Author Archive | Pedri

#10 Winter 2018

GSB hosts first African MBA World Summit

Mills Soko, former director of the GSB, welcomes delegates to the 2018 MBA World Summit.

The UCT Graduate School of Business hosted the 2018 MBA World Summit, an event that harnessed the collective thinking power of 100 MBA students from top global business schools.

One hundred MBA students from the world’s best business schools were in Cape Town in March to attend the 5th MBA World Summit – an event that set out to empower exceptional students to act as global change agents and contribute their collective experience toward changing the world for the better.

With a focus on creating impact, the Summit aims to leave a lasting legacy for local communities wherever it is held. Participants of the 2018 Summit were paired with 30 local entrepreneurs to collaboratively explore short, medium and long-term practical solutions for their business obstacles and challenges, particularly in a township environment.

Hosted by the UCT Graduate School of Business (GSB) from the 14-16 March, this was the first time the event was held in Africa. Participants split their time between the school’s campus at the V&A Waterfront and its satellite site embedded in the community of Philippi – 30kms away.

Dr Kutlwano Ramaboa, director of International Relations at the GSB, said that the school was well placed to host a summit of this kind that combined global thinking with local relevance. “As one of only three business schools in Africa to have triple-crown accreditation the GSB’s international credentials are well established,” she said. “In hosting this event, the GSB drew on its five decades of experience in pioneering business education in Africa and our strong focus on creating sustainable impact for business and society, which made the school a perfect fit for the MBA World Summit.”

Raymond Ledwaba, a GSB alumnus and the local organiser of the Summit, said that the event has contributed to the GSB’s status as a global player. “It demonstrated that we can host prestigious international events and bring thought leaders from across the world to South Africa,” he said. “It is important to note that this was also an African event, with African and South African students participating and contributing to a valuable global network.”

Ledwaba added that as Africa has four of the fastest growing economies in the world, the Summit was a good platform to explore the endless opportunities that abound on the continent.  The 2018 Summit was made up of participants from 39 international business schools. Each year a maximum of 100 students are selected from over 2 000 applicants who undergo a rigorous multi-stage selection process. Yannick Reiss, co-founder of the Summit, believes that the essence of the Summit rests on the diversity of its participants. This diversity creates a space for collaboration, global networking, peer-learning and a multi-disciplinary approach to global problems. As this year’s event took place in Cape Town, Ledwaba said it was an opportunity to do things differently and expose participants to South Africa’s unique context. Students spent two days at the GSB satellite site in the community of Philippi (GSB Solution Space), a space that was established to enhance the school’s commitment to developing socially relevant solutions to South African challenges.

Local entrepreneurs participating in the event brought real-life challenges to the table and engaged with the students in an intensive, facilitated process. The collaboration kick started a three month programme, that will be managed by the GSB Solution Space-Philippi and give the Summit and stakeholders the opportunity to track the real impact made in these businesses and communities going forward.

Dr Ramaboa said that aside from the positive impact the Summit will have had on local entrepreneurs, participating students will have benefited enormously from the international exchange of ideas and networking with their global counterparts. “International mobility is a growing theme for MBA students who need to be able to demonstrate a global mind-set. Events like the MBA World Summit are life- changing and career-boosting,” she concluded.

#10 Winter 2018

How to respond to the age of massive disruption

Golden MBA alumni from the class of 1967 engaged with Professor Ralph Hamann on what it means to live and work in the age of AI during their class reunion in February.

Artificial intelligence (AI) is changing the way we live and work. And while many analysts are hopeful and excited – saying change could enhance quality of life and widen access to essential services – it is hard to ignore the dangers of job losses and an increasing concentration of wealth and power. So says Professor Ralph Hamann, Research Director at the UCT Graduate School of Business (GSB).

Hamann was addressing the GSB MBA Class of 1967 during their recent golden reunion celebrations. A group of business veterans who have witnessed the evolution of business from pen and paper to emails and smart phones, these alumni are excited at the possibilities that the current technological revolution holds. However, the dangers and challenges of AI, particularly in an emerging market context, were the focus of the discussion as the class engaged with Hamann on how to respond to this age of massive disruption.

As part of the discussion, Hamann shared current thinking of his GSB colleagues. Kurt April, professor in leadership, diversity and inclusion and Chair of the Allan Gray Centre for Values-Based Leadership, is excited about the expanding options and opportunities technology can bring to improve workplaces through remote working and gaming for instance. Associate Professor Hamieda Parker, lecturer in operations and supply chain management, is also positive about the possibilities for efficiency, especially in operations, but is concerned about the downside of job losses. And, Professor Thomas Koelble, convener of the markets in emerging economies course on the MBA, warns that “our democratic systems cannot accommodate an ever-increasing concentration of wealth and power”.

Hamann stressed that technology itself is not to be feared, and that there is no way of predicting how technological advances will affect individuals or organisations. He added that history is full of examples of pundits who got it wrong – Darryl Zanuck head of Twentieth Century Fox in 1946 famously said: “TV won’t hold up after the first six months. People will get tired of staring at a plywood box every night”.

A recent McKinsey report also shows that while there has always been a fear of technology and how machines might replace jobs, over time, these technological advances often lead to new industries and increased job creation. “However, the issue here is the time lag. People will not have these new jobs straight away, and they will require different skills to perform them,” said Hamann.

The best way to face the AI challenge is therefore to keep abreast of innovation and to empower organisations to be agile and adapt to change, said Hamann. The focus for individuals and organisations should be to put in place structures which re-skill people and value social and environmental performance.

Ken Dreyer, a 1967 alumnus now living in Boston, shared his experience of working with a B Corporation as a way in which the business world might look to other models to mitigate the risks of job losses in the continual quest for profit. B Corporations are for-profit companies, certified by the global non-profit B Lab to meet standards of social and environmental performance and accountability. “If you look at B Corporations’ bottom line performance, they often out-perform companies that don’t do this,” he said.

Hamann agreed that businesses that value people, as much as profit, may gain a competitive advantage in that consumers may support organisations that build local communities and are seen to value and reward their people.

The 4th Industrial Revolution is clearly both an opportunity and a risk, not only for society and for current and future leaders, but also for the GSB itself. To deliver agile individuals and organisations fit for the future, Hamann concluded that the GSB is responding to the current environment in several ways. “The GSB is staying abreast in our research; innovating in what we teach to prepare students for risks and opportunities; innovating in how we teach by expanding into blended learning with a mix of on-line and face-to-face offerings; and finally, by continuing to provide thought leadership to the public and private sectors.”

#10 Winter 2018


Telling the GSB’s stories

As South Africa’s oldest business school, the UCT Graduate School of Business (GSB) is rich in stories of its transformative potential and newly appointed marketing manager, Darren Ravens, is looking forward to being part of the team that tells them.

Ravens brings a wealth of experience in ecommerce, online marketing and brand management to his new position. A former brand manager for Zando and head of eCommerce at Bata South Africa, he also co-founded the digital marketing consultancy, Black Lotus Network, and was an integrated marketing manager at, a digital publisher that forms part of the Media 24 group.

Several months into the job, he says he finds more reasons every day to be excited about his new role. “It is a very stimulating place to work and a great industry to be in. The GSB, in particular, is a very energising environment.”

He adds that while it is great to be working with a strong and established brand like the GSB, the environment is very competitive and no business school can afford to rest on its laurels. “We have to be working constantly to ensure that the positioning of the school is aligned with its strategic objectives. We have to keep our finger on the pulse of what the perception is in the market and ensure that the brand responds to what is happening out there.”

Ravens is himself an MBA alumnus of the school – graduating seven years ago – and so he has both an inside-out and outside-in perspective on the school. He says that the value of the MBA is undisputed and that it had a significant impact on him personally and professionally. “The skills that I gained at the GSB I have carried with me. And the ones I most value are the interpersonal skills and skills to manage relationships, these are really vital if you want to climb the ladder in any organisation.”

One of the most important aspects of his job, he says, will be to ensure that the GSB is able to continue to attract the highest calibre of talent and grow the diversity of the student and faculty body. To achieve this, he says marketing will take a content-led approach, which offers something valuable to an audience, without any obligation.

“People are attracted to stories because we are wired to relate with others. Human beings have been telling stories from the moment we could talk!”

“This is an exciting time to be a marketer,” concludes Ravens. “We have many tools at our disposal and the opportunity to learn something new every day. But we need to remember that our ultimate goal is to help our students and stakeholders towards success. Ultimately if our customers succeed, then we have succeeded too.”

Green shoots in Africa

After a stint working at Harvard University in the US, Dr Grieve Chelwa is back home in Africa, to take up a new position as lecturer of economics at the UCT Graduate School of Business (GSB), and he says there is nowhere he’d rather be.

His new role brings him closer to the issues that inspire him. Only a short while ago, he was at one of the world’s top universities, with access to the finest library and research facilities. “In Boston you are surrounded by the sharpest minds, with Harvard on the one side and MIT on the other, and yet I felt compelled to come back to Africa,” he says.

“The GSB is the best business school on the continent and it has bold plans for expansion. It is also attracting students from all over the continent and this creates an atmosphere of engagement that is very stimulating and exciting.”

Raised in Zambia where he did a BA in economics with statistics, Dr Chelwa first worked in the private sector before joining academia. His resume includes stints as a management associate for Citibank based in Johannesburg as well as working as a researcher for the Centre for Financial Regulation and Inclusion (Cenfri) in Cape Town and an internship with the Central Bank of Zambia. He then furthered his studies with postgraduate degrees in economics at UCT and was an inaugural postdoctoral fellow at the Centre for African Studies at Harvard as well as a visiting postdoctoral fellow at the Wits Institute for Social and Economic Research (WISER). Apart from his teaching work and research, Dr Chelwa also likes to blog about development issues and has been published widely.

His research ranges from issues surrounding the economics of education in Zambia to the economics of tobacco control in Africa as well as impact evaluations of market failure interventions in Southern Africa. He is currently working on new research in development economics in the agricultural sector attempting to address the disparity in agricultural output that exists between African farmers and those elsewhere in the world. “Farmers in Africa need tractors and equipment, they need fertilizer and technology, hybrid feed, irrigation etc. It is not a question of getting them more money but rather at directing investments better and channelling those funds in more productive and effective ways,” says Dr Chelwa. “So my research is looking into what needs to be implemented to improve outputs; should there be more subsidies or grants, what the implications are of better prices and what kind of interventions are the most effective.”

Another idea he wants to explore is around why the African continent is lagging behind both the West and East in terms of industrialisation and how this trajectory can be shifted. He is currently teaching across all academic programmes at the school and says that as soon as he is settled in, he hopes to turn his attention more fully towards his research. “The GSB has world-class resources too and from a professional point of view in terms of opportunities to better myself as an academic, there really is no better place to be.”

#10 Winter 2018


UCT GSB gets AMBA stamp of approval

The UCT Graduate School of Business (UCT GSB) has cemented its international reputation as one of the top business schools in the world by again being awarded the AMBA accreditation from the Association of MBAs, which will be effective for a further five years.

“The AMBA accreditation is vital to us as a business school,” says Dr Kutlwano Ramaboa, director of International Relations at the UCT GSB. “It is one of the highest standards of achievement in postgraduate business education and only the best business schools around the world are honoured with it.” The UCT GSB is one of just three business schools in Africa with triple-crown accreditation, meaning that it is accredited by the three largest and most influential business school accreditation associations.

Dr Ramaboa says that accreditations are an endorsement of the quality education that the business school strives to provide while increasing the school’s visibility internationally. “This means we are able to attract more international students and faculty. The world is increasingly globalised and it is imperative that we expose all students to diverse perspectives and cultures in order to enrich the learning experience by avoiding the assimilation trap and prepare them to operate successfully in any environment.” She says accreditations also help with attracting and arranging international exchange partnership with good schools in different regions as they are often used as one of several criteria giving a guarantee in the quality of education.

“Our students can select full semester exchanges, shorter summer/winter schools, and one-week immersion options from 45 partner schools with whom we have bilateral exchange agreements, as well as 29 schools from the Global Network of Advanced Management (GNAM) – a Yale School of Management Initiative,” Dr Ramaboa says.

In addition to pursuing accreditations, the UCT GSB also works on improving its international profile through membership of international associations and networks, offering students and faculty international opportunities that further enhance the impact of the school. Affiliations such as the Global Business School Network (GBSN), the Principles for Responsible Management Education (PRME) – a United Nations supported initiative – and the Academy of Business in Society (ABIS), afford additional opportunities for UCT GSB faculty and students to collaborate internationally on teaching and research.

“Through research, the school is committed to participating in leading international scholarly conversations,” says Dr Ramaboa.

Helping clients achieve their strategic goals

From a pan-African leadership programme for a high end bank to a programme to help school principals in the Western Cape be more effective in the day-to-day running
of their schools, the GSB’s business development team is delivering learning experiences across multiple sectors, catering for local and global clients.

“Customised programmes speak to our respon-siveness, not only to what needs to be taught but also to where and how learning can take place around business demands,” says Rayner Canning, Business Development Director at the GSB. “Our goal is to help clients achieve their strategic goals and we work with them in ways that suit them best to make sure we deliver the desired impact.”

The GSB runs an Executive Development Programme for Agra Ltd. in Namibia, for example. “This large agri-processing company has very specific peaks and troughs during the week. The only time they can step out of their day-to-day is over the weekend, so we customised delivery of the course to take place in Namibia over weekends.”

Programmes offered range from targeted short courses and formal academic qualifications such as the Postgraduate Diploma in Management Practice (PGDip). Examples include a pan-African PGDip for Barclays ABSA Africa and a suite of client centricity programmes for Standard Bank, which has been running for four years, and has seen over 650 delegates. In a world-first collaboration between a business school and a design school, the GSB has also partnered with the globally renowned Hasso Plattner Institute of Design Thinking (d-school) at UCT to deliver a programme for Sanlam, blending design thinking with senior leadership development.

Other GSB clients include global heavyweight McDonalds, the Twinsaver Group and Cell C. “It’s important to note that we don’t only cater for high-profile corporates,” says Canning. “Our Principals Management Development programme, a highly successful collaboration with the Principals Academy Trust in the Western Cape is an example of our commitment to local leadership development.”

GSB bids farewell to founding director of the Bertha Centre

Dr François Bonnici, founding director of the Bertha Centre for Social Innovation and Entrepreneurship at the UCT GSB stepped down at the end of March, marking the end of a highly successful seven-year tenure at the helm.

The Bertha Centre was established in 2011 as a partnership between the UCT GSB and the Bertha Foundation and it has made a key contribution to the ongoing mission of the GSB to become a more relevant business school in Africa.

“The UCT Graduate School of Business and the Bertha Foundation would like to thank Dr François Bonnici, for his dedicated work in establishing what is now one of the leading centres for social innovation in the world,” says former director of the GSB Mills Soko.

“François and the Bertha Centre team have made an indelible impact on the GSB. They have helped introduce social innovation into the core identity and curriculum of the school, and explicitly extended the scope of management education and research into areas of social purpose. During his tenure, students motivated by a social mission have been attracted to study at the GSB, enriching the classroom experience for all. Our learning spaces have also been expanded to a broader community of students and practitioners through the creation of the Solution Space on our Waterfront campus and in Philippi – the university’s first informal campus in a township community. Furthermore, the Centre has been instrumental in building the fields of social innovation, social entrepreneurship, innovative finance and impact investing in Africa, positioning the school as part of a new wave of thinking and action to realise new possibilities for the continent.”

New course to boost leadership in the hospitality industry

Professionals working in the hospitality industry will, for the first time, have access to high-level, industry-relevant learning in South Africa thanks to an innovative partnership between the UCT Graduate School of Business (GSB) and industry players that has seen the launch of a new executive education short course tailor-made for the industry.

“There is nothing like it in the African market and it illustrates the possibilities of collaborative innovation,” says Jonathan Steyn, convenor of the Hospitality Leadership short course at the GSB.

The course fills an educational gap for senior hospitality managers and mid-level managers. Steyn explains, “there is a lot of technical and operational training and education in the hospitality industry. People move up through the ranks, and they are very hands-on, but they haven’t necessarily had the opportunity to develop the conceptual and critical thinking skills needed to make that transition to senior leadership positions.”

Chris Godenir, General Manager at The Peninsula Hotel, who is one of a group of industry leaders who approached and worked with the GSB to design the course content, says that the course is designed for and by the South African industry, and seeks to find inventive solutions for emerging market contexts.

“The aim is not to tell people how to run a hotel the way we’ve done for 30 years, but to use our experience to address current challenges. Together we can think about and share new ways of doing things.”

The longer-term goal is also to create a body of leadership knowledge that will get passed down to future leaders, says Michael Pownall, Managing Partner at PMR Hospitality, who also collaborated on the course design.

“The cohort of delegates will form an alumni group which builds year-on-year. The only industry body currently is FEDHASA, and they are supportive of this effort to strengthen industry leadership skills,” he says.

The course stresses the importance of innovation in leadership and strategic thinking. “It encourages blue ocean thinking, especially around how to deal with disruption in the industry and also focuses on sustainable innovation in balancing social, environmental and economic purpose, for example how to manage the current Cape water crisis,” says Steyn.

The Hospitality Leadership short course ran from 8-16 June in Cape Town.

South Africa’s oldest business short course celebrates its 100th intake

The Programme for Management Development (PMD) at the UCT Graduate School of Business (GSB) is the longest continuously running business short course in South Africa and this September it celebrates its 100th intake. The GSB launched PMD in 1968 two years after its pioneering MBA, at a time when there were just two business schools in South Africa.

“Fast-forward 50 years and Executive Education in South Africa is now a fiercely competitive, multi-billion Rand industry,” says Kumeshnee West, Director of Executive Education at the GSB.

West says that it is a tough but exciting environment to operate in. “You have to be ahead of the game,” she says. “Yes we get to draw on our five decades of experience at the GSB, but we cannot rest of our laurels.” She adds that PMD has stayed the distance because it has been able to reinvent itself as the years have gone by. “The need for management development is a constant,” she says, “though what is required of managers and leaders has changed over time. Today’s working environment is of course changing at an exponential rate thanks in part to the rise of AI and digital technology – and business schools have a duty to keep ahead of this curve.”

Jenny Boxall, who convenes the PMD agrees. “Financial acumen and technical expertise are still rated highly in workplaces, but research shows that managers with self-awareness and self-knowledge are more effective and better able to lead productive teams in today’s workplaces. The course is therefore putting ever-more emphasis on self knowledge, exploring how people communicate, how messages are interpreted and how this process can be improved upon.”

The WEF Future of Jobs report puts people management, emotional intelligence, and coordinating with others in top 10 skills list required to be successful in 2020. “While some people are naturals when it comes to these so called softer skills, most benefit from guidance in developing them,” says Boxall. “By gaining insight into your own strengths and weaknesses and becoming attuned to your blind spots, solid people skills are developed that make us better at relating to others as well.”

The 100th intake of the Programme for Management Development runs in September in Cape Town. The programme will also be offered for the first time this year at the GSB’s Johannesburg office in Sandton.

For more information
on upcoming GSB short courses.
Contact us on:
T: 0860 UCT GSB

#10 Winter 2018

Can Africa rise again?

One of Africa’s most established modern cities, Nairobi is on the top five global watch list of fast modernising cities that are attracting new global business.

Africa has an opportunity to ride the wave of recent political reform and leadership shifts to boost economic growth, but questions remain as to whether the continent can achieve the necessary diversification of its economies and capitalise on the adoption of new technologies offered by the 4th industrial revolution to catch up with the rest of the world.

Recent political changes in Africa have sparked optimism that the continent, once perceived as a hopeless region, is on the rise again. Angola’s Jose Eduardo dos Santos and Zimbabwe’s Robert Mugabe both vacated office in 2017 after a combined 75 years in power.

The new leaders of the two Southern African nations, João Lourenço and Emmerson Mnangagwa, have both promised to root out corruption, open up their economies, and create a business-friendly environment to attract investment and create jobs. In South Africa, the continent’s economic powerhouse, the election of Cyril Ramaphosa as president following the reluctant resignation of scandal-ridden Jacob Zuma earlier in 2018, promises to kick-start the country’s struggling economy and avoid a further credit ratings downgrade.

According to the World Bank, growth in Sub-Saharan Africa is estimated to have rebounded to 2.4% in 2017, after slowing sharply to 1.3% in 2016. The rise reflects a modest recovery in Angola, Nigeria, and SA – some of the region’s largest economies – supported by an improvement in commodity prices, favourable global financing conditions, and slowing inflation that helped to lift household demand. Growth in the region is projected to continue to rise to 3.2% in 2018 and to 3.5% in 2019, on the back of firming commodity prices and gradually strengthening domestic demand. However, growth will remain below pre-crisis averages, partly reflecting a struggle in larger economies to boost private investment, the World Bank notes.

SA is forecast to tick up to 1.1% growth in 2018 from 0.8% in 2017. The recovery is expected to solidify, as improving business sentiment supports a modest rise in investment. According to the World Bank, policy uncertainty is likely to remain and could slow needed structural reforms.

However, in order for these countries and the broader continent to realise their full potential, diversification, prioritisation of the manufacturing sector and the adoption of technology will be key going forward, according to Dr Grieve Chelwa, senior lecturer in economics at the UCT Graduate School of Business and Associate Professor Mills Soko, former director of the GSB. The two co-convened a short course on the Political Economy of Doing Business in Africa as part of the March 2018 GNAM Global Network Week, which unpacked these issues for a class of international students.

Diversification essential for sustained growth

Diversification of African economies is essential to drive growth, build market resilience and weather shocks in the face of difficult global economic conditions. To economically rise, a country has to produce sustained growth well into the future, China being a classic example. Sustained economic growth is important as it improves incomes and thus the livelihoods of the populace, says Dr Chelwa.

But sustained economic growth on the continent has largely been elusive, in part because of the over-reliance on commodities, which are vulnerable to price shocks. For the better part of the last decade, Africa’s economic growth has been largely driven by commodities and the exports of raw materials. Yet, according to Associate Professor Soko, economic history has often revealed that without significant diversification into manufacturing and services, and away from resource extraction, economic growth prospects of countries are generally always bleak.

It is thus a major concern that while many African countries have in recent times enjoyed above average growth rates (growth across the continent has averaged about 5% over the past decade), the growth has taken place in the context of limited economic diversification and structural change.

Furthermore, it is disappointing to note that Africa’s share of global manufacturing fell from 3% in 1970 to less than 2% in 2013. Manufacturing, at 10% of total African economic output, is lower than that of other developing regions, notes Soko. Going forward, it will be imperative for Africa to focus on boosting the manufacturing sector, which is vital, particularly in terms of job creation.

Riding the wave of the 4th industrial revolution

Africa should also harness technology, including artificial intelligence, to boost economic growth. Indeed, the world at large has made major progress when it comes to machine learning which has transformed the efficiency of public and private sector organisations alike. However, Africa has generally struggled to harness these cutting-edge technologies to improve public and private sector operations and boost economic growth.

Nouha Abardazzou an analyst at Infomineo, a business research company focusing on Africa and the Middle East, has argued that many African countries are still battling with issues related to the first, second and third industrial revolutions such as electricity, mechanisation of production and automation. Therefore, questions about Africa’s preparedness for the 4th industrial revolution (a digital revolution that is fusing the physical, digital and biological worlds), are being raised: Is Africa catching up with the continual advancement in technology?

“From cheap abundant labour to natural resources, Africa’s current strengths seem not to match with the fundamental needs of the 4th industrial revolution that consist mainly of colossal investment capital, research and development (R&D) and highly-skilled talent. However, the ongoing industrial revolution represents an opportunity, if used well, that will enable Africa to become a main player in the world economy,” says Abardazzou.

According to a report by PwC, there is evidence that Africa is embracing new technologies in a way that sets the continent apart from others and with the potential to transform Africa’s economic prospects, create new target markets and unprecedented consumer choice. The continent is also less constrained by legacy than other regions, creating a clean sheet upon which innovators can develop new business models and blur industry boundaries.

With agriculture being the largest employer in Africa, innovative technology is increasingly important to modernise the sector and improve the livelihood of a large farming community. Innovation in education, healthcare, energy and finance also offer a significant opportunity for the continent – some of this is already unfolding. In the past two decades financial innovation has increased exponentially and is now radically changing the very concept of a banking-centred financial system and African innovation has been at the forefront of some of these advances – think of M-Pesa in Kenya for example.

Cashing in on the demographic dividend

Thus, despite some of these concerns about the hurdles impeding Africa’s economic growth, there are encouraging signs that the continent could establish itself as a major economic player; the political environment looks stable, there is growing appetite amongst the investment community to venture into the continent, and a young and rapidly expanding population and middle class means Africa has an opportunity to reap the demographic dividend and become a new powerhouse of production and consumption in the 21st century, just as Asia did in the late 20th century , says Chelwa.

He says most countries on the continent now have stronger democracies; there are fewer civil wars, and stronger institutions such as the judiciary and central banks (which could explain why most African countries have recorded single digit inflation rates in recent times). Constraints that have held Africa back have largely been loosened. The continent basically now has all the pre-conditions of catching up with the rest of the world, Chelwa points out.

It is thus imperative for business schools on the continent to drive this message home: Africa is rising once again and is an ideal place for business. Higher education can be a key driver to narrow the gap between African countries and developed nations via targeted skills development. As renowned professor William Gumede once stated: African higher education institutions will actively have to research what needs to be done to make current African industries globally competitive, develop new production chains around them, develop new strategic sectors, introduce value-added services and find avenues for beneficiation.

To capitalise on the opportunities, the continent’s new leadership must meanwhile continue to drive reforms that create the conditions for growth and prosperity and embrace change and technical disruption as an opportunity. Africa is on the cusp of something great. Working together there is a chance we will realise it.

Global Network Weeks are organised by the Global Network for Advanced Management (GNAM). The GSB is one of just 32 global business schools that are members of GNAM.

#10 Winter 2018

Wealthy Africans have the power to accelerate sustainable change in Africa

Poster for the film Black Panther. Copyright belongs to the distributor, Walt Disney Studios Motion Pictures, and the publisher, Marvel Studios.

A new generation of High Net Worth Africans could provide the financial muscle Africa needs to shift its fortunes.

Young Africans are increasingly expressing their ambitions and desires to be wealthy. Not only that, but they are aspiring to create intergenerational wealth. From land expropriation debates on Twitter to the enthusiasm surrounding the film Black Panther, set in a fictitious African country with great wealth, the topic of African wealth is taking centre stage. And whether in fact or fiction there is a growing awareness amongst Africans that wealth has the power to drive change and development to eradicate inequality and poverty on the continent.

The definition of wealth can be as debatable as that of inequality; however in monetary terms wealthy individuals, known as high net worth individuals, (HNWIs) are individuals with a minimum of US$1 million in net investable assets. The HNWI includes millionaires (US$ 1 milion – $10 million) multi-millionaires (US$10 million – US$30 million) and Ultra HNWIs (US$30 million or more ) in net investable assets. At the end of 2016 there were more than 13 million HNWIs globally, owning investable assets in the region of US$ 70 trillion.

