Enterprise Africa April 2018

AFRICA

THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS

April 2018

www.enterprise-africa.net

EXCLUSIVE INTERVIEW WITH OASIS WATER MANAGING DIRECTOR, MYNHARDT OOSTHUIZEN

Taking Finest Quality Purified And Oxygenated Water

Where It Is Needed Most

ALSO IN THIS ISSUE:

Rolfe Laboratories / Wonga SA / NFB Financial Services / RussellStone Group

(+27) 12 807 1984 or www.oasiswater.co.za

EDITOR’S LETTER EDITOR Joe Forshaw  joe@enterprise-africa.co.za SALES ADMINISTRATOR Emma Neethling  sales@enterprise-africa.co.za SENIOR PROJECT MANAGER Sam Hendricks  sam@enterprise-africa.co.za PROJECT MANAGER Shannon James  shannon@enterprise-africa.co.za PROJECT MANAGER Alex Williams  alex@enterprise-africa.co.za PROJECT MANAGER James Redwell  james@enterprise-africa.co.za FINANCE MANAGER Emily Taylor  finance@enterprise-africa.co.za SENIOR DESIGNER Liam Woodbine  liam@enterprise-africa.co.za CONTRIBUTOR Manelesi Dumasi CONTRIBUTOR Karl Pietersen CONTRIBUTOR David Napier CONTRIBUTOR Timothy Reeder CONTRIBUTOR Colin Chinery

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The water crisis across South Africa, often prominently reported from Cape Town, continues to take its toll on businesses and residents. Companies have had water sources depressurised and people have had their consumption limited, but a huge water saving drive has seen the dreaded Day-Zero avoided completely, hopefully.

One of the organisations helping business and public during these difficult times is Oasis Water. The franchise network, with locations all over Southern Africa, has developed technology to purify drinking water. It also has the logistics and infrastructure to source water from other parts of the country to deliver to areas that need it most. Managing Director, Mynhardt Oosthuizen says that since the water crisis began, the company has received more enquiries than ever from potential franchisees.

We also talk to South Africa’s RussellStone Group – not a name you are familiar with? This is a ‘seed to shelf’ company that owns many agricultural businesses across Southern Africa and is responsible for stocking the shelves with food. CEO Russell du Preez tells Enterprise Africa that the company is looking beyond the water crisis, and focussing on how it can create thousands more jobs in the coming years.

Mike Estment, Chairman of NFB Financial Services explains how the business has grown significantly over the past two years, and is now looking forward to a very exciting period following the appointment of President Ramaphosa.

This sentiment is echoed by almost everyone we talk to, and provides strong hope that now is the time for SA business to thrive, despite the operational challenges that are unavoidable.

Get in touch with us today and tell us how your business has managed around the water shortage, and if you are feeling confident under the new President. @EnterpriseAfri1

Joe Forshaw EDITOR

Editorial & Design +44 (0)20 7193 2735 E. info@cmb-multimedia.com www.cmb-multimedia.com CMB Multimedia does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/or in advertisements included in this magazine do not necessarily represent those of the publisher. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. © CMB Multimedia Ltd 2018

GET IN TOUCH  +44 (0) 20 8123 7859  joe@enterprise-africa.co.za www.enterprise-africa.net

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06/NEWS: The News Snapshot A round up of some of the latest news stories from around the country

110/EXHIBITION CALENDAR: Key Upcoming Events Across the Country Our regular update to help you keep track of important events and exhibitions taking place across the spectrum of industry sectors

8/OASIS WATER Taking Finest Quality Purified And Oxygenated Water Where It Is Needed Most It may sound ironic that Oasis Water, South Africa’s water franchising specialist, continues to expand and grow in a time when the country’s supply of water is at an all-time low. Strict water saving measures are in force but Oasis Water is thriving. With more and more enquiries for franchise opportunities coming every day, it is clear that Oasis Water has become a trusted name when it comes to delivering water where it is desperately needed.

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CONTENTS

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INDUSTRY FOCUS:FINANCE 17/WONGA SA Gaining Credit 22/NFB FINANCIAL SERVICES Financial Farmers Continue Growing In Fertile SA Market 30/MARSH Global Risks Coming to Africa 37/NEDBANK GROUP A Tale of Growth & Innovation INDUSTRY FOCUS:MANUFACTURING 41/ROLFE LABORATORIES Rolfe Labs Expecting Beautiful Growth With Prominent Principles INDUSTRY FOCUS:FOOD & DRINK 46/RUSSELLSTONE GROUP Agricultural Investment House Aims for 5000 Employed by 2023 54/KFC SOUTH AFRICA A Chicken Coup for KFC in South Africa INDUSTRY FOCUS:RETAIL 61/MASSMART Massmart Rejects Retail Demise and Promises Continued Expansion

46/ 67/KIT KAT CASH & CARRY Kit Kat Aims For Nationwide Coverage INDUSTRY FOCUS:MINING 72/PETRA DIAMONDS Long-Term Plan Shines Through for Petra 79/WHITE RIVERS EXPLORATION Striking Gold Time and Again INDUSTRY FOCUS:AUTOMOTIVE 82/SHELL SOUTH AFRICA Shell Drives Roll Out of Retail Network 89/EQSTRA FLEET MANAGEMENT EFM Realising Potential of Big Data INDUSTRY FOCUS:PROJECT MANAGEMENT 94/GHC AFRICA Delivering Projects On Time, Every Time INDUSTRY FOCUS:TECHNOLOGY 98/MIP HOLDINGS Perfect Partner to Avoid the App Gap INDUSTRY FOCUS:PROPERTY 105/MCCORMICK PROPERTY DEVELOPEMENT Rural Retail Kings

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DTI TO SPEND R415 MILLION ON INDUSTRIAL PARKS The Department of Trade and Industry (dti) has set aside R415 million to refurbish 11 industrial parks across South Africa.

Presenting the dti’s Annual Performance Plan to Parliament’s Portfolio Committee on Trade and Industry this week, Director General Lionel October said the revitalisation of industrial parks is one of the department’s key areas.

“The Industrial Parks Revitalisation Programme is one of the flagship programmes of our department aimed at facilitating broad-based economic participation to achieve inclusive growth, as well as facilitating the transformation of the economy.

“These industrial parks will promote industrial development, investment, competitiveness and employment creation.”

The department has therefore allocated R415 million for the revitalisation of eleven industrial parks across the country. The ten industrial parks employ a total of 55,000 people, said the Director General.

Industrial parks that have already been renovated and launched as they have completed the first phase of the programme include Vulindlela and Komani in the Eastern Cape, Botshabelo in the Free State, Seshego in Limpopo and Isithebe in KwaZulu-Natal.

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WITHDRAW YOUR MEDICATION AT THE ‘ATM PHARMACY’

Gauteng Health MEC Gwen Ramokgopa says snaking queues for chronic medication at health facilities will soon be a thing of the past with the launch of the Pharmacy Dispensing Unit (PDU).

The PDU is the first of its kind in Africa. It operates like an ATM, only in this case it dispenses medication, giving it the name the ‘ATM pharmacy’.

“We have leveraged the ICT and digitilisation economy to benefit the health of our people. The PDU will assist us to reduce congestion in public healthcare facilities,” said MEC Ramokgopa.

The Health Department, in partnership with non-profit organisation Right to Care and Right ePharmacy, launched the PDU in

Alexandra, Johannesburg in March.

According to the MEC, the PDU has been tried and tested during its pilot phase which saw 4000 patients withdraw their medicines at the ATM pharmacy. A total of 18,000 medicines were dispensed during its trial.

The PDU uses world class technology that allows patients to enter their unique PIN code to withdraw medication handpicked by a robotic arm Through a two-way Skype-likeaudio-visual interaction feature, patients can also receive counselling at the ATM pharmacy.

The MEC said the counselling option ensures that the safety of patients is not compromised.

NEWS SNAPSHOT MANTASHE CALLS FOR IMPROVED SAFETY IN MINING SECTOR Mineral Resources Minister Gwede Mantashe has called for increased vigilance on health and safety in the mining sector.

This follows three fatalities which were reported at mines in the third week of March. This resulted in total fatalities for the first quarter of 2018 sitting at 22.

Minister Mantashe has urged employers and labour to continue to work with the department in finding solutions to health and safety matters at the mines, through established structures including the Mine Health and Safety Council (MHSC).

In 2017, fatalities increased for the first time in 10 years, where 88 mineworkers lost their lives, compared to 73 in 2016.

“Turning the tide on fatalities in the sector is the responsibility of all social partners – government, labour and business – and is critical for the sustainability of the mining industry in the long term,” the department said.

SA ECONOMY ENDED 2017 ON STRONG FOOTING South Africa’s economy grew by 3.1% in the fourth quarter of 2017 ending the year on a strong footing, according to Stats SA. At a media briefing in Tshwane, Stats SA’s Deputy Director-General: Economic Statistics Joe de Beer announced that GDP in the fourth quarter grew by 3.1% following a revised growth of 2.3% in the fourth quarter. Growth in the third quarter of 2017 was revised upwards from an initial 2%.

“The highest contributor to the growth of 3.1% came from agriculture that grew by 37.5 % followed by strong growth from the trade sector which grew by 4.8%,” said de Beer.

On an annual basis GDP grew by

1.3% in 2017.

The fourth quarter data beat National Treasury projections made at the tabling of the 2018 Budget of GDP growth of 1% in 2017. Previously at the tabling of the Medium Term Budget Policy Statement (MTBPS) in October last year Treasury had projected growth to come in at 0.7% at the end of 2017.

On a quarter on quarter basis, the largest positive contributor to GDP growth in the fourth quarter was the agriculture, forestry and fishing industry which increased by 37.5% – contributing 0.8% to GDP growth.

Meanwhile the trade, catering and accommodation industry increased by 4.8% and contributed 0.6% to GDP

growth. The manufacturing industry and finance, real estate and business services increased by 4.3% and 2.5%, respectively contributing 0.5% to GDP growth.

However, mining and quarrying decreased by 4.4%.

Household final consumption expenditure increased by 3.6% in the fourth quarter contributing 2.2% in total growth while government final consumption expenditure increased by 1.6%.

Exports increased by 12.3% and imports increased by 26.5%.

Since the tabling of the MTBPS, the South African economy has grown faster than the projected rate, despite a short recession seen in early 2017.

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OASIS WATER

Taking Finest Quality Purified And Oxygenated Water

Where It Is Needed Most PRODUCTION: Karl Pietersen

It may sound ironic that Oasis Water, South Africa’s water franchising specialist, continues to expand and grow in a time when the country’s supply of water is at an all-time low. Strict water saving measures are in force but Oasis Water is thriving. With more and more enquiries for franchise opportunities coming every day, it is clear that Oasis Water has become a trusted name when it comes to delivering water where it is desperately needed. www.enterprise-africa.net / 9

INDUSTRY FOCUS: FRANCHISING

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“If there was ever a time when we should be working together as a people, this water crisis is the time when we should all join hands and make sure that we address this water challenge that we now face,” stated Cyril Ramaphosa as he addressed a Cape Town crowd while commemorating Nelson Mandela’s release from prison in February.

The ongoing water crisis has received international attention thanks to its severity, with the local government threatening that the taps would run dry if extreme water saving measures are not taken up by all. ‘Day Zero’ is the rather apocalyptic term used to describe the date when reserves in the regions six-dam reservoir system reach 13.5%. The effects on the city if Day Zero arrives will be undeniably catastrophic. Water shortages, sanitation failures, disease outbreaks and anarchy due to competition for scarce

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resources have been outlined by Cape Town’s head of disaster operations as major concerns.

But, following a major public and private water savings drive, Day Zero has been pushed out to August 2018 with some residents claiming that, with ongoing hard work, the city will not reach the dreaded dry out.

Should Day Zero arrive, Capetonians will only be entitled to 25 litres per day and the taps, which have already been depressurised, will be turned off completely.

This has led to a run on the stores for bottled water and fill ups of storage tanks.

While the big retailers have struggled to meet this demand, and specialist water outlets have quickly become overwhelmed, there is one company that has continued to serve the needs of South Africans by bringing clean, high-quality,

// WATER IS NOW MORE RECOGNISED AS A VALUABLE COMMODITY AND PEOPLE ARE STARTING TO TREAT IT WITH AN INCREASED LEVEL OF RESPECT // environmentally friendly, sustainable water to communities all over the country. That company is Oasis Water, the specialist franchising operation that sells purified water through a network of more than 280 stores.

Managing Director, Mynhardt Oosthuizen tells Enterprise Africa that

OASIS WATER

wherever people need water, Oasis Water can help.

“Water is now more recognised as a valuable commodity and people are starting to treat it with an increased level of respect,” he says.

“All of our franchise stores are still in operation whereas competitors have been closing down because of various operational factors and their dependency on one specific water source. We can bring in water from different water sources and our decentralised model has served us very well in the current situation.”

RESPONSIBLE BUSINESS Oasis Water has displayed its responsible mantra since its founding in 2003.

One of the key elements in its strategy has been using packaging that is environmentally friendly and easily recycled, but Oosthuizen says that overall company culture is now in the spotlight as consumers look for organisations that are trustworthy in all aspects of business.

“Society holds companies responsible for the policies on water and we’ve seen that specifically with waste and recycling policies – people actually want to know what you are doing as a responsible company to protect this rare commodity.

“What we see at global level is corporate governance becoming more inclusive at the public level. It’s something that you have to be transparent with.

Companies that produce products and remain quiet on the waste that they produce are now being held to account.

Accountability is pushing business forward in a new direction that we have not seen before.”

Oasis Water’s core business revolves around a refill model which sees customers bring large containers into stores to be refilled with purified water – keeping more than 150 million bottles out of landfill. The company creates sustainable jobs and invests in local community development projects. It’s also committed to having products and packaging tested by accredited bodies to

ensure adherence and quality.

But what is driving this intense focus on business ethics and responsibility?

Oosthuizen suggests that it could be down to competition for scarce resources and a mind-set of everyone being a part of the problem and the solution and the feeling of ‘if we have to be responsible with water, so should the companies that serve us’.

“Globalisation and urbanisation means people are moving to the cities and what tends to happen is that there is more people compared to the available water resources and people start to compete for availability of water,” he says.

“Because there are many different spheres in our society, those spheres all compete and if you ask the poorer, they will say water is a basic right and they need uninterrupted access but if you ask a company that is producing, they will say

MANAGING DIRECTOR, MYNHARDT OOSTHUIZEN

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INDUSTRY FOCUS: FRANCHISING

they need water to continually produce products and secure jobs, so we must find a balance. What we’ve seen over the last few years is that Cape Town has managed to reduce its daily consumption by around 50% and even at that level, there isn’t sufficient levels to address the needs of all of these spheres of society.

“I think there is enough water available but it’s the share of water that people are asking questions about.”

FLOWING DEMAND Oosthuizen was quick to explain that Oasis Water does not see the country’s water crisis as a business opportunity and that the company would never look to increase prices or drive demand off the back of the situation. But he did admit that the current problem has had an impact on sales.

“Because of the other water companies closing down, there is demand for clean drinking water and we have had to upgrade our infrastructure and water availability to ensure that we can serve these additional customers.

In some instances, we have seen 100%

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// IN BOTSWANA, WE’VE BEEN VERY SUCCESSFUL AND WE ARE IN THE PROCESS OF ROLLING OUT ANOTHER 10 FRANCHISES THIS YEAR // growth rates but the average is around 50-55% increase in sales.”

The company is careful with its resources and does not push resources where they are not necessary; it listens to the feedback from its franchisees and delivers the products that are demanded by a specific community.

“We follow a process in the franchise business called cluster management where we rely on specific knowledge that comes out of communities. We can quickly see that demand in one area is such that availability of water is more

important than absolute quality,” details Oosthuizen. “We can then adjust our processes around a specific situation.

In other instances, we hear that certain areas want water but they don’t want it in plastic containers as that is not environmentally friendly. They prefer to refill water in big containers and reuse those containers. Cluster management allows us to tailor make our offerings to customers depending on the knowledge that is available in that community.

“There is no more one size fits all customer requirement, you have to adapt and listen to what customers are saying and what they value. If there is a big push towards a green environment, we must respond to that, and that is exactly what we are doing in the Western Cape,” he adds.

The Pretoria-headquartered company stated last year that it held 23% market share and covered 80% of South Africa while also creeping up into subSaharan Africa. This is still the case in 2018 but the Managing Director expects figures to increase as the company’s store roll-out continues and while the country’s water

OASIS WATER

shortage lingers.

“We still cover 80% of South Africa but we have increased our coverage in Botswana. We will definitely increase our market share thanks to our brand receiving such a favourable response in the Western Cape.”

MAKING A SPLASH According to a 2013 World Bank report, southern Africa could be set for an increase of two to four degrees Celsius on average temperatures and significantly decreasing average rainfall.

Of course, this would be a major blow for the region’s food producers and a worry for local governments.

Oasis Water has already started its movement into Africa and is now active in Namibia and Botswana and has eyes on Zambia, Zimbabwe, Lesotho, Swaziland and Mozambique. This expansion is good news for the host communities as the Oasis model brings high-quality drinking water and other products, jobs, and community support.

Movement into Africa is often one step too far for SA businesses looking for

the next growth frontier but the franchise model operated by Oasis minimises risk.

Botswana and Namibia remain key focus markets for future growth.

“We are still trying to attract the right candidates in Windhoek,” explains Oosthuizen. “In Botswana, we’ve been very successful and we are in the process of rolling out another 10 franchises this year. Candidates have been selected, store sites have been identified, supply chains are gearing up to supply there and training is taking place so Botswana remains a high growth area for us.”

Botswana, like South Africa, is a large country with an irregular spread of large centres and so site positioning is important, alongside carefully planned logistics and supply infrastructure.

“We need to make sure the supply chain is able to deliver products to those new stores,” highlights Oosthuizen. “We work very closely with our suppliers on those projects to develop new transport routes and warehouses to store our products. That happens in the background but on the frontline, we need to ensure we have the right people to

operate the franchise in an environment that hasn’t experienced franchising before – we operate in some towns where we are the first and only franchise. It’s a different approach to opening up a standalone store. Those stores we open in Botswana have to receive the same benefits that we offer local franchisees. Our products and quality and our offering that we take to market, even in the rural areas, are the same as you would receive in a CBD market in the major cities.

“Customers appreciate the quality that we offer and franchisees in Botswana are definitely benefitting from the economies of scale that our business operates. They can go to market a lot faster, they can open stores with or without support, and we regularly travel across the border to facilitate training. The community of franchisees support each other and that local flavour is important.”

STRONG CURRENT IN 2018 Oasis Water’s predicted growth statistics for 2018 are impressive. The company’s extremely strong history, experienced leadership team and exciting product

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INDUSTRY FOCUS: FRANCHISING

portfolio have resulted in a positive outlook – especially considering that the country’s GDP growth rate remains low.

“We pay a lot of attention to our national growth rate year-on-year and that is sitting at around 9%,” says Oosthuizen.

