Author Archive | Jane Notten

#8 Winter 2017

A leader who understands the power of people


With over 30 years of business experience, the CEO of African Equity Empowerment Investments Limited (AEEI), a diversified Group listed on the Johannesburg Stock Exchange, Khalid Abdulla believes now, more than ever, that investing in people is the best strategy for success in business as it is in life.

A passionate family man, Abdulla has just been recognised as SA’s Most Empowered Business Leader of 2017 by the Oliver Empowerment Awards and in 2015 was listed in the top ten best CEOs in South Africa by the Financial Mail. Under his leadership, the Group has also received several prestigious awards in the past trading year. Implicit in all these honours, he says, is a recognition that a people-centric approach pays off.

Abdulla’s formative years had much to do with his current success. Growing up in a rough neighbourhood, he developed a keen interest and excelled in sport and was even scouted for an international soccer team in his late teens. The sporting world, he says, taught him much about the importance of being part of a capable team, and nurturing talent as a leader.

Besides his street-smart upbringing, his studies (a B. Compt (Honours) and a CTA from the University of South Africa) taught him further valuable lessons about the relationship between academic life and real-world business. Abdulla says, “I was forced to complete my degrees part time and work while I was studying, from day one. This meant I was picking up a lot of business experience during my studies, which definitely gave me an advantage over many of the full-time students.”

After completing his accounting articles and working his way up through the industry, Abdulla found himself in the position of CFO at AEEI. Shortly afterwards, to challenge himself, he enrolled in an MBA at the UCT Graduate School of Business.

“The MBA programme was easily the toughest couple of years of my life but I definitely learnt what I needed to take my career further. It was much more than just the academic component. The opportunities to network and learn how to understand people and stakeholder relationships were immensely valuable,” says Abdulla.

The year after graduating, Abdulla put this new-found expertise to work in a new role as CEO of the AEEI. He also elected to continue to pass the benefit of his experience on to others in the industry, personally mentoring one or two MBA students each year as a way of giving back.

“The best piece of advice that I can give to any MBA student, is to receive solid guidance as soon as possible. The opportunity to speak to an experienced mentor before making a big decision, helps to develop your confidence to make the right moves and implement the right strategies,” he says.

One might argue that, as a leader at the top of his game, there is not that much further that Abdulla could go from here – but he is not resting on his laurels yet. As a forward-thinking person he has positive, realistic growth plans, not only for AEEI, but for the various communities he is engaged in and the country as a whole. He adds that as the country is entering difficult times, it is going to need good and responsible leadership and organisations now more than ever.

“Strengthening the overall governance within the organisation; strengthening the business leadership from entrepreneurial to professional business processes; communicating with all internal and external stakeholders – which includes customers, employees and shareholders – are all principles that make it possible to run almost any company well,” Abdulla says.

#8 Winter 2017




Debbie Ralph, who has worked for the GSB for 20 years, is now playing a pivotal role in making sure the GSB’s Sandton campus runs smoothly and efficiently.

The GSB has had a presence in Gauteng for many years, and the new Sandton campus is strengthening and expanding that presence, in Gauteng and into other African countries. “This new venture is very exciting,” says Debbie, “and I’m sure it will grow from strength to strength. Our new campus is really a beautiful space, it’s perfect for us, and we are close to where it all happens.”

Debbie has worked closely with the Cape Town office, for 20 years, in alumni relations and has helped co-ordinate the GSB’s presence in Gauteng. She is now working with the Sandton campus business development and executive education teams and is providing support for all GSB departments – Alumni, Marketing, Admissions and Executive Education.

The Sandton campus hosts alumni events, executive education programmes, marketing events, workshops, and talks with guest speakers, and whatever the event, Debbie is behind the scenes making sure it all runs smoothly and that the delegates and speakers have everything they need. “It’s not like hosting an event at a hotel, where if something is wrong with the audio-visual you just call banqueting and they send someone to sort it out” she laughs.

Debbie also plans and attends road shows in other cities, liaises with sponsors, sources speakers, arranges catering and does whatever is required to get any GSB event to go according to plan. She humbly says, “it doesn’t matter what you call my role, it changes all the time, and I’m just doing whatever needs doing”.

Over the years at the GSB Debbie has worked with many alumni. “The best part of my job has been the people I’ve met. The alumni are always so energetic, and always want to do something for the school. The people I’ve worked with have been amazing.” She is looking forward to continuing her work with alumni and expanding their networks, and the school’s.

She reflects that expanding the GSB’s presence in Gauteng, and in Africa is a difficult task. “Politically, economically, and in terms of our competition, it’s a tough environment right now, but the GSB brand is very strong, and we are doing some amazing work.”

“Recently, we ran a programme for a big multinational, and all of the delegates were either from Europe or from countries in Africa”. Debbie feels that “this is great exposure for the school, and the work that we do”. She adds, “when each of those delegates goes home they will carry a bit of the GSB brand with them.”



Newly appointed Business Development Manager at the GSB’s Sandton campus, Jacob Makgato, works closely with clients to design customised programmes which match faculty expertise with client’s needs. He believes in experiential learning which ensures knowledge transfer back at the workplace, and supports students and clients to grow and tackle their specific business challenges.

The GSB’s Sandton campus offers customised Executive Education for corporate clients, and Jacob emphasises the importance of the diagnostic process to ensure that GSB programmes meet the clients’ needs and give them a return on their investment. “We practise active listening, and have a high level of client interaction to understand exactly what the client wants”, says Jacob. He also believes that “there is no such thing as strategy without the client in the room”. “We are not offering off-the-shelf courses,” Jacob explains. “The business development team is building long-term relationships with clients, developing understanding and building rapport with key people in companies, understanding their culture and their challenges so that we can grow with them.”

Jacob’s enthusiasm for the value of education and for his work is clear. “The best part of my job,” he says “is when I go into a client meeting I feel like I’m an artist and I have a blank canvas to create with the client. We paint a picture together. It’s collaborative, we work together towards the client’s success.” Nothing makes Jacob happier than seeing student growth and having satisfied clients. He laughs as he says, “I feel the reward for doing good work, is doing more work!”

Previously, Jacob spent four years as the Business Development Manager for Executive Education at Wits University. He holds a BA in Psychology from the University of Johannesburg; a Postgraduate Diploma in Management from Wits; he also studied Project Management at Stellenbosch University, and Sales Management at UCT. He has many years of experience in education, and designed and implemented after-school educational programmes which prioritised experiential learning over textbooks in classrooms. This led to his belief that “experience is key to learning, it makes it easy to understand and remember”.

A key part of the GSB’s Executive Education courses is that knowledge is relevant and applied back in the workplace. For example, “for some of our clients, ex-co members are in the syndicate groups with the students, and projects are assessed by the client. This ensures targeted impact and relevance. In another instance, the course projects were fully implemented in the workplace.”
Jacob sees immense potential for the GSB to grow and form lasting relationships with African and South African businesses. “I am excited to be a part of it, and I believe in education and growth on a personal, team, organisational and wider societal level. When you grow as an individual it affects those around you, it challenges all of you to do more, and everyone benefits”.

#7 Autumn 2017

Lighting the fires to fuel Africa’s development

Mills Soko

To meet the scale of the continent’s challenges, African entrepreneurs and innovators need to re-orientate their enterprises towards good business principles – and business schools must make sure they are on hand to support them.

Things are looking tougher for Africa this year. After a decade of exuberant growth, recent GDP data shows that key economies in sub-Saharan Africa (SSA) continue to slow, dragging growth in the region down to a disappointing average 1.1% per annum, its lowest for six years. Add to that global threats, including uncertainty surrounding a Trump administration in the US, and you could start to get quite gloomy about prospects on the continent.

Such pessimism, however, would be misplaced. As businessman and philanthropist Tony Elumelu – champion of the concept of Africans investing in Africa – has pointed out the commercial rewards for investing on the continent are still significant. And done right they can bring significant economic and much needed social benefits.

There is already significant investment interest in the continent both at home and abroad, particularly in the impact investment space, which looks for businesses that deliver social value along with financial returns.

According to Rachel Keeler, writing in the Stanford Social Innovation Review (SSI) recently, Africa has been the top geographic focus for impact investment in the past few years. The only problem is that the number of interested investors far outstrips the number of investable enterprises.

To better position African business to take advantage of this interest, entrepreneurs need to learn to think like investors. This starts with having a clear and articulate vision of what they are trying to achieve and a strong business model for how they plan to do this, along with clear measures in place to track and demonstrate impact.

In short, they need to embody good business principles first and innovative potential second. Innovation is frequently touted as the cure-all for creating new markets, jobs and solutions to age-old development problems, but despite its seductive lure as a quick fix for Africa’s challenges, innovation in and of itself is never going to be a substitute for sound business. It is not – as Christian Seelos and Johanna Mair put it in their article in the SSI – a shortcut to development.

Innovation, they argue, does not magically solve big problems faster. More dangerously, the belief that it does can mean that value created by incremental improvements of the core, routine activities of organisations (which are altogether less glamorous) can be side lined – creating more harm than good.
A recent analysis of KPMG International Development Advisory Services’ (IDAS) investment portfolio across Africa confirmed, perhaps unsurprisingly, that successful businesses also have the most impact. If we want to create impact in Africa, we need to attend therefore to the task of creating successful business – that includes paying more attention to the businesses that fail and understanding why this is, in addition to celebrating the ones that succeed. This will require a coordinated effort from business, government, civil society, media and academia working together to support and build business on the continent. Business schools, of course, have a special role to play here, and collaborations like the African Academic Association on Entrepreneurship (AAAE) too will play a crucial role.

An institution like the GSB, which is a founding member of the AAAE and rated as the top business school on the continent, has a duty to facilitate and promote the growth of business on the continent. We can do this not only by making sure business leaders and entrepreneurs are equipped with the right skills and attitudes to build successful and profitable businesses that also move society forward, but also by convening spaces to enable the necessary conversations and connecting the right people.

If we don’t do this, we risk the tragedy of exciting new ideas – no matter how good they are – burning brightly and briefly before crashing to the ground never to be seen again because they do not have the right business infrastructure in place to support them.

When it comes to the development challenges facing this continent, we don’t just need bright flares and dazzling innovations – we need slow burning and sustainable fires that bring about systemic changes – and the GSB is positioning itself to ignite these .

#7 Autumn 2017

News Round-up

New partnership brings a range of exciting voices to the GSB


The GSB has partnered with the online finance portal Fin24 for a range of speaker events designed to bring high profile voices to the school and broaden the debate on current affairs.

“We believe in the power of bringing prominent leaders together and encouraging debate on issues that impact the South African economy and democracy,” says GSB director, Associate Professor Mills Soko. “The media plays a vital role in any free society and we are excited about this new par tnership with Fin24.”

“As a source of reliable business news, it made sense for us to team up with the GSB,” says Fadia Salie, editor of Fin24. “The business school has the credibility and connections to convene a powerful group of speakers and we have the platform to ensure that these get heard as widely as possible.”

“The GSB speaker events are always highlights on the business school’s calendar,” agrees Saskia Hickey, Market Intelligence and Strategy Manager at the GSB. “It is about quality conversations and dialogue, sparking new ideas and fresh ways of thinking about the most important drivers in the world of business as well as society at large.”

As part of the partnership, the GSB also now contributes a weekly column to Fin24.

New publication shines light on innovative finance in Africa

Innovative Finance in Africa
The Bertha Centre has launched a new publication, the Innovative Finance in Africa Review, which showcases innovative models and practices of the finance ecosystem in Africa. The review emphasises the outstanding work being done and discusses the key drivers for creating system-wide strategies and new business models. It also highlights innovations to watch from more than 20 African countries.

Innovative finance has evolved over the past decade, particularly in the design and implementation of financing strategies. “Over the last five years we have worked with social finance experts and partnered with governments, enterprises and investors to research, incubate and test promising innovative financing models across Africa. This review is an introduction for stakeholders seeking to engage with this exciting space,” said Aunnie Patton Power, Bertha Centre’s Innovative Finance Lead. The review builds on the Centre’s previous reviews, such as the Health Innovators Review (2014) and SA Education Innovators Review (2015). The Innovative Finance in Africa Review discusses the nature of innovative financing, its evolution and the creation of new financing tools and categories of capital. It also features content from the GSB Executive Education Impact Investing course which was run in partnership with Oxford’s Saïd Business School’s Skoll Centre for Social Entrepreneurship.

The review ends on a very practical note detailing how governments, foundations, universities and high net-worth individuals can get involved in this space .

GSB MOOC makes Class Central’s Best Online Courses of 2016 list

A MOOC (Massive Open Online Course) designed and delivered by the Bertha Centre was named as one of the top ten new MOOCs launched in 2016, as voted on by thousands of Class Central users in December. The list is based on Class Central users’ written course reviews.

In 2016, 2 600 new courses were launched online, across all platforms and on all subjects. “This is a testament to our partners RLabs and UCT’s Centre for Innovation in Learning and Teaching’s (UCT CILT) significant contributions, into making this an accessible, applicable and enjoyable MOOC,” said Dr François Bonnici, Bertha Centre director. The Bertha MOOC – Becoming a Changemaker: Introduction to Social Innovation – seeks to catalyse social change by empowering people to begin acting as social innovators.

Bertha Centre in top five globally for social impact education

The Bertha Team

The Bertha Team.
Social impact education has entered the mainstream and the GSB is among a handful of global leaders in the field – according to a new report from the Bridgespan Group. The Bertha Centre for Social Innovation and Entrepreneurship at the GSB has been profiled in the report as one of the top five university-based centres for social impact education.

There has been rapid growth in social impact initiatives at business schools within the last decade. “The report points out that ten years ago, establishing such a centre was a distinctive act of leadership,” says Dr François Bonnici, director of the Bertha Centre. “But today, almost 50% of the top 50 business schools host a social impact programme.” The report benchmarked the GSB alongside business school heavyweights including the Centre for the Advancement of Social Entrepreneurship at Duke University’s Fuqua School of Business; the Social Enterprise Initiative at Harvard Business School; the Centre for Social Innovation at Stanford’s Graduate School of Business, and the Skoll Centre for Social Entrepreneurship at the University of Oxford’s Saïd Business School.

The Bertha Centre is the only emerging economy centre featured in the report. Established in 2011, in partnership with the Bertha Foundation, the Bertha Centre’s goal is to achieve social justice and impact through teaching, research, events and actionable projects. “We have developed deep expertise in education, health and finance innovation,” says Dr Bonnici.

Dr Bonnici adds that social innovation centres can push universities to innovate and become more relevant and resilient. “This is pertinent to the #FeesMustFall debate around the shape and purpose of university education. Social innovation requires that we challenge the rules and status quo of power and exclusion by building products and processes that deliver greater social value.”

Director of the GSB Associate Professor Mills Soko agrees that business schools in Africa need to prioritise relevance and impact. “We play an important role in training business leaders and entrepreneurs to build successful businesses that move society forward, but we can also influence policy and practices to tackle pressing social problems,” he said.

“This endorsement of the Bertha Centre is a boost to what we do and an encouragement to continue with this important work.”

Award season: GSB ranked as top business school in Africa and awarded best Master’s degree in corporate finance

GSB awarded top Business School
The GSB has won two prestigious awards from the international education rating agency, Eduniversal in its latest ranking of global business schools in December 2016. The GSB was ranked as the best business school in Africa, and the GSB’s Master’s in Development Finance was named the top Master’s degree in Africa in the field of corporate finance .

Winning two awards from Eduniversal’s 2016 ranking of business schools and degree programmes around the world is an achievement that brings fresh honours to the GSB. It is the ninth year in a row that the GSB has been named the best business school in Africa. GSB director Associate Professor Mills Soko, says the school is honoured to receive the award again. “International recognition of the school is very important to us and all our stakeholders, to demonstrate the quality of education at the GSB.”

The GSB’s Master’s in Development Finance, named top Master’s degree in Africa in the field of corporate finance, is hosted by the Development Finance Centre (DEFIC) at the school. DEFIC was launched in January 2016, and aims to grow local and international development finance expertise in emerging markets. The Master’s degree that forms a core part of the centre’s work was the first degree of its kind to be launched in Africa.

DEFIC director, Professor Nicholas Biekpe, says: “We set out to build a programme that was useful, which meant it had to be relevant. It couldn’t be all theory.” Local case studies are a big component of the course, as well as bringing in speakers from the development finance industry in Africa, to give insight into how people are dealing with real life situations.

“The GSB is honoured and delighted by these awards,” says Associate Professor Soko. “This is a tremendous achievement that shows international recognition and support for the ground-breaking work we are doing.”

#7 Autumn 2017

GSB takes up prime position in Africa’s top business district

GSB Campus in Sandton

The GSB has opened a satellite campus in Sandton, Gauteng, in order to move closer to core stakeholders and widen access for African alumni and students.

Billed by the developers as “the perfect place to do business”, the GSB’s new home-away-from-home at 61 Katharine Street in Sandton is up and running and ready to do business.

The satellite campus will formally open its doors in early May, and GSB director Associate Professor Mills Soko says that the school is looking forward to working more closely with clients and stakeholders in the region.

“While the GSB has been doing business in Gauteng for years – specifically with its customised and Executive Education short courses – we are excited to be formally taking up a permanent home in the heart of South Africa’s business district. This is an area that is, to a very real degree, the gateway to Africa,” he said.

The new campus will be used primarily to deliver short courses and customised courses to corporate clients as well as to host alumni events. It will also offer students enrolled in academic programmes, such as the Modular MBA and the EMBA, who are based in Gauteng and its surrounds, a space to gather and collaborate between modules.

“The ease of access to Sandton from across the continent also makes it a far more convenient venue for many of our African delegates,” commented Soko.

Soko explained that the opening of a campus in Gauteng is part of a wider strategy at the GSB to be more tapped into African business – and is, he hopes, not the last satellite campus that the school will open. The school is considering additional campuses north of its borders. Earlier this year it also opened a satellite campus in Philippi Village in Cape Town, in an effort to widen its engagement with relevant stakeholders and increase access to its courses and expertise.

“While the university has been active in township communities through field sites, mobile health services and education programmes for decades, it has not, until now, established a presence like the Philippi Campus. This has the long-term purpose of getting all students and stakeholders to engage and interact beyond the traditional spaces of the university,” said Soko. “The idea is that each campus will be fit for the market in the area that it serves.”

He added that the school seeks to be responsive to its stakeholders and that the key impetus behind the establishment of both campuses has been in response to feedback from partners and clients. “Many of our clients who are based in Gauteng or the rest of Africa, expressed to us that they would appreciate having greater access to the business school,” he said.

The building – which was formerly home to Alexander Forbes – is strategically located within the Sandton “superblock” (bound by Katherine Street, Rivonia Road and West Street) forming part of the new Sandton Central surrounding the Gautrain Station and Sandton City Mall. Located on the 5th floor, the single-level, open plan campus is a 674-square metre space commanding great views of the surrounding area. Facilities include two multi-purpose teaching venues and two breakaway meeting rooms that are sound-proofed and equipped with the latest technology.

Rayner Canning, director of Business Development at the GSB, said that the school has been working towards getting the campus ready for the past ten months, since the site was identified in early June 2016, after a protracted search for the perfect spot.

“Our new campus is looking fantastic and we are looking forward to introducing it to our alumni and stakeholders,” said Canning. “We hope that over the next few months everyone will make an effort to come and visit us and enjoy the facilities.”
The campus will be officially opened with a “bit of a party” for alumni and stakeholders and the first programmes will run from June.

#7 Autumn 2017

How to make the Internet of Things work for Africa

The Internet of Things

Autonomous technology – an Internet of Intelligent Things – can provide the infrastructure to enable aspects of economic growth across Africa, but realising the potential of the next wave of digital innovation will depend on effective public policy.

Late last year, Senegal’s Banque Regionale De Marches announced the launch of the eCFA Franc, a cryptocurrency for the countries of the West African Monetary Union: Senegal, Cote d’Ivoire, Benin, Burkina Faso, Mali, Niger, Togo, and Guinea-Bissau. A milestone for financial services and regional collaboration in Africa, this and similar innovations mark the coming of age of a new generation of blockchain applications; an Internet of Intelligent Things that could provide a new infrastructure for economic development.

In essence, the blockchain, mostly known as the technology underpinning digital currency Bitcoin, is an almost incorruptible digital ledger of transactions, agreements, contracts – anything that needs to be independently recorded and verified as having happened – that is distributed across several, hundreds or even thousands of computers globally. Now, new platforms such as Ethereum are emerging to support the development of distributed applications – DApps – that are providing user-friendly ways to use blockchain. In the same way that web browsers made the internet useful, DApps act like “autonomous agents”; little brains that receive and process information, make decisions and take actions. When linked to a cryptocurrency like the eCFA through “smart contacts” that are also securely recorded in a blockchain, these new capabilities will have widespread implications.

Step-wise innovation that will redefine how we live and work

Because the DApps, that are now populating the blockchain in their millions, can be programmed to take data-informed actions without human intervention, platforms like Ethereum are also transforming the Internet of Things (IoT). The IoT has been around since 1990, when a toaster was first operated via the Internet, but its applications have since expanded and diversified with cheap sensors and ubiquitous bandwidth, sparking enthusiasm for information management, smart cities and a wealth of consumer devices. DApps provide a practical and affordable means of making Things intelligent and able to interact directly with similar Things. This step-wise innovation is causing agencies such as the European Union to consider new regulations to govern the use and creation of robots and artificial intelligence including the proposal of legal status for robots that would be analogous to cor porate “personhood”.

Overcoming the limitations of inadequate infrastructure in Africa

There are particular possibilities here for Africa. The potential for Africa’s economic growth is well established. And there is an abundance of opportunity for digital innovation, as a recent continent-wide entrepreneurship competition organised by the UCT Graduate School of Business has shown. But there are also the limitations of inadequate infrastructure. While intelligent refrigerators, driverless cars and domestic robots continue to make news, the potential for sustainable improvements in the quality of life is in a quieter revolution of everyday systems and facilities including innovations in financial services, and the provision of affordable and reliable services where blockchain-based solutions could leapfrog traditional or non-existent technology infrastructures and drive a new era of more inclusive growth.

Economic growth is underpinned and enabled by appropriate financial services. While early internet-based innovations such as M-PESA have clearly demonstrated the appetite for accessible, Internet-financial services, many small and medium businesses are still restricted because of a lack of access to standard loan financing; in the absence of traditional title deeds to land and buildings, or a conventional payslip, banks will not extend the credit facilities that are a standard requirement for investment in potential and success. But as Don and Alex Tapscott show in their recent book, Blockchain Revolution, the new blockchain can be “the ledger of everything”. Once tagged with a geospatial reference and sensors that monitor its continuing existence, a house can become an intelligent entity registered on a secure, distributed database. Through an Ethereum-based smart contract the owner of the asset can secure a loan to expand a start-up enterprise. Intermediary arrangements, such as registries, deeds offices or patronage arrangements with local politicians and officials become unnecessary. As economist Hernando de Soto, author of The Mystery of Capital, puts it, this could create “a revolution in proper ty rights”.

Economic growth also depends on affordable and reliable services, such as water and energy. Here, again, the new Internet of Things has the potential to compensate for the legacies of underdevelopment. Water is an increasingly scarce resource in many parts of Africa, particularly in cities, where rapid increases in population will make old precepts of urban planning redundant. Autonomous agents positioned across all aspects of water reticulation systems can monitor supplies of potable water, storm water and waste water, taking appropriate actions to detect and report damage and leakage and close off supply lines. Smart devices can also monitor water quality to detect health hazards, and regulate and charge for water consumption.

Similarly, for the supply of energy, smart devices are already being deployed across conventional and aging power grids. In Australia, for example, intelligent monitors detect when an individual pole is in trouble, report the fault and call out a repair crew and communicate with other poles to redirect the supply and preserve the integrity of the grid. More widely, intelligent Things will be deployed across aging networks of pylons.

In parallel with conventional systems of supply, new digital technologies can enable full integration with renewable sources of energy and the intelligent management of supply at the household level. Because the new blockchain is designed for secure peer-to-peer transactions combined with incorruptible contracts between multiple parties, individual households can manage their own supply and demand to incorporate self-generated energy. A house equipped with a simple windmill and a roof made up of photovoltaic tiles could sell surplus power to a neighbour in need, or buy from another house to meet a shortfall. Intelligent houses could predict their energy requirements from weather forecasts and could take actions in response to non-routine events, such as a system fault or a spike in demand caused by a family celebration. Such microgrids are already in development; the combination of ubiquitous and affordable bandwidth and low-cost autonomous agents could bring affordable energy to communities who have never had the benefits of dependable electricity supply.

Smart houses, secure in the blockchain and empowered by autonomous agents, could prove their existence as collateral for loans, monitor and optimise their supply of water, and generate, manage and negotiate their own energy supplies. In turn, a new infrastructure built up in this way could be a springboard for economic development, from small enterprises that would have the resources to take innovations to scale, to significant household efficiencies and increases in consumer purchasing power. As has been the pattern with previous digital technologies, costs of production will fall dramatically as the global market for Intelligent Things explodes. That which seems extraordinary today will be everyday tomorrow.

The established interests that stand in the way

The constraints on the deployment of a new digital infrastructure will not come from the technology but rather the established interests in play including state enterprises and near-monopolies that are heavily invested in conventional systems, local patronage networks and conventional banks, and the failure of political vision. Realising the potential of the next wave of digital innovation will depend on effective public policy and business, government and civil society innovators need to be directing much of their attention here .

This is why the West African Monetary Union’s cryptocurrency initiative is encouraging. Don and Alex Tapscott comment that if we get this right, “we will move from an Internet driven primarily by the falling costs of search, coordination, data collection, and decision making – where the name of the game was monitoring, mediating, and monetizing information and transactions on the Web – to one driven by the falling costs of bargaining, policing, and enforcing social and commercial agreements, where the name of the game will be integrity, security, collaboration, the privacy of all transactions, and the creation and distribution of value”.

#7 Autumn 2017

Going BOS: The story of a born global South African ice tea brand


BOS logo
When Dave Evans, founder of Vovo Telo, noticed that a humble local ice tea brand by the name of BOS was outselling Coca-Cola in his artisanal bakeries, his interest was piqued.

It was the start of a love affair with the brand that saw him join the company, BOS Brands, in 2011 as investor and CEO. At the time, the rapidly growing ice tea category was forecast to contribute 20% of the global soft drink market growth over the following five years, growing to 52 billion litres by 2018 (a projection the category looks set to exceed). Recognising the massive potential in the ice tea category, which was stealing market share from more sugary carbonated drinks in Europe and the US, Evans set to work.

The small team included serial entrepreneur Grant Rushmere and rooibos farmer Richard Bowsher (BOS’ original founders) and marketing director, Marié van Niekerk. Together they set out to capitalise on the brand’s appeal. Five years down the line, BOS is South Africa’s fastest growing soft drink with almost 14% of the local ice tea market in the bag. The brand has also successfully expanded abroad. Over the past three years BOS has seen consistent offshore growth in excess of 100% a year with more than 30% of BOS’ sales now based in Europe.

The story of how this small local company struck it big is one of high-touch marketing, strong partnerships and strategic investment, making it the perfect case study for South African businesses wanting to follow a similarly ambitious path.

Standing out from the crowd

Rushmere had gained valuable insight from his exposure to the inner workings of Red Bull’s marketing mechanics (he sold his previous company Afro Café to Red Bull in 2007). His keen appreciation of the value of a well-managed brand and his mastery of the techniques required to achieve the requisite levels of clarity and simplicity, contributed to the building of an iconic and engaging brand. Despite its range of health benefits, BOS’ stand-out identity and tongue in cheek humour (unusual in the category) are the sources of its unique appeal.

Unlike most ice teas, BOS is made from organic rooibos extract, natural fruit flavours and is free from preservatives and colourants. BOS is also lower in sugar than the majority of its soft drink competitors, and high in natural anti-oxidants. But for Dave and the BOS team, these natural credentials have always been the back story. The team intentionally chose to “hide them on the back of the can”, putting BOS’ unusual, fun and accessible personality front and centre.

The brand’s early, and memorable, marketing efforts were quirky, and contained BOS’ signature playfulness. In 2012, the team built a vending machine named Bev who dispensed free ice tea in exchange for tweets at the Design Indaba in Cape Town. Giraffes on bicycles put free cans of BOS in the hands of perplexed bystanders on the streets of Amsterdam, Antwerp and beyond. Swimmers donning shark fins popped up with the beverage from the waters of local Cape Town beaches. BOS gets plenty of exposure from stunts like these, which van Niekerk refers to collectively as “marketing moments of joy”.

Adopting an expansion strategy

BOS Brand’s tag-line, ‘Not just an ice tea’, reflects the team’s emphasis on broadening the brand’s appeal into allied categories including sports drinks and cocktails (with recipes listed on the BOS website). Despite the market breadth that these product extensions provide, BOS continues to find itself butting up against the limitations of the local market. South Africa’s current ice tea consumption of one litre per person a year, is one-sixth of the European average and does not provide the scale required to meet BOS’ ambitious revenue targets. Fortunately, the personality, experience, ambitious mindset, and global exposure of BOS’ founders have resulted in the network and knowledge to recognise and actively develop oppor tunities abroad.

The fun, healthy brand is well aligned with global trends and tested positively with consumers in key markets. The team considered the pros and cons of expanding into the rest of Africa (ROA), the USA, Europe, Japan and China based on the possible volume and margin opportunities these regions presented.

However, despite the fact that the ROA encompasses many fast-growing economies and a burgeoning consumer class, they decided against this market as the ice tea category (and related product knowledge) there is limited. After gaining a solid foothold in South Africa and neighbouring countries, BOS ventured into Europe in 2013. The team was more connected in Europe than they were in the USA, based on their existing network of partners. To facilitate a smooth expansion they leveraged their networks within the HORECA (hotels, restaurants, and cafés) trade in Belgium, then the Netherlands and more recently France and Spain.

Evans explains that launching the brand in smaller countries first allowed them to contain the risk of both failure and success. In addition, the cultural and language similarity between the Netherlands and Belgium provided fertile ground to begin the internationalisation process.

BOS’ initial and growing presence in these two launch markets spurred demand in nearby countries. They expanded into key cities in Sweden and Switzerland, and after about 18-months distribution in the Netherlands and Belgium was opened up to include retail outlets. More recently, an invitation to list at Albert Heijn – one of the Netherlands’ largest supermarket chains with 878 stores located across the country – has added significant retail presence for the brand in Europe.

Starting off on the right foot

BOS’ presence in six European countries has little to do with luck. Their business model and brand were designed for internationalisation from the get-go. The company is part of a growing club of born global firms – businesses that are created with the intention of internationalising, generally within three years of commencing operations.

The team’s vision for a global brand came off the back of solid market research, strong experience in the beverage and hospitality spaces and a keen understanding of what consumers really want. The founding team was able to leverage their initial investments and secure investment from respected venture capital firm Invenfin. CEO Dave Evans and investor Jaime Gubbins were the initial angel investors to come on board, followed by Invenfin and former Manchester United Football Club coach Sir Alex Ferguson.

The BOS team’s metered, brand-first approach, and time and attention spent on building networks and relationships is now evident in the global interest in BOS’ products. BOS has the making of an iconic South African export and a brand we can be proud of as it takes its share of restaurant fridges and supermarket shelves in Europe and beyond.

This article is based on a case study written by Bick and Human that won the 2016 AABS/Emerald Case Competition.

#7 Autumn 2017

Decolonising the curriculum: The good, the bad and the plain silly

The University of Choice

The debate on decolonising the curriculum needs to be about how we add to, and grow, what we have rather than what we should lose. There is an opportunity here to forge a powerful new narrative and identity for South Africans.

As a young black undergraduate studying in the UK more than 15 years ago, I remember the first time I came across the view-point of a black academic, because it was that unusual. The academic was Professor Stella Nkomo, a pioneer in the research of race and gender in organisations, and the experience for me was profound. I was not alone.

So when South African students talk about feeling alienated because the examples in their curricula are all from overseas or feature dead white men, I know exactly how they feel – and why it is important to change this.