African HNWIs accounted for a little over 1.1% of HNWI globally and owned 1.2% of the wealth assets. According to the AfrAsia Bank Africa Wealth report of 2017, the number of HNWIs in Africa is expected to rise by 36% by 2026. It is also estimated that at the end of 2016 US$132 billion in African HNWI assets were managed by wealth management companies in South Africa, the UK and Switzerland.

The wealth of individuals in Africa is the financial muscle that can potentially accelerate sustainable change for the continent. Whilst some may advocate for African governments to increase tax collection from HWNIs, getting more HNWIs to be committed to allocate their wealth to return-generating sustainable finance alternatives could complement governments’ roles in financing development and ultimately, sustainable change in Africa.

The goal of sustainable finance is to allocate more capital towards return-generating investable opportunities in the real economy in a manner that achieves sustainable development goals such as fighting social inequality or climate change, promoting gender equality and biodiversity. This is not only a European or US trend. According to the latest African Investing For Impact Barometer, as of the end of July 2017, more than US $428.29bn of investment assets in the Sub-Saharan regions of East, West and Southern Africa were allocated to investment strategies which seek to generate social or environmental impact whilst generating investment returns. However, the investing for impact industry is still in its infancy on the continent. The Barometer, which is published annually by the Bertha Centre for Social Innovation and Entrepreneurship at the UCT Graduate School of Business, reveals that while investment opportunities in sustainability and impact themes such as renewable energy, agriculture, inclusive financial services, socio-economic transformation as well as infrastructure exist, they are still largely untapped.

Global asset and wealth management trends are pointing to an increased demand for these approaches to investment among HNWIs. European surveys have pinpointed HNWIs as an important agent of change and acceleration of sustainable finance notably around sustainability and impact investing. A similar survey in South Africa on a database of more than 800 HNWIs demonstrates that despite some present investment and future appetite from South African HNWIs, the lack of marketing and information provided by fund managers and investment advisors appears to be hampering further uptake.

Undoubtedly, top fund managers in Africa who are leading the way on sustainable and impact investing could do a better job to connect their private wealth clients to the positive financial and sustainable impact they could achieve for the continent through their wealth – without sacrificing returns.

Much also still need to be done to make sure that the wealthy African elite – young and old – are aware of the options available and that they understand that they themselves hold a good deal of power to bring about positive change in their respective countries and on the continent as a whole. Wealthy investors should be asking more questions of their fund managers as to where their funds are being invested and ideally, leading by example, in investing for impact and steering the continent towards a brighter future.

#10 Winter 2018

Innovation and education go hand in hand

Innovation is helping to ensure that Africa’s children can receive the education they deserve, and educated Africans in their turn are driving innovation. It’s a cycle of excellence that we need to invest in to ensure that nobody is left behind as the 4th industrial revolution gathers pace.

Innovation is increasing exponentially and the world our children and grandchildren will know is one we cannot conceive of now. But it’s also true that “the world” is not homogeneous, and that as we innovate, we must be mindful of development objectives. We need to guard against leaving people behind!

The risk is real. According to a new report from economists Anton Korinek (Johns Hopkins University) and Joseph E. Stiglitz (Columbia University) economic inequality “is one of the main challenges posed by the proliferation of artificial intelligence and other forms of worker-replacing technological progress.”

Artificial intelligence advancements are likely to increase the disparity of wealth between the rich and poor – already a worsening global crisis. A recent report from Credit Suisse found the richest 1% own half of the world’s wealth and a new analysis produced by the House of Commons library says that they are on track to own two-thirds by 2030 unless action is taken.

Short of changing the rules of the economy, one way to guard against this growing divide is to invest in education to prepare young people more effectively for this unknown future.

Education is essential for the continent’s development under any circumstances, and yet worryingly, 17 million out of 128 school-aged children across Africa are unlikely ever to see the inside of a classroom – according to an analysis from Seedstars. Another 37 million children won’t be able to receive regularly at least a basic education because of child labour, insecurity or weak education policies.

Even more concerning is the prediction from the International Commission on Financing Global Education that even for those who are in formal education now, without major shifts in how we use our educational resources, by 2030 half of all the youth – over 800 million young people – will not have the skills needed to keep up in a new economy.

Much needs to change, not only in what we teach – the commission recommends a breadth of skills are imparted to children including critical thinking and communication skills – but also in how we teach. Here the application of new technology to learning offers huge opportunities, from enhancing learning to improving data collection to driving down costs.
Africa is one of the fastest growing markets for mobile phones and mobile EdTech or m-learning. As a result, it has one of the fastest growing e-learning markets, with revenues reaching USD 355m in 2013 and will more than double to USD 758m by 2018, led by Senegal, Zambia and Kenya

South Africa, too, has its fair share of innovators. Four years ago already, the BBC noted that education in South Africa was getting an “e-learning digital makeover”, in which “old-fashioned, dusty textbooks (were) gradually being replaced by tablets, computers and mobile phones”. Some of the developments South Africa has seen include entrepreneur Sibella Knott-Craig’s Slimkop, an educational app for children under the age of seven which is available for under R40; the free Vodacom e-school, which is also zero-rated, meaning it doesn’t incur data charges; and Thinkahead, a PDF document listing iPad apps by subject and grade.

Then there are apps that specifically encourage science learning in young students: for example one by Toca Lab, which gives children aged seven and up an interactive tool to help them learn about the periodic table and figure out their own virtual laboratory experiments; and EveryCircuit, which has a free version and teaches learners about electric circuits. Cape Town based Rethink Education, a mobile platform, pushes content to instant messaging platforms, while the web platform is used in schools, improving dramatically the engagement of learners. Eiffel Corp, an education and training company for tertiary institutions, has been producing e-learning materials to support students from all walks of life.

And it is not only the private sector that has been working hard. In the Western Cape, for example, the provincial education department has been rolling out a R1,2 billion e-learning initiative over a five-year period and across the continent, governments are embracing technology, providing laptops in schools and committing to Sustainable Development Goals with ICT at the heart. It is exciting to see. In a very real way, education drives innovation and development, and so innovation must drive education. It is a cycle of excellence that must be encouraged.

Of course there are still many obstacles to technology-enabled education on the continent from a lack of access to electricity to low internet and mobile penetration. Currently, just 29% of the continent can rely on a permanent access to the Internet. According to the GSMA Intelligence Mobile Economy report for 2017, mobile penetration in South Africa is particularly high, with Nigeria coming in second. South Africa has 37.5 million unique mobile subscribers and a 68% penetration rate, followed by Nigeria’s 86 million mobile subscribers, and 45% penetration. But just four other countries have managed over 20 million subscribers, namely Ethiopia, Kenya, the DRC and Tanzania.

An important priority must therefore be to drive greater mobile access for all Africans. We must pour our energy into creating the conditions that will support access to education – this includes actively promoting partnerships and investment in education innovation to facilitate an expansion of educational opportunity. We need to believe, as the International Commission on Financing Global Education Opportunity does, that it is possible to create a learning generation, where all people have the skills needed to thrive in the 21st century and nobody is left behind as the 4th industrial revolution gathers pace.


Kumeshnee West

Kumeshnee Westis the director of Executive Education at the GSB and an MBA graduate of the school. In her role at the school, she strives to create programmes that address unique challenges and offer participants the opportunity for authentic development.
#10 Winter 2018

Three truths to future proof your organisation

Automation, artificial intelligence and emerging technologies are changing our world and redefining the future of work. Organisations need to gear up to manage this transition wisely and this starts with understanding the new rules of the game.

The 4th industrial revolution has the potential to disrupt every industry in every country through large-scale automation, adoption of emergent technologies, big data and artificial intelligence. There are many predictions and estimates on how this will affect labour markets, but one thing is certain – the jobs we do, and the skills we need to perform them, will change, and rapidly.

A McKinsey report estimated that by 2030 at least one-third of the activities of 60% of occupations could be automated. This means that globally up to 375 million people may need to change jobs or learn new skills. A World Economic Forum report predicted that current trends in a disruptive labour market could lead to a loss of 7.1 million jobs in the next five years, two thirds of which are in administrative roles. And a study by Oxford University estimated that 47% of total employment in the United States is at risk due to computerisation, given that automation and computerisation are no longer confined to routine manufacturing tasks. Big data and artificial intelligence are allowing a wide range of non-routine cognitive tasks to be performed by machines.

While this may sound catastrophic, the good news is that just because large-scale automation may redefine the workplace this does not necessarily mean we will all be out of a job. Changes in technology also create new jobs and spawn new industries. The challenge is going to be ensuring that workers have the skills they need to transition to different jobs. The 4th industrial revolution poses a risk to job security only in the sense that not managing this transition can lead to greater unemployment and social inequality.

In approaching what lies ahead, managers and leaders should consider the following three truths.

1. Talent will be more important than capital

Klaus Schwab, chairman of the World Economic Forum believes that “in the future, talent, more than capital, will represent the critical factor of production”. To make sure they are ready for a future that is still emerging, organisations and people need to be adaptable, innovative and responsive. If up to 65% of the jobs of tomorrow don’t exist yet – it is impossible to “train” people in the conventional sense. Rather we need to invest in their essential capabilities.

To ensure we build talent that is capable of mastering change we need to invest in resilient leadership and emotional intelligence. Leadership skills are not tied to particular jobs or industries and solid leadership development provides the kind of transferable skills likely to be needed in the future. The WEF identified the top 10 skills that will be most needed in 2020 as: complex problem solving; critical thinking; creativity; people management; coordinating with others; emotional intelligence; judgement and decision making; service orientation; negotiation and cognitive flexibility.

In another survey by the Financial Times, researchers found that one in three employers struggle to find suitable candidates for the modern workplace and that functional skills in which MBAs are traditionally strong – such as finance and marketing – were becoming less useful to them than so-called soft skills. The employers surveyed said the ability to work with a wide variety of people (cited by 76%) and the ability to prioritise (cited by 72%), along with the ability to solve complex problems, were among the most prized skills – and the hardest to find.

These essential skills have long been part of most good leadership development, MBA and executive education programmes – and they will need to be scaled up. Business schools must ensure they are graduating the kind of managers and leaders needed in the real world of work.

2. Education needs to be flexible too

The WEF report recommends that organisations embrace talent diversity, leverage flexible working arrangements and incentivise lifelong learning to best manage the changes ahead. Lifelong learning and executive education certainly have an important role to play in a rapidly changing job market, and these programmes also need to be flexible and adaptable to students’ and organisations’ needs.

Massive Open Online Courses (MOOCs) already offer flexible access to lifelong learning and the number of courses available is rapidly increasing to meet demand. Many perceive the downside of online learning to be the loss of face-to-face interaction, which is still regarded as critical to the quality of education – specifically when it comes to learning and practising the essential skills identified by the WEF. Educational institutions are looking to fix this by offering a mix of traditional and online learning to reskill and prepare for workplace transition. There are opportunities for combinations and blends of one-on-one and group interactions at all levels of learning.

3. The link between education and business is a two-way street

The format of what is being taught needs to be flexible but so does the content.

As the WEF report suggests, education systems need to be re-designed if we are going to tackle the transitions ahead. This entails businesses, governments and educational institutions working together to provide curricula that meet current and future needs. The McKinsey report suggests that governments have a role to play in maintaining economic growth, scaling job retraining and workforce skills development, and providing income and transition support to workers whilst retraining. But they cannot do this on their own.

Educators supply industry with critical skills, and industry has a hand in shaping the talent pool and informing educational institutions of the changes they foresee and the skills they wish to develop. Businesses that invest in long-term partnerships with educational institutions to develop skills and respond to changes in the environment will stand a better chance of building a workforce that is future proof: suitably skilled, adaptable and ready for the challenges that we collectively face. As the African proverb goes: If we want to go far, we need to go together.

#10 Winter 2018

Putting EQ in everyone’s pocket

Mark Baker (right) and Theron Knighton-Fitt., co-founders of Mygrow.

An artful combination of film and neuroscience through technology has birthed Mygrow, The Emotional Intelligence Platform. Co-founded by MBA alumnus, Mark Baker, and incubated at the UCT Graduate School of Business Solution Space, Mygrow has a bold vision for helping individuals and corporates to flourish.

Mark Baker is an organisational psychologist who believes that navigating your way through life is an emotional skill. He says, “Emotional Intelligence (EQ) impacts every aspect of our lives.” Unfortunately, many people are lacking in critical EQ competencies such as self-motivation, emotional regulation, interpersonal competencies, decision-making and the ability to manage stress.

Baker wants to change this. In 2016, he put his money where his mouth was and, with one of his oldest friends, Theran Knighton-Fitt, co-founded Mygrow – an innovative and fast-growing online platform that is changing the landscape of EQ development. Mygrow caters for both individuals and organisations and works to develop EQ skills at the physiological level using a set of daily exercises that rewire the neurological architecture in the emotional centres of the brain.

“Improving EQ skills is hugely beneficial for individuals and organisations, as it can boost productivity by as much as 40% and have a profound effect on organisational culture and staff retention,” he says.

The vision was “to put emotional intelligence in everyone’s pocket”. Baker describes Mygrow as “leveraging technology to do everything that an organisational psychologist would typically do in an organisation, at about a tenth of the cost, with a much wider reach and richer data”. The start-up was incubated in the Solution Space at the UCT Graduate School of Business (GSB) and already services clients across the organisational spectrum.

After completing an Honours degree in psychology at UCT in 2003 and a Master’s in organisational psychology at Stellenbosch in 2006, Baker spent a decade working in leadership development through organisational programmes and individual coaching. He noticed that many EQ interventions were not creating lasting impact. “I noticed that there would be a powerful initial impact on people’s lives, but they would revert to old habits, or the organisational culture would drag people back into doing what they had done before.”

“I started researching the neuroscience behind EQ and realised that the pedagogy used in traditional training and development needed to change. Developing EQ, according to neuroscience, is like developing a physical competency such as physical fitness or playing a musical instrument. You need to exercise or practice over and over again – over a long period of time. Traditional EQ development approaches are a bit like reading a Men’s Health Magazine and hoping to develop a six-pack!”

Baker realised that there is no affordable way of developing EQ skills if you rely on the traditional model of sessions with a psychologist: it is too expensive, and too infrequent. Mygrow addresses this pedagogical shift with a video-based micro-learning platform to build EQ skills through daily practice, and coaching by a team of support staff. The use of short videos, games, quizzes and dashboards to track progress make it engaging and accessible. Each 15-minute daily session practices one EQ competency, for example decision-making is improved through developing competencies such as problem-solving, reality testing and impulse control.

This has huge benefits for corporations as employees show improvement in motivation, interpersonal skills and productivity. Developing EQ also leads to effective stress management and is shown to reduce absenteeism. Additionally, it is critical for effective leadership. Baker notes, that research shows that 85% of leadership skills lie in the EQ domain.

“The innovation of this business,” says Baker, “is that we bring film and neuroscience together through technology.”

“Film is an incredibly emotive medium for con-necting with people,” says co-founder Knighton-Fitt. “This is people’s lives we are dealing with, their marriages, their self-perception, their leadership challenges. We aren’t just teaching them some ‘interesting stuff,’ we are giving them tools to grow themselves. Technology in its essence is quite impersonal, and film is one of the ways we make the growth journey more human.”

Baker’s experience in his MBA played a huge role in birthing this idea and making it a reality. “The entrepreneurial courses inspired me and initiated my conversations with Theran. Towards the end of my MBA we applied, and were selected for, the three-month Venture Incubation Programme at the MTN Solution Space. They were incredibly helpful with arranging mentors, giving us start-up advice and office space.” The Venture Incubation Programme provides support to innovative start-ups and helps them build viable and scalable businesses. After a year and a half, Mygrow matured into a fully-fledged business employing 12 people.

Baker stresses that although Mygrow is catering for corporates, the heart and vision is aimed at helping people. “There is a massive social development aspect of Mygrow,” he says. “In the wider South African context, we often try to deal with systemic issues through structural or legislative changes. It is often too expensive to scale help down to each individual. Mygrow’s mission is to scale help to the agents – to equip everybody to flourish. Ultimately we want to deal with South African problems where the systemic change is inadequate because the agents in the system are psychologically disempowered to respond to the systemic changes.”

This has huge potential in education as EQ is a better predictor of academic performance than IQ. Baker hopes to scale Mygrow to students in the future, ultimately making it a pre-requisite for higher education.

Mygrow’s users have seen massive improvements in many aspects of their lives, Baker says. “We have seen reconciled marriages, better family relationships, stronger teams, and some people have overcome social anxiety disorders. Mygrow’s EQ development process works because the pedagogy is aligned with what causes neurological change. People are literally changing from the inside out.”

#10 Winter 2018

Making tracks: A delighted customer is your best marketing tool

In a high-tech world the opportunities for ecommerce entrepreneurs are seemingly endless. But to grow their bright ideas into sustainable businesses, they have to know how to market them – and it starts and ends with the customer.

Technology has become an incredible business enabler. It has not only reduced barriers to entry for entrepreneurs in many markets, but also created new ways of reaching customers.

We’ve seen the huge success of innovations like Uber that allow people to receive services on demand. The internet has also given businesses the ability to offer their products and services directly to consumers without the need for bricks and mortar shops.

The opportunities in ecommerce are so rich that new ideas seem to be launched every day. The best of them challenge traditional markets and disrupt the way that competitors are used to doing business.

Take Utyre for example – a tech start-up in Cape Town that has turned long-established business models in the tyre industry on their head. When South Africans have needed new tyres, they have always had to take the time to drive their cars to a fitment centre, where they invariably wait an hour or more for the work to be done. Nobody thought of taking this service to the customer. Until now. Utyre takes orders online, where customers can search for and choose the tyres they want, as well as where and when they want them fitted. A mobile fitment unit goes to wherever it is convenient for the client.

It’s a great idea, and one that has already proven successful in Australia, which is where Utyre’s founder picked up the model. However, the question that it and other businesses like it have to answer is: how do they turn their idea into something sustainable and successful?
Such businesses have very little in the way of competitive advantage. The model is easy to replicate and is therefore extremely vulnerable. If the established companies in the market feel threatened by the upstart, they could easily start their own, similar offerings, probably with far more capital behind them.

The power of first mover advantage

The one thing that disrupters do have in their favour, however, is first mover advantage. As the first company to bring a concept to market, they have some leverage. And it’s important for them to use this head start to build their brands in a way that will help them remain robust. The only way to do that is to have a strong value proposition and delight the customer so that they not only have return business, but their customers become their best marketing tools.

This is easier said than done, because a new business in an untried market faces real challenges. For a start, they are immediately competing against established companies with big brands that might have a strong physical presence and a fair amount of customer loyalty.

Customers are also used to doing things a certain way. They know how things work in the traditional industry and unless they have a dramatically bad experience, is there enough incentive for them to try something new?

For many people, ecommerce businesses also cause some anxiety around the safety of their information. There is still resistance to entering details like credit card information online, and the recent revelations about Uber’s data breach and cover up will do little to alleviate this concern. Uber Technologies Inc. paid hackers $100,000 (R1,389,670) to keep secret a massive breach that exposed the personal information of about 57 million accounts of the ride-service provider, it emerged last November.

In essence, the challenge facing the ecommerce start-up is building trust. They have to show that what they are offering is credible, that it delivers an experience superior to what customers are used to, and that it can do so repeatedly.

What people say about your brand carries weight

The ecommerce entrepreneur needs to appreciate that their very early customers are a precious resource and it’s critical that they are not disappointed because they will spread the word either way. Word-of-mouth is powerful in the early stages of any business and is even more so in an untested market. Potential customers will care a lot less about what the business is telling them about itself, than what they are hearing from others. Increasingly this is not just in personal interactions, but on social media. The things people say on Facebook, Instagram or Twitter have become vital in building a brand.

Social media is obviously an ideal platform for ecommerce businesses, since it is cheap and reaches an audience already using internet services, but start-ups also have to be careful about how they use it. What people want is authenticity. Customers are becoming increasingly sceptical about what businesses say about themselves, and rather looking for independent voices on social media.

This is true even when those voices are people they don’t know. This is the concept behind ratings sites like TripAdvisor. Potential customers may not personally know any of the people who have reviewed the restaurant they are thinking of visiting, but they trust their feedback far more than the restaurant’s own marketing material.

Few industries have the equivalent of TripAdvisor, however. Start-ups like Utyre therefore have to encourage their customers to spread the word on their own. They have to provide an avenue that encourages customers to talk.

While social media is powerful, it is not likely to be enough on its own. Start-ups need to find a multi-channel approach that engages people in other ways too. Whether that is through traditional media like radio, or identifying opportunities to reach potential customers in places where they are likely to be receptive to the idea.

In the case of Utyre, the company has distributed air-freshener tags that double as tyre tread depth indicators through a local car wash. It’s an innovative way to reach the kind of customer they are likely to attract – someone who wants convenience, values service excellence, and probably has a low interest in the technical details when it comes to their car.

Crucial in any marketing campaign however, is to make sure that when you do attract customers you deliver what you promise. If you give them more than they expect and encourage them to share that experience with others, you will have turned your customers into your most potent promotional tool. And for any start-up, that is marketing gold.

This article is based on a case study written with MBA student Warren Gatcke. The case study is one of ten recently published by the Case Writing Centre at the UCT GSB as part of a wider aim to increase the amount of African-centric, professional teaching material for business schools around the world.

#10 Winter 2018

The future of work: Fun and games and a healthy dose of humanity

The 4th Industrial Revolution is here. Recent reports have listed some 30 top companies that have already placed machines in key functions, and chatbots are widely moving from basic support roles into mentoring and counselling. To make sure these technologies build better workplaces, we will need leaders with more humanity and less ego.

Revolution is a time of dis-ruption, which typically means both development and adjustment. The 4th industrial revolution will be no exception. Game-changing developments can be expected and significant adjustments will need to be made. For companies and employees alike, it is a mixed bag – but one filled with immense possibility.

Already, some of these disruptions can be observed as a new wave of AI technology impacts the workplace. The world of gaming in particular is making its presence felt in this space, with many companies gamifying the user experience with a variety of online offerings, whether it be in sales, mock-up of experiences, storyboarding client solutions collaboratively, modular learning by employees, or even incentivising goals and KPIs for employees.

New ways of working

With progress, it is always a reality that some skills will be replaced. Major companies such as Petronas in Malaysia have already installed robots to complement humans in some key functions – for example, in the Treasury Department. Other organisations such as Novartis have implemented robot technology at manufacturing sites around the globe, in logistics and mobility roles.

In 2017, MSN reported on 30 companies – among them Amazon, DHL, Uber, Tesla, and Target – that have installed robots in key functions, alongside a prediction that robots would take over a large proportion of roles within the next 30 years.

But AI is not just going to benefit robots, it also benefits human employees. Human beings are becoming increasingly comfortable with the use of chatbots in their everyday lives, for instance, to the extent that some are even beginning to demand them in the workplace. According to Facebook Vice President, David Marcus, there are now more than 100,000 chatbots on the Facebook Messenger platform.

As this technology advances, we are beginning to see extraordinary developments: the use of chatbots for mentoring, and even coaching.Further, the use of AI is helping companies to become employers of choice with an emerging generation of graduates – by using technology to help them write bias-free job descriptions and adverts.

As some jobs become redundant, others are created. The faster technology advances in the workplace, the greater the need for highly skilled individuals who can manage these processes. There is a need to re-train staff and employees to embrace these new ways of working. Meanwhile, new job roles in companies, for instance conversational design staff, story-boarding staff, scrum-masters, employee experience roles, digital transformation team roles, customer interface roles – to name but a few that already exist – spring up as companies plot their technology roadmaps for continued roll-outs of greater and greater technological influences in their workspaces.

Fun and games

The world of gaming has also penetrated the workspace. Many companies are gamifying both the customer and employee experience. For customers, it can create a positive experience and drive higher engagement with the brand.

For employees, there are many benefits, including skills development. Gaming has been shown to increase motivation and productivity, encourage creativity, improve communication, increase engagement, improve innovative dynamics, grow specific skills, and transmit corporate image.
Moreover, there are personal benefits for employees, such as an improved ability to work well with others. These benefits include adeptness with failure, which comes with learning to try again and again; working often in cross-cultural teams or global virtual teams; collaboration; and enriched, highly stimulating or multi-sensory environments.

Gaming can be used for helping employees reach their KPIs, and for tapping into employees’ psychological drivers – a fundamental shift in how we view productivity.

Is there a role left for leaders?

Naturally, there are safety considerations when one operates in the online sphere. There are ethical considerations, as well as possibilities of cyber breaches and data security. More specifically, hierarchical structures and interpersonal relationships within workspaces change considerably when not only human beings are employed.

The impact of AI and other technological developments means humans now no longer lead humans only – distributive leadership can now be achieved between human and machine – and traditional notions of time and space no longer apply, as remote, flexible or constant work schedules become even easier. Traditional hierarchical and linear models of leadership may no longer apply as workplace structures change.

So how do leaders navigate these changes with integrity and still provide positive, impactful and ethical leadership? Leadership training is also affected. Traditional topics of leadership must be examined through a new lens. How do we lead in virtual environments? How do we lead across cultures? How does technology enable teamwork? Does the traditional notion of a team still exist? How do shared leadership roles work?

When we discuss communication and dialogue, how do we re-frame our discussions taking into account the impacts of these new technologies? How do we re-imagine our working and personal identities in this new world? Our sense of community and belonging? How do we communicate internally and externally, and how do we enrich multi-person, inter-personal dialogue with the many new avenues open to us? For example, when one brings in discussions with, or design of, a chatbot – communication requires an entirely new angle. And that is before we have touched on the considerable impact of social media, gaming, or the control of our personal data and privacy.

These are all questions we do not have the answers to yet, but which must be grappled with as the working world continues to change, and as business schools continually invite debate on, and dialogue with regard to, these important challenges.

Meanwhile, leaders will need to balance the exciting possibilities of technology with the development of their people. The World Economic Forum points out that while we don’t need everyone to be a software engineer, we do need employees who can learn, who can share, who can connect the dots and build good relationships with colleagues inside and outside of the organisation. Just as important, we need employees who understand how technology and society interact to drive progress for all stakeholders.

And if we need employees who can do all of that, then we need leaders to match. We will need to find new ways of learning and now more than ever, leaders will need to develop their inner resources to be effective.

Currently, the signs are good that the digital age can help us to reinvent the workplace for the better; to build more inclusive, productive, creative workspaces that are more attractive to employees. But to achieve all of that we are also going to need leaders who balance the benefits of AI with a healthy dose of humanity.

As the WEF’s Professor Klaus Schwab notes, “We need leaders who are emotionally intelligent, and able to model and champion co-operative working. They’ll coach, rather than command; they’ll be driven by empathy, not ego. The digital revolution needs a different, more human kind of leadership”.

#10 Winter 2018

Developing countries need to wake up to the risks of new technologies

Entrepreneurs sell old phones and tape recorders in Chennai, India.

While the 4th industrial revolution holds out hope for advancing economic and social development in developing countries, the risks and benefits of what it may bring need to be carefully weighed up – and the bulk of responsibility for this lies with governments.