“Our growth has been very consistent over the past 12 years with around 30 franchise stores opening every year. In the past year, we‘ve had more stores opening up outside of Cape Town so it is not just localised to Cape Town or the Western Cape - Cape Town only represents around 8% of our business.”

Another target that the company is successfully achieving is a seven-year plan set out in 2016 to sell one billion litres of water. While ambitious, Oosthuizen is optimistic about the company’s chances of reaching this goal on schedule.

“That was part of our seven year plan and we are now in the second year of that plan but on target to achieve it and everything is going to plan.”

Since last year, the company’s product mix has remained almost the same with food products and fruit juices still growing but representing a small portion of revenue. Energy drinks have been a successful growth product for the company.

“We’ve introduced our alternative products on a national scale and energy drinks are where the strong growth is coming from. With small snacks and

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foods, we’ve found that people are not associating our brand with those kind of products. They are buying water and energy drinks as they associate us with drinks only.”

The company groups its products two categories: happy and healthy.

Happy includes sugary drinks, carbonated products, energy drinks and all things that ‘make you feel good’. Healthy includes all water-based beverages. “We give our franchisees freedom of choice to stock which types of product suits their

// WE ARE KEEPING OUR EXISTING CUSTOMER BASE AND ADDING NEW CUSTOMERS EVERY MONTH // community,” explains Oosthuizen.

“What we’ve seen is that there has been an increase in bottled water sales because of our new rebranding exercise.

We followed environmental guidelines with the design and there’s no colourants or anything harmful used in our bottles, they are easy to recycle and appeal to the modern consumer.

“Our refill business remains strong,

between 65% and 70% of our business on average. Previously, the division between our bottled and refill business was 70-30 but now that is more like 65-35. We think the reason behind this is customer convenience – people are moving and travelling a lot and bottled water is so convenient.”

The immediate growth focus for Oasis Water in 2018’s second quarter will be on new store openings. Intriguingly, interest in new stores is coming from areas where drought is prominent and this may seem counterintuitive considering the situation – selling water although there is no water supply. But the decentralised supply model operated by Oasis Water is effective across all areas, regardless of water supply issues.

“We are seeing an increase in franchise enquiries in areas where there are water shortages. The stores will open where communities feel there is a requirement for clean drinking water. We will always have our consistent growth but we expect exponential growth in the drought-stricken areas.

“As dam levels drop, the municipal water treatment plants come under pressure to produce water of consistent quality and so consumers turn to the private sector to supplement their water supply with purified clean drinking water.

“We are busy with the roll out in Botswana and then there are some stores opening in the large metros in South Africa.”

LIQUID ECONOMY Oasis Water, like many companies, is one that is seeing an improvement in the business environment of South Africa since the appointment of Cyril Ramaphosa as President of the Republic.

We have previously reported on many intangible feelings since the new President took office but Oasis is seeing actual business confidence numbers improving.

“We definitely see an upswing following his appointment. In general, business confidence is climbing and we are seeing a return to levels that we had before the 2008 financial crisis,” says Oosthuizen.

OASIS WATER

“We are seeing that right now people are not investing into new projects. People are nervous about their return on investment and the risks involved with big spends. The way that the government views big investment and the appetite of the private sector is misaligned in terms of time scales.

Political instability has held the country back when it comes to investing into the fourth industrial revolution but when we get the sense that things have stabilised in the political environment for the long-term, you’ll start to see companies invest again.”

But, despite the slow return to regular and significant GDP growth, Oasis Water remains positive about its own development and about the fortunes of South Africa.

“Drought and water scarcity is a reality,” Oosthuizen admits, “but drought is not new to us - it is a country-wide issue and we continue to adapt and find solutions.

“We have changed our marketing and there has been a lot of activity going on and it has been received very well.

We measure it by looking at feedback from franchisees about how many new customers they are receiving. We are keeping our existing customer base and adding new customers every month.

“We are very confident about the next few years ahead. We have a good plan, good leadership, and we know what we want to do in the technology field. Our customers see value in our products and we have a low turnover on the franchisee side, indicating confidence in the

system. We are very positive about new opportunities and there is a real sense of optimism within the leadership team right now,” he concludes.

Indeed, the future for this franchising success story looks bright. It continues to flow across borders into Africa, it continues to deliver a stream of innovative products to customers all over South Africa, and it continues to bring high-quality drinking water to those who need it during these times of shortage.

With new stores opening regularly and growth being achieved every year, this is one business that will not be drying up anytime soon.

WWW.OASISWATER.CO.ZA

CAPE TOWN DROUGHT RELIEF Oasis Water is currently running the Donate a Drop scheme in partnership with the Water4Good fund which is looking for the public to make donations so that the company can source and distribute water across Cape Town where it is so desperately needed.

Follow the link for more information: lovingthyneighbour.org/donateoasis www.enterprise-africa.net / 15

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WONGA SA

Gaining

Credit PRODUCTION: Colin Chinery

What went Wronger with Wonga? was just one searching question in the re-structuring of the online instant payday loan giant. How it repositions and grows are others. “We want to play a long-term sustainable role in this local market, putting the consumer first, and at the heart of what we are doing,” says CEO of Wonga South Africa, Brett van Aswegen. “We are now at a very exciting position.”

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INDUSTRY FOCUS: FINANCE

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In 2006 two South Africans set up what was to be a gamechanging business in Britain.

For entrepreneurs Errol Damelin and Jonty Hurwitz success came quickly: the controversy later.

Their baby was the online instant payday loan company Wonga. Within a short time it had become sector market leader, and by 2012 had opened an operation in South Africa, its first outside the UK. Spain and Poland were to follow.

But by then Wonga had run into trouble in the UK, accused of prioritising its ambitions for growth over its customers.

The furore reached a peak in June 2014 when Britain’s regulatory body, the Financial Conduct Authority, found Wonga guilty of unfair and misleading debt-collection practices, and ordered the company to pay £2.6m compensation (R43.16m) to 45,000 customers.

Unsurprisingly, a new transformation management team took over, with strengthened governance and expanded product offerings part of the ensuing clean-up operation. “We are right up there with the banks,” reported Group Chairman Andy Haste, “still seen as a trusted brand by our core audience.”

// WE WANT TO PLAY A LONG-TERM SUSTAINABLE ROLE IN THIS LOCAL MARKET, PUTTING THE CONSUMER FIRST AND AT THE HEART OF WHAT WE ARE DOING // BRAND-TRANSFORMER Here in South Africa, Wonga had a very different reputation at the time, as a legitimate financial services provider assisting clients with short term cash flow issues in a responsible and transparent manner. Even so the brand-transforming tide was hitting its shores, and in 2015 Brett van Aswegen moved in as the new CEO of Wonga South Africa. van Aswegen, former Managing Director of Cards for afb - pioneers in unsecured credit in Africa - is passionate about the ‘new’ reputation of the company and its phased reformation.

“Some of the things that went wrong in the UK market never happened in South Africa. South Africa has a different credit regulatory environment, with different legislation on issues such as the interest rates charged.

“We have moved from Wonga 1.0 in the UK, where there were some

regrettable tactics, to Wonga 2.0 with a new management team and strategy, and on to Wonga 3.0, with a fresh reputation, trustworthy nature and international reach.”

Since his arrival he has headed a comprehensive turnaround strategy to create a resilient, responsible lender with wide appeal. “We have introduced lots of changes at Wonga to make sure we offer better, fairer loans to customers.

“Over the last two years we have reconsidered our value proposition to our consumers, and spent an incredible amount of time and money in research to help us to better understand our consumers and how we can help them.”

Fintech - financial software technology – is one path. “In the past, a lot of time was spent trying to manage a monolithic platform. Now we want to spend 80% of our time redeveloping the technology and the experience of the user.”

PURPOSE BUILDING It has also been a period of selfanalysis. “We asked ourselves, what is our purpose? There needs to be a purpose behind our company, otherwise we are just another loan provider. We want to play a long-term sustainable role in this local market, putting the consumer first and at the heart of what we are doing. And we saw that operating a single product business was never going to perform as a long term strategic business.”

Wonga Group’s success – it remains the UK’s market leader - was to make an effective transition from being a start-up disruptor into a legitimate industry player, says van

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WONGA SA

// WE HAVE INTRODUCED LOTS OF CHANGES AT WONGA TO MAKE SURE WE OFFER BETTER, FAIRER LOANS TO CUSTOMERS //

Brett van Aswegen - CEO

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INDUSTRY FOCUS: FINANCE

• BANKING AS A SERVICE • RETAIL AS A SERVICE • MICRO FINANCE AS A SERVICE • WALLETS AND LOYALTY SERVICES • PAYMENTS AS A SERVICE • ACQUIRING AS A SERVICE • SUPPORT SERVICES • MONEY TRANSFER & REMITTANCE SERVICES WWW.DIRECTTRANSACT.CO.ZA

+27 12 368 4900 INFO@DIRECTTRANSACT.CO.ZA

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Aswegen.

“It was one of the first in the UK to be given a licence by the Financial Conduct Authority, probably because it had already begun to structure the necessary changes to secure compliance, and this has transcended throughout all out regions.”

Adhering to statutory obligations, and going beyond that, is written into Wonga South Africa’s new mindset and online approach. Loan offerings of up to R4000 for new customers and up to R8000 for existing customers - now with six months to pay – are ring fenced with applicant checks – stringent affordability checks, bank detail verification and last three months proof of income - and prudent advice.

“Please think very carefully before you apply,” cautions the Wonga website, “because we expect you to repay us when you promise to. If you have any doubts or are unsure you’ll be able to do that comfortably, please don’t apply in the first place.”

With South African consumers currently owing more than R1 trillion on home loans, cars, store and credit cards, the need for financial planning basics is hardly misplaced, with Wonga launching an on line ‘Money Academy’ to provide financial literacy training via a series of short videos.

“One of the areas that was frustrating people was having access to educational material,” says van Aswegen. “Here in South Africa we have very well educated people and also those who struggle to read complex problems - and some financial documents are really complicated.

Educating people about their finances will lead to lowerrisk customers in future, says van Aswegen. “We need to take collective responsibility for the financial health and well-being of consumers. Being responsible in our approach to credit provision is the first step towards ensuring a stable and sustainable

WONGA SA

countries is a very obvious next step.

The means of operation would be very similar to South Africa, and the ability to move into those countries is fairly seamless.

“If you look at the African continent as a whole, there are some really exciting opportunities out there. Do we want to grow there?

For sure. But it’s a big continent, and some markets are more developed than others. We would be selective, making sure we have the right capability to build each of these markets in the same responsible way that we would in any other part of the world.” credit market in South Africa.”

CREDIT NAÏVE? Is credit too easy to obtain? “I don’t think anybody has a simple answer.

Credit should clearly not be used to support someone gambling, for example, but credit is being used for many positive things, and there are far more positive than negative stories.

“Negative stories do highlight the problems across every single country where credit is offered. But look at it more broadly and you see there are so many people who are really responsible with their finances, using credit only when they need to, and to propel them forward in their lives.

Wonga-positive case stories are publically showcased; the parents who took a loan to fund a pre-

// IT’S NOT JUST ABOUT OFFERING A LOAN, IT’S ABOUT HOW DO I TREAT YOU AS A CUSTOMER OF OURS, HOW I LEAVE A POSITIVE IMPACT IN YOUR LIFE? //

entry equipment shortfall for their child who was awarded a university bursary, the man who took a loan when his housemate moved out unexpectedly and he needed to cover the rental shortfall, the daughter who bought a special medical mattress and comforts for her infirmed father.

“Access to cash flow has made a difference to many lives, and these are just some examples of people struggling with cash flow who are far from being irresponsible.

“We see a much bigger role around responsible lending. It’s not just about offering a loan, it’s about how do I treat you as a customer of ours, how I leave a positive impact in your life?

“I know this sounds a bit lofty but it’s very much part of the principle behind what we are trying to do here. We are not just a lending business; we are playing a role in somebody’s life.”

Will van Aswegen - who built Kenya’s first retail credit operation, developing strategic partnerships with some of its largest retailers - consider taking Wonga north of South Africa’s borders?

“We have an incredible amount of opportunity to build a very strong and stable business here in South Africa, and a look at our neighbouring

NO JOURNEY’S END The process of re engineering and changing an organisational culture “is not something that can happen overnight,” says van Aswegen. “It’s really tough. I have walked a long journey over the past three years and it’s been far from easy.

“But we are now at a very exciting position in our business. We still have a long journey ahead of us, with many things we need to improve.

“We have a purpose behind us in this business, and understanding what that purpose is, provides us with a long-term vision of where we want to move to.

“Where we are today is very different from two years ago, and it’s a very exciting place to be. Two years ago our focus was on what was behind us; we had problems to deal with and fix and restructure the business. Now as we take a lot of lessons with us, the focus is on Forward.”

WWW.WONGA.CO.ZA

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NFB FINANCIAL SERVICES

Financial Farmers

Continue Growing In Fertile SA Market PRODUCTION: Karl Pietersen

In the past two years, NFB Financial Services has added a further R3 billion to its assets under management, taking its total to R28 billion. It continues to grow organically and through acquisition, and with an upturn in business confidence, NFB’s farming philosophy continues to result in a bountiful outlook.

//

In April of 2016, Mike Estment Chairman of NFB Financial Services told Enterprise Africa that he was ‘terribly excited’ about the way the company was moving. He was right to feel positive. At the time, NFB had R25 billion under management and its 150 expert employees were spread around offices across the country from Sandton to East London to Port Elizabeth to Cape Town.

This month, Estment again speaks

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to Enterprise Africa to give an update on the company’s performance. He founded the financial advisory business back in ’85 and has steadily grown the size and reputation of NFB, leading it to become one of the country’s most trusted private and institutional wealth partners.

“It certainly hasn’t happened without headwinds,” he says. “I like to climb mountains and you remember the party at the top rather than the very difficult bit between base camp and

summit, but it has been challenging.”

Asked if he remains excited about the future, Estment is clear in his reply: “I think even more so now. We’re up to R28 billion under management and we’re always growing. Politically, it appears that the better faction has gained control of South Africa and I am extremely positive about the potential for the country.”

NFB - which offers private wealth advice, institutional wealth services, investment knowledge and asset

INDUSTRY FOCUS: FINANCE

management – benefits from a healthy economy, where spending is fluid, and with the appointment of Cyril Ramaphosa prompting a turnaround in business confidence, NFB looks set to thrive. Estment classes it as a turning point in the country’s history – a pivotal time where financial advisory services will become all important.

“It’s almost like a Rudy Giuliani moment,” he says. “When you take a decade of corruption and malfeasance, it doesn’t take just a couple of weeks to fix. What is very evident is that there is a political will to implement tough decisions and jeopardise potential factions of the populous, who will not understand these decisions but will celebrate when it’s done, and they will celebrate true democracy and true freedom.

“I was positive already notwithstanding the storm clouds of corruption and theft taking place all over the economy but now we have a

game changer. He is a leader and a man who comes from organised labour. It’s unique to have the backing of labour, global business and big business in South Africa; and when big business trusts, you’re going to start seeing capital employed instead of people sitting on their hands – economic growth needs a velocity of money.”

SA’S SHARE PRICE For many months (and years) business leaders, both local and international, have been crying out for certainty in South Africa so that long-term plans can be made for future investment strategies.

Now that some level of certainty has been installed, with Ramaphosa announcing a number of new cabinet members, Estment says that NFB has already seen positivity.

“It’s very evident,” he begins. “You just have to look at the currency. I think the share price of a country is its currency, and the Rand was sitting at

around 13 to the Dollar two years ago before blowing out and hitting 15-16 but it’s now at 11. That’s a remarkable correction. It’s a bit of a colloquialism but a currency price is like a share price. It talks about capital flows; the Rand would not strengthen if money was leaving.

Obviously people are buying Rand and it allows the Central Bank to consider dropping interest rates as opposed to six-months ago when they were talking about hiking the rates. If rates drop, it should encourage investment into longer-term projects, into borrowing, and investing into companies – and that is all good for employment.”

In March, Moody’s revised its credit outlook for South Africa to stable from negative. The country’s treasury welcomed the announcement and suggested that the messages delivered in Ramaphosa’s SONA had started to hit home. NFB agrees: “People are no longer taking a three or six month view, they are starting to take a three to five

// About Investec Asset Management Our strategy at Investec Asset Management is simple. As a global specialist investment manager we want to assist people around the globe to enjoy a dignified retirement and to preserve wealth for future generations. We invest other people’s money, not our own. At our core, we are focused on the long term, investing in people and relationships.

We offer investment strategies investing in global, emerging and frontier markets spanning the equity, fixed income, multi-asset and alternative asset classes.

Established in South Africa in 1991, our business has been built from a small start-up into an international business managing approximately R1.7 trillion on behalf of clients all over the world. Today, we proudly serve a growing international client base from the Americas, the UK and Continental Europe, Asia, the Middle East, Australia and Africa.

As one of the first asset management firms to have built a global franchise from emerging market origins, the journey of our business has uniquely prepared us to navigate a rapidly evolving world. Our global approach, combined with a footprint in the emerging and developed markets, enables us to find the best investment opportunities for our clients.

Our clients include some of the world’s largest private and public sector pension funds, insurers and corporates, and range from foundations and central banks to intermediate and direct investors.

Our business is still managed by our founding members. This has not only balanced stability with growth but has fostered a culture in which our people have the creative freedom to challenge the status quo and own and develop ideas to the benefit of our clients.

Investec Asset Management is an independently managed subsidiary of Investec Group. Our employees are equity stakeholders in the firm.

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INDUSTRY FOCUS: FINANCE

year view and that is critical as projects are never short-term,” details Estment.

“I could never, as a top wealth manager, tell people to come into a growth project and expect a six-month out – that’s just not reasonable. These things take a longer gestation period, but when they come good they have a wealth effect and that fuels another slew of employment and spending.

“South Africa has a growth rate which needs to return to the mid-single digit growth numbers; it cannot languish around 0.5-1% - that is useless in Africa where growth rates are higher.”

LISTING AND BOOMING As a listed business (under the banner NVest Financial Holdings), NFB has managed to grow successfully through acquisitive activity. The company has recently concluded the purchase of two important local businesses, broadening the horizon of the NFB group.

“Last year, we acquired a business in Port Elizabeth, Three Oaks Capital, and that has just been merged with NFB Port Elizabeth. It’s basically doubled the size of that business and it’s a very nice network and very complimentary,” explains Estment.

The Chairman is extremely excited about another partnership; one which will see NFB become more involved with a top rated BBBEE organisation.

“We have partnered with a company called Nations Capital. This is a group of very highly regarded group of black chartered accountants.

Together, we have created a group called Nations NFB and the agenda is to fetch assets from black wealthy individuals, black professional firms, universities, unions and mining group’s rehabilitation mandates and that is very exciting. That entity is very progressive in terms of South Africa as the wealth and financial services market has a long way to go in terms of providing advice to the black wealthy and middle market.”

NFB will use its scale to train, educate and partner with the already

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reputable leadership of Nations Capital.