How we do this, of course, is far from clear and the violent clashes between students and police, and rhetoric around the issue both on and off campuses in recent months, are an indication of just how difficult and sensitive an issue this is.

The theme of decolonisation is not new. From Derrida to Said, Spivak and Bhabha, it is a field of study several decades in the making. Yet the problem remains essentially unresolved and in recent times there is a sense that it has been somewhat side-lined. Scholars Martin Fougere and Agnet Moulettes in their recent paper A postcolonial deconstruction disclaimers, dichotomies and disappearances in international business textbooks argued that the tendency has been towards political correctness, where the importance of cultural sensitivity is named but not really embodied. And, that an awful lot is left unsaid about colonial history. Thus, there has been a kind of glossing-over of the issues at the expense of real change and engagement.

A certain amount of this has undoubtedly happened at institutions in South Africa. Since the glory days of 1994 there has been much talk and some action towards transformation, but clearly not enough has actually changed. As the #FeesMustFall protestors express, the experience is still, by and large, one of exclusion.

The problem of parody

Fixing this is no easy task. For starters, before we even start to play the game, it is difficult to establish what the board looks like. For instance, what is this thing we call “Africa” or “African” that we wish to infuse into our curricula? When you unpack it, the notion of “African”’ is largely a social construct that is not borne out by facts. Somalia is different to Zimbabwe and one cannot mistake Egypt for South Africa.

And if we are all just one big happy family as this narrative of an African identity suggests, what is the xenophobia we have seen playing out across South Africa in recent years all about? And by the way, these attacks also happen on campuses.
We have the same difficulty when trying to get to grips with what are we trying to decolonise. What are we trying to get away from? What is this “western hegemony” we hear so much about?

As the philosopher and novelist Kwame Anthony Appiah wrote in The Guardian recently: “The use of the term ‘west’ is in and of itself problematic. Is it a contrast between east and west / Europe and Asia – as it was used in the 18th century or between communism and capitalism as during the cold war? “

Appiah writes, “the west” seems to mean the north Atlantic, Europe and her former colonies in North America. “The opposite here is a non-western world in Africa, Asia and Latin America – now dubbed ‘the global south’ – though many people in Latin America will claim a western inheritance, too. This way of talking notices the whole world, but lumps a whole lot of extremely different societies together, while delicately carving around Australians and New Zealanders and white South Africans, so that ‘western’ here can look simply like a euphemism for white.”

It’s enough to give anyone a headache! As Said himself identifies in his ground-breaking treatise Orientalism, in caricaturing and parodying the other you run the risk of absurdity. Additionally, if we lose ourselves in an obsession with the terms “African”, “colonial,” “western” or “white”, then we run the risk of being trapped in these identities and miss an opportunity to forge something larger.

The difficulty of laying claim to knowledge

Even if you answer the questions of “what is Africa” and “what is western” satisfactorily for yourself, you still have to contend with another thorny question on the path towards decolonisation: What is knowledge? More specifically, who owns it?
When one student protestor called for the scrapping of “white science” from the curriculum last year she seemed to be implying that some ideas are inherently non-African. But to assign the theory of gravity to the white west is to misunderstand the history and origins of some of these things. Knowledge is not really owned by anyone – it is a cumulative and shared resource that is available to everyone.

There is perhaps no better way to illustrate this than with the fact that the classical inheritance of Greek and Roman learning, hailed by many as the foundation of western civilization, is actually an inheritance shared with Islam – traditionally an enemy of the west.

The BBC documentary Mistaken Identities, points out that the Islamic world had a significant role to play in preserving this knowledge during the dark ages, after the fall of the Roman Empire, until it was recovered by European scholars during the Renaissance. In Baghdad during the ninth century Abbasid caliphate, the palace library featured the works of Plato, Aristotle, Pythagoras and Euclid, translated into Arabic.

The knowledge did not belong to the Europeans any more than it belonged to the caliphate, but it was useful to the human project more broadly. Both sides would have been foolish to discard it.

So, back to South African universities – the conversation here would benefit more if it was not about what needs to be taken away. We should be striving for the best of both worlds not an either/ or. If there is African indigenous knowledge out there – then yes, I want more of it. If a “western” scientist has the cure for cancer – then, yes, I want that too!

The only way through this is together

Rather than polarising and “othering”, we need to move towards the middle ground where ideas can be exchanged and built upon, and it is crucial that we foster dialogue to facilitate this exchange. Universities are traditionally spaces where ideas can be rigorously and critically debated and they need to step-up and own this space at this difficult and exciting time in this countr y’s history.

As the distinguished scholar Philip Altbach has pointed out, education has certainly been one of the most important (however insidious) vehicles of colonialist appropriation. It also, therefore, has the power to play a crucial role in forging a new narrative for this country and continent that is both global and local.

What is at stake is our very identity and potential. We can become visible when we see ourselves reflected in what we are studying. Let’s not waste this opportunity.

#7 Autumn 2017

BRICS wants to set up an alternative rating agency: Why it may not work

BRICS alternative rating agency

Photo by Beto Barata/PR – Agência Brasil, CC BY 3.0 br,
The idea of establishing an alternative credit rating agency led by the BRICS bloc of countries is gaining momentum. But there are questions as to whether it will prosper given the major challenges it’s bound to face.

Leaders from the BRICS bloc – made up of Brazil, Russia, India, China and South Africa – are championing the idea of establishing an alternative rating agency. The idea emerged during the 2015 BRICS summit in Ufa and was affirmed by the Goa Declaration at the 8th BRICS Summit. Most recently South Africa’s President Jacob Zuma said BRICS countries had taken the decision that they could rate themselves, and perhaps others too. The aim would be to ensure a more “balanced view” when ratings are made.

Both Brazil and Russia have recently been downgraded by Moody’s. And for over a year South Africa has lived with a possible downgrade by the “big three” Western credit rating agencies, Standard & Poor’s, Moody’s and Fitch.

The big three have faced increasing criticism. Critics claim that the frequent downgrades of developing countries are unjust and serve Western political interests.

BRICS has started engaging financial experts on a business model for the new rating agency as well as what methodology it would adopt.

This isn’t the first time there’s been an attempt to challenge the big three. China, Russia, India and Brazil have all established their own credit rating agencies. But none has ever come close to establishing itself as an alternative. Will the BRICS initiative be the exception?

Alternative view

Critics of the big three were emboldened after the 2008 financial crisis. The rating agencies were forced to pay over $2.2 billion in fines relating to their complicity in the credit crisis. This further damaged their credibility and heightened accusations, particularly in emerging countries. Critics have also attacked the rating agencies’ issuer pay model. Under this system credit rating agencies are paid by the institutions being rated (debt issuers) and not by the investors who use the information, creating a conflict of interest. Critics also argue that this entrenches geopolitical biases.

The hope is that a new agency would compensate for the perceived bias in the global financial architecture. It would also create competition and offer investors, issuers and other stakeholders a wider choice and a more diverse view on creditworthiness.

Weakness in the BRICS muscle

Given that BRICS is home to half the world’s population, accounts for more than a quarter of the world’s economic output and has recently set up a nascent New Development Bank, the countries under its banner have, between them, the capacity to establish an influential credit rating institution.

But questions have been raised about whether the new rating agency satisfies a financial need or is politically motivated. And if it will be competent to provide an independent, objective and credible credit rating service based on sound methodology. China has already expressed concerns about the credibility of a new agency. Analysts have also strongly criticised the probable adoption of the existing “issuer-pay” model. This would mean that the current model is simply replicated.

Tough market to crack

Considering that the three major rating agencies control more than 90% of the world’s ratings business, establishing a new one wouldn’t be easy. It could take years, or even decades, to gel.

There have been previous attempts to launch new ratings agencies. All failed to take off. Examples include the Lisbon headquartered ARC Ratings which was launched in November 2013 as a consortium of five national ratings agencies from South Africa, Malaysia, India, Brazil and Portugal. It is yet to release its first sovereign rating. The CARE Rating agency of India, started in April 1993, is still rating small to medium enterprises.

The Global Credit Ratings (GCR) was established in South Africa in 1995. It is only planning to start offering sovereign credit ratings from 2017.

Others that have been launched include:

  • MARC of Malaysia which has been operational since 1996, but still only covers corporate ratings
  • The Hong Kong based Universal Credit Rating Group which was launched in 2014
  • Russia’s Analytical Credit Rating Agency (ACRA) which was established in 2015
  • The Beijing based China Chengxin Credit Rating Group, established in 1992
  • The Dagong Global Credit Rating established in 1994.

None has established itself as an alternative credit rating agency of choice for emerging countries.

The task ahead

The biggest task for a new BRICS credit rating agency will be to convince investors, particularly those from the US and Europe, that the ratings assigned are politically impartial. One way of doing this would be to adopt the “investor-pays” model where investors subscribe to ratings released by the agencies, and the subscription revenues become its source of income. This would ensure transparency and credibility while avoiding conflicts of interests.

But adopting a new model might not fly given that main users of the credit rating information are global pension and mutual funds which currently use at least one of the big three rating agencies. They are therefore unlikely to trust any ratings from the new BRICS rating agency with a yet to be tested rating model. Adopting a new model would also be tricky as the BRICS rating agency would need to wield enough influence to be able to attract sufficient subscriptions from international funds.

Finally, investors will be sceptical about the new BRICS rating agency’s ability to compensate for losses in the event that it issues false ratings as the big three did in the US. The BRICS agency is likely to be another failed rating agency project unless it can overcome these three hurdles.

#7 Autumn 2017

Respect and clear communication in SA workplaces key for growth

Clear Communcation

The psychological contract between employer and employee – as well as between workers and their peers – is a fragile bond anywhere; and in South Africa it comes with its own set of unique challenges. Properly nurtured, it can unlock productivity and boost economic growth. Left unattended, it can undermine both.

In any workplace, the psychological contracts between its inhabitants are an integral part of the productivity of that organisation. Workers, as much as their managers, have certain expectations, and the results can be disastrous if a promise – even an unspoken one – is perceived to be broken.

The psychological contract between employer and employee is the unwritten set of expectations that exist between them, which begins even before work starts. Together with the formal employment contract, it underpins the employee-employer relationship. Psychological contracts also exist between workers themselves and are central to good working relationships. Breach of a psychological contract can irreparably damage relationships and produce a number of undesirable outcomes: employees not going the extra mile, or even resigning. Most importantly, the state of the psychological contract impacts employees’ loyalty.

This loyalty requires respect for the worker’s personhood. Globally and locally, employees – particularly the younger generation – are increasingly demanding recognition and a voice with regard to their employment conditions and workplace relationships. In South Africa, where thanks to the country’s apartheid history, a significant portion of the population has been actively deprived of their voice, this is particularly charged. Employers who do not acknowledge this – covertly or overtly – are treading on dangerous ground.

Understanding what makes or breaks a psychological contract

Scholar Denise Rousseau has described psychological contracts as motivating workers to fulfil commitments made to employers, when they are confident that employers will deliver something in return. Factors that affect the psychological contract, she argues, include the impact of entering into such a contract voluntarily (voluntary commitments tend to be kept), a belief in mutual agreement (or a mutual understanding of what has been said), incompleteness (or the need to flesh out psychological contracts over time, as the relationship develops), the presence of multiple contract makers at various levels of the organisation, and the need to manage loss when a contract collapses or fails.

But beyond simply setting the expectations the employee has of the employer and vice versa, or maintaining strong team bonds between peers, psychological contracts include an intricate and complex web of social and cultural dynamics. The difficulty with psychological contracts in general is that, so often, key aspects are not clearly communicated. And in South Africa, where there are diverse cultural and personal needs in play, mutual understanding cannot be taken for granted. Communication styles, too, may vary more than the average, not to mention linguistic diversity. As a result, there is a greater risk for misunderstanding.

Additionally, South Africa is recovering from a unique set of historical circumstances and inequalities that caused a stagnation of growth both in employment and educational spheres, and the understanding of these is often perceived differently by various generations.

Beyond the usual differences between, say, Baby Boomers and Millennials, there are also vastly disparate political viewpoints to navigate in the South African workplace.

Other factors, such as the limited efficacy of national training facilities and the poor impact of Sector Education and Training Authorities also contribute to an overall national skills shortage. South Africa therefore has a very large number of unskilled workers and increasingly tight competition for the limited pool of talented and skilled individuals – although this is not, of course a uniquely South African phenomenon. Researchers Markova and Ford argue that in such a situation, people management differentiation is particularly important if organisations are to maintain a competitive advantage.

In South Africa, inter-generational differences carry their own unique stamp. Generally, Baby Boomers prefer teamwork where they are in charge; Generation X tends to favour teams where individual contribution is valued; and Millennials enjoy teamwork but require some supervision. The Millennials are categorised into the Transition Generation and the Born Frees, who have a very different understanding of their rights and obligations; and previous generations in turn have had their workplace expectations coloured by apartheid.

This can manifest in any number of ways: in terms of access to resources (e.g. education and training or transport); in attitude to employment equity policies; what constitutes a reasonable work-life balance; or different understandings of when time off should be given for cultural observances, for example.

It’s important to note here that Millennials of all flavours typically show little allegiance to their employers, but higher levels of loyalty to their work and their peers. This underlines that as the new generation increasingly moves into the workforce, the need for sound relationships between all parties within the workplace becomes more important than ever to foster loyalty.

Uniquely South African solutions

The good news is that while there are challenges shaped by South Africa, so too there are uniquely local solutions. The concept of Ubuntu has gained traction in the workplace, signifying an attempted return to African cultural values eroded by both colonialism and apartheid according to local researchers Beet & La Grange. The values of generosity, hospitality, friendliness, care and compassion through being human – as Archbishop Emeritus Desmond Tutu puts it – as well as accessibility and affirmation, underpin Ubuntu. For organisations, this means staying focused on solidarity, respect and compassion, both in and out of the workplace, argues Lovemore Mbigi in his book Ubuntu: the African dream in management. This runs in parallel to the expectations of Millennials globally.

Human Resources (HR) professionals are also probing the inter-generational aspect of relationship building, not just the potential pitfalls. A system of “reverse mentorship”, for example, allows for skills transfer between generations – where a Baby Boomer or Generation X colleague may offer a Millennial experience and insight; the Millennial, in turn, might bring new knowledge of updated skills or technologies. Bringing Ubuntu into the workplace involves strategies that build and consolidate these interpersonal relationships, so that more effective cross-generational collaboration can flourish.

Start as you mean to go on

All workplace challenges can be more easily navigated if well-understood psychological contracts are in place. The stronger these are, the more likely their positive impact on the country’s economic growth. But their often unspoken nature makes this tricky. And it starts even before the job interview, with prospective recruits forming expectations based on branding, and the wording of job advertisements. It is therefore crucial for managers and HR staff to ensure that communication is clear, considerate and respectful beginning at the interview stage; and that mutual understandings are clarified to avoid the breakdown of trust.

If employee relationships are at the heart of retaining the competitive advantage, then successfully navigating the complex territory of a psychological contract in South Africa is central to this. Ensuring ongoing strategic competitiveness, improved performance and long-term organisational sustainability depends on mastering an intricate tight-rope walk between cultures, demographics and generations. But with focus, respect and clear communication, it can be done .

#7 Autumn 2017

Conflicting demands keep the glass ceiling in place

Conflicting demands

Women across the world are still battling a “double whammy” of social expectations that are at odds with the expectations they face in the workplace and this conflict is effectively keeping them from climbing the corporate ladder.

According to new research from the Global Network for Advanced Management (GNAM), women are literally caught between a rock and a hard place: their communities reward congenial, non-competitive personalities and playing large family roles, while the workplace expects long hours and assertiveness. To make matters more complicated, many women feel – paradoxically – that their employers would dislike them if they do not appear family oriented, despite the fact that they feel long hours are expected of them. This push-pull factor of conflicting expectations is a global phenomenon.

Researchers interviewed over 5 000 students and alumni from 28 business schools worldwide, including the GSB. They found overwhelming evidence that diversifying the talent pool is good for business. This applies to race, gender and many other factors. For starters, it simply means that one increases the size of the available talent pool and potentially represents a more diverse customer base.

And yet, women are still facing difficulties in the workplace and disproportionate representation in leadership roles. Although they make up more than half of the workforce, they are still in the minority of leadership roles. In fact, 39% of companies in G7 countries have no women in senior roles at all.

The GNAM study found that one of the reasons for this might be the expectation that women will play a more active role in childcare, and so, logically it should follow that they will spend less time at work, be less productive, and be less career-oriented.

“Female employees are likely to be on the horns of a dilemma: spending hours at work might help them get promoted, but their boss (and everyone else) may at the same time dislike them for bucking societal expectations,” the study argued. “Around the world, the presumption is that the mother should bear more than 50% of the responsibility for childcare.”
These findings should shock us, but perhaps the most important outcome of the survey is the most obvious: combatting gender inequality in the workplace is not somebody else’s problem. It is up to employers, the report noted, to convince women that they do not have to straddle a complex web of expectations in the workplace.

The GNAM recommendations are simple, yet potentially very effective. Given that women are often caught between a disproportionately large family role and a workplace that rewards long hours on the job, employers can make supportive decisions armed with this knowledge. They can take measures that make for stronger, more attractive workplace environments.

Key suggestions included:
1. Reward productivity, not hours worked in the office.
2. Support personality differences, acknowledging the value of diversity, and reward non-assertive but effective approaches.
3. Encourage fathers who may want to be more involved in childcare, in order to counter the perception that childcare is primarily a woman’s responsibility. This is also more supportive to fathers who want to spend more time with their children.
4. Use the ability to work remotely to allow for workplace flexibility, rather than as a limitless extension of the office.

The study found that working remotely was viewed in a positive light when it was done after hours, but in a negative light when it was done during office hours. This means that working remotely does not necessarily increase flexibility, but rather that there is a stigma attached to those who must take advantage of it.

Employers around the world need to re-commit themselves to doing more to make it easier for women to work and lead. Companies that develop a culture that supports women in the workplace also encourage a healthy work-life balance for all employees. Such a culture could prove an advantage in the competition for the best talent. Employers cannot take on a patriarchal society at large, but they can provide a supportive environment to women trying to navigate the complex path between conflicting expectations. Those in senior roles have the power to exacerbate or relieve the pressure employees are feeling to conform to perceived expectations. Building more flexible and more accepting organisations that explicitly express support for women will not only benefit women, but also men. And the business as a whole will benefit from a more diverse and committed workforce. Now that’s something worth standing up for!

#7 Autumn 2017

A window of opportunity that won’t stay open forever

Kuga saga

The brand image of Ford has been damaged significantly by the Kuga saga and the window of opportunity for Ford South Africa to win back consumer confidence is closing.

There can be no doubt that the Ford Kuga brand in South Africa is in trouble. The story of its problems does not need re-telling here. Suffice to say that after more than a year of largely avoiding the issue of its Kuga SUV’s propensity to burst into flame, the company was finally compelled to announce a recall for 2 566 Kuga 1.6-litre models in January 2017.

It didn’t really help that this voluntary recall came only after the company was put under pressure from the National Consumer Commission, which was concerned about avoiding further incidents. Up until this point, Ford had not produced a satisfactory response and was facing severe criticism from media and consumer agents and police were investigating the fires.

The company’s reputation has suffered, the brand is reeling, and while it is too soon to calculate the financial cost, one thing is certain – it is not too late for Ford to embark on a massive consumer and Public Relations (PR) campaign to rebuild trust with consumers and mitigate the damage done to its image.

Consumers are forgiving

Consumers are remarkably forgiving. Take the example of Volkswagen. Early in 2017, it was announced that the German car giant is now the world’s biggest car manufacturer, selling more vehicles than Toyota in 2016 – despite suffering damage due to a huge diesel emissions scandal.

Volkswagen was found to be cheating in emission tests to make some cars appear to be more environmentally friendly when they were, in fact, emitting up to 40 times more toxic fumes than permitted. The defect affected 11 million cars worldwide.
VW had to deal with car recalls, fines, prosecutions and settlements but was still able to record an overall 3.8% rise in vehicle sales. Its closest competitor, Toyota, also had to recall millions of cars due to safety fears over faulty accelerator pedals but remains one of the biggest – and most trusted – car manufacturers in the world.

Over the years, there have been many products tainted by scandal and worldwide recall. Food manufacturer Nestlé has battled many baby milk formula scandals but this does not appear to have affected the company’s standing as a leading food provider.

In 1982 multinational Johnson & Johnson also spent millions of dollars recalling the painkilling medication Tylenol in the US after seven people died following cases of potassium cyanide poisoning. It was revealed that the pills had been tampered with and new tamper-proof holders had to be made for the medication. The company destroyed 31 million capsules valued at $100 million.

Ford would do well to study how Johnson & Johnson dealt with the Tylenol crisis. In US business schools today, it is said to be the most widely taught case study of effective crisis management. Johnson & Johnson acted swiftly and decisively, turning the crisis into an opportunity. The company chairman appeared on commercials and did more than 50 interviews, and a press conference was organised to introduce the new packaging for the medication. It is widely believed that the crisis plan actioned by Johnson & Johnson was what really saved the day. Tylenol’s market share went up from 33% before the crisis to 48% days after the relaunch of the medication.

Ford needs to launch its own crisis plan

It seems unlikely that Ford will be able to replicate Johnson & Johnson’s success, given the company’s poor response to the Ford Kuga crisis thus far. But it is imperative that the company puts together some kind of war-room or operational team to drive a public relations strategy around the Ford Kuga incidents. Ford needs a marketing plan – not to sell more cars, but to restore consumer confidence. The company needs to appear to be open, honest and less concerned about the legal implications of the situation. Customer needs should be foregrounded.

Top of the action plan should be to hire a dedicated person to run a nationwide campaign and interface with the public. In addition, Ford should consider setting up a hotline where people can call in with their concerns, where customers can air their grievances – rather than turning to consumer forums such as Hello Peter.

Even though Ford has provided a customer service number for Kuga customers that might require further information and assistance, it is not helping that some of the Ford dealers are not ready to assist customers as instructed. The company needs to consider setting up dedicated centres where consumers can go with their cars for help and advice.

The window of opportunity is closing for Ford. The company will have to act quickly to avoid looking like it is acting only in its own interest. Some might say it is already too late. Other critics may point out that Ford is an entrenched brand, a huge international organisation backed by years of experience and consumer loyalty. While faith in the Ford Kuga may have slipped, the company has many other cars whose owners are loyal to their manufacturer.

One could only speculate to what extent the damage done to the Ford Kuga brand will spread to Ford itself. Much depends on how the organisation handles the situation from here on.

Whatever response it chooses it will be doing so in a difficult economic environment. New car sales are down: the latest figures show a 15.3% year-on-year drop in new car sales in South Africa. Reasons given are financial constraints – consumers are facing higher food prices, increased fuel prices and rising inflation. This year will also be tough for car manufacturers. Ford cannot afford to let its reputation be tarnished any further. It is time to stop the Ford Kuga bleed and to make the most of the small window of opportunity for Ford South Africa to repair its name and reputation.

#7 Autumn 2017

Big picture view needed to tackle food crisis

Food security

Food security could easily become one of the biggest challenges facing Africa. The Southern Africa Food Lab has been laying the groundwork for the kind of innovative thinking required to meet the multiple challenges of the complex food network.

On 20 November 2016, Deputy President Cyril Ramaphosa announced a proposal by the National Economic Development and Labour Council (Nedlac) to set the national minimum wage in South Africa at R3 500 per month (or R20 per hour). In the weeks that followed, the proposal was roundly criticised by parties on both sides of the political spectrum. Irvin Jim, General secretary of the National Union of Metalworkers (Numsa), called it “a legitimisation of slavery wages,” while commentators from the market sector argued that the proposal would lead to increased unemployment and widen the gap between rich and poor.

While these debates continue to rage, new research on the rising cost of food gives the issue an alarmingly visceral dimension. R3 500, it turns out, is scarcely enough to pay for nutritious food for a small family in South Africa. What is more, almost half of the country’s population (47%) earn even less than that. The math is not difficult: a large number of households in South Africa do not earn sufficient income to feed themselves properly. For many, hunger and malnutrition are becoming the order of the day.

Exacerbated by drought, low economic growth and political instability, threats to the food system could easily become one of the biggest challenges our fledgling democracy has faced so far. And yet defining the precise nature of the problem – much less finding a solution – has proven to be elusive. This is due in large part to the extraordinary complexity of the network: from agricultural methods, environmental conditions and levels of pollution to government regulations, distribution channels and international trade agreements. Each aspect of the food system is in itself a multifaceted area of investigation in which many diverse stakeholders have an interest. When these stakeholders have competing affiliations – and sometimes even diametrically opposed views – the prospect of working out ways to improve the food system begins to seem like an impossibly daunting task.

Sketching the big picture

Fortunately, the Southern Africa Food Lab (SAFL) – a collaborative, multi-sector initiative that was created in 2009 to respond to systemic issues in the food system – has been laying the groundwork for the kind of innovative thinking that is required to meet the multiple challenges confronting food security. Using a process called “transformative scenario planning”, SAFL has created a series of four hypothetical scenarios that each tell a story about the future of food in South Africa. Each scenario is constructed around a particular aspect of the food system: food as natural resource, food production, food in the political economy and food as nutrition. It is the result of an exhaustive, fiercely contested workshopping process during which influential representatives from various sectors – including the food industry, government, civil society and academia – came together to debate the consequences of an impoverished food situation in the country.

The four food scenarios do not presume to offer actual windows into the future. What they provide instead is a kind of middle ground between the diverse and frequently conflicting points of view that make up the complexity of the food system. By creating a shared vision of what the future may look like – albeit an unpalatable future – the food scenarios provide a point of departure in the present for facilitating crucial discussions around the transformation of the food system into a socially and ecologically sustainable process.

One of the important benefits of such an approach is that it does not attempt to reduce the complexity of the situation by dividing it up into smaller components. While scaling down the problem into more manageable chunks may seem like an attractive prospect, in the long run the only way to alter systemic deficiencies are by approaching them systemically. The food scenarios work towards creating a big picture view of the food system in South Africa, thus providing a framework within which each role-player can understand themselves as forming part of a larger narrative.

Another considerable advantage of the food scenario process is the capacity it affords for improved communication between different role-players in the food system. At the most basic level, the need for better communication simply has to do with co-ordination – different stakeholders need to be aware that their actions can have significant knock-on effects on other sectors within the system. This happens, for example, when energy and mining policies encourage coal mining in areas that are water-sensitive or agriculturally important. As these trade-offs become more explicit, the consequences of the various options available for government policy also become clearer.

On a more profound level, however, the food scenario process also enables a more authentic form of communication. By bringing key stakeholders, from various sectors, around the table and encouraging frank discussion, people are granted an opportunity to perceive each other’s motivations, and thus better understand the multiple forces at work in the collective food system. This enhanced form of understanding challenges people to move beyond their everyday approach to problem solving and to find novel ways of confronting the many pressing issues in the food system.

Few human problems are as deceptively simple as the problem of hunger. There is a pang in my stomach, if I eat some food the pang will disappear, and all will be well. Unfortunately, the reality of the food system circumscribes a situation that is infinitely more complex. When it comes to threatened food security, it is simply not feasible to identify a direct route to the solution. We will have to learn to take the longer path: to discuss things together, explore each other’s assumptions and think creatively. If we all work together in this way, we may eventually be able to sketch a scenario in which everyone has enough to eat.

#7 Autumn 2017

Making an impact in emerging markets

Vuyo Lee

Marketing and brand building is more than a support function – it is a critical strategic imperative and commercial enabler – argues newly appointed chief marketing officer at Old Mutual Emerging Markets and MBA alumna Vuyo Lee.

MBA alumna Vuyo Lee, who has recently been appointed chief marketing officer at Old Mutual Emerging Markets (OMEM), is eagerly embracing the challenge of providing strategic direction in the branding and marketing of a large and reputable financial services brand that operates in several geographic locations.

Lee is part of a new breed of talented and driven GSB alumni making their mark on the continent. She stresses the significant role the GSB has played in her career, describing it as a turning point that marked her transition from a specialist role as a research analyst in the FMCG industry to her entry into broader general management roles in the financial services industry.

“What I learned at the GSB liberated the untapped potential within me to lead rather than purely manage activities,” she remarks.

“The MBA programme provided me with the knowledge consolidation and confidence to make the career change I sought. I found that I was able to apply the learnings, frameworks and techniques that I acquired on the programme in the working environment to my advantage,” she says. “That education, coupled with my hard work and mentorship from experienced people in the industry, helped me progress up the leadership ladder as I demonstrated my abilities and value-add to organisations. Although there are many more MBA graduates since my time at the GSB, I still encourage people who want to fast-track or change their careers to consider the MBA as a lever for that change and for opening new doors.”

In her new role, Lee is “returning to the fold” of the Old Mutual Group as it were. Her link with Old Mutual began when the company sponsored her MBA studies at the GSB after which she joined the company as a business planning manager. She was promoted to the divisional head of strategy and subsequently undertook an operational role as manager of an intermediary support services function before progressing to an executive role in charge of brand, customer care and transformation at Mutual and Federal, a wholly-owned subsidiary within the Old Mutual Group.

Ever hungry for new horizons and broader financial services exposure, Lee then left Mutual and Federal for its direct competitor, MMI Holdings, a merged entity between Metropolitan and Momentum insurance companies. Her role as executive for Brand, Corporate Affairs and Transformation for the group saw her leading a multi-disciplinary division that included the company’s portfolio of brands as well as sustainability, transformation, stakeholder management, internal communication and external communication.

One of the most challenging aspects of the role, she says, was to work in an environment where you were not a revenue generator as such but were able to influence the organisation in terms of investing in marketing. “It demanded that I become more strategic and creative in engaging the business to make them realise that marketing is not purely a support function but a strategic imperative.”

Lee has always seen brand management and marketing in any organisation as a commercial enabler and as chief marketing officer at OMEM she will again be drawing on her strategic skills as she creates and rolls out innovative marketing and communication strategies across OMEM’s customer and corporate markets.

“I’m excited about building on what I have achieved over the course of my career and playing a key role in Old Mutual Emerging Markets’ unique journey. I also believe that, in addition to creating value, it is also an opportunity for me to contribute to the company’s commitment to progressing the socio-economic transformation of South Africa and Africa.”
In all her roles, Lee has revelled in opportunities to lead and motivate multi-disciplinary teams, mentoring and enabling people to reach their own potential. She finds considerable fulfilment in helping and inspiring others in the same way that she was assisted and supported by many different people from many different organisations.

“I like to stretch myself to attain new heights of achievement. Most important for me is to find meaning and purpose, both in what I am doing from a career perspective, as well as what I do for others in the community, for students and for my team members. Finding the balance between career achievements and reaching out to others is not an easy undertaking.”

#6 Summer 2016

News Round-up

GSB case study wins prestigious international competition


A teaching case written by a team from the UCT Graduate School of Business on innovative tech start-up, Zoona, has been awarded top spot in the internationally prestigious CEEMAN Emerging Market Case Study Competition. The team consisted of GSB MBA student and Bertha Centre Scholar John Bazley, with co-authors Cynthia Schweer Rayner, senior researcher at the Bertha Centre for Social Innovation and Entrepreneurship, Aunnie Patton Power, Innovative Finance Lead at the Bertha Centre, and Thomas Hellmann, Professor of Entrepreneurship and Innovation, University of Oxford’s Saïd Business School.

The two-part case focuses on Zoona, a mobile money start-up based in Cape Town but working in several African countries, and charts their journey to raise Series A investment capital to finance their growth. “By far the most difficult aspect [of the case study] was distilling the fascinating and rich story of how Zoona was conceived, its growth and path to investment, into just a few digestible pages. The biggest challenge was finding the core of the story that would resonate with the broadest audience while teaching the specifics of term sheets,” said Bazley.

The case study is set to be used in business schools and academic institutions across the world. “There is a scarcity of teaching materials focused on Innovative Financing in Africa,” said Aunnie Patton Power.

“We hope this material will inspire academics around the world to teach more cases on Africa that reflect the rising tide of entrepreneurship and innovation on the continent as well as the ways in which investors and private capital can participate in this momentum.”