Technological advances associated with the 4th industrial revo-lution – including artificial intelligence – allow the automation of an increasingly wide array of processes in increasingly interactive and sophisticated ways. These advances will likely give rise to many opportunities for economic and social development in developing countries, for instance by increasing food production.

But the new technologies also involve important risks, which have special significance in developing countries. They may build upon and exacerbate existing inequalities – both within developing countries as well as between developing and more developed regions.

Three of these inter-related risks are worsening unemployment, increasing concentration of economic power and wealth, and the spread of biases in influential algorithms. They will manifest in different ways and require different responses in diverse contexts. A cross-cutting problem is that too few developing country governments are giving these risks serious attention.

Risk 1: Worsening unemployment

The concern that new technologies – especially artificial intelligence – will lead to widespread job losses has been widely discussed. Of course, the fear that new technologies replace workers is an old one. But it’s been pointed out that historically new technologies have often given rise to more new jobs than the ones that have been automated away.

What’s perhaps different now is that the new, interconnected digital technologies will likely have a broader and more far-reaching array of abilities. And so the prospect of new kinds of jobs may well be diminished or limited to increasingly sophisticated domains, such as machine learning.

In addition, new technologies are now not just replacing jobs, but they are also enabling the disruption and restructuring of entire industries. For instance, Uber has already pulled the rug from underneath the conventional taxi industry in many places. Imagine the possible consequences of Uber’s shift to driver-less cars. Lower labour costs in many developing countries mean that investments in job replacing technologies will be lower. But other aspects of developing countries’ contexts increase the possible severity of this risk.

First, the dearth of effective education systems and skills in countries like South Africa will make it more difficult for people to be retrained for the technology intensive new jobs that will become available. Secondly, all governments are struggling to grapple with the implications of new technologies and associated new business models. This struggle is particularly strong in developing country governments. The case of Uber in South Africa reflects this.

Risk 2: Increasing concentration of wealth

Many developing countries are characterised by high levels of inequality within their populations. Elites within these countries will be more likely to make use of AI and other new technologies. This will further increase returns to capital widening the gap between elites’ productive capacity and that of everyone else.  A similar effect is likely at a global level. It’s no coincidence that Russia’s President Vladimir Putin has identified AI as the new terrain for global competition between nations.

New technologies’ advantages for capital are not just due to increasing productivity, but also because they allow new business models that may control or even dominate entire sub-sectors and stifle competition. For instance, it could become possible for a single company to control large fleets of automated vehicles in one or more large areas.

Again, much will depend on whether states can keep up with these developments and respond effectively. Particular attention will need to be paid to intellectual property and competition law. For instance, the strict enforcement of intellectual property rights for AI algorithms may well support increasing economic concentration. It’s also likely that national governments may have less and less influence over such decisions and trends. Even so, many developing country governments are not giving these developments their due attention.

Risk 3: Bias baked into algorithms

Finally, the AI algorithms that are at the centre of the 4th industrial revolution will reflect and perpetuate the contexts and biases of those that create them. Difficulties faced by voice recognition software in recognising particular accents are a relatively innocuous example. Of course, the promise is that AI will enable such systems to learn to address such issues. But the learning process itself might be influenced by racial, gender, or other prejudices.

AI algorithms are developed almost entirely in developed regions. Thus they may not sufficiently reflect the contexts and priorities of developing countries. Ensuring that AI algorithms are appropriately trained and adapted in different contexts is part of the required response. It would be even better if developing countries become more engaged in the development of new technological systems from the get-go.

Governments need to act

These three risks require that academics, businesses, and civil society actors attend to the role of new technologies in developing countries. But a special responsibility lies with governments. For the most part, they seem to be distracted. Governments ought to carefully assess the above risks in their national context and then establish corresponding policies and programmes. This includes national skills development and work placement platforms, intellectual property and competition policies, and local technology adaptation and development.

#10 Winter 2018

The one thing that will boost your chances of getting a job

Entrepreneurs sell old phones and tape recorders in Chennai, India.

In the age of job insecurity, study exchange programmes and international experience will elevate your employability. Up to 80% of employers look for people who have worked or studied overseas.

It is estimated that graduate unemployment in South Africa is at about 7%. That means that close to 600 000 graduates are unable to get a job – despite having a university qualification. Having a CV that stands out from the crowd can be tricky – unless, it seems, you have some international experience to show.

Whether you were able to study abroad, went on an exchange programme to another country or did a module of your course at a partner institution, research shows that this is one thing that could improve your chances of getting the job you want. According to the QS Global Employer Survey Report, more than 80% of 10 000 employers in 116 countries on five continents said they looked for graduates who studied overseas. Six out of 10 companies also gave extra credit for an international student experience.

This report also showed that the industries where international experience was most helpful – were energy, hospitality, electronics, and technology as well as finance and management.

Student opportunities are increasing

The good news is that in line with employer interest in international mobility, graduate schools are taking steps to ensure that their students have access to international opportunities. Exchange programmes are common in most good business schools. Some have even formed themselves into associations that are dedicated to this purpose. The Global Network for Advanced Management (GNAM), by way of example, is a network of 32 global business schools that was founded on the premise that enterprises need leaders who understand how markets and organisations work in increasingly diverse and complex contexts.

Each year, GNAM organises Global Network Weeks, which give students at network schools the opportunity to travel to another school for a one-week intensive mini-course that takes advantage of localised expertise.

This March, more than 700 students travelled to attend one of these weeks at 18 diverse schools including the University of Cape Town Graduate School of Business (GSB) in South Africa, Seoul National University Graduate School of Business in South Korea, EGADE Business School (Santa Fe, Mexico), and Haas School of Business, University of California, Berkeley. The GSB offered a course on the Political Economy of Doing Business in Africa.

According to a March University World News article, while Canada, the UK and the US are still the most preferred study destinations, students are increasingly seeking out opportunities in emerging market countries in Africa, Latin America and the East. Fast growing emerging markets in the Asia-Pacific, Latin America, Africa and the Middle East are increasing the capacity of higher education systems to attract international students, encourage student exchange and boost economic growth.

People with international experience are easy to appoint

It is much easier to appoint someone who already has inter-cultural skills and international experience, and studying abroad is an avenue where you can gain recognised international experience. According to the IIE (Institute of International Education), overseas study is a top skill for employers who are interested in people with a diverse, global background. One of their studies states that international study gives job candidates an important edge – adding to their CV qualities like adaptability, practical knowledge and experiences that enhance their professional skills and improve their career productivity.

At the 2017 IIE Generation Study Abroad Summit, it was shown that knowledge from study abroad also led students to landing more jobs. “Now more than ever, companies are no longer just looking for technical skills, they are also putting a greater focus on an employee’s ability to speak another language, demonstrate respect for others and cope with cultural differences,” writes Eric Friedman, CEO of eSkill Corporation.

Because an international workforce is good for business

The value of having employers who are culturally sensitive and attuned is obvious – particularly for multinational corporations working across various borders.

While digital solutions can help to bridge the gap – with meetings held via Skype, keeping in contact through WhatsApp and Facebook – technology cannot replace a human presence when building relationships, getting to know a foreign culture and forging the kinds of partnerships that especially joint ventures need to survive.

HR specialist and author Frank Horwitz, who convenes a course on strategic HR at the UCT Graduate School of Business, says between 30-70% of joint ventures fail due to cultural differences as a result of poor communication, a lack of sensitivity and awareness, labour tensions and operational stresses.

However, putting in place policies around international mobility is complex and is thus a key challenge facing the HR industry today. Companies know that the ability to offer compelling global opportunities is likely to attract the top talent and top talent will allow them to close skills gaps and fuel business growth around the world. However, international assignments impose immense cost on the organisation and increased stringency on labour laws in many countries do not make the task of sending assignees abroad easy.

If you get an internationalopportunity – grab it

Living abroad builds personal mastery, develops resilience and broadens perspectives – all key leadership qualities that employers, especially multinationals, look for in their top executives. International experience impacts on attitude and behaviour, shaping awareness and sensitivity to other cultures and diversity, and improves vital communication and relationship-building skills.

So, if there is one thing you can do to improve your chances of getting your dream job – especially in an age of increasing job insecurity – it is to demonstrate that you are internationally savvy.

Make sure you take advantage of study abroad opportunities or even perhaps learn a foreign language. These markers can be used as leverage to advance your career and job search.


Amena Hayat

Amena Hayat is the Career Services Manager at the GSB. Formally in the corporate environment with expertise in HR Talent Management, she brings perspective and understanding of the marketplace to her role. With a degree in economics and organisational psychology from UCT, she also has a postgraduate qualification in management marketing.
#10 Winter 2018

Using blockchain to stamp out development aid fraud

Rufaro Masiiwa

Participating in South Africa’s first-ever Blockchain Hackathon organised by Linum Labs and UCT, MBA student and Solution Space scholar Rufaro Masiiwa and her team designed a platform to reduce corruption and fraud in the development aid sector.

Though the claim that 70% of aid budgets are “stolen off the top” has been widely debunked, it is sadly undisputed that the loss of aid to theft and fraud is a cause for concern across the developing world. In a worst case scenario some 30% of aid is lost to corruption and fraud, then-UN secretary-general Ban-Ki Moon pointed out at a high-level social panel on accountability and transparency in 2012.

It was this figure that inspired Rufaro Masiiwa, a modular MBA student at the UCT Graduate School of Business (GSB), to work on developing a more secure solution to help donors transfer monetary aid to beneficiaries. Some of the MBA’s core learning goals include understanding the leadership challenges of diverse national and international environments, as well as sustainable development issues and the role of business in promoting these, so her concern dovetails with her work in the classroom. But Masiiwa really got to develop this idea when she was selected to participate in Africa’s largest BlockChain hackathon Unblock the Block, hosted by Linum Labs and UCT research institute the African Institute for Financial Markets and Risk Management (AIFMRM), earlier this year. The 10-day event was looking to surface relevant blockchain solutions with a positive application on the African continent and saw almost 80 participants from around the world attending.

Masiiwa’s team, Funds Aid, built a platform that would help solve the problem of transferring monetary aid from donors to beneficiaries. “Nearly a third of aid is lost to corruption and fraud. Furthermore, sending monetary transfers through traditional banking systems is associated with high transaction costs,” says Masiiwa. The solution, therefore, allows users to bypass traditional channels, instead depositing funds demarcated as aid into an escrow account of a partner bank.

#10 Winter 2018

Saving us from plastic soup

Richard Hardiman

Self-proclaimed “accidental environmentalist” and GSB alumnus, Richard Hardiman has built a drone, based on a science fiction character, that can clean the ocean.

One afternoon, while enjoying a cup of coffee at the V&A Waterfront, Richard Hardiman witnessed something that would change his life. He watched two men in a boat, armed with nothing but a pool-net, taking plastic trash out of the water. He recalls, “the wind and tide were pushing vast amounts of rubbish out to sea, and the men didn’t seem to be getting much of it into the boat”. The frustrating inefficiency of this process really bothered Hardiman and he couldn’t let go of the thought “surely, there must be a better way to do that”.

Fuelled by curiosity, he began researching how large cities remove trash from their waterways, and he discovered that there was no other way of doing it. Four years later, Hardiman leads Ranmarine, a tech start-up in Cape Town and Rotterdam, inventor of the WasteShark. This remote controlled nautical drone cleans water surfaces in harbours by scooping up waste. Hardiman realised that 80% of plastic waste in the ocean comes from harbours, marinas, ports, and storm water drains and the WasteShark is designed to target these areas.

Currently there are 10  WasteSharks being tested around the world, in India, the Netherlands, the USA and Cape Town’s V&A harbour. The compact and agile WasteShark can remove 350kg of waste at a time and can swim for 16 hours a day. It has no carbon emissions and does not harm wildlife. It can also be customised to scoop up chemical spills. Apart from picking up trash, it collects valuable data. Hardiman explains, “sensors collect data on water depth, chemical composition and salinity – that’s very exciting from a technological point of view. We can really investigate the quality of our water”.

What began as curiosity turned into “accidental environmentalism” as Hardiman’s research revealed the state of the world’s oceans. “I began to worry for the safety of our planet.  I realised that eight million tons of plastic go into the ocean every year – and this will get worse, tenfold, over the next decade. By 2025 there will be more pieces of plastic in the ocean than there are fish. Our oceans are becoming plastic soup.” He says this threatens our sea life and our food chain. “Fish are eating the plastic, and this is returning to us on our plates.”

This sparked Hardiman’s sense of social responsibility. “I knew I had to do something. I guess I developed a guilty conscience, but it spurred me to act, to put my entrepreneurial streak to good use. Also, work is much more meaningful when you are contributing to the greater good.”

Hardiman does not have a maritime or technological background. He began his career as a journalist and moved into radio, as a DJ on KFM and a director at 2OceansVibe, an online radio station. He always wanted to be more entrepreneurial and completed his Postgraduate Diploma in Business Administration at the GSB in 2009. “Going back to study was a seminal moment for me, I knew I wanted to create something, to do more,” he says.

“The GSB is very close to my heart – without it I wouldn’t have had the ability to put a team together, to run a business or to make this happen. The classes and group work gave me the necessary skills, grounding and confidence to flee the nest of a safe job and become an entrepreneur.”

The WasteShark was inspired by the Disney Pixar character WALL-E, a robot left to clean-up earth after humans have gone to live on other planets. Hardiman says he loved WALL-E’s sense of dedication, his determination to do the jobs humans don’t want to do. He acknowledges that there is a lot of fear around AI and robotics potentially taking away employment. “Because the WasteShark is born in Africa, I am very aware of not wanting to take away anyone’s job. Actually, the ports we work in are not comfortable with autonomous vessels as these are heavily congested areas.” Each WasteShark provides employment as it requires a remote control operator. “We’ve specifically invested in intuitive design for the controls so that anyone without technological experience can operate it. The WasteShark is a drone but it’s designed for humans.”

In a TedxTalk, Hardiman quotes Jacques Cousteau, the famous marine explorer and conservationist, saying “people protect what they love”. What Hardiman may not know is that Cousteau also said, “when one man, for whatever reason, has the opportunity to lead an extraordinary life, he has no right to keep it to himself”. This certainly describes Hardiman’s remarkable journey.

#10 Winter 2018

Q&A: In business, everything is about people

James Espey

James Espey, OBE and MBA alumnus of the 1968 class, has spent 50 exceptional years in business building brands and people. He talks to us here about the challenges facing a new generation of leaders squaring up to AI.

The world of work is changing. Artificial Intelligence and the 4th Industrial Revolution are bridging many capacity gaps, but what are the knock-on effects from a “human” perspective?

In business, really, everything is about people. It is people who make the world work – only people. The problem is that often in modern workplaces people are treated as numbers – but they are not numbers. As a result you see more and more mental health problems in the workplace. AI and the 4th Industrial Revolution I think are accentuating this tendency to treat people like numbers and this is concerning.

People are hiding behind tech far too much. There is no doubt it is useful but it should be used as an aid to judgment not a substitute. When I chair board meetings – I make people switch off their phones and I only take a pen and note pad. When I am talking to you, I concentrate on talking to you.

People are the capital that make it happen – AI doesn’t really change that. I have done a lot of things wrong in my career but the one thing that I am proud of is that I hardly ever lost staff. It boils down to how you treat people.

“Humanness” and “EQ” in the workplace are becoming more and more sought after – how do we develop leaders who want to build their leadership capability in the face of what AI and the 4th industrial revolution are bringing?

Just because certain things will be replaced by machines does not mean we won’t need people any more. In fact, I think that now more than ever we need good people skills and good self-awareness to be effective in the workplace. The best thing that leaders can do therefore is to build their self-awareness and hone their capacity to work with and influence others.

You have made public that you have suffered more than one mental crisis during your career and one of your key projects now is as President of the Shaw Mind Foundation, an organisation that is dedicated to fighting and redressing mental health injustices. Are we looking at an epidemic of stress and mental illness in the workplace?

One of the terms I like least in the world is HR. Don’t talk to me about HR – I call that human remains. If you treat people like numbers – it will have an impact on their mental health. Instead you need to ask; what are you doing for the well being of your staff especially in the age of AI and job insecurity?

What happens in the workplace is that often people are not functioning properly, as they are scared to talk about mental health; they are scared to say anything and instead try to live with it. A survey of employees conducted by the Shaw Mind Foundation in 2014 found that 31% said that they would not feel able to talk to their manager if diagnosed with a mental health problem; 33% said that if they told their boss that they were stressed at work, they felt that their ability to do the job would be questioned.

But these are issues that have to be confronted – not only because of the cost to business, but also because of the human cost. The UK economy as a whole is thought to be negatively affected by mental health problems in the workplace by approximately £70 billion annually. In the USA, estimates for the total cost of mental health and substance abuse to businesses annually are considerably higher. Meantime, according to research in Australia, a massive 20% of suicides are linked to work pressures.

Collectively, employers spend upward of $8 billion a year on wellness programmes – yet these underperform by most measures, and barely 25% of employers even try to understand how well their programmes do – according to Harvard Business Review. Can you comment on this? What should organisations be doing differently?

There is much that organisations can do to deal with this crisis. Managers should be better trained to pick up mental issues and to support staff who are suffering. Additionally, they need to work to reduce the stigma of mental health in the workplace and also ensure that workloads are not unreasonable. Work hours should be restricted. Consider limiting email on the weekend for instance. In addition, businesses also need to ensure ‘buy in’ from all employees on the issue. As employees make up the bulk of any business it is crucial that they also play a pivotal role in supporting each other and building a culture that does not stigmatise mental illness.


Alicia English

Alicia English is an editor at Mikateko Media. She has 17 years’ experience in the media industry, including newspaper reporting, internal communications and magazine publishing; and is now the Senior Editor of The Big Issue magazine – Cape Town, as well as the Myline newspaper.

Fatima Hamdulay

Fatima Hamdulay is a senior lecturer in operations management at the GSB. Her passion lies in human capital issues and organisational transformation. Her work with MBA student Himanshu Vidhani on the successful turnaround at K-Way won top honours at the annual Emerald/Association of African Business Schools (AABS) Case Study Competition.

Richard Chivaka

Richard Chivaka is an associate professor of business strategy and supply chain management at the GSB and founding director of Spark Health, an intensive mentoring and team transformation programme that strengthens health systems through culture change, with a strong focus on transformational leadership.

Michael Mugabire

Michael Mugabire is a PhD graduate of the GSB and the CEO of Eden Forestry Company Limited. His PhD research on supply chains in the Ugandan sugarcane industry is making a major contribution to policy formulation in that country, especially with respect to the Uganda Sugar Bill 2016, which is currently before Parliament.

Xolisa Dhlamini

Xolisa Dhlamini is a PhD Bertha Scholar and a researcher for the Bertha Centre for Social Innovation and Entrepreneurship at the GSB and a chartered development finance analyst in the Institute of Development Finance.

Cynthia Schweer Rayner

Cynthia Schweer Rayner is a senior researcher and lecturer of social entrepreneurship and systems change at the Bertha Centre for Social Innovation and Entrepreneurship.
#9 Summer 2017

Why social impact educators should disrupt their own systems

Esona Makinana, a Raymond Ackerman Academy student, during a brainstorming session in the MTN Solution Space. Photo Bev Meldrum.

Changing how universities teach social innovation offers unprecedented learning opportunities for students, and the potential to create greater social impact.

In the last decade, business, management, and leadership schools have increased their focus on social impact education. Social entrepreneurship and related courses are most visibly offered in the West, and mostly at universities that represent a homogeny of privilege, power, wealth, and exclusion. These institutions are taking on the task of teaching adaptive thinking – often focused on an approach to solving global poverty issues – even though they are not necessarily the most adaptive or innovative institutions themselves, and even though most of their students are more often the elite than the underprivileged.

It is hardly surprising, then, that social impact educators are increasingly coming up against the limitations of their existing systems, which were built in an era of increasing specialisation and to serve the production of knowledge, not its application. The time has come for educators to start changing these systems – to start disrupting and innovating from within.
After all, social innovation requires that we challenge the rules and status quo of power and exclusion by building new products, processes, and models that: a) deliver greater social value, and b) challenge established belief systems, cultures, behaviours, flows of resources, and positions of power. If we are teaching disruptive approaches to our students, why shouldn’t we apply them to how our own higher education institutions deliver social impact education?

In South Africa, waves of protests around inequality and access to education have been sweeping the country, and this question has come vividly into the public domain, forcing universities to reflect on their role and responsibilities. At the UCT Graduate School of Business, the Bertha Centre for Social Innovation and Entrepreneurship was established in partnership with the Bertha Foundation, a family foundation explicitly supporting social justice and activism, rooting our ideals and values in using social innovation to realise rights. Thus, we have identified numerous areas in which we can start experimenting and exploring ways to address these challenges, including who participates and where we teach.

Who is in the classroom?

As university educators, many of us have grown complacent with the fact that most students pay to be in our classrooms. But if you think about it, this really limits the learning experience. Put a self-selected, relatively homogeneous group in a room to talk about solutions to poverty, for example (something very few of them have experienced), and the ideas that emerge are going to be limited to a fairly narrow band of possibilities. At the Bertha Centre, we have started to experiment with inviting non-paying students, practitioners, and executives – not only as guest speakers, but also as participants – into the room to shake things up and broaden the conversation. This is simple enough to do, and it is often enough to tip the scales so that really interesting – and often unpredictable – learning emerges. Though some paying students may react poorly to having their classroom “invaded” in this way, it also gives students an opening to check and challenge their own and each other’s assumptions of privilege.

Letting go of our expectations of what “should” happen in a classroom opens us to other possibilities, including the co-creation of what we teach. Currently, most university classes are based on the assumption that professors know what students need and want; we are supposedly the experts after all. But things change fast, and cultural and economic divides are deep and wide in this day and age. What is stopping us from engaging with students, asking them what they need to know, and then shaping the curriculum accordingly, or going even further to encourage self-directed learning and support their learning journeys?

Where is the classroom?

In South Africa, where historic geographic divides prevail, a further interesting question arises about where we locate our classrooms. In general, universities expect that students will travel to the classroom – but poor public transport and long distances separating economically divided communities present a significant barrier for many people. So what can we do about this?
Massive open online courses (MOOCs) offer an obvious solution to reaching a broader audience, but research shows that the vast majority of people who access MOOCs are privileged and already hold degrees. At the Bertha Centre, we decided to keep the physical classroom in place and – through a partnership with R-Labs, a youth-focussed multinational social enterprise headquartered in Cape Town – developed a MOOC that students can access offline. This enables R-Labs trainers to facilitate social innovation courses for citizens in community halls, schools, and homes, in areas that have limited access to technology.

More recently, we have taken the bold step of bringing the classroom out into the world, rather than expecting everyone to come to us. We established a facility in Philippi Village – in the heart of one of Cape Town’s disadvantaged township communities – with the long-term purpose of getting all students, faculty, and stakeholders to engage and interact with each other beyond the traditional spaces of the university.

As social innovators and educators, we need to better understand the contexts in which we operate. Innovating our offerings does not have to mean moving the campus; finding other ways to shift the centre of gravity of our institutions can unlock startling new possibilities. We have learned to begin at home. For us, walking the talk means starting, as poet David Whyte might say, “close in”. We don’t have to travel to the other side of the world to engage with social entrepreneurship. As educators, beginning at home also means understanding ourselves and our own prejudices. As Parker Palmer writes in his book The Courage to Teach, “Authority comes when [we] reclaim [our] identity and integrity… ”

Taking action to learn

Experiments like these are not disruption for the sake of disruption. By challenging who is in the classroom and who teaches, as well as where and what we teach, we can introduce students to much more than a narrative of social change and some insights from afar. We can help them experience what change feels like by walking the talk. To do this, we must step out of our comfort zones and into the zone of action. We need to take our place as actors in society and break out of the bubble of our discipline, and we must learn from each other’s experiences taking social impact education beyond university walls.

At the Bertha Centre, we foresee opportunities for social innovation and look to be active players in the process of change. Our efforts include the establishment of a marketplace for social impact bonds and social franchising; building new spaces for social innovation on campus, in hospitals, and in Philippi; and designing new partnerships for social impact in health and education sectors.

Walking the talk is a fine line to tread; if we stray too far beyond the bounds of the university, we risk losing our relative neutrality and credibility. But I believe it is a risk worth taking, not only because disrupting our own systems offers unprecedented learning opportunities for our students, but because it makes us better educators.

The process of evolving and disrupting our own education systems is not a one-off event. We need to embed a reflective practice into our daily operation as we challenge ourselves to continually find better ways of co-creating social value. It isn’t enough to teach by simply reflecting what we believe is happening in practice. By adopting and living the philosophy of social innovation, social impact education may be able to make significant gains.

This embedded process, which sheds the idea of social innovation as a discipline and turns it into a verb, could become one of a set of critical approaches for the evolution of universities, and us as educators within them.

#9 Summer 2017

Bertha Centre: an African pioneer for sustainable economies and just societies

Panellists from left: Bulelwa Makalima Ngewana, Cape Town Partnership; Dr Richard Chivaka, SPARK Health; Dr Salim Hussein, Ministry of Health, Kenya and Gayle Northrop (moderator), UCLA, engage in a conversation around Government as a Partner: Working from Within as part of the Bertha Centre Social Entrepreneurship and Systems Change course.

An ‘unlikely partnership’ between the UCT Graduate School of Business and the Bertha Foundation led to the establishment of the Bertha Centre for Social Innovation and Entrepreneurship in 2011. More than five years down the line, the centre is living up to its mandate to disrupt existing systems and realise new possibilities.

The Bertha Centre for Social Innovation and Entrepreneurship is the first of its kind on the African continent. It was established in 2011 as a partnership between the University of Cape Town Graduate School of Business (UCT GSB) and the Bertha Foundation, a family foundation that supports inspiring leaders who are working to bring about social and economic justice and human rights for all.

The Bertha Centre has also been part of the UCT GSB’s journey in striving to be a leading business school that is both relevant and excellent. In 2017, it was recognised as one of the leading social impact centres globally in a report by Bridgespan, alongside similar initiatives at Harvard, Stanford, Duke and Oxford.

“The Bertha Centre supports the broader mission of the business school and is underpinned by our complementary values. We seek to equip the current and next generation with the tools for organisations and businesses to be more relevant in terms of advancing social and environmental outcomes. We hope to inspire and unlock the agency in all who interact with us to practice, radical engaged enquiry towards creating more inclusive, sustainable economies with just societies,” explains Dr François Bonnici, Director of the Bertha Centre for Social Innovation and Entrepreneurship.

The centre celebrated its fifth anniversary in 2016. In its first six years, it has become an integral part of the UCT GSB’s character. “It’s embedded in the identity of the business school, which is reflected by the offerings and curriculum of the school. The GSB offers the first MBA where you have to do social innovation as part of your course,” explains Segran Nair, Director for the Open Academic Programmes offered at the GSB.

The Bertha Centre brings many partners together, including non-profit organisations, the public sector and companies to focus on their collective social impact. In so doing, it has created platforms for diverse and robust dialogues and collaborative projects around social change and innovation.