But growing through acquisition is not always easy. There are many players in the market, and many regulations and pieces of legislation that must be followed. Many of the large South African institutions can enter the wealth management space as part of their acquisitive strategy and this causes prices to boom; “a thorn in the side” is how Estment describes the situation. “They pay inappropriate multiples for businesses just so they can gain momentum.

“We are cautious and we are very selective because our agenda is long-term, it’s not just hit and miss, and we want to create long-term

// WHEN YOU TAKE A DECADE OF CORRUPTION AND MALFEASANCE, IT DOESN’T TAKE JUST A COUPLE OF WEEKS TO FIX // partnerships. We don’t want to buy 100% control of the business and then have the principals leave. We want to keep principals involved and take away the compliance, fund selection and administrative burdens and let these quality people do what they are best at which is manage relationships and fetch new money.”

Previously, when Estment spoke to Enterprise Africa in 2016, he detailed a big target for NFB being a movement from private wealth management into institutional money. And the partnership with Nations has been completed with exactly this in mind.

NATIONS “The creation of Nations NFB is where we will see significant progress. The institutional space is significantly impacted by BBBEE credentials, and

NFB growing the way it has, our rating has suffered. We went from a level three to a six and improvement is very difficult without relinquishing shareholding and management control and that doesn’t make sense for our current client base.”

Nations NFB is a level 2 BBBEE company and is 51% owned by Nations management.

“The people in that business will absolutely be targeted with increasing our presence in an area we know well - universities, mining rehabilitation spaces, medical aid funds, industrial bargaining councils, and municipal and other pension funds. We will never walk away from private wealth, and there is significant wealth in the black communities.

“We have the ability to bring R28 billion of NFB scale and that positively affects the pricing of transactions; and we bring experience, insurance, compliance and all the other parts without having to reinvent the wheel.

We keep the costs of Nations as low as possible while focussing spend on human capital.”

Estment uses an analogy of NFB being a farmer. This philosophy was also pitched in 2016 when he said that ‘you own the field, you fertilise it, if the rain comes it’s your fault and if it doesn’t come it’s also your fault; you own it and you don’t blame anyone if things don’t go right’.

He says, with the strongest degree of certainty, that this mantra that this mind-set continues in the business, and will be unequivocally adopted by all involved going forward. The key driver behind this is one of the baseline pillars of NFB – making clients feel safe.

“One of the reasons why Nations NFB is so important is because the growth of the black middle class has resulted in a space for an incubator for private wealth management. We are too small to cover the whole of South Africa, but wherever we touch, I want quality people that are long-term farmers. I see NFB as a farmer and

NFB FINANCIAL SERVICES

// SOUTH AFRICA HAS A GROWTH RATE WHICH NEEDS TO RETURN TO THE MID-SINGLE DIGIT GROWTH NUMBERS; IT CANNOT LANGUISH AROUND 0.5-1% // not a hunter and I want to create that mentality within Nations.

“The farming philosophy is absolutely in the DNA of the company.

Whilst I’ve moved into that preretirement five-year glideslope, the farming mentality remains engrained in everyone. We have a management team made up of seven people that

look out across the rest of the business and regard everyone as clients - we must first sell our story to them.

“Growing from R25 billion to R28 billion under management has not been easy; 30-35% of our clients funds have been overseas and the Rand has been strong and that has impacted our asset prices. Combine that with the JSE not having a great time and it makes for a difficult environment.

But we have grown and why is that?

Because NFB is good at making people feel safe. That is a profound word and we have thought about it a lot. If you walk into NFB, it’s everyone’s job to make people feel empowered. When they people feel empowered, they feel safe. This results in less risk and this is why our focus on farming is now stronger – I will never stop beating that drum.”

INCOMING CHALLENGES? No one can predict the future, and in an ever-changing economy like that of South Africa, it is increasingly important to be prepared wherever possible. NFB is experienced in this regard and calls on many very knowledgeable minds to evaluate the future of finance and wealth solutions.

Previously, Estment has discussed the use of AI and robo-advisors to streamline communication, and while strategy in this field is still being developed, it certainly remains a part of NFB’s thinking for the future.

“Robo-advising remains a very light component of what we do. AI is a critical component and in five years’ time will be the only ticket to the game. As a business, we are trying to become paperless but we are way off that just now. Robo-advising is still in

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INDUSTRY FOCUS: FINANCE

// WE ARE CAUTIOUS AND WE ARE VERY SELECTIVE BECAUSE OUR AGENDA IS LONG-TERM, IT’S NOT JUST HIT AND MISS, AND WE WANT TO CREATE LONG-TERM PARTNERSHIPS // its early days because so many clients still need face-time. We are slick in our processes but old fashioned in terms of face-time and client care and that all comes back to us being safe and making people feel safe.”

In the future, referral business (often a result of successful customer interaction) and traditional marketing will be combined to push the NFB portfolio to new audiences.

“We are currently in the process of consolidating our marketing across

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the country. We never lose the personal touch and we create networks at sporting events, golf clubs, dinners, and at boardroom lunches. They’re very targeted events where we bring in very influential people to talk to our clients and help deepen relationships.

We are now embarking on a national marketing agenda where we are trying to identify the niches for growth and put into words what it is that NFB does so well and has resulted in our material growth and position of dominance in the private wealth market.”

But there are potential banana skins in the road. Coming in the form of new and changing regulation, NFB must navigate a quickly changing landscape in the short-term future.

“Recent changes in regulation have been significant,” admits Estment.

“We’ve had an amendment to FICA (Financial Intelligence Centre Act) which has made the processing of transactions more tricky. There is now much more information required to satisfy security and everyone is cast in the same light regardless of history. In

America, FATCA (Foreign Account Tax Compliance Act) was introduced and the world caught on to that, introducing the Common Reporting Standard (CRS) which can be a real pain. The UK has introduced MiFID II (Markets in Financial Instruments Directive II) which is total overkill and is yet to impact us but it’s on its way. Locally, we have RDR (Retail Distribution Review) and TCF (Treating Customers Fairly). RDR touches all of our relationships with institutions and is a legal framework – the way people are incentivised and rewarded is under review. TCF is more to do with behaviour and the industry has to embrace it.”

But he remains confident that changes in legislation will not cause NFB any problems as the experience and scale of the company has resulted in it being well-prepared for change.

“Businesses of our size are heavy on administration – if you look at our entire operation, only around 20 people are market facing. So we have a massive administration centre which is good for compliance and has resulted in us being ahead of the curve.”

NFB FINANCIAL SERVICES

// WE HAVE PURCHASED THE 11TH FLOOR OF ILOVO POINT TO GIVE NFB A NEW HEAD OFFICE IN GAUTENG // NFB: WINNERS To cap off a very productive 2017, and start 2018 on a strong footing, NFB was pleased to receive a host of awards earlier in the year. The company was commended at the Raging Bull Investment Summit and the Morningstar investment management awards ceremony.

“I’m very proud as Chairman of the business to say that we won two Raging Bull awards and two Morning Star awards which are globally assessed,” says Estment. “There are only seven Morning Star awards and little old NFB beat all competitors to two of the seven which is fabulous. We received the Morning Stars on February in Cape Town and three weeks before that we were also in Cape Town to collect the Ranging Bulls, which we also won last year.

“My job as Chairman is to make sure I can report on winning these

awards at the same time next year!”

The future for this expert business is nothing short of exciting. As one of the most prominent financial advisory and asset management businesses in the country, NFB remains extremely busy but Estment confirms there is always time for talk on long-term growth – always with clients in mind.

“There’s always conversations and we are engaged consistently as a business that targets acquisition.

Financial services is a key asset of any economy and it is scalable. We continue as entrepreneurs to deliver for our clients and that is service and advice that we like to believe is without peer.

We continue to look beyond ourselves for businesses that would fit.”

NFB’s ongoing growth is testament to the mind-set and mentality instilled by management. Since its inception, everything has been

about delivering quality and helping clients succeed with their financial goals. Each individual active in the company embraces the ‘farming’ ideal exemplified by Estment, and so, even through challenging times, the company’s development gathers pace.

“We are lucky but not by fluke. We continue to work hard and we have some really good people who are very capable, and we will always continue to look for new talent.

“We have recently purchased the 11th floor of Ilovo Point to give NFB a new head office in Gauteng in the next six to eight months. It’s all go, you cannot sit back.,” he concludes.

If you require financial advisory services or asset management expertise, if you are a private individual or institutional fund manager, awardwinning NFB is now South Africa’s onestop-shop.

WWW.NFB.CO.ZA

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MARSH

Global Risks Coming to Africa PRODUCTION: DAVID NAPIER

Marsh is the ‘biggest broker on this continent and the biggest risk advisor in the world’, and its insurance products and services are known globally for their quality. But a new set of risks has been identified and Marsh is working hard to ensure its clients continue to operate uninterrupted.

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INDUSTRY FOCUS: FINANCE

//

Earlier this year, the Marsh & McLennan group of companies partnered with the World Economic Forum to release its Global Risks Report 2018. This report suggested environmental risks, economic uncertainty and cyber threats are some of the most feared for 2018. The authors suggest that readers develop ‘a more rigorous exploration of potential sources of value destruction, greater strategic agility to match a rapidly evolving market context, and sharper contingency planning for unexpected events’ while all the time remaining cognisant of underlying threats that have become the norm.

This changing landscape, accepted to have a new and everchanging risk profile, is a challenge for the private and public sector. Insurers

are now under pressure to come up with innovative and effective products to meet the needs of a changing consumer base.

In Africa, these ‘new’ risks enter the market at a time when regulation, consumer protection, talent pools, awareness of insurance and vastly differing political and economic environments are already creating an industry fraught with challenges.

Last year, Enterprise Africa spoke to Marsh South Africa CEO, Spiros Fatouros about how the business was adapting to a shifting insurance landscape and he said that, at that point, the economy was the big concern. “Customers whether large corporate or midmarket, have felt the economic pinch and this has put pressure

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// WE REMAIN HEAVILY INVESTED IN THE CONTINENT, WANTING TO SERVE OUR CLIENTS WHEREVER WE CAN // on us in terms of finding value for clients, determining premium spend, where they can reduce that cover, and how they can better manage their risks within their financial constraints,” he said.

But now, in 2018, after a successful year end for the county as a whole (reporting 3.1% GDP growth in the fourth quarter), Marsh and Fatouros are focussing on the findings promoted in the Global Risks Report 2018.

“The big issue which is at the fore at the moment is our recently released Global Risk Report for 2018. If you look at the differing risks from 2017 to 2018, obviously extreme weather conditions has become a key issue across the globe – particularly in South Africa with our current water crisis in Cape Town.

One of the key risk issues from some executives, mainly from a Northern Hemisphere perspective, is cyber risk and cyber terrorism and we’ve seen the insurance industry respond by issuing policies to cover exposure, and by building advisory networks and response teams to help clients deal with cyber-attacks if and when they occur.”

Marsh takes a holistic approach to its cyber assurance portfolio and, rather than managing one element of a very complex risk profile, the company offers a comprehensive and quantitative tactic designed to cover all needs which can include brand and reputation damage, regulatory scrutiny, stakeholder dissatisfaction, and financial losses.

“The product has been around

MARSH

for some years but it is now gaining a better understanding and traction with clients,” says Fatouros. “Cyber risk is on the agenda for all major Boards and that is something that has changed significantly in the last 12 months.” Cybercrime is no longer solely the responsibility of the IT department – it effects everyone within an organisation.

And the intangible nature of any cyber-attack is nothing to scoff at. The Global Risk Report cites the example of state-onstate cyberwarfare as a trigger of something much more serious which could disrupt much more than business activity. “Imagine that a country’s critical infrastructure systems are compromised by a cyberattack, leading to disruption of essential services and loss of life - the pressure to retaliate would build rapidly, potentially setting off an escalatory chain reaction.”

Fortunately, Marsh is wellpositioned. In Europe, Marsh was named Winner of the Advisen 2014, 2015 and 2016 Best Cyber Risk Broking Team, and has been recognised for its expertise in the sector which is estimated to cost the global economy $445 billion each year.

With the onset of the Internet of Things (IoT) and ever-increasing levels of connectivity, the threat of digital breakdown and cyber-attacks continues to require invention and forward thinking from companies, individuals and insurers.

“Risks will continually evolve,” admits Fatouros. “If you look at certain exposures or a certain risk class, it might not fundamentally change but there might be new components to it. If you look at commercial crime, for example. The policy has evolved over time and now there is a big drive to bring social engineering into the policy – and that is effectively revolution rather than reinvention. Then there are new risks such as cyber which has

Spiros Fatouros - CEO

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INDUSTRY FOCUS: FINANCE

developed, and we need to come up with new solutions. The unbanked and uninsured across the continent remain, and we must find out how the develop distribution to these groups and help them to unlock the value that insurance can provide them with.”

AFRICA In 2017, Marsh was on a growth drive, looking to build on its success in Africa by expanding on the continent through further acquisitions. The group had previously solidified its position in Africa by completing a number of high profile mergers and takeovers, and this strategy looks set to continue but Fatouros will not single out any potential suitors at this time.

“From an African expansion perspective, we continually look for opportunities to grow,” he says. “Our footprint hasn’t changed in the past year and we haven’t made any further acquisitions but we continue to look at opportunities and we remain heavily invested in the continent, wanting to serve our clients wherever we can. We continue to follow our clients from South Africa north into Africa and we service many multinationals that have offices all

over the continent. We are always looking at each individual country to decide where there are opportunities to expand our footprint. We are always identifying target countries and opportunities where we see they fit both our expanding Africa client base and corporate strategy.

“Historically, Marsh has always had the view that if we want to go into a new territory it makes sense to be the Number One or Number Two there, and then look for local acquisitions to match our appetite for expansion.”

The explosion of population, business and commercial activity over the past few decades has resulted in major opportunities for insurers who can scale quickly but deliver first-class service.

In 2011, Marsh acquired the brokerage business of South Africa’s Alexander Forbes in 11 African countries for R809 million. Two years later, Marsh acquired the Alexander Forbes Risk Services operation in Uganda before also taking the Alexander Forbes insurance broking operations in Botswana, Namibia, Malawi, Uganda and Zambia. Soon after, Marsh purchased Nigerian insurance broker Femi Johnson & Company. Globally, the company has

// THE BENEFIT FOR OUR CLIENTS IS THAT THEY ARE DEALING WITH THE BIGGEST BROKER ON THIS CONTINENT AND THE BIGGEST RISK ADVISOR IN THE WORLD // made a number of major acquisitions, strengthening its position in all territories, driving group revenues to $13 billion annually.

“As a global organisation, there are opportunities all over the world and we need to decide where we can gain the greatest value for the global business,” explains Fatouros. “We look at things like you would with any acquisition – what is the fit, the macro factors, and the synergies – it’s a deep thought process.

“As an organisation, we have 1300 colleagues in Africa 800-900 in South Africa, and the benefit for our clients is that they are dealing with the biggest broker on this continent and the biggest risk advisor in the world.”

He cites the continental opportunities in agriculture, power and infrastructure as major gateways for growth. “As Marsh we position ourselves to help clients and governments unlock those investment opportunities are remove the risk that can’t be managed, and benefit society from a wider perspective by encouraging entrepreneurship and investment.”

2018 AND BEYOND As Marsh continues to excel in Africa, delivering products and services of unrivalled quality, its key element – people – will remain in the spotlight.

The company says it wants to “be a

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MARSH

magnet for the industry’s best.”

When you work for Marsh, you’ll work with ‘a team of diverse professionals across the globe, dedicated to helping clients manage some of the world’s most challenging and complex risks’.

“We are a global organisation in 140 countries with around 60,000 people and the mantra of the business is colleagues, clients and growth,” details Fatouros.

The company runs a number of learnership and graduate programs in its locations all over the world and takes training and development very seriously.

“We understand that we are a business that relies on people, people’s intellectual property and the advice that our people give to our clients so we know we must focus on our people. Our people must focus

on our clients and if we get that right, it will lead to growth. We are a client focussed business and we try to understand what the client’s needs so that we can become a trusted advisor, helping them to see risk as an opportunity and not a drawback.

“In Africa and globally across our sister companies we are a business that really understand risks, understands people, and understands strategy.”

And now is the perfect time to invest in people and growth. Despite the threats identified in the 2018 Global Risk Report, the economy in South Africa is going through something of a revival following a period of slack growth and, according to the African Insurance Organisation, technology development is helping many uninsured join the market.

Fatouros says that, following the

recent governmental overhaul in SA, the industry is feeling buoyant.

“There’s no doubt that the change in the Presidency has created huge levels of excitement in South Africa. We’ve had muted consumer confidence for some time, and that has impacted our ability to unlock investment and direct FDI so the mood is very positive at the moment but it is early days.

“Business is eager to engage with government and if you look at South Africa, and across the continent and any regions in the world with opportunities for growth - they need to be unlocked and harnessed, but there are definitely opportunities here for growth,” he concludes.

WWW.MARSH.COM

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NEDBANK GROUP

A Tale of

Growth & Innovation PRODUCTION: William Denstone

Nedbank Group stands among South Africa’s four largest banks while continuing to expand into the rest of Africa, owning subsidiaries and banks in Namibia, Swaziland, Malawi, Mozambique, Lesotho, Zimbabwe, as well as representative offices in Angola and Kenya.

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INDUSTRY FOCUS: FINANCE

//

Nedbank specialises in a wide range of wholesale and retail banking services which combine with a growing insurance, asset management and wealth management offering. Its history can be traced back to the early 19th century with the establishment of the Cape of Good Hope Bank in 1831.

Following successive branding and structural changes, Nedbank Group was formed in 2003, since which time Nedbank has implemented a fleet of innovations, and been named Bank of the Year in both 2013 and 2014 by Financial Times’s The Banker magazine.

GLOBAL COMPETITION Today, Nedbank benefits from strategic alliances across the globe, and has gained a reputation as one of

// WE WANT TO LEVERAGE THE STRENGTH THAT NEDBANK HAS IN SOUTH AFRICA OVER OTHER AFRICAN COUNTRIES // the most heavily transformed banks in South Africa. Nedbank Zimbabwe is one of the focal points for the Group in expanding its global reach, and represents a rebranding of Merchant Bank of Central Africa Limited (MBCA), the oldest of its kind in the country following its incorporation

Emerge Queue’s cutting-edge Qmatic Enterprise Queue Management System is shaping customer experiences in more than 260 Nedbank branches across South Africa. Talk to us about how we can improve your customer experience today.

www.emergequeue.co.za

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in 1956. Access to the cutting edge of global capital markets through its shareholder network alongside numerous correspondent bank relationships in all financial centres worldwide affords technical expertise and sources of competitive finance on a worldwide scale.

According to Managing Director Charity Jinya, the changeover will be performed with a focus on adaptability to the changing needs of the market, in order to give the new entity the edge over the staunch domestic competition.

Maintaining this approach has been central to securing the pan-African success to date of its South-African headquartered major shareholder, NedGroup Investments Africa, as it mounts this challenge on Zimbabwe’s banking landscape.

“We are looking into the future where we have more agility and where we are more responsive to the needs of our clients; we want to be competitive,” Jinya explained. “We want to leverage the strength that Nedbank has in South Africa over other African countries.