Double take: The GSB secures second consecutive Emerald win


Chris Human, left with supervisor Geoff Bick.
First prize in the 2016 Association of African Business Schools Emerald Case Writing Competition has again been awarded to the GSB for an outstanding submission from 2015 MBA alumnus, Christopher Human, with supervision from Professor Geoff Bick, for a case study on an iconic local ice tea brand, BOS Brands and the challenges of internationalisation.

The competition was launched in March 2015 to encourage the development of Africa-specific case studies, so the primary submission criteria requires cases to be: of high quality; based in Africa; written by a student at an African university; and focused on real-life situations in Africa.

Professor Bick remarks of Human: “He put an excellent case together, well written and illustrated, [and he] understood the requirements for the facilitator to address theoretical issues in the classroom, so these were well covered in the Teaching Note. I hope I will get to supervise more students just like him in the future.”

Human says that he chose to focus on the local BOS brand as much for strategic reasons as personal interest. “BOS provided a neat fit with the teaching objectives I had in mind from the outset, but I’m also a big fan of the brand. I have always believed it had the potential to do well abroad. When I heard that BOS was successfully expanding into Europe, I seized the opportunity.”

The case captures the BOS story in an engaging narrative, grounding the reader in the ‘challenges and choices’ that the BOS team had to navigate while expanding into foreign territory.

Prize-winning article rethinks the nature of institutions

Dr Warren Nilsson

Grace Mugo, accreditation development project manager at AABS.
The GSB’s Dr Warren Nilsson has become the first scholar from a Global South institution to win the prestigious Academy of Management Review’s Best Article Award for 2016 for his startling new research on positive institutional work.

How do some organisations manage to stay strong and healthy for decades in the midst of ever-changing environments? Are there certain patterns – submerged, unnoticed, but nevertheless powerful in their effects – that help to explain why an organisation can thrive despite the fact that the people who work there come and go? Is it possible, somehow, to institutionalise those things that are fundamentally experiential: things like joy, creativity and fulfilment – the positive human experiences that fuel such vibrant and durable organisations? These are some of the questions that motivated Dr Nilsson, senior lecturer at the Bertha Centre for Social Innovation and Entrepreneurship, to write the article titled Positive Institutional Work: Exploring institutional work through the lens of positive organizational scholarship. The piece is a fascinating theoretical exploration of the central role of human experience in the creation and maintenance of powerful, adaptive and positive organisations.

According to Professor Ralph Hamann, research head at the GSB, winning such a prestigious prize from the highly competitive Academy of Management Review is a big accomplishment, not only for the GSB, but for scholarship in South Africa more generally. Nilsson is only the eighth author from a Global South Institution to publish in AMR out of more than 3 000 authors over 40 years and is the first from the region to win the award.

#6 Summer 2016

New GSB director to take the helm in January 2017

GSB Director Mills Soko

Director designate of the GSB Associate Professor Mills Soko, says that the business school can and must play a broader role in influencing policy and practices that move South Africa forward.

Associate Professor Mills Soko has been appointed director of the UCT Graduate School of Business (GSB) with effect from the beginning of the 2017 academic year. He will take over from Professor Geoff Bick, who has been acting director since Professor Walter Baets left the school at the end of July.

Soko, who joined the GSB in 2006 as a senior lecturer, inherits the school at a challenging time for tertiary education generally, but says he is motivated by the work that can and needs to be done, both at the university and in the country more broadly. “The key to understanding the transition we are in and the changes it demands is that we have to apply our minds to the task of managing this transition. Transitions are difficult to manage: they throw us out because we are creatures of stability and familiarity, but change is also invigorating and if we play to our strengths we can plot a positive way through it,” says Soko.

An institution like the GSB has a key role to play in facilitating and promoting the growth of business in South Africa and positively influencing the direction of the country, he says. Not only can it continue to train business leaders and entrepreneurs who are well equipped to build successful and profitable businesses that also move society forward, but it can also use its position to influence policy and practices to raise South Africa’s global competitiveness and tackle the pressing social problems of unemployment, poverty and inequality.

“One of the ways in which the GSB can maximise its impact on South African business for example, is to use its convening power to facilitate meaningful dialogue and bridge the trust gap between the government and business,” he says. “South Africa’s progress in realising the country’s economic potential has been partly stunted by deep-seated mutual suspicion and distrust between business and government. Developing a tangible sense of common purpose between these two vital sectors that centres on the pursuit of the national interest could be transformative.

“If managed wisely, structured and purposeful interactions between business and the government can provide a vital platform to generate the level of cooperation needed to address the daunting challenges besetting our country,” he continues.

Soko is uniquely qualified to bridge the gap between business and government. In addition to being a veteran academic with a PhD from Warwick University in the UK on the political economy of trade policy reform in post-apartheid South Africa, he has held leadership positions both in government (as a senior policy adviser) and in the business sector through his involvement in the International Chamber of Commerce and Africa Business Network. In addition, he was a commissioner on the Warwick Commission on the Future of World Trade and is a member of the Evian Group, a think-tank affiliated to the IMD business school that is dedicated to promoting an open, integrated and equitable global economic order.

In the NGO sector he has previously served as chairperson of the board of trustees of Inyathelo (South African Institute of Advancement) and chaired a working group on education and employment under the auspices of the Africa-Germany Partnership, an initiative of the former President of the Federal Republic of Germany, Horst Köhler. He is a research associate of both the South African Institute of International Affairs and the Institute for Global Dialogue, the former deputy chairperson of the editorial board of New Agenda and a member of the editorial boards of Global Governance and Africa Growth Agenda.

Soko says that he is looking forward to consulting broadly with his new leadership team and other GSB stakeholders to develop priorities and strategies for the future. He also extends a heartfelt thanks to acting director, Geoff Bick, who will be holding the fort until he takes office in January next year.

In taking up this new role at the GSB, Soko says that he is well aware that it has a reputation to guard – and grow – both in Africa and globally. The school is widely regarded as the top school in Africa and is currently one of just three business schools on the continent to be triple crowned, meaning that it has been endorsed by the world’s top three accreditation bodies.

“I am passionate about the UCT GSB and I am excited to play a role in making this great school an even greater learning institution and provider of business and management education that is also relevant and engaged,” he says.

#6 Summer 2016

Bridging the access gap

Durban Metro: Unequal Scenes

©Durban Metro: Unequal Scenes

South Africa is widely acknowledged to be one of the most unequal countries in the world, with a massive imbalance in the economy and therefore a disparity between our citizens in terms of access to education, healthcare, housing and safety. At an economic level, this manifests in a two-tier system in terms of access (and lack thereof) to capital and knowledge infrastructure. In the absence of intervention, this divide is only set to broaden in an increasingly knowledge-based economy.

As business leaders and leaders in our fields of excellence, we are duty-bound to seek out ways to correct these imbalances. Access to financial acumen and the skills required to grow small to medium microenterprises (SMMEs) in South Africa are critical.

Particularly important in our view is implementing a sustainable yet comprehensive employee value proposition – as finding, developing, nurturing and retaining talent is a key component in nurturing the engine room of SMMEs – their people – in the knowledge-based economy. By creating the capacity for our people to better themselves and their families, by protecting them with medical care, life assurance, retirement savings and the capacity to improve their families’ fortunes within the next generation through education and nurturing skills and knowledge formation.

These provisions have a multiplier effect. Take the example of the first graduate from a family – an example we can all relate to. Through hard work and some good luck, a young woman is able to secure a bursary to attend university from a hardened rural background. She excels and thrives and is rewarded with a fulfilling career that allows her to support her family at home and nurture future generations of the extended family. There are so many demands on this young graduate which a similar graduate from a more privileged background does not face! In the South African context, this is often colloquially known as ‘black tax’, as the broad majority of young first-time graduates who need to support families at home are (unsurprisingly) black Africans. Imagine a world where, as employers, we can support our rising star and support her family, so that, in time, the family as a whole is uplifted and can collectively support our knowledge economy? A beautiful thought, but at the same time we need to commit to the today (in terms of enhancing our support for her).

Furthermore, we need to give wings to these young people so that they are not the job-taker today, but rather become a generation of job-creators, or entrepreneurs, who have financial support (whether that means finance, insurance, advice or access to markets) in order to develop their own businesses and thereby resolve the scourge of unemployment and its nasty sibling – poverty.

Thinking from the mind-set of an employee should not be hard to do. We must ask ourselves what we need today to build our career. To protect our family. To provide for the future and its unknowns.

In the here and now, we require simplicity in transfer of financial knowledge and solutions which, at their core, help our employees (and ourselves) succeed. These tools must not simply fit within the framework with National Treasury and the National Development Plan aim to create.

To quote a doyen of marketing research, Peter Drucker, “Business has only two functions – marketing and innovation.” This innovation can be the critical link in partnering with government and civil society in resolving the knowledge economy question. By focusing on innovation which supports our future entrepreneurs – the first generation of our knowledge workers – we can create employment which will seriously alter the future of our continent.

John Taylor is an investment marketing actuary at Liberty Corporate with extensive experience in investment consulting and product development on retirement funding investments. His previous expertise ranges from pension fund valuations to asset consulting.

#6 Summer 2016

GSB’s first Massive Open Online Course seeks to catalyse social change

RLabs – living labs located in Bridgetown, Athlone

RLabs – living labs located in Bridgetown, Athlone

Bertha Centre and RLabs MOOC is UCT’s sixth free online offering.

The Bertha Centre for Social Innovation and Entrepreneurship, a specialised unit at the GSB, has teamed up with RLabs and the University of Cape Town (UCT) to launch the free Massive Open Online Course (MOOC) Becoming a Changemaker: Introduction to Social Innovation. To date, 4500 students from over 70 countries have signed up.

The six-week course sets out to debunk common assumptions around what resources are needed to be a changemaker, as well as to encourage people to begin acting as social innovators. It was co-created by the Bertha Centre and RLabs, a social movement ‘born-and-bred’ in Bridgetown, Cape Town, which is now active in 22 countries. RLabs, which stands for Reconstructed Living Lab, seeks to empower youth through innovative and disruptive technology by teaching them vital skills and providing muchneeded support and a sense of community.

Participants follow the journey of RLabs and other examples of social innovations in Africa and all over the world and are challenged to get out of their comfort zones, to start engaging in and with the diverse spaces, people, challenges and opportunities around them.

MOOCs are free online courses and have no entry requirements. Anyone with an internet connection can take part. In early 2015, UCT became the first African university to offer MOOCs on international MOOC platforms, joining many leading international universities. Through Coursera, the world’s largest MOOC platform, and FutureLearn (a smaller Britishbased platform), UCT is reaching thousands of learners worldwide.

“As RLabs we are really excited to partner with the Bertha Centre, who have been pioneering work and research in social innovation. This collaboration also enables us to fulfil a broader mandate to see more changemakers driving social change globally,” said Marlon Parker, founder of RLabs.

“We are excited about pioneering a new kind of MOOC that will reach deeper into communities. It will also advance access to quality education in order to catalyse social change,” said François Bonnici, director of the Bertha Centre.

Commenting on UCT’s decision to launch MOOCs deputy vice-chancellor, Professor Sandra Klopper explained, “In developing UCT’s MOOC strategy, we have been mindful of the scarcity of contributing universities from the Global South, and from Africa in particular. We believe there is an opportunity to share knowledge generated from our leading academics and researchers, and to showcase the university’s rich array of intellectual and teaching resources.”

The goals of the UCT MOOCs project include making UCT knowledge resources globally accessible; giving exposure to African content and knowledge; supporting students in academic transitions; and developing models and expertise in online learning that could be deployed in mainstream degree programmes. According to Klopper, although MOOCs are often non-credit-bearing courses, they can provide valuable skills to professionals as well as more general interest learners in a host of critical areas. For example, during the 2014 Ebola outbreak in Western Africa, MOOCs, that could be accessed via cellphones, were used extensively to educate ordinary citizens about the symptoms of the disease and how to avoid contracting it. Even healthcare professionals used MOOCs to train their staff.

#6 Summer 2016




Executive Education is a billion dollar industry globally and as such forms a crucial part of the offering of any business school. And the UCT Graduate School of Business (GSB) is no different.

So says Kumeshnee West, newly appointed director of Executive Education at the GSB. West, who has been in the role in an acting capacity for the past two years, says that in common with the rest of the world, Executive Education at the GSB is on the up – with growth in customised programmes in particular rising year-on-year. As a result, the pace is pretty intense.

“Being at the helm of this important division is stimulating and challenging at the same time,” says West. “At the moment we work with a number of very high profile clients, including four of the big five banks in South Africa. I am proud to say that we have a very high level of client satisfaction. It takes a lot of energy, a lot of teamwork, a lot of outside-the-box thinking and I love every minute of it.” Leading a team of 16 education and industry experts, West is described by her people as enthusiastic, energetic and a fair leader. “Almost everyone in my team also describes me as loud,” a laughing West adds. “That’s not a bad thing, mind you. We are a pretty dynamic team and I do my best to keep the energy going all the time,” she says. Starting her career in the healthcare industry, West was a management consultant before joining the GSB in 2012 – right after completing her MBA at the school. “I have a lot of passion for leadership and management development,” she says. “While the role of Executive Education in the business school is often seen as a revenue generator, we also need, I think, not to lose sight of our primary objective which is to develop excellent leaders and managers, who are capable of driving change and innovation in their companies.

“Our country and continent needs leaders and managers who are above average.”

West says that in too many instances, experienced professionals are promoted into management and leadership positions without the necessary support. “There needs to be an emphasis on training them to be effective managers and giving them support. A big part of what we do here at Executive Education is enabling business professionals to build their peer networks of support along with their skills. Our programmes draw people from across the continent and from all the top organisations.”



New lecturer in development finance and head of MCom coursework in the Development Finance Centre (DEFIC) at the GSB, Ailie Charteris loves teaching and interacting with tertiary students. To her, education is more than a passion – it is clearly a calling.

“In my first block of teaching at the GSB in August, I learnt more from my class than they did from me!” laughs Charteris. She says the challenge is to create a teaching environment to share knowledge, providing the greatest possible stimulation and learning experience for students.

Charteris is excited about her new position at the GSB, which saw her relocating from Durban and the University of KwaZulu-Natal, where she spent seven years teaching undergraduate and postgraduate students. Working in academia, she says, often feels like two distinct jobs – teaching and research. “Working with postgraduate students is extremely rewarding as they are knowledgeable and passionate about various issues and engage substantially with the material. They provide stimulation and a level of job satisfaction that I would be hard-pressed to find anywhere else.”

She says education helps people to rise above their circumstances by expanding their opportunities. In addition, an educated public is critical for the continued development and growth of an economy. This ties in with her other field of interest – finance. She has a master’s degree in Commerce and is currently completing her PhD. “Finance is central to the efficient functioning and growth of the economy,” she believes. “Managers and entrepreneurs need to learn how to allocate scarce financial resources to the most productive means in the economy and manage them efficiently to generate the best financial and social returns.”



The GSB’s newest adjunct professor and former global head of marketing at Investec promises to bring his own brand of tough truths, pragmatic answers and honest evaluation to the classroom.

Equally comfortable on the back of a motorcycle or in front at the podium, van Niekerk has travelled the world, worked a variety of adventurous jobs and mingled with a range of interesting people in an extraordinary career as a marketing guru, culminating in his appointment as global head of marketing at Investec – a position he held for 16 years. He is now looking forward to his new involvement at the GSB. It is not van Niekerk’s first time on the campus. He did his MBA at the school in 1996 and has lectured on various marketing courses over the years. So he knows the GSB brand – and he likes it.

“The GSB is an extraordinary business school,” he says. “It takes the best that is on offer internationally in terms of business knowledge and expertise and makes it relevant contextually, for Africa. The school has to have its own niche, but that doesn’t mean turning its back on centuries of European learning,” he says. Van Niekerk knows how to cut to the chase and get to the essence of a matter. As motivational speaker, brand builder and strategist, he has made a name for himself as a straight talker.

“There are no sacred cows in my approach to brand guidance. I don’t do marketing speak. Tough truths, pragmatic answers and honest evaluation are what I give.”

He was the architect of Investec’s brand and before that, was the founding partner and director of Sw!tch Branding & Design. Prior to this, he was director of consulting and board member of KSDP Pentagraph (at the time the 10th biggest design consultancy in the world).

Van Niekerk enjoys teaching, interacting with students and sharing his expertise. “I have been fortunate in my career and have had reasonable success. There is a sense of giving back now and helping to open the doors for others. People have paved the way for me and I have an obligation to return the favour to others who are starting out now.”



Although he grew up and did his undergraduate and masters studies in Ghana, Dr Latif Alhassan has made Cape Town his home. And as the new finance lecturer and head of research at the Development Finance Centre (DEFIC), he is determined to make a difference to the GSB and to the country.

“I am very happy to be here,” says Latif Alhassan, who also completed his PhD at this business school in 2016. “The GSB has an important place in Africa. It is the foremost business school in Africa and highly ranked and regarded overseas. So it is an honour to be working here.” He adds that the GSB is not only an African institution but also an international one, with diverse cultural representation from all over the world. As such, the school also offers many opportunities for young people, like himself, and he is eager to play a part in this. “My philosophy is to help students move beyond theory and the classroom, to the outside world, their place of work. I want to ensure that they can really use what they have learnt in a practical sense.”

Far more important than imparting knowledge and teaching skills, is ensuring that students have truly grasped the concepts and are able to apply what they have learnt. “They need to be able to explain in practical terms what this knowledge means. Case studies play a vital role in this,” he says. “When theory relates to real, current world events, it leaves an imprint on their minds and takes the discussion further into their external interactions with the broader society.”

This will not be his first teaching experience, as he previously taught at the University of Ghana Business School. “I like to stimulate their minds,” he says of his students. “Engaging with students is very fulfilling.”

When he compares students in Ghana to those at the GSB, he observes that while there are similarities, there are also differences. “There is greater diversity in the geographical backgrounds of both faculty and students. The GSB students are nationals of various countries and this reflects the international status of the school.”

Apart from his academic work, Latif Alhassan was actively involved in the implementation of a capacity-building programme for farmer-based organisations in eight African countries on behalf of the Farmer Organisation Support Centre in Africa (FOSCA) programme of the Alliance for a Green Revolution in Africa (AGRA). He is currently an associate editor for Africagrowth Agenda and Development Finance Agenda magazines.

He is very passionate about research with a focus on the financial services industry, and more specifically, the insurance markets in emerging economies. “There is much more uncertainty in emerging market economies,” says Latif Alhassan. “Many depend heavily on trading with developed economies and are susceptible to fluctuations in the market conditions.”

Latif Alhassan believes research plays a critical role in development of insurance markets to enhance its role of promoting stable business environments in emerging markets.

Amongst other work, he is currently undertaking research to estimate the liquidity de-creation behaviour in the shortterm insurance market in South Africa as well as examining the complementarity between banking and insurance markets in stimulating economic growth in Africa.



Creativity might not be the first characteristic that springs to mind when one thinks about finance, but the GSB’s new Finance Manager Karo Wilson views the matter a little differently.

“I love people as much as I love being creative, from a numbers point of view,” says Wilson, who joined the GSB after completing his MBA through the school in 2008.

He has had a varied and exciting career, working at organisations as diverse as Rentokil, the College of Cape Town, the Department of Justice and Constitutional Development, as well as a number of chartered accounting firms. The people skills he speaks of have not only drawn him back to the GSB, but also to teaching. He is now a volunteer tutor at The Tertiary School in Business Administration (TSiBA). “I love every minute of it,” Wilson says of his time teaching business administration and principles of accounting and finance. “It is quite a humbling experience.”

The human side of his work blends well with the intellectual side, believes Wilson. “The thing I enjoy most about my line of work is building relationships and building financial models,” he explains.

Wilson says he brings with him to the GSB a set of values he holds dear: strategic thinking, a commitment to positive change, and a dedication to supporting a learning culture. Particular skills, he says, are financial management, financial systems design and implementation, and identifying risks and overcoming business obstacles. “These values took root after I completed my MBA,” he explains. “Upon returning to Rentokil, I moved into a role that required me not only to look at the finances, but the application of operational resources and the structural integrity of the business model. I was instrumental in a divisional restructuring process which was extremely challenging and exciting.

“These values gave flight to my creative side, and are the driving force behind my passion for inquiry.”

He is inspired, above all he says, by the desire for knowledge and curiosity – his own and that of others – especially children.

Wilson, who hails from Athlone in Cape Town, is a keen hiker, and a sports fan, and loves taking time out to watch football in the Cape Town or Athlone stadiums.



Zambian-born Mundia Kabinga says there is no better place for an African academic than the UCT Graduate School of Business.

At the age of only 34, Kabinga has studied in Canada, worked in Switzerland, completed his PhD and received numerous scholarships and awards, among them the Brightest Young Minds SA’s Top 100 Brightest Young Minds in South Africa (2010).

Newly appointed to the GSB permanent faculty as a senior research fellow and lecturer in development finance and strategy (he has worked at the school in a non-tenured capacity for the past three years), Kabinga says the GSB is the best place for an African academic. “It is the top business school on the continent; it provides emergent scholars the space and opportunity to engage with a rich empirical context, solve some of the world’s most wicked organisational problems and grow one’s career as a world-class researcher,” he says.

There are so many areas where good quality research on African and frontier market themes is needed. The kind of research that influences frontier market businesses, guides government policies and breaks new ground is crucially important in bringing about real improvements in society, he believes.

Kabinga has three areas of focus: industry and economic transformation in Africa; energy and infrastructure reform management; and inclusive finance. Each of these fields is daunting enough in itself, but this former technical advisor to the Ministry of Finance and National Planning in Zambia does not shy away from complicated topics. For instance, his doctoral dissertation was on Eskom, examining why blackouts plagued South Africa between 2005 and 2008.

“The electricity crisis was commonly explained by insufficient generation capacity, badly maintained power plants, insufficient coal quality and a weak electricity grid. But how did such a situation occur in the sixth largest electric utility in the world?” He looked, in detail, at the crippling capacity shortfall that the power utility had in 2008 and found that a dramatic lack of competencies and skills played a crucial role. Underpinning these developments, were five sector and public policy reforms that had severe – and unintended effects – on Eskom’s capability structure.



Johannes Schüler may have been born and raised in Germany, but his heart is in South Africa where he teaches the Business Model Innovation core course and the Planning New Ventures elective on the MBA programme at the GSB.

“I have been living in South Africa since 2002,” says senior lecturer Johannes Schüler, who was recently appointed to the full-time faculty of the UCT GSB (he has taught at the school in a part-time capacity for the past few years). “Despite the obvious and much talked-about challenges, this country holds much potential for people with a positive mindset and a willingness to overcome obstacles by embracing them as opportunities.”

Schüler came to South Africa to assist in building a technical consulting agency start-up, followed by developing a local appliance manufacturer to become a global market leader in its category and from there went on to found his own company, Le Bonbon Confection, which currently employs over 100 people and supplies Woolworths.

“I am passionate about entrepreneurship, as I see it as one of the most impactful responses to the many problems South Africa is facing,” says Schüler. “Entrepreneurs provide solutions to unemployment, slow economic growth and increasing challenges in competitiveness in comparison to other emerging market economies.”

Unfortunately, there are many obstacles standing in the way of entrepreneurs, especially in South Africa, he says. “Regulatory requirements, onerous labour laws, insufficient start-up funding opportunities and most importantly, the level and quality of education.” In addition, he sees the business school’s role as integrating academic knowledge with practical, implementable competencies that are required in emerging market contexts. “This will hopefully result in more capable rather than knowledgeable graduates,” he says.

Beyond the classroom, Schüler has been able to make a significant impact on helping MBAs to integrate their knowledge through his role as coach and mentor to student teams that have gone on to compete successfully in several international case competitions. The experience of participating in these case competitions “forces the students to learn how to work efficiently as a team and to make wellthought- out, practical decisions quickly, rather than remaining stuck in academic discussions,” explains Schüler. This is where the magic happens and MBAs become business leaders.



Fighting for social change and justice is a lifelong passion of new senior manager at the Bertha Centre for Social Innovation and Entrepreneurship, Sikhumbuzo Thabede.

He has come a long way since his early years, growing up in a rural area in KwaZulu-Natal. As a child, Thabede was a herd boy in a povertystricken community mired in factional fighting and violence. He remembers the lack of basic services, poor healthcare and the need for social justice.

“It groomed me for socio-economic development activism and the empowerment of our communities,” says Thabede. He looks forward to bringing this experience to bear in his new role at the Bertha Centre, specifically, to help it operate ever more efficiently by designing innovative processes and structures to support its fast-growing operations.

Thabede is exceptionally well placed to step into a management role in what is a complex and fast-growing centre that is part academic institution, part innovation hub and part NGO, in terms of its funding.

He understands this kind of organisational complexity, having spent years working in the public service and NGO sector. He has been with the Department of Social Development, Department of Health and later became Deputy Director for Service Delivery Integration in the Department of Local Government in the Western Cape. He then spent four years working as an operations manager, training manager and national programme implementation manager for various NGOs. He also started his own management consultant company – Moyomuhle Social Solutions – which gave him practical insight into the obstacles that many entrepreneurs and organisations face. And his experiences as a student (he has an MBA under his belt) also give him a unique insight into the workings of a business school. A great believer in the value of blazing a trial for others to follow, Thabede says that his focus will be on creating methods and ways of working that can be scaled up and used by others to create social impact. “One thing we talk about a lot is the role that the Bertha Centre plays – and needs to play – in society and business. It is about making a tangible impact on students and society, one that is meaningful, relatable and sustainable.”



Times might be tough for South African higher education, but Rayner Canning, the GSB’s new business development director, is confident that the school is well placed to ride out the storm.

“We are fortunate to have the opportunity to grow our way out of the current economic slump,” he says. “The business school is relatively well placed – we are a diverse business operation both in terms of our teaching portfolio, which includes academic programmes and executive education offerings, our various centres of excellence and our physical infrastructure, such as our hotel. The school is also shortly to begin work on the construction of an multi-purpose academic conference centre that will further bolster its property portfolio while providing an expanded support base for our academic endeavour.”

Canning, who is a seasoned financial professional, having worked for over a decade in university financing – the last eight of which have been as finance director at the GSB – says that it is no accident that the GSB finds itself in a good position, but the result of good strategic planning over several years.

“Even before the #FeesMustFall protests and the resulting freeze on fee increases, universities have been under pressure to improve volumes, efficiencies and diversify their offerings – while maintaining quality,” says Canning. “And the GSB has been hard at work over the past decade doing just this. In recent years, we have had a lot of opportunity to innovate and bring a different financial outlook to how we do things.”

“There are always things to improve in any organisation. The GSB is already one of the leading institutions on the African continent and it is our job to make it even better.”

For Canning, finance is a strategic enabler. First it is about making sure there are funds available and then it’s about investing them wisely in line with the strategic vision of the school.

Such wise investments in the past few years have included the opening of an international office, to facilitate the school’s international relations and drive the rankings and accreditations work, which forms a crucial part of the GSB’s positioning; the formation of a research office to advance the school’s research agenda, which plays a key role in building the school’s reputation; and the opening of an academic office that includes a case writing centre. It has also seen some significant changes and additions to the programme portfolio.

In his new role, Canning will step back from the financial nitty gritty and step into a broader strategic role. Describing himself as a man who “loves adventure” he is looking forward to the new challenges that the role brings.

“I think that growing a business like the GSB in the current economic climate is a careful balancing act – while we strive to run the school like a business – the commercial operation that it is – it is a very specific kind of animal – the link between academia and business. This requires us to approach things differently.”

He says he will be looking to encourage his team to be ever more innovative and entrepreneurial in their thinking as they seek ways to grow and consolidate the business of the business school. “The GSB has so much to offer in terms of access to talent and new thinking and innovative teaching methodologies that help our clients and partners to always be ready to take the next step. To keep on exceeding.”

Another key focus in his new role will be on building the school’s relationship with its graduates, “our key stakeholders”, through the work of the alumni, career services and marketing offices at the school.

It’s quite a lot to take in, but Canning says he has a good team to support him and that he keeps his life in balance with regular exercise (he is a gym addict and loves hiking). In his approach to work and life, he says that he is inspired by his small children (aged five and a half and two and a half) to take things as they come.

“Their decisions are untainted and honest,” he says. And it is that spirit that he hopes to bring to his new role; a fresh, open and energetic approach.

#6 Summer 2016

Finding the sweet spot between analysis and intuition

Professor Roger Martin addresses an audience at the GSB.

Professor Roger Martin addresses an audience at the GSB.
Future-ready leaders need to learn how to collaborate with those who think differently from themselves and integrate analytical and intuitive thinking modes if they want to get beyond the limits of their own knowledge or experience and create new solutions.

“Poetry, coding and philosophy.” These are the subjects that Professor Roger Martin, global influencer in management strategy, design, innovation and business education, believes are most important for all who aspire to future-ready leadership in the 21st century.

Director of the Martin Prosperity Institute at Toronto University’s Rotman School of Management and former dean of the same institution, Martin was speaking on strategy and innovation for transforming organisations at a breakfast hosted by the UCT Graduate School of Business, the Bertha Centre and Deloitte. He challenged leaders in business and business education to consider whether they were sufficiently geared for the innovation challenges of the dynamic, complex environments that characterise modern economies.

Martin suggests that most US business education is failing business. It needs, he says, to wake up to the thinking that is more suited to the world, as “there is way more innovation going on in business schools” in other countries.

According to Martin, education that does not embrace the perspectives of others, can’t teach how to use and capitalise on the diversity of thought available. Yet, the value of inter-disciplinary teamwork, which is crucial for problem solving in the contemporary era, is best realised by people, he reflects, who have learnt how to collaborate with those who see the world differently from themselves. And in doing so, they are able to create solutions that are greater than the sum of their own knowledge or experience.

Martin says that data-driven, analytical thinking remains the default thinking mode in business – upheld in Aristotle’s much-referenced Analytica Posteriora. However, this limits business strategy to what is known and has already happened. It results in business models that are built for reliability and optimisation; based on exploitation of what already exists.

This is fine, up to a point, but what is needed for strategising and designing effectively for the future, he argues, is an alternative way of thinking that integrates intuitive thinking with analytical thinking. Here he counterposed Aristotle’s other great, but significantly less read, work Rhetorica, a treatise on the art of persuasion, which encourages thinking that is based on judgment and instinct.

It is a way of thinking that encourages creativity, and extends the business model to include an exploration that goes beyond what already exists.

In Martin’s view, business thinking needs to land at the nexus of these two edges.

This new approach requires, he suggests, that the central question dominating business thinking should change from, “What is true?” to “What would have to be true for this idea to be a good one?”

And, the thinking capacity of the most effective person in any organisation will draw on both analytical and intuitive thinking, he insists.

Martin advances Design Thinking – the design-led innovation methodology – as the thinking needed for synthesising analytical and intuitive thinking, and integrating modes of exploration and exploitation. In Martin’s view, design thinking enables the best forward-looking solutions; giving organisations a critical competitive advantage in the contemporary era. It is the key, he says, to future-forward business leadership that can innovate in complex, fast-changing modern economies.

In advocating the kind of thinking necessary for the integrated world, Martin believes contemporary business leaders need to integrate the unknown in their strategy and plans, and have the ability to construct compelling arguments to advocate for their solutions. This is what makes disciplines like philosophy, which teaches rhetoric, so important. Martin is a leading expert on integrative thinking, business design strategy and country competitiveness, and the go-to strategist and adviser to some of the world’s leading companies, like Lego and Procter and Gamble. He heads the Skoll Foundation and holds the Premier’s Chair in Productivity and Competitiveness in Toronto, Canada, and his accolades include being named one of the most influential designers in the world, one of the 10 most influential business professors in the world, and the third most influential business thinker in the world. He has authored and co-authored 11 books.

He is described by Professor Kosheek Sewchurran, director of the GSB’s Master’s in Executive Management as “the most effective concept maker in business education in the 21st century,” based on the numerous successful interventions that Martin has introduced to business education. Sewchurran says the significance of Martin’s contribution lies in his ability to match the systemic changes he considers necessary with innovations in education and ideas.