“If we want any kind of social innovation, no single organisation can do that on its own. Every partner needs to be participating in the economy to bring about social change. It’s a question of how do we bring the resources of our partnerships to the mix to bring about that social change? We need to develop integrated thinking, regarding the process in which we build inclusive economies and better societies – that’s the process of social innovation. The MTN Solution Space and Philippi Village sites are examples of some of the GSB platforms that are creating productive spaces for such generative conversations,” says Bonnici.

Social innovation in Action

The Bertha Centre has made many inroads into social innovation in the health, education and finance sectors of South Africa.

In 2015, it facilitated the development of the Groote Schuur Hospital Health Innovation Hub and Innovation Programme, which supports public health workers at the facility to become innovators themselves by unlocking their capacity to innovate and then creating a support system around these frontline leaders.

From this local work of identifying local health innovators, the Bertha Centre designed and led a global initiative with the World Health Organisation and the University of Oxford’s Skoll Centre to identify, recognise and support community-based innovations in delivering healthcare solutions in emerging economies. This has led to the establishment of four other social innovation in health hubs, in Mozambique, Malawi, the Philippines and in London. “These initiatives demonstrate our ability to work with partners to catalyse new ways of doing things, while doing action research,” says Bonnici.

In 2016, the centre partnered with Reconstructed Living Labs (RLabs) a local community-based social enterprise in Bridgetown to develop and introduce the GSB’s first free massive open online course or MOOC. The six-week Becoming a Changemaker: Introduction to Social Innovation course has no entry requirements or entry fee and is available on Coursera. It is also available offline, which has enabled trainers to facilitate the course in community halls, schools and homes, in areas with limited access to technology.

“Through our partnership with RLabs, we now have almost 15 000 people enrolled online in over 170 countries. That’s quite phenomenal,” says Bonnici.
The free course was listed as one of the Top 10 massive open online courses (MOOCs) globally in 2016.

Three years ago, the Bertha Centre started working with the provincial and national governments on financing social service delivery by focusing on results, through outcomes-based financing, or social impact bonds. It initiated the conversation through research for National Treasury and worked with many partners and investors to test and develop these mechanisms for incentivising social outcomes. “We’re probably not going to see the results for several years, but there is sufficient interest in the market that National Treasury is running feasibility studies for a pilot that they can evaluate internally. That’s a massive achievement,” says Sue de Witt, former Bertha Scholar and now Senior Project Manager at the Bertha Centre.

Educating for Impact

Closer to home, the Bertha Centre’s impact is evident in the opportunities granted to students of the UCT GSB through the scholarships it offers annually. “At a student level, we have partnerships and engagements through our Social Innovation Lab, which has enabled students to get out of the classroom and into society, partnering with organisations and companies that are seeking sustainable and innovative ways to create impact.

“The Bertha Scholarship, which is the bursary tuition funding we award to curious and active changemakers to come and do a degree here, is key to our work at the GSB. The scholarship intends to help them accelerate their own journey, and give them access to a prestigious Master’s degree (MBA or MPhil), and to free them from the debt burden to make career choices based on pursuing their own purpose. The scholarship also allows us to bring a diversity of voices and backgrounds to the GSB student body.

“This has an impact on the school as a whole and not just on the individual because they’re in the classroom. Having those discussions (brought by Bertha Scholars and those interested in social good, rather than just good financial returns) who would not normally come to business school, brings an important heterogeneity of thinking, experiences and perspectives,” says Bonnici.
But measuring the centre’s impact goes beyond tallying up the number of students and partners who have passed through its doors over the last six years.

“When talking about measuring our impact on our students, it’s about tracing it back to the students’ journey to be a more impactful individual. If we work with an organisation, how are we working with them to be a better organisation, whether in education or healthcare? Has our work with our partners in the field, government, students and NPOs been of value to them? In addition, has it made the way their organisations run more reflective and innovative? And ultimately, are their products and services more accessible, sustainable and of value to people? These are the questions that we ask ourselves,” says Bonnici.

Lessons Learnt

Making advances in this field and in a business school, and the way we view social change and innovation does not come without its own set of challenges or lessons learnt the hard way. As Bonnici recalls, the Bertha Centre has had its fair share of these.

“The first is that you put the Bertha Foundation which is funding social justice and radical activists together with a business school. That unlikely partnership – from the beginning – has a level of paradox and inherent tensions. It’s like we’re doing a dance between the two very different paradigms. Sometimes we’re going to fall over our feet because there are some tensions, but sometimes there might be a new dance that is possible, and can be beautiful and beneficial to both institutions.

“The other is that we’re in an academic institution, yet with a mandate to do more than to research and teach. There have been challenges and mistakes of keeping the academic core but not barricading ourselves in the academic silo, and so challenging the limits of what can be done from a university platform. Sometimes we went too far away from what that core was and sometimes we have not gone far enough,” he recalls.

Future Forward

Bonnici says looking ahead, the Bertha Centre’s focus will be on consolidating its gains, and digging deeper into the work that it’s been doing. “The Bertha Scholar programme will continue to afford people who would ordinarily not attend the business school, the opportunity to do so. We’ll be introducing new online courses and are working on case studies to document the incredible impact and innovative talent of organisations in South Africa and on the continent.”

In terms of the GSB Director Associate Professor Mills Soko’s new direction and vision for the GSB, the centre is already working more with African partners in Rwanda, Kenya, Mali and Liberia on advancing social innovation. One of its Bertha Scholars, Micah Shako, also recently established Tsavo Labs, a social innovation centre in Kenya (see page 28).

“Over the next few years, our focus will also be on advancing the systemic impact of social innovation. We need to go beyond individual solutions and how these might work collectively and work to shift larger systems and markets, and simultaneously look at how these address underpinning root causes of the challenges we face.

“We’re immensely proud of and grateful to our colleagues and students in the GSB and UCT communities, and our many external partners and stakeholders, and of course, the Bertha Foundation for their unwavering support and belief in our work,” concludes Bonnici.

#9 Summer 2017

Entrepreneur or activist? A new way to tackle global challenges emerges

Solving social problems such as the world’s unmet need for eyeglasses is a systems challenge as EYElliance, a coalition of multi-sector public, private, and NGO partners, and stakeholders, is demonstrating.

The lines between social entrepreneurs and activists are blurring as the skillsets of both are needed to try to shift global systems for the better – according to a new report from the World Economic Forum (WEF) and the UCT Graduate School of Business.

The rise of the right across Europe in the past two years is one of a series of global shocks that are shaking the current systems of governance and democracy that underpin our way of life.

In the face of a growing backlash from voters against the political establishment and against a backdrop of rising global inequality, the progressive agenda is stalling – causing some to ask the question: was it progressive enough in the first place?

Social change is slow at the best of times, but increasingly economists, like Thomas Piketty, are warning us that things may be going in the wrong direction. According to data from the Maddison Project, in 1960 people living in the world’s richest country were 33 times richer than people living in the poorest. By 2000, after neoliberal globalisation had run its course, that figure had jumped to 134 times richer! This is prompting those working in social change – including social entrepreneurs – to question the limitations of their models.

For a time, the rise of social entrepreneurship – the hybridisation of non-profit and for-profit organisations – seemed to herald a new era in tackling poverty and inequality by harnessing the powers of business and business thinking for the service of social good. And indeed, these organisations have made a significant impact in the world. Take for example Jordan Kassalow of VisionSpring, an organisation that has increased the productivity and incomes of more than 3.5 million poor people through the sale of eyeglasses in Asia, Africa and Latin America, creating an economic impact estimated at $280 million.

Many such social businesses are reaching countless beneficiaries, but mostly they stop short of challenging the architecture of the systems themselves – the laws, policies, economic and cultural structures – that have caused the problems in the first place. Rather, they exist primarily to try and correct the consequences of failures of these systems.

Without taking away from the extraordinary work these social entrepreneurs do and will continue to do, some are losing patience with this band-aid approach and are looking at ways to go beyond service delivery to influence the underlying beliefs and structures that hold certain truths in place. VisionSpring, by way of example, has moved on to found EYElliance, a coalition of multi-sector public, private, and NGO partners, and stakeholders that are working within systems to engage governments and harness market forces to collectively find solutions to the world’s unmet need for eyeglasses. Such reach was not something that VisionSpring was able to achieve on its own.

So, while faith in current systems to solve the big problems may be waning, interest in creating new, more inclusive systems is gaining momentum.

According to the late Donella Meadows, in her pioneering book, Thinking in Systems, a system is “an interconnected set of elements that is coherently organised in a way that achieves something”. This new brand of social entrepreneur wants to influence these interconnected elements – such as policy, governments, and global institutions – all while working to find the leverage points to bring about a new way of doing things.

These entrepreneurs often use a language more commonly associated with activists and revolutionaries than business people, and they are the subject of a new report from the World Economic forum (WEF) and the Bertha Centre for Social Innovation and Entrepreneurship at the UCT Graduate School of Business (GSB) – launched in May 2017.

The report delves deeply into the modus operandi of six for-profit and non-profit social entrepreneurs working across the globe, in the sectors of education, health, consumer rights, land rights, rural development and the informal economy, who share a common approach of setting their sights higher than their own organisations to focus on shifting social systems. The report calls these organisations “systems entrepreneurs” and looks to highlight and share the key lessons learned for how to effectively position an organisation to effect systems change.

While the concept of systems entrepreneurship has been around for a few years now, this report is one of the first to put some concrete examples behind it. Fleshing out the theory in a way that has immediate and important impact for others working in the space – and those who aspire to do so – the research has been developed into a set of six teaching case studies that will be taught in business schools.

The potential application of systems change is significant. According to Martin Fischer, Co-Founder and CEO of KickStart International, systems change means “fundamentally, and on a large scale, changing the way a majority of relevant players solve a big social challenge, such that a critical mass of people affected by that problem substantially benefits.”

South Africa is, of course, ripe for systems change. Issues around widening inequality, free tertiary education and land reform are just some of the systems that are reaching a breaking point. It is clear that if these failing systems are not addressed, they will undermine the democratic transition and put the future of the country and the well-being of millions at risk.

The evidence from the WEF report is that to bring about systems change, entrepreneurs and other actors will need to improve their ability to collaborate and coordinate across sectors. They will also need to work to identify and alter the rules and norms that create barriers to change by exerting positive peer pressure as well as by taking political action where necessary. The latter may include borrowing from the playbook of activists – an unlikely ally of the business sector – such as the ability to dismantle existing power structures and mobilise communities.

Systems entrepreneurs must understand that they need to embrace both market dynamics and be prepared to work with and influence governments. And they must make sure that the beneficiaries of their efforts are given the power to steer their own destinies so that they become true partners in driving change. This is more sustainable than the top-down approaches that have been historical practice.

Of course, all this might not be enough to save us from ourselves. As systems theorists teach us, in order to change, sometimes you have to break things apart. There is an element of creative destruction involved in the rise of new ideas, and history is replete with examples of societies that have floundered – or even failed – because they have not had the courage to move forward. Instead, they opt to try to maintain the status quo or, as we have seen in global politics, they retreat into perceived safer territory. But this is not a long-term or sustainable solution, as keeping the majority out in the cold only serves as a threat to social stability.

The challenge therefore is whether we can positively transform failing systems into new systems that work for the majority of citizens, rather than against them.

#9 Summer 2017

Can Africa unlock the potential of investing for impact?

Bertha Centre research shows that investments seeking to combine financial returns with positive social, environmental and/or governance outcomes are flourishing on the African continent – but professional investors still have a long way to go in terms of practice and disclosure.

Investing for impact (IFI) has become a key focus for many fund managers in Africa. According to the 2016 African Investing for Impact Barometer released in June 2017, just under half of funds surveyed in southern, West and East Africa are now using their assets not only to generate good returns for their clients, but also to achieve outcomes that are good for society at large.

Of 1 924 investment funds surveyed in the study across nine key African countries, 45% have been identified as implementing one or more IFI strategies, which amounts to $353.9bn.

This is good news for Africa, a continent that needs billions annually to deliver on the United Nations’ sustainable development goals (SDGs) and the African Union’s Agenda 2063, but with limited domestic resources to meet these huge investment needs.

It also demonstrates the robustness and vitality of African markets. According to recent research reported in the Stanford Social Innovation Review, Africa has been a top geographic focus for impact investment for the past few years and if anything, demand for investments outstrips supply of investible enterprises – so there is immense room for growth in this sector.

Now in its fourth year, the African Investing for Impact Barometer seeks to provide a snapshot of the growing IFI market on the continent. It is produced by the Bertha Centre for Social Innovation and Entrepreneurship at the UCT Graduate School of Business and the research team uses publicly available information sourced from fund manager disclosures on their websites, reports and fund-fact sheets to assess the size and the trends within the African Investing for Impact market.

Expanded study allows for regional comparisons

For the 2016 barometer, six additional countries – Tanzania, Uganda, Rwanda, Namibia, Zimbabwe and Ghana – were added to the three surveyed in previous years (Nigeria, Kenya and South Africa). This allowed for a deeper and wider perspective of professional fund managers’ practices across the East, West and southern African regions.

The study showed that southern Africa is home to the majority of IFI investments, with $325.9bn of assets using at least one impact strategy in 2016. Fund managers in East Africa reported $15.4bn of overall assets, and in West Africa another $12.6bn of assets were deploying at least one IFI strategy.

At a country level, South Africa remains the country in southern Africa with the largest amount of funds and assets dedicated to IFI with Namibia and Zimbabwe following well behind.
In East Africa, Kenya dominates Tanzania, Uganda and Rwanda, which have less established financial markets, and in West Africa Nigeria represents the largest IFI assets, well ahead of Ghana. Ghana displays a flourishing fund management industry but it is currently less geared towards IFI than its neighbour.

Five types of investment strategy

The barometer analysed two distinct categories of professional fund managers: asset managers, and private equity and venture capital firms. It scored their investments according to five internationally-recognised investment strategies: ESG (environmental, social and governance) integration; investor engagement; screening (positive and negative); sustainability; and impact investing.

ESG integration into investment decisions remains the leading IFI strategy employed across all countries. Investor engagement, where an investor uses their shareholder or bondholder status to promote positive change in a company’s behaviour, is the next most implemented strategy, while screening, which includes religious and ethical investment practices such as Islamic Finance, remains third.

Environmental and social issues still a challenge

Asset managers, based predominantly in South Africa, are leading the ESG effort. However, they still focus primarily on integrating corporate governance when implementing ESG integration. The systematic integration of environmental and social issues remains a challenge.

Impact investing and sustainability themed investment, which involve investing directly in companies promoting sustainability, remain the two least used IFI strategies in Africa. Fortunately however, they are showing growth in the proportion of IFI assets as the study increases its scope of markets surveyed.

They represent $44bn amounting to 6% and 8% respectively of the total 2016 IFI assets surveyed, up from 2% and 4% respectively in the 2015 survey. The most popular themes for investments in these categories are agriculture, infrastructure, energy, healthcare, financial services, and investment in SMEs.

In southern Africa, socio-economic transformation ranks second of the top five themes showing that there is investor commitment to this issue. However education, water and sanitation, which are considered key to achieving the SDGs, do not feature in the top five in any of the three regions.

The UNDP has identified the development of a strong impact investing sector as an important step in achieving Africa’s development objectives. But while the African investing for impact industry is consolidating, its actual impact on key sectors and ultimately on African citizens who are in the greatest need of developmental and impact capital, remains unclear.
More needs to be done therefore to qualify how IFI changes lives and why this matters. Transparency and disclosure are key here; and while the Bertha Centre research shows that the investment industry is doing better in communicating how they invest for impact, a lot of work still needs to be done to record the tangible impact of these investments in practice.

The importance of reporting

It is critical that this is reported in a transparent way that will convince an external audience of their value and therefore unlock future investment.

A handful of large fund managers with a Pan-African footprint are showing improvement in this regard, implementing and reporting on their investor engagement strategies, although with varying degrees of consistency.

Large asset managers such as Old Mutual, Stanlib and Allan Gray have extensive operational footprints across the three regions. Old Mutual is however the only one that discloses IFI strategies at a country-by-country level.

More of the large players must do the same and lead by example in encouraging a culture of transparency in the industry if we are to be able to fully tap into this powerful force to fund much-needed development on the continent. If we don’t, we run the risk of IFI becoming just another buzzword investors pay lip service to but without actually becoming direct drivers of sustainable developmental change.

#9 Summer 2017

Policy reforms key to unlocking competitiveness in African agriculture

To achieve economic prosperity in Africa, the continent must raise its competitiveness in agricultural sectors and support the development of entrepreneurial traits in its people. But research shows that without proper policies and equitable regulations – even the most determined entrepreneurs will struggle to succeed.

New reports state that food demand on the African continent will rise by more than 60% by 2050. The continent has the fastest growing population in the world and is expected to increase by about 50% over the next 18 years – equating to nearly half of the expected global population growth for the next 20 years. However, despite having 65% of the world’s arable land, most countries rely on imported food – costing an estimated $50 billion a year.

Pursuing an agricultural productivity agenda is therefore no longer a choice but a must in sub-Saharan Africa. But while some countries advance in global marketplaces – others fail to do so. While conditions differ among African countries, some similarities exist. A new study into the Ugandan sugarcane industry undertaken by the UCT Graduate School of Business (GSB) offers some useful insights into what’s getting in the way and points to a lack of competitiveness as one of the biggest barriers to greater productivity and profits in the agricultural sector.

Although sugarcane is a key cash crop for Uganda and one of its leading industries, the sector could be performing much better – with much greater benefits for producers and families. Although the economy is growing at over 3%, a recent PricewaterhouseCoopers report states that as many as 70% of Ugandans are vulnerable and sometimes fall below the poverty line. In May 2017, Oxfam said the rich were getting richer and the poor were getting poorer in Uganda. Although most Ugandans work in agriculture (about 70%), the sector share of the economy is only 23%.

Increasing competitiveness in the sugarcane industry is vital. According to the global ranking of 108 sugar producing countries for 2013, Uganda is ranked number 38 in sugar production and number 41 in sugar yields per hectare. There are many problems in the industry – one of them being that the country lags behind competitors in terms of production and productivity. For example, South Africa is able to market its cane in nine months, while Uganda needs another six months to do so.

In addition, the sector is riddled with unjust and unethical policies and practices. A survey of Ugandan farmers showed that over 78% are in favour of dismantling the current monopoly ‘zoning’ policies. These restrict property rights ownership, especially land, and prevent open access to the establishment of competing mills that would be able to offer competitive cane prices to growers and ultimately enhance competitiveness along the sugarcane value chain.

The demerits of monopoly policies have been confirmed by the World Bank in the World Development Report of 2013, which points out that large firms can only innovate if they are exposed to competition. In Uganda, in addition to monopoly land ownership, there are also uncompetitive cane prices and these differ significantly between regions.

The country’s sugarcane industry is also hampered by unethical regulation, the exploitation of growers, and unequal governance power sharing between millers and growers.

While farmers worldwide earn around 60-65% of sugar industry proceeds, the reverse is true in Uganda. Here, farmers earn less than 40% of the sugarcane proceeds. Considering that it takes cane farmers two years to produce a cane crop ready for the market, while millers need only 24 hours to crush the cane, it is hardly any wonder that sugarcane farmers in Uganda are described as some of the most exploited on the continent. Despite taking most of the risk on producing the crop, they get the smallest share of the value created.

New legislation for a minimum 50% share is currently being debated in the Ugandan Parliament where more reform is also being considered to address inequalities in the sugarcane industry. Farmers and entrepreneurs – especially in small to medium sugarcane enterprises – eagerly anticipate these reforms.

The World Economic Forum (WEF) defines competitiveness as being the set of institutions, policies and factors that determine the productivity of a country – the main factor driving economic growth and income levels. Rising competitiveness means more prosperity.

Much of the research being done into competitiveness falls into the field of global value chains (GVCs) and looks at how competition pressure is affected by the globalisation of industries and how value is created and captured.

The GSB research covers new ground in GVC theory-building by discovering new critical success factors for measuring competitiveness at firm and sector levels. These include the entrepreneurial qualities of the people involved in the business, passion for the business, goodwill between business and communities, and prompt payment of labour. While high-performing companies attribute their competitiveness to internal factors under an entrepreneur’s control, the medium- and low-performing enterprises attribute their low productivity to external environmental factors outside an entrepreneur’s control. Larger companies are more likely to overcome some of these environmental obstacles, but they are particularly destructive for smaller, more entrepreneurial organisations.

This corresponds with the findings of the Global Entrepreneurship Monitor (GEM), which tracks entrepreneurial activity in sub-Saharan Africa. The organisation notes that while entrepreneurial activity is on the rise in several African countries, various factors hinder the survival and growth of small businesses in Africa, with a lack of government support, bureaucracy and lack of financial backing at the top of the list.

The major issue holding back Ugandan sugarcane farmers is policy and industry regulation. The entrepreneurial drive, passion and determination are already there. But for the industry – and the country – to be truly competitive and a world player in the industry, it will have to become more equitable and willing to share value with farmers.

The most competitive nations in the world, according to the WEF, are Switzerland followed by the USA, Singapore and The Netherlands. Their rankings are based on various factors, including how benefits are spread across the population, equal opportunities and higher standards of living. The lesson for Africa is clear. Focusing on entrepreneurship is not enough.

Becoming more competitive means sharing value, cutting down on exploitation and unjust practices and pursuing more equal partnerships that benefit all along the value chain. Not only is this the right thing to do, but – as the GSB research shows – it will lead to greater productivity and higher profits by creating an enabling investment climate and business environment that spurs job creation especially for the youth. It is a scenario in which not only the industry and the farmers involved, but the whole economy ultimately benefits.

#9 Summer 2017

What the textile industry can teach us about moving forward

With so many gloomy stories in South Africa currently, it’s easy to overlook one of the more encouraging success stories: the clothing and textile industry.

Earlier in 2017, Minister in the Presidency for Planning, Monitoring and Evaluation, Jeff Radebe, highlighted the textile and clothing industry as one of the sectors where the economy could most effectively be bolstered.

This is something of a miraculous turnaround, particularly in the face of investment downgrades and economic and socio-political instability. The clothing and textile industry was one of the hardest hit by globalisation and increased competition following the opening of South Africa’s borders to global markets post 1994. Facing high import duties and the skyrocketing of illegal imports and cheap textiles from China, Pakistan and elsewhere, coupled with insufficient investment, the industry went into decline.

Fortunately, a number of conscious interventions were implemented that have helped to turn things around.

In the Western Cape, government and industry jointly established the Cape Clothing Textile Cluster (CCTC) in 2005, a not-for-profit initiative that believed that struggling participants in the sector needed to pool resources and collaborate as a cluster in order to counter the effects of globalisation. Embedded in the CCTC’s approach was the concept of lean thinking – a business methodology that, simply put, aims to continuously offer more value to customers with fewer resources. It does this by foregrounding respect for people while providing organisations with a new way to think about how they organise processes and slowly eliminate the things that are not adding value.

A few years later, the Department of Trade and Industry developed a nation-wide Clothing and Textile Competitiveness Programme (CTCP) whose broader objective is “to assist the industry in upgrading processes, products and people to re-position it so as to compete effectively against other low cost producing countries”. The initiative provides financial assistance to organisations as well as training in best operating practices including lean manufacturing and thinking.

Fast forward a few years, and by 2013, textiles and clothing accounted for about 14% of manufacturing employment and represented South Africa’s second largest source of tax revenue. The textiles, clothing and footwear industry was – according to the Industrial Development Corporation – becoming the most cost-effective way of creating jobs. In fact, that year’s Source Africa Conference brought to light that the CTCP had created some 12,000 jobs and assisted more than 400 companies.

According to Ebrahim Patel, local manufacturing industry sales in clothing, textiles, footwear and leather increased from about R41.8 billion in 2010 to over R50 billion in 2015; an increase of 21% over five years. By contrast, they decreased by 6% in the former five years from 2005 to 2010.

One company that exemplifies the turnaround is K-Way, a leading outdoor apparel brand. Part of the Cape Union Mart Group, K-Way’s dramatic about-turn over the past 12 years is the subject of a recent award-winning case study, “The Evolution of Lean Thinking at K-Way”, from the UCT Graduate School of Business adapted from a thesis by MBA student Himanshu Vidhani.

In 2004, K-Way was operating at a loss and on the verge of shutting down. General Manager Bobby Fairlamb was hired and given the task of turning the business around in two years – a tall order by any standard. He embraced the challenges head-on and the ensuing story makes for gripping reading.

K-Way benefited from the collaboration and support provided by both the CCTC and the CTCP. The latter provided funding and training in lean thinking that enabled K-Way to buy the best machinery available and double the scale of its production while also improving quality. Later the organisation also benefited from an injection of enthusiasm and expertise from lean thinking consultant Herlecia Stevens.

Fairlamb and his team, notably Beverley Williams, who became the Production Manager in 2009, started by using lean principles to identify and implement changes to achieve better results in the factory – notably improving production efficiency and on time delivery. After some initial success there they turned their attention to the much more difficult task of shifting organisational culture.

They engaged deeply with the mostly unseen, or what lean thinking calls “under the water” elements, like leadership, employee behaviour and engagement. People started to become more engaged in their work and supervisors saw an increased ownership of the process. Absenteeism fell along with rework and reject rates. Fairlamb attributed all this to the morale of the people: “It’s clear to me now – if morale is up – all the KPIs are up. If morale and engagement are down, you are always on the back foot. This is why we could make the eventual strides we did.”

Why is this story important? Because it offers us some insights into how to achieve success in difficult times – and not just in the clothing sector. Looking at what worked, and why, can help other organisations make more informed choices in thinking about how to approach the unique challenges in their industry or context.

The first lesson that the K-Way story surfaces is that at any time – but particularly at this critical juncture in South Africa’s economic history – we absolutely cannot afford waste. Amid cries of corruption and economic decline, we must focus on adding more value to our customers, consumers and enterprises by eliminating waste.

The second – and this is related to the first – is that we need a fundamental shift in thinking that emphasises respectful relationships between people. This is particularly important because without engaged customers and partners, there will be no on-going business relationships. And critically, without the participation and commitment of staff, the elimination of waste will remain a theory only.

According to Professor Norman Faull, founder and director of the Lean Institute Africa, at the core of lean leadership is the necessity of adopting a different way of behaving. It is both a leadership and a management system and it involves learning new behaviours and tools; like how to learn from mistakes and how to embed the actions and processes that an organisation must implement to ensure that it is fit and ready for practice.

It’s hard to put a price, or a number, on this kind of shift in behaviour, but the K-Way case comes close. When Fairlamb joined K-Way, the factory was operating at 40% productivity. This meant that for every clothing item, which should have taken 10 minutes to manufacture, employees at the factory clocked roughly 16 minutes. By 2012, K-Way was operating at 75% production efficiency. By 2015, it was charting an efficiency of 120%, as employees took eight minutes or less to make the same garment.

South Africa is facing turbulent times, of that there is no doubt, but the K-Way story shows us that a slow but sure journey towards eliminating waste, creating greater respect for people and continuously engaging how to do both these things better – as well as wise collaboration within the industry and with government, it is possible to turn things around, one KPI at a time.

