa was a nut that could not be cracked as easily. There, in an unrelentingly ferocious and destructive contest which oozed across from East Africa into Central Africa and down into South Eastern Africa, opposing forces engaged in a long and gruelling see-saw struggle. The wholesale plundering of peasant lands and mass conscription of villagers that it brought imposed a terrible toll. With horses and other draught animals laid low by tsetse fly and trucks unable to cope with the poor terrain, both sides resorted to conscripting men to work as transport porters and carriers. Britain alone recruited at least a million laborers. Overworked, malnourished and exposed to appalling conditions, up to 200,000 died. At the same time, around 300,000 inhabitants of German-occupied areas perished from the effects of famine as their livestock and crops were looted by soldiers. The suffering didn’t end there. Late in 1918, the deadly worldwide Spanish influenza struck hard, spreading throughout the continent to infect populations already weakened by the war.
By then, the region had not only been feeling the burden of a war that was embraced by many white colonists but which was otherwise resented by the vast majority of their black subjects. It was also adapting to its momentous consequences. In what has sometimes been termed the second partition of Africa, Germany was eliminated from the continent. To the victors, including South Africa, went the spoils. Jan Smuts was now able to advance his vision of the new Union of 1910 becoming a Greater South Africa. As for Britain, by securing control of German East Africa as Tanganyika, it was finally able to realize Cecil Rhodes’s bombastic vision of an all-red road from the Cape to Cairo. Until African decolonization and independence decades later, the First World War settled which powers would keep what.
Still, looking back from where we are now, we can also see that the end of hostilities did not mean a simple return to business as usual. Following the Paris Peace Conference and the Treaty of Versailles in 1919, control of the conquered colonies was mandated by the newly-created League of Nations. Although limited in practice, for the first time this introduced the principle of international humanitarian trusteeship into colonial Africa. In effect, those states which had gained new territories were their guardians and could not do entirely as they wished with them.
In post-war decades both Britain and France found themselves having to commit new educational, medical, administrative and commercial resources to the development of their African possessions to beef up the legitimacy of their colonial rule. After the blood and chaos of the war, colonial rule needed to provide Africans with security, stability and progress.
Inevitably, the glimpse of mighty European powers on the ropes left a deep mark on the consciousness of returning African war veterans. The hollowness of Europe’s claims upon superior civilization and enlightenment had been laid bare. There was widespread disillusion that Africans’ wartime sacrifices and contributions had gone virtually unrecognized and unrewarded.
Black South African papers like Abantu Batho applauded United States President Woodrow Wilson’s declaration of national rights and freedom from oppression. If that was being prescribed for European nations after 1918, should there not also be recognition of the justice of African claims? Less than a century ago, it was still too early.