“The objective is to grow the business to ensure that we move into the top tier of banks. Nedbank is going international,” Jinya detailed.

ROBOTS TO RULE? In tune with Nedbank’s policy of being at the forefront of changing consumer demands, it has this month pledged up to R2 billion on technology investments, in the form of highly advanced software robots. While the excitement of the innovation might be tempered by fears of cutting staff numbers, the potential replacement of some 3000 employees would in fact take place through natural attrition and offset through the bank’s expected growth, rather than through redundancy, Nedbank Chief Information Officer Fred Swanepoel explained.

“When we look at the expected

NEDBANK

// OUR HEADLINE EARNINGS OF R11.8BN REFLECTS A GOOD PERFORMANCE FROM OUR MANAGED OPERATIONS, UNDERPINNED

BY TIGHT COST MANAGEMENT AND A HIGH-QUALITY ADVANCES BOOK // implementations and the natural attrition we are going to suffer,” he said, “we think that there is more than adequate room for us not to have any mass retrenchments on account of robotics. We are looking to have some of that displacement offset in the growth we will receive.

With about 32,000 staff, our natural

attrition rate is about 3000 per year.

When we look at a three-year period, we don’t think that robotics will take up more than one year of that natural attrition.”

STRONG RESULTS IN A TOUGH CLIMATE When Nedbank announced its financial results for 2017, it would have been difficult to predict headline earnings growing by 2.8%, given what the bank describes as a very difficult operating environment, characterised by weak economic growth and heightened political and policy uncertainty. This delivered a marked improvement on the 2.9% reduction in headline earnings which Nedbank reported in the first half of 2017. Further to this, headline earnings from managed operations, which include all operations except Nedbank’s approximate 20% share in associate Ecobank Transnational Incorporated (ETI), grew by 7.8%. Net asset value grew by 7.3%, dividends were up 7.1%, and return on equity

remained steady at 16.4%.

This, said Nedbank Group CEO Mike Brown, showed the bank’s resilience in a tough economic environment. “Our headline earnings of R11.8bn reflects a good performance from our managed operations, underpinned by tight cost management and a highquality advances book,” said Brown, who also added his optimism for the 2018 outlook.

“While during 2017 consumer and business confidence had slumped to the lowest levels in many years, contributing to a slowdown in lending and transactional activities, particularly in our corporate and investment and wealth businesses, there was a marked change in confidence after the election of Cyril Ramaphosa as ANC President and, subsequently, as president of SA,” Brown concluded.

WWW.NEDBANK.CO.ZA

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ROLFE LABORATORIES

Rolfe Labs Expecting

Beautiful Growth

With Prominent Principles PRODUCTION: Manelesi Dumasi

Chances are that some of the cosmetic, beauty and household products in your cupboards are manufactured by Rolfe Laboratories in the Eastern Cape. This history of this South African contract packer goes back a long way, but has always been entrenched in Middelburg. The Rolfe family is looking to continue producing high-quality products for its big-name customers while always protecting local jobs and upskilling local people. CEO, Brad Rolfe tells us more‌ www.enterprise-africa.net / 41

INDUSTRY FOCUS: MANUFACTURING

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South Africa’s manufacturing sector, one often identified as holding major opportunities for growth and job creation, has not been utilised to its full potential.

Famous for food, automotive, pharmaceuticals, chemicals, and metals and minerals, South Africa’s manufactured goods, especially in export markets, are known for quality and reliability.

But as imported goods become cheaper than ever, South African consumers and businesses have started to move away from locally produced goods in favour of inexpensive alternatives from other sources.

Then there’s technology, which has also had an impact on how the country manufactures. Jobs are being lost to machines and robots, but this is not something new.

Enterprise Africa speaks to one of the country’s most prominent manufacturing specialists - Rolfe Laboratories, a Middelburg-based producer of branded and mass-market home and personal care products – about the industry and how the company is managing to thrive in an ever-changing environment.

“We currently have around 650 people employed, down from around 1000 in peak time four years ago,” explains CEO, Brad Rolfe.

“We have dropped the numbers in the plant as we were producing Sanex and the volumes were massive, running with more than one shift, but we no longer have that brand. Ideally, our efforts are focussed around running a single shift from Monday to Friday and if needed we can run an extended or additional shift to meet the needs of the month.”

Sanex, a skincare product range owned by Colgate Palmolive, moved its production to Europe to take advantage of economies of scale through a centralised manufacturing process. Rolfe was happy that the business was not lost to a competing

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// IN TOTAL, WE HAVE 21 DIFFERENT PRINCIPALS ON OUR BOOKS RIGHT NOW, AND THAT IS VERY HEALTHY // contract packer in South Africa and says that some of the business was quickly replaced.

“Tiger Brands is still an ongoing principle and one of our bigger clients.

We still do business for Unilever. We still for work for SC Johnson – we’ve been working for them for a number of years. We are working for Avroy Shlain, which is now owned by Tupperware Brand Corporation, they are a big principal. In total, we have 21 different principles on our books right now, and that is very healthy.”

MIDDELBURG… THE MIDDLE OF NOWHERE? Located in the Eastern Cape, in the Chris Hani District Municipality’s Upper Karoo, Rolfe Laboratories home in Middelburg is remote. It is almost seven hours drive to Jo’burg and more than 750 km from Cape Town.

Nestled neatly between Port Elizabeth and Bloemfontein, Middelburg is a small town that has the cosmetic manufacturing industry at its heart.

The business was founded as a small pharmacy shop more than 100 years ago. It grew to become a chemist, serving the local region, before gaining investment from local farming businesses and bringing in a larger product range, and then manufacturing its own ranges. In the ensuing years, the company looked for growth opportunities and Brad’s father, Phillip found it. The company owned the rights to the Playboy trademark in South Africa but had never used it. He quickly realised this potential, bought the company and launched the Playboy range of

cosmetics. Playboy deodorant became the number one male deodorant in the country and catapulted Rolfe Laboratories into an industry leading position. The Playboy brand was sold and new brands launched as the company became a contract packaging specialist, servicing international brands from the same base in Middelburg.

The company makes it clear that it is at home in Middelburg and has no intention of leaving. It has become home to a strong and skilled workforce and the business is entrenched in the local community.

Today, Rolfe Laboratories is one of the largest employers in the region and supports the lives of many families.

“We are entrenched in Middelburg,” says Brad Rolfe. “It’s in a difficult location because of it’s in the middle of nowhere. The services that we have in the nearby area are very limited so any skills that we have in the plant are there because we have put them there. Generally speaking, we love the town, we love the area, we love the people – they are good, honest people and there’s a massive pool of labour available for us to tap into and we continue to support.

“We’ve got a situation now where we are employing three generations from the same family,” he adds. “It is not uncommon for us to employ brothers and sisters and mothers and

// WE LOVE THE TOWN, WE LOVE THE AREA, WE LOVE THE PEOPLE – THEY ARE GOOD, HONEST PEOPLE // fathers from the same family. The town doesn’t offer opportunities for many people to move away from Middelburg, it’s a relatively poor area and people grow up here with this work being all

ROLFE LABORATORIES

they know. When they already have family working here, it gives them a step up into the business.”

The company is very keen on job creation and Brad Rolfe wants to stir economic growth in the region - he wants Middelburg to share in the success of the business. This is why he will not automate the factory like many other cosmetic manufacturers.

“It’s a manual manufacturing plant and is not fully automated,” he says. “It’s semi-automated in certain areas and when the equipment gets old we need to replace it and we try and replace with similar equipment because the last thing we want is to replace jobs with machines – that wouldn’t go down well with our labour force.

“We are continually improving and when we outgrow certain parts of

our facility, we install new machinery to increase our capacity. We have just installed another powder line to increase our output. On fragrances and perfumes, we have just installed more capacity but we’re always taking into account that we have access to a lot of labour, especially on the packing side.”

GROWING, OR NOT? After losing Colgate Palmolive as a customer, Rolfe had no trouble replacing that business and is now booming with its 21 principals. In particular, local brands from Avroy Shlain and Signature Cosmetics have kept Rolfe’s facilities busy.

“We’ve got to a situation where the challenge is not getting business into the manufacturing facility. It’s operational things that become a

challenge such as supply chain. To be honest, we are happy with our size and we’re not looking to get too much bigger right now,” says Rolfe.

“Our biggest growth right now is coming from two principals: Avroy Shlain and Signature Cosmetics. The growth that we are seeing there is unprecedented and both are making huge investments which we are benefitting from. One has a large store network across South Africa and is planning further growth in the future. The product range is toiletries and cosmetics and they are showing excellent growth.

“When we lose a principal and have spare capacity, we go out and look to replace that with a similar product from a new principal.”

The company’s growth in the past two years has been modest, and work

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INDUSTRY FOCUS: MANUFACTURING

patterns and throughput is now very regular and reliable. Rolfe Laboratories calls on its vast experience to offer unique insights into the consumer space, helping its clients to delight their own customers.

“The industry is not in the best place and everyone is battling for volume and for margin protection.

“We have built line extensions on existing brands, we haven’t acquired any new brands but we have recently released a bigger brand which we purchased from Boots Healthcare - Mylol Mosquito Repellent.

Subsequently, we sold that brand to part of the Cavi Group.”

Asked what separates Rolfe Laboratories from its competitors, both local and international, the Director is clear is his reply – financial stability, strong relationships with clients and suppliers and, of course, its workforce.

“We have a slightly different model as we have been around for a long time and a lot of our equipment and our buildings are all owned – we

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// OUR ORDER BOOK IS NICE AND FULL AND WE’RE ALWAYS RUNNING OUR CONTINUOUS IMPROVEMENT PROGRAMME ACROSS ALL PARTS OF OUR BUSINESS // don’t owe any money,” he says. “We’re at a different level to others and we’re happy with the size of the business.

The volume that we’re doing will grow with our existing customer base and I don’t believe that would be successful if we went out looking for more substantial contracts, at least not in the near future.”

2018 FUTURE STRATEGY The future looks extremely bright for Rolfe Laboratories. With its brands and principals promising ongoing growth, and with a growing middle-class becoming more influenced than ever by innovative cosmetic advertising campaigns (especially men), now is a good time to have an established and reputable operation.

Rolfe sees opportunities on

the continent for future expansion and he is buoyed by the positivity surrounding the appointment of a new President.

“Not only locally but internationally there has been a lot more interest in looking to South Africa for opportunities. Ramaphosa has reshuffled the government and there is a good team involved. I’m very positive about the future for this country,” he says.

“At this stage, we do supply some of the SADC countries including Mozambique, Namibia, Botswana and Zimbabwe but we do see a huge opportunity further north. We are in discussions with certain key players but we’re not doing volumes into North Africa. It is very exciting for us as the Rand has strengthened in

ROLFE LABORATORIES

recent times and since Zuma left office it has strengthened further.

Africa is always an opportunity for us but it’s not our focus; we look at local supply first.”

Of course, economic development, government policy and living standards will impact on demand for Rolfe Laboratories’ clients, and this could filter through to the Middelburg business. But the fourth quarter in 2017 saw the country finish strongly, growing by 3.1% according to Stats SA. Brad Rolfe is understandably confident, stating that South Africa is perfectly

positioned to become a global exporter to rival those that have built their mega-economies on export.

“Our order book is nice and full and we’re always running our continuous improvement programme across all parts of our business,” he says. “Our hope is that what you see in five years’ time will not be the same as you see today. We want to be improving our systems, facilities and capabilities every year and that is our commitment to the industry. We need it in South Africa; there’s so many opportunities to manufacture here for export markets. There’s no reason why

South Africa cannot become a serious contender with China and India as a manufacturing destination of choice.”

So, Rolfe is in Middelburg for the long-term. And despite the location of this somewhat remote operation, things continue to go from strength to strength. This is ethical South Africa at its best – an example to follow for those looking to create jobs and empower communities.

TELEPHONE: 031 502 3301

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RUSSELLSTONE GROUP

Agricultural Investment House Aims for

5000 Employed by 2023 PRODUCTION: Karl Pietersen

With operations spanning six countries and 26 companies, the growth of the RussellStone Group over the past 15 years has been nothing short of remarkable. This is a seed to shelf, farm to fork agricultural sector leader that acts as an example to the wider industry. CEO, Russell du Preez tells us more about the organisation’s plans for further African expansion.

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INDUSTRY FOCUS: FOOD & DRINK

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Agriculture is one of the oldest industry sectors in the world and farming is widely regarded as one of the oldest occupations. But there is a new wave of technology and innovation that is turning this age old profession into a modern goliath of an industry – especially in Africa where a major portion of the world’s population sits, and where a major amount of consumption is happening.

The World Bank reports that agriculture is responsible for 65% of the continent’s work force and 32% of GDP. By 2030, the agricultural market will be worth a reported $1 trillion and the ability of Africa’s farmers to meet demand for food will be vital in ensuring economic development continues.

// RussellStone Group companies include: Primary Agriculture • Willow Creek • Southern Hemisphere Seeds • IBIS Piggery • Grainvest Farming • Donnybrook Poultry • Granary Normandien • KMF Sugar Risk Management • RussellStone International • RussellStone Treasury • Dalevest • Coalvest • Grainvest Livestock • Grainvest Futures • Grainvest Physicals • In2Fresh • iMPAC • Smoke and Wild Agro-Processing & Logistics • United Refineries Ltd • RussellStone Protein • Ingogo Mills Group • Grainvest Oil • Elangeni

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The large farming and agriculture companies are often closely scrutinised as stakeholders look to ensure that food production and job creation is maximised but ethical principles are also strictly adhered to.

One of those large businesses is the Pretoria-based RussellStone Group. Founded 15 years ago, this agri-focussed, total-value chain expert is looking forward to a connected future that is sustainable and steeped in technology.

“The growth of technology is one thing that makes me so excited about Africa - there is no legacy of bad technology here,” CEO, Russell du Preez tells Enterprise Africa. “We have seen that people can transform. We will be a wireless continent; we will not have electricity travelling over thousands of kilometres, we will be using sustainable electricity without a grid. Now, Africa has one billion of the world’s seven billion total. In the next 50 years, Africa will have four billion of the world’s 10 billion people. This will make for a totally different future for the continent.

“We believe technology will gain exponentially in Africa. People are the biggest asset of any community and when every single person has a wireless phone that is constantly connected – that will have a huge impact,” he adds.

One of the key results of an increase in the use of technology is the amount of specialist information now available to farmers. Cloud computing, open-source software and digital tools have helped to smooth operations, and aerial imagery from drones or satellites, weather forecasts and soil sensors are allowing for planning like never before. Financial service providers are also coming with tools that help even the smallest of agricultural businesses – money transfer, communication services, savings and investment opportunities, and general financial inclusion have helped farmers and farming

communities to become increasingly involved with a wider audience.

The RussellStone Group owns more than 25 companies across six countries, and employs more than 1000 people. The group touches the entire value chain, moving with product from seed to shelf, and often even further.

In a time where ‘farm to fork’ is a trend for consumers, this is one of the only businesses that can truly claim to be vertically integrated in such a way.

“We are an agricultural value chain player and we’ve been around since 2003,” confirms du Preez. “Myself and a partner started the business; we started out with just a handful of people and today we’re up to 1000 + people. We do everything from genetics right through to retail. That’s animal genetics and plant genetics, and includes trading, planting, logistics, processing, crushing, refining of oil, bottling and retailing. On the animal side, we do genetics, we do farming and we do the trading. We are fully equipped with an abattoir and a processing plant which produces bacon, ham and other meats, and we sell to retailers and directly to customers.”

RussellStone Group is an investment house and centres its drive around a ‘commitment to uplifting all people and their communities by encouraging them to make career choices based on passion and commitment’.

The group brings scale, finance, experience and motivation when it makes acquisitions, and this is what has helped the business to grow across not just Africa but also as far as the USA, Argentina and Australia.

Technology helps this mammoth business stay connected. “We work across the total value chain across the entire SADC region,” details du Preez. “We have farms in Mozambique, Swaziland, South Africa, Zimbabwe, Zambia and we grow all kinds of crops.

“We have chickens in Australia, pigs in South Africa, we have big processing capacity in SADC, we have capacity for crushing of soya beans –

INDUSTRY FOCUS: FOOD & DRINK

around 250-260,000 tons per year, we crush around 60,000 tons of sunflower seeds per year, and we trade around one million tons of grain.

“We’re very excited about the demographics of Africa, it’s not going to be easy to grow as it’s not an easy place to operate. The political instability and stupidity is unbelievable sometimes and this makes for a volatile environment but we can’t control that.

The continent’s demographics mean there is large demand for foods and we have plans for the long-term. We are not building a one generation family business, we are building as a company that can make a difference in society by creating sustainable jobs,” he adds.

MEETING DEMAND WITH SUPPLY South Africa itself has a population that is growing at around 2% each year according to the WWF. And within this population, consumption trends are ever-evolving. One of the latest foodtypes that is gaining huge momentum,

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// THERE ARE CERTAIN CROPS THAT ARE ‘NO BRAINERS’ FOR THE FUTURE SUCH AS AVOCADOS WHERE WE ARE SEEING CONSTANT GROWTH IN CONSUMPTION // both locally and internationally, is the avocado. Recognised as being a fantastic source of fibre, healthy fats, antioxidants, potassium, and many nutrients and vitamins, the avocado has become a symbol of the modern healthy-eating lifestyle. Thought to have originated in Mexico, the avocado comes from the Lauraceae flowering plant family. Conditions in

certain areas of South Africa are ideal for growing this in-demand fruit.

“We definitely think that there are certain crops that are ‘no brainers’ for the future such as avocados where we are seeing constant growth in consumption,” says du Preez while discussing plans for increasing the group’s crop portfolio. “We really believe this is an interesting crop that we would like to expand over the coming years.

“We have migrated towards more intensive farming of wheat, maize, soya bean, pecans, sugar and we are now starting to plant avocados.”

RussellStone Group companies will also be tasked with developing the company’s protein business.

Already a strong supplier of plantbased proteins, du Preez is keen to bolster the group’s meat contribution of this vital foodstuff.

“With pork, we believe this is a very cheap protein for Africa and the potential is huge,” he says.

RUSSELLSTONE GROUP

// WITH PORK, WE BELIEVE THIS IS A VERY CHEAP PROTEIN FOR AFRICA AND THE POTENTIAL IS HUGE // “We are reshuffling the portfolio and moving more towards protein.

We have always been big in plant proteins but we will be moving more into animal protein. We are developing our pork business, especially north of South Africa.”

The group’s geographic spread will help it with this reshuffle as South Africa’s regional soil types are vastly different. Just 12% of the country’s land is classed as fertile – suitable for rain-fed crop production - and only 3% is regarded as land with high potential.

However, more than 50% of land is suitable for grazing and livestock farming is a large and established part of the industry. A Trade Probe in 2015 found that South Africa is consuming more pork than it produces meaning the opportunities detailed by du Preez are real.

When it comes to fruit and vegetable farming, the current concern for South Africa is water. The country’s water crisis has had a major impact on the ability of agricultural companies to operate at full capacity. But, following ‘Day Zero’ in the Western Cape being pushed back, du Preez looks beyond the short-term and is planning the next fruits to add to the portfolio.