If we focus on what works as much as we focus on what doesn’t, we may find a way better and more sustainable way forward.

#9 Summer 2017

Pioneering social innovation in East Africa

Bertha Scholar and MBA alumnus, Micah Shako, is working toward the systemic social transformation of East Africa – nothing less – and he credits the skills he learned at the GSB for helping him on this epic journey.

Micah Shako, founder and CEO of Tsavo Innovation Labs based in Nairobi, Kenya, feels he was always destined to work in social innovation. “People tell me I have my mother’s heart,” he says. “By that, they mean I have always wanted to solve problems for others, and that has led me to where I am now.” He speaks fondly of his childhood in Kenya and says, “My mother gave so much of herself, in terms of her time and her resources, to helping our extended family and community. At one stage, we had 17 people living in our house! No wonder I’ve always been very community-minded!”

After completing his BSc in Computer Science at the University of Nairobi, Shako moved into the corporate world and built a career in ICT infrastructure management. He spent three years at Barclays Bank, managing initiatives across Kenya, Ghana, Zambia, Mauritius and South Africa. In 2011 he joined General Electric – Africa, as the Regional Infrastructure Manager. In his corporate career, Shako took most pride in the work “which had impact on lives by improving products or services people depend upon”.

But he felt he had more to contribute. “2014 was a turning point for me,” Shako says. He founded Tsavo Innovation Labs, which initially worked with communities to solve problems through developing mobile apps. Then in 2015 he completed his GSB MBA, on a scholarship from the Bertha Centre for Social Innovation and Entrepreneurship, which set him on a whole new trajectory.

“I cannot thank the Bertha Centre enough for funding my studies. The centre was very influential in how Tsavo Innovation Labs has evolved. I learned how to run a social innovation centre and I brought what I learned, particularly human-centred design and design thinking, back to Kenya. It was incredible to meet other Bertha scholars at the GSB, Africans who want to contribute to the transformation of their continent, and to have the freedom to look at the world differently and speak openly around the change that we want.”

Today, Tsavo Innovation Labs is a centre of social innovation and entrepreneurship, which focuses on agriculture, healthcare and education. It aims to reduce poverty, marginalisation and the loss of human dignity and to contribute to the systemic social transformation of East Africa.

The Lab’s services include incubation, research, project design and management, capacity development, and consulting. It supports social entrepreneurs with services and networks to help them build and operate sustainable businesses. “We run several social entrepreneurship and leadership academies to build the emerging leaders that East Africa needs,” says Shako. The Lab also builds partnerships with academic and government institutions and has recently formalised an agreement with the Tanzanian Commission of Science, Technology and Innovation.

One of the achievements Shako is particularly proud of is the success of the“ Tsavorites” – the ventures which the Lab incubates – named after the gemstones found in the Tsavo region of Kenya. “We measure our success on how these ventures have matured, how much change and impact they have made. We also measure our evolution in terms of our influence, how many partnerships have we built across the region that help us push our agenda.”

Support from the GSB and the Bertha Centre continues. “The Bertha Centre and the GSB have been amazing in helping us build partnerships, continentally and globally. They refer any opportunities they think we will benefit from, they have added value, recommended us, and given us exposure.” Shako also extends special thanks to Dr François Bonnici, Director of the Bertha Centre. “I have never met a more humble person, who is so committed to the work he is doing. He is one of our advisors, and I really look up to him.”

Looking back on his MBA, Shako laughs when he remembers the leadership course with Kurt April. “I hated that assignment at the time! There was a lot of introspection, which is hard for someone like myself from a technical background. I used to look at every problem as something that can be broken down and fixed. That leadership course really transformed me and has made a difference to how I run Tsavo Innovation Labs.”

Personal insight, he says, brings a broader perspective. For instance, Shako’s parents came from different communities within Kenya, which he feels imbued him with a different outlook on society, inspiring him to bridge the gaps. And his enduring hope for the future generation is that “they will not know lines between communities, they will look at the world and think we are all the same”.

#9 Summer 2017

African healthcare: How mind shifts can move mountains

The journey towards eliminating HIV in Africa by 2030 requires a different approach and the Spark Health partnership between the UCT Graduate School of Business and Johnson & Johnson is modelling just this – proving that significant changes in service delivery can be achieved by changing the way healthcare professionals think about the challenges they face.

The announcement by US President Donald Trump that foreign aid for HIV/AIDS will be slashed has caused an outcry from stakeholders and healthcare professionals worried about the impact on HIV/AIDS care, prevention and treatment in Africa, but a small project at the UCT Graduate School of Business (GSB) is showing that it is possible to achieve big impacts with limited resources.

According to UNAIDS, South Africa has the highest prevalence of HIV globally, with 19% of the adult population carrying the virus in 2015. Around 6.8 million people are estimated to live with the virus in South Africa alone. The country spends R23 billion per year on fighting it, but still it has the largest number of HIV/AIDS infected individuals in the world.

While there has been significant progress made in combatting the scourge on the continent, we now find ourselves at a fork in the road. Strategic choices on the way forward will determine sustained gains against HIV infections or see the unravelling of the progress made thus far. In other words, similar to a marathon where the last mile is the hardest and thus requires the athlete to dig deeper into his/her inner strength (as opposed to simply leveraging physical strength), the journey towards eliminating HIV by 2030 requires a different approach.

What is called for now is not just more funding or aid – but a new way of thinking. The silo approach to service delivery needs to be transformed into a more integrated one, with shared experiences, and both vertical and horizontal communication lubricating joint efforts, where problems are reframed as challenges. This may sound idealistic, but there is evidence that simply changing the way nurses, doctors and healthcare workers think about the challenges they face can have a monumental impact. HIV/AIDS transmission rates can be reduced comprehensively – without spending much more on equipment, medicines or staff.

This is the inspirational story of the small group of people at Spark Health – an organisation of just nine people that has had a major impact on service delivery in the HIV/AIDS sector in nine African countries including South Africa, Zimbabwe, Malawi, Kenya and Nigeria.

Spark Health is a partnership between the UCT GSB and Johnson & Johnson, but it was never going to be a standard training intervention. While the transfer of new leadership and management principles and practices is core, the initiative has a more ambitious agenda: to reframe the way healthcare professionals think about their work and empower them to devise new solutions.

Specifically, they want to find new ways to reduce mother to child transmission of HIV in Africa – the most common way in which children are infected with the virus and a major focus area of the World Health Organisation (WHO) in combating the disease.

A pilot programme was initiated in the Kingdom of Lesotho in 2011-12 partnering with the Ministry of Health, USAID and EGPAF and involving about 139 (79 directly trained by Spark Health and another 60 integrated by those who had been trained) managers and healthcare professionals at district level, all over the country.

At the end of the year-long programme, there was an improvement in all seven identified key indicator areas – with a 7.6% increase in pregnant women attending antenatal visits and an 8% increase in women receiving anti-retroviral drugs or prophylaxis. Safe and controlled births in healthcare facilities (as opposed to home births) improved by 6.7%.

Participants provided extremely positive feedback. The new way of thinking helped transform simple work groups into well-functioning teams that had a shared vision. Critically, data integrity became everyone’s business and not just the domain of health information systems professionals.The intervention also prompted a critical policy change by the Ministry of Health on pharmaceutical delivery in Lesotho, which had a direct impact on the availability of medicines and improved service delivery.

Following these results, Spark Health was asked to run more programmes at district level in the Eastern Cape in South Africa and a programme is currently under way in KwaZulu-Natal.

The results from the 2012-2013 Eastern Cape initiative were even more impressive. There was an increase in pregnant women attending antenatal classes, a 17.7% increase in women who were initiated on HAART (highly active anti-retroviral therapy), and a 36% increase in pregnant women who were re-tested for HIV. Stock availability of medicines at two depots increased by 76%, making a huge improvement in service delivery to patients in the area.

It is worth noting that Spark Health achieved these results with a limited budget and funding. The question of how such a small team could make such a big difference lies in the core principles of the Spark Health programme – which is to empower health officials, to give them new tools and to encourage them to share these with others and to let this information spread virally.

Instead of looking at what healthcare officials don’t have (resources, time), they are encouraged to look at what they do have (parts of the health system that are functioning well, available assets) to develop creative and innovative solutions and promote teamwork and better communication. Building relationships and opening channels of communication is vital for better efficiency and productivity at clinics, hospitals and pharmacies.

With their new management and leadership skills, these officials then set about finding ways to overcome the challenges they were facing, resulting in strengthened health systems and improved outcomes. What is key to the Spark Health approach is the recognition that training alone will not yield the desired health outcomes. As such, more emphasis is placed on intensive, on-the-job mentoring to assist the healthcare professionals to transform skills into practice, and practice into performance, and then performance into health outcomes.

The Spark Health programme begins with an intense week-long workshop at the end of which participants leave with an action plan. Thereafter, there is about a year or two of intensive mentoring, day-to-day communication as well as quarterly review meetings and feedback sessions to see how teams are getting on with their plan.

One of the big advantages of the Spark Health programme is the further co-opting (integration) of other individuals to the programme by participants who have successfully attended the workshop. They then share their new expertise and knowledge with colleagues, effectively training them in the same way of thinking and integrating them into the process.

This integration causes a ripple effect of knowledge, empowerment and increased productivity and sees the expansion of a new way of thinking and acting, widening the reach of the programme and increasing its effectiveness.

The Eastern Cape programme run in 2012-13 saw 123 people initially participating and a further 56 people integrated into the process afterwards, resulting in a total of 179 professionals able to draw on the resources of the programme through mentorship, support and review sessions.

What the Spark Health initiative has shown is the power of a transformed mind to unlock people’s intentions and ignite their passion and drive. By empowering professionals in the healthcare system to effect change – the change actually happens: lower infection rates, improved maternal and newborn health, strengthened health systems and better medicine availability.

It is clear that more investment is needed in the fight against HIV/AIDS – but this is not necessarily limited to financial resources. It is the targeted development of individuals on the front lines of the war against HIV/AIDS that will produce improved and sustained health outcomes. Healthcare professionals are the most important asset in the healthcare system; assisting them to develop a different culture that is characterised by strong, well-functioning teams with a shared vision and asset-based rather than needs-based thinking, is key to achieving more and improved health outcomes with less resources.

It is possible to eliminate HIV in Africa by 2030, but as our healthcare professionals head towards that finishing line, exhausted, thirsty and running on empty, a shift is required to enable them to persevere and find ways of coping with the added pressure and pain. When we stop thinking about how tough it is and look toward what is possible, we see that our objective can be reached.

#9 Summer 2017


Long-awaited GSB Academic Conference Centre takes shape

Work has started on the construction of a state-of-the-art academic conference centre on the GSB campus that will greatly enhance the school’s ability to convene thought leadership conferences and host sizeable international delegations.

“The limited scale of existing facilities has hampered our ability to host modern conferences on site,” explains Rayner Canning, Director of the GSB Business Development Unit. “The constraints presented by the more than 100 year-old heritage site mean that existing facilities are unable to cope with the increasing need for large events focussed on research and academic themes.”

Canning says that an improved facility for the GSB had actually been mooted for many years, and that in the face of rising demand, he and the previous GSB director, had decided to resurrect the project.

“We appointed the design team, conducted the financial feasibility study, crafted the business model and organised financing via the Development Bank of Africa and other stakeholders. Then, once the various university authorities had given their approval, it was full steam ahead!”

The academic conference centre is specifically planned to conform to the requirements of a technologically advanced era in academic and research circles. “It has been designed on three levels,” Canning says. “The basement houses a stepped auditorium capable of seating some 250 people, so it will be ideal for the larger seminars and for lectures to big groups. Both the ground and first floor contain multi-purpose flat venues which can operate either as independent spaces with about 70 people in each, or the entire area can be opened out to cater for bigger functions, which can be attended by up to 300 people. There are also a number of smaller breakaway rooms for delegates to focus on specific topics during a conference. The entire facility will be able to hold 750-900 people at any one time.”

The conference centre will be available for hire by outside parties – its location in the Waterfront precinct offering obvious attractions – and the GSB is also offering naming rights opportunities on the building and on specific venues.

The centre will be positioned on campus between the main academic block and Stone House four and five. Canning says that the site was handed over to the contractors, at the beginning of October 2017. Demolition of the existing structures, including the old fish factory, will commence after site preparations are completed. Excavation and construction will then be initiated and the build phase of the project is scheduled for completion by the end of 2018. The fit out phase will then commence. “We anticipate the venue to be operational by the end of the first quarter 2019,” he says..

GSB embarks on pioneering learning journey with Barclays ABSA Career Compliance Academy

The GSB’s Business Development team recently launched a customised Postgraduate Diploma in Management Practice for the Barclays ABSA Career Compliance Academy. The project represents a huge step forward in professionalising compliance as a discipline. As a pan-African initiative, it also demonstrates the GSB’s increasing relevance in Africa.

The Barclays ABSA Career Compliance Academy, an initiative by Barclays Bank, combines the knowledge and expertise of three different service providers. As the chosen business school partner for this initiative, the GSB provides a customised Postgraduate Diploma in Management Practice (PGDip) specialising in regulatory compliance.

Rayner Canning, Director of Business Development at the GSB highlights that this programme is a real feather in the School’s cap. “Previously, Barclays PLC (UK) had partnered with Cambridge Judge Business School (part of Cambridge University) to deliver a similar programme. Thus, having been selected to pioneer a more African-focussed programme for the pan-African Barclays-ABSA business is something the GSB can be really proud of. We also expect to see a strong collaboration between GSB Faculty member, Dr Elanca Shelley and UCT’s Faculty of Law experts to create this unique programme.”

Derek Naude, Business Developer at the GSB, was involved in the development of the programme. He explains: “Career compliance in this instance is specific to banking, and the Academy combines the GSB’s customised PGDip with workshops on compliance by Duke University and a module on financial crime run by Deloitte. The key motivation of the Academy is to integrate knowledge on regulatory compliance. It is pioneering work.

In the design of the programme, we changed 50% of the content of the diploma to focus on regulatory compliance. It is important to note that everything that applies to any postgraduate diploma still applies: delegates need to have a degree and a certain amount of experience to apply and qualify for the programme. It is seen as aspirational, within Barclays, to attain this diploma.”

The overall objective of the PGDip is to provide a consistent practice in regulatory compliance for compliance officers. “Compliance officers have different qualifications and come from different backgrounds such as law, commerce, or specialised product fields. But everyone who works in compliance focuses on the same thing, and the PGDip aims to consolidate and standardise knowledge and introduce a new platform in compliance best practice. It will raise the benchmark of skill and practice in compliance,” says Naude. “Furthermore, the programme is designed to tackle challenges facing the banking industry including blockchain, cryptocurrency, and fintech innovations. Barclays wanted to focus on getting people skilled to be able to regulate these.”

The first cohort of 30 professionals from the Barclays ABSA Africa Group started their journey with GSB in August 2018. “What is spectacular about this programme,” says Naude, “is that it is a pan-African initiative. We have delegates from eight African countries attending.” Delegates will attend modules at the GSB in Cape Town as well as fieldwork modules elsewhere. The programme will run twice a year with an average of 30 delegates in each cohort, so the GSB will host 60 pan-African delegates a year, for the next three years.

GSB makes history – and a difference – in Philippi

UCT Vice-Chancellor Dr Max Price welcomes guests to the official opening of the UCT GSB Solution Space in Philippi, Cape Town.

For the first time in its 179-year history, UCT has established an official and permanent educational space in a Cape Town community with the opening of the UCT GSB Solution Space, a hub for innovation and entrepreneurship, in Philippi Village this June.

An initiative of the UCT Graduate School of Business (GSB) and the Bertha Centre for Social Innovation and Entrepreneurship, the GSB Solution Space at Philippi Village celebrates a new approach that seeks to go beyond the traditional reach of a university. Over the past year it has started to establish a presence in the community with the long-term purpose of getting community members of Philippi and surrounding Nyanga, Gugulethu and Khayelitsha, as well as private stakeholders, donors, corporate parties and business school students involved in a collaborative process to realise new possibilities.

“Our presence in the Philippi Village development is one way in which the GSB is deepening its roots and relevance as an African business school,” says GSB Director Associate Professor Mills Soko. “The GSB is widely regarded as the leading business school in Africa, but its location at the V&A Waterfront is far from representative of the reality that the vast majority of South Africans face every day.”

The GSB Solution Space in Philippi Village has a campus set-up with workspaces, lecture space, lounge areas and meeting rooms creating a vibrant hub where creative thinking around entrepreneurship and technology is encouraged. To date, over 100 workshops and educational programmes have been held there, which have been attended by about 3 000 people. All students who study an academic programme at the GSB are also encouraged to take at least one course at the Philippi Village satellite site and the hub also works closely with students from the Raymond Ackerman Academy for Entrepreneurial Development.

Associate Professor Soko says the GSB teaches students the importance of learning how to become comfortable with uncertainty and paradox in a complex and fast-changing world – and to trust that solutions will emerge.

“Being here helps our students to develop empathy and resilience and to open their eyes to wider perspectives – all of which are vital attributes for the modern leader, especially one operating in an emerging market. In addition, by working directly with entrepreneurs in the community we are able to be more inclusive and more actively involved in developing business innovations that change lives for the better.”

Sarah-Anne Arnold, Solution Space Manager, explains that the GSB Solution Space acts as a business incubator and hosts local social enterprise businesses such as Lakheni, a bulk-buying initiative for low-income households, Discover Ikasi, which promotes township tourism, and the Blue Door Early Childhood Development venture.

“The GSB Solution Space has been operational for one year and the launch was aimed also at celebrating the businesses and initiatives that have been started here, promoting them and creating awareness about the possibilities for collaboration, innovation and entrepreneurship that exist in the space,” says Arnold.

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. The 6 000m2 mixed-use space now boasts a retail section as well as a modern public library. Small businesses like Kings Fish & Chips, Betty’s Hair Salon, Simphiwe Shoes, and AV Schoolwear have shops there. Organisations with offices at Philippi Village include the Business Activator, Harambee, Desmond Tutu HIV Foundation and Leap Schools.
The UCT GSB is one of the foundation tenants of the Philippi Village development and its facilities have been made possible with the support and involvement of key sponsors including the MTN Group, the UCT Vice-Chancellor’s Strategic Fund and the Flanders Government Funding for building a social economy as well as the Bertha Foundation.

GSB booklet shines light on Eskom state capture allegations

Former ministers Pravin Gordhan (left) and Derek Hanekom (centre) with Catrina Godinho, Lauren Hermanus and Professor Anton Eberhard at the launch of the Eskom reference booklet.

With the fight against state capture gaining momentum, UCT Graduate School of Business academics Professor Anton Eberhard and Catrina Godinho have made a valuable contribution to the mounting body of evidence on how the system of corruption works.

In September, Eberhard and Godinho launched a reference booklet that provides an independent, accessible and concise account of the alleged instances of governance failure and corruption at Eskom.

The booklet brings together information that has emerged around what has taken place at the power utility since the start of Jacob Zuma’s presidency in 2009 and presents it in a coherent, easily understandable timeline that shows how governance at the power utility was systematically destabilised, allowing corruption to set in.

It details how a number of tenders were decided at board or ministerial level, against executive procurement committee decisions; how coal contracts with the Gupta-owned Brakfontein mine were signed and extended despite the coal not meeting quality or environmental standards; and how Eskom’s assistance was critical in Gupta-owned Tegeta gaining ownership of Optimum Coal Holdings from Glencore.

Professor Eberhard said that the booklet was designed to serve as an important source of reference for parliament’s Public Enterprises Committee inquiry into state capture at Eskom, Transnet and Denel, which got under way in October. It includes a number of questions that committee members are encouraged to probe.

“If parliament fulfils its constitutional mandate, the fingerprints of the President, the Guptas and their associates, of ministers Gigaba and Brown, and of implicated Eskom board members and management will be revealed,” he said.

Former finance minister Pravin Gordhan, who was the keynote speaker at the launch, said that there was a political economy around the booklet which puts some serious questions before South Africans as to what kind of politics are playing out in the country. “What is the structure of our state, and how is it that with the constitution that we have, the checks and balances we thought we built in, the powerful civil society, media and other organs that we have operating in our country, how do we still end up where we are?” he asked.

Roger Martin launches latest book at GSB event

In the world of business, being decisive is often held up as being one of the great virtues of a good leader. But, argues Roger Martin, global thought leader and author, in rushing to make a decision, business leaders miss the opportunity to explore and find better options that may create more value for more stakeholders.

Speaking at the global launch of his new book – co-authored with Jennifer Riel – Creating Great Choices; A Leaders Guide to Integrative Thinking, Martin said when it comes to our hardest choices, it can seem as though making trade-offs is inevitable. “But what do we do when the choices in front of us don’t get us what we need?” he asks. “In those cases, rather than choosing the least worst option, we can use the models in front of us to create a new and superior answer.”

Martin, who was in Cape Town as a guest of the UCT Graduate School of Business and The Hasso Plattner Institute of Design Thinking to deliver an exclusive two-day strategy masterclass, calls this approach integrative thinking. He believes it is a discipline that anyone can acquire and apply to improve their ability to make good strategic choices, rather than weak compromises.

Speaking at the book launch, director of the GSB, Associate Professor Mills Soko, said the school was honoured that Martin had chosen Cape Town to launch his new book. “The GSB aligns with many of the philosophies Martin has pioneered around systems thinking and innovation. We are excited to have this opportunity to expose a greater community to his level of thought leadership,” he said.

The launch event was sponsored by Media24 and took place on their Nasdak, described as one of the hottest rooftop venues in Cape Town.

A former dean of the Rotman School of Management from 1998 to 2013, Roger Martin is the Institute Director of the Martin Prosperity Institute and the Michael Lee-Chin Family Institute for Corporate Citizenship at Rotman. He also holds the Premier’s Chair in Productivity and Competitiveness in Toronto, Canada. He has authored and co-authored more than 11 books including The Rise and Likely Fall of the Talent Economy, Getting Beyond Better, The Future of the MBA, Fixing the Game, and Playing to Win.

GSB booklet shines light on Eskom state capture allegations

Associate Professor Stephanie Giamporcaro.

When local micro lender African Bank collapsed in 2014, few people appreciated the extent of what had gone wrong with its board and management. It was only months later, when the Myburgh Report was released, that details emerged of how serious the failure of corporate governance within the bank had been.

Now, the story has been further unpacked in an award-winning business case study, written by UCT Graduate School of Business academic Associate Professor Stephanie Giamporcaro and MBA student Matthew Marrian. The case, which examines the choices made by a fictional asset manager that has invested in African Bank Investments Limited (ABIL), encourages students to ask why so many institutional investors found the investment case compelling, and seemingly missed the risks posed by the company’s weak corporate governance.

Now, the story has been further unpacked in an award-winning business case study, written by UCT Graduate School of Business academic Associate Professor Stephanie Giamporcaro and MBA student Matthew Marrian. The case, which examines the choices made by a fictional asset manager that has invested in African Bank Investments Limited (ABIL), encourages students to ask why so many institutional investors found the investment case compelling, and seemingly missed the risks posed by the company’s weak corporate governance.

The work has now gained international recognition by being selected as one of the top 10 case studies in the 2017 CEEMAN (The Central and East European Management Development Association) Case Writing Competition. The competition drew a total of 66 entries from all over the world. More recently, the case won the 2017 Institute of Director’s African Governance Showcase Competition.

“I decided to look at the African Bank story because I was teaching the MBA class on corporate finance. I realised that there were not too many cases written on corporate governance and responsible investing in an emerging market, and South African, context,” says Dr Giamporcaro. “I asked the students to think of something that had happened recently that we could call a corporate governance failure, and African Bank was obviously an interesting case to look at.”

The international recognition is a boost to the GSB’s goal of producing high quality local case studies that reflect the realities of emerging economies, and reduce the reliance on case studies from international universities. The GSB established a Case Writing Centre in a joint venture with the Harvard Business School Alumni Africa Club in 2016. Giamporcaro and Marrian’s African Bank case study is one of the first to emerge from this initiative.

GSB Launches new finance mooc to help advance sustainable development goals

The Bertha Centre for Social Innovation and Entrepreneurship, a specialised centre at the UCT Graduate School of Business (GSB), is launching a first-of-its-kind MOOC (Massive Open Online Course) on Innovative Finance that seeks to give individuals and organisations, who are passionate about tackling social issues, the financial tools to turn their plans into reality.

Innovative Finance has been identified as one of the key strategies towards meeting the UN’s Sustainable Development Goals (SDGs). The Bertha Centre was recently chosen by the United Nations Development Programme to represent UCT, as one of nine universities worldwide, to develop a research agenda to better leverage private investment to finance the SDGs and the MOOC forms part of this work.

Aunnie Patton Power, Innovative Finance Lead at the Bertha Centre and designer of the MOOC, explains that what makes this course unique is it teaches a different way of looking at financing. “It starts with the outcome you want to achieve, for example access to healthcare or clean water, and then you design a financing strategy around that outcome.”

This is the second MOOC to come out of the Bertha Centre, as part of a wider UCT initiative driven by the Centre for Innovation Learning and Teaching (CILT) to develop online learning material that is free and accessible to anyone, anywhere in the world.

Last year the Bertha Centre launched the highly successful MOOC – Becoming a Changemaker: Introduction to Social Innovation – which has had approximately 12 000 participants to date and was named as one of the top ten new MOOCs launched in 2016, as voted on by thousands of Class Central users.

“The first MOOC focussed on empowering individuals to act as social innovators,” says François Bonnici, Director of the Bertha Centre. “This one is focussed on innovative financing, and essentially looks at financing Sustainable Development Goals (SDGs). There is an estimated $2.5 trillion funding gap annually in reaching the United Nation’s SDGs and we are looking at how we can bridge that to contribute to those goals.” He adds that the course’s methodology is unique. “It lays out how we do what we do at the Bertha Centre. It’s a specific methodology that we’ve designed over the last six years and it ties in with the global focus on SDGs and how we’re working in our small way to help attain them.”

Innovative Financing will appeal to anyone interested in financing social impact, including students and professionals from the public and private sectors. Five case studies are included in the course to demonstrate successful innovative finance models used by foundations, non-profits, social enterprises, private investors and governments. It gives participants the tools to address a social issue, to think through the best way of doing it, and to design a financing and resourcing strategy. “If a traditional model doesn’t work, then we equip you to invent a new one,” says Patton Power.

#9 Summer 2017


Newly appointed GSB Alumni Relations Manager, Niven Maree, believes that researching alumni needs and expectations holds the key to building mutually beneficial and sustainable relationships. And that these form part of the GSB’s strategic vision to remain relevant and build a strong presence in Africa.

“Alumni relations, like any other relationship you value, should never be taken for granted,” says Maree. “Relationships need work. Just as you need to nurture your relationship with your partner, your granny, your friends. That is how I view alumni relations.” He is excited that his new role will allow him to “really get involved, to understand and grow the GSB’s relationship with its key stakeholders”.

Maree has been actively involved in stakeholder relations in higher education for 15 years. He joins the GSB after seven years at the Cape Peninsula University of Technology (CPUT) as a senior fundraiser in the corporate, trust and foundations sectors. This involved strategic communication management, industry liaison and project management. Prior to that, he worked as a development manager in fundraising at UCT.