Fighting And Famine On The African Front

To say Nicky Oppenheimer is understated is an understatement in itself. It is tantamount to saying his family – the third richest in Africa – is well off; or that Winston Churchill, another famous Old Harrovian, was a fair public speaker.
It must be tough suffering the stare and glare that goes with being the scion of a powerful world famous family, but Oppenheimer wears his eminence lightly as he sits opposite me for this rare interview. This Johannesburg office may be dressed lavishly, but the man himself, in a blue open-necked shirt, is not. He is measured, calm and guarded as he chats about everything from entrepreneurs and corruption to government and business. There is a glint of pride in the eye when he mentions, fleetingly at the end of the interview, his son’s first class cricket career as an Oxford Blue. Jonathan Oppenheimer bowled for Combined Universities against one of the world’s finest batsmen, West Indian Brian Lara.
“He bowled the first three and moved them away and then brought one back into the pad. Lara LBW Oppenheimer 0,” chuckles the proud father.
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The laidback calm belies a busy few years for the Oppenheimers and the two corporate giants that the family took generations to build: Anglo American and De Beers. In the next few years, the family will invest billions into Africa and her entrepreneurs with straightforward business philosophy.
“You have to learn to get on with people, you have to learn to determine the bullshit from the serious stuff, and then you have to have a good common sense and a vision of where you want to get to,” says Oppenheimer.
This no nonsense approach is driving the family forward in the business of private equity. The investment drive came after the wrench of selling out from De Beers, the largest diamond producer in the world. Along with Anglo American, De Beers may have survived political upheaval and two world wars, but the recession of 2008 proved a turning point.
“From a De Beers perspective, it came at a bad time. De Beers had just being opening new mines so we had to borrow money to pay for the mines – you don’t get a return very quickly – so we had to renegotiate our debt conversance with the bank, that environment wasn’t easy. We managed, we had to turn to our shareholders and get more money from them; this was post privatization. So both Anglo and the family put up more money, which was brave on both our parts,” says Oppenheimer.
“In my father’s lifetime, he talked about the great depression, where the situation was far more dramatic than anything I ever had to face, and you knew that people wanted to have diamonds, there was never any lessening of desire just that they didn’t have the income to do it. So you had to cut your cloth to suit that and wait for the times to improve… It never occurred to me that the business wouldn’t recover, there were times where you have somewhat sleepless nights.”
The emotional decision came in 2011. After 85 years, the Oppenheimers voted to sell their 40% stake in De Beers, the business that built the family fortune, for an estimated $5.1 billion. For the first time in decades, the family had no stake in any listed company.
“Not quite a difficult decision, the fact that there were three shareholders in De Beers, the family, Anglo and the Botswana Government was always in my view an unstable arrangement and I knew something was going to happen at some stage. Either Anglo would say it was not a business for them or they would say they really want to be in it in a much more serious way than we are at the moment and they came out on that side and made us a very fair and reasonable offer. And then of course I was in a difficult position because I had to deal with a business I had been in all my life on the one hand, and then the requirements of the family, my sister, her children, my children. We ended up in a situation where my heart made me say ‘look we should stay with De Beers’ but my head knew absolutely clear that this was the right deal to do.”
Analysts in Johannesburg will say Mary Slack, Oppenheimer’s sister, was a strong voice in the decision to sell.
“She (my sister) was not in the day to day running of the business… We all ended up wanting to sell,” replies Oppenheimer.
The parting broke a link with De Beers that dates back to Nicky’s grandfather, who led the family’s charge into Africa.
A London trading company posted 21-year-old EO Oppenheimer, the son of a German cigar merchant, to South Africa to buy diamonds. He took to the diamond trade like a duck to water and his knowledge of the stones was unparalleled; legend has it that Oppenheimer used to carry a note book around him to write down any useful business information. By the time he was 30, Oppenheimer was the mayor of the diamond town of Kimberly – no mean feat in an age when grey hair ruled the roost.
“I always remember him as a very quiet guy, I remember him as the sort of guy that if you bumped into him you rebounded,” says Oppenheimer.
The formidable Harry Oppenheimer was the next generation – a strident man who made his mark both in business and politics, as well as guiding his son in the art of business.
“No, I don’t think he was a tough man in business, he had a very good view of the right way to get to a point, to how to negotiate his way there. I would have thought my grandfather was a tougher business man,” says Oppenheimer.
“I always knew that my father was there and I could discuss business matters with him, and that gave you a head start, it never got you to the finishing line, so that was whether you could deliver or not. He taught me business went on and it was an assessment of risk and to be a successful business man you have to take risks. There is no good being risk adverse, then you go nowhere.”
Nicky Oppenheimer’s air harks back to the gentility of 1950s Britain, where he began his education at prep school at the age of seven. Harrow and Christ Church Oxford followed.
“I am of an age where going to university was the last holiday of your life and I thought that was absolutely fantastic. Politics, philosophy and economics was a good sort of all-round degree. I thought it was fantastic, wonderful life. I didn’t work very hard I got a third-class degree at the end of it all. But I had a lot of fun,” he says.
When Oppenheimer arrived home in South Africa, the army called him for national service.