Martin’s recognition of the attributes that contemporary leaders require is particularly pertinent to the global economy of the 21st century. This is reflected in the central focus of this year’s World Economic Forum that sought to understand the implication of the rapid digitisation for decision-makers in industry and government, who are responsible for developing solutions in an increasingly complex, connected and fast-paced world. In South Africa the challenges – and opportunities – are significant too. The Global Entrepreneurship Monitor (GEM) 2015/16 country report for South Africa paints the picture of a stagnating economy that needs opportunity-driven entrepreneurship for employment creation and economic growth. Yet, the country struggles to convert its comparatively high record for innovation into viable enterprises.

In this context, design thinking’s human-centred innovation process can act as a change-maker for leaders. As Richard Perez, director of the Hasso Plattner Institute of Design Thinking at UCT (d-school) and a panelist on the discussion that followed Martin’s presentation, explains – design thinking adds the desires and needs of humans to the financial viability and technological feasibility on which business usually focuses. The innovation that happens at the nexus of these three (viability, feasibility and desirability) is more likely to succeed because it reflects what people – the end-users and – actually want, and are suitable to the contexts they experience.

#6 Summer 2016

Collaborative consumption could revolutionise how we do business in SA

Collaborative consumption

Business models based on matchmaking platforms – like the controversial Uber – could boost growth in SA, but they should not be embraced uncritically.

Most South Africans have heard about Uber, not only because of the company’s thorough marketing tactics, but also because Uber has been in the news for all the wrong reasons.

Spawning strikes and protests from the traditional taxi industry, as well as outbreaks of violence and intimidation, the service – which has been hailed as a business model innovation by many a scholar – is doing what technology innovation does best – disrupt.

Uber’s is described as a collaborative consumption (CC) business model, which is a derivative of the sharing economy – an explosive new phenomenon that is taking the world by storm. According to global law firm Norton Rose Fulbright, such business models are not a fad, but an unstoppable force that has taken root in the wake of the financial crisis. Now generating around $15 billion US in global annual revenue, according to a recent PwC report, the socalled sharing economy has already revolutionised a number of industries and is showing no signs of slowing down.

Driven by a fundamental shift from private ownership to shared usage and access, the sharing economy promises to provide potential benefits to both the economy and society through the shared consumption of goods and services. The rapidly developing segments in the sharing economy have profitably leveraged unprecedented advances in technology to match cultural trends and the evolving needs and demands of their customers.

In fact, CC business models like Uber are described as “sharing redefined by technology”. They tend to utilise two-way online platforms and smart algorithms to conduct business, and break away from the traditional notions of doing business by seamlessly linking stakeholders and decreasing transaction costs. One of their chief claims, in terms of social benefit, is that they empower individuals to become microentrepreneurs who make their assets, skills or time available publicly by means of a digital matchmaking platform. Digitally driven business models like this are allowing new entrants – sometimes from lowincome groups – to access markets and disrupt wellestablished players in numerous industries and gain a competitive advantage in the process.

This alone must make them worthy of consideration in any discussion about boosting economic growth in highly unequal emerging markets. Such business models have the potential to be rolled out into other areas of the economy. Imagine for example, if governments could leverage mining-related infrastructure for regional economic development. Facilitating the shared use of mining infrastructure between mining companies and third parties could contribute to the distribution of the benefits of mining investments more widely.

So far, so good. But not everyone is convinced. Despite the seductive promise of CC business models, there is ambivalence, and uncertainty surrounding the stakeholder impacts of such models especially those operating in emerging economies like South Africa, where almost no research has been done.

“There is no reason to assume that CC business models are sustainable business models per se. The question whether CC leads to more sustainable business is especially unclear within an emerging market context, where it might be of special importance due to the particular vulnerability of the potentially affected social groups,” comments Betine Dreyer, a researcher from the UCT Graduate School of Business (GSB), who recently co-authored a paper that set out to plug this research gap and investigate the impact of CC models on stakeholders in South Africa.

Dreyer and co-authors Professor Ralph Hamann and Kristy Faccer from the GSB and Florian Lüdeke-Freund, from the University of Hamburg, explain that critics have suggested that CC models could be exploiting people rather than empowering them because they do not sufficiently protect workers’ rights. The protection of consumers, too, often appears to be of secondary concern in the face of aggressive expansion. Uber, for example, has been slow to comply with regulations protecting passengers or to conform to established practice in its hunger for market share.

So, while the models do hold significant potential for economic empowerment, especially of marginalised groups, more attention needs to be paid to local context and understanding the impact of business model changes on local stakeholders. Simply put, the impact of a shift in Uber policy at global level could have very different impacts on drivers in the US than on drivers in South Africa.

A case in point was the introduction of cash payments in line with its global strategy earlier in 2016. While on the surface this move was good for consumers and business, in South Africa, it undermined two important stakeholder benefits: the perceived security for drivers and customers associated with cashless transactions in a high-crime environment; and the market differentiation between Uber South Africa and the traditional taxi industry.

CC business models, are, by their very nature, agile. Changes can be implemented relatively easily and swiftly, given the technological platform at the core of the business model. But this brings threats as well as opportunity.

The GSB research concludes that CC business managers should pay greater attention to local context when making business model changes, than they seem to be doing currently.

Regulators and activists should go beyond generic arguments around stakeholder impacts of CC business models, and rather recognise specific and disaggregated stakeholder impacts and how they may be influenced by changes in CC business models.

Not to do so runs the risk that the baby gets thrown out with the bathwater, and the country loses out on the potential benefits of disruptive power of CC business models. As Botsman and Rogers, authors of the influential book What’s mine is yours: How collaborative consumption is changing the way we live, point out – CC business models could be “as important as the industrial revolution in terms of how we think about ownership”.

Uber has been the ‘bull in a china shop’ in many ways, but their success demands that the model is given serious consideration as an enabler for economic development.

SA’s National Development Plan’s pledge, declares that, as a nation, South Africa must keep on trying to succeed. This demands, that as a country we learn from the shortcomings of business model innovations like Uber and build on their success. We need to take the best that CC models have to offer and make them work in the SA context.

The authors are MBA students at the GSB. This article is based on research they conducted as part of their course requirements with fellow students Trisha Naicker, Adam Parsons and Wouter Vink. It draws inspiration from a report on Business Models for Shared Value from the Network for Business Sustainability-South Africa.

#6 Summer 2016

Youth unemployment – does business hold the key?

Youth unemployment
With soaring youth unemployment, a stagnating economy, and rising inequality, we have to question just how much our young people have to look forward to. Clearly we have a problem. Who’s going to solve it?

“I don’t like the term born free, because there is no African child Born Free in this country … I see it as a negative, false thesis that shows better change in this country, whereas all of us knows that life hasn’t changed for the better.”

The young man speaking here is named Thando. He’s talking to Vanessa Malila, a postdoctoral student at Rhodes University, for her paper Born free but still in chains. He’s one of several to speak in a similar vein.

Thando is voicing a common theme in the current South African discourse: the end of apartheid in 1994 promised a new beginning, with political freedom and rising prospects for all, but 22 years on, many of the so-called born frees are not yet enjoying the fruits of this new found freedom.

According to the World Economic Forum Global Risk Report (2014), South Africa has the third highest rate of youth unemployment in the world. From 2010 to 2016 it has risen from 50% to 52%, with the expanded definition – which includes those so discouraged they are no longer seeking work – as high as 63% in 2015.

A puzzling parallel problem is this: why, when so many of our youth are unemployed, do we still face a critical skills gap in the job market? Why, when nearly two-thirds of young people do not have jobs, are 96% of CEOs in the country concerned about a critical skills gap according to a PWC report? This despite the fact that government spends a relatively high percentage of GDP on the education system.

Various reasons have been put forward for this phenomenon; one of which is that there is a mismatch between what business needs and what the education and training system is producing. According to labour market analyst Loanne Sharp writing in a City Press feature titled, Degrees without Guarantees, 600 000 graduates were without jobs in 2012. But Haroon Borhat and fellow economists Alan Hirsch, Ravi Kanbur and Mthuli Ncube counter in their paper Economic policy in South Africa past, present, and future that there is a strong correlation between level of education and whether you have a job or not.

We can draw two main conclusions from this: one, South Africans need more access to tertiary education; and two, we need to direct students towards those areas where there is a skills shortage.

Borhat et al write that considering South Africa is a young nation built on a complex and very challenging political economy, expectations that the new government would get everything right quickly were naive. What other entities, then, can play a role in achieving these two objectives? The obvious answer is business.

Business has a huge incentive to solve this problem because millennials, also called Generation Y (those born between 1980 and 2000, which includes the ‘born free’ generation), while thought of as ‘high maintenance’ employees, are also highly prized as a dynamic force for innovation.

As scholars have pointed out, this generation thrives on challenges, enjoys freedom and the flexibility to be creative, and dislikes being micro-managed – the perfect recipe for innovation, which is widely touted to be the lifeblood of business success in a world of increasing complexity and competition.

And indeed, around the world, corporations are recognising the important functions they can play in marrying education and employment. In 2014, The Guardian reported that “economic powerhouses can attribute much of their success to their heavy investment in human capital”. Citing the examples of Samsung’s Tech Institutes and Honeywell’s Initiative for Science and Engineering (HISE), the publication suggests companies can use their assets to close the skills gap.

This has the dual function of building employee loyalty and driving staff retention in a competitive market. Billy Elliot, South Africa manager at the Top Employers Institute, points out that the new generation of employees no longer considers a salary alone highly motivating. Long-term investment in talent is essential, and leadership development programmes start from the bottom. It therefore makes sense to spot talent as early as possible and invest in education, says Elliot. Further, the kind of education they are investing in needs to be carefully considered, with a determined focus on ‘job readiness’, says David Taylor, Head of the African Institute of Financial Markets and Risk Management (AIFMRM) at UCT. AIFMRM has just launched a new Master of Commerce degree that was developed following several years of collaboration with industry. Taylor says that specialised master’s programmes of this kind that are structured as apprenticeships and are coordinated by both industry and universities should become “a matter of course” if the country wants to get to make headway in bridging critical skills shortages.

And what about those who don’t wish to study further after school? It’s just as important to invest in functional internships for artisans, particularly in the building trade. South Africa has a shortage of tradespeople and artisans, and currently the average artisan is bordering on retirement age. Who, when the current generation retires, will build the infrastructure for the next generation’s dreams and developments? Functional internships and career guidance from the appropriate businesses are essential here.

Schools can play an important guiding role here too, in helping young people decide which avenue they want to pursue after matric. The focus at schools should also be on job readiness, argues Nicky Sheridan, CEO of Christel House. Christel House uses a holistic approach to service learners from severely financially disadvantaged backgrounds. Its focus on creating jobready graduates includes driving the development of ‘soft skills’ to increase employability and running an entrepreneurship programme in the school.

The school does this with the assistance of corporate donors, such as Dell and MTN and Sheridan, who is the former head of Oracle South Africa, is a big advocate of the role that business can play in supporting interventions that work at school level.

Beyond the school walls, there is also much that business – in partnership with local government – can do to create enabling environments that will prepare learners to become economically active citizens. The Western Cape Government Smart Schools project – a R1.2 billion initiative that will link schools in the Western Cape through a high-speed, real-time wide area network (WAN) and include the provision of local area networks (LAN) as well as the building and refreshing of computer laboratories is a case in point. With any luck, this will provide school leavers with facilities that will not only drive greater computer literacy, but also enable easier job applications and communications.

If we are to really create a country that our youth can be excited to be part of, a realistic outlook is essential. We will need more education options – certainly – more access to the right kind of education or training and more funding opportunities as well as more support for young people to develop the right skills to become economically active.

The challenge is immense and the reality is that at this stage, however little we may like it, the taxpayer cannot continue to foot the bill on his/ her own. Business has a hugely impor tant role to play as a par tner in this process – and many are already heeding the call. They should be applauded for it, as our collective future really does depend on turning the numbers around: lower youth unemployment plus a lower skills gap will equal the healthier economy that we all so desperately want.

#6 Summer 2016

To humbly go where no business school has gone before

The new GSB campus at Philippi Village

The new GSB campus at Philippi Village: Photos by Francois Swanepoel.

Megan Blair and Kuthala Kafi

Megan Blair and Kuthala Kafi of Blue Door Early Childhood Education conducting business at the Philippi Village.
The UCT Graduate School of Business (GSB) is deepening its roots and relevance as an African business school seeking to develop more socially relevant solutions by formally establishing a campus in Philippi Village.

The GSB, with its reputation for academic excellence, relevance, and purpose firmly established, is widely regarded as the leading business school in Africa. Yet, as an emerging market business school, its location at the V&A Waterfront is far from representative of the reality of the vast majority of South Africans.

Over the past five years, the school has built numerous partnerships and piloted several initiatives to cultivate an environment that tries to bridge this gap; spaces and programmes where individuals with innovative ideas can understand, build and develop solutions that are relevant for Africa. Now it is moving these one step closer to the realities of an emerging market with the establishment of a permanent base in Philippi Village – a mixed use, 6 000m2 entrepreneurial development zone at the epicentre of Nyanga, Gugulethu, Mitchell’s Plain and Khayelitsha.

Spearheaded by the GSB MTN Solution Space and the Bertha Centre for Social Innovation and Entrepreneurship, the Philippi Campus is the first community campus to be established by UCT in its 178-year existence. While the university has been active in township communities, with field sites, mobile health services and education programmes for decades, it has not, until now, established a presence with the long-term purpose of getting all students and stakeholders to engage and interact beyond the traditional spaces of the university.

It is, in many ways, a bold step into the unknown that has to be taken with a considerable amount of humility. As a university, traditionally the ‘expert’ voice, we know in this instance, we do not have all the answers. And quite honestly, no-one knows how this will turn out.

The reality is that we live in a thoroughly divided country and city from a geographic perspective, and that creates a divide in understanding, in connections, and in networks. For many Capetonians, it can take more than 90 minutes to make their way to the school’s Waterfront campus by means of unreliable public transport to attend class or listen to a talk. The aspiration for our Philippi campus is to bridge this physical divide, certainly, and by so doing, to create a space where conversations can take place that are natural and authentic, and based on real relationships and a real understanding.

This may be difficult and uncomfortable at times – in fact, this will definitely be difficult and uncomfortable at times. But in business schools today we teach our students about the importance of learning to get comfortable with uncertainty and paradox in a complex and fast changing world – and to trust that solutions will emerge. Here at Philippi we will get to practice what we preach. Staying with and working with discomfort, we believe, will be a crucial part of forging a new reality for business and society from the ground up. As Richard Heeks proposes in his ladder model of inclusive innovation, we are seeking to move beyond inclusion of intention and consumption, where inclusive innovation seeks to address the needs and wants of an excluded group, towards inclusion of impact, process and structure, where the excluded group(s) are more actively involved in the development of the innovation and whose livelihoods are therefore more directly impacted. Philippi Village, as a development, was initiated more than five years ago with the vision of creating economic opportunity through the active inclusion of those who are excluded from the mainstream of development, and the GSB has been involved in these conversations from the outset. The founding sponsor of the Bertha Centre at the GSB, the Bertha Foundation, is one of two founding partners in the initiative; the other being a Cape Town-based NGO The Business Place. And already our students are actively engaged in working with businesses in the community. In 2016, almost all students at the school across most academic programmes will have done at least one course on the Philippi campus.

Now as we prepare to formally take our place in the community, the question that is driving our activities is how do we, as a business school, contribute to that larger vision of integrated socio-economic development? As a business school, we have a clear sense of where our strengths lie and what we have to offer in terms of understanding business and the mechanisms of business through teaching, research and engagement. But can we bring our knowledge and networks to bear where they are needed most? Can we genuinely co-create new business models that are inclusive, that empower people and communities and that have the power to shift the system?

We don’t know, but we do know that we want to try.

Right now, South Africa is at a difficult crossroads. Paradoxes abound and challenges are mounting around us. In that context we want to be a business school that is relevant and engaged, and that makes a difference in society. We can do that through developing learning programmes that produce socially conscious graduates with a new approach to doing business. We can do it through ensuring our research, undertaken by students and faculty, is both relevant and has a positive impact on society, and we can do it by creating greater access to critical business skills and support to build entrepreneurs from the ground up. But more than that, we also need to be prepared to step beyond our traditional roles of thinking and reflecting, to take our place as actors in society where we can play a role in catalysing an enabling ecosystem for inclusive development across sectors.

And while universities are not necessarily the most entrepreneurial and innovative of organisations in and of themselves, we need to be willing to take some risks, to, in effect, ‘innovate’ ourselves. We teach our students to challenge the rules and the status quo of power and exclusion by building new products, processes and models that deliver greater social value and also shift belief systems, cultures, behaviours, flows of resources and positions of authority. If we are teaching these approaches to our students, why should they not also be applied to higher education institutions themselves?

We cannot afford to be paralysed by paradox. We believe it is more important to try new approaches – even if they fail. And it is in this spirit that we take our place in the community of Philippi Village. We want to be the change the system so desperately needs.

The establishment of the Philippi campus would not have been possible without support and involvement of key sponsors including MTN (in its role as the sponsor of the MTN Solution Space); the UCT Vice-Chancellor’s Strategic Fund; and the Flanders Government funding for building a social economy, and the Bertha Foundation.

#6 Summer 2016

Striking the right note with the GSB’s 50th celebrations

Bongani Sothononda

Bongani Sothononda takes centre stage with his specially adapted chromatic marimba.

Bongani Sothononda, the man behind the music that marks the 50th anniversary of the GSB, says that if it had been up to his parents, he would never have become a musician.

“My parents were very much against me choosing music as a career. I recall my father asking me: ‘Ok, fine, you want to do music – but what are you going to do for a living?’ I said: ‘Music’. And he said: ‘No, no, no, no – what are you going to do to make money?’”

Sotshononda’s father, who now acknowledges the value of his son’s persistence, could not know that he would grow up to be internationally recognised as a composer, instrumentalist, band leader and arranger. He could not know that music would show his son the world and teach him about people. As a successful music entrepreneur, Sotshononda‘s story strikes a chord with the values and vision of the GSB, which was one of the reasons he was approached to work on the somewhat delicate job of composing a piece of music to mark the school’s 50th anniversary.

“We wanted to create a piece that reflected the GSB’s ethos of a locally rooted business school with global relevance where the first thing you will learn, is to unlearn what you think you know,” says Saskia Hickey, market intelligence and strategy manager at the school and MBA alumnae. “That is not an easy brief!”

But Sotshononda was delighted to rise to the challenge. The primary idea behind the resulting piece, titled New world, new ideas, was one of celebrating unity in difference, he says. “My message was about how, if we work together, we can achieve more; hence the different elements I incorporated into the composition.” He continues that musicians tend to default to comfort zones. “Classical musicians seldom want to work with jazz musicians because the former want everything charted, even their solos,” he laughs. They’re a draw-by-numbers ilk, even their creativity must be contained within structure – staying within the lines when colouring in. Whereas jazz musicians are much more unpredictable – malleable. More likely to toss the colouring-in book altogether and freehand the process instead. And then there are traditional musicians who offer their own idiosyncrasies.

“Add everyone to the mix and some semblance of unity must be found for the music to occur. The theme is inherent in the nature of music.”

Steve Gordon, co-founder of Making Music Productions, who project managed the production of the piece, adds that it’s important to note that the United Nations of Africa Band, which performed the music live at the GSB’s Graduation Dinner in June, wasn’t just assembled as a concept project. “It grew out of an organic process with various people he had worked with over time; immigrants, musicians from across the continent. The band had already evolved in that way. We didn’t have to hunt for it and manufacture it. It wasn’t a kitschy construction.”

The result of bringing this interesting bunch of musicians together is that the composition doesn’t fall under a specific genre. “I can’t box it,” says Sotshononda. “It could be considered African, jazz, or even classical with the incorporation of the violin and the cello. Maybe even the term World Music applies.”

Hickey says that this rather echoes what the GSB itself stands for. “We are more or less re-inventing what it means to be a business school in an emerging market context. We also bring unusual influences, ideas and people together to create something unexpected – in business terms we might say disruptive – in order to create something new,” she says.

The GSB’s growing reputation for turning things on its head is also evident in the foregrounding of the marimba as a solo instrument in this piece. The marimba, a quintessential African instrument, is more commonly thought of as a background or chorus performer, but in this piece the instrument, by contrast, is a unique chromatic instrument and it takes centre stage. This is one of the things that make Sotshononda special as a musician. He codesigned the instrument with a local craftsman based in Grahamstown, Christian Carver.

His decision to move away from a diatonic marimba was informed by business, as much as artistic prerogatives. The artist in him wanted to take the indigenous sounds of the instrument beyond the marimba groups of his youth, and the entrepreneur in him realised that there would be more work opportunities if he stretched the instrument into new territory. He says, “I decided to invest in my own craft and buy the first chromatic marimba. This makes me the only person in the country, as far as I know, playing this instrument. I also get to lead, on the marimba, which is incredibly rare – especially with jazz outfits.”

“There is something magical about upending the perception of the marimba as an African curio shop instrument and, through action, asserting its role to that of a serious musical lead,” comments Hickey.

New world, new ideas was also composed with collaboration, another hallmark of the GSB, in mind. Gordon says, “The music’s copyright acknowledges Bongani’s contribution. Although the assemblage of the project recognises that there could be other voices built into the music.

“Our intent was that sections of the composition be made available to other artists. As an instrumental it may mean that someone may want to MC over it for example. There’s a provision for that aural space; the music has a groove and a melody in its own right as a composition and would work well in terms of a collaboration.” Sotshononda points out that a lot of artists from back in the day were against the idea of more modern musicians sampling their music, especially in other genres of music. They would complain about their work being spoilt. But they should thank Jay-Z, Casper Nyovest and all those House DJs for the royalties they’re earning now. “Some of the music that the older musicians made is now sitting on a shelf, forgotten,” he says. Adding that: “There is a lot that one can do with the piece. I wanted not just a piece, but a template for anyone to be able to take the music and add their own personality to it. It could end up in Australia or anywhere else in the world.”

Hickey says that this dynamic approach is more in keeping with the ethos of the school. “We didn’t want to create a great piece that lived and died in 2016. In the same way that the knowledge and spirit our students acquire while studying at the GSB will be augmented and applied in different ways, we hope that this composition will find an evolving expression and meaning in the world,” she concludes.

#6 Summer 2016

Switching on finance for off-grid energy

A new report explores the issues and opportunities related to the financing of off-grid energy innovations, primarily focusing on the provision of small home systems for individual households or village microgrids in East and Southern Africa.

According to the Africa Progress Panel – 2015, on current trends, it will take until 2080 for every African to have access to electricity.

In spite of this rather gloomy prediction, lights are switching on across the continent, thanks to the ingenuity of energy entrepreneurs and their funders. While more than 600 million people in Africa lack access to clean, safe and affordable energy, innovations in solar technology, mobile payments and distribution models are increasingly enabling greater levels of affordable access. In support of these innovations, the industry has seen committed capital of at least US$30 billion over the next five years from public and private funders – all focused on Africa for access to energy. However, access to finance remains the number one restriction to scale, according to energy access enterprises.

To grapple with this challenge, a new report by the Bertha Centre for Social Innovation and Entrepreneurship at the GSB and the Worldwide Fund for Nature South Africa, with support from the Wallace Global Fund, set out to explore innovative finance solutions for the industry. The research was based on workshops and consultations with more than 100 industry representatives across the continent.


Although the majority of mainstream efforts focus on large-scale infrastructure development, much of Africa’s potential lies in the off-grid space, which is currently being tapped by so-called energy access entrepreneurs. These entrepreneurs leverage the current momentum behind local, decentralised, renewable energy solutions, particularly solar technologies, such as microgrids, solar home systems (SHS), and intra-household or ‘picosolar’ systems. For solar home systems and picosolar products, Kenya, Tanzania and Ethiopia made up 66% of the sales in Africa in 2015, with Rwanda and Uganda generally regarded as the next emerging frontiers. Bloomberg estimates suggest that the market could be worth US$3.1 billion by 2020 – reaching almost 100 million households.


The market opportunity has spurred innovative business models, such as M-Kopa and Off-Grid Electric, that allow people to pay-as-you-go (PAYG) for their solar products. Over the last five years, the PAYG model has become the popular enduser financing model. PAYG customers pay a small deposit for a solar system to be installed in their homes. They then make smaller regular payments over time, usually through a mobile payment system, to pay for either the energy used or ownership of the system.

Beyond PAYG models, other companies are thinking equally creatively about the consumer financing component by tapping into either government resources or collaborating with corporates. The iShack project in South Africa builds their model to be in sync with existing national energy access strategies and integrates the mandated Free Basic Electricity subsidy into their end users’ payment model.

Solarus, an international renewable energy technology company, is currently testing another interesting business model in South Africa. To extend their off-grid energy solution to lower income customers who may not be able to afford the installation cost, Solarus is collaborating with a hotel in South Africa to roll out the Hotel Staff MPower Project. The hotel will finance the up-front installation costs of the systems to up to 600 employees’ homes. The employees repay the cost of the installation at an affordable monthly rate to the hotel.


The UN’s Sustainable Energy for All (SE4All) initiative, estimates that annual investments of US$48 billion are required to reach universal access. USAID’s Power Africa is one initiative driving these commitments, which has identified more than 43 private sector investors and practitioners who have committed US$1 billion to emerging energy access enterprises over the next five years through the Beyond the Grid initiative. But while momentum is building and large amounts of capital have been committed, energy access enterprises find that the types of capital and investment terms often do not match the enterprises’ needs and capabilities and that access to finance remains the n umber one restriction to scale.

Traditional financing through commercial banks or commercial lending institutions has not been a viable option for many of the energy access enterprises. The inability to predict future cash flow from sales, the actual return on investment per product sold, the lack of customers’ credit history and, often, the informal economy within which these businesses operate mean they struggle to access finance. Enterprises and entrepreneurs highlighted that: 1) there is an increasing need for local capital for (local) entrepreneurs; 2) that seed funding remains a challenge; 3) that working capital is one of the most significant financing gaps, particularly for enterprises offering PAYG solutions to their customers; and 4) that funding for logistics and distribution often goes ignored.


From Nairobi to Cape Town, interview respondents and roundtable participants urged the industry to come together to increase coordination and develop innovative finance solutions. Recommendations for different capital providers include:

Grant providers: In order to scale, the industry will need continued grant funding and concessionary capital along with better integration into the investment cycle. This concessionary capital will likely be necessary for proof of concept for early-stage ventures. Apart from directly seeding early-stage ventures, grant capital can be catalytic in opening up new, untested markets for the larger energy access companies, thereby enabling them to expand faster than otherwise possible. An impactful example is the use of result-based finance (RBF) in Tanzania, where companies are incentivised to go into harder to reach, high impact areas. “This incentive is exactly the kind of support we need to rapidly expand energy access to the customers who need it most,” says Xavier Helgesen, CEO of Off-grid Electric. “We believe it is an ideal model because it accelerates the market without distorting it …”

Local banks and other financial services providers: For companies that rely on cash sales and provision of devices to end-customers on a PAYG basis, working capital is a critical component to operating and scaling a business. Local banks potentially have a catalytic role to play in deploying much-needed debt financing to energy access enterprises. However, they remain relatively hesitant to lending based on cash flows, especially to early-stage companies in a sector most banks are not familiar with. One emerging alternative comes from digital finance, such as online lending marketplaces, which can be suppor ted by international impact investors, local institutional investors as well as retail investors. Through an online marketplace, the transaction cost of SME investing is reduced and automated. One such platform, which is blending institutional and retail investments, is Rainfin, launched in 2012 as South Africa’s first online lending marketplace. Models such as this have potential to fur ther leverage capital from institutional and retail investors.

Impact investors: Not surprisingly, investors generally did not second the notion that access to finance is the key challenge. For impact investors targeting market-rate return, the key challenge reported is a lack of investable deals. To mitigate this, impact investors are increasingly working with energy access enterprises to test new models such as securitising PAYG portfolios through bond structures. This is being explored by BBOXX, a London-based solar innovator, which aims to raise US$2 billion over the next five years to turn solar into an asset class and create contracts for thousands of solar rooftop arrays to sell as bonds to investors – ultimately demonstrating that it is possible to lend on the basis of future receivables from the solar home system contracts and the securitisation of the unbanked.

Thanks to the ingenuity of energy access entrepreneurs, such as M-Kopa, BBoXX, Solarus, and iShack, as well as the funders they partner with, the future is increasingly looking bright across the continent as millions of people are accessing off-grid energy.

#6 Summer 2016

The BRIC countries: economic drivers for engagement with Africa

China discount shopping centre

Photo courtesy of The China Initiative Research Blog.

Cargo containers, Rio de janiero

Cargo containers in the docks in Rio de Janeiro, Brazil.
An analysis of how each of the BRIC countries implements its commercial strategies on the African continent starkly reveals that hopes that the alliance will deliver development progress for the continent are misguided. Instead they are seeking to fulfil their own commercial interests while shoring up their international legitimacy and credibility.

National interest still trumps friendship in international relations. The notions of solidarity that were popular among developing countries in the 1950s and the 1960s have no resonance in 21st century diplomacy, which is largely driven by commercial considerations. Many developing countries still view the advent of rising powers – some of whom were part of the Third World movement known as BRIC (Brazil, Russia, India and China)* that positioned itself to counter imperialism – as offering promise for development progress. However, BRIC countries are not primarily driven by Africa’s development concerns, but are seeking to fulfil their own commercial interests, as well as to use Africa as an avenue for shoring up their international legitimacy and credibility.

Undoubtedly, economic incentives form a core element of each of the BRIC countries’ interests in Africa. These countries share a common desire to gain access for their goods and services to the burgeoning consumer markets in Africa. With a combined population of over 900 million, and evidence of gradually increasing levels of household spending, Africa is viewed as a potentially profitable and largely untapped frontier for investments and exports of manufactured commodities. To be sure, Africa is viewed as an underdeveloped market for low-technology, but also cost-effective manufactured goods and services. Furthermore, Africa also presents an opportunity for the BRIC countries – China and India in particular – to access markets like Europe and the United States, due to the preferential access into those markets granted to less developed countries, especially in the case of textiles and apparels.

In particular, the growth of the ‘middle class’ has become the key narrative of Africa’s resurgence. With African countries experiencing rapid economic growth, combined with rapid urbanisation, the middle classes are projected to expand, with an accompanying youth bulge in urban centres. This potentially acts as a magnet for external actors, such as China and India, to tap into this growth dynamic. Fast-moving consumer goods are especially targeted, since this rising middle class will presumably consume ever-larger quantities of goods and services. Urban centres also require services infrastructure, such as banking, telecommunications, energy and transportation, in ways that build linkages with physical infrastructure development – another important area of opportunity for the BRIC countries. Already, mining, agriculture and infrastructure projects are at various stages of development and completion across the continent, and companies will need to provide a range of goods and services to fill the growing demand, especially for capital inputs. Add all this up, and Africa’s developmental needs are likely to drive a virtuous cycle of expanding demand, employment creation, trade and fiscal revenue generation for decades to come as the demographic dividend plays out. Recognising this, each of the BRIC economies has devoted significant attention towards penetrating the African export markets in a way that best fits its national economic interests. In the case of China, Africa represents a ready market for Chinese manufacturers. While its imports are dominated by raw materials, China exports primarily finished products to Africa, including a range of machinery, textiles and electronic items. In this respect, China has been quick to recognise the market potential in Africa, which it sees as a prime market for low-cost electronic and consumer goods as well as exports of light manufacturing, agro-processing, apparel products and communications and other services. Even though there has been a gradual shift in China’s commercial foray into Africa, especially outside of the resource-rich economies, broadening out to services and manufacturing, the security of supply of natural resources remains the thrust of China’s commercial diplomacy on the African continent.

Consider, for example, China’s trade relations with sub-Saharan African countries. While China overtook the US as Africa’s single largest trading partner in 2009, with the value of trade topping US$126,5 billion in 2010, much of the two-way trade has been skewed in China’s favour. The only exceptions to this general rule are resource-rich countries, such as Angola, the Republic of Congo, the Democratic Republic of Congo, Zambia, and Equatorial Guinea, which have sustained trade surpluses.