He feels his most important task ahead will be “to find out what makes GSB alumni tick”. The beauty of this, he says, is that no one stakeholder group is the same. “Alumni are not a homogeneous group. What works for someone who graduated in 1970 is not the same as someone graduating in 2017. Their needs and expectations are different, and they require a different approach.”

His vision is to ensure that the GSB’s strategy and relationship management remains relevant. “My hope is to build on the exceptional foundation laid by my predecessors, and to develop a deeper understanding of our stakeholders in order to provide a better service to them.”

Maree is currently completing a Master of Technology in Public Relations Management at CPUT, which he feels will ground his practical experience in theory, and help him in his new role. He already holds a Bachelor of Technology from CPUT where he graduated cum laude.

The best part about his work, Maree feels, is that “every positive interaction with a stakeholder for me is a highlight. Also, it is a privilege to be associated with a world-class business school like the GSB. It is an honour, and I want people to know that I am here to serve them.”

Career advancement is the number one objective for the vast majority of students who enrol on a business programme
and Amena Hayat, newly appointed Career Service Manager at the GSB, is determined to ensure that these ambitions become realities.

“My role is around engaging with diverse talent; providing a platform and opportunities for students to advance or change careers and equipping them with the tools to handle this life-changing experience most effectively,” she says.

Hayat, who was formerly the Global Talent Manager for Unilever London, brings to the position a wealth of local and global expertise, new perspectives and ideas.

“Talent management involves understanding that the process reaches well beyond recruitment and takes a long-term view on talent. It is not just about ‘landing’ graduates in an organisation, but considering each individual and developing him or her to become an asset to the organisation by speaking to the strategic goals of that organisation,” she explains.

Hayat draws on an eclectic career path: she qualified as a chef with the South African Chefs Academy before going on to achieve a BSocSci in economics and organisational psychology and a postgraduate diploma in marketing management. She then entered the human resources division of Unilever South Africa where she immediately began to chalk up an impressive list of achievements paving the way for a position in Unilever UK where in 2016 she was recognised as the “Key Emerging Talent”.

At Unilever she developed a passion for talent and careers which led to her deciding that she wanted a diversion in her own career path to understand “the education side of careers”. So when she saw the role being advertised at the GSB she jumped at it.

This role forms part of the newly streamlined unit: the Department of Alumni Relations and Careers Services. According to Morea Josias, who heads up the new department, the new structure is designed to improve the career support provided to students and alumni.

“Success will be to leverage off the strong foundation the GSB careers team has and boost it to help meet the needs of an evolving corporate landscape so that together, we can build South Africa,” says Hayat.

Newly appointed Allan Gray Chair in Values-Based Leadership at the GSB, Professor Kurt April, is currently working on his ninth book, but it’s not what you would expect from a business school professor.

Professor Kurt April is one of the GSB’s most published academics, but his newest book will come as a surprise to some. The book, expected out this November, will be a collection of poetry that will feature his own work, as well as the contributions of MBA students whom he has encouraged to think not only about responsible and purposeful leadership, but also about being more creative and flexible.

“Poetry and business, at face value, appear to be odd bedfellows,” he admits. “But poetry can enhance, enrich and animate the life of business, and the lives of those within business.”
Exploring new ways of looking at more responsible and sustainable leadership practices has become the focus of an illustrious academic career for Professor April, that has, somewhat appropriately, led to his appointment as Chair of the Allan Gray Centre for Values-Based Leadership at the GSB. April took up the mantle in September this year after a lengthy competitive recruitment process to fill the Chair, which has been vacant for over a year.

Professor April has been a member of faculty at the GSB, most recently as professor of leadership, diversity and inclusion, for almost two decades. He is also an Associate Fellow at Saïd Business School, University of Oxford, UK (2000-present), and Programme Director at DukeCE, Duke University, USA (2008-present). He has previously been a regular visiting professor at Rotterdam School of Management, Erasmus University, Netherlands (2001-2013), research fellow at Ashridge-Hult Business School, UK (2004-2016), and visiting professor at the University of Amsterdam, Netherlands (2004-2007).

Outside of tertiary education, he holds many positions including shareholder and managing partner of LICM Consulting, South Africa, shareholder and executive director of the Achievement Awards Group, South Africa, and chairman of the international D&I advisory council of Novartis AG, Switzerland. He is also a non-executive director of the Power Group, South Africa and a non-executive director of the International School of Cape Town in South Africa, as well as an ambassador of the global Unashamedly Ethical campaign.

He is excited to take on more responsibilities as the Allan Gray Chair. “It really is an extension of the work I have been doing over the past 18 years,” says Professor April. “The premise I operate from is that if you cannot lead yourself, you will struggle to lead others and head up organisations. It starts with the self, with true self-awareness that guides behaviour, choices and decision-making,” he says.

These views are closely aligned with the objectives of the Allan Gray Centre for Values-Based Leadership. The centre was established at the GSB in 2011 with the aim of deconstructing ineffective and toxic business management models, and promoting an orientation towards purpose-guided business practices, accountability and responsible practices. With Professor April on board, the centre will additionally focus on individual aspects in the workplace: character, self-care, narratology, ethics and personal resilience. It will also seek to enhance its relationship with the Allan Gray Orbis Foundation, which supports the development of emerging business leaders and entrepreneurs through 150 scholarships (school-based), 320 fellowships (at 10 universities) and 330 associates (post-university).

Professor April explains that “There is nothing soft about this work, it is extremely hard to do!” He explains how helping individuals gain courage through shifting from ‘comfortability’ to possibility, and establishing boundaries in order to gain control of their choices and work lives, enables them in turn to be sustainably more effective managers and leaders. “Many employees suppress their own value systems in the name of their job and this can cause stress. It can be a big factor in burnout, depression, decreased self-esteem, anxiety, lack of sleep, poor diet and other mental/physical health problems. These are problems on the increase in the modern business world.”

By introducing MBA students to poetry, he hopes to stimulate their creativity and imagination and to help them become more critical and flexible in their thinking. “The world is increasingly complex and business leaders need to be able to think creatively about solutions and opportunities.” Students are encouraged to write poems on topics like “personal purpose” or the “enhancement or contravention of their personal values and motivations”, an exercise that also deepens relationships within the study groups and enhances the teaching experience.

“Like all art, poetry engages the imagination in unique and surprising ways. It enables a new kind of seeing, gives creative orientation and brings apparent simplicity to seeming chaos, opening vistas unimaginable through mere business processes and numbers.”

The Impact Investing Project Manager at the GSB’s Bertha Centre, Bakang Moetse, is dedicated to innovative social finance which is inclusive and benefits communities and SMEs.

The GSB’s Bertha Centre for Social Innovation and Entrepreneurship is well known for its work in innovative finance. As the new Impact Investing Project Manager, Bakang Moetse works with the centre’s innovative finance team to promote inclusive business and finance models within the economy. She explains “working in the social finance space, we are finding innovative ways to incorporate a social impact lens into finance and investment decisions. Impact investing is about making business models that are more inclusive of everyone, communities and SMEs, not just high net-worth individuals or wealthy capital owners.

“We also test and implement new financial instruments which are geared towards catalysing the investment into social impact sectors and increasing access to finance for early stage enterprises.”

Originally from Maun in Botswana, Moetse studied at UCT, completing her BCom degree in Management Studies specialising in Economics. She is currently working towards a level 2 of the CFA programme. She is also qualified as a Prince 2 project manager. In her new position, Moetse is excited to “engage and utilise everything I’ve learned in my studies about finance and economics to contribute to a system change in financial models, to make the economy more inclusive.”

She’s not only bringing theory to the table, she has extensive working experience in commercial banking. Before joining the Bertha Centre, she worked as a product manager, a product analyst and a commercial banking analyst at Stanbic Bank in Botswana.

Moetse finds the move from commercial banking to innovative and social finance to be a fulfilling one. She says, “Investment decisions shouldn’t be just about the bottom line. Working on financial inclusivity for me is beneficial and gratifying, knowing that the work we do is making a lasting and sustainable change.”

Her vision is to keep promoting innovative financing in South Africa and scale it to other African countries. She stresses the importance of sharing knowledge and resources across the continent. Business and finance innovations need to take local communities into account, she says. “People living in those contexts are best placed to solve those problems”.
The best part of her job, she says “is being part of something that’s gaining traction, part of the momentum towards change”.

The Bertha Centre for Social Innovation and Entrepreneurship’s new Innovative Finance Project Coordinator Noluyolo Magazi is driven to find solutions for the social ills afflicting many South Africans.

Growing up in the Eastern Cape gave Magazi first-hand experience of the living conditions and the realities that many South Africans are facing every day. Making a difference was the driving force behind her undergraduate studies in financial accounting and then starting the MCom in Development Finance at the UCT GSB. While on the GSB campus, she learned of the position at the Bertha Centre and was motivated to apply. “During my studies I took the Innovative Finance elective. This is where I was introduced to the concept of impact investing and the various tools and approaches where development finance can be utilised to mobilise private capital to fund social outcomes. Decisive action is needed to accelerate the pace of economic growth, pursue transformation and social justice with greater diligence and urgency than ever before!”

Since taking up the position, she facilitates research on impact investing and is actively involved in the development of the South African National Advisory Board on Impact Investing. She believes the centre is doing important work that can have positive outcomes for many communities.

She admits that she is an idealist who wants to help work towards a better future. “I dream of a world where people have equitable access to quality education and healthcare, where families don’t have to sacrifice meals because there is not enough money to put food on the table; where children don’t have to choose between going to school and providing for their families and where there are equal opportunities for all.”

But her feet are also firmly on the ground. She previously worked at the Eastern Cape Provincial Treasury as a budget analyst and she knows exactly what challenges government faces. “Over the past four years government has been in a state of fiscal consolidation, containing the budget deficit and controlling the pace of debt accumulation. The public purse is further stretched as the growth in tax revenues has not kept pace with the level of service demanded. This is where innovative finance business models pioneered by the Bertha Centre can have a lot of impact on achieving effective service delivery outcomes. That excites me about my new position.”


Tim London

Tim London joined the GSB as a member of the Allan Gray Centre for Values Based Leadership in 2014 as a full-time faculty member teaching and supervising students across the full range of existing programmes. His research interests are broad and multi-disciplinary which reflects his diverse experiences around the globe and his training in a variety of disciplines.
#8 Winter 2017

Managing race relations as critical as managing stakeholder relations

Rising racial and political tensions and a deficit of authentic leadership in society are adding to difficulties facing businesses operating in South Africa.

The current racial and political tensions in South Africa are playing out in the SA workplace where leaders and managers have to view the handling of racial conflict as a real issue, similar to managing stakeholder relations.

The fires are being continually stoked amid a talk of ‘Radical Economic Transformation’ a concept which some view as tool to ‘loot’ especially from white owned businesses to “radically enrich a small elite”, including President Jacob Zuma and his associates, the Guptas.

Social media platforms have also been awash with debate on racial issues in recent times. Former Democratic Alliance leader and Western Cape Premier Helen Zille, who faced disciplinary action in the party following her tweets in which she appeared to extol the benefits of colonialism, stated in a recent opinion piece that “critical race theory” that regards “whiteness and whites” as the key obstacle to the progress of black people in South Africa has started to emerge in the country.

Zille wrote: “The buzzword transformation has been replaced by ‘decolonisation’. Stripped of its academic veneer, this means all whites are colonisers and have no place in the new South Africa unless they retreat into guilty self-flagellation… The condemnation of a whole category of people because of their (white) race is the new face of racism in South Africa, and it has taken us a long time to wake up to it. Like all populist, blame-shifting philosophies, it is catching on fast, and it has potentially perilous consequences for South Africa’s future.”
Meanwhile, the President himself says the people protesting to get rid of him are ‘racists’. This is a disingenuous diagnosis of what is going on. It is also shaming. And that whole shaming discourse is causing a further alienation and lack of participation.

South Africa has to manage these racial tensions actively and do away with the blaming and shaming discourse that has come to dominate the current political climate. Zille’s original tweets for example are hurtful since they ignore the understanding and appreciation of the repercussions of Africa’s colonial past and the complexity that results when a culture is dis-membered – as Ngugi Wa Thiong’o would say.

When you blame and shame you are responding from your lowest self and you are not dealing with the real problems we need to fix such as inequality, poverty unemployment, and a lack of economic participation. Those are the things we need to keep our eyes on.

All of this is pointing to the fact that South Africa has a serious deficit in authentic leadership in society. Why can we not have a hundred Mandelas, or a hundred Kathradas, or a hundred Mbekis? Perhaps if we did we would not have this crisis we are in.

Authentic leadership, means having your ‘best self’ show up when making decisions. Despite it emerging as the gold standard to strive for in leadership development, authenticity remains an elusive target for many leaders in our society. Being true to yourself and being genuine have emerged to define authenticity as a behavioural state. When one is being authentic, by implication one is being deliberate about the action one is taking; the specific choices that one makes resonate with dearly held values, as well as an overall narrative about how one wants to live one’s life. When one is being authentic, there is thus a strict coherence between what one feels and what one does or says. It is much less likely that people will lapse into blaming and shaming if there is such coherence.

The benefits of living authentically can be said to amount to greater well-being, better life-performances, more emotional commitment, and less apathy; and those who pursue authenticity buy into these long-term benefits.

It is for this reason that the work of business schools must be not only to impart the relevant business skills to our students but also to encourage them to access their best and most authentic selves as they step out into the leadership space in this country – and beyond its borders.

Inevitably, racial and other societal tensions have permeated the classroom too and that contestation can be quite explosive. As such, the classroom can be a useful laboratory for how to manage racial tensions in the workplace and in society. We try to encourage students to respond from the authentic insightful self, to eliminate a response from their lower selves.

We are dealing with complex challenges with no easy answers. You cannot give someone a theory about racial conflict, nor can you give a theory about transformation. These are the things we are struggling with and we cannot get it right through legislation or learning. Ultimately, we need better empathy and leaders who are more benevolent in their outlook and we need to approach the reality of racial tension with our eyes wide open.


Mundia Kabinga

Mundia Kabinga is an Old Mutual Emerging Markets Lecturer at the GSB, having previously worked at the GSB’s Management Programme in Infrastructure Reform and Regulation (MIR), and the School of Business at the Copperbelt University.
#8 Winter 2017

Strong institutions are more important than great leaders

Zuma’s Cabinet reshuffle has been billed as a watershed moment in SA’s history, but unless the underlying systems of government are shifted, nothing much is likely to change and the country will be doomed to continue to lurch from one crisis to the next.

When the axe finally fell on embattled Finance Minister Pravin Gordhan and his deputy Mcebisi Jonas a few minutes after midnight on Thursday night, the reactions played out as many people had predicted: an immediate drop in the value of the rand and a rating downgrade from S&P. Given the current state of the economy, it is inevitable that we are likely to fixate on the financial impacts of the move – even though it was part of a larger Cabinet shakeup. While obviously important, however, focusing too heavily on these outcomes is incredibly dangerous.

This is not because these outcomes are unimportant, but because in this case, South Africa’s medium- and long-term future will depend on whether one of the outcomes of this event is to change processes. While people within and outside the ANC have spoken out about the change and what it means for the country, if we think about this response beyond the 24-hour news cycle, it means little. The underlying systems of government and party politics that generate these leaders, and the environments (social, political, economic, etc.) that allowed them to flourish, need to change or we are doomed to repeat the calamities we spend so much time decrying in the present.

People can shout and Tweet slogans like “Zuma Must Fall”, but that makes the enormous assumption that change in this one leadership position means all of the underlying systems will also change. Likewise, the positioning of Gordhan (and to a lesser extent Jonas) as the saviours in this story – the two lone men keeping downgrades at bay, stabilising the economy and safeguarding against the looting of the Treasury – speaks to this same problem. Both perspectives are based on an extremely limited conception of how institutions and societies work, hearkening back to the out-dated, and ironically colonial, “Great Man Theory”.

This theory posits that leaders are born with a special gift that allows them access to positions of great authority. Crucially in this scenario, their unique skills make them indispensable, with successors few and far between. Great things can only happen with these chosen people at the helm of institutions or societies; without them, those same intuitions will likely fail. This notion is scary, mostly because it shows a shockingly unrealistic understanding of the scope of issues facing the country and because it shifts people’s focus to leaders in certain positions as opposed to systems and institutions.

Good leaders can obviously make a difference, but environments can also exert a profound impact on leaders. The running joke in America is that Trump said he was going to “drain the swamp” (change the political system), but his recent failings in many initiatives show that “the swamp is draining him”. So while it is certainly possible that a change in leadership at the top may lead to better outcomes in some measures, keeping all of the underlying systems and processes will likely guarantee we end up in the same place in the not too distant future. To get a better sense of the true impacts of the reshuffle, we need to assess how it impacted on crucial systems, rather than just immediately quantifiable outcomes. For those who were fearing or hoping this move was a watershed event, the proof of their case will not come in shorter-term outputs, but in real changes to these underlying systems, which speak to the strength – or weakness – of institutions. For instance:
There were reports that other Cabinet members would resign in protest if Gordhan was removed; if that fails to happen in a meaningful way, it will be a strong indication that the underlying system will not be shaken.

Short of resignation, who will speak out from inside the ANC against and in support of the Cabinet reshuffle? There have already been rumours and accusations of internal factions in the ANC, exacerbated by the coming elections; if these factional territories are kept hidden rather than staked out in public, it will be a strong indication that the underlying system will not be shaken.
Much of the ANC’s leadership selection and succession processes are highly opaque, making it hard for the public to see just how leaders arrive at their positions. This does not mean there is anything wrong with that person or those processes, but the lack of transparency allows for every shortcoming to be magnified with suspicions of shady dealings in the background. If the process for the elevation of leaders in the ANC is not made more transparent, it will be a strong indication that the underlying system will not be shaken.

The loss of Gordhan and Jonas is no doubt a blow to the Finance Ministry; good leadership is always a benefit to institutions and South Africa, like any country, should try to make the most of any good leadership it can find. But this should not blind South Africans to the fact that the Finance Ministry, and the economy as a whole, can never be wholly dependent on one or two people. If the country wants real “radical economic transformation”, it can only come from institutions that are strong throughout and buoyed by the work of many people dedicated to the task of improving the country.

Gordhan himself appears to understand this – commenting after his dismissal that the Treasury is in safe hands and that the “1 000 plus professionals are committed today as they will be committed tomorrow to make sure they do their utmost best to continue a very proud tradition of managing and maintaining macroeconomic stability in South Africa.”

The bottom line is that if South African politics is its own “swamp”, we would be foolish to think that skimming the top (whether that’s in the form of Zuma or Cabinet ministers) will be sufficient on its own to improve the situation and keep us safe from future harm. Anyone who has been in a swamp knows that the most dangerous things lie below the surface, ready to emerge at the right moment for an attack.

#8 Winter 2017

Is there life after junk status?

Like it or not, South Africa is part of a global economy and therefore, subject to global rules. Wishing it were otherwise won’t make it so.

So, the worst has finally happened. After months of uncertainty, ratings agencies S&P and Fitch officially downgraded South Africa to junk status following the ill-timed Cabinet reshuffle that saw finance minister Pravin Gordhan and his deputy Mcebisi Jonas, among others, unceremoniously shown the door.

S&P and Fitch reduced SA’s credit rating one notch to BB+ from BBB- respectively, placing the country’s bonds in “speculative grade”, commonly known as junk. Moody’s the third of the big three rating agencies has also placed the country on watch for a possible downgrade with a decision expected in July.

The move has, predictably enough, caused consternation, with commentators pointing out that the implications for the country’s economy are not good. From higher foreign-denominated borrowing costs associated with currency depreciations to higher interest rates and inflation for consumers as food and fuel prices go up, the common theme is that South Africans are going to get poorer as a result of this downgrade, and that growth and employment rates will fall on account of progressive declines in consumer purchasing power and confidence.

Spending on essential government services and poverty alleviation will also be constrained so that the economic development project to close the inequality gap will be put on the back burner, despite Zuma’s rallying call for “radical economic transformation”.

Given the multitude of bad news on the economic front, it is inevitable that there has been pushback, especially from government supporters, that South Africa’s development trajectory should not be held to ransom by rating agencies and that we can forge a new path without them.

It is undeniable that the big three rating agencies – S&P, Moody’s and Fitch – have a strong grip on the world of international finance, and have been criticised in the past for discriminating against emerging economies and serving Western political interests.

Errors of judgement

They have also made some terrible errors of judgement in recent years, including their role in the 2008 financial crisis. Credit rating agencies came under scrutiny following the mortgage crisis for giving investment-grade ratings to securitised mortgages – in the form of securities known as mortgage-backed securities (MBS) and collateralised debt obligations (CDOs) – based on “non-prime”, subprime or Alt-A mortgage loans – for which they were heavily penalised.

This has prompted some to tout alternatives, including a suggestion that BRICS countries create their own rating agency to rate themselves – and perhaps others too.

The idea is indeed attractive. It is possible that a BRICS agency could provide a much-needed counterbalance to the Western-orientated big three, create competition and offer investors, issuers and other stakeholders a wider choice and more diverse view on creditworthiness.

But as Dr Sean Gossel, a colleague at the UCT Graduate School of Business, has  pointed out, there are several reasons why this might not work. Firstly, it is a difficult market to crack; there have been several previous attempts to launch new agencies and all have failed to take off. In addition, the BRICS proposal looks set to replicate the problematic “issuer pay” model whereby a bond’s issuer pays the rating agencies for the initial rating of a security, as well as ongoing ratings. The public (and investors) can then access these ratings free of charge. This creates a potential conflict of interest the rating agencies are struggling to resolve.

China has already expressed concerns about the integrity of the new agency, saying that it will lack credibility unless it can prove itself to be autonomous from its sponsoring authorities, and that BRICS governments would do well to keep away from it.

An issue of credibility

Even if such an agency does get off the ground, chances are that it would fail to convince investors in Europe and the US that its ratings are credible and politically impartial. The BRICS agency, like many of its predecessor agencies, would not be registered with both the American Securities and Exchange Commission (SEC) and European Securities Market Authority (ESMA), which would make it impossible to attract portfolio investment flows from the US and Europe.

This means that such ratings would only likely attract finance from the East and other emerging economies in the long term. And that will do very little or nothing to retain the American and European institutional investments already in South Africa which, according to National Treasury’s 2016 estimates, currently make up about 40% of the total investment in South African bonds and securities.

It is worth noting that these institutions invest only in investment grade instruments (BBB- and above) as determined by Standard and Poor’s, Moody’s and Fitch. Thus, their imminent departure will undoubtedly translate into economic hardship for South Africans, no matter how much we protest that we don’t need them!

The same argument applies to the loss of Gordhan at the helm of the National Treasury. While we are asked to judge new Finance Minister Gigaba on his “actions” and not “rumours and speculation”, the rest of the world might not feel the same. Perception in the world of finance is everything, and Gordhan was perceived as a safe pair of hands. The former chief of the South African Revenue Service and two-time finance minister is well known in international financial circles, and was making notable progress in allaying fears around South Africa’s investment status. His departure, therefore, has fuelled widespread  uncertainty.

What is needed is a seasoned and well-known personality at the helm of the National Treasury to calm international financial markets and shepherd South Africa’s return to investment grade status. Like it or not, South Africa is part of a global economy. We are, therefore, subject to global rules. As the lyrics to the Everly Brothers famous song go: wishing it were otherwise won’t make it so.

We are, for the foreseeable future at least, firmly stuck in the unpleasant situation of an economy in contraction and unable to attract low-cost and investment grade finance in international markets.

#8 Winter 2017

Rebuilding the ANC brand

In 1994, the idea that the ANC might lose power was unthinkable. Now, with the 2019 elections approaching, the party is on the ropes. It’s a classic tale of a strong brand that has been allowed to denature thanks to a string of scandals and poor service delivery. The question is, can it be saved?

The fact that Ahmed Kathrada, stalwart of the struggle, chose to be buried draped in the ANC flag, despite his disillusionment with the current party leadership, says much about the power of the ANC brand and what it has meant to so many people for so many years. Over its 104-year history it is a brand that has inspired devotion of religious proportions in its followers. But Africa’s best-known liberation movement is in trouble.

Brand management theory emphasises two fundamental transgressions that can lead to the demise of a brand: violating the brand promise and jettisoning the values that are important to the brand and its supporters.

The African National Congress (ANC) has in recent years consistently violated the promises it made when it came to power and has abandoned its own values. Subsequently, the once revered organisation is facing an uphill battle to retain the lustre of its brand which has been tarnished by scandals, allegations of corruption and “state capture”, and a poor service delivery record.
For the first time since 1994, the ANC faces the serious risk of losing power in the years ahead. The outcome of last year’s local government elections provided the clearest indication yet that the party is losing support, especially in urban areas. Ongoing calls for its leader, President Jacob Zuma, to step down, suggest that the ANC is on the ropes and a knockout blow appears imminent. Can the party’s leaders do anything to save the brand?

Strategy consultant Thabang Motsohi has argued that in business when sales and profits progressively decline over time [read when votes decline in politics], it means among other things, that erosion of the brand has set in and usually the task of rebuilding it can be very challenging and disruptive. And the problems that caused the decline must first be fixed before the brand rebuilding can resume. According to Motsohi, some brands have literally disappeared from history through bad strategic judgement that led to self-destruction. In business, and indeed in politics, the demise and disappearance of brands occurs all the time irrespective of how strong they were. Despite President Zuma’s infamous claim that the ANC will rule until Jesus comes, the party runs the risk of imploding should it fail to successfully re-invent itself.

Back to branding basics

Opposition parties are waiting in the wings to capitalise on the ANC’s weaknesses, so, what can the ANC do to stave off this challenge? A good place to start would be a good old-fashioned “SWOT” (Strengths, Weaknesses, Opportunities and Threats) analysis to clearly identify, among other things, the party’s strengths that it can build on and the weaknesses that have led to its current state. Such an analysis will be key in informing future strategies of re-building or re-positioning the brand. One of the few strengths of the party at present is the fact that it has been in government for a very long time. It should look to highlight or emphasise this experience in government, notwithstanding its shortcomings. It has an opportunity to renew itself by, among other things, promoting a new breed of young leaders, and taking strong action against those seen to be tarnishing the brand. Thus far, the party has failed to take this opportunity, and is unlikely to do so.

The handling of scandals by ANC leaders to date, has not been reassuring. From the Nkandla debacle during which public money was unjustly used to upgrade Zuma’s plush private homestead, and the allegations of state capture by the controversial Gupta family, to the recent axing of respected finance minister Pravin Gordhan, which sent the rand and markets into a tailspin, no-one has been held accountable. This has further eroded the brand.

Leading by example

According to Johnny Johnson, a brand and communications strategist, writing in BusinessLive, living up to the brand promise needs to be the concerted effort of everyone in the organisation but it is leadership’s responsibility to look after the brand and to make sure it has integrity. If an organisation wants a strong brand, with strength measured by trust, then the brand strategy that builds and protects the brand, must be developed and owned by the full leadership team, inspired by the CEO/President, who is the brand owner. Brand strategy needs to be facilitated at the highest level of leadership in the company because great brands are built from the inside out, argues Johnson.