“There are many crops that we are looking at but it is regionally based and dependent on micro climates. Right now, we are excited about macadamia nuts; it’s a growing product in the nut group and is relatively unknown in Africa compared to cashews and almonds. It’s an easy transport, highvalue crop and we believe it is an exciting product.

“Obviously, we see a growth in apples into the region. It’s a very healthy

meal that can be eaten in the street so we think there is potential as there are only a limited number of varieties that can be grown in Africa. However, you need cold units and infrastructure to succeed with apple production.

“We see big growth in mandarins or easy peelers. Seedless grapes are also growing; the trends come and go so quickly and we have to be swift with our varieties. We see a lot of blueberries being planted all over the region, mainly for export, and there are so many other crop varieties being successful.”

AFRICAN EXPANSION Already with a presence across a number of African markets, the RussellStone Group is keen to exploit opportunities in the various very fertile, and quickly growing markets. Without

doubt, any chance that could add value to the group’s operation will be explored and, where suitable, land and business will be acquired.

“We believe agricultural land should be a part of our portfolio and we like to keep 20-25% of our portfolio as land. We buy land on a freehold basis and look to benefit from capital gains while understanding that our revenue comes from a combination of sources,” explains du Preez.

“The one country that excites us, and that will be a big turning point for us, is Zimbabwe. It’s exciting politically and it has fantastic micro climates. I definitely see that country as one that now has brilliant opportunities to rejuvenate its agriculture area.

“Tanzania has opportunities but is not a place where we would

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INDUSTRY FOCUS: FOOD & DRINK

invest right now because of politics.

Country’s like Uganda and Ethiopia are interesting. We are focussed on Southern and Eastern Africa and don’t go to Western or Central Africa because of the language barrier.”

These ideas are exciting, particularly in Zimbabwe where RussellStone is active through United Refineries, as investment from the group can result in fast creation of large numbers of sustainable jobs, which in turn feeds consumption.

Previously, new President Emmerson Mnangagwa has singled out agriculture as an industry with the ability to turn around this ailing economy.

“In Zimbabwe, there is 90% unemployment and we are part of the 10% supplying jobs and paying people on time, every month. We are also

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contributing to taxes and economic activity,” reminds du Preez.

How has RussellStone managed to excel in Africa, especially across a number of different countries with different cultures, regulations, laws and land types? du Preez puts it down to a philosophy of always solving the problem of the customer or consumer.

“Our attitude of service separates us from the limited competition we face in Africa. We subscribe to several industry best-practice philosophies such as Blue Oceans and Purple Cows.

Our attitude and approach is all about the customer being key – he isn’t always right but he is key.

“We only care about what the customer and consumer wants.

Throughout history, you’ll see that successful companies work to solve

problem of their customers rather than push their own agenda – even in the bible it says you must give before you receive,” he says.

AMBITIOUS BUSINESS With many South African businesses buoyant following the appointment of a new president – a man who is business friendly, keen on job creation and rooting out corruption – now seems to be a time when businesses are considering their future growth strategy, rather than looking over the shoulder.

RussellStone has always been an ambitious, forward thinking business and du Preez says that several growth options are now under consideration.

“We have two models,” he starts.

“We are not scared to do greenfields

RUSSELLSTONE GROUP

// WE WANT TO DOUBLE THE BUSINESS IN THE NEXT FIVE YEARS. WE’D LIKE TO HAVE 5000 PEOPLE BY 2023 // and we have completed a number of greenfield projects through our history. We are not a normal private equity investor. We run what we call a managed private equity model.

We don’t buy a company and sit on the board and only worry about compliance and finance – we go in and buy and then manage. We grow organically but you cannot double the size of a business without mergers and acquisition.

“We believe we have a superior culture to any other business and so we would not merge unless we could spread that culture.”

In the period October to December

of 2017, Stats SA reported that the country’s economy grew by 3.1% - a marked improvement on previous quarters since 2016. Agriculture registered the highest growth at 37.5% quarter-on-quarter, although the expansion was slower than in July to September when the sector expanded 41.1%. Perhaps now is the time for agricultural businesses with scale and experience to come to the fore and lead the country, and region, on a path back towards meaningful economic growth.

And proving the ambition of this determined and aspiring CEO, du Preez details his goals for the next five years:

“We want to double the business in the next five years. We’d like to have 5000 people by 2023. We enjoy what we do, it gives us a real kick to contribute to society and pay people’s salaries.”

The RussellStone Group is passionate about building world class companies and is actively seeking growth opportunities. Find out more about how to get involved: www.russellstone.co.za

WWW.RUSSELLSTONE.CO.ZA

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KFC SOUTH AFRICA

A Chicken Coup

for KFC in South Africa PRODUCTION: Timothy Reeder

Despite a brutally competitive fast food, and particularly fried chicken, market, KFC is the dominant fast food chain in South Africa, serving over 20 million customers each month in its more than 800 outlets across the country.

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KFC is the most popular chicken restaurant chain across the globe, perhaps most widely renowned for its world-famous Original Recipe® fried chicken which is today a fast food staple of millions. The creation of Colonel Harland Sanders’s more than 75 years ago, a recipe which began life merely as a simple list of secret herbs

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and spices scratched on the back of his kitchen door, has led KFC to boast a footprint today consisting of in excess of 20,000 restaurants in more than 125 countries worldwide.

Largely through carefully selecting franchise partners around the world, KFC has become one of the fastest growing retail brands both in emerging

and developed markets alike, and first took on the South African competition in 1971. Over nearly 50 years KFC has striven to deliver the great tasting chicken so well known and loved to its many millions of clients each month, giving it a strong brand heritage in South Africa and seeing KFC indelibly weaved into its customers’ lives.

INDUSTRY FOCUS: FOOD & DRINK

// KFC IS ONE OF THE MOST LOVED BRANDS IN SOUTH AFRICA, AND WE ARE SO EXCITED THAT UBEREATS CAN HELP BRING EATERS THE KFC MEALS THEY’VE SO DESPERATELY CRAVED // REWARDING ADVERTISING It is only possible to stand so far ahead of the other players, in what is known to be one of the most competitive markets in the country, if you are constantly catching the eye of possible consumers.

KFC is acutely aware of this, and was recently named as one of the biggest winners at the 2018 instalment of the annual Bookmark Awards in March.

The initiative is designed to celebrate excellence in digital and the impact that interactive has on the overall marketing mix. KFC scooped the most highly sought-after award on the night, announced by the IAB SA at a glittering

event held in Kyalami, taking home the coveted title of Brand of the Year. Its partnership with Ogilvy & Mather SA, the industry leader focused on building and transforming brands and the other notable winner on the night, continues to reap the highest rewards.

Ogilvy was itself presented with four ‘Gold Pixel’ trophies at the ceremony, the last of which was for its ‘Suppertime Stories’ work for KFC in the Innovative Use of Media category, only the most recent in a long line of examples where the companies’ partnership has caught the eye of the wider public. Ben Schoderer, digital manager of Yum!

Restaurants, the fast food company which operates KFC worldwide, also won the Best Marketer Award.

It was a richly deserved success for the two companies, and Chairman of the M&C Saatchi Group and Jury President of the IAB SA Bookmarks 2018, Jerry Mpufane, spoke of the rationale behind the awards’ existence, and their importance. “The Bookmark Awards are an interesting window into modern and cutting-edge advertising,” he explained. “The great brands entered their work, and I know I speak on behalf of the jurors when I say that we saw some worthy winners. The case study entries challenged the way we look at advertising, elicited some heated debates about what works and what doesn’t, and mostly some lessons came out which can be applied into the future – and that’s very exciting.”

OVERWHELMING FAVOURITE This was not the only recognition received by KFC in recent times.

It was also, in late 2017, named as South Africa’s favourite fast food restaurant in the latest Sunday Times Top Brands awards, beating Nando’s and Debonair’s Pizza to claim the top spot, in research conducted by market research agency Kantar TNS. KFC not only won the top fast food brand award, but also, perhaps even more significantly, were garnished with the overall grand prix award. This feat means that it was calculated to be the absolute favourite brand in the polls, followed by the electronics giant Samsung.

“The work behind this has been immense,” said KFC marketing manager Jacques Cronje, “it represents a couple of years of consistent hard work when we started the journey to contemporise the brand and speak to consumers

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INDUSTRY FOCUS: FOOD & DRINK

in a new and fresh way. For me as a marketer and for the marketing team at KFC this is wonderful, as it means we are doing the right things – things that are resonating with consumers.”

KFC has also capitalised on the newest technology at its disposal and partnered with UberEATS, the online meal delivery service operated by Uber, in June. Nic Robertson, general manager for UberEATS South Africa, stated: “KFC is one of the most loved brands in South Africa, and we are so excited that UberEATS can help bring eaters the KFC meals they’ve so desperately craved.”

MISSING CHICKEN For any business, especially one as successful and heavily relied upon as KFC, a shortage of the one product for which it is best known

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is far from a desired situation, at any time. KFC was left somewhat red-faced earlier this year when its fried chicken was, in unprecedented circumstances, absent from hundreds of its restaurants across the UK following a logistics crisis with its new supplier. KFC’s own words of the adverts published in the wake of the mix up summed up the situation most succinctly: “A chicken restaurant without any chicken. It’s not ideal.

Huge apologies to our customers.”

KFC in the UK has since signed a new long-term contract with former supplier, South African company Bidvest, which has several distribution depots across the country. Bidvest commented that “as the UK’s leading food service logistics specialist, we understand the complexities of delivering fresh

chicken,” the Guardian newspaper reported.

FIGHT AGAINST HUNGER Earlier in March, staff at the Dalton branch of KFC displayed the social awareness of the brand by handing over a R45,000 cheque to Vianney Children’s Home in Ndwedwe, to contribute to the home’s feeding scheme. Every R2 that KFC customers donate to Add Hope, combined with KFC social-investment contributions, goes to sustainable feeding programmes to feed over 120,000 children at 25 national and 113 local beneficiaries. Vianney Children’s Home is part of the local beneficiary programme, founded in 1962 as a non-profit organisation that provides temporary residence, a Child and Youth Care Programme and support for

KFC SA

// WE ARE VERY EXCITED ABOUT THE IMPLEMENTATION OF RENEWABLE ENERGY SOLUTIONS IN OUR RESTAURANTS // orphans and other vulnerable children and their families in the area.

Lethiwe Mazibuko, who runs the charity, said: “With a high unemployment rate and a lack of resources in the area, some parents cannot afford to feed or send their children to school. With Add Hope funding, the home is able to feed vulnerable children nutritious meals every day, as well as provide a safe place that orphans can call home. We are very

grateful for this funding, which will help us make a real difference to children and families here.”

GOING SOLAR AKM Foods currently owns 34 KFC outlets across the Eastern Cape, and recently made waves by revealing that working with Solar Africa had allowed four of these to be converted to some of the very first solar-powered restaurants in Port Elizabeth. Nishid Dosa, Principle Operator of AKM Foods, explained that the success of this initial foray would see the conversion extended much further: “We are excited about the introduction of solar and green energy in our stores and are satisfied with the results thus far. Currently only four stores are being piloted, and the plan is to roll out to other stores.”

Dosa added that the switch

to Solar power was prompted by the large square meterage in roof space at the majority of the stores, which is ideal for the introduction of solar. KFC Africa chief executive Doug Smart, meanwhile, concluded that this move toward solar clearly displays the company’s commitment to lessen its carbon footprint as its presence continues to grow. “As one of the country’s most loved food brands, KFC remains committed to supporting our franchise partners uphold environmental standards,” he commented. “We are very excited about the implementation of this renewable energy solution in our restaurants.”

WWW.KFC.CO.ZA

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MASSMART

Massmart Rejects Retail Demise and Promises

Continued Expansion PRODUCTION: Manelesi Dumasi

South African retail business Massmart is bucking the trend of the global high-street which is seeing big-name stores close all over the world. By investing in its online offering and by always keeping a meticulous control over expenditure, this is a retailer that is showing the rest how to achieve strong results. www.enterprise-africa.net / 61

INDUSTRY FOCUS: RETAIL

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Globally, a new retail environment has emerged as internet shopping has cast a dark cloud over the world’s highstreets – the traditional trading grounds for goods. It’s not just developed or developing economies that have witnessed the boom in digital retail, this is a global phenomenon. In the USA, a number of major traditional retailers are closing stores including RadioShack, Macy’s and Abercrombie & Fitch. In Australia, Gap finally closed its last retail outlet in February. In China (which has seen more store closures than anywhere else), luxury brands including Burberry and Dunhill have hoisted ‘closed’ signs.

The UK high-street has lost Toys R Us and electronics seller Maplin resulting in thousands of redundancies. And in Dubai, fashion retailer, Sana announced in July that it would shut up shop after 30 years of trading.

South Africa has seen a number of big-name brands come and go.

Stuttafords, Nine West, Mango and River Island have all announced complete close downs, and many more - locally and internationally - have suggested that the end is nigh.

But are we truly now in the time of the end of the high street? Is this the point in history when people stop travelling to stores to buy goods and services? Will the doom and gloom predictions of the 1980s finally come true?

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Simply put, no. The landscape is certainly changing, and in five years’ time, we could be faced with a completely different retail sphere.

But the necessity for locations where people go and acquire things they need will remain. It’s about being savvy, staying up to date, controlling costs, and embracing a new style of shopping where everything is available, there is no waiting in line, and prices are low.

Amazon has announced that it is already piloting an Amazon Go store idea in Seattle where customers can walk in, pick up, and walk out – no cash exchange, no que, and no fuss; payment is taken for only the goods collected through smart technology.

But while these new ideas are being refined, and the kinks are being ironed out, the high-street still exists, and it exists in a big way. While the need for retail differs from sector to sector and from country to country, there are some that continue to succeed.

In South Africa, one retailer that is navigating the situation with positivity is Massmart. The company is a globally competitive regional management group invested in a range of focused wholesale and retail formats. The JSElisted business is owned by American retail giant Wal-Mart and runs nine wholesale and retail chains, and one buying group across 13 sub-Saharan African countries. Massdiscounters,

// WE LOOK FORWARD TO AN IMPROVEMENT IN MANY OF THE ECONOMIC FACTORS THAT HAVE CREATED HEADWINDS, PARTICULARLY FOR DURABLE GOODS RETAILERS // Masswarehouse, Massbuild, and Masscash are the divisions of the group and together make up second-largest distributor of consumer goods in Africa.

More than 400 stores and 500 buying group members across its network are all focused on high-volume and lowcost distribution.

RESULTS JUSTIFY MODEL In February, Massmart released its annual results for the 53 weeks ended 31 December 2017.

The encouraging report showed that retailers with extensive store networks can be very successful. Sales increased by 2.7% to R93.7 billion, trading profit before interest was up 4.2% to R2.7 billion, and headline earnings were up 14% to R1.5 billion.

This success was realised even with the backdrop of a very uncertain, unstable and unpredictable political and economic environment.

The company cited three factors that hampered growth: very weak consumer confidence that resulted in low consumer demand for durable goods (being the General Merchandise and Home Improvement categories); significant deflation in most major commodities in the wholesale businesses; and the impact of generally weaker African economies and currencies.

But CEO Guy Hayward was positive about the results and remains optimistic about the future. “The 2017 consumer

INDUSTRY FOCUS: RETAIL

environment presented a number of challenges for retailers,” he said.

“However, we are excited about the political changes we have seen since the ANC conference in December and we look forward to an improvement in many of the economic factors that have created headwinds, particularly for durable goods retailers. The work we have done on enhancing our operational efficiencies, reducing the cost of execution and refining our product mix means we are well positioned to take advantage of a cyclical upturn. Nonetheless, the structural, policy and public sector impediments remain long-term challenges through which our Food & Liquor offerings will provide a defensive positioning. This is an important moment for South Africa in terms of reinvigorating our own social, economic and political progress and we are keen to contribute to this positive passage of growth and renewal.”

He highlighted the problems that caused challenges for the business but reminded of the positivity realised in the second half of the year.

“Very weak consumer confidence resulted in lower demand for durable goods, significant deflation in most major commodities impacted the wholesale business and we were negatively affected by generally weaker African economies and currencies.

“While these headline figures are indicative of the exceedingly difficult consumer environment that persisted in the period, they mask a muchimproved performance in the second half of 2017. In this second half, three of the four Divisions recorded higher comparable sales growths than the second half of 2016 where year-todate product inflation fell from 3.2% (June) to 2.0% (December) over the same period. And adjusting for product inflation shows that all Divisions reported higher real comparable sales in the second half of 2017.”

One of the big boosts for the retailer was ‘Black Friday’, an American

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MASSMART

// ONLINE REMAINS A VERY BIG FOCUS FOR US; WE NOW HAVE STRONG AND VISIBLE ONLINE SHOPPING PRESENCES IN GAME, MAKRO, BUILDERS WAREHOUSE AND DIONWIRED // invention where large discounts are offered on the day after the country’s Thanksgiving celebrations. The concept has spread across various international markets, and South Africa caught on in 2014.

“Massmart recorded another bumper Black Friday with over R1bn in sales and improved margin management. A useful portion of this success was enabled by our continued strategy to grow our omnichannel offering, resulting in the Group’s aggregate online sales growing by 47% for 2017. This was achieved through our four e-commerce points of presence; Makro, Game, Dion-Wired and Builders Warehouse which are all currently using or migrating to the SAP Hybris platform,” the company stated.

“We saw a wonderful response form customers and we saw enormous penetration of online and mobile – Black Friday is with us and it’s enormous,” confirmed Hayward.

NOT CLOSING Far from a depressing situation, like many of the other international retailers are facing right now, Massmart remains in an extremely strong position. In fact, while others are closing, Massmart is looking at opening new stores.

In March, the company announced that it would further fuel its pan-African expansion plans by opening 20 new stores outside of South Africa over the next three years. Reports suggest that new stores will open in Kenya, Ghana, Mozambique, Zambia and Swaziland.

Massmart is also said to be exploring expansion opportunities in French speaking African countries as it looks to increase its continental footprint.

In total, the Massmart group is home to more than 45,000 people across sub-Saharan Africa and this number looks set to grow as the company has set out a target of growing net trading space by 76,823 m2 in the next three years.

As well as boasting a fantastic and widespread store network, Massmart has also invested in its online presence – something which many of the failing retailers have ignored.

“Online remains a very big focus for us; we now have strong and visible online shopping presences in Game, Makro, Builders Warehouse and DionWired. It has grown exceptionally, around 46% was the total online sales growth for the year ending December 2017. In Makro, for November and December, online represented 4% of total sales for those months so you can

feel it is growing and growing,” said Hayward.

Combine Massmart’s store growth, improving sales, positive brand recognition, and strong leadership with the country’s much improved political environment and economic situation, and add in the company’s excellent online push, and your result is very positive outlook for future trading.

Where so many retailers have not future proofed themselves and prepared for a new digital age, Massmart has come up with an effective strategy to keep it moving in the right direction.