Indeed, as much as 87% of China’s exports to Africa consist of equipment and machinery, textiles and clothing and other manufactured products. China is also interested in Africa’s labour market. Africa boasts a large reservoir of untapped labour resources, making it an ideal location for China’s labour-intensive industries. To reform its current development model, China needs to outsource and relocate its labour-intensive industries, as well as low-skilled jobs to Africa, while developing more capital-intensive, high-tech industries within China. The rising labour costs in China have made the need for reform increasingly urgent, and forced many Chinese manufacturing enterprises to relocate production to cheaper destinations.

Africa also represents an important market for China’s arms sales. Following the end of the Cold War, Chinese weaponry began to penetrate the African markets, replacing the Soviet Union, by offering lower priced weapons and ammunition. Between 2003 and 2006, Chinese arms exports to Africa were the third largest of all countries.

Similarly, Brazil’s growing presence in Africa has been motivated by strong commercial diplomacy considerations. It is no coincidence that Brazil, for example, has been actively engaged in several countries in which both China and India have been scouring for commercial opportunities. Brazil has not been merely focusing on Lusophone countries, even though the bulk of its relations have been with these countries, in particular Angola and Mozambique. Brazil sees Africa as a key consumer market for its manufactured goods, and sees the expansion of exports of manufactured products to Africa as a means to stave off de-industrialisation. Brazilian exports to Africa, which include many agricultural products, together with manufactured and semi-manufactured goods, are far more diversified than its imports from the continent. As of 2012, manufactured products accounted for 42% of Brazil’s total exports to Africa. Brazil has a growing commercial footprint on the African continent. Even so, despite Brazil’s desire and efforts to grow its commercial and financial relations with Africa, trade remains relatively low and is confined to the Lusophone countries, notably Angola and Mozambique. Beyond the Lusophone countries, the country has an economic presence in countries such as Ghana, Gabon, Nigeria, Senegal, Kenya, Ethiopia, Namibia and South Africa. Companies such as Vale (mining), Odebrecht (infrastructure), Petrobas (oil) and Embrapa (agriculture) are iconic Brazilian companies that are making a mark on the continent.

For its part, India’s economic interest in African countries has also been propelled by a desire to access the continent’s sizeable and largely untapped export markets. At present, India’s manufactured products represent about 51% of its total exports to Africa. Indian firms have been particularly keen to improve the penetration of electrical and electronic products and automobiles in African markets. The Indian government has invested heavily in key industries in Africa, such as telecoms, consumer manufacturing, automotive and resources.

Trade and investment have also been important drivers of Russia’s foray into Africa. In 2012, total trade between Russia and sub-Saharan Africa amounted to US$3 billion. Russia’s focus has mostly been confined to tapping into markets within Africa’s minerals and energy sectors. Russian companies have also broken into such markets as science, engineering and arms. The arms trade, in particular, has been a crucial aspect of economic relations between Russia and Africa. Arms exports from Russia to the world reached US$13 billion in 2011, with 10% of those destined for North Africa (especially Algeria) and 7% to sub- Saharan Africa.

South Africa is one Russia’s key African trade partners. In 2002, bilateral trade totalled US$138,1 million, and grew to almost US$1 billion in 2012. Major Russian companies operating in South Africa include the Renova Group (exploration and production of manganese ore), Norilsk Nickel (production and mining of nickel) and the Evraz Group (production of vanadium and steel). Through the state-run nuclear company, Rosatom, Russia has been focusing on ramping up its supply of nuclear reactors to African countries. This includes South Africa, which is believed to be a frontrunner for the procurement of 9 600 MW of nuclear energy, and Egypt for the construction of four nuclear reactors at 1 200 MW each. In March 2015, Rosatom and the Nigerian government signed a cooperation agreement for the design and construction of four nuclear reactors at a total cost of US$20 billion. Furthermore, Ghana has concluded a cooperation agreement with Rosatom on the peaceful development of nuclear energy. Aside from exporting their goods and services to Africa, a yearning to gain access to Africa’s natural resources is another key driver of the BRIC countries’ involvement on the continent. The abundance of natural resources in Africa has piqued the attention of the BRIC countries, both for their own economic interests, but also for reasons of energy security. As the BRIC countries industrialise with unprecedented speed, their fast-growing economies demand increasing supplies of oil, gas, timber and other natural resources to fuel development. Africa, with rich reserves of minerals and raw materials, is a key source of these supplies. In the case of both India and China, in particular, Africa is critical as a source of natural resources and raw materials, especially oil. Due to its limited exposure to the world’s main conflict zones, its general openness to foreign participation, and high quality, African oil supplies are of considerable strategic importance to these countries. China became a net-crude oil importer in 1993. Today, it is the second-largest consumer of oil in the world and around 25% of its oil imports come from Africa.

Africa is regarded as a key source of natural resources to serve as inputs into production and to fuel China’s energy needs, while also serving as a market for Chinese exports, all of which are key to China’s continued economic growth and development. Indeed, large-scale economic development in China is increasingly throttled by the depletion of domestic energy reserves and natural resources, meaning that access to much-needed natural resources is a key element of China’s relationship with African countries. At the same time, China is also attempting to reduce its dependency on the Middle East to fuel its energy needs. China’s internationalisation strategy has balanced investments in the financial sector and technology acquisitions in the West with expansion into, what was in the past regarded as peripheral economies, in Africa. It is heavily engaged in the African economies across energy, agriculture, finance, and telecommunication sectors.

For its part, India needs to import 90% of the crude oil and natural gas required to feed its industrial appetite. The International Energy Agency predicts that India’s oil dependence will increase from 2,1 million barrels a day in 2007 to 6,6 million barrels a day in 2030. As the world’s fifth-largest consumer of energy, India is keen to match its needs with Africa’s growing production output. Deepening relations with Africa – especially oil-producing countries, such as Nigeria and Sudan – has been crucial to India’s energy security considerations.

In contrast to India and China, Brazil’s involvement in Africa is less motivated by natural resources needs. Brazil is not reliant on imports of natural resources from Africa, as it is a natural resource-abundant country itself, with ores, oil and fuel products contributing a significant share of the country’s total exports. Instead, the resource-based specialisation of Brazil’s large-scale enterprises is central to the country’s activity in the resource sectors of African countries. Since Brazil does not need to secure energy and resources overseas, the presence of companies, such as Petrobras, in foreign markets derives from a desire to internationalise and diversify its markets. In this sense, the Brazilian state-owned oil company Petrobras and the mining company Vale are, “deeply involved in the extraction of Africa’s resources”, and oil and other natural resources account for almost 90% of Brazil’s imports from Africa. Having operated in the oil-rich African states of Angola, Benin, Gabon, Nigeria and Senegal, Petrobras is regarded as a key actor in fulfilling the Brazilian state’s ambition to secure oil supplies.

Akin to Brazil, accessing natural resources is not central to Russia’s interests in Africa. Internationally, Russia is an important producer of minerals, oil and gas. In 2012 alone, natural gas and oil contributed close to 30% of Russia’s gross domestic product and accounted for nearly two-thirds of total exports. Simply put, Russia does not have the same need as China, or even India, to purchase natural resources. That said, Russian companies are striving for increased access to the mineral wealth of countries across the continent. The financial crisis of 2008 exposed the extent to which Russia relies on oil and gas to support growth, and encouraged the Russian political and business elites to look towards the abundant energy reserves available in Africa.

Russian imports from Africa include, among others, manganese, chrome, nickel, zinc, lead and bauxite. More than 30 large Russian companies are involved in the development of Africa’s natural resources projects. In South Africa, Russia aims to control nearly half (45%) of South Africa’s uranium enrichment market. Russia also hopes to use South Africa as a springboard from which to establish a competitive position in Africa’s natural resources sector, focusing particularly on the extraction of nickel, chromium, diamonds, zinc and cobalt.

The above analysis illustrates that the contemporary era of global diplomacy has witnessed growing and intense political and economic competition, not only between developed and developing countries, but also among developing countries. It reveals that the booming presence of the BRIC countries in Africa is driven by these countries’ national interest, and the notion of a collective interest of the Global South is largely a misnomer in contemporary international political economy.

There is no doubt that the BRIC countries, especially China, are redefining and will continue to influence the African continent’s global geo-political positioning, while also redrawing its economic landscape. It is hard to predict how relations between these countries and Africa will develop in the future. Yet it is clear that they will be largely shaped, not only by the evolving political and economic forces in Africa, but also by the changing international and domestic policy priorities of the BRIC countries.

* South Africa is excluded from this analysis as the focus of the article is on how the non-African members of the BRICS formation pursue their commercial strategies on the continent.

#6 Summer 2016

Putting development finance institutions to work in Africa

Nelson Mandela Bridge, Johannesburg.

Nelson Mandela Bridge, Johannesburg.
Access to international capital is drying up, but Africa’s development needs are on the increase. In this context, the role of development finance institutions in plugging the finance gap is becoming more critical, says Professor Nicholas Biekpe, head of the newly established Development Finance Centre at the GSB and the man behind the school’s pioneering MCom in Development Finance.

Africa has big development aspirations that call for substantial financial resources, but a key question remains: where is it going to get the money from?

In recent times, there has been a sharp slowdown in the global economy, which has made it even more difficult for Africa to access international financial markets. At the same time, private investors have also been discouraged from investing in the continent in part, because most low-income countries do not have sovereign credit ratings that are up to investment grade, awarded by international rating agencies.

With access to capital becoming tricky, a recent United Nations report on economic development on the continent advised African governments to find new ways to finance development. Between US$600 billion and US$1.2 trillion will be needed each year to achieve the sustainable development goals in Africa, according to the UN Report, subtitled Debt dynamics and development finance in Africa. This equates to about one third of some countries’ gross national income, meaning that public budgetary resources, official development aid and external debt are unlikely to cover those needs. The conclusion? Development partners will need to share the burden.

With serious constraints on public finance both in Africa and in donor countries, development finance institutions (DFIs) therefore are poised to assume a prominent role in terms of financing development and supporting Africa’s infrastructure needs.

According to Professor Nicholas Biekpe, who heads up the newly established Development Finance Centre (DEFIC) at the GSB, national and international DFIs are specialised development banks or subsidiaries set up to support government and some private sector development programmes in developing countries. In essence, DFIs invest in areas where commercial investors or banks would be reluctant to venture.

Local DFIs can play a key role in mobilising resources for underserved segments of the economy, including entrepreneurs and smallholder farmers. From this perspective, they can complement international financial institutions and commercial banks, says Biekpe.

“DFIs … aim to have a developmental impact in the markets in which they invest, alongside the requirement for sustainable returns. They are typically majority-owned by national governments and source their capital from national or international development funds or benefit from government guarantees,” says Biekpe. This, by and large, guarantees their creditworthiness, which makes it possible for them to raise significant amounts of money on international capital markets at low rates and provide financing on very competitive terms. The finance provided by the DFI is also intended to act as a catalyst to attract and mobilise the involvement of other private investors.

Some of the major international DFIs investing in Africa include the World Bank’s International Finance Corporation (IFC) and the European Investment Bank (EIB). There are also several African DFIs, the largest of which is the African Development Bank. The New Development Bank (NDB), also referred to as the BRICS Development Bank, is another prominent and more recent player. Created in 2014 by the BRICS member states (Brazil, Russia, China, India and South Africa), the main objective of the bank is to establish an alternative to the current set of multilateral institutions as a source of development finance for emerging and developing countries.

But while the institutions are well developed and active, Biekpe says that the record of DFIs in stimulating economic growth has not always yielded the desired results in Africa and other developing regions.

In a 2013 working paper for the African Development Bank group, Pietro Calice says that African DFIs have historically played an important developmental role, taking higher-than-average risks to perform their mandates and reducing credit pro-cyclicality. But, notes Calice, the track record of African DFIs is mixed, and their developmental contribution has frequently come with a cost in terms of relatively low efficiency and effectiveness. According to Biekpe, clear and focused mandates, robust corporate governance standards, ‘acceptable’ level of government control, appropriate lending and risk management technologies, and the ability to recruit and retain qualified staff, are some of the key ingredients for an effective DFI that will ultimately contribute to economic and social development.

In the face of the huge developmental needs of the continent, there are strong reasons for African policymakers to continue strengthening and modernising local DFIs, giving them the tools to better fulfil their policy mandates, notes Biekpe.

“Additionally, there is no question that African governments should not continue to depend on the Bretton Woods Institutions – the World Bank and the International Monetary Fund (IMF) – which have their own agenda based on Western interests,” says Biekpe.

He says that the recently launched Development Finance Centre at the Graduate School of Business seeks to address some of these issues within the development finance sector. “Establishing such a centre in Africa is vital for improving the functioning of these institutions which, if managed properly, can be central in the development of the continent. Among other goals, the centre seeks to improve the efficiency of the DFIs, and bolster the production and publication of research related to development finance. Despite a growing literature looking at the impact of individual investments and projects on development, gaps still remain in the research of both the micro and the macro impact of DFIs and indeed their inner workings. What is also lacking is the relevant professional capacity in development finance.” The centre will seek to bring together development finance practitioners from all over the world to encourage knowledge sharing, and promote the public understanding of development finance.

“Very often, development finance institutions have been criticised for being inaccessible to poor communities on the ground, the people most in need of their help. Improving the visibility of DFIs is, therefore, crucial if we are to make sure that they remain useful tools to promote investment and growth in poor countries and communities,” says Biekpe.

The Master of Commerce Degree in Development Finance, hosted by the centre, also plays a key role in terms of honing skills that can help DFIs perform optimally. Furthermore, because many African countries will increasingly become dependent on the DFIs to meet their developmental needs, it is important that they are staffed by people with an in-depth understanding of how these institutions function.

“It will be crucial for the continent’s future to build efficient, sustainable and well-functioning local DFIs that understand the needs of Africa and its people, and that will be able and willing to bridge the financing gap faced by the credit-rationed sectors,” concludes Biekpe.

#6 Summer 2016

How to take a young person from Italic to bold

Zuko Mbobo

Zuko Mbobo and classmates of the Raymond Ackerman Academy Class of 2011.
To prepare under-served students to become successful participants in the economy, universities have to be prepared to let go of traditional approaches and do things differently, and the Raymond Ackerman Academy at the GSB is showing the way.

Around the world, youth populations are growing, while resources and economic opportunities shrink and inequality worsens. We’ve known for a while that the old ways are failing us, and nowhere is that more true than in the world of education.

Training institutions are having to dig deep to come up with strategies to overcome their limitations and find new ways to provide hope and advancement to their students – enabling them to go on to access real opportunities and engage meaningfully in economies – to get, in short – their slice of the pie.

Not to do so invites disaster. In South Africa, we see this playing out in the #FeesMustFall and other youth protest movements including the #ThisFlag protests north of our borders. These movements herald a growing tide of dissent and dissatisfaction among the youth with the status quo. You cannot exclude the majority of young people from the mainstream economy forever and expect them not to react.

The uncomfortable fact is that young Africans are three times more likely than adults to be unemployed and many more are trapped in menial jobs by poor or non-existent education. A UNESCO study found that the number of African children and adolescents who are out of school is on the rise, and grew to 124 million in 2013.

Entrepreneurship has long been trumpeted as a solution to economic marginalisation. The (slightly patronising) narrative goes something along the lines of “teach a man to fish and you feed him for a lifetime”. But the reality is that teaching someone the techniques of running a business is only a fraction of the matter. Knowing how to balance the books is not enough to create an entrepreneur – especially when you are engaging with a marginalised young person who may not have been equipped with even basic skills such as time management.

The challenge therefore is to find a way to ‘teach’ entrepreneurship that also transforms the individuals involved.

At the Raymond Ackerman Academy, a specialised unit at the UCT Graduate School of Business, we have been grappling with this for more than a decade and the centre has emerged as a leader in this field. In 2013, it was recognised as one of a handful of institutions around the world engaging in pioneering work to put young people on a path to sustainability and was awarded a prestigious Youth Economic Participation Initiative (YEPI) demonstration grant from the Tufts University Talloires Network to expand and deepen its impact and, importantly, to research the critical factors of the model with a view to scaling these up globally.

Ross VeLure Roholt, an associate professor at the University of Minnesota specialising in youth development and one of the YEPI programme learning partners, says that the RAA is “doing something better than many” in reaching beyond the disciplinary community of the university and bringing the knowledge that it is creating to bear on the lives of young, aspiring entrepreneurs. The RAA was established 11 years ago with funding from Raymond Ackerman – one of SA’s most respected entrepreneurs. Its vision is simple enough: to offer unemployed and under-resourced youth an opportunity to develop an entrepreneurial mindset and explore and realise their entrepreneurial vision through an intensive, holistic, six-month training experience that is heavily subsidised. In recent years, the academy has expanded its offering and now includes a thriving Graduate Entrepreneur Support Service (GESS) that works with graduates of the six-month programme who are now running their own businesses.

An adjective that comes up often in relation to what the academy does is ‘disruptive’. According to VeLure Roholt, we do several things very differently to the norm. To start with, understanding that we are doing more than teaching people to fish, we take a very personcentred – and personal – approach. We invite our students and graduates to look at themselves before they look at the business they want to start or work in. They are invited to answer the somewhat awkward question of “Who are you?” as a person; as an entrepreneur; as a citizen. We also develop a lot of soft skills, because we’ve seen that when you build character and confidence – and get people to articulate a sense of purpose – they are that much better equipped, and more enthusiastic about travelling the entrepreneurial journey.

Our second disruptive intervention is to build an entrepreneurial support system around students that is notable for its breadth and depth and provides a powerful source of support and connection. This system consists of access to professional services, grant funding and personal and business mentoring. RAA graduates on the GESS initiative receive individual mentorship and also benefit from group mentoring from their peers.

The RAA’s close connection to the GSB and the Raymond Ackerman Foundation are, of course, wonderful resources and allow students and graduates to leverage off these facilities and connections.

This is something that is very close to our benefactor’s heart. One of Raymond Ackerman’s daughters recently described her father as a builder of bridges. “He is a leader who has striven to develop connections and links between people of different backgrounds; to create bonds that look past colour, language, ethnicity or religion …”

And our support system extends well beyond what is considered usual to include the provision of a small monthly stipend to help with buying the essentials like data, electricity and food. This has proven vital in taking some of the pressure off young business people in the early stages of their ventures. As anyone who has travelled the entrepreneurial path can attest, things in the early days can be tough and money is almost always scarce.

Our students are taught to think differently too. The RAA’s pedagogical model is based on the principles of public engagement; experiential learning; and critical thinking and it makes our students step into new roles. The focus is on building in each of them an entrepreneurial mindset. They are taught the skills of ideation and critical thinking and are empowered to recognise characteristics such as resilience. The expectation is that they will fail and that this should not deter them. Students quickly come to learn that we are less interested in where they came from and what they lack in life and more in where they are going, and what they can achieve. We empower them not to see limitations and challenges – but opportunities.

As Wadji Abrahams, the facilitator of the GESS programme says: “If you change the way you look at things, the things you look at change.”

But in the end it is not one approach or another that makes the difference, it is the combination of them all. We also believe that to build entrepreneurs we, the team behind the programme, need to act like entrepreneurs ourselves.

It takes passion, energy, compassion, commitment, risk taking, determination, flexibility and optimism to create and deliver programmes that foster those same characteristics in the aspiring participant entrepreneurs. What we have learned along the way is that transformation is not a one-way street or a once-off intervention – it is a relationship, a journey and it takes time.

To create impact; people and relationship hold the key. Through this approach, we have witnessed many lives changing before our eyes as young entrepreneurs turn ideas into reality and start to provide for their families. And this transformation is perhaps best summed in the words of one entrepreneur who told me simply: “The Raymond Ackerman Academy helped me discover the person that I am; it has taken me from italic to bold.”

#6 Summer 2016

Phila Water creator shows it takes more than an award-winning idea to be successful

Phila Magidigidi

Phila Magidigidi, the entrepreneur behind a new brand of bottled water sold at events and local ‘hangout spots’, had to drop out of college due to financial constraints, but his determination to succeed in business led him to the Raymond Ackerman Academy of Entrepreneurial Development (RAA) in 2014.

Magidigidi, who comes from New Crossroads in the Nyanga township on the Cape Flats, was on his way to becoming a mechanical engineer when he dropped out of his studies at the College of Cape Town because he could not afford the fees.

A learnership from Barloworld Motors to train as a mechanic helped get him back on track, but he quickly realised he wasn’t where he was meant to be. “I just knew that being a mechanic was not for me. I love talking to people, I love entertaining and I just didn’t get that from being a mechanic, so I left that world,” recalled Magidigidi in a recent interview with News24.

He moved on to’s call centre, where he earned the position of quality assurance manager, before starting Lesip Entertainment in 2014, organising events, selling branded clothes and dressing local artists.

During that year he enrolled at the Raymond Ackerman Academy of Entrepreneurial Development (RAA) at the GSB where he and his business partner were awarded Best Business Idea for their Park Free App, an app that would help people find available parking at shopping malls and other large parking facilities. But the app never materialised and shortly after, he and another business partner, Bongo Mahambehlala, won another award at a business idea pitching session in Guga Sthebe, Langa, for their sneaker cleaning business venture, Takkie Wash Kings, that operated in Gugulethu.

While running this new venture, it dawned on Magidigidi that they were using a lot of water while millions of people in informal settlements don’t have access to clean drinking water. That’s how Phila Water was conceived: “Water is life and it sometimes pains me when I hear stories of people in remote rural areas who have to compete with animals for water,” said Magidigidi when interviewed by Drum Magazine.

Very much in line with the Ackerman ideal that “doing good is good business”, Phila Water – a range of distilled, still, and sparkling water in 500ml bottles – was launched in July this year and sold 5 000 bottles within a month.

The product was in the development phase for the better part of this year and is now available for events and local retailers as well, according to Magidigidi, who’s hoping that the locals can heed this call for a healthier alternative to alcohol and fizzy dr inks.

Despite his hectic schedule as a budding entrepreneur, Magidigidi also works as a team leader at Capitec Bank where he is garnering almost as much praise for his entrepreneurial spirit inside the organisation as he is outside of it.

#6 Summer 2016

Cape Town entrepreneur chosen to lead international youth network

Nicole Mountain

Nicole Mountain grew up in one of Cape Town’s poorest townships. Today, aged just 20, she has just landed a plum job as Community Engagement Associate at Barclays Africa and last year was chosen to lead other young people via the international organisation the Young Global Pioneers (YPG), a non-profit organisation that creates networks for young talent across the globe.

With 200 million people aged between 15 and 24, Africa has the youngest population in the world and increasingly, societies are looking to the youth to provide direction and leadership for the continent. It is a role that Mountain is embracing enthusiastically. During her journey with YPG, she received an Honour Award for participating at the 2015 International Youth Entrepreneur Summit in Xi’an, China – a moment she still says gives her “chills” to remember.

“I never imagined I would be able to represent my country as I did,” she says.

The mission of Young Global Pioneers is to ‘ignite global curiosity, empathy and aspiration in the next generation,’ explains Mountain. It does this by shaping talented youth into global-minded, responsible leaders.

“My values correlate strongly. I’ve always been inquisitive and motivated to be an agent of change through community service,” she says.

“Being voted to lead the YGP network means that I have an opportunity to show leadership on a global scale, and challenge myself during the process. My role is to ensure that the group remains closely knit and continues its global support system with regards to global insights and inter-cultural learning.” Despite growing up in Bishop Lavis, one of the country’s most disadvantaged areas, there is no trace of self-pity in Mountain’s approach to life.

“South Africa is a developing country, and we do face a lot of adversity, but once you open yourself up to the rest of the world, you get a real sense of responsibility. Once that is instilled in you, that is a real motivation; it opens people to being agents of change. I really support that.”

This sense of responsibility is a major driver for Mountain. Her own desire to be a social entrepreneur was honed at the Raymond Ackerman Academy (RAA) where she was a student in 2015, which allowed her, she says, to cut her teeth in the academic and business world and gave her the opportunity to travel to China and ultimately led to her new role.

That’s why one of her main, though tongue-in-cheek, pieces of advice to other aspiring entrepreneurs is to enrol at the RAA. “Apply as soon as possible!” she says with a smile.

#6 Summer 2016

Universities and others should link divestment with active engagement

Climate Revolution

The global divestment movement is gaining steam, with investors, including city councils (e.g. Sydney), pension funds (e.g. Norwegian Government Pension Fund), and universities (e.g. Stanford) publicly withdrawing their assets from coal, oil and gas companies, or ‘fossil fuel companies’. The debate is reaching South African universities too.

At a recent panel discussion at the GSB, I argued both for and against divestment: the broad principle is sound, but its application needs more sophistication.

The divestment campaign is part of an activists’ strategy to bring about reductions in greenhouse gas emissions. It counteracts an entrenched economic and institutional system with vested interests. Fierce resistance is to be expected.

Historical analogy can be helpful in this regard. Consider the abolition movement opposing slavery. The moral case for countering climate change is arguably similarly strong. Resistance to this movement also highlighted the expected economic costs. As it happened, abolition gave rise to innovation and economic advancement. (Though it’s also worth remembering that slavery is still with us, albeit less overtly.)

This analogy helps counter claims that investment decisions are not political, as argued by the president of Harvard. It is disingenuous to say that investments are made purely for economic reasons, as long as they are legal. Laws change, and norms play a role too. Just because slavery was legal does not mean that it was morally or economically right.

A second argument against divestment is that it will lead to reduced returns and higher risks for the investors and lower economic growth. The abolition experience is telling in this respect too; reliance on fossil fuels breeds the kind of intellectual laziness that slavery once did. Freeing ourselves from this laziness can unleash much more creative and potentially exponential gains from renewable energy and other technologies and innovations.

Some point to the specific South African circumstances, but even in a small market like South Africa, alternative companies can be added to the basket to maintain risk-adjusted return prospects. The economic foundation for divestment is further strengthened by a glut of fossil fuels, as evidenced in low prices, which will only grow when the Paris agreement is translated into targets in 2020.

A third counter claim is that divestment won’t make a difference; there will always be others who will take your place to invest in fossil fuel companies. But of course this depends on the proportion of participants, which is rising rapidly. More importantly, it is not primarily the economic impact on the fossil fuel industry that matters – it is the symbolic impacts, the stigmatisation. Some belittle symbolic impacts, but they can be very important. For instance, ask Shell about employing skilled engineers after the Brent Spar and Saro-Wiwa debacles in the 1990s.

So there is a compelling moral economic, and environmental case for divestment. However, the current approach of the divestment campaign is misguided. To paraphrase Einstein, it is trying to make things as simple as possible to enhance its impact, but in so doing it is making things too simple. Climate change is a complex problem and focusing on just one lever of change while disregarding the broader picture can be detrimental.

For a start, an important part of the divestment movement’s simplification process is to target a specific group of ‘fossil fuel companies.’ But where would you legitimately draw the line? It will necessarily involve some arbitrary choices. Moreover, divesting from oil companies will probably mean investing instead in, say, banks, which then pass the money onto those same oil companies. A more inclusive, holistic approach to strategic change in a broader range of businesses (especially finance) is required.

Second, there are likely to be unintended consequences, including possible job losses, especially if divestment decisions are implemented abruptly. Companies and sectors need to be given signals that changes are going to be made over a specified period, so that adaptations can be made as much as possible. Such adaptation will include, for instance, reskilling of workers.

Third, despite clear signs of unscrupulous behaviour among some of the targeted energy companies, it is unhelpful to paint companies with a single brush. Specifically, investors lose influence when they divest from one day to the next. As part of a gradual divestment strategy, an active shareholder engagement approach should be applied to cajole companies – those identified as ‘fossil fuel companies’ and others, especially banks – into making a broader array of shifts.

Finally, any organisation opting to include divestment into its strategy must get its own house in order. It would be hypocritical of UCT to divest from oil companies without making much more committed changes to energy consumption and generation on campus and members’ travel arrangements.

In sum, UCT and others should develop a hybrid approach that connects an active shareholder engagement strategy with clear expectations on a range of key social, environmental and governance issues. The parameters for such engagement exist in the form of the UN Principles for Responsible Investment, to which we should subscribe. But this engagement needs to be beefed up with much clearer expectations, especially on greenhouse gas emissions, and if such targets are not met, we shall withdraw funds. Moreover, we should do all this not just in a transparent manner, but vocally, so that our message is loud and clear: our research shows that current responses to climate change are too meek and we’re putting our money where our mouth is.

#6 Summer 2016

Do as I do, not as I say

Obama 09

The most important question we need to ask of our leaders is not what they have achieved themselves, but who have they helped to get ahead.

ONE of US President Barack Obama’s lasting legacies will undoubtedly be his “My Brother’s Keeper” initiative, which he launched in 2014.

Obama, whose term of office will end in January 2017, has framed the project as a call to action for every American to take responsibility for the youth and to recognise that “my neighbour’s child is my child”.

Many have responded to his call, announcing a range of new initiatives to address the challenges facing youths, especially black youth. And although it is too early to gauge how successful the movement has been, early indications are that it has been well received. At the very least, it has brought the issue of youth mentorship to the fore.

Such initiatives are woefully lacking in SA, and elsewhere in Africa amid clear signs that the youth are growing more disillusioned with their leaders; a situation that is perhaps most vividly now playing out in the #FeesMustFall protests, which analysts have said represent much more than a struggle over university fees. They are a proxy struggle for the frustrations faced by many youths who are unhappy with the direction the country is taking, their living conditions and the unemployment crisis.

Undoubtedly, the recent local government elections also demonstrated young people’s anger with the poor leadership in the country, with many choosing not to vote. Apathy has long been long thought to be the cause of low voter turnout among young South Africans, but research by the Institute for Security Studies (ISS) published in July revealed that this apathy is actually disillusionment with the current political landscape.

“Young people are growing increasingly frustrated,” said ISS researcher and author Lauren Tracey. She observed that corruption is a major disincentive to voting.

A report by trade union Solidarity also highlights the leadership deficit in the country and details cases of corruption that have grabbed headlines in SA in recent times. It points out cases of bad leadership in terms of integrity, accountability, and transparency and details cases such as the false qualifications scandals and corruption scandals that have cost the taxpayer much more than the R246 million spent on the President Jacob Zuma’s home in Nkandla. According to the Institute of Internal Auditors of South Africa, R700 million was lost due to corruption during the two decades following the dawn of democracy. What kind of example are the leaders involved in these scandals setting for the youth? Should a country that has leaders setting bad examples in almost every sector expect the next generation to do good and build a better society? How can, for example, Zuma talk about integrity and fighting corruption when he has been at the heart of it?

Many African cultures place great importance on respect for elders. Young people are expected to know their place and to respect the wisdom of those rich in life experience. Yet, if they see the elders always doing wrong and being irresponsible in society, it seems absurd to assume that they will show respect and act in a responsible manner themselves.

It can be argued that behaviours are contagious and when young people see leaders and potential mentors doing wrong, it bodes ill for the future of the society. Robert Zipplies, co-founder of Common Cause South Africa, notes that human values and behaviours are mostly unconscious and acquired through the sum-total of a person’s historic and ongoing lived experiences – upbringing, peer groups, jobs, education, culture, government policies and media, among others will shape what we do.

Therefore, if we are to build a successful society it is imperative and urgent that leaders begin to change and set good examples for youth to follow, he argues.

More than that, leaders must be playing an active role in mentoring the next generation. A popular African proverb says: “It takes a whole village to raise a child”. This means that everyone in society, including leaders in business and politics, is responsible for creating moral character is society. Mentors play a crucial role in helping young people access opportunities and skills. However, often public investment in mentoring is negligible.

David Shapiro, president and CEO, MENTOR: The National Mentoring Partnership in the US, and Nancy Altobello, global vice chair, talent, EY, observed in 2015 that the business case for more corporate engagement in youth mentoring is clear. It builds business acumen for employees, including experience in managing and developing talent.

“The investments in quality youth mentoring made by companies are direct contributions to the future strength of … communities … They connect young people to the powerful asset that is mentoring, to opportunity and to success,” Shapiro and Altobello wrote.