Some within the ANC are very much aware of the fact that the party has lost its way. Deputy President Cyril Ramaphosa recently called on the ANC to address the challenges it is facing, or continue to lose support. ANC MP Makhosi Khoza has also been vocal and recently penned her concerns about the state of the ruling party. With more senior party members speaking openly about the shortcomings of the organisation, there is a glimmer of hope that the brand can be saved. However, the problem in the ANC is not just Zuma but the entire organisation, as it has to a large extent become a political organisation based on financial transactions and patronage. The decay of the ANC brand is playing out in state owned entities such as Eskom, SAA and SABC, which continue to fail largely because of the party’s deployment of incompetent cadres. SA Inc. as a brand has also been tarnished by the ANC and this is likely to lead to investor and capital flight, which will make it harder for the country’s economy to grow and create much needed jobs.

The need to modernise

Some have argued that the current crisis in the ANC stems from the fact that the organisation has remained fundamentally a liberation movement, and has not assumed a new, modern, professional political party posture. The organisation has kept the moral righteousness of liberator but this has not translated into responsible governance.

Furthermore, the ANC appears oblivious to the impact of its decisions on the social and economic fabric of the country. The party has long relied on its liberation credentials since coming into power in 1994, and as we have seen with other liberation movements on the continent, like Zanu PF in Zimbabwe, such a strategy is slowly but surely losing resonance with a large section of the public, most of whom are young, forward looking and more interested in the bread and butter issues, not the sentimentality of the liberation struggle.

To speak to these voters, the ANC will need to work harder to clean up its tarnished image and look to introduce new forward-looking strategies. A leadership renewal will also be crucial. The party needs to give younger, energetic leaders with fresh ideas, a chance to take charge. Moreover, it needs moral guardians who will enforce and promote the party’s core values, which include building a united, non-racial, non-sexist, democratic and prosperous SA. Maybe then it can live up to the trust placed in it by the late, great Kathrada and others who lived and died to uphold the organisation – and the country.

#8 Winter 2017

Detoxifying leadership

Toxic leadership is not uncommon in the private sector, but it’s emerging more often in the public space too, as is all too evident in the US and in South Africa right now. The good news is that it can be overcome.

Toxic leadership is characterised by a number of familiar traits: unwillingness to take feedback, lying and/ or inconsistency, cliquishness, autocracy, manipulation, intimidation, bullying, and narcissism. The toxic leader can – if s/he is allowed to run rampant for long enough – destroy organisational structures over time and bring down an entire organisation.

There are a number of reasons for this. The first and most obvious is that a toxic leader may influence organisational culture through aversive action that is, by flouting organisational processes, rewarding loyalty over competence, normalising socially unacceptable behaviours like infighting, and by breaking down trust and eroding clear lines of authority.

But the other, more insidious influence of the toxic leader is to be found in what they do to the relationships of those around them. Babiak and Hare, in their extensive study on the subject of aberrant advancement, describe how two factions typically develop in an organisation once the deviant leader’s ascent has begun. One faction consists of supporters, pawns and patrons; the other, of those who remain true to their principles, realising they have been used and abused and that the organisation – whose ultimate goals they still support – are in danger.

If it sounds familiar it’s because South Africans are spectators to exactly this kind of factionalism playing out on the national stage. Both in the ANC and within the tripartite alliance, pro- and anti-President Jacob Zuma factions have been involved in an energetic mudslinging match in recent months. Zuma, who for better or worse has been resistant to the feedback of his critics, remains at the helm. Whether one is for or against the president, it remains that he is at the very least a controversial figure, and criticism of him can lead to reprisals. For many, he represents the quintessential toxic leader.

By a similar token, US President Donald Trump’s reign has been characterised by a slew of resignations, barely 100 days in. In addition, several of Trump’s opponents have simply been removed from office – like the recent axing of the FBI Director – or asked to resign, in a manoeuvre not unlike the new South African national sport, the Cabinet reshuffle. Within the public sphere, leadership should be consistent enough that even where there is political disagreement, there can be cooperation. But where there is toxic leadership, this cannot occur.

The toxic environment

Where there is toxic leadership, the ethics of the working environment are compromised. Typical behaviours are theft, abuse of privileges, violence, verbal abuse – the list goes on, and any number of these may be recognised from news reports both local and international. Tenderpreneurship scandals, the mismanagement of taxpayer funds and the maintenance of corrupt relationships are an all-too-familiar occurrence.

Of course, the presence of the toxic leader does not absolve those who choose to engage in deviant conduct. Ministers and private sector employees who pursue personal gain or corrupt relationships remain responsible for their own choices. However, it is that much easier to make the wrong decision when one has seen examples of operating in an environment without consequences. Such behaviour may be rooted in financial gain, or lie within the culture of an organisation, where the motivation to achieve results may spark greater numbers of people either actively harming or passively ignoring the welfare of others in order to achieve their desired end.

The removal of the psychopathic leader therefore does not guarantee the eradication of toxicity as it is likely to be entrenched at lower levels of organisational leadership by the leader’s sycophants.

Fighting from the bottom up

The good news is that toxic leadership can be overcome. When it is understood, it can be dismantled or reformed. We can expand our understanding of leadership styles, particularly in times of change, and derive relevance for our own organisations.

The responsibility to move against it does not lie with an individual, but concerns the organisation as a whole. In the case of the public sphere, this responsibility extends to society as a whole.

Crucial to overcoming the toxic leader’s negative impact, is for other members of the organisation to remain firm and loyal to their principles, and to take a united stand. It is not for nothing that business schools are increasingly emphasising the development of the whole person and encouraging students to reflect on their principles and values as well as to polish up their technical skills. Being in management or leadership today, whether in the public or private sector, requires much more of people than just the ability to understand a balance sheet or hone a marketing strategy; they need to be able to manage relationships and get results with integrity. And, as is so often the case in life, it is only in tough times that the importance of these skills really becomes apparent.

If people are able to stand together against a toxic leader, s/he may leave of their own accord. But the rest of the organisation must be able to distance themselves from the leader’s negative actions, remain calm, and not respond to threats, since it is fear that fuels such a leader. Without this key tool, s/he may self-destruct.

A second strategy: find out who s/he answers to, if it is not immediately apparent, and appeal to this authority. Bullies are not always swayed by open dialogue or whistle-blowing, but may answer to a higher law if this is done formally and armed with the facts. In the case of an errant public servant, this may be achieved through, for example, the judiciary and institutions like the Public Protector.

If, however, the above measures fail, there are ways to manage the situation with the toxic leader in position. We need to understand the leader’s history to analyse how s/he got to this point, and share this with key decision makers, as a core aspect of the solution is establishing a working coalition of like-minded individuals who understand the leader’s negative impact. The coalition should not take a punitive, antagonistic approach, but rather a supportive one, using appropriate benchmarks and timelines that reflect the goals of all key stakeholders.

Continued transparency, also, remains key. Crucial to avoiding long-term negative impact is setting finite term limits for leadership, as well as using 360 degree review processes (preferably anonymous) where subordinates, superiors and external stakeholders rate the performance and behaviour of the leader. In the political sphere, this approach can be invaluable and would support the call for a secret ballot in the upcoming motion of no confidence in President Zuma.

Learning from each other

Much of what we observe in the corporate sphere can be applied to leadership in the public sector and vice versa, bringing a valuable level of accountability into the workplace and to service delivery. The accountability of leaders can be increased through forums like town-hall meetings to force leaders to think deeply about their behaviour and decisions. Where politics is concerned, such visible performance management can do wonders for the well-being of citizens.

It is also critical to establish mechanisms to protect people speaking up against leaders – the whistle-blowers – as their actions should be free of fear, such as losing the economic base to cater for their families. With protection mechanisms in place, employees and citizens alike should be able to freely raise issues and protect both themselves and their ideals, whether their concerns relate to a private company or a government department, from harm.

#8 Winter 2017

Why SA needs more steward leaders like Ahmed Kathrada

Leaders like Ahmed Kathrada who are defined by their service to others, are deeply mourned upon their passing. Fortunately, there are many men and women in this country ready to step forward to serve society in similar ways – if we can find the right means to support them.

The death of anti-apartheid struggle stalwart Ahmed Kathrada in March sent shock waves throughout the country. It came at a time of political volatility and tension and his loss was felt keenly by many who had drawn courage from him over the years and had hoped for his guidance in these times. Despite his advanced age, he was still very much engaged in the public arena.

In his eulogy at the funeral, former president Kgalema Motlanthe paid tribute to comrade Kathy, as he was affectionately known. “Today is the day on which we close the eyes of comrade Ahmed Kathrada, permanently; because during his lifetime he opened ours forever and saved us from the blindness of the heart. Along with countless men and women of a higher order of consciousness with whom he cast his lot in pursuance of deep ideals, comrade Kathy helped unleash human possibilities,” said Motlanthe.

Respected and revered for his humility and humanity – despite being arrested multiple times and serving 26 years in jail on Robben Island – Ahmed Kathrada personifies the principles of a leadership style that is defined by service to others, contribution to community and a profound insight into the self. It is called steward leadership.

From hero to servant

Steward leadership evolved from the early 20th century concept of a leader as an individual hero into a person with more transformational, visionary, collaborative and resilient qualities. Such individuals are skilfully aware of how to achieve results through the use of soft power (the ability to get others to want the same things that we do responsibly): acts of generosity; respect for other traditions; appeal of cultural, social and moral messages; moral courage; compassionate orientation; attraction and influence; and, acting from deep care and love – as opposed to the unfettered use of hard power (the ability to get others to do what we want): control; power of position; using authority; economic muscle; as well as military threat and might.

Leaders, both in business and civil society, with a stewardship outlook on life are concerned about the challenges represented by climate change, economic inequality, class struggles, gender issues, sustainability as well as financial vulnerability. It is a rare kind of leader who combines a concern for these with a greater organisational ability and expertise to become highly capable, influential and impactful.

A journey towards personal mastery

Stewardship has at its centre the notion of others and the common good, emanating from a deep spiritual orientation or ignited purpose on the part of the individual. For Ahmed Kathrada, this undoubtedly came about in part during his 26 years of imprisonment on Robben Island, or during any one of his many arrests and periods of detention. He was also devoutly religious, having undertaken the Islamic Haj pilgrimage to Mecca in 1992.

But stewardship is not about religion or even about spirituality. First and foremost, it is perhaps about personal psychology and self-awareness. Our research shows that a framework of stewardship may include nine dimensions: personal mastery; personal vision; mentoring; valuing diversity and inclusion; shared vision; risk-taking and experimentation; vulnerability and maturity; raising awareness; and delivering results.

The common thread that runs through all these dimensions is that personal mastery is a journey on which a person is continuously improving their abilities and growing in the quest for a different future reality. It is about learning, unlearning and re-learning, as well as becoming more aware of oneself and conscious of those energies that prioritise one’s choices in moving towards the desired state. It means being willing to let go of negative emotions, of old ways of doing that may be comfortable but are no longer productive – tapping into one’s full potential as a human being; first and foremost becoming the leader of one’s own life. Often steward leaders set out initially to serve (something much larger than the self – a cause, a movement, a calling, a purpose), and end up leading. Leading is rarely their initial goal.

Strength of character

Stewardship advocates being in a position that benefits the community before the individual. It is also about trust. A person who is the master of their abilities, and is gracious enough to be willing to grow others, will inspire trust in others and make stewardship a reality.

Research shows that the ability to get people engaged, and to perform well, depends largely on what they perceive when they look and listen to you. They need to see someone who appears willing to step into unknown possibilities, show courage when adaptability to changes is required, and witness someone who is willing to stand up and carry on after failing. This kind of strength and resilience is acquired through continuous sense-making of one’s own personal narrative, and development of ‘personal gaps’ in order to achieve personal mastery.

Steward leaders need vision, both personally and more generally, to be able to lead others. It is important to know where you want to go and be willing to continuously learn and strive to get there. Effective steward leaders have a vision of making a difference, in the lives of others, the community (whether business or civil society), and in the nation, since they fundamentally believe in a greater positive outcome at the end of the relentless journey.

Steward leaders are everywhere

While Kathrada’s contribution to society in South Africa in particular, is felt most strongly in the political and human rights sphere, steward leaders in the business world can have a tremendous impact when it comes to promoting more sustainable, ethical, economically sound and human-oriented practices. By developing and promoting others (even taking “chances” on people), and inspiring them to be courageous and resilient, companies can also achieve more – not only in terms of productivity, but also in terms of impact and social consequence. At this time in South Africa, with complex political and social turbulence, as well as a stagnant economy, we need steward leaders like Kathrada more than ever.

The steward leader seeks to be the ‘best for the world’, not only the ‘best in the world’ and, in my experience, many executives exhibiting a certain maturity, develop a concern or orientation for the “common good” and become interested in issues relating to wider society. This country has many such leaders, across the broad spectrum of society and at all levels, ready to step up to take this country forward. And if leaders are open to being developed and are willing to make positive and constructive choices, they can move beyond the traditional selfish and narcissistic expectations of leaders, to become leaders who care about others. It is our challenge to find ways to support them on this journey.

#8 Winter 2017

No to Nuclear: The struggle for SA’s energy future heats up

The recent victory against nuclear in the courts is not the end of the story, the fundamental and enduring challenge facing South Africa is to restructure the energy sector so that we can move to a more sustainable power market that delivers least-cost, reliable power.

The battle for South Africa’s nuclear and energy future is not over. While many South Africans welcomed the Western Cape High Court’s decision in April setting aside international nuclear energy treaties and declaring the government’s nuclear procurement programme unlawful and unconstitutional, President Zuma and his allies have not given up. Ultimately the structure of South Africa’s power market will need to change to ensure an optimal and least-cost energy mix. Reforming the power sector will be the more important struggle.

Unfortunately, the Court’s nuclear decisions were essentially around procedural issues and it declined to rule on substantive matters such as the rationality of procuring nuclear power when government’s own updated electricity plan says it is not needed.

The Court ruled that government was dilatory in tabling the earlier US and Korean nuclear agreements in parliament and used the wrong constitutional provision in submitting the more recent Russian agreement, which should have been subject to parliamentary debate and approval.

The Court also found that the National Energy Regulator of South Africa (NERSA), whose concurrence the Minister of Energy requires before gazetting a determination to procure new electricity generation capacity, didn’t consult the public before agreeing with this crucial decision.

Zuma’s government will likely correct these procedural deficiencies through re-tabling the international agreements for parliamentary approval and restarting the procurement process. The Energy Minister could make a new determination in terms of the Electricity Regulation Act, based on a more favourable nuclear scenario in a new electricity plan. NERSA could then go through the motions of consulting affected parties before offering its concurrence.

But business groups, electricity consumers or civil society groups may mount new court challenges, this time on substantive grounds. Any administrative actions by the Department of Energy (DoE), NERSA or Eskom should meet the standard of being lawful, reasonable, and procedurally fair.

NERSA has become a key institution amidst the contestation of interests, power and ideas that are shaping our energy future. Though the Energy Regulation Act enjoins NERSA to act in a justifiable manner and independently of any undue influence or instruction, it will be difficult for NERSA to hold the line against a determined, kleptocratic elite. I know, from first hand experience, when I was an electricity regulator, of the subtle and not so subtle pressures that were brought to bear around regulatory decisions. In work across Africa, I have seen governments replace regulators to achieve more compliant outcomes.

The substantive grounds for blocking a nuclear procurement are formidable but may not be sufficient. Rational arguments, supported by computer models, don’t always win the day.

All the models that underpin South Africa’s electricity plans show that nuclear power does not fit in a least-cost scenario. The models are backed by market prices revealed in actual long-term, fixed-price contracts. For example, Russia’s Rosatom nuclear contract in Turkey is 12.35 USc/kWh, twice Eskom’s average tariff.

South Africa’s official electricity plan is prepared by Eskom modellers on behalf of the Department of Energy. The model shows clearly that our next, least-cost investments in power stations should be a mix of solar plus wind plus gas power.

This is not surprising: globally, and in South Africa, costs of solar photovoltaics have fallen more than 80% since 2008 and wind energy by 30-40%. A recent solar auction in Chile achieved 2.9 USc/kWh; that’s half Eskom’s average tariff and a fraction of its new generation costs. Solar prices in the UAE are even lower at 2.1 USc/kWh. Who could have imagined this, even a few years ago? It is undeniable that we are in the midst of a technological and market revolution in energy, yet many old professionals in the electricity industry fail to fully appreciate the implications.

I still find it hard to accept how quickly renewable energy has broken through. When I started my professional career in 1980, OPEC-induced oil price spikes sparked a new wave of innovation and investment in renewable energy. I spent a year of my PhD doing field work in villages in the mountains of Lesotho on solar energy applications that would promote rural development.

When I returned to UCT, I started a new energy research centre, and postgraduate programme, and sent my students out to rural areas to build and test new solar applications. We were full of hope, but as oil prices tanked, the promise of super-efficient and low cost solar energy didn’t materialise. Investment in renewable energy dried up and I became cynical about the prospects of solar and wind energy.

But in recent years everything has changed. Global climate change commitments and support mechanisms for renewable energy, especially in Europe, have created a new market for innovation and investment in solar and wind energy. Feed-in tariffs, initially at generous levels, encouraged mass production to meet new demand, resulting in significant cost and price reductions. In this environment, it would be foolhardy to embark on large power investments in old technologies that would lock-in uncompetitive prices for future generations.

Government’s premier scientific establishment – the CSIR – has used exactly the same, internationally accepted, electricity planning model employed by DoE/Eskom, with the same investment costs that Eskom’s Chief Nuclear Officer expects, but nuclear energy does not appear in a least-cost future mix. UCT’s Energy Research Centre runs a different model but they come up with essentially the same result.

All the models also ensure that the least-cost mix meets specified security of supply standards. Variable, but ultra-cheap energy resources, can be complemented with flexible electricity generation and storage, including gas, bio-energy, pumped storage, hydro and demand-side management. More and more countries are demonstrating that this is possible in practice.

However, the structure of South Africa’s power market constrains the rate at which new, more flexible, least-cost power options can be contracted. It is clear that government and Eskom still favour big coal and big nuclear. Despite the Renewable Energy Independent Power Programme attracting hundreds of billions of Rands in private investment, sparking local manufacture and ownership, and transferring tens of millions to local communities, our state-owned, vertically-integrated utility blocks solar and wind energy contracts that are below its average cost of supply.

Globally, economies that are larger than ours, and even many emerging economies and developing countries, have restructured their electricity markets to accommodate more competition and private investment. Independent grids have been established to contract state and private power generation on an equal footing and to allow system operators to respond more intelligently around balancing supply and demand, and to dispatch electricity at least-cost.

In principle, these power sector reforms are not difficult to implement. Eskom’s power generation can become a separate subsidiary of Eskom Holdings and then be spun-off into a separate state-owned generation company, leaving an independent grid.

Through a simple amendment to the Electricity Regulation Act we can recognise direct agreements between generators, traders and large consumers. Already this is happening and private companies are wheeling electricity across the grid to industrial customers. But, through more explicit legal and regulatory recognition of these options, we could unleash a new market that stimulates innovation with lower prices while sustaining grid stability and reliability, as well as encouraging off-grid options.

However, these reforms have been resisted, even though they appeared in our Energy Policy as long ago as 1998. Constituencies that continue to promote big coal and big nuclear also generally support retaining a dominant, patronage-dispensing, state-utility. Now the consequences are there for all to see: brazen rent-seeking by a politically-linked elite.

As I reflect back on my career as an energy professional and policy advisor, I marvel not only at the recent, dramatic breakthrough of renewable energy, and how nuclear power is now more often than not on the back-foot, but I am also increasingly aware of how complex the political-economy of the power sector is and how difficult reform has been.

While the nuclear battle is by no means won and it is likely that we will need to maintain the legal thrust, the more fundamental and enduring challenge will be to restructure the sector so that we can move to a more sustainable power market that delivers least-cost, reliable power. This struggle for institutional change will demand a penetrating understanding of political and economic interests, the way that power is wielded through institutions and in policy and decision-making, and the role of ideas and rhetoric in mobilising support for and against reforms.

The nuclear battle has made clear that the struggle for a new energy future, that will benefit all South Africans for generations to come, is far from over.

#8 Winter 2017

Radical economic transformation: You can’t redistribute what isn’t there

Economic transformation in SA is long overdue, but current talk about radical economic transformation is “mere political rhetoric”, agreed panellists at a recent UCT Graduate School of Business roundtable discussion.

Talk of radical economic transformation, a concept that has dominated public discourse in recent months, is an outcome of government policy failures which have left the majority black population on the margins of the mainstream economy, speakers argued during a panel discussion organised by the University of Cape Town Graduate School of Business (GSB) in April.

The panel discussion on perspectives on economic transformation in South Africa took place amid raging debate in the country about the exact meaning of the term “radical economic transformation”, and how it will impact the broader economy.

Associate Professor Mills Soko, the director of the GSB, chaired the well-attended discussion, which was at times highly charged and emotive. The panel comprised Mncane Mthunzi, the president of the Black Management Forum, an organisation which has been advocating and lobbying for transformation in corporate South Africa; Sean Gossel, a senior lecturer in Finance at the GSB; and United Democratic Movement (UDM) Member of Parliament and chief whip Nqabayomzi Kwankwa. Soko said attempts to invite a representative of the ruling African National Congress (ANC) had failed.
Opening the discussion, Mthunzi said South Africans had been “fed reformation disguised as transformation” over the past 23 years.

“In my view reformation is pretty much like a chameleon …it changes colours depending on the environment …it’s not transformation. Transformation in my view is like a metamorphosis…by its very nature the outcome of transformation ought to be different prior to the implementation of that transformation,” said Mthunzi.

He emphasised that transformation cannot happen without pain, and businesses and institutions have to be more willing to change and give more black people access to the mainstream economy.

“It’s a very painful process that needs to take place… businesses and institutions have been coming with a minimalist approach as far as transformation is concerned. Self-regulation has not helped. No wonder you hear the noise and militancy in the ruling party with regards to radical economic transformation,” said Mthunzi.

He argued that during the drafting of the Constitution, which was adopted in 1996, parties skated around the need for social change. There had been no social contract on how to achieve the equality and social justice promised by the Constitution.

“We missed an opportunity during negotiations for democracy to deal with issues of economic transformation and how we deal with the injustices,” said Mthunzi.

As a result, land ownership remains skewed in favour of the white minority, black representation in JSE listed companies remains low, and the household income gap between black and white families continues to widen, he said.

“No one has defined this radical economic transformation. It’s political talk. It’s just rhetoric, you cannot touch it…we do not know when it will explode, but it will explode in our faces.”

Deputy President Cyril Ramaphosa said that radical economic transformation was unavoidable. He said the idea behind the concept was fundamentally about building an inclusive and more collective economy in the country. Government hoped to create more sustainable growth, higher investment, increased employment, reduced inequality and to de-racialise the economy.

The ANC has argued that Black people constitute almost 80% of the population, yet the lion’s share of the economy in terms of ownership of land and companies remains in the hands of white people, who make up about 8% of the population.

However, Kwankwa argued during the panel discussion that the radical economic transformation narrative at the moment is being used, perhaps abused, by ANC factions jostling for power ahead of the party’s elective conference in December. He said leadership failures have contributed to policy failures, and while economic transformation is long overdue, the current discussion in government around the issue is mere rhetoric used for political mileage. Land reform was a ticking time bomb and it needs to be addressed urgently, said Kwankwa.

The debate on radical economic transformation has been simmering for some time amid general public unhappiness with government’s performance since 1994, agreed Dr Gossel. The concept, he said, should not be seen as surprising and definitely not a sudden explosion.

“Much of the frustration we see [today] largely has to do with failure to deliver on [past] promises,” said Gossel.

However, Gossel argued that the country was in essence putting the cart before the horse by emphasising radical economic transformation, and not radical economic growth.

“You cannot have radical economic transformation unless you have radical economic growth. The one is an outcome of the other. You cannot redistribute what isn’t there,” he said.

SA continues to record slow economic growth. Growth has averaged about 3% since 1994, which is considerably lower than 5.4% envisioned in the National Development Plan, a long-term plan articulating the country’s vision to eliminate poverty and reduce inequality by 2030. The country’s economy is likely to shrink further following the decision by ratings agencies S&P and Fitch to downgrade the sovereign debt to junk status, or sub-investment grade. The two agencies cited likely changes in economic policy after respected finance minister Pravin Gordhan was sacked during a midnight cabinet reshuffle, a move that sent the rand and markets into a tailspin and sparked widespread protests against President Jacob Zuma.

Gossel said that the country needs to go back to the drawing board and address fundamental structural limitations in the economy that are hampering economic growth and seek ways to ensure that growth can be spread across classes, races and the disadvantaged.

“You cannot have transformation in a shrinking economy that’s just received junk status…as bad as these [economic growth] statistics are I actually suspect it will get worse and therefore the political rhetoric will get ramped up …it’s all about electioneering, it isn’t about the economy…no one is talking about economic growth.”

#8 Winter 2017

Does it matter where knowledge comes from?

Current debates around decolonising the curriculum lack nuance and create more questions than answers. In tackling this ‘wicked problem’, universities must not lose sight of their mandate to advance all forms of knowledge, not limited to one country or continent, and educate citizens who can take this continent forward.

Universities should seek to advance all forms of knowledge not limited to one country or continent.

This was the commonly held view among academics during a roundtable discussion on decolonising the management curriculum hosted at the UCT Graduate School of Business by the Allan Gray Centre for Values-Based Leadership in May.

While the debate on decolonising the curriculum is not new and has cropped up as far back as the early 90s, the fact that it has recently reignited in South Africa shows that the issue has not been adequately addressed. And when it comes to the management curriculum the same issues occur. During the GSB discussion, panellists noted that such conversations were previously left to the humanities, yet they should concern all departments and disciplines including finance, management and accounting as these cannot be divorced from the broader socio-political context.

The theme of decolonisation hit headlines during the first wave of the #RhodesMustFall protests at UCT in 2015 during which students demanded the removal of the statue of Cecil John Rhodes. From there, the protests spread to focus on issues like outsourcing and the curriculum with protesters arguing essentially that South Africa’s universities should do away with values, norms and practices that essentially categorise anything non-European and not white as inferior.

But the definition of “decolonising the curriculum” remains a grey area and it’s unclear how it will work on a practical level. Emmanuel Mgqwashu, Professor of English Language Teaching and Literacy Development, at Rhodes University, has previously stated that many people in South Africa use the terms transformation and decolonisation interchangeably. Mgqwashu noted recently that in curriculum debates after apartheid, transformation has come to mean replacing texts by scholars and writers who are white or European with work done by those who are neither.

Opening the roundtable discussion, Dr Shaun Ruggunan a senior lecturer in Human Resources at the University of KwaZulu-Natal, suggested that the current debates perhaps lacked nuance.

“If we change the racial or gender demographics of knowledge producers, does that in itself decolonise the curriculum or the discipline? My answer is no,” said Ruggunan.