“Overall, I’m quietly confident that we’re going to see a great 2018, maybe starting a little slowly in the first quarter, possibly into the second, but then getting strong beyond that,” said Hayward.

So Massmart is proving that there is life in the retail environment yet.

The trick now will be managing the inevitable transition to a more digitised environment, but with ongoing investment into digital operations, Massmart is arguably the leader in subSaharan Africa’s mas retailing industry.

WWW.MASSMART.CO.ZA

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KIT KAT CASH & CARRY

Kit Kat Aims For

Nationwide Coverage PRODUCTION: David Napier

Delivering fist-class customer service while ensuring a smooth operation and keeping prices low is not easy for today’s big retailers. But South Africa’s Kit Kat Group has mastered this model and is now aiming for country-wide expansion as the family business looks to grow while always delivering on its promise of customer first. www.enterprise-africa.net / 67

INDUSTRY FOCUS: RETAIL

//

The story of leading South African cash and carry operation, Kit Kat Group, is a true tale of drive, determination and innovation. This retail expert has been delighting customers since its formation in 1953. Although the Kit Kat Group today is very different from its roots in the 50s, one thing remains true – the customer is at the heart of everything.

Founded in Pretoria’s Asiatic Bazaar

by Osman Mohammed, brother-in-law Osman Gani and Gani’s daughter, the business was started as a small family run café. Unfortunately, the challenges came thick and fast starting with a fire that ruined the company’s premises in 1959. After attempting to rebuild, the café was moved to Pretoria’s 11th Street because the city relocated a bus route that was delivering much of the café’s trade. In 1973, Gani’s sons Abdul Kader and Abdul Razzak joined the company and brought fresh new ideas to the operation. Soon, the business was

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// THE BRAND KIT KAT IS RECOGNISED AS ONE OF THE LEADING BRANDS IN THE FMCG INDUSTRY TODAY // reformed as a self-serve supermarket and trade flourished. However, the operating space at the time was only 110 m2 and so the young entrepreneurs realised the time for expansion was upon them. 1983 saw Kit Kat move to the Asiatic Complex and convert to a wholesale-type business but the rapid growth of the organisation again caught up with the company. In 1989, the Kit Kat Hyperstore was opened south of Pretoria. The next generation of the family business entered the business and, in 1992, the 1500 m2 Kit Kat Cash and Carry opened its doors.

What followed was a period of extraordinary growth as the number of

people coming through the doors and the value of products sold increased year-on-year. The country’s transition into democracy in 1994 greatly boosted the company, and in 1999 the new Kit Kat Cash and Carry was opened in Pretoria West. The 20,000 m2 is home to a large range of goods including groceries, electronics and cosmetics.

Value for money and customer service have always remained at the core of Kit Kat and, in an effort to provide a one stop shop experience, the flagship store is always expanding, now offering fast food, clothing, interior decorating and many more services.

“The brand Kit Kat is recognised as one of the leading brands in the FMCG industry today, and it symbolises the trust of our customers,” says Kit Kat Group Chairman, Ahmed Gani.

“We feel highly contented that it is overwhelmingly accepted and recognised by our valued customers as a trustworthy brand. The trust of our customers in our brand constantly

motivates us to offer better services.”

The company’s belief in customer service is one shared by many of the world’s most respected business personalities.

“A customer is the most important visitor on our premises, he is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so,” said Mahatma Gandhi.

“Spend a lot of time talking to customers face to face. You’d be amazed how many companies don’t listen to their customers,” said American business magnate, Ross Perot.

Ahmed Gani very much agrees.

“Customers see the value of dealing

INDUSTRY FOCUS: RETAIL

with hands-on type operators,” he told Entrepreneur Magazine.

His office is strategically positioned with a glass front, looking over the entrance to the premises. “I want to see that nobody looks unhappy as they walk out,” he said.

“I want them to see me so that at least our eyes can meet and we can greet each other. If you are not satisfied you can meet the MD of the company in a minute and we can immediately try to rectify things so that you leave here as a happy client.”

The ambitions of the Kit Kat Group, and especially its management, are impressive. Not content with sitting still, the business is always looking for the next growth opportunity. Following the success of the Kit Kat brand and its growth throughout Pretoria, the management turned their attention to a new strategy and opened Build Mart. Build Mart is a resource for those operating in the hardware and building materials

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industry. Management saw the opportunity to bring what was already a strong presence in the retail market to the buildings and DIY industry, while always keeping the company’s low pricing model at its heart.

Build More For Less is the slogan

by which Build Mart operates and today, the company deals in not only construction materials but also plumbing, lighting, sanitary ware, imported furniture and tiles.

Realising the opportunity for further expansion, the management

KITKAT CASH & CARRY

// WE ONLY HAVE A FEW EXPRESS STORES JUST NOW BUT WE AIM TO GROW THAT THAT UP TO 100 STORES IN THE NEXT TWO TO THREE YEARS // made its first move outside of South Africa recently when its opened Value Market, a cash and carry outlet, in Dubai. Close the city’s main airport, Value Market is a distributor of a wide range of products, very similar to operations in Pretoria, and is becoming known in the Middle East for its competitive pricing. Locally, Value Market offers online shopping and brings an innovative price checker to ensure customers are getting the best deal.

In South Africa, Kit Kat Cash and Carry recently launched its new app, in an attempt to make mobile shopping a seamless experience. To date, the app has been widely downloaded and well-received.

The small family business that started

out more than 60 years ago is now leading the way when it comes to effective retailing in South Africa. Next on the agenda for Kit Kat? Nationwide coverage.

“We plan on becoming a national player in the FMCG industry of South Africa – our philosophy is very simple: go big or go home,” says Gani.

This will be achieved through the roll out of a franchise-style operation and the Kit Kat Express model. Kit Kat Express stores are designed to be smaller than the flagship premises, 200 m2 in size, but to act as suppliers into certain regions, buying from the company’s main store. According to Gani, it’s about creating customers for themselves. “We only have a few Express stores just now but we aim to grow that that up to 100 stores in the

next two to three years.”

Franchising has grown to become an extremely important part of the country’s economy, contributing a big portion of GDP and creating thousands of jobs.

If there is one business that can make a success of this type of invention and change in strategy, it’s the Kit Kat Group. The family behind this big-name retailer are experts in the industry and have been through all the ups and downs, thriving at each turn. As pressure mounts on the country’s retailers to deliver products at cheaper prices, while always investing in innovation and new technology, Kit Kat is ahead of the curve and utilises its experience to ensure the most important goal is achieved: It’s customers leave happy, and return.

WWW.KITKATGROUP.COM

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PETRA DIAMONDS

Long-Term Plan

Shines Through for Petra PRODUCTION: David Napier

Currently navigating a complicated period in its history, Petra Diamonds continues to increase the life of its mines and prepare for long-term success across all of its southern African operations.

//

Petra Diamonds, the Londonlisted diamond miner that operates a number of old De Beers mines in South Africa, recently released its results for the six-month period ending 31 December 2017.

Following a tough period dogged by strikes, challenges in

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Tanzania, and currency pricing – Petra’s results came out mixed, with a varied response from investors.

Diamonds sold (carats) and revenue (US$m) were both down by 5% and 1% respectively yet total number of diamonds produced, ROM tonnes and total tonnes treated were

up (10%, 28% and 1% respectively).

Big investments are underway across the company’s mine portfolio to extend life and improve efficiencies and, with the expected sale of the blocked Williamson parcel in Tanzania to go through this year, 2018 is expected to be a stronger one for this expert company.

Š Petra Diamonds

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INDUSTRY FOCUS: MINING

© Petra Diamonds

“H1 saw further growth in production to 2.2 million carats,” detailed Petra Diamonds CEO, Johan Dippenaar. “Our focus now is to keep on delivering from the new production blocks, particularly at Finsch and Cullinan where the expansion programmes continue to ramp up, and to further optimise the new Cullinan plant. The challenge of the strong Rand has also sharpened focus on our operating and capital expenses.”

Currently, a large portion of Petra Diamonds stock is sourced from South Africa and its four key mines – Finsch, Cullinan, Koffiefontein and the Kimberley Ekapa Mining joint venture.

The company also runs the Williamson open pit operation in Tanzania and maintains an exploration programme in Botswana.

The Williamson mine has produced a number of exceptional pink diamonds in the past few years, the Cullinan mine is famous for its major discoveries, and Finsch and Koffiefontein both chip in high-quality large stones.

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ROUGH TIMES However, despite the historic success of its mines, Petra has suffered recently because of challenging operational factors.

In February, the company said that the combination of a strong Rand, labour unrest, slow demand, and the problems in Tanzania had effected business so much so that the company could breach one of its loan covenants. But the company responded by renegotiating with its lenders and revising down its forecasts.

Ultimately, these problems were demonstrated when the H1 FY 2018 report detailed revenue down to US$m 225.5 from US$m 228.5 and adjusted EBITDA down to US$m 80.1 from US$m 87.1.

This came after a share price slide in 2017’s fourth quarter, and the announcement in February that $60 million worth of planned capital expenditure over the next three years would now be shelved while the company services its debts.

“The company has been reviewing

its capital requirements for FY 2018 to FY 2020, with a view to deferring nonessential projects that will not impact on short to medium term production plans,” said Dippenaar.

But, while the current situation makes some stakeholders uneasy, the company remained confident. Driving value is the key focus going forward as Petra looks to maximise free cash flow rather than volume targets.

FORWARD FOCUS Since the release of the H1 FY 2018 report, demand in the market has strengthened slightly, the labour situation in South Africa has been resolved, and the company has started to make progress with the blocked parcel in Tanzania.

“While the diamond market experienced weakness from July to October 2017, which is seasonally the slowest time for the rough diamond market, it started to strengthen before the calendar year end further to positive momentum around the festive selling season. Results relating to Christmas

PETRA DIAMONDS

// WE SEE SAFETY AS THE SINGLE MOST IMPORTANT PERSONAL AND ORGANISATIONAL VALUE AND WE CONTINUE TO PLACE GREAT EMPHASIS ON THIS AREA // sales are generally positive, further to buoyant sales in the US and continued strong growth in the Chinese and Hong Kong markets,” said Dippenaar.

“Increased production was also achieved despite the labour disruption experienced in Q1 at our South African operations (with the exception of Cullinan) prior to the signing of a new three-year wage agreement,” he added. “Fortunately the disruption was contained to a period of less than two weeks due to the concerted effort of Petra’s management to engage with all levels of the National Union of Mineworkers (NUM) in order to find a resolution. I am pleased to say that labour relations are currently stable and the new three-year agreement bodes well for the labour relations environment during this period.”

The strengthening of the Rand, and an improved business outlook in South Africa, has been tied to the appointment of Cyril Ramaphosa as the Republic’s new President. The former-leader of the NUM is described as a skilled negotiator and an astute businessman. Now that he holds the top job, the general feeling is that business will be encouraged to thrive, with corruption being targeted and rooted out. And while this may impact on the company from a financial standpoint regarding currency exchange, the feeling is positive.

“People still believe in mining,” said Koffiefontein mine manager, Lino Nkuna. “There’s nothing more

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INDUSTRY FOCUS: MINING

encouraging for the people than hearing that the mine life will be extended.

“If we can sustain production, even through instability in the economy, there will be a time where we can sell at a higher price. The more precious minerals you have, the better position you are in to negotiate.”

Mine manager at Finsch, Luctor Roode said that current expansion at the mine was already showing positive results. “We are at a point now where a lot of the hard work is done. We are in the process of ramping up the project to full production and accessing fresh, undiluted and high-grade kimberlite.

The improvements are already evident with run of mine grades increasing as the new ore source starts ramping up.”

And Dippenaar said that safety in particular, a cornerstone of Petra’s strategy, was being aided by the implementation of new technology

© Petra Diamonds - Finsch mine

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// EACH MONTH PETRA GROWS THE FOOTPRINT OF THE EXISTING MINING AREAS AND OPENS UP MORE ACCESS TO THE RESPECTIVE OREBODIES // and mining methods.

“The improving production performance is pleasing because it was set against a solid safety performance, with our lost time injury frequency rate decreasing to 0.24. This is very important to us because we see safety as the single most important personal and organisational value and we continue to place great emphasis on this area. However, we will continue to strive to do better, with our aim being a zero harm workplace.”

At Finsch, after recent success in exposing new pipe, another programme is in place to take mining deeper than ever; a new Block 5 Cave will be installed at 900 mL from FY 2023/FY

2024. At Koffiefontein, the company is hoping to increase production from 50,500 ctpa in FY 2017 to ca. 85,000 ctpa by FY 2019, taking the life of the mine well beyond the current 2025 expectancy. At Cullinan, a new processing plant was completed in September 2017 and an expansion programme is under way to take annual production to 2.2 mcts by FY 2019.

Petra is also hoping to extend life at Williamson and Kimberley Ekapa JV through modernising and upgrading.

“Petra’s main underground expansion projects remain on track, with both Finsch’s Block 5 SLC and Cullinan’s C-Cut Phase 1 continuing to ramp up during the Period,” said

PETRA DIAMONDS

© Petra Diamonds - Koffiefontein mine

Dippenaar when delivering the company’s H1 FY 2018 trading update.

“Finsch’s ROM carat production rose 14% to 931,859 carats and Cullinan’s ROM carat production rose 68% to 602,594, demonstrating the significant progress made at both assets. Due to the nature of sub level caving and block caving, each month Petra grows the footprint of the existing mining areas and opens up more access to the respective orebodies. These expanding footprints deliver higher production volumes each month, thereby growing access to undiluted ore.”

SHINY NEW HORIZONS Moving through 2018, Petra will have to get used to life without Technical Director, Jim Davidson who recently announced his retirement after more than four decades in the industry.

The company moved CFO Jacques Breytenbach to its Board of Directors

and is planning for a long future in Southern Africa.

Ongoing expansion work across the existing portfolio, completely resolving issues in Tanzania, and staying up to date with the country’s ever-changing economy and mining charter will be key in the company’s continued development. Of course, the growth of the wider economy will play a part, but Petra has already secured programmes that will help it grow as strong demand returns to the industry.

“In Botswana, Petra’s focus has been on the evaluation of the KX36 deposit, which was discovered by the company and where a Resource of 8.7 Mct (contained in 24.6 Mt at an average grade of 35 cpht) has been identified, with an estimated average diamond value of US$65 per carat.

“In South Africa, Petra’s focus remains the investigation of the Reivilo project, which is situated approximately

110 kilometres north-east of the Finsch mine and where the company has delineated a cluster of three kimberlite bodies within a 250m radius with estimated sizes of 3.1 Ha, 1.7 Ha and 0.9 Ha respectively.

“A prospecting right adjacent to the Sedibeng mine (one of the ‘Fissure Mines’ formerly operated by Petra) in the Northern Cape was awarded to Petra in June 2017. An airborne geophysical survey will be the next step to evaluate this property,” said Dippenaar.

Petra’s short-term challenges are dwarfed by the major long-term potential. This is a ‘leading independent diamond miner with a diversified portfolio and high quality team’ and its history is proof enough that it knows how to extract value.

WWW.PETRADIAMONDS.COM

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WHITE RIVERS EXPLORATION

Striking Gold Time and Again PRODUCTION: William Denstone

In a little over ten years, White Rivers Exploration has established a highly prospective portfolio of 10 exploration properties in the Witwatersrand Basin in South Africa, where its team, with over 200 years of relevant experience, continues to make major discoveries.

//

White Rivers Exploration was formed in 2007 in Northcliff, Johannesburg by Britishborn explorer and major shareholder, Mark Creasy, a legendary Western Australian Prospector. WRE, through its wholly owned subsidiary Western Allen Ridge Gold Mines, and its associated entities, WRE Coal, WRE Manganese and WRE Base Metals, has commodity-focused portfolios of high quality tenements and develops projects from exploration through to mining execution. It is backed by two unique databases consisting of over 3,200 historical boreholes, meaning that projects are fast-tracked and provide extraordinary returns on investment.

A MAJOR RESOURCE Mining in South Africa has long been among the main driving forces behind the history and development of Africa’s most advanced and richest economy. South Africa accounted for 15% of the world’s gold production in 2002 and 12% in 2005, though the nation had produced as much as 30% of world output as recently as 1993.

The discovery of gold in South Africa in the late 19th century spawned the development of the city of Johannesburg, Egoli - the city of gold and numerous towns around the gold diggings. For many years South Africa was the world’s primary gold producer, and the industry still employs in the region of 120,000 people.

The Witwatersrand Basin still stands today as the world’s largest gold resource, and is the primary focus of WRE. To date, the Wits Basin has produced more than two billion ounces of gold over a century of mining, at an average grade of 15 g/t (grams per ton).

It is estimated that between 40 to 50% of all the gold ever mined in the world has emerged from Witwatersrand, and that the remaining reserves weigh in at a hefty 36,000 tonnes. The mines in the Basin are some of the deepest in the world, tunneling miles below the surface, which has made WRE’s colossal experience invaluable in continuing to profit from the riches. It has a primary focus on gold and is backed by a large historic borehole database, as well as

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INDUSTRY FOCUS: MINING

200 years’ experience in Witwatersrand geology and over a century in exploration.

NOVEL APPROACHES As Executive Director of White Rivers Exploration, Refilwe Monageng, states: “Our mission is to discover world class African mines,” and nobody is better qualified to fulfil such a challenge. “The company was started by one of the most successful prospectors in Australia, Mark Creasy,” Monageng continues, “and he introduced a model that he used in Australia to apply for tenements that would not take long to get into production. A lot of the time, investors only put money into projects where they can see their returns sooner rather than later and mining always takes longer than one can anticipate.

“In 1995, Creasy discovered one of the most successful mines - Bronzewing

- where people said it could not work and that is similar to what’s happening with White Rivers. A lot of people have said that gold is dissipating and that we would never find anything but our vision, which we believe we are achieving, is to discover world class African mines and we are continuing to do this through a historic borehole database.

A lot of holes have been drilled by previous companies, such as Anglovaal, AngloGold etc, so with that in mind Mark Creasy established a database in order to ensure that we apply for tenements that he thinks are near to surface or are able to bring required returns.”

// OUR MISSION IS TO DISCOVER WORLD CLASS AFRICAN MINES //

BREATHING NEW LIFE INTO THE BASIN It was Mark Creasy’s clear belief in the Witwatersrand Basin’s potential to mine significant gold volumes which led to the establishment of WRE. The purpose at the outset was to acquire mining prospects within the Basin that were dropped back in 2007, when the majors were required to convert their old order mining rights to new mining rights and, in doing so, vacate properties that were sitting idle. Having acquired a significant number of properties in the region, WRE has spent the last eight years evaluating the information from the old borehole databases it has acquired.