Because of Africa’s late demographic transition – the population is young and will remain so for a long time. Youth are therefore, in a very real sense, the key to the future of the continent. As Microsoft founder and philanthropist, Bill Gates noted recently: “In the next 35 years, two billion babies will be born in Africa. By 2050, 40% of the world’s children will live on this continent. Economists talk about the demographic dividend. When you have more people of working age, and fewer dependents for them to take care of, you can generate phenomenal economic growth,” said Gates.

However, the poor leadership and mentorship gap that currently exists poses a serious threat to the future of the youth on the continent. To head off the disaster that is looming the leaders of today urgently need to change track. They need to stop talking and lead by example and they need to reach out a helping hand to the next generation the way. We need to build a country and continent where the most important question you can ask of a leader is not what they have achieved but “who have you helped to get ahead recently?”

#6 Summer 2016

High heels and hard hats: How to lead in man’s world


Farana Boodhram has made her mark in the male-dominated fields of mining and transport in South Africa and has been recognised for her achievements by being selected for a prestigious Vital Voices leadership fellowship.

Mining and transport entrepreneur Farana Boodhram, jokes that it has been suggested that if she were to start a blog she would have to call it high heels and hard hats – such are the contradictions of being a woman working in an industry dominated by males in South Africa.

“I love my heels, and embrace the fact that I am a woman,” says Boodhram, founder and CEO of mining company Avita Mining and transport organisation, Talmin Logistics. But her daily reality is likely to find her down a mineshaft as often as in a boardroom.

At Avita Mining, Boodhram contributes to community development by employing and training people from underprivileged communities in the mining belt of Mpumalanga. She is also involved in various projects that empower women in mining and was responsible for designing and patenting a world-first safety garment that women can wear underground.

“Existing overalls leave a woman very vulnerable as they virtually have to remove the entire garment when utilising ablution facilities underground,” she explains. Her overall has been customised in order to maintain the dignity of the user.

It is this passion for empowering women and communities that has been the driving force behind her career as an entrepreneur – that and a belief in turning ideas into reality. After 11 years of working in corporate banking, the birth of her child inspired her to start her very first business, supplying baby goods and products to businesses and individuals in the Mpumalanga area.

Later, the foundation of her transport and logistics company – Talmin Logistics – came about when a local mine withdrew its transport allowance for employees. She stepped in to help get personnel to their place of work in an affordable and efficient way. The company rapidly expanded when it won a contract for the transportation of coal to various Eskom power stations.

These achievements brought her to the attention of the international Vital Voices development agency and led to her being selected as one of only 60 women in the world to be awarded a prestigious VV GROW Fellowship earlier this year.

Vital Voices is a global NGO founded by US presidential candidate Hillary Clinton, with a mission to “invest in women who are changing the world.” The GROW Fellowship, now in its fourth year, works like a business accelerator for women entrepreneurs – particularly small and medium business owners working in emerging markets.

“These businesses and the women who lead them have the potential to be a powerful force for building prosperity through GDP growth and job creation,” states a press release on the Vital Voices website. “But while the potential for economic contributions are significant, women business owners face challenges in accessing the support services they need to grow, such as access to networks, training, financing and markets.”

The one-year intensive programme, which got under way in June, aims to plug this gap and includes customised business skills training, technical assistance, leadership development, and access to 12 business management and leadership courses through Harvard Business School Publishing’s online platform, Harvard ManageMentor (HMM).

Boodhram is no stranger to investing in her leadership potential, having just completed an Executive MBA at the GSB. She enrolled on the programme thinking that she could use the qualification to further enhance her career – “after all, an MBA drastically increases credibility in any industry”. But she soon realised that the value of this prestigious degree was much more than the piece of paper she would receive. “The Executive MBA has been a unique experience that has allowed me to be pleasantly surprised by what I found on the other side of my self-imposed barriers,” she says, explaining that it is different to a traditional MBA because it takes a more holistic approach, incorporating mindfulness as well as design thinking into the concepts of leadership and business.

What she liked especially was the recognition of Emotional Quotient (EQ) in matters of business. “It is rare to find a course that acknowledges the power and acumen of emotions, as well as instinct in business,” she says.

Following your instincts and staying true to your values and who you are, she believes, are key to personal excellence and success in any industry, more especially if you are a woman working in a male dominated industry where too often, women get misled into thinking that they have to “be more like a man” to succeed.

Boodhram is unashamedly herself, high heels and all, and her values and ethics shine through everything she does. It is illustrative of who she is, for instance, when she had to travel to Cape Town for her twoweek modules at the GSB during her MBA, she would cook meals for her family and freeze them, to ensure that there was a home-cooked meal for them every day while she was away. She does not see this as a sacrifice on her part. “I only get one chance to be a great mother and wife and it’s a challenge I want to succeed in,” she says.

“My family are my first priority. I will drop anything in a heartbeat for them. For me, there was never a choice between my family and having a career. I am of the belief that if you keep your ethics and morals right, everything else falls into place.”

Boodhram says that having a strong inner compass (and a positive mental attitude to boot) can also help you overcome obstacles and challenges, both in your personal life and career. And she certainly has had her fair share of obstacles.

“But those have been my greatest learning lessons, the ones that have forced me to swim,” she says. And with the VV GROW Fellowship, she is hoping to learn a few new strokes.

“I am sure it is going to be a fantastic learning experience,” she says.

#6 Summer 2016

A picture paints a thousand (legal) words

Robert de Rooy

Cape Town lawyer and EMB A alumnus, Robert de Rooy, has pioneered the world’s first picture-based legal contract in a bid to enable greater legal literacy – especially among those who cannot read.

Most people don’t bother to read the small print of their legal contracts because they struggle to understand the jargon; now imagine how it must feel to be confronted with a legal document when you are not able to read at all!

With around 8% of South Africa’s population still illiterate, and many more semiliterate, Cape Town lawyer, Robert de Rooy decided that something needed to be done to help such vulnerable people to navigate the complex world of contracts and legal documents. From there, Comic Contracts – the world’s first picturebased legal contract – was born.

“Conventional contracts have always been written by lawyers, for lawyers. Trying to find a way around the legal language so that any person, regardless of their level of literacy, can understand the agreement, has been a challenging process.”

“Conventional contracts have always been written by lawyers, for lawyers,” De Rooy says. “Trying to find a way around the legal language so that any person, regardless of their level of literacy, can understand the agreement, has been a challenging process. Comic Contracts are contracts, where the parties are represented by characters, pictures illustrate the terms of the contract, and the parties sign the comic contract.

“The purpose is to improve the relationship between the contracting parties, by creating a more transparent agreement, so that both parties know what they can expect from each other.”

De Rooy points out that marrying the two seemingly opposite ideas of contract language and creative illustration, has required a whole new way of thinking. And it was while studying his EMBA at the GSB that he was given the impetus to do this.

“I’ve been a lawyer for nearly 20 years now. I also have a background in conflict resolution, and this idea started while I was doing my EMBA. Our programme placed a lot of emphasis on different conceptual models and especially systems thinking, including rich pictures,” he says.

“My final dissertation was on the relationship between the way that people visualise their company’s business models and conflict in an organisation. During that time, I started thinking about the relationship between contracts and conflict – because every conflict in a way, is an agreement gone wrong.

“Systems thinking provided two key insights in the development of the idea of comic contracts, focusing on the relationship instead of the parties; and the possibilities of intervening in the system the produces a problem like conflict ‘upstream’ from the problem.”

De Rooy discovered while he was researching this, that there is a group of lawyers and academics who were looking to visualisation as a solution to improve business relationships.

“But they always emphasised the fact that the visualisations are only an aid in interpreting the contract and that it does not have legal force. This bothered me a lot because low literacy individuals would then still be legally bound to the text, the part of the agreement that they could not read or understand! It made me ask myself whether it would be possible to create an agreement using only pictures.”

He worked on the idea on and off for a couple of years, employing cartoonists and corresponding with colleagues, as a result of which he was invited to present the idea at the International Contract Simplification Conference in Switzerland in March 2016, hosted by Swiss Re.

“At that point I did not have a complete contract to present as an example of my idea, so one of my clients, ClemenGold, agreed to commission one of these contracts for their fruit-pickers being a category of their employees with low literacy levels. They gave me the budget to develop a professional quality example of the concept.

“ClemenGold subsequently signed these contracts with nearly 300 of their employees and feedback has been only positive,” he says. The concept also caused quite a stir at the Switzerland conference and De Rooy was subsequently invited to present it at the International Association for Contract and Commercial Management in the US this October. “Apart from all this, I still have to earn my living as a lawyer, spend time with my children and find time to cycle,” he says with a smile.

#6 Summer 2016

What it takes to connect South Africa

Rani with some of his customers.

Rani with some of his customers.
Self-proclaimed urban technologist, Luvuyo Rani, GSB alumnus and co-founder of Silulo Ulutho Technologies, a company that aims to inspire and educate marginalised South Africans through technology, is teaching the business world a thing or two about how to build a company from the ground up in a township ecosystem.

Imagine being a student without access to the internet? Impossible, right? Yet for Luvuyo Rani, this was a daily reality. Living in Khayelitsha and studying in Cape Town in the 1990s, he would have to travel for an hour at least to get to a computer just so that he could check his email.

Now this was more than two decades ago. And while it would be nice to believe that things have improved for township communities in the past 20 years, the reality is that too many South Africans still struggle to get online. According to internet live statistics, just over half of South Africans (52%) enjoy the luxury of internet access at home. And the further you are from the centre, the less likely you are to be connected. A 2014 Statistics South Africa report found that just 2% of homes in South Africa’s rural townships had internet access. If you count mobile phones and internet cafés, the numbers trudge upwards to around 20%. This statistic translates into significant problems down the line, since education, the likelihood of employment, and the option of further studies are increasingly becoming tied to an individual’s computer literacy and internet access.

It was these numbers and his personal frustrations that drove Rani, now an award-winning entrepreneur, to take his first step into the world of business. “Before I started the business, I was a teacher. It was back when Outcomes Based Education had just started being introduced. Teachers and students alike started needing access to computers and no one was really providing for that demand,” Rani says.

“We started off by selling second-hand computers to teachers in the townships and eventually opened an internet café in Khayelitsha when we realised that so many people actually didn’t know how to use the technology. Most people we encountered, of course, didn’t have much faith in what we were doing, but we could see that there was a real need and a real opportunity for growth.”

Rani says that they started the internet shops as a way of giving people in underserved areas access to computers. “School learners in particular would make use of the computers and through that we helped the students become computer literate,” he remembers.

Ten years down the line, Rani can claim to have helped more than 25 000 such youngsters. His company, Silulo Ulutho Technology, which he co-founded with brother Lonwabo, has expanded dramatically from a single internet cafés to a R30 million company that offers computer training courses, internet cafés, business centre services and IT retail and repair. And the awards and recognition for these achievements are stacking up on Rani’s shelves. Most recently, he was named the 2016 Schwab Foundation Social Entrepreneur of the Year.

Rani credits much of his success to his involvement over the years with the UCT Graduate School of Business. “In 2006 I was a student at the GSB (the Association Management programme). That course was definitely my break into serious business. I used to tell everyone I met there that I ran a spaza shop, but I was planning to run an empire someday. I also continually based all my business cases that I was doing for the course on my own company.”

The course, according to Rani, shaped his thinking. “I also managed to get a loan of R26 000 through the Centre for Innovation and Entrepreneurship while I was there, allowing me to buy the computers that I was renting at that stage, and take my business to the next level,” Rani continues. The next level involved expanding the internet café into more of a business centre. “We based the whole business at that stage on internet access, education, business services and mobile,” he says. They then bought a bakkie and started to form new connections and partnerships and developed a franchise model to help grow the business and expand beyond the limits of Khayelitsha. It has since spread to 40 centres in the Western and Eastern Cape that together employ more than 180 people. “We are rolling out to Gauteng now as well,” Rani adds. “And we plan to grow the business outside of South Africa’s borders too.”

What makes Silulo’s success even more significant, is the fact that many similar initiatives to bring connectivity to South African townships have been slow to take off. This is true, not just for initiatives like the free WiFi projects in Kayelitsha and Soweto, but also for other products like short-term insurance and other financial services (a study by KPMG reveals that only 15% of South Africa’s total population has short-term insurance).

Rani notes that a sound business plan is only one small part of what it takes to launch any such project in South Africa’s underserved communities. “We are certainly not the first business operation to try and cater for the underserved and rural markets, and I believe that other companies have suffered setbacks because they are not in tune with what these communities need from a business. We have made a success of it so far because we understand the community in which we work,” he explains. “Small communities such as these do not support businesses if they do not have a good understanding of what they do and their motivations. You earn the trust of customers in rural areas if you can easily communicate why you are there, and you can show that your motivations are pure,” Rani says.

Rani uses an interesting case to make his point. “A while ago our business in Khayelitsha was robbed. What struck me about that was the fact that only our office was robbed, and the computers and equipment that are used to serve the customers were left untouched. We have also received a lot of support from the community that we operate in, which I believe is due to the fact that people are actually realising that they can and should depend on the types of service that we provide,” he says.

Rani adds that being able to show results has also been important. “Many of the students that have been trained and helped by Silulo Ulutho Technologies have found employment as a direct result of becoming computer literate. From call centre operators to IT professionals, we can actually show the community how we have helped people that they know. That takes away a lot of the suspicion with which a new business is sometimes viewed,” Rani adds.

As a final point, Rani also notes that this lesson is relevant to companies that are looking for new business in the rest of Africa. “We also envision Silulo Ulutho Technologies venturing into other African countries in the future and I believe that the lessons we take from operating in South Africa’s underserved communities would be valuable to any business that looks to create and tap into new markets on this continent,” concludes Rani.

#6 Summer 2016

Paying it forward to change the nature of leadership in Africa

Graduates at the GSB’s June 2014 Graduation Ceremony.

Graduates at the GSB’s June 2014 Graduation Ceremony. Photo: Bev Meldrum.
How does one ever say thank you for the gift of a great career? By giving others the same opportunities, of course, say the founders of the GSB Foundation, an independent trust that has been set up to raise funds to expand access to education at the UCT Graduate School of Business (GSB).

Late in September, Finance Minister Pravin Gordhan called on the country’s leaders to rededicate themselves to building democracy in South Africa in order to regain the trust of the global community.

This timely reminder applies to business, NGO and political leaders alike, who are called upon to rally to better the lives of South Africans. Against this backdrop, the GSB celebrated its 50th birthday in 2016. Widely regarded as the top business school on the continent, one of its core functions has always been to produce strong leaders. And in the current climate – economic, political and social – the need for ethical and informed leaders from all walks of life to take their place in society has become an urgent matter.

Enter the GSB Foundation, an independent, registered trust, NPO and PBO that was established in April after receiving the blessing of UCT Council late last year. Based at the GSB campus in Cape Town and operating internationally, the GSB Foundation fundraises for and governs an investment fund, which is managed by Investec. The trustees consist of representatives of UCT, the GSB and GSB alumni.
The brainchild of alumni and long-time business stalwarts Tiger Wessels, Stewart Cohen, Ian Kantor and Peter Thorrington-Smith, the foundation seeks to raise the calibre of leadership on the continent, by giving talented students greater access to a world-class education at the GSB, regardless of their financial circumstances.
Specifically, it is raising funds to support four key areas at the school: scholarships; faculty; research; and facilities. At the same time, candidates benefiting from foundation funding will also have access to mentorship support from the school’s powerful alumni network.

The four founders, who were all part of the MBA Class of 1969, came up with the concept after discussing the extent to which their studies at the GSB were formational. “I would have made a very poor engineer,” jokes former UTi Worldwide president Thorrington-Smith, who had indeed studied engineering at undergraduate level. “But once you have that opportunity in business, the GSB has not only given you the knowledge, but the confidence to do that job well. There were lots of opportunities – so many people from the school did well in business. As we were gathering at the 45th reunion in 2014, we all recognised how fortunate we were.”
At the time of his studies, recalls Thorrington-Smith, he received a loan of US$750, which he paid back over two years.

For Wessels, co-founder of UTi Worldwide, there was a strong need to pay forward some of the advantages he had enjoyed at the start of his career. “The [endowment] fund was an idea that was conceived by a couple of guys that the time had come to put something back into the business school,” he says. “The school had given us so much, for which we are extremely grateful. As a token of thanks, as we get into the later stage of life, it was important to put some of that back for those who are still to come.”

It was time, the founders felt, to “get the ball rolling” – and, says Wessels, there were a “great number” of graduates who felt exactly the same way.
To some degree, they say, their own classmates have stepped up to support the endowment; now they have thrown open the challenge to other MBA classes to either club together to match, or better, the Class of 1969’s donation – or to make an individual contribution.

Retailer Stewart Cohen, who co-founded the Mr Price Group Limited, says that giving back is an essential part of redress on the socio-economic landscape. “South Africa has its past, its apartheid past,” he says. “We need to pay back for the advantage that some people have received. And the area to give back is [in] education.”
Particularly business education will make a difference, Cohen believes. “We need more diverse MBA classes and they will become the business leaders and entrepreneurs of tomorrow. We need MBAs in our parastatals and even in government. That will make a huge impact over time,” he stresses.

Part of the challenge that lies ahead, says Cohen, is to wake up graduates in South Africa to a culture of giving back that is seen in other parts of the world; where business school graduates “give back in spades” where they can. “In South Africa you don’t see this same commitment to supporting those who come after and this needs to change,” he says.

And, says, Investec co-founder Ian Kantor, it is not just a moral obligation that should motivate graduates to step up to contribute. He points out that business leadership is simply no longer expected to operate in the same way and that the need to train business graduates with a wider understanding of their role in developing society is becoming critical. The GSB has already established itself as a leader in this field and with the right support, it can continue to train and equip talented young men and women to go out and make a difference in the world.

“The current interest in social entrepreneurship implies that 35% of GSB students will make a social as well as an economic impact – that is truly inspiring,” he says. Social entrepreneurship has already made a substantial impact abroad and locally; in the UK, the most comprehensive report into the state of the sector reveals that social enterprises are thriving, outperforming their mainstream SME counterparts in nearly every area of business: turnover growth, workforce growth, job creation, innovation, business optimism and start-up rates. University World News has argued that increased social entrepreneurship will be a key factor in beating corruption across Africa, while the Global Entrepreneurship Monitor (GEM) report has argued the same. The foundation’s multi-pronged approach addresses a number of related problems: in the short term, it increases access to education, while easing financial stress for its beneficiaries, while the broader crisis of tertiary education is tackled at higher levels. And in the long term, it potentially contributes to job creation as well as decreasing long-ingrained patterns of inequality.

Research has shown, over and over, that diversity positively impacts organisations of all flavours; it is therefore essential that leadership in South Africa must reflect greater diversity. This will only improve the role that management plays in business, NGOs, parastatals and government. In short, the foundation is a platform that allows alumni – not just the founders – to leave a lasting legacy for future generations, tax efficiently.

“How does one say thank you for an incredible gift you have been given? I think the right way to say thank you is to invest,” concludes Thorrington-Smith. “Given what the GSB has done for me, it’s great that there is now a fund to which I can contribute in order to express my thanks – a fund that will allow bright and inspired entrepreneurs without the necessary financial resources to enjoy the GSB experience and make a difference in the world. There is no doubt that this can be a life-changer for talented young men and women.”

To learn more about the GSB Foundation or to find out how you can make a tax-efficient contribution, please visit

#6 Summer 2016

Feats of Endurance

3 Peaks awards

This October several of the GSB’smore determined students, alumniand faculty took on the arduousThree Peaks Challenge. The traditionis one of the oldest of the school –stretching back to the late 1970s.

In 1979, GSB MBA student, Michael Main decided to formalise the school’s ThreePeaks hike into a formal and timed event.Mike became the official GSB record holderof the hike completing the 17km route in3 hours 39 minutes. Since then, the schoolhas turned this test of determination into aregular tradition, with students, alumni andfaculty taking to the hills en masse at leastonce each year ever since.Starting in front of the GSB’s former campus(just above Marquard and Tugwell residences inRondebosch), the route leads to the top of Devil’sPeak via the treacherous ‘Knife’s Edge’, and thenacross the ravine, up onto the ‘real’ Ledges ofTable Mountain and on to Maclear’s Beacon. Fromthere, participants must descend the infamous andexcruciating Platteklip, and continue along TafelbergRoad – crossing Kloofnek Road for the final ascentup Lion’s Head.

Long-time alumni supporter and sponsor of the eventPeter Major, director of mining at Cadiz CorporateSolutions, says that while there are certainly moreextreme and challenging events nowadays, the ThreePeaks has a special place in the GSB’s calendar. “Idon’t think we pretend that it is an overly difficult orprestigious course. What it is, is a challenge exclusiveto the GSB, and it is definitely held very close to thehearts of students and alumni alike.”

Peter has run the race 22 times, winning it on a staggering 15 occasions – so far. He was the firstman home in the latest run, a feat that is particularly noteworthy because he had seemed to have hungup his running shoes these past few years. But hesays that, despite a messy motorcycle accident a few months ago, he was keen to give it one more go.After all – it is the GSB’s 50th anniversary year!

“Memories can really fool you” Peter says. “You always ‘remember’ Three Peaks as being easier thanit actually was. And so when you do it again – bam– you get the shock of your life. You’d think I would learn from all these years. After all – isn’t that why we did the MBA in the first place? To learn to use our head – instead of our body?”

While Peter is not the only person with a long history of supporting – and winning – the challenge there is, as former GSB Alumni Relations Manager Linda Fasham, puts it, no person who knows more aboutthe history and running of the event. He held the record of 2 hours and 40 minutes until it was broken by MBA Paul Donald in a time two minutes quicker.

According to Peter, those who finish the race are rewarded with a beer, a commemorative T-shirt,a firm handshake, a pat on the back and amazing lifelong memories! “Oh – and the unwritten rule is that no student who completes Three Peaks ever fails their MBA,” he says.

The top man and woman home also get a trophy – a bronzed running shoe – each from a pair of Peter’s winning footwear that he donated for the purpose some years back.

This does not mean that participants don’t take it extremely seriously, he adds. “I remember back in 1984 when Mike le Plastrier and I ended up tied for first place. This, of course, was not good enough for the very competitive Mike and so one afternoon about three weeks later he ‘out of the blue’ challenged me to a rematch – just so we could settle on a clear winner,” Major recounts. “I lost that one by about 100 metres. Dammit!”

“This adventurous spirit comes out again every year,and each year we see a new class with some new and different ‘spark plug’ student(s) intent on making‘their’ Three Peaks more exciting and memorable than the last. Most years I hear comments from the faculty, telling me that they have a super ‘special’,dynamic and motivated class ‘this year’.”

Twenty five people braved the mountain this October to try their luck. Peter points out that it was a relatively tough run: “The path was probably the most overgrown and unmaintained it has ever been. It is very brushy and full of blister bush.Horrible!” Fortunately, the weather which is always unpredictable – and can make the trek a real ordeal– was very favourable.

Coming in tied second place after Peter were Wouter Vink and Ryamond Grieg. The first woman home was Ashleigh Crosland.

#5 Winter 2016

5 DECADES of excellence and achievement

The GSB has over the past 50 years charted its own distinctly African path. In the sections that follow, we highlight the many milestones along the school’s long and interesting journey and celebrate the people who have helped make this institution the success that it is today.

These are the directors of the GSB that made it all possible:

  • Bob boland, 1966 – 1972
  • Meyer Feldberg, 1972 – 1979
  • John Simpson, 1979 – 1986
  • Paul Suclas, 1987 – 1989
  • Frank Horwitz 1989 – 1990
  • David Hall, 1990 – 1992
  • Kate Jowell, 1993 – 1999
  • Nick Segal, 200 0 – 2003
  • Frank Horwitz, 2004 – 2009
  • Walter Baets, 2009 – present

Decade 01 : 1966 – 1976

Kate Jowell meets Lord Fraser of Lonsdale (left), the well-known British peer, at a lunch in his honour. Meyer Feldberg in the middle.
In the early 1960s, renowned economist and UCT Dean of the Faculty of Commerce, Professor William Hutt had a vision. He wanted to create a South African business school; one that would be as good as the thriving institutions in the US, UK and Europe, and able to offer a full-time MBA, but more accessible to the South African business community. In 1964, the GSB opened its doors in Orange Street with the first class of part-time MBAs. The school took up residence at the Rondebosch campus in 1966 and the first full-time MBA class was launched.

“I came to Cape Town in August 1965 with the dream of developing a multi-racial Harvard Business School in Africa.”

– Dr Bob Boland, founding director of the GSB.

Meyer Feldberg puts an early class of MBAs through their paces.

Early MBA students (left to right) A B Hall, J B Robb, J F Payne and K G Marshall-Smith at the school’s original Rondebosch campus.

Decade 02 : 1976 – 1986

A 1977 survey showed that within 10 years of graduating from the GSB MBA, over 25% of students had become chairpersons, managing directors and general managers. By 1979, this figure had climbed to 36%. Part of this success may be ascribed to the acumen of then-director, Meyer Feldberg, who strengthened ties with the business community and redesigned and refreshed academic programmes. In the 1980s, director John Simpson saw a leadership position for the GSB, not only in South Africa, but in southern Africa and understood how it could participate in the advancement of all people of the region.

The Centre for African Management was established in the1980s as an independent wing of the GSB aimed at developing managers from diverse backgrounds. Pictured here (l to r) are the staff; Fatima Allie, Linda Human, Angus Bowmaker-Falconer and Bulelwa Dywili.

Members of the Programme for Management Development (PMD) class of 1984 get down to their group work. The GSB pioneered the concept of group learning in South Africa.

Decade 03 : 1986 – 1996

The late 1980s and early 1990s were a time of unprecedented turmoil in South Africa and a time of exciting change for the GSB, too. As the country embarked on its journey towards equality, the GSB launched the Associate in Management (AIM) programme – allowing working black South Africans who might not have had access to education under the apartheid regime to achieve a postgraduate qualification in business. During this period, the GSB moved to its current home – the Breakwater Campus at the V&A Waterfront. This iconic building was formerly a political prison and also a hostel in the apartheid era and its transformation into a centre of knowledge and learning is symbolic of the transformation of the country as a whole.

“Companies now have to face issues far broader than fair wages and grievance procedures.”

– Kate Jowell, sixth director of the GSB.

Top AIM students from the Class of 1993, Zhang Dongmei and Bhekisisa Nkosi, chat with associate professors Dunn and Bradfield.

The new GSB campus is opened by Sir Harry Oppenheimer (far right) with Professor David Hall and Dr Stuart Saunders.

Decade 04 : 1996 – 2006

As the millennium approached, with environmental and sustainability concerns growing, it was clear that a new approach to business education was needed – especially in emerging markets, where economic disparities were greatest. The GSB was determined to drive this process. In 1999, the Executive MBA was launched – an applied learning experience for executives and leaders that broke the mould of a traditional MBA. The GSB also signed an exchange agreement with the prestigious Columbia Business School in 2000, becoming the first business school in South Africa to do so. The GSB was a pioneer in this respect, leading the charge for numerous exchange agreements across the globe, as well as the establishment of an international office at the GSB.

“As is so often the case, we in South Africa have the opportunity to pioneer new approaches that bridge the developed and developing worlds.”

– Nick Segal, the GSB’s seventh director.

Mother and daughter Thami and Nina Tshandu are both graduates of the GSB AIM programme (2000 and 2001 respectively).

Director of the GSB, Nick Segal, chats with then-speaker of the National Assembly, Frene Ginwala, at the GSB Annual Dinner in 2001. Former UCT Vice-Chancellor, Professor Njabulo Ndebele looks on.

Decade 05 : 2006 – 2016

In the past 10 years, the GSB has continued to ascend the ladder of professional excellence – while beefing up its commitment to local relevance. In 2013, the school achieved coveted triple-crown accreditation, meaning that the world’s most significant accreditation bodies: AMBA (Association of MBAs); EQUIS (from the European Foundation of Management Development); and AACSB (Association to Advance Collegiate Schools) endorse it. Under the guidance of director Walter Baets, the school has increased its focus on substance and relevance; moving steadily towards a stronger emphasis on adding value and achieving sustainability through social innovation in business.

“There is a desperate need for a new way of thinking, a new way of doing and a new way of being in business.”

– Walter Baets, current GSB director.

MPhil student and Bertha Scholar Francois Petousis in conversation with entrepreneur, Tobela Kilimba about social innovation startup, Lumkani.

Archbishop Desmond Tutu speaking at the GSB Distinguished Speaker’s Programme in 2014.
#5 Winter 2016

Towards a new MBA: Has the current model failed us?

Towards a new MBA.

A meeting at the MTN Solution Space, an innovation and entrepreneurship hub on the GSB campus that embodies a new approach to business learning.
As South Africa’s economic challenges intensify, criticism has been levelled at the apparent failure of business schools to produce better business leaders. What should they be doing differently?

A new survey from the Graduate Management Admissions Council (GMAC) has found that MBAs and other business degrees continue to be in high demand in the marketplace. In fact, 96% of employers polled in the January 2016 survey said that said that hiring business school graduates creates value for their companies. But at the same time, criticism has been laid at the door of the MBA for not meeting the needs of a changing market.

Closer to home there is a sense, too, that South African business schools have not done enough to provide the management and leadership needed to make South Africa work. After 21 years of democracy, South Africa’s economy is struggling to grow beyond a percentage point or two, the local currency is hovering at around R16 to the US$, and over a quarter of the population is unemployed. The country is failing to meet its three main objectives of macroeconomic policy, and its state-owned enterprises (SOEs) are in a state of virtual collapse. Corruption is seemingly a runaway train.

In this tough economic and political climate we need to question whether business schools should be doing something differently. In the early 1900s, the MBA programme developed by US universities supported rapid industrialisation in that country. The idea behind the Master of Business Administration (MBA) was to increase efficiency and smooth the production cycle. Now, as one alumnus of the GSB recently put to me, “to be an ‘administrator’ has lost its allure. No one wants to be an administrator.”

Prominent voices have entered the debate over the years. McGill University professor Henry Mintzberg famously said more than a decade ago that MBA programmes were labouring under irrelevant curricula, and Harvard Business School scholars Srikant M. Datar, David A. Garvin and Patrick G. Cullen published their book Rethinking the M.B.A.: Business Education at a Crossroads after the global financial crisis. “Post-crisis, executives and deans identified a number of gaps in MBA teaching, largely in applied areas,” the authors wrote. Among other areas, these included risk management, internal governance, the behaviour of complex systems, business-government relations, and socially responsible leadership. Importantly, the authors noted a distinct lack of introspection and a heavy concentration of greed. Students, they write, are typically overconfident of their own abilities. “If astute financial management is to occur outside the classroom, better self-knowledge is critical.”

This is ironic, because one of the chief critiques levelled at MBAs today is that the pendulum has swung too far in the opposite direction and they concentrate over much on leadership and personal development and too little on the nitty-gritty of administration. But, in the aftermath of the global financial crisis – and in the context of an emerging market in particular – this is a very necessary addition to the educational menu. Much of the contemporary thinking following the collapse of Enron and the economic meltdown of 2008 has required a more abstract analysis and – dare one say it – a philosophical turn of mind to explore its origins. These crises were not merely financial in origin; many of the initial wrong turns were ethical, or could have been averted by more accurate self-assessment. Similarly, the economic and political challenges facing South Africa (and the broader continent) cannot be solved by skills alone; these will need to be applied empathetically, introspectively and innovatively. It is precisely for this reason that the GSB has turned its focus to values-based leadership and social innovation and entrepreneurship to complement its more traditional focus on business fundamentals.

Warren Bennis and James O’Toole, writing for the Harvard Business Review, put it thus: “In fact, business is a profession, akin to medicine and the law, and business schools are professional schools – or should be. Like other professions, business calls upon the work of many academic disciplines. For medicine, those disciplines include biology, chemistry and psychology; for business, they include mathematics, economics, psychology, philosophy and sociology.” Business schools therefore – if they are to evolve – need to call on what we at the GSB call ‘full colour thinking’; a spectrum of analysis that covers leadership and management responsibility from all angles.