He said a demographic shift in knowledge producers does not necessarily mean a “content shift”, but may mean a shift from colonial to a neo-colonial legitimation project.

“[We] cannot equate work authored by South Africans or Africans /global South as immediately post-colonial. This in itself does not mean the work is critical or reflexive or emancipatory,” said Ruggunan.

While conceding that the debate on decolonising the curriculum had unsettled a lot of academics “because we work in our ways and we have our theorists that we know and we are now being asked to do things completely differently”, Dr Shannon Morreira, an anthropologist based in the Humanities Education Development Unit at UCT, said the debate was necessary, especially for a university such as UCT.

Citing various authors who have referred to UCT as a “European greenhouse under African skies in post-apartheid South Africa”, where “many of the dominant institutional academic and cultural practices are still “white”, English, middle class and male (even Oxbridge) in character,’” Morreira said a lot of students at the institution felt alienated.

She said while a review of the curriculum was necessary, “we need to aim to recognise the entangled nature of forms of knowledge in postcolonial Africa such that it is impossible to categorise knowledge as ‘African’ versus ‘European’”.
“It’s important to adopt and examine an epistemic lens that recognises multiple knowledge forms as legitimate…We can take the specificity of the African experience seriously in our work as educators and legitimate contesting forms of knowledge – through using new theorists; or teaching and examining in multiple languages,” said Morreira.

Dr Tim London, a senior lecturer at the GSB focusing on issues of leadership, said the country should be open to engaging with all forms of knowledge irrespective of where they come from. “If the cure for cancer comes from America, I do not care where you live, I want that. You do not want to reject something just because it’s from there”.

Professor Stella Nkomo from the University of Pretoria was of the view that the management curriculum should be multidisciplinary and include: pre-colonial, colonial, and post-colonial history and its implications for organisations and management. She said the curriculum should contain alternative theories and examples of different organisational forms, including post-capitalist forms of organisation, and social justice approaches to dealing with racism, sexism, heterosexism, xenophobia, and ableism. Continental and national imperatives should drive the curriculum, but we should not lose sight of the global viewpoints, said Nkomo.

Management curricula around the world – and not just in South Africa – are unashamedly biased towards America – and this must be recognised and confronted, she stressed.

“Americanisation of management knowledge is a real phenomenon…it was forced down people’s throats in exchange for funding. This is still happening today and it has to change,” said Nkomo, albeit conceding– it is easier to critique the curriculum than to come up with a replacement. “We have a lot of talking to do and we are hoping that the conversation includes all students and stakeholders…it’s a wicked problem this …how do you create something new and different to try to come up with a management curriculum to enable our country to become what it wants to be?”

#8 Winter 2017

Winning the game

Sam Paddock.

The GetSmarter deal shows that SA and Africa at large is the next hotbed for technological innovation led by start-ups.

Cape Town – The decision by Nasdaq-listed technology education company 2U to acquire Cape Town-based start-up GetSmarter for R1.4bn ($103m) is not only a vote of confidence in Cape Town and South Africa’s digital economy, but a classic example of bootstrapping eventually yielding significant results.

GetSmarter started off with just five employees when it was launched in 2008 by brothers Rob and Sam Paddock, backed by a very small budget derived from their family’s other business which was just enough to pay salaries. The company currently has a 400-strong workforce and could take on many more employees as it continues to show strong signs of growth following the acquisition.
GetSmarter’s growth is impressive. Its revenue was about R227m in 2016, derived from students enrolled in the company’s programmes with South African universities, with a significant element from new partners in Britain and the US.

Its business model is premised on working with universities such as Cambridge University, Harvard University, the Massachusetts Institute of Technology, the University of Cape Town, the University of Witwatersrand, Stellenbosch Business School, and industry experts to provide short courses. The programmes are delivered entirely online and target specifically, working professionals who might not necessarily have the time or opportunity to be in a physical classroom. 2U has a similar business model, but focuses on full degree programmes, partnering with colleges and universities to build digital education solutions.

GetSmarter’s purchase price is a measure of the high costs that universities will encounter if they decide to set up full online divisions of their own. 2U and GetSmarter represent an alternative highway to the future; partnerships between traditional public universities that bring expertise, reputation and credibility to the table, and for-profits that can manage the risk and flex with the requirements of a rapidly changing market.

For Sam Paddock, GetSmarter’s CEO, this deal presents a great opportunity for the company to grow and fully establish itself in the online education space. It also suggests that the digital economy in Cape Town is set to take off: “this is a clear message to all South Africans that we not only have what it takes to play on the global stage, we can win.”

In terms of the acquisition, GetSmarter will continue to operate independently as a wholly owned subsidiary of 2U, based in Cape Town. It will continue to be operated by its current management team. More generally, 2U’s confidence in GetSmarter also signals confidence in Cape Town and South Africa. South Africa’s digital economy is ranked 65th out of 139 countries surveyed in the Networked Readiness Index, up from 75th in 2015. This makes SA one of 10 most-improved countries, alongside Italy and Slovakia. In keeping with this, the Department of Telecommunications and Postal Services has called for input on the national e-strategy, e-government and ICT SMME support strategies. This is aimed at unlocking business opportunities and creating an enabling business and administrative environment for SMMEs in the ICT sector. Small and medium sized ICT players can only benefit from this.

Tech entrepreneur Eric MK Osiakwan, recently noted that the “Africa Rising” narrative is underpinned by an “Africa Tech Rising,” jumpstarted by pervasive connectivity as a result of Africans leapfrogging from almost non-existent fixed lines to exponential mobile growth at the dawn of the 21st century. Most recently, the Chan Zuckerberg Initiative (CZI), founded by Facebook founder Mark Zuckerberg and his wife, led a $24m investment round in Andela, a Lagos start-up that trains and deploys local software developers.

2U’s investment in South Africa is consistent with this trend. With the support that will follow, GetSmarter will mark Cape Town as a centre of expertise in the rapidly evolving field of digitally enabled education.

#8 Winter 2017

Making the (down)grade: Does this spell the end of innovation?

South Africa’s ratings downgrade is, without a doubt, bad news for the economy. The question is, does it spell the end for our fragile culture of innovation?

South Africa’s fears recently materialised: the country was downgraded first by rating agency Standard & Poor’s and then by Fitch to junk status. Concerns for the implications are wide-ranging, not least of which is the possible effect on innovation.

It is well documented that innovation drives economic growth. This is, in fact, one of the most consistent findings by scholars in macroeconomics, and according to the US Chamber Foundation, some 50% of US economic growth is attributable to increases in innovation.

There is a widespread romantic notion that the corollary is also true, when times are tough, human beings rise like phoenixes from the ashes and begin to innovate faster than ever. This is not entirely inaccurate: to some extent, necessity is the mother of invention, and reverse innovation is an inspiring concept. But in order for a culture of innovation to truly take root and become transformative, there must be a certain amount of available R&D budget and an enabling environment, which includes favourable policy, strong leadership, and supportive legislation.

India, for example, is aiming to make the country an innovation-driven economy via a major increase in investment – some $31 million in 100 incubators supporting start-ups in innovation throughout the country. This, says Human Resources Development Minister Prakash Javadekar, is “the only way for sustainable prosperity for the country”, which currently ranks 66th out of 128 countries in the Global Innovation Index 2016. Canada, meanwhile, already one of the world’s most innovative countries, is angling for more venture-capital investment, to further boost the country’s innovation economy.

The relationship between a strong economy and innovation is clear. Countries that top the 2017 Bloomberg Innovation Index for instance: South Korea, Sweden and Germany, are not countries that are badly off. And according to the Global Entrepreneurship Monitor (GEM) innovation intensity tracks development status so when looking at regional statistics for 2016, innovation is lowest in Africa at just 20% and highest in North America at 39%. Hopes for an African Renaissance depend on the entire continent’s ability to innovate, and it is naïve to hope that the extent of innovation required can take place without an environment conducive to investment.

As IMF Managing Director Christine Lagarde said recently, even developed economies are still reeling from the effects of the financial crisis and governments will have to step up to invest in research and technology and unleash the entrepreneurial spirit by “removing unnecessary barriers to competition, cutting red tape, investing more in education and providing tax incentives for research and development.”

For South Africa, a ratings downgrade, and the resultant negative impact on the economy and growth will, if anything, result in less government spending on these things. Already in July 2016 South Africa owed close to R2 trillion in debt, and a ratings downgrade will increase the interest on those repayments significantly.

For businesses needing to innovate to grow, the environment is set to get tougher too. Higher interest costs on debt repayments and inflationary pressures will create an untenable situation for would-be entrepreneurs needing to borrow start-up capital, and increased taxes will further exacerbate the problem. As it is, the 2016 GEM report found that entrepreneurial activity was on the decline in South Africa, with a low rate of perceived opportunity and an even lower rate of entrepreneurial intention.

Can anything be done to salvage the situation? There is little good news that can be teased out of a ratings downgrade. What one hopes, however, is that regardless, active citizenry will take the opportunity to bridge the gaps between possibility and opportunity. Academic institutions, policymakers, NGOs and businesses can all work together to help create a more supportive environment for entrepreneurs and innovators, through maintaining high standards of scholarship, ethical leadership, and not abandoning community outreach. The research is clear that cooperation between firms and external agents is considered by many to be one of the most important drivers of innovation.

This will not make the economic impact of a ratings downgrade disappear. But it may make it possible for some of the country’s bright minds to find a niche where they otherwise would not – and keep the spark of innovation alive.

#8 Winter 2017

THE GREAT DIVIDE Getting to grips with South Africa’s real challenges

Calls for radical economic transformation deflect attention away from government failings and the very real structural problems in the South African economy that must be addressed if there is to be inclusive growth.

The call for radical economic transformation in South Africa has grown louder in the past few months. Accompanying these calls is a line of argument that says ‘white monopoly capital’ is to blame for the fact that the majority of black South Africans remain marginalised from the mainstream economy 22 years after apartheid ended.

The term ‘white monopoly capital’ is not new but increasingly it’s used to deflect attention away from the real issues facing the country’s economy. These include government incompetence, corruption, poor infrastructure, lack of skills and bad policies.

While the white monopoly capital noise rages on it’s become clear that the governing party (African National Congress) has no political will to address critical areas harming the economy such as rigid labour laws and market inefficiencies caused by state-owned enterprises. There are also indications that the call for radical economic transformation is a political ploy to loot and enrich the black elites who are abusing their proximity to political power.

‘White monopoly capital’ illusion

The truth is; capital has no colour or political affiliation. Thus no race or person can ever monopolise it. As such this ‘white monopoly capital’ talk is a fabrication. Ownership figures based on the Johannesburg Stock Exchange’s shareholder-weighted index prove this point. Approximately 50% of total market capitalisation of the stock exchange (R14 trillion) is held by international investors. Next are the Black Economic Empowerment groups who control 23% (10% directly and 13% indirectly through mandated investments).

Then there is 14% belonging mainly to South African pension funds, investment funds, which also comes with some black representation, and other unmeasured fund managers. Lastly there is the Public Investment Corporation (PIC), the state-owned asset management company, which holds approximately 13% of the JSE’s total value, of which the Government Employee Pension Fund controls the biggest chunk. These numbers show that the white monopoly capital domination factor is both overstated and illusive. Instead of harping on about this mythical deception, the governing party should focus on saving the country’s economy from the tail-spinning mode.

State of the economy

South Africa’s economy almost ground to a halt in 2016 – coming in at 0.3% down from 1.3% in 2015. Projections suggest that growth will remain depressed – under 2% – in the next two years. There’s consensus that South Africa’s economy needs to grow by at least 6% to reduce stubbornly high levels of unemployment – most recently quoted at 27%. Mixed with rising political and social unrest and a weakening fiscal position this has become cause for major concern especially following the credit rating agencies downgrades.

It’s therefore imperative that the government acknowledges the current state of affairs and confronts the real causes of the country’s predicament. The major sectors of mining and manufacturing have been perennially shrinking in recent years as global trade and output patterns change. Yet the government still hankers after a previous era of mass low-skilled employment rather than designing education and labour market policies that will produce a more relevant skills base. In addition, the current economic downturn is eroding both government revenue collection and its spending. This pressure was evident in the recent budget where the R30 billion revenue shortfall was largely filled by raising taxes on high-income earners.

A continuation of this pattern makes South Africa’s redistributive tax system unsustainable. The latest tax data shows the top 10% of earners pay 72% of the income taxes received. These taxpayers only make use of 6% of social services. In contrast, the bottom 50% of earners pay just 4% of taxes but receive 59% of social services. This is a delicate situation which requires due care. Policies that limit the wealth generation capabilities of the wealthy via market interference and higher taxes will stimulate capital flight and tax avoidance. And this will negatively affect tax collection and service delivery to the poor.

The solutions

To solve the current situation a number of measures need to be taken that will stimulate economic growth. First, the government needs to go back to basics. It must clear up the contradictory regulatory frameworks and infuse certainty around how economic transformation policies will proceed. Government must also entrench good governance and fight corruption. Most importantly, South Africa needs to overhaul its education frameworks so as to develop skilled and semi-skilled labour appropriate for a globalised world.

Politicians should also stop misleading South Africans by projecting their failure on to ‘white monopoly capital’ and creating false hopes. They should rather concentrate their efforts on fundamental areas that will strengthen business and investor confidence to help the country move out of its low growth cycle.

Lastly, the government should introduce the much advocated structural reforms in critical economic sectors. These include a sustainable supply of energy, efficiency in state owned enterprises (including partial and full privatisation), and labour market reforms.

Without political will beyond cheap rhetoric, South Africa will remain mired in a rising tide of poverty, inequality, and unemployment.

This article was first published on The Conversation

#8 Winter 2017

Leadership in turbulent times

Nhlanhla Nene chats with Rayner Canning, Business Development Director at the GSB, at the launch of GSB Johannesburg in May where Nene was the keynote speaker. The venue, at 61 Katherine Street in Sandton, will be used primarily to deliver customised executive programmes and short courses to the GSB’s corporate and government clients. It will also host various Distinguished Speaker Programmes, recruitment events, careers service events and alumni events. The venue is one of two satellite sites established by the GSB in recent months to ensure that its offerings and expertise are more accessible to key stakeholders. The other site is located in the community of Philippi in Cape Town.

Developing and implementing public policy is difficult even at the best of times. And currently, the circumstances prevailing in South Africa are far from the best. That’s when good leadership matters more than ever.

We are living in turbulent times. Our economy is moving at a snail’s pace – for some it may feel like it’s not moving at all. And then there’s the political drama that grabs attention much more than any of the soapies currently on our TV screens.

But as Warren Buffet puts it: ‘only when the tide goes out do you discover who’s been swimming naked’

Turbulent times call for a special quality of leaders. Above all else, they call for steady nerves. They call for leaders who can lift their gaze above the fog of today, but also make their followers believe that tomorrow, and the many days after, will be better than today.

Even under the best of circumstances achieving sustained economic growth and development is difficult. It takes a lot of discipline and focus by policymakers and a country’s political leadership.

But as we all know, one never has the best of circumstances, at least not all of the time. So, achieving sustained economic growth and development is even more difficult. To achieve sustained growth and development, or even to manage to keep a country’s head above the economic waters, there must be a few basic things in place.

They are, in no particular order of importance:
Sound economic and social policies.
Effective and efficient public administration; and
Good political leadership.

Absent good political leadership, there will be no sound economic and social policies. As we know, bad leaders focus not on the long-term development of their societies, but on themselves, their immediate families and cronies. But even if a country has sound economic and social policies in place, they won’t be implemented without effective and efficient public administration. Weak public administration is also a function of poor leadership.

The Commission on Growth and Development which st

udied countries that had sustained high levels of economic growth over long periods of time concluded that these countries shared “an increasingly capable, credible, and committed government”.

Growth at a fast pace and growth that is sustained over long periods of time

happens because of strong political leadership. Such growth requires of leaders to: choose a growth strategy; communicate their goals to the public, and; convince people that the future rewards are worth the effort, thrift, and economic upheaval.

Leaders can only succeed if their promises are credible and inclusive, if they can reassure people that they will enjoy a share of the benefits of economic growth, or at the very least that their children will have a better life.

Such promises can only be believable if policies are being implemented by an effective public administration. As the saying goes: ‘You can fool all of the people some of the time, but not all of the people all of the time.’

As the Growth Commission reminded us, building an effective government machinery takes time. It’s a task that requires constant attention. This requires that the public administration be structured and run in a manner that attracts and retains talented people. This can be done by, among other things, paying better salaries based on performance and promoting people based on a performance criteria and not political patronage.

But as we know from our most recent experiences, an effective public servant is as, if not more, dangerous than a public servant who knows not what he or she is doing. So, a culture of honest public service must be fostered and maintained.

The integrity of the state machinery matters a great deal. Corruption is not only a tax on economic growth, it is theft of the futures of the most vulnerable in our society. Corruption deprives the poor of their only access to the means of survival. Without good governance and economic growth, a country is deprived of its means to lift more and more of its people out of poverty.

As laid out in the book To Serve and to Preserve: Improving Public Administration in a Competitive World, Asian Development Bank, we can only build good governance on four pillars: Accountability; Transparency; Predictability; and Participation.

But to come back to the crux of the topic, developing and implementing public policy is difficult even at the best of times. And currently, the circumstances prevailing in South Africa, aren’t the best of circumstances. This is largely due to our own domestic factors, whilst the global economic environment isn’t helping either.

Economic management, for example, is an art, not a science. It is an art which is often practised in unprepossessing circumstances because information, the raw material of the art, is unreliable.
As the late Edmund Dell pointed out in his study of the chancellors of the exchequers: “Economic theory provides no comfort, only controversy, and may be a distraction. Scepticism is to be encouraged but, on the other hand, is not in itself creative.

“Politics is an inevitable presence with its demanding questions and its partisan answers too often pressing the Chancellor against his better judgement, or at least that of the Treasury. At the centre of political attention, he will be subject to a spate of criticism from many people, all of whom will consider themselves better equipped to define policy than he.”

Dell adds that there are no secure stepping-stones to a more prosperous future – all are at least slippery, some are merely mirages. In the absence of anything better, the Chancellor of the Exchequer may watch the market, which, though “self-opinionated, short-sighted, often passionate rather than rational”, may nevertheless provide their best anchor.

A Chancellor’s essential judgement, according to Dell, should be whether his policy is robust against the market and robust against errors in economic forecasting. Whatever a he or she does, he should not claim more for his policies than seems optimal in the circumstances as he understands them.

The art of economic policy management has to be practised in an environment of great uncertainty.

The Governor of the Reserve Bank of New Zealand explains the uncertainty in which central banks decide on interest rates, in particular. “Central banks do not have special powers of market foresight or a franchise on wisdom. But they do have significant research and analytical capacity that can deliver valuable insights, and this is being applied to challenges associated with the current global economic and financial developments. It means that central banks are in a position to modify their perspectives and policies as new analysis and data becomes available.”
He concludes that in the end, judgement is inevitably involved in balancing a range of risks and uncertainties. Some of the risks and uncertainties lie beyond the influence of a central bank. Others can be addressed through monetary policy. Inevitably, decisions involve reflection and pragmatism in managing different trade-offs.

Finance Ministers face similar challenges. Their task is made much more complex today by the fact that they have to manage in a time of socio-economic and political turbulence.

South Africa has had to, and I am sure will continue to, manage its economic affairs in a global environment of uncertainty, both economic and political. This is primarily because South Africa cannot delink from the global economy. It is a very small economy by global standards and therefore depends for its sustenance and prosperity on the umbilical cords it has with the global economy. We sell goods and services to the rest of the world.

Our umbilical chord to the globe is a conduit not only of nutrients that sustain our economy, it is also a transporter of shocks and risks emanating from elsewhere. These shocks, such as the 2008 global financial crisis, which started in the US sub-prime housing market, make economic management that much more of a challenge.

Former UN secretary-general captured the globalisation dilemma rather well: “Historians may well look back on the first years of the 21st century as a decisive moment in the human story. The different societies that make up the human family are today interconnected as never before. They face threats that no nation can hope to master by acting alone – and opportunities that can be much more hopefully exploited if all nations work together.”

For decades to come, South African policy makers will have to manage our economy in such a manner that our economy and society reap maximum benefits from our links but at the same time strengthen the country’s ability to withstand shocks emanating from elsewhere in the world.

There is another complicating factor. And it is the fact that the people on whose behalf public policy is made and implemented judge policies not on the basis of science, evidence and principle. As a policymaker you can develop and implement all manner of public policy that your balance of evidence and science tells you will in the long run be in the interest of all citizens.

Citizens, however, will most often base their judgments of your policies upon the meaning of the policy as they see it, not in terms of some kind of propositionally rigorous analysis, such as a demonstrated causal relationship among variables or a deduction from first principles. As Richard D. French writes in a blog for the London School of Economics, often policies are judged when they are announced, not after implementation has generated any evidence, for or against.

In conclusion, public policy development and implementation is challenging. In some ways, it is no different from what private sector economic institutions face daily. But in many other ways, public policy management is that much more complex. What makes life relatively much easier for private sector firms is that they have one objective, which is to turn a profit. Private sector firms that fail to turn a profit disappear, or are taken over by their more successful competitors. Public sector institutions have multiple objectives, and often these are in conflict with one another. Policies that benefit one segment of society, create losers in another sector. Often, public sector institutions are immune to being disciplined by the public they are meant to serve.
A further complicating factor is that the poorest of the poor are most often the ones most dependent on public services. Yet, the voice of the poor is often not heard in the corridors of power and public service. Those in the middle and upper income earners, have the means with which to buy whatever public services they want from the private sector: security, education and health care.
In short, public policy making and implementation is complex. Policy makers have no special powers to see into the future, yet they must make policies that take years, if not decades, to implement and deliver the desired results. In the end, all they have to balance the risks and uncertainties about the future is good judgment. On top of all this, public officials must explain the basis of their decisions to the legislatures and the electorates.

All of these factors are difficult to manage in normal times. They are even worse in times of turbulence. That’s when leadership matters the most.

Nhlanhla Nene is Resident Adviser, Thebe Investment Corporation Non-executive Director, Allan Gray Investments. This article is an edited version of a speech delivered at the opening of the Johannesburg campus of the UCT Graduate School of Business.

#8 Winter 2017

National Treasury will be hard to break

Speaking at the GSB in May, outgoing Director General of the National Treasury, Lungisa Fuzile said that an institution founded on good values and principles does not get threatened easily.

The National Treasury has a solid foundation and a strong institutional culture which will be hard to break, says outgoing National Treasury director general Lungisa Fuzile.

Speaking at an exclusive event hosted by the UCT Graduate School of Business a few days before his departure from office in May, Fuzile allayed fears that the removal of Finance Minister Pravin Gordhan and his deputy Mcebisi Jonas, as well as his own departure and that of deputy director general Andrew Donaldson, would leave the Treasury open to rogue elements.

“Any institution founded on good values and principles does not get threatened easily,” said Fuzile. “I can tell you that when you have an institution such as Treasury, it is very hard to come into it and disrupt the culture and therefore get the entire institution aligned to ill intentions. Such attempts, however, would disrupt the institution.”

Observers have pointed out that Fuzile’s and Donaldson’s departure, hot on the heels of the sacking of Gordhan and Jonas, signals the loss of extensive institutional memory at Treasury, which could further destabilise the department following months of turbulence. Fuzile’s contract was due to expire in May next year‚ but he asked then finance minister Gordhan to allow him to leave a year early on May 15. His resignation was made public almost a week after the firing of Gordhan and Jonas during the now infamous midnight cabinet reshuffle by President Jacob Zuma.
Fuzile said after 19 years in government, he felt he had “served his time” and it was the right time to leave, and make way for new leaders with fresh ideas.

“I have no reason to wish for an extra day after May 15. After 19 years I leave very happy to watch government from outside,” he said. Media reports last year suggested that Fuzile, Donaldson‚ and another treasury deputy director general, Ismail Momoniat, were on a list of treasury officials that the controversial Gupta family‚ associates of the President‚ wanted to get rid of as they attempted to ‘capture’ and gain more control of the National Treasury. The new Finance Minister, Malusi Gigaba, is alleged to have a close relationship with the Guptas.

However, Fuzile was reluctant to comment on suggestions that the recent developments in Treasury were linked to the state capture allegations. “I have heard the issue of the connection between what has happened at Treasury and state capture. I have my views on it, but as you can imagine its deeply political and contentious.”

Fuzile said that his departure and that of other senior officials would not necessarily lead to a change in fiscal policy or the mandate of National Treasury. The work of the institution is reinforced by the Constitution and other key legislation, he said. Furthermore, competent and highly skilled officials such as Momoniat would continue to occupy key positions in the department.
“It will be hard to change such people and make them think the Constitution doesn’t matter. It will be hard to rewire them so that they think that sound fiscal management belongs in the dustbin. I don’t want to say it won’t happen but it’s hard to see it happening,” said Fuzile.

Fuzile also talked about “radical” economic transformation, a concept which has come to dominate public discourse in recent times.

Using the term “radical” in discussions about economic transformation is unhelpful and should be seen as politicking, he said.

Fuzile said economic transformation was necessary but using the word “radical” was problematic. It meant those backing the concept wasted time explaining the term “radical” instead of the merits of economic transformation.

“My interpretation of radical is that it’s just politicians. By the way, those who have studied marketing will know that just by adding ‘new’ to a product changes how that product is perceived by the people who receive it, and politicians are in the business of marketing themselves and their organisations. So we should not be too surprised when they add adjectives like radical,” said Fuzile.

Fuzile said economic transformation was primarily about inclusive growth. “Let me leave the ‘r’ for now and say to you would you disagree that a country with a history like ours needs economic transformation? … The economy must grow at accelerated rates and in growing it must not only deliver the revenue government needs to pay the social wage, but it should give people who have been left out of the mainstream economy opportunities to participate meaningfully whether as business people or as workers.”

“We need an economy that is competitive, certain industries are highly concentrated. We need to focus on regulation to reduce barriers to entry to force completion,” said Fuzile.

The outgoing Treasury director general is an avid cattle rancher and is likely to focus on his farm in the Eastern Cape for the foreseeable future. He talked at length about the land question, which has unsettled many in the agricultural sector.

Fuzile said the current land reform programme was “on a road to nowhere”. There was an emphasis on redistribution and not on training up and coming farmers, which is a threat to food security, he said.

“Some of the land that has already been redistributed may not be used as effectively and productively as it should. We need programmes to skill the people who have the land to assist them in whatever way necessary and possible to put that land to productive use.

“[I am not] suggesting that accelerated redistribution of land is irrelevant and unnecessary. It has to be pursued with a lot of energy and vigour [but] within the framework of the law.”
If it was pursued outside the parameters of the law and without certain measures in place to maintain productivity, then the land redistribution programme would in all likelihood fail, said Fuzile.

“Redistributing land then becomes a failure in terms of food security, agricultural production, and agricultural employment. You can’t do that.”

Mr Fuzile was in conversation with GSB director Professor Mills Soko as part of the school’s Distinguished Speakers’ Programme.