“We now have the largest privately owned database of the Witwatersrand Basin in South Africa,” explains WRE executive chairman

Excellence and Innovation

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Target Generation Tenement (Africa Knowledge) Maintenance

Exploration

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Address: Cnr. Ethel Ave and Ruth Crescent, Northcliff, Johannesburg, South Africa

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Resource Estimation

Technical Reporting

Contact Numbers: Tel: +27 11 678 6504 Fax: +27 11 678 9731

Email: info@shango.co.za

www.shango.co.za

WHITE RIVERS EXPLORATION

// WE HAVE ONE OF THE WORLD’S LARGEST UNMINED HIGH GRADE GOLD RESOURCES WITH HUGE UPSIDE POTENTIAL // Neil Warburton, “largely located in the Free State where the majority of our tenements lie. Having built up the properties’ prospectivity thanks to our substantial complement of experienced geologists from consulting firm Shango Solutions, WRE has been able to up-value the portfolio, relinquish certain properties and prioritise our focus areas.”

MASSIVE DISCOVERIES Because of its expertise, and its commitment to employing the data at its disposal, White Rivers Exploration is equipped to rapidly advance its priority projects, and among the most notable and widely-reported of these is the joint venture project in the Free State. It is 65% owned by WRE, the largest tenement holder in the Witwatersrand Basin, and 35% owned by Harmony Gold, South Africa’s third largest gold miner, and is the second largest undeveloped gold resource in the world.

The deposit contains 11.5 million ounces of gold at a grade of 8.9 g/t. It is located near Harmony Gold’s producing Target Mine, and could produce between 250,000 and 300,000 ounces of gold per year for more than 30 years. “The project represents one of the world’s largest unmined high grade gold resources with huge upside potential,” according to

Neil Warburton, White Rivers executive chairman, and it could become one of the first new gold mines to open in the area since the South Deep mine in 1990.

“By utilising Harmony’s neighbouring Target Mine infrastructure, including existing shafts ventilation systems and tailings dams, gold production from the JV resource can be fast-tracked, and operating and capital expenditure required by the JV reduced significantly,” Warburton added. “We are proceeding with a full pre-feasibility study and intend to seek in 2017 a dual listing on the London and Johannesburg stock exchanges to facilitate the commercialisation of this very substantial resource,” he concludes.

WWW.WHITERIVERS.CO.ZA

// Shango Solutions Shango Solutions is a leading geological consultancy firm established in April 2004 and is located in Johannesburg, South Africa. It has provided on-going technical services to White Rivers Exploration (WRE) since 2006.

The company strives towards technical excellence through innovation. Thirty five passionate employees, including 27 graduates, provide a diverse range of offerings to the minerals industry in South Africa and beyond. Client services range from ‘data mining’ (capture and re-evaluation of data), target generation (for example, target generation exercises conducted for PTM and WRE resulted in the discovery of the Waterberg Platinum deposit and the Harmony/WRE joint venture project, respectively) and technical reporting. See the resource value chain overleaf for full service offerings.

Project deliverables are enhanced through an extensive network of national and international affiliations, a core of unique mineral and resource estimation experts, extensive in-house databases, more than 500 combined person years of Africa-based, multi-commodity mining and exploration experience and an established track record of successful project execution and management.

Shango was instrumental in creating WRE’s tenement portfolio during 2006. Target generation activities led to the establishment of the Harmony/WRE joint venture abutting Harmony’s Target Mine. Currently, exploration activities focus on upgrading the Shango defined multi-million ounce JORC code-compliant gold resources. The project team captured and interpreted historic data consisting of 2 000 underground boreholes (110 km of drilling), 200 000 face samples, 8 000 pegs and 300 km’s of geological mapping. Shango is adding value to WRE’s remaining tenement portfolio by sourcing and reinterpreting historic exploration data and conducting various exploration activities.

Examples of Shango’s clients include Pan African Resources, West Wits Mining Limited, Bauba Platinum and Gold One.

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SHELL SOUTH AFRICA

Shell Drives Roll Out of

Retail Network PRODUCTION: Karl Pietersen

When you pull up to refill at a Shell service station, gone are the days of ‘splash and dash’ petrol fill-up. Today, you’ll find a whole host of retail offerings that bring convenient services to drivers, helping to make their journeys that little bit better.

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Driving East down the M2 in Johannesburg, towards Germiston, between Denver and the Gables, one could be forgiven for feeling rather bored. The Francois Oberholzer Freeway is not the most exciting of roads. Flat, with grassy verges, looking onto various industrial sites, this Jo’burg service road stretches

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from Main Reef Road in the West, South of the city, to the N3 in the East.

It’s straight, long and rather dull.

But it is a vital transport link for the city and as such, it is a busy road, often laden with cars, vans and trucks.

This is one of the reasons that global fuel and automotive powerhouse corporation, Shell, chose the road for a

fully equipped service station. Offering a mix of Shell fuel products, as well as an unrivalled retail offering, this is a service station with a difference. Ultra City Johannesburg, as it is known, is an all-encompassing retail forecourt and epitomises the offering that Shell is looking to roll out across the country in a bid to gain market share in a

INDUSTRY FOCUS: AUTOMOTIVE

// PEOPLE’S LIFESTYLES HAVE EVOLVED AND CONSUMERS ARE LOOKING FOR MUCH MORE THAN JUST FUEL WHEN VISITING A SERVICE STATION // challenging environment where fuel prices are strictly regulated.

As Enterprise Africa has learned in recent years, Shell has poured resources into its forecourt operations and Retail Marketing Manager of Shell SA Downstream, Yaasier Abrahams explained last year that new partnerships are extremely helpful in boosting traffic.

“What we do well in South Africa

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is leverage partnerships. Because of the fuels regulations within SA, oil companies are not allowed to have loyalty programmes and we can’t incentivise fuel sales, but our partners can,” he says.

“Because margins are regulated, the non-fuel retailing space is where you actually start seeing money and differentiation from competition.”

By installing Vida e Caffe outlets on forecourts, and following that with the rollout of partnerships with Clicks, KFC, Steers and Vitality, Shell offers a whole host of products and services for South Africa’s drivers. Convenience items such as groceries, snacks and drinks are complemented by quick service restaurants, contactless payment offerings and a network of more than 600 sites.

“People’s lifestyles have evolved and consumers are looking for much more than just fuel when visiting a service station,” details Abrahams.

“Where we’ve put in coffee shops, we’ve seen the basket size in the store increase and we’re also seeing an uplift in fuel volumes because we’re attracting more consumers from the forecourt into the stores.

“In terms of investments, where we are putting in coffee, we are still seeing improvements in the overall purchase size and CR basket size, and the group doesn’t see that in other markets. That is because we have a full-service model and we can use our service staff to upsell products and build one-on-one relationships with customers.”

Shell’s nearest competitors have seen the success achieved by this world-recognised brand and all are now looking to bolster their foot traffic by competing with non-fuel offerings.

“It’s an exciting time for us,” admits Abrahams. “As consumers wants and needs have changed, and as technology has shifted, it’s opened up so many opportunities for Shell.

SHELL SOUTH AFRICA

“We have more than 100 quickservice restaurants at our forecourts, catering to the growing demand for food across the network.”

When he spoke to IgnitionLIVE at the Ultra City on the M2, he said that the site attracts around 128,000 visitors every day. He spoke of the importance of installing local feeling across the retail network, as well as understanding the historic success that has been achieved over the company’s 116 year life in South African.

“Shell was the first to introduce motorway sites in the late 1990s in this country and those are still some of the best located sites on our national routes.

Understanding where population growth is coming from and where the new suburbs and hubs are coming from is absolutely critical. Taking the data on what customers are buying in the area

and what the market segment is looking at all determines what offers you put on the forecourts.

“We take great pride in our ‘Welcome to Shell’ service ethic that we instil in our forecourt service attendants.”

STRONG GLOBAL PERFORMANCE Away from South Africa, Shell displayed its ongoing global dominance when it released its 2017 Annual Report.

Global CEO Ben van Beurden detailed successes in increasing earnings, disposing of non-core assets and bringing new projects on board.

“Shell delivered a strong financial performance in 2017. We are making good progress towards building a world-class investment case,” he began.

“Income for the period was $13.4 billion in 2017 compared with $4.8 billion in 2016. Earnings on a current

cost of supplies basis were $12.5 billion, compared with $3.7 billion in 2016.

“Our delivery of new projects continues and we remain on track to deliver one million barrels of oil equivalent a day (boe/d) from new projects between 2014 and 2018.

“Our $30 billion divestment programme for 2016-18 made good progress in 2017. Divestments included oil sands interests in Canada, onshore upstream operations in Gabon, a number of assets in the UK North Sea, and our shares in Woodside in Australia,” he said.

Globally, the company continues to be recognised as an industry leader with its presence across all continents and in all major and developing markets almost unmatched. The red and yellow colour scheme is a welcome sight for drivers, especially on the Jo’burg M2

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INDUSTRY FOCUS: AUTOMOTIVE

where modern and exciting service stops are not common.

NEW CHAIRMAN Last year, Shell SA’s longstanding chairman, the esteemed businessman Bonang Mohale, announced that he would step down from the role in the company he joined nine years ago.

Since joining in 2009, the formerChairman and Vice President Sales & Operations Downstream and Vice President Upstream helped to increase the businesses retail network and drive traffic through the company’s refinery. He also served as CEO of Black Leadership South Africa and was a member of the country’s Institute of Directors. He was replaced by Hloniphizwe Mtolo, promoted from General Manager for Retail and the Downstream South Africa.

When he announced his decision, Mohale said: “I am honoured to have been part of this dynamic organisation

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// WE HAVE MORE THAN 100 QUICK-SERVICE RESTAURANTS AT OUR FORECOURTS, CATERING TO THE GROWING DEMAND FOR FOOD ACROSS THE NETWORK // and to have had the opportunity to lead, serve and uphold the values and principles of the organisation.

My journey in Shell has been truly remarkable and enriching. I leave Shell South Africa with contentment knowing that our business demonstrated resilience, continuous improvement and notable growth.”

Mtolo commented: “It is an

exceptional opportunity to be appointed to this role, I look forward to working with all Shell partners to pursue our purpose of providing reliable energy solutions.”

In March, Mtolo joined with prominent CEOs from other South African organisations to launch Brand South Africa’s ‘CEO’s Know’ campaign, a movement hoped to push South Africa as an investment destination.

FRACKING Shell has previously expressed interest in extracting natural gas from the desert plains in the Karoo. Widely reported in the US as a clean, safe and sustainable energy source, obtaining natural gas by fracturing shale rocks deep in the earth and releasing gas is seen as a new energy frontier. But there is serious opposition to this relatively new concept. However, after years of research, Shell still believes that it could exploit the Karoo’s resources.

SHELL SOUTH AFRICA

Mtolo will look to meet with opposition to the idea in the near future after the Treasure the Karoo Action Group (TKAG) and Afriforum wrote an open letter to all energy organisations with an interest in fracking.

TKAG CEO Jonathan Deal recently reiterated his thoughts on the idea of drilling in the Karoo: “It doesn’t make economic sense as South Africa can source the gas elsewhere at much lower costs and without any of the risks posed to underground water, farming and tourism.

“It’s a non-starter and appears to be pushed by those who want to and will indeed make a lot of money in the short term at a great cost to the environment and local communities.”

He also reminded of the country’s water crisis and stated that fracking is a water-heavy operation.

Mtolo will meet with Karoo stakeholders and will discuss all aspect of the company’s plans following a SA

government announcement in March 2017 that fracking would be given the go ahead.

“Based on the balance of available scientific evidence, government took a decision to proceed with the development of shale gas in the Karoo formation of South Africa,” said formerMineral Resources Minister, Mosebenzi Zwane. Zwane was replaced by Gwede Mantashe in February 2018.

Wherever Shell sources its energy resources from, its position in South Africa as an automotive, energy and industrial industry leader is not in question. The 20,000-plus employees that work across the breadth of the country are part of a growing business that has its eyes on a top retail position as well as recognition as a leading energy and lubricants supplier.

“We have such a strong heritage, particularly with our history with Formula 1 and our Ferrari technical endorsement.

Most recently, we also have the

BMW M-Power recommendation for Shell’s performance fuels, and we are represented across all the major motorsports with our fuels and lubricants,” Abrahams told IgnitionLIVE. “We are a confident nation behind the wheel. South African’s drive for around 27 minutes per day,” he added.

Fortunately, Shell is also a confident company and in the future it will look to replicate the success of Ultra City on the M2 at new sites throughout the country. Utilising its partnerships with the likes of Vida e Caffe, Clicks and KFC, Shell is driving convenience and driving its consumers.

Full steam ahead for this very South African but very global company.

WWW.SHELL.CO.ZA

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EQSTRA FLEET MANAGEMENT

EFM Realising Potential of

Big Data PRODUCTION: David Napier

After a strategy defining few years starting in 2008, Eqstra Fleet Management has gone through a host of major changes to ensure it remains in pole position at the forefront of this important and economically constant industry sector. www.enterprise-africa.net / 89

INDUSTRY FOCUS: AUTOMOTIVE

//

What a time to be active in the fleet management industry! In April 2017, research company Berg Insight delivered a report that said the industry is buoyant and set for a further period of sustained growth.

“Fleet management in South Africa is in a growth period which will continue in the years to come. The number of FM systems in active use is forecasted to grow at a compound annual growth rate (CAGR) of 12.6% from 1.1 million units at the end of 2016 to 1.9 million by 2021,” the report read.

“The penetration rate in the total population of non-privately owned fleet vehicles used by businesses is at the same time estimated to increase from 24.1% in 2016 to 39.6% in 2021.”

This is good news for one of the country’s biggest and best fleet managers – Eqstra Fleet Management.

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Previously part of the Imperial portfolio, Eqstra Fleet Management was under the Eqstra Holdings banner until it was bought by the enX Group in 2016 in a deal reportedly worth R7.8 billion.

Last year, Managing Director, Murray Price told Enterprise Africa about the platform on which Eqstra Fleet Management had positioned itself for future growth. An all new IT system, which took eight years to install, and a host of new digital services which take fleet management to the next level moved helped to move this business from a leasing company doing a bit of fleet management to an end-to-end fleet services provider which plays in the leasing industry.

“From the moment we started, the new strategy brought us into a lot of new areas we had not traditionally been involved in. It had been built to handle

leasing, and as with all new strategies there was no time for systems to catch up,” he said.

“With all these ancillaries now added to our core, we realised we needed to change the system and have a complete rebuild,” he added.

This resulted in the roll out of a new enterprise resource planning process management software (ERP) Microsoft Dynamics AX which allowed for the collection and review of large amounts of data.

“It delivers a single point of access to the full array of our fleet solutions, providing more control to our customers as well as better reporting capabilities across all aspects of their fleet.

“We have had some feedback from fleet directors operating across the world who tell us they have not seen

EQSTRA FLEET MANAGEMENT

// AT EQSTRA WE ARE PASSIONATE ABOUT FLEET MANAGEMENT AND DELIVERING SUSTAINABLE AND QUANTIFIABLE VALUE TO OUR CUSTOMERS // this end-to-end solution anywhere else; not in the UK, Australia, or the USA. “Obviously there is more and more pressure from customers. They are looking for more for the same amount of money or for less, and we believe we’ve got the platform that allows us to do this,” said Price.

BIG DATA When processing information from such a large array of vehicles, the ability to quickly process and display data in a meaningful manner is imperative for EFM. This is why Price is keen on effective collection and use of big data.

“Big data is going to have an enormous effect on the fleet industry as a whole,” he said in his EFM video.

“Big data is only useful when you can compare it to other data. By bringing it into one embedded platform it allows us to use data more effectively and start to look for trends and insights that maybe we would have missed.

It’s interesting to see that someone is speeding on a tracking device but what does that mean for fuel consumption and fines, is it impacting operating CPK (cost per kilometre) or maintenance for the vehicle? Bringing that data into context is really where we see a key differentiator for Eqstra Fleet Management, and that’s why we went through the significant pain of building one platform that does all elements of fleet.

“Many people said we were crazy for doing it, and there were times when I agreed with them, but we’re at the time

now where we have one vehicle record with all the operating data around it and that gives us a huge advantage, being able to tell customers about the trends we see and how changes in behaviour could result in changes in cost benefit.”

RISING COST At the end of March, the Department of Energy announced that a fuel price rise would hit consumers’ pockets.

The hike saw a 72 cents a litre increase in the price of 95 ULP and 69 cents a litre in the price of 93 ULP. Prices in Gauteng for a litre of petrol rose from R13.76 to R14.48 cents a litre. Diesel, sulphur and illuminating paraffin also saw price increases.

While the prices at the pumps are regularly fluttering in South Africa, this was the largest jump in some time and made those who are regulars at

the service station nervous.

“Fuel has become a bigger component of your fleet cost. At the moment, we estimate it being around 46-48% of the operating costs of the vehicle, depending on the type of vehicle. Without doubt, it’s going to be a big driver. Most of our customers take the view that by changing driver behaviour, you can make significant fuel savings but that will be dependent on what happens with the Rand and with oil,” said Price.

The Rand has strengthened in recent months, most putting the correction down to the appointment of new President Ramaphosa. Today, it sits at just above 11 to the Dollar and just above 14 to the Euro. Right now, oil is priced at just above $60 a barrel and so the stabilising price of crude combined with a

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INDUSTRY FOCUS: AUTOMOTIVE

strengthening Rand has resulted in the pair of figures cancelling each other out.

With fuel prices on the way up, in the short-term at least, now is the perfect time to be investing into a

partnership that can gain insight and results.

“Our EFM business strategy is to not only be the best but also the most responsible fleet provider in the market. Eqstra Fleet Management and

Logistics is an authorised financial services provider, fully compliant and ISO 9001 accredited,” said Price.

“We are agile, responsive and our solutions are a product of customer need. Our solutions offer comprehensive fleet management, proven to save your company time and money and keeping your fleet active,” he added.

DRIVING REVOLUTION The world’s top fleet managers are already looking to the future for the next innovation both on and off the roads.

It is now clear to see that in the future (someway off yet), we will be facing roads that are taken up by self-driving vehicles. Having been in development for some time, this is a concept that is definitely coming, and Eqstra is already building its knowledge to make sure its customers are fully equipped with the necessary information to make the most of the situation.

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EQSTRA FLEET MANAGEMENT

“The impact of self-driving cars is going to be an absolute game changer for the industry as a whole and its more than just self-driving technology, there’s four key areas of technology together that believe will significantly impact the market,” detailed Price.

“Firstly, there’s battery technology and the improvements we’ve seen from Tesla. Secondly, it’s the rise of autonomous vehicles. Third is that those vehicles will be electric vehicles and lastly, they are likely to be charged from solar. The impact of these things combined is likely to be as big as us moving from riding horses to driving cars because we believe it will see people move away from owning a vehicle and towards requiring a service.”

Some have described it as a movement from car ownership towards a rolling contract deal, similar to what you might expect from a mobile phone provider. This future-tech shift is something that could be a great asset

for businesses, but Price points out the human factor that will be upended.

“It will have an impact of employment as the driving of vehicles is the second largest employer in the world behind farming and we believe there would be an operational impact from end to end. There would be a risk of insurance not being relevant because there would be no more accidents, there would be a risk of no more maintenance as the vehicles would be electric, so if you take it across the industry we would have to move away from our current operation towards how we manage the logistics solution for customers rather than owning vehicles.”