We all agree that a key purposes of an MBA – or indeed any business qualification – is to learn to run companies effectively, but this on its own is no longer sufficient. The world has become much more volatile, and (information) technology has disrupted it seriously. Where the classical management models were constructed in an economy that was slowly but steadily growing, but all in all rather stable and mature, this is no longer the case. Managing the sweet shop in those days was good enough. The equation was simple: the better you managed it, the better the results you would get. Today, in most countries in the world, we live in complex societies – highly dynamic and non-linear – where we are confronted with high degrees of uncertainty, be it cultural, economic or political. Poverty and inequality is also a reality for many. In such economies, it is not enough just to administer companies. We need more.

What created the crisis of Enron, or the financial crisis of 2009, or even the current scandal of VW is not a lack of procedures, or capacity to manage those. Rather, these crises are the consequence of a too-strong focus on procedure, which allows managers to hide behind them. The one missing link in most, if not all these crises, is accountability and respect. The best procedures in the world, with a lack of responsibility or accountability, will lead to misuse, and indeed corruption – an issue faced by both the public and private sector to varying degrees.

Steve Denning writes for, “Business schools suffer from the syndrome of their own success. At the bottom of their heart they don’t see the need to change what they believe is a winning model.” He adds that “[b]usiness schools should be equipping graduates to be leaders of the 21st century organisation that operates in a complex environment, where innovation and responsiveness to customers and society are key.” A “radical cross-disciplinary thinking” is required, he believes. “Forward-looking business schools,” he says, “should join together in generating textbooks and courses that reflect an updated view of management … The ranking of business schools by the Financial Times and others should include a criterion that reflects practical relevance, vitality and impact.”

We absolutely require the skills to administer, and in South Africa we have to increase the number of people in the country that have those skills – that is a topic for another day. But alongside that, we need the knowledge and wisdom to administer with a purpose, being accountable, contributing to a better world for our children and grandchildren. As Pravin Gordhan said in his recent budget speech; effective leadership is essential to progress. In this sense, a business school is much more than just an MBA school. Do we want to leave our world merely well administered, or do we want to leave it in overall good health?

#5 Winter 2016

Beyond traditional business skills

Beyond traditional business skills.
Recruiters in southern Africa are beginning to look at hiring people who are not only business savvy, but more connected to communities, socially innovative and able to plan for uncertain economic times.

Employers still love business school graduates according to the Graduate Management Admissions Council (GMAC) annual corporate recruiters survey, but at a recent networking event of the South African Graduate Employers Association (SAGEA) in Johannesburg, it emerged that there is a growing trend that employers in South Africa and Africa are seeking people with an expanded set of business skills.

While still looking for solid business acumen and traditional business skills, there is a move towards people who are also more in tune with social responsibilities, have values that are more community-based than corporate, and who are geared towards sustainability in environmental as well as social terms.

Nicola Jowell, who runs the MPhil in Inclusive Innovation at the UCT Graduate School of Business (GSB), says that she has also noticed this shift in her conversations with industry. The MPhil, which is one of the GSB’s more recent academic offerings and sets out deliberately to foster just such a broader skill set in its students, is attracting a lot of interest from prospective students and industry, she reports.

“There are signs that the idea of business as usual is waning, globally as well as locally, with both employers and employees focusing on business unusual,” says Jowell. By this, she means a more multi-dimensional approach towards running businesses and leading teams and building operations that are about creating value for the business as well as for customers and for society at large.

She says this contemporary view needs to be based within a new paradigm, a more systemic view of the company that starts with a thorough reflection on value creation, for customers, citizens and stakeholders, while managing sustainable performance.

It all boils down to a different way of doing business, a more meaningful way that is based on the realisation of value as a key driver for management. Jowell says a socially innovative or responsible business leader makes decisions that are not motivated by profit alone, but by the value creation that accrues both to the business and its customers as well as to the communities within which it operates.

Being more socially aware and community-spirited are characteristics of the generation that have become known as the millennials. Young people between the ages of 18 and 33 years old generally fall in this category. Millennials have been shown to want more flexible and creative workplaces and they prefer more options in terms of their careers and their job path.

According to Forbes, a survey of 1 000 millennials revealed that more than 90% stated that connection and community were their biggest priority. They said relationships and turning ordinary ways of doing things into extraordinary processes were important to them.

Millennials are often criticised for being entitled and demanding, but the survey showed that 71% of companies interviewed said losing millennial employees increased workloads and stress levels of current employees. In addition, 56% of companies said it took up to seven weeks to hire a fully functional millennial in a new role, proving that it may be better for office morale and productivity to look at ways to keep millennials satisfied in their positions and prevent them from leaving.

There is definitely a shift in the mindset and attitude of big corporations and multinationals towards recruitment, says Samantha Crous, regional director: Africa for the Top Employers Institute (TEI). The institute certifies excellence in the conditions employers around the world create for employees.

Crous says top employers in Africa, in common with those around the world, are increasingly emphasising corporate social responsibility, employee wellness and involvements in charities and community initiatives in social or environmentally responsible areas. For most top employers, this is an essential part of building people as a strategic resource, she says.

Unilever is a case in point. The company offers all kinds of development and mentoring programmes to employees as well as flexible working hours, sabbaticals and special services, like onsite breastfeeding rooms for new mothers. The company also encourages social media interaction and uses the Internet to facilitate better communications between employees and remote offices.

The world is changing towards a more social- and community-driven environment, where businesses are expected to do more than pay lip service to social responsibility and innovation. In South Africa and Africa generally, there is a growing belief in the power of social innovation to address the many developmental challenges societies are facing. Initiatives that are profitable from a business point of view while being geared towards making positive contributions to communities are the objective.

With recruiters interested in hiring more socially responsible leaders, it seems that corporations are not only taking heed of what is happening around them on the ground, but are also responding to the needs of the millennials who want to be more connected to people within and outside their organisations. Considering the country’s uncertain economic outlook as well as political turbulence, many business leaders want key staff members, who are not only aware of the political and social issues but also able to address them, deal with them and plan for the future with all of these variables in mind.

Planning for uncertainty might sound like a catch-22, but Jowell says not only can this be taught to young business leaders – it should be taught, especially to those working in emerging market business conditions. This includes the traditional focus on business acumen and leadership, but adding elements of design thinking, which provides viable thinking strategies for particularly tricky situations – like how to avoid conflict in communities where development has to take place or how to involve stakeholders in corporate processes.

Emerging markets and developing countries often face business challenges that are unique to their context and cultures and business leaders wanting to excel in these contexts need to study how others have acted and planned. This forms the core of the GSB’s MPhil in Inclusive Innovation as well as many of its other courses.

The school’s director, Professor Walter Baets explains, “In a world where business lurches from crisis to crisis and scandal to scandal, where ordinary people see their savings wiped out through the unscrupulous and largely risk-insulated decision of executives and managers and where governments are compelled to intervene to prevent further collapse and loss, there is a desperate need for a new way of thinking, a new way of doing and a new way of being in business.”

#5 Winter 2016

The new frontier for top talent

The new frontier for top talent.
A new study has highlighted that the next generation of leaders in business are impatient for change and that businesses that act first will be rewarded with the best talent.

In previous decades, there was a belief that capitalism and environmental sustainability were mutually exclusive, but green business enterprises are booming globally, and recent research from Yale University and the World Business Council for Sustainable Development (WBCSD) shows that a new generation talent is insisting on a more environmentally conscious approach to business.

The Yale study, which was presented to world leaders at COP21 last December, surveyed more than 3 700 students at 29 top business schools across the world that form part of the Global Network for Advanced Management (GNAM) – including the UCT Graduate School of Business. It revealed a consensus that business needs to adapt, not only because the planet needs a greener approach to business, but also because future leaders want to work for more environmentally friendly enterprises. So much so that the issue could become the new frontier for talent attraction and retention.

Eighty-four percent of students surveyed said they would choose to work for a company with good environmental practices, while 44% would actually accept a lower salary in order to work for such a company. Nearly a fifth said they would not accept a job at a company with poor environmental practices, no matter what the salary was. And, most importantly, nearly 80% of business school students surveyed said businesses should be leading efforts to address global warming. Not just contributing: leading.

Problematically, however, some 79% said that regardless of their strong feelings on the matter, they felt they were “only moderately to not at all” knowledgeable on how to make businesses more environmentally sustainable. This speaks to a key gap in business education – and imagination. If we are to attend to sustainability and produce a new generation of business leaders who address these needs, environmental sustainability should be a critical area of focus for business schools and a large part of this is giving students the aspiration to dream big. Innovation is going to play a key role in digging humanity out of its current crisis, so it stands to reason that we need to be grooming innovative leaders for the future.

Business also has a role to play by creating the conditions where bright young graduates eager to change the world for the better can innovate and help create the changes the world so badly needs.

There is no doubt that business is moving faster on this issue than ever before. The latest McKinsey report on sustainability reveals that since 2010, there has been a definite rise in the perceived need for sustainable environmental practices among respondents in industries such as energy, transportation and extractive industries, most likely because their long-term survival would depend on it. Significantly, the share of respondents saying their companies’ top reasons for addressing sustainability include improving operational efficiency and lowering costs jumped 14 percentage points since last year, to 33%. This concern for costs replaces corporate reputation as the most frequently chosen reason at 32%.

The Yale study suggests that business should add the ability to recruit top talent as among their top reasons for acting on sustainability. The ‘war’ for talent is hotting up globally, and if some of the best and the brightest emerging business leaders are expressing a desire for more ethical and sustainable employment opportunities, then employers who want to win that war would surely benefit by providing a home for them.

A recent longitudinal study from Harvard and London Business School, which compared 90 American companies that took sustainability seriously with 90 that did not, showed that over 18 years, the 90 committed to sustainability delivered annual financial returns 4.8% higher than those that did not.

A focus on sustainability worked for these companies, in part because they were able to attract better human capital, establish more reliable supply chains and avoid conflicts and costly controversies with nearby communities – an issue that is particularly pertinent in emerging markets. This, in turn, allowed them to engage in more product and process innovations.

The lesson is clear: if corporates are to be successful in the long term, they need to create a business environment that is attractive to the top recruits in their field. Stuart DeCew, programme director at the Yale Center for Business and the Environment, in a recent Financial Times article puts it well when he says that there is a new carbon tax on talent and business needs to take heed.

#5 Winter 2016

The case for African case studies

The case for African case studies.

Aunnie Patton, Innovative Finance Lead at the Bertha Centre for Social Innovation and Entrepreneurship at the GSB, teaches one of the new cases on innovative finance created in collaboration with the University of Oxford’s Saïd Business School.
The UCT Graduate School of Business is investing in the development of local case studies that will result in the largest body of Africa-focused business learning material to date.

Much has been written about Wendy Luhabe, one of South Africa’s most powerful and respected businesswomen. But these articles don’t offer much to those who wish to learn in greater depth how she succeeded despite numerous disadvantages; and what distinguishes her leadership style and entrepreneurial vision.

Fortunately, there is a case study on Luhabe at the UCT Graduate School of Business (GSB). The school is investing heavily in the development of local case material, most recently with the establishment of a new case study centre at the school. Established with funding from the Harvard Business School (HBS) Alumni Club, which was matched by a contribution from the GSB, the new centre will build on existing efforts at the GSB to facilitate the writing and publishing of peer-reviewed business case studies on doing business in emerging markets and the various challenges and opportunities that this presents.

The need to promote the development of local case studies is often heard in academic circles. At the recent African Academy of Management Conference in Nairobi, Kenya, there was much talk about how to go about developing local materials as well as a ‘decolonisation’ of the curriculum. For many, there is simply too much of a focus on Western case studies and textbooks.

But writing case studies is not a straightforward task. Case studies are not traditional research, which most academics are used to. So it isn’t simply a matter of tasking academics with writing more case studies. Some academics might need guidance on how to formulate these documents and they may need instruction on how to supervise students who are writing case studies.

The ideal is to develop case studies that are not only used locally, at business schools in South Africa and Africa, but elsewhere in the world. After all, if global business wants to operate successfully in emerging markets, it too will need to have access to quality African case studies.

This is certainly the objective of the Bertha Centre for Social Innovation and Entrepreneurship, a specialised unit at the GSB, which is collaborating with several international business schools and other organisations in the generation of local material that will have a universal appeal.

Work, for example, with the University of Oxford’s Saïd Business School is resulting in the development of several new teaching case studies on innovative finance in Africa that are drawing interest from Duke University’s Fuqua School of Business, New York University’s Stern School of Business, Georgetown’s McDonough School of Business, and Strathmore University among others. To date, 12 cases have been written focusing on 18 social impact enterprises and 16 funds from 11 countries across the continent and tackle issues such as access to housing, health, finance, education, water, sanitation and hygiene. There are also case studies on innovative financing vehicles such as diaspora bonds, crowd funding, blended finance, micro finance, peer lending, social insurance products, quasi equity, and trade credit for SMEs.

Additionally, the Bertha Centre is collaborating with Harvard Business School to generate cases on social entrepreneurship to teach on the centre’s new Social Entrepreneurship course, and work with Rotterdam School of Management has yielded a seminal study on innovative local startup RLabs. A collaboration with Skoll Centre for Social Entrepreneurship at Saïd Business School and the World Health Organisation has seen the development of 25 studies on innovative healthcare delivery solutions.

All in all, the centre has generated close on 50 studies in the past few years.

Aunnie Patton, Innovative Finance Lead at the Bertha Centre believes the contribution of these case studies to entrepreneurial education cannot be underestimated. “We view the publication of these case studies as a pioneering endeavour that will advance students’ understanding of the particular context and challenges for ventures with social purpose in African countries and look forward to their wide dissemination,” she said.

Through its efforts, the GSB is seeking to develop the largest body of Africa-focused teaching material on the continent. This is an exceptional investment and a potential game-changer when it comes to business education in Africa. Investing in local material means that African business education is where it should be when it comes to business in Africa; leading, not following.

#5 Winter 2016

Throwing away the box

Throwing away the box

A shipping container turned into a small business enterprise at the Philippi Village entrepreneurial development. Image by Francois Swanepoel.
When it comes to the thorny issue of how to boost economic development in the townships, banks and government need to move beyond current models to a whole new way of thinking about the challenge.

There is an overused proverb that says ‘Give a man a fish and you will feed him for a day; teach a man to fish and you will feed him for a lifetime’.

It’s a noble idea of course. But does it always work? What if the marine regulations where the man lives prohibits fishing in his area? Or stipulates that you may only catch one type of fish, using a rather expensive type of rod? Sometimes the best intentions are not enough.

When it comes to the issue of how to finance economic development in low-income settings, there are no shortages of examples of good intentions gone awry. In fact, says UCT Graduate School of Business (GSB) professor, Nicholas Biekpe, too often the intention of empowering the poor ends up further boosting the wealthy.

Speaking at a recent forum hosted by GSB’s MCom in Development Finance programme and the Chartered Institute of Development Finance (Cidef) on the issue of financing economic development in South Africa’s townships, Biekpe said that since biblical times, the ideal held up is that money flows from the rich to the poor. However, this principle is all too often inverted with contemporary corporate solutions. For example, while building a large supermarket in the middle of a township, may at face value appear to be a poor-friendly initiative, in fact it means that more money then flows from poor to rich. The poor may have a handy place to shop, a few may even have jobs, but this is hardly a motivational long-term solution for pioneering growth in township economies. Instead of incubating growth and innovation within the community, most townships tend to be consumer-based, with inhabitants leaving each day to make money elsewhere and what money they spend in the townships is often cycled back to corporate headquarters elsewhere.

Banks, government, NGOs and the private sector are scrambling to find solutions that achieve the opposite: boosting innovation within townships to create more local jobs, opportunities and wealth. But progress is slow.

In the banking arena the balance between making profits and meeting development criteria remains precarious. Financial institutions do encourage communities to save, but only through the banks’ existing formal structures, which are often impractical for the real needs of poorer communities, that require greater flexibility and support. Although some banks do come up with initiatives to support generating income within township communities, they are bound by their own regulations to protect their own interests first and foremost.

Government interventions come with other frustrations. Organisations such as the Small Enterprise Development Agency (SEDA) and the National Youth Development Agency (NYDA) have been working on developing a township economy for some time. And although grants for small businesses are available, the application process is tedious. An application must jump through many hoops before it is approved. To sustain enthusiasm for the project requires enormous persistence from the entrepreneur, who risks rejection at any turn. Meantime, the opportunities may have moved on by the time they get the funding.

Although government policy recognises a need to correct the situation, growth from developmental loans tends to be slower than from other more lucrative assets, which diverts the fiscal focus towards more tangible investments that perform faster. Systems are often clumsy, with frequent duplication of mandates, making this a potentially sluggish area of focus. To become more efficient across the full spectrum of this sector, government players must coordinate and streamline policies. But how?

A potential solution may already be in place.

Left to their own devices in a very real sense, the poor have evolved their own systems of saving and financing in the form of stokvels that could hold the key to building a more robust township economy. These informal savings clubs evolved because products in the formal sector simply do not meet poorer peoples’ needs – and they are widespread in township economies. The National Stokvel Association of South Africa estimates that about R45 billion is held in about 800 000 stokvels around the country. These tend to be built on trust and community values and are as much a social strategy as a financial instrument. Governed by contributors, with both profit and risk shared, the group decides on a goal and the rules for savings. Their success lies in their freedom and flexibility and in their ability to offer people direct control over their savings.

Given the banks’ reluctance to provide conventional finance to poorer communities and the long and tedious process requirements when it comes to development loans, the stokvel system is well placed to help solve part of the problem. If carefully managed, stokvels could be scaled up and linked to provide one cohesive covered financial institution, which would enhance the accessibility of funds and provide a viable and speedy financing alternative for small business loans. Naturally, it would require strong regulation, administration and protocols, but with the savings structure already working in communities, there is a real opportunity to create a vibrant resource that brings more people into the fold.

Professor Biekpe says that with these kinds of solutions in mind, financing economic development in the townships does not mean thinking out of the box, it means throwing the box away, because for the most part, the box does not offer a viable fit for this economic sector. “Current banking regulations do not support or relate to the reality of township living, where there are no bank branches or ATMs and where the inhabitants have neither the assets nor the debt required by banks for loans of any sort,” he explains.

Similarly, when it comes to government interventions, although some inroads are being made in this arena, it’s clearly not enough. Policymakers need to get their hands dirtier and develop a grassroots understanding of the challenges faced by this sector from the ground up. Encouraging vibrant township economies, whether on a micro or macro scale, does not involve a top-down imposition of corporate formulae and rigid regulation. Nor is it about teaching and mentoring entrepreneurs in how to qualify for and comply and align with middle class systems; white-collar decision-makers proposing solutions for issues they do not fully understand.

Instead, it is about listening; about finding and enabling innovative and viable solutions for real challenges; about upskilling township residents and assisting with platforms that encourage self-reliance and the spirit of community-based entrepreneurship.

To create wealth in poorer communities, it is possible to streamline and enhance innovations that have evolved organically into powerful vehicles for growth.

As Lefentse Radikeledi, director of development finance institutions at National Treasury and one of the speakers at the GSB forum noted, South Africa needs to move away from the idea that development and development funding mean making a loss.

#5 Winter 2016

Tired of emerging

Tired of emerging.

Cape Town harbour in the mist.

Tired of emerging.

A harbour in Lagos, Nigeria.
Africapitalism, a new economic philosophy that seeks to harness private sector entrepreneurship and investment to create social wealth and address structural inequalities in the economy, is making itself felt in Africa – and analysts believe it has the potential to help the continent reinvent itself, turning from perpetual basket case to self reliance and prosperity.
Helping Africa to emerge is a thriving industry. In a 2015 paper in the Africa Journal of Management, Kenneth Amaeshi and Uwafiokun Idemudia point out that improving Africa’s socio-economic status has remained big business for multinational institutions, foreign governments, aid agencies, inter-national NGOs and international donors alike for many decades.

“Regrettably, some of these actors have also proven to be Africa’s Achilles’ heel. The latest to arrive among this array of helpers are multinational corporations, which often (are forced to) take on public responsibilities in the form of corporate social responsibility. Predictably, none of these has become the panacea to the many challenges confronting the continent rather, most of them continue to flounder at the margins,” say Amaeshi and Idemudia.

Responding to this challenge, there have been greater calls in recent years for better collaboration and partnership among the state, business and civil society on the continent, if developmental challenges in the region are to be addressed. The “Africa should come up with home-grown solutions to realise its full potential” mantra has come to dominate the discourse on African development.

Thus, a new notion called Africapitalism, which seeks to harness private sector entrepreneurship and investment to create social wealth and deal with the structural problems at the local level, is being hailed as a viable way to improve the fortunes of the continent and drive growth that is inclusive.

Proponents of the concept suggest that private sector development, rather than charity or aid is the fastest, most effective and most sustainable path toward self-reliance and prosperity for Africa.

The term Africapitalism was coined by Tony Elumelu, a Nigerian billionaire and banker who founded the United Bank for Africa.

He has described the concept as “the philosophy that the African private sector has the power to transform the continent through long-term investments, creating both economic prosperity and social wealth”.

“Africapitalism believes in the inherent ingenuity, commitment to hard work and desire for self-sufficiency of Africans. It is an economic philosophy that also believes that the African private sector, in cooperation with governments, development institutions, civil society and others, will be the most important source of rising and expanding prosperity in Africa,” wrote Elumelu in an article published last year by Time Magazine.

The Tony Elumelu Foundation has argued that conventional development and business approaches to leveraging Africa’s resources have focused on wealth extraction and often leave local economies in a state of chronic dependency, with little wealth and few resources with which to address challenges at the local level.

For instance, after 50 years of pumping out billions of dollars of crude oil and natural gas, there is still no indigenous Nigerian oil major. And while Nigeria exports crude, it imports refined petroleum for domestic consumption. All of the value creation in the production chain takes place outside the country, and imported refined products are so expensive they require government subsidies to be affordable.

Africapitalism by its nature aims to change such status quos and beneficiation is to a large degree at the heart of the concept.

Its commonly know as the ‘resource curse’. Governments have become preoccupied with extracting raw materials from the land instead of developing a productive population. This, analysts believe, keeps Africa out of the global manufacturing chains that invariably thrust developing countries into the ranks of the rich.

“We export cheap and import dear. Our resources are sold at prices we cannot influence and then the value-adding process happens elsewhere and we end up importing these processed goods,” says UCT Graduate School of Business (GSB) professor, John Luiz, who specialises in international business strategy and the economics of emerging markets.

He says Africa cannot keep relying on its natural resources as this leaves the continent vulnerable to the whims of pricing cycles, and is of the opinion that the continent needs to transition from its reliance on commodities, diversify and specialise. Further, Luiz says, Africa should innovate and most importantly invest more in its people in order to reach its full potential. Investing in human capital is something that proponents of Africapitalism frequently espouse.

Amaeshi and Idemudia state that Africapitalism is capitalism by Africa-oriented entrepreneurs for Africa. It allows for a space to re-appropriate the discourse of capitalism in a manner that puts Africa, its culture and its people front and centre of any possibility of capitalist development in the region. They believe that for Africapitalism to succeed, it needs to permeate the entrepreneurial mindset and boardrooms. Given its normative base, they argue, it also needs supporting governance mechanisms to attain this. Africapitalism requires Africa-consciousness, a form of re-imagined Afrocentricism, which places the interests of Africa and Africans at the epicentre of business decisions.

“Africapitalism offers an opportunity to be inclusive, to take business and development to places that have normally been left outside of the formal,” says Nceku Nyathi, a senior lecturer at the GSB Allan Gray Centre for Values-Based Leadership.

He says Africapitalism is a rallying call for Africans to be more proactive and drive the growth of the continent. Nyathi agrees with Luiz that part of the reason why Africa’s growth has failed to kick in and has not been inclusive is because the continent is still reliant on the old colonial economic arrangements of exporting its raw materials wholesale.

“One solution to that is a rethinking and breaking the status quo … we must add value to products, we must trade more with each other – this requires that the basics are in place though – infrastructure, power, public services and less corruption which, in turn, will enable other things to grow.”

Pointing to the recent biennial African Academy of Management conference in Kenya, a major gathering on the continent where Africapitalism took centre stage, Nyathi says that the academe is now paying more attention to the role of management and organisations in the development of the continent. The conference brings together global policymakers, academics and management to provide key insights on the socio-economic challenges that hamper the continent’s growth.

Nyathi says at the heart of the discussions at the conference was the need for organisations not to just think about profits, but about building communities and reducing poverty – something which a lot of the continent’s organisations, but not all, are already doing.

Intra-African trade has also been seen as one way of improving Africa’s fortunes. Nyathi says one example that came up during the conference was Kenya’s recent decision to buy its sugar from Uganda, which saved the country a lot of money and at the same time benefited Uganda’s sugar industry. Kenya used to purchase most of its sugar from Brazil.

The conference also touched on other initiatives that could boost Africa’s growth, including, education, innovation, skills and management training, especially amongst the youth.

Attendees also discussed some of the hurdles that Africa faces, for example political instability in some parts of the continent, lack of capital and poor infrastructure. Nyathi says the academe needs to engage more with governments and other stakeholders to tackle some of these barriers to Africa’s growth.

“Africa must first think of its people and the gains that will transform the lives of so many. I’m sure a successful Africa benefits the world with less trying to run away from (the continent), the wars, the healthcare access and issues due to instability and lack of development. Africa should not forever be the junior player/partner but could also begin to lead and contribute to humanity,” Nyathi says.

Commenting on the recent migrant crisis in Europe, which was sparked by the Syrian war, Elumelu said the only lasting solution to reduce the economic motivation of migrants is to focus on creating opportunities for Africans at home by empowering local entrepreneurs and businesses to thrive and spread prosperity.

Poverty, political instability and civil war are all powerful ‘push factors’ for migration. For instance, a large number of migrants are from the far northern region of Nigeria where the terrorist group Boko Haram has been waging a bloody insurgency. But migrants from African countries like Eritrea – another large source – cite economic issues, forced conscription and a repressive government as their reasons for leaving. Other migrants are fleeing from the Gambia and Senegal, countries that do not have active conflicts, which means Europe will likely continue to grapple with a flood of illegal migrants, even after the Syrian conflict subsides.

Elumelu said employed in the right way, Africapitalism as a policy can address some of these challenges.

Nyathi says South Africa, as the continent’s most advanced economy, has an opportunity to demonstrate the benefits of Africapitalism by showing exemplary values-driven leadership that leads to inclusion and beneficiation of formerly disadvantaged communities gaining from business participation through a shift in mindset.

“Business will benefit from developing new customers and nurturing better trustful relations with communities that it operates in. Existing businesses need to play an active role and newly created BEE enterprises can’t just follow old models and must carry with them a better attuned business mindset that is aware of the need to create social wealth,” says Nyathi, adding that the ultimate goal of Africapitalism is meeting the challenges Africa faces and improving the lives of the majority, bringing effective leadership and running organisations that deliver for the stakeholders and their social missions.

“Africa is tired of emerging,” he says. “It’s time for the continent to write itself a new story.”

#5 Winter 2016

Budget 2016: laying the foundations for the long term

Budget 2016
Investing in education, skills development and infrastructure and attracting more financial capital are seen as key to getting South Africa back on track, but Brian Kantor, Investec economic advisor and former UCT professor, also had some more radical proposals to offer at the annual GSB Post-budget Breakfast.

Last year, US President Barack Obama told an African Union (AU) meeting in Addis Ababa that Africa’s progress will depend on unleashing economic growth, not just for the few at the top, but for the many.

Obama, who has been very open about his passion for Africa, said progress will depend on development that truly lifts countries from poverty to prosperity.

“Many of your nations have made important reforms to attract investment … it’s been a spark for growth. But in many places across Africa, it’s still too hard to start a venture, still too hard to build a business. Governments that take additional reforms to make doing business easier will have an eager partner in the United States,” said Obama.

The right political or policy environment including respect for property rights will be crucial to ensure better growth prospects for Africa, agrees Brian Kantor, Investec economic advisor and former University of Cape Town (UCT) professor.

Kantor, who was speaking at a post-budget breakfast organised by the UCT Graduate School of Business (GSB) in March, emphasised how important it was for governments to take a lead in this respect, saying the right environment would provide the foundations for businesses to grow and create much-needed jobs and prosperity for the continent.

Africa has experienced something of an extraordinary economic transformation over the last decade or so. In recent years Sub-Saharan Africa has been home to six of the world’s 10 fastest-growing economies. Growth has averaged 5% per annum since 2000, with some countries even approaching 7%-plus.

False dawns

But critics have warned that Africa has seen false dawns before and constantly fails to realise its full potential.

Investing in education, skills development and infrastructure are some of the key ingredients that can help buck this trend and keep Africa’s development on a positive track in the coming years, Kantor said.

“Yes, there is hope. The demographics are encouraging … we are adopting modern technology. We have a young workforce, but you have to put them to work and retain skills.”

Turning to South Africa’s growth prospects, Kantor said: “Our future rests on our ability to retain and attract globally competitive skills of all pigmentation. Yes, it is true at the moment that the majority of top management positions are occupied by whites … but I say it’s good for the poor … I wish we could get over this … yes the skills were acquired in an unfair way, but they are useful and can grow the economy which will also benefit the poor … the alternative is (for those skills) to go away.”

Kantor believes that South Africa and the continent as a whole can only attract financial capital by promising more growth.

“Growth leads capital … but right now there is very little growth in South Africa (about 1%).”

Delivering his budget speech in Parliament in February, Finance Minister Pravin Gordhan said South Africa was “strong enough, resilient enough and creative enough” to manage and overcome its economic challenges.

South Africa’s growth forecast was slashed to 0.9% – after 1.3% in 2015.

“This reflects both depressed global conditions and the impact of the drought … It also reflects policy uncertainty, the effect of protracted labour disputes on business confidence, electricity supply constraints and regulatory barriers to investment,” the minister said.

He emphasised that South Africa had effective macroeconomic policy, a strong private sector, banks that were well-capitalised, and “resourceful people, committed to contributing to a better South Africa”, which put the country’s economy in a better position to succeed. Gordhan said that for the economy to grow at a rate that would create jobs and raise incomes, investment growth needed to be scaled up. Without growth, the country would be unable to increase spending on its priorities adequately.

“This means we must address institutional and regulatory barriers to business investment and growth. It means we must give greater impetus to sectors and industries where we have competitive advantages,” stated Gordhan.

Commentators on Gordhan’s speech variously noted that the budget’s proposals are a return to what fiscal leadership should look like, where government plays the role of the facilitator and builds the platform from which others can create growth. There was broad agreement that the message Gordhan is sending is one of long-term stability and concern for the economic well-being of South Africans, rather than short-term extreme adjustments.

An end to corporate tax

Kantor, by contrast, offered what he called a “revolutionary” proposal to resuscitate the flagging South African economy. He said government should give up corporate tax altogether.

“No corporate tax. Sacrifice R200 billion a year of corporate tax…no tax on income of companies … only tax the owners and workers of companies. How do you make it up the R200 billion? We make it up through wealth or payroll tax. This will make our corporate sector the most competitive in the world from a tax point of view (and) every head office in the world will want to come to South Africa. Other countries would hate it. We become the tax haven of tax havens.”

Such a policy would attract capital to South Africa, create jobs and lead to economic growth, said Kantor. On the other side of spectrum, he warned that plans to introduce a minimum wage could hurt South Africa’s growth prospects.

“The minimum wage of, let’s say R4 000, will price unskilled people even more out of the labour market. They will be fewer people in jobs … To say wages do not affect employment, is absolute rubbish. Cost of employment will affect demand for employees.”

Focus on growth

In addition, Kantor said, South Africa should forget about redistribution and focus on growth. He was of the view that growth would help the poor and policies of redistribution in South Africa have not been about assisting the deprived, but largely about serving the politically influential.

Kantor was also of the strong opinion that it was completely wrong for the Reserve Bank to raise interest rates into a recession and into a drought. Such a move, he said, was likely to stifle South Africa’s growth prospects at a time when it can least afford it. He said growth could improve if the rand recovers, but that this was doubtful because of rising interest rates.