“The army had a terrible problem with me and that was that I had a degree, and so if you have a degree you did your basics and then became an officer. So, I became an officer and then they had no idea what to do with me. I had no skills that were of any use to them at all. I was sent to a great big parking lot just outside Pretoria and I signed my name every time a vehicle came in and I signed saying the vehicle had four tyres and two headlights. I always say that the army taught me how to sign my name very fast,” he smiles.
Then, Oppenheimer took his seat on the board, which he was to occupy for 37 years.
“It is what I saw myself doing; I had a particular love within the Anglo business, the diamond business. I was lucky enough to achieve what any diamond person’s primary ambition would be and that’s become chairman of De Beers. I’ve been extraordinarily lucky,” he says.
Not too soon after the De Beers exit in 2011, the family set up its investment arm Tana Africa Capital with the investment company E. Oppenheimer &amp; Son and Temasek, a sovereign wealth fund from Singapore. The partners put up $150 million each and sources say the family is also ready to invest the billions from the De Beers deal. The investment company will look at agriculture and consumer businesses. It will also consider deals in media, healthcare and education up to $50 million.
“We are Africans and we would like to invest in Africa. So we are busy looking for things to do, we have some investments but we are constantly on the lookout,” says Oppenheimer.
Tana Africa Capital has already invested in Promasidor Group, a company founded in the Democratic Republic of Congo in 1979, that sells everything from powdered milk to tea in 30 African countries. Regina is Egypt’s second largest pasta manufacturer and owns the country’s only durum wheat flour mill. It has an expanding export business into Africa and the Middle East.
Oppenheimer has faith in African entrepreneurs.
“People are pretty entrepreneurial in Africa and growing so and that is very encouraging, a constraint in Africa is bureaucracy,” he says.
“The problem rests on the fact that, so many African economies are mineral based. The thing with minerals is that you can’t pick them up and take them anywhere and that allows government, wherever they are, to be bureaucratic, which is not business friendly, because a business can’t simply say I don’t like you I’m going to go somewhere else, you’ve got to deal with it. As a continent we’ve got to learn that you’ve got to be business friendly and find ways to create an environment for business to flourish and that means a bit of a mind change. The important thing is they (governments) have a huge role to play in controlling the environment. The less they have to do with the actual business, in my view, the better.”
I venture that, in the words of Ugandan president Yoweri Museveni it is easier for a camel to pass through the eye of a needle than it is to keep government out of business.
“What one has to realize and what governments have to understand is, they are missing an opportunity. The penny will fall and then they must do much more than you talked about. They have to create the environment, they have to set the rules and regulations and tax rates but actually running of business is something short term that government is really bad at.”
And corruption?
“You have to stand up for what is right, corruption is an extremely insidious and dangerous thing and very difficult to eradicate once it starts… I often ask people once you’ve become a corrupt society, how do you stop being a corrupt society? And you don’t get very satisfactory answers. I think you have to demonstrate that you can be successful and contribute to society while being ethically sound, and it will be a long and slow process.”
More legislation, I venture.
“I always worry about legislation and what is does. When legislation comes forward, it is designed to catch the crooks. To my mind the crooks are always too clever to be caught. What is does is make honest people’s lives intolerable. So there has to be legislation but there has to be a drive to get people to believe in business ethics and doing the right thing.”
Then there is the struggling mining industry, which Oppenheimer spent more than half of his life working in. South Africa was shaken by a costly four-month strike in the platinum mines, followed by sapping and unprecedented power cuts. The Energy Intensive User Group that represents 32 of the country’s biggest energy consumers – including the smelters and mines – says 97% of its members are cutting back on capital projects because of a fear of power cuts.
“I think [mining] has a huge contribution to make. People talk about it like it’s a curse, which it certainly isn’t. Minerals have a future, if you’re blessed with minerals that’s a fantastically good start – you’ve got to use them. I think what happened in Botswana is a good example of a country that has taken its diamond revenues and put it to a good cause. You’ve got to find a way of encouraging mining, and mining is more long term than almost anything else. So you’ve got to create an environment where somebody is going to invest billions of dollars with a view that the first return will be seven to ten years away and the confidence to believe that the deal you have and environment you’re dealing in will still be there in seven to ten years. Then you will find people who will invest and companies and businesses will do… It is going to depend on the mining legislation, which is a bit up in the air at the moment. If you want to invest in a mine, you have to say ‘am I confident that the environment that the government creates for me will stand the seven to ten year test.’”
Oppenheimer concedes that the battered image of mining, in the land of his birth, has made foreign investors think twice.
“I think that people are looking at South Africa and waiting to see – that’s a bad situation. You want them not to be in wait mode, you want them to be in invest mode. The key thing in South Africa seems to be the creation of jobs. The government task I think should be to do everything in its power to create jobs so that the huge number of unemployed youth we have in the country can get jobs, get wages, fair proper wages and that needs to color every decision they make,”
says Oppenheimer.
As for the man himself, he is throwing himself into a number of philanthropic projects including the effort to save the endangered pangolin. Apparently, the long-tailed, scaly mammal is prone to electric security fences in the bush and is dying out.
If the pangolin survives and corruption dies, surely anything is possible in Africa.

Tag: Winston Churchill

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Quote Of The Day

Nigeria needs a blood Transfusion

The Last Roll Of The Diamonds

Fighting And Famine On The African Front

‘Corruption Is An Extremely Insidious And Dangerous Thing’