The South African Reserve Bank has steadfastly pursued an inflation targeting policy since the early 2000s with a target of between 3 and 6%.In March, it raised interest rates by 25 basis points to 7% in a bid to protect the country’s beleaguered currency.

Central bank governor Lesetja Kganyago said the 0.25-percentage-point rise left rates low enough to support a weak economy, while mitigating accelerating pressure on the currency and bonds.

According to Kantor, higher interest rates have generally slowed the economy without necessarily supporting the rand – and could even encourage further rand weakness. Slower growth would discourage foreign and domestic owners or managers of capital to invest in South Africa. Growth attracts the capital flows that determine the value of the rand and a stronger rand means lower inflation, Kantor said.

Despite these concerns, Kantor reiterated that it was not all doom and gloom for South Africa and indeed the continent.

“My recipe is quite simple: Provide the right environment, freedoms, the protection of property and you let people get on with it. You cannot direct from the top,” he concluded.

#5 Winter 2016

What if…?

Fees must fall

UCT Vice-Chancellor, Max Price addresses students and workers at the GSB during Fees Must Fall protests last year. Photograph by Jan Cronje.
South African universities are being challenged to re-examine their business models and explore how they could do things differently in response to the rising tide of discontent on campuses around the country. There are lessons to be learnt here for others in the business world.

South Africa is on the brink of a social movement for transformation in higher education. The 2016 academic year began with protest action, vandalism and massive disruption of registration at various campuses across the country. In some instances, registration had to be halted and universities were temporarily shut down.

In a continuation of the ‘Fees Must Falls’ campaign, students were protesting against paying registration fees – upfront payments ranging from about R3 000 to R20 000 – depending on the university. Students were also demanding that outsourcing be scrapped. This controversial policy allows universities to contract workers through private companies instead of employing them directly.

In the case of the University of the Witwatersrand (Wits), outsourcing of cleaners, gardeners and maintenance workers in 2000 resulted in the retrenchment of 613 workers, with less than 50% re-employed by the private companies. Wages fell significantly and workers no longer had benefits like medical aid and pensions. The workers also no longer qualified for subsidised education for their children at the university.

Following weeks of protests by students, Wits and UNISA in January 2016 announced that they would scrap outsourcing and begin employing workers directly again. While a victory for students and workers, the process has been costly both financially and in terms of the disruption of academic services.

According to Higher Education and Training Minister Blade Nzimande, the university fees protests have cost universities R150 million since it began in 2015. Unisa and Wits have obtained court orders against protesting students and have increased security on campuses.

What is happening is that universities are finding themselves being pushed into changing their business models, in some instances, scrapping policies and rethinking revenue streams in a manner that should have been done years ago. They are rethinking how they are structured and what service they are providing and are being forced to examine the value of their offering.

In South Africa, other organisations and companies are finding themselves in a similar boat. With the bleak economic outlook, an escalating drought and weak currency, many businesses are taking strain – and in some instances are facing uncertain futures.

It is in this unstable economic landscape that a business model innovation mindset helps to promote innovative thinking and creative approaches to sticky problems. The essence of business model innovation is to rethink the engrained style of the organising practices, value creating mechanisms and value production in an organisation in order to create new styles to evolve to when the timing is most optimal. Professor Roger Martin, author and former Dean of the Rotman School of Management, says the process is not about simply evaluating options and avoiding the worst ones and choosing the least-worst options. It is about creating brand new options; novel customised structures that work for a particular organisation, institution or business.

In a world constrained by the resources of one planet, monetary instability, growing inequality and low-growth, expedient choice among existing options simply won’t do the trick. We need more if we are to create medium- to long-term sustainable value.

Business model innovation prompts CEOs and managers to ask what value they are delivering to their customers; if their customers’ needs are changing and how more value can be given to clients. It essentially helps executive to change the game and provides insight in how business leaders can turn the tables.

In their book Business Model Generation, authors Alexander Osterwalder and Yves Pigneur explore the power of asking “what if” questions. This is illustrated by the example of furniture giant IKEA, which, in 1960 asked, “What if customers bought furniture in components in a box and assembled it themselves?” The idea was unheard of at the time, but has become common practice in the industry over time.

Another “what if” example given by the authors is telecommunications app Skype, which provides free voice calls worldwide and is believed to have earned $2 billion in 2013. Not bad for a ‘free’ service. But many people don’t realise that Skype’s business model makes room for monthly subscriptions and Skype credit, which is used to make calls and send text messages to non-Skype members. This is where Skype is making its money.

Such innovative thinking in terms of providing value and generating revenue is, without a doubt, the way of the future. South African universities are having their own “what if” moments, like asking, what if they scrapped student fee increases? What if they dumped outsourcing? What if they were able to provide free higher education for disadvantaged students in South Africa?

A few years ago, it would have been unheard of for the University of Stellenbosch (US) to drop Afrikaans as language of teaching. But this is what happened towards the end of 2015, following the Open Stellenbosch campaign, which exposed the level of racism and intolerance on campus.

Racism and inequality have become hot topics in South Africa. The Penny Sparrow tweet, coupled with several high-profile cases involving alleged hate speech and outcries over social media have revealed a deeply divided South African society. In addition to the economic strain, there is now also a bigger spotlight on transformation, affirmative action and how representative companies are being.

No company executive, business leader or department head can afford to be blind to the discontent that can be felt in various instances of the South African social landscape – be it among farmers in rural South Africa, on campuses around the country, in unions like Nehawu and Cosatu, between political parties gearing up for local elections or ordinary citizens of South Africa venting on social media.

Leon Schreiber, a research specialist in innovations for successful societies at Princeton University, recently wrote in the Mail & Guardian that South African society has not been this saturated with anger and protest since the late 1980s. He said over the past year, there has been a shift in the country’s political consciousness, motivated by a population frustrated by inequality, poverty and growing unemployment.

There is no business in South Africa that can afford to ignore this – whether it is a family-run bakery in the suburbs or a university offering higher learning to disadvantaged students. Business models must be flexible and able to change. It quite simply is a matter of adapt – or die.

#5 Winter 2016

A united front

A united front

The opening ceremony of the 35th SADC Heads of State and Government Summit in Gaborone, Botswana. Image by Kopano Tlape for the Government Communication and Information System.
The advantages of stronger regional blocks to drive Africa’s development are many, but structural and policy hurdles remain that threaten to undermine any benefits.

Regional integration in Africa has, for the most part, proceeded slowly and erratically. However, recently several African governments have been pushing for renewed regional cooperation in a bid to add more impetus to the continent’s economic growth.

Thus, the recent initiative to establish a Tripartite Free Trade Area (T-FTA) between the member states of the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC), has been seen as a game changer for the continent.

The free-trade agreement, which effectively created a common market spanning half the continent, from Cairo to Cape Town, was launched in Egypt in June last year. The three blocks that make up the free trade area bring together 26 countries with a population of around 625 million people and GDP of $1,6 trillion. Tariff liberalisation, trade remedies, provision for dispute settlement, elimination of quantitative restrictions, customs cooperation and trade facilitation are some of the key aspects of the deal.

“What we are doing today represents a very important step in the history of regional integration of Africa,” Egyptian president, Abdel Fattah al-Sisi, said last year as the free trade area was launched.

President Robert Mugabe, who was chairperson of the African Union at the time, said the trade agreement would create a “borderless economy” that would rank 13th in the world in terms of GDP.But while the integration efforts have gathered pace, considerable structural and policy hurdles still remain which threaten to undermine any benefits that might flow from this. These include, inter alia, poor infrastructure, political instability and generally low levels of industrialisation.

“There is this idea that somehow regions will foster economic growth. Why? What has to happen first is that the conditions for growth have to exist – that is infrastructure to encourage economic activity. Roads, rail, ports, airports, telephone and cell phone connectivity that works well, water, electricity and security of property and person,” says UCT Graduate School of Business (GSB) professor Thomas Koelble. He adds that regardless of integration efforts, the continent will struggle to attract ongoing investment if security concerns, among other issues, are not addressed.

“The fact of the matter is that investment in Africa will lag if security of person and property are non-existent or tenuous. Economic activity will gravitate to those areas where infrastructure for certain economic activities exists and in which property and person is relatively secure.”

In addition, regional planning has to be focused on providing the essentials for economic activity and “cannot start off as another means for politicians to raid the national cookie jar,” says Koelble.

A 2013 World Bank report on infrastructure in Sub-Saharan Africa reiterates that regional integration will mean little without infrastructure improvements on the continent. It notes that in most African countries, particularly the lower-income countries, infrastructure is a major constraint on doing business, and is found to depress firm productivity by around 40%. For most countries, the negative impact of deficient infrastructure is at least as large as that associated with corruption, crime, financial market and red tape. For an important subset of countries, power emerged as the most limiting factor, being cited by more than half of firms in more than half of African countries as a major business obstacle. Deficiencies in broader transport infrastructure and infrastructure for information and communication technologies (ICT) are less prevalent, but nonetheless substantial in some cases.

Many African countries cite a lack of funds as the reason why infrastructure developments have progressed at a very slow pace and it is possible that the new Brics (Brazil, Russia, India, China and SA) development bank, through its Africa branch in South Africa, will play a role in boosting Africa’s infrastructure drive. Pretoria believes that while China may have the largest share of voting rights in the bank with its $41 billion pledged contribution, the South African contribution and its work in the organisation will go a long way to developing the rest of the continent as an emerging economic force.

It would be good for Africa if this turns out to be the case and if better financing can pave the way for better integration. As the World Bank report points out, the advantages of integration are many. Not only does it lower the cost of infrastructure by giving smaller countries access to more efficient technologies and a larger scale of production, it also allows less developed countries to follow in the slipstream of their more successful neighbours – as happened in Asia.

The success of the Asian economies had a flying geese aspect to it, with Japan as the initial leader, then followed by the group of four including South Korea, Taiwan, Singapore and Hong Kong. These were joined by the South East Asian countries of Malaysia, Thailand and Indonesia, then China and more recently Vietnam and so forth. The regional momentum also created regional supply lines closely integrated into complex value chains.

This is going to be key in Africa’s economic future. The individual size of African economies means that developing viable local industries and sectors that help build a more inclusive African economy is going to require further and different economic integration with diverse countries assuming different roles. South Africa, for example, is not competitive in low-value manufacturing as its cost structure is too high. The manufacturing sector has been declining for decades and even the extreme depreciation of the currency has not triggered a revival.

Both industry and government are at fault. The latter with an antiquated approach to industrial policy that does not recognise how the global economy and its production networks have fundamentally altered the nature of manufacturing; the former, by not developing manufacturing chains into neighbouring countries. South African firms have moved into the rest of the continent to sell goods and services but have not fully exploited the opportunities to develop these locations as sources of lower cost production, something that could actually help the country’s internal revival of manufacturing as a source of cheap inputs that are geographically proximate.

Africa must move from being a place where others come to sell stuff and, equally problematically, an economy that sells its natural resources wholesale to others to develop and refine. African economies must invest in themselves and each other and develop infrastructure and supply chains that work to promote real growth at a local level. This requires a different mindset.

A decade of euphoric growth in Africa, fuelled by rising commodity prices, better governance, positive demographics and rising incomes, has encouraged many to ignore some of the warning signs, but the recent downturn in the commodity price cycle has exposed the soft underbelly of these economies. It is hoped that a renewed focus on regional integration based on sound principles of collaboration will encourage a healthier, more resilient long-term development trajectory for the continent.

#5 Winter 2016

The future could be bright

The future could be bright
South Africa’s renewable energy private sector investment programme is widely regarded as one of the most successful in the world, so how can its winning formula be rolled out to the rest of the continent, where a staggering two thirds of the population still live without electricity?

It is surprising how many people still believe that renewable energy (RE) is too expensive to be a viable option for power generation.

GIobally, innovation and competition have driven down costs, and solar photovoltaic (PV) and wind energy are now among the cheapest electricity sources in many countries, including South Africa. While intermittency remains a challenge (the wind does not always blow and the sun does not always shine), renewable energy combined with load-following generation sources such as gas-powered turbines offer reliable electricity supply, and future innovation in electricity storage will be a game changer.

In sub-Saharan Africa (SSA), South Africa is the undisputed leader in renewable energy. Its Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), launched in 2011 to promote private sector investment into grid-connected RE generation, is widely regarded as one of the most successful of its kind anywhere in the world. South Africa has achieved more investment via IPPs in four years than the rest of SSA over the past two decades. Independent power producers (IPPs) were invited to submit bids for a variety of RE technologies under a competitive tender process. To date, four such bidding rounds have been completed, resulting in 92 projects totalling 6,328 megawatts and R192 billion in private investment.

And that’s not all. The tariffs of South Africa’s most recently awarded solar PV and wind projects are lower than the national utility’s average cost of supply. They are also amongst the lowest priced grid-connected RE projects in the world with wind energy now as low as 57 c/kWh (or below 4 USc/kWh).

Unlike unsolicited directly negotiated projects where contract negotiation takes place between the IPP and host governments or utilities on a case-by-case basis, South Africa’s bidding process awards multiple bidders in each competitive tender. These also tend to reduce corruption when compared to directly negotiated projects, and the REIPPPP has maintained high levels of transparency and security to ensure objectivity during bid evaluations.

The competitive nature of this procurement model results in considerable economic advantages. Between bid window 1 and window 4, the average price of wind energy dropped by 48% and that of solar PV by 71%. This also speaks to the benefit of running multiple bid rounds. IPPs are able to bid more competitively as they learn from prior in-country experience and competition may grow as investors develop confidence in the programme.

South Africa’s success, however, stands in stark contrast to most of its African neighbours. SSA has a general under-supply of power generation (not specific to renewables).

So what is standing in the way of taking renewable energy in Africa to the next level? Several reports released in the past few months have highlighted Africa’s potential in this sphere. According to the International Renewable Energy Agency Africa 2030 report, renewable energy has the potential to more than quadruple by 2030 to 22% of total power supply, compared to today’s level of about 5% – and yet progress is slow.

The South African example suggests that technology and cost do not have to be an obstacle. Rather, the primary barriers to implementing RE across Africa remain institutional. Africa needs to build on best international practices in running competitive tenders or auctions for new power generation capacity, including renewable energy.

At the moment however, corruption is rife in many countries, causing problematic tender processes. The majority of power projects in Africa were procured through unsolicited, directly negotiated deals, but research from the Management Programme in Infrastructure Reform and Regulation (MIR) at the UCT Graduate School of Business (GSB) shows that competitive tenders or auctions for renewable energy (and other off-the-shelf energy technologies) are always cheaper. This is clearly the way to go.

Several SSA countries have now implemented or expressed interest in competitive tenders to secure renewable energy, and while not all elements of the REIPPPP will be replicable in other countries (particularly its stringent economic development requirements imposed on bidders), there is scope for these countries to use the REIPPPP as a skeleton framework and adjust as necessary. There is currently a strong interest from international developers in Africa and governments could capitalise on this by using the REIPPPP framework as a springboard to launch a quality procurement programme in a shorter amount of time.

The South African example points to several key elements that must be considered in the roll-out of similar RE investment programmes in Africa. An in-depth review of the REIPPPP carried out by the MIR has distilled several recommendations. These include setting clear RE policy within an overall integrated electricity plan and fostering an enabling environment. A programme champion needs to be mandated and given the resources to hire experienced transaction advisors to design a renewable energy auction based on international best practice.

A key consideration for any IPP is whether the contracts associated with the competitive tender or auction are ‘bankable’; in other words, whether the terms will be acceptable to lenders in the event of payment defaults. Again, international best practice and expert legal drafting is crucial. In most African countries, it will be necessary to provide some form of credit enhancement and additional security to attract sufficient investment for these project-financed deals. The REIPPP included an effective sovereign guarantee embedded in the implementation agreement, although the contingent liability for the South African government was mitigated by an inter-governmental framework agreement that commits Eskom to make good any payment defaults through pass-through of regulator approved tariff increases.

Renewable energy is capable of providing a significant alternative to conventional fossil fuels in Africa. This applies not only to the largest resource, solar PV, and the other popular option of wind generation, but also to the continent’s substantial hydro reserves (predominantly in the DRC and Ethiopia) and geothermal resources in Kenya and Ethiopia – both of which can serve as base load options. However to properly unlock all RE resources, it is vital that SSA governments adequately incentivise private sector investment, while also preparing their procurement programmes in a way that ensures that a fair amount of the benefits and wealth are realised, and stay, in their countries. South Africa has proven that a well-designed competitive tender or auction can achieve this, and the potential for other SSA countries to build on this framework remains an exciting possibility.

#5 Winter 2016

Change just isn’t good enough anymore

Change just isn't good enough.
Political and economic uncertainty at home and abroad means nothing will appear tomorrow as it did today – the only way leaders will keep up with change is to change the way that they change – and it starts with tapping into how people feel.

It is a well-worn management refrain that change is the only constant; but these days, as author Gary Hamel points out, the rate of change has gone into overdrive and it’s shaking things up. Change is now multifaceted, relentless, rebellious and occasionally shocking, and it is becoming more so as each day passes.

To put change in our era into perspective, unimagined advances in technology from the invention of the internet to the decoding the human genome, as well as social and environmental pressures such as climate change and the refugee crisis, are quite literally, causing the ground beneath our feet to shift. One thing all of these changes have in common: they have come about as a result of change and they have created additional explosions of change. Change begets change. And we have to figure out a way to keep up.

To survive the tumult, organisations and individuals will need to adopt the sort of strategic thinking that allows them to change and adapt in unprecedented ways.

The contradiction at the heart of business

A great paradox of our time is that change itself is changing. In short: the future is becoming less and less predictable based on what is already known or on what has happened in the past.

In this world, nothing is sacred. Even the 100-year-old venerable institutions that seem invulnerable to change. The hard truth is that yesterday’s business models were not built to be adaptable, but adaptability and agility are key for survival today. This is the contradiction that lies at the heart of most modern-day business that managers and leaders need to grapple with.

Trivial and traumatic change

Hamel, who is a management expert and founder of international management consulting firm, Strategos, says this of change in his book What Matters Now: “The only thing that can be safely predicted is that sometime soon your organisation will be challenged to change in ways for which it has no precedent. Your company will either adapt or falter, rethink its core assumptions or fumble.”

Of course, the concept that change can bring opportunity as well as disaster is not new, but whether an organisation will innovate or crumble when faced with inevitable change depends on its capacity to adapt, and adapt more quickly than organisations have ever done before. The problem is, as Hamel writes, that because those early management pioneers set out to build companies that were disciplined, not resilient, adaptation does not come easily. “They understood that efficiency comes from well-mapped business models and routine. Adaptability, on the other hand, demands a willingness to occasionally abandon these routines – and in most organisations there are few incentives to do so. That’s why change tends to come in only two varieties: the trivial and the traumatic. Review the history of the average corporation and what can be seen is long periods of incremental fiddling punctuated by occasional bouts of frantic, crisis-driven change.”

But it seems like a great waste for an organisation to run into a crisis and lose billions in market value before it gets serious about change. A much better approach for those companies looking to future competitiveness would be to get change-ready. As Hamel writes “A turnaround is a poor substitute for timely transformation. That’s why we need to change the way we change.”

And how do we change the way we change? It starts with revisited and re-orienting management and leadership skills towards how to make relevant change happen. All those careful systems, models and routines perfected over a hundred years need to go. Managers today need to unlearn the lessons of the past and discover a new range of critical skills to stock a new strategy toolbox that allows them to engage others in conversations for change.

A deeper understanding of change

As it stands, the traditional strategy toolbox will not allow organisations to change the way they change. Too often, present-day corporate conversations for change are missing one critical component: the psychology of strategy. This is the component that determines how leaders go about managing change.

Typically, business analysis tends to be the primary driver for making strategic choices instead of a deeper understanding of human behaviour – again this means throwing out the routines that organisations are most comfortable with. It is a fact that organisations, when making decisions, still rely most heavily on quantitative parameters – the business case, for instance, because it supposedly offers a measure of certainty to decision-making about some future position that is inherently uncertain.

Of course, there is nothing wrong with business analysis or business case development, these are essential tools for the general manager’s toolbox, but thought-leaders must be willing to explore further whether they can get more effective results from a deeper understanding of human behaviour. This is something most organisations remain uncomfortable with because it requires an understanding of the personalities and behaviour preferences of those who are integral to organisational success and the key influencers of strategic decision-making: both the people in the organisation itself, as well as customers and stakeholders. This takes hard work and time to develop. But it is this kind of multi-faceted approach that will allow organisations to charter the uncertain territories of change.

Heads and hearts critical to new change

John Kotter, an authority on leadership and change, as well as being a New York Times best-selling author and Harvard professor, offers insight on the topic of making change happen. He emphasises the power of bringing about desired change by addressing how people may be feeling – which he suggests is even more telling than how these same people may be thinking about the new behaviours expected of them for change. Kotter goes so far as to assert that the core of a new way of addressing change is tuning into the hearts and minds – in that order – of those most affected by, and most able to bring about, change. He suggests that by aiming to change how people feel, and by role-modelling a desired behaviour, organisations become even more effective in making change happen than if they relied only on applying analysis and logic in an attempt to persuade others to think and, as a result, behave differently.

Strategic alignment in an ever-changing world

In other words, it is the ability and effectiveness of general management and leadership to place the human dimension of their organisation, and their organisational culture, at the forefront of change in a way that gives them the greatest influence over strategic change. In order to optimise strategic alignment in an ever-changing world, the leader must be ready to adapt his or her personal style and focus to ensure that the dominant organisational culture and current strategy are optimally aligned with the demands of the market place.

In essence, a new approach to change must begin with a willingness to explore the relationships between general management and leadership, leadership and behaviour, strategy and innovation and, ultimately, strategy and change. It is only when leaders understand how important the connectivity of these elements is that they can hope to change the way they change and build organisational resilience that will allow them to stand strong when faced with waves of uncertainty and change.

#5 Winter 2016

Impact Investing: Doing well by doing good

Impact investing

Bank of Lagos, Nigeria.

Doing well by doing good.

As Africa moves away from an aid-dependent economic model to a tighter embrace of capitalism, impact investing – the practice of investing for a measurable social or environmental gain – appears to have captured the zeitgeist. But, says the GSB’s Dr Stephanie Giamporcaro, it is easier said than done.

From the interest-bearing clay tablet loans traded in ancient Mesopotamia to the corporate bonds issued by the 17th century Dutch East India Company, historians have long struggled to pin down the world’s first stock exchange. But academics broadly agree on at least one point – the trading floor has always been synonymous with the accumulation of capital and the spread of commerce.

For one African bourse, that definition may need stretching. African Exchange Holdings, a firm that established its first outpost in Kigali, has set itself a loftier goal – ensuring food security in swathes of the continent by providing farmers with a ready market for their goods. Commodities and derivatives – long the buzzwords of speculative traders – are now the talk of philanthropists.

Backed by the charitable foundation of Nigerian banking billionaire Tony Elumelu, the firm stands as a prime example of how ‘impact investing’ – the practice of investing for a measurable social or environmental gain – is fast altering Africa’s business landscape and attracting the endorsement of the continent’s biggest business personalities.

A new survey by the University of Cape Town’s Bertha Centre for Social Innovation and Entrepreneurship found that 47% of $721 billion in assets surveyed in South Africa, Kenya and Nigeria have been specifically earmarked for positive impact.

According to the United Nations Development Programme, some $8 billion had been invested in African projects by November 2014. Meanwhile, some of the world’s largest companies have shown an increasing interest in joining global development efforts. The likes of Unilever chief executive, Paul Polman – who was a member of Ban Ki-moon’s high-level advisory panel on the post-2015 agenda – have been particularly vocal in pushing for business involvement.

Since the phrase ‘impact investing’ was coined by the Rockefeller Foundation in 2007, dozens of firms have sprung up around the world, eager to assure clients that they can have it all – an alluring mix of financial reward and the satisfaction of knowing that they’ve made a difference. That goal was pithily summed up by a recent Bloomberg headline exhorting readers to “Save the world, turn a profit”.

As Africa moves away from an aid-dependent economic model to a tighter embrace of capitalism, impact investing appears to have captured the zeitgeist. But while projects compete aggressively for new funds, a debate has begun about what, if any, long-term effects their investments are having on Africa’s development, and whether the practice is a vanity project for wealthy investors or a new path to mutual prosperity.

“The discourse of sustainability is to say that you can have it all,” says Stephanie Giamporcaro, research director at UCT’s Graduate School of Business. “That’s the thing that a lot of people believe in. But at the same time, it’s easier said than done.”

Business and philanthropy

The relationship between business and philanthropy is hardly new. From John D. Rockefeller to Bill Gates, high net worth individuals have long ploughed their earnings into favoured social projects and personal foundations. Yet until the new millennium, philanthropic activity was largely seen as a by-product of business success, rather than an integral driver behind it.

According to the United Nations Development Programme (UNDP), that mindset has finally begun to change, with the global financial crises of 2001 and 2007 being major turning points. Those seismic events led to public and regulatory pressure on corporations to increase accountability and set environmental and social objectives, according to the UNDP’s Impact Investing in Africa report.

The new-found importance of incorporating responsible practices into business decisions was highlighted in November when Trafigura – the international commodities trading firm that gained infamy after a 2006 toxic waste dump in Côte d’Ivoire – released its first ever responsibility report. In the report, chief executive, Jeremy Weir explained why it is essential for the business to pay greater attention to its social and environmental footprint.

“We know we have to earn and maintain a social licence to operate in the many countries and communities where we are active. This is more than ever a fact of corporate life, with media focusing on corporate reputation crises and governments, regulators and civil society subjecting business to ever closer and more critical scrutiny,” he wrote.

Giamporcaro, who has spent years studying how businesses relate to sustainable practices, says that this ambition to do no harm – particularly prevalent among a younger generation of business leaders – is beginning to inform investment decisions.

“There is a rising awareness that you need to invest money for social good. This happened because of reputational damage – we had the financial crisis scandals, and incidents like Marikana (on 16 August 2012, 34 striking miners were killed by South African security forces amid protests in the northwestern town of Marikana). Investors know their reputation is not always the best one, and they don’t want to be the bad guys, especially the younger generation.”

But it is not only businesses that have reassessed their approach to development. Much of the donor community has acknowledged that economic growth, rather than aid dollars, has lifted millions out of poverty, leading to a greater willingness to work alongside business to achieve mutually beneficial outcomes. That new openness was illustrated by the adoption of the UN Global Goals – successor to the business-free Millennium Development Goals – during last September’s UN General Assembly meeting. These goals specifically call for a focus on employment, economic growth and industrial expansion.

Yet if there is new consensus between businesses and donors, there is far less agreement on how this should happen – and whether investors can achieve real impact at the same time as strengthening their bottom line.

Profits vs Impact

For Kevin Starr, managing director at the Mulago Foundation, a US-based ‘impact-first’ investor, industry conferences are a chance to discuss projects, make contacts and catch the latest news. But what he heard at a recent lunch confirmed a long-held belief – some impact investors are complacent about their model.

“I was recently at a lunch led by a prominent impact investor. Someone blithely said the conflict between impact first and profit is over – they declared this fundamental issue irrelevant. I thought that was tidy but simply not true.

“It was as if a fundamental debate that needs to be ongoing was just becoming too inconvenient,” he says.

That tension between profit and impact gets to the heart of the debate over whether investors can ‘have it all’. For Starr, whose foundation targets investments on the basis of social impact, the ability to make significant profits at the same time as achieving maximum social gain remains more of a myth than reality.

“What is the jackpot? It’s when maximum profit lines up with profound impact. In the world where we operate, we find that this doesn’t happen very often, and if it did, we wouldn’t really have any need for this thing called impact investing lying in the grey zone between maximum impact philanthropy and maximum profit investing,” he says.

Starr argues that investors typically shun the sort of projects that Mulago is interested in, due to their low potential for financial returns. Yet many investors appear to be persuaded that economic returns are compatible with social impact. Annual research conducted by the Global Impact Investing Network (GIIN) finds that 55 to 60% of impact investors attempt to achieve market rates of return, while around 40% are content to achieve less. Abhilash Mudaliar, research manager at the GIIN, says that there is a range of approaches in the market for firms operating under the impact investment banner.

“We notice that with large commercial-driven investors, impact investing is seen as an approach that can achieve financial returns and an impact. There are other players for whom impact investing will deliver less than commercial returns.”

Mudaliar said that recent research conducted by the GIIN found that private equity firms in the impact investing space achieved market returns comparable with buyout firms operating without a social or environmental mandate. Nevertheless, for many commercial investors, the risks of investing in the impact space remain high. A recent report from British bank Barclays found that wealthy individuals preferred to give money to philanthropic causes alongside traditional investments, with many finding impact investing too complex.

James Mwangi, executive director at Africa-focused advisory firm Dalberg, says that this attitude may be turning investors off interesting opportunities.

“Increasingly advancing the needs of society and the environment is just good business. The fastest-growing firms across the African continent are in renewable energy, inclusive financial services, and pro-poor technologies. … Often the assumption that serving social needs has to be at odds with profit blinds business leaders to real opportunities.”

Even if more businesses can be lured to the impact sector, Starr’s hypothesis – that maximum returns are not necessarily compatible with maximum impact – remains up for debate. In particular, there is widespread consensus that the industry must get much better at explaining itself.

Communication breakdown

When Cape Town’s Bertha Centre began the comprehensive task of reviewing Africa’s impact space, their researchers came up against a familiar brick wall – there is simply not enough data to evaluate the overall social impact of many projects. Despite amassing evidence that firms are increasingly investing for good, the report found that only a handful of industry leaders are able to demonstrate that they do it consistently well.

For lead researcher, Giamporcaro, a full assessment of the sector will require far more transparency. “Are they doing what they claim? To know that, there aren’t many things you can do except track and try and understand their practices. It’s a complicated exercise that takes a lot of time – you need to compare the data.”

Sachindra Rudra, chief investment officer of US-based venture fund Acumen, agrees that the wider industry has been unsuccessful in making its case. He argues that investors tend to look at broad indicators, such as the total number of lives impacted by projects, without really getting down to the granular detail of exactly who benefits.

“At this point we must articulate what the key metrics are and then work with experts in the field or internally … Frankly speaking, the whole sector has kind of stopped or got stuck on the number of lives impacted. And nobody’s really doing much on poverty focus or depth. My hypothesis is that you would quickly come up against a wall in terms of aggregating data for the whole sector,” he says.

Without a more rigorous approach to assessing the impact of their projects, well-intentioned investors could find themselves accused of ‘greenwashing’ – the strategy of making erroneous or inflated environmental and social claims to burnish their reputations.

With impact investing showing every sign of playing a key role in Africa’s future – a JPMorgan Chase survey of investors found that they intend to deploy 16% more into the global impact sector this year – securing a compromise between acceptable returns and measurable impact will be essential if the practice is to forge a lasting legacy. The sector will likely be the key battleground in the argument over whether doing well financially is compatible with achieving social good.

Given Africa’s uneasy relationship with capitalism, rooted in the abuses of the colonial period, the outcome of that debate could shape the views of many towards the economic growth story unfolding on the continent.

If businesses are not seen to serve the majority or leave a legacy beyond profit extraction, billions could turn away from the principles of open markets upon which Africa’s latest economic renaissance relies. For UCT’s Giamporcaro, all stakeholders will have to play their part if Africa’s growth is to benefit more than the usual gilded elite.

“Everybody needs to do his job, but being honest about what we can do – it’s framed by what the investment industry can give us. We’re still in a place where they’re saying they can do it but we cannot know. Maybe five to 10% are doing something very interesting, but for the rest it’s on the surface, it’s in the marketing discourse. How do we change that together, and do they really want to?”

Acumen’s Rudra agrees that the time has come for industry to step up to the plate. “We need to become better at being able to articulate what it is we are delivering both on the financial and impact side. We are absolutely in the window where we have the experience that is sufficient to start talking in a concrete way about where we are coming from, what we’ve learned and what the path forwards is.”

By David Thomas. This article originally appeared in African Business magazine and has been reproduced here with kind permission.