While, following a test crash in which a woman was killed in the USA, self-driving cars seem to be not approaching in the next few years, the management of fleet and the way that you use the information available remains of vital importance to companies all over Africa.

“At Eqstra we are passionate about fleet management and delivering sustainable and quantifiable value to our customers. Our range of integrated solutions are designed to not only finance vehicles but to actively manage your fleet optimally and efficiently,” reminds Price.

The company holds the vision of ‘being the leading integrated fleet management solutions provider globally, creating compelling value and sustainable returns that exceed the expectations of our stakeholders’ and it looks as though it is achieving this, as its moves on from its big IT overhaul to the next challenge, whether that be data, self-driving, or changing driver behaviour.

WWW.EFM.CO.ZA

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GHC AFRICA

Delivering Projects

On Time, Every Time PRODUCTION: Timothy Reeder

GHC has always believed that a policy of close attention to, and effective collaboration with, its clients is what has enabled it to effectively manage projects over the last quarter-century. It brings together the expertise and control necessary to actively monitor each aspect of a project to achieve optimum completion every time.

//

Founded in Johannesburg 25 years ago, GHC specialises in project management and has completed high-profile instructions not only in South Africa, but across the continent. At its core, GHC seeks to complete projects that, “not only fulfil your vision for today, but inspire your vision of tomorrow.” To achieve this entails a detailed examination of each project’s funding requirements, the risks and benefits it presents, and then managing the procurement and selection of specialist services. In short, GHC tries to relieve clients of the potential distraction of servicing project aspects themselves that fall outside their direct area of expertise, allowing them to concentrate on their core business activities.

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EMPHASIS ON UNDERSTANDING It has been GHC’s recognition of the importance of building relationships - of listening to clients and drilling down deeper into their objectives to better understand and service their needs - that has helped to continually set it apart in such a crowded market.

GHC isn’t a business that conducts its work from afar; rather its project managers get close to clients and take a personal approach to each and every undertaking. According to theskillsportal.co.za such competences are at the very forefront of the necessary skills required to succeed in this burgeoning business: “the attributes required to be a successful project manager include excellent interpersonal and communication skills, adept problem solving and the ability to work

well under pressure, whilst being highly adaptable and a logical thinker,” it states.

A focus on building these interpersonal relationships has been central to negotiating the pressures which have been terminal to so many similar companies over GHC’s long operational lifetime, as Director, Mike Woodruff, outlines. “The last few years have been tumultuous,” he says. “We’ve been very fortunate as South Africa’s construction industry and the built environment industry has gone through a hard time and remains under pressure but we managed to pick up some nice, long-term jobs which has helped us build our reputation, knowledge base and staff skill set.

“There’s a lot of project managers who like to work from afar and manage by email. That’s not our style. We get

INDUSTRY FOCUS: PROJECT MANAGEMENT

// PROJECT MANAGEMENT IS A SKILL THAT IS IN HIGH DEMAND IN SOUTH AFRICA AND GLOBALLY // involved, we get alongside our clients, we understand the business case of why they’re taking on the project and we like to think we relieve the client of responsibility of ensuring that building is built to meet their needs. We analyse the business case and we make sure that when we deliver the project, it’s something that clients actually need rather than something they want.

We get very involved with clients and the evidence of that is in our repeat business – there’s a handful of clients that we’ve been working with for almost the entire existence of this company.

“We like to meet people. Our clients have to trust a multi-million Rand or Billion Rand project to our people

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and they have to know our people are capable. The only way to sell that is by being in front of clients and talking to them about how you can add value.”

A GROWING NEED There has been a massive shift of late towards project management in organisations. So great has been the upturn in its perceived importance that South Africa is on the brink of facing a severe shortage of skilled project managers. As business interactions, both between and within organisations, become ever more complex, the need to effectively manage available time and resources becomes vital. As such, and coupled with significant investment in infrastructure and service, the demand for project management skills in South Africa has increased significantly across a wide variety of industries.

A project management team in a business tends to become vital when a company embarks on a significant initiative, which explains the need of such a wide skillset in a budding project manager. It is most commonly

associated within the information technology (IT) divisions of corporate and government organisations and in the engineering and construction industries, although it can be applied to almost any sector or business. So crucial is effective project management that it can also contribute to the overall success of a business, by ensuring that projects are successfully completed within the at times crippling constraints of time, cost and quality.

Today, companies are more reliant on project managers as they look to focus on their core business so says Ian Yoell, Managing Director of Edexcel Southern Africa. “Project management is a skill that is in high demand in South Africa and globally. Project managers play a vital role in the economic growth of a developing country such as ours.

International accreditations such as the BTEC diploma or certificate are designed to ensure aspiring project managers acquire the skills needed to be a successful team player in a diverse project team, both locally and internationally,”

GHC AFRICA

// WE HAVE AN UNTAINTED RECORD OF DELIVERING ON TIME, WITHIN BUDGET AND TO THE REQUIRED QUALITY // COMPREHENSIVE OFFERING GHC’s offering is designed to be applicable to as many contexts as possible, but its core services fall into four main categories: Commercial Management, Construction Management, Development Management and Project Management.

An impressive completed projects portfolio includes the Sandton Sun reconfiguration, Nelson Mandela Square reconfiguration, Sandton Tower refurbishment and Accra Mall reconfiguration, to name only a few.

Mike Woodruff believes that, as a result, GHC can bring its expertise to clients in any industry to superb effect.

“Our speciality is retail but we do commercial projects for hospitals and

similar,” he details. “Our client base varies but we think we can apply our principles to any industry. Our added value is where there are many inputs and coordination that requires management to get the job done. Our core function is to deliver on time, on budget and to top quality standards.

“We believe we have a different culture to many other project managers as we get involved in the project directly. We also expand our scope beyond that of a normal project manager to help our clients put projects together – we perform a development management role before the project gets underway.

“We’re also heavily involved in the financial and commercial aspects of

the project,” Woodruff concludes of the all-encompassing way in which GHC tackles its work. “Looking at our track record, we’ve completed some very high-profile projects including the Mall of Africa – the largest single phase retail centre development in sub-Saharan Africa – and Menlyn Mall, the biggest refurbishment of a retail centre.

“We’re not a big company in terms of numbers but we have a core of excellent people who deliver these projects and we have an untainted record of delivering on time, within budget and to the required quality.”

WWW.GHCAFRICA.CO.ZA

Alc Lift Consultants ALC have been privileged to have been associated with GHC in many iconic projects. GHC have managed these projects professionally with the client’s interests in the forefront.



(011) 867 2308



• • • • • • • • •

083 444 2284

Sandton City South East Extension Woolworths repositioning Sandton City Level 2 re-development Nelson Mandela Square re-development Sandton Office Towers Sandton Sun Hotel Atrium on 5th The Mall of Africa Sandton City re-development Phase 1&2

 paulalc@mweb.co.za

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MIP HOLDINGS

Perfect Partner to Avoid the App Gap PRODUCTION: David Napier

As more businesses make the inevitable jump, taking services online or fully digital, now is the time to find a partner that can deliver software and IT services for the next generation of demanding consumers. MIP Holdings is one of Africa’s leading specialists when it comes to apps, software and digital tech and is waiting to find you a solution.

//

Turn back the clock, even just a few years, and you’ll find that the way we enquire about and purchase financial services has changed dramatically – this is no surprise. With technological advances and people’s demand for instantaneous service, the pace of change has been swift. Go back one decade and people were walking into banks and insurance branches and talking with

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salespeople about products. Today, everything is online, everything is done through an app, everything is quick and convenient. Again, this news is not new but for those that are serious about change accept that change is an ongoing process - something which needs constant attention. For example, tech has allowed business to reach further, higher and faster than ever before. A small insurance company

can no offer its products and services to clients all over the world from a small office in the middle of nowhere.

It can reach different contact points very quickly, and respond to customer needs at the touch of a button.

But, as an industry, the success of tech has seen it swamped with players who cannot deliver. This is why partnering with the right organisation is important.

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INDUSTRY FOCUS: TECHNOLOGY

MIP Holdings is a leading provider of affordable business/IT solutions to the financial services industry in emerging markets. Headquartered in Bryanston, Johannesburg, MIP has been serving its customers with software and IT solutions for 29 years.

Today, MIP serves more than 13 million policy holders/participants on a daily basis. It is the world’s only software company delivering solutions across the financial service verticals.

Known for its success in the insurance industry, designing and developing software that aids in the collection of employee contributions, MIP is entering a new phase in its

existence as the demands of software, tech and apps from clients and customers become more challenging than ever before.

Traditionally a strong player in its home market of South Africa, MIP is also targeting expansion on the African continent, where both technology and financial services are burgeoning industries.

“We want to become a major player on the African continent from an insurance perspective, that is our big drive,” says CEO, Richard Firth.

“The advent of the app has been one of the biggest changes in the industry over the years.

// WE WANT TO BECOME A MAJOR PLAYER ON THE AFRICAN CONTINENT FROM AN INSURANCE PERSPECTIVE, THAT IS OUR BIG DRIVE //

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Communication has fundamentally changed the way we can operate.”

While MIP’s focus on its core products will remain, growth into exciting new spheres, especially in the app world, is providing many fresh opportunities.

Firth refers to this smart world as social infrastructure and states that developing products that easily meet the needs of business and customers in a user-friendly way is vital.

“I call it socialising the infrastructure,” he says. “This really translates to a new era when machines or systems will begin to socialise with consumers. For this to become a reality, the traditional business system needs an arsenal of functionality to truly bind the system, with a consumer sitting on the other end of a mobile app running on a multitude of devices.”

Development of this kind of

At SAMWUMED it’s important that we build lasting business relations, therefore our partnership with industry leading companies such as MIP whose system we work on, allows us to better manage our membership information and ensuring an effective communication strategy between the Scheme and its members and beneficiaries at all times. The Scheme together with MIP have embarked on several projects that have assisted the Scheme in managing costs and the utilisation of technology in our communication efforts continues to be an important aspect of our business relationship with the likes of MIP.

SAMWUMED continues to be one of the Top Most Sustainable Medical Schemes within the 10 largest closed medical Schemes in South Africa, according to the Alexander Forbes Sustainability Index Report 2017.

The index measures key factors that contribute to the sustainability of the 10 largest open and the 10 largest closed medical schemes in South Africa. This is based on; size and scale, membership growth and profile, financial results, as well as the scheme’s solvency levels.

According to the results, SAMWUMED was recognised for its improvements in its operating results in a tough economic climate, as well as substantial increases in both the Scheme’s reserves and solvency ratio.

The award is testament of the Scheme’s dedication to creating affordable healthcare for its members, as well as for its commitment to promoting universal healthcare in the country.

 021 697 9500  www.facebook.com/Samwumed www.samwumed.org  info@samwumed.org  C/O Trematon & Lascelles Streets, Athlone, Cape Town, 7700

INDUSTRY FOCUS: TECHNOLOGY

// EVERYONE IS LOOKING AT BECOMING A TECHNOLOGY BUSINESS BECAUSE IF YOU DON’T, YOU’LL LOSE OUT // software is now more important than ever as businesses turn to apps to easily and affordably communicate with mass numbers of consumers. The alternative is falling into what Firth ters the “app gap”.

This is different to chat-bots or robo-advisors which have been used in the insurance and telecoms sectors, and which have gained popularity with developers after the growth of the home assistant such as Alexa, Google Home and Apple’s HomePod. The use of AI for tasks has been welcomed by the insurance industry. Global giant, Aviva and CEO Mark Wilson recently commented that the industry had long been living in the ‘stone age’

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and the time for partnering with tech companies was now.

“The last few years have been very good. Obviously, technology is playing a bigger role in financial services, and that is true for all businesses – everyone is looking at becoming a technology business because if you don’t, you’ll lose out. There’s a transition underway and everything is going digital,” agrees Firth.

“We are seeing a shift in the call centre model,” he adds. “We’ve built an automated FAQ input section into software and it’s becoming chat like.

Traditionally, email and SMS has been popular but we’re finding in the large consumer space that email is no longer

an effective communication method so we are building in digital stamps to recognise people and prevent fraud.

We are also working on an important product called the Central Calendar which is like a Facebook timeline where the business has a timeline view of the consumer. Traditionally, we could post prompts in outlook to remind someone to renew a product; now we have centralised all the data and we can show it like a Facebook timeline which is imperative for customer service. We are also integrating the ‘invisible app’ where our app can integrate with other app services. For example, if we want to show the consumer the weather forecast where they are – we don’t build a weather app, we integrate with another weather services and other risk services while all the while sharing information.”

At the recent Dubai World Insurance Congress, tech was in the

MIP HOLDINGS

// THERE’S A TRANSITION UNDERWAY AND EVERYTHING IS GOING DIGITAL // spotlight with commentators and industry specialist suggesting that emerging technologies such as AI and blockchain are going to redefine business models of insurance firms in the digital world.

MIP sits perfectly positioned to partner with, not only South Africa’s very strong financial organisations, but also with global players.

“Our key differentiator is that we operate in any of the insurance silos, from healthcare through to pension fund administration and life insurance.

We have many touchpoints in the

financial service chain. We don’t have any competitors who can compete in every one of those spaces,” says Firth.

“We compete with company’s in each individual space and what we’re finding is to achieve economies of scale and price competitiveness, it’s becoming imperative to have volume.

We have a R&D team of 35 people and they focus on where technology is going and how it can help us change the consumer interaction with insurers.”

“Today, we have more than 330 people and we look after approximately 13 million policy holders through pension, health, life and other sectors.”

There’s no doubt that FinTech (Financial Technologies) is here to stay and if you want to stay at the top of the market, commanding a market leading position, and a sustainable piece of the market, then partnering with the likes of MIP to help deliver your FinTech

solutions is vital.

“FinTech like crowdfunding, mobile payments, and money transfer services is revolutionizing the way small businesses start up, accept payments, and go global, and they are making it easier than ever to start and run a business,” explains Forbes big data expert contributor Bernard Marr. “Don’t assume that FinTech is simply a fad or buzzword: Accenture recently released a report which found that investment in FinTech around the world has increased dramatically from $930 million in 2008 to more than $12 billion by early 2015,” he adds.

Now is the time to make the move.

Customers want it, businesses need it.

The FinTech revolution is coming and you better be ready.

WWW.MIP.CO.ZA

www.enterprise-africa.net / 103

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MCCORMICK PROPERTY DEVELOPMENT

Rural Retail Kings PRODUCTION: Timothy Reeder

Founded by Chairman John McCormick in 1983, McCormick Property Development (MPD) has pioneered the development of emerging markets ever since, and has become the dominant force in growing critically important retail centres in rural South Africa.

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INDUSTRY FOCUS: PROPERTY

//

McCormick Property Development is a South African company to its core, embodying the archetypal local, family-run business that has stuck stringently to its founding values throughout its lifetime. MPD puts its success down in large part to having remained private by design, achieving the remarkable that it has experienced through the recommendations of the scores of people it has served over the last more than 30 years. Both clients and the wider public have been moved by its ability to develop primarily real estate, but more broadly, entire communities, creating wealth and employment in the process.

While a smaller economic contributor than such sectors as mining and manufacturing, providing 8% and 13% of the country’s gross

// WE’RE IN THE LAST QUADRANT OF THE COUNTRY THAT STILL HAS OPPORTUNITIES FOR NEW MALL DEVELOPMENTS // domestic product respectively, real estate is nonetheless an important tertiary sector for the South African economy. As recently as 2016, the South African property sector was said to be worth R5.8trn, equating to a meaningful increase of nearly R1trn in four years.

This was revealed by a reviewed market size estimation by the Property Sector Charter Council, compiled alongside provider of research-driven

insights MSCI. “For a sector this big and this important,” explained Property Sector Charter Council CEO Portia Tau-Sekati, “it is crucial to have a hub of knowledge that consolidates information to support a common and consistent understanding of the sector.” For McCormick Property Development the report proved especially revelatory in the value it showed to be held in commercial property - around R1.3 trillion - with R534 billion of this provided by its top performer, retail property.

Retail development has long been the central pillar of McCormick Property Development’s work, but the company has worked tirelessly to set itself apart by focussing almost entirely on high growth emerging markets. The retail sector forms an ever-more critical element of a community’s economic and social welfare, and provides its

// About Mike Buyskes Construction In November of 1972 Mike Buyskes, a young man of 20 years old decided he was not going to work for an employer and started a business in the building trade called Mike D. Buyskes Builders. The Business consisted of Mike and one labourer who together started an alteration that eventually took 1 year. As they progressed the first payment they could employ a few more people and that was the start of today’s Mike Buyskes Construction (Pty) Ltd. the Company grew from strength to strength and today it plays a leading role in the Pretoria based Construction Companies.

A taste of our Mission & Vision statement The mission of the Company is to engage in and execute building contracts to the highest standards and professionalism as humanly as possible. To at all times trade at a reasonable profit and not to the detriment of its employees, sub-contractors, suppliers, clients and professional associates.

To at all times belong to and be pro-actively involved with organizations allied to and engaged in the welfare of the trade.

We have a long list of projects under our belts including: •

Military College, Centurion

•

Z.A Hospital, Pretoria

•

Fairways hotel and spa, Randburg

•

Stay easy hotel, Witbank

•

Phinda lodge, Kzn

•

Marataba Lodge, Thabazimbi

•

Chamberlains & Checkers distribution centre, Pretoria (silver lakes)

Anyone doubting our experience or level of workmanship should have a look at our testimonials and website.

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MCCORMICK PROPERTY DEVELOPMENT

// WE AIM TO ROLL OUT SOLAR POWER PLANTS ACROSS OUR PORTFOLIO // people with choices and services which had been, until very recently, extremely limited in township areas.

This, combined with a slowdown in the development of retail ‘mega-malls’ within traditional urban centres due to a weakening market and oversaturation of retail space in these areas, has allowed MPD to craft its niche in the development of rural areas and the peri-urban townships, seeing numerous previously underdeveloped areas now catered for. PwC’s important ‘Drivers of change for the Real Estate Industry’ study was unequivocal in its agreement

“

with this approach, stating that, “rapid urbanisation and demographic changes, especially within emerging markets, will lead to substantial growth in the real estate industry.”

It is widely acknowledged that South Africa’s pre-1994 retail landscape was dominated by small, often informal businesses, which offered basic household necessities to relatively low income earners.

According to AA Ligthelm, of the Bureau of Market Research, University of South Africa, this meant that, “the majority of township workers engaged in economic activities outside the townships with most of their shopping being in the main city centres or at shopping malls at the fringes of township areas.” Rapid income growth of township residents since this point, however, has resulted in a substantial

increase in consumer expenditure in these areas, and has given rise to a lucrative emerging market which, according to Ligthelm, represents the last retail frontier in South Africa.

“The increasing movement of formal retailers into previously untapped middle- and low-income markets has resulted in an increase in shopping centre development in townships,” concludes Ligthelm, and McCormick Property Development has made this its task, a communityfocussed company striving to become the premier development company in South Africa. At its helm is secondgeneration family leader Jason McCormick, who began by talking us through the importance of its specialist spaces to the population as a whole. “South Africa has the sixth highest ratio of malls to population in

”

CONSTRUCTION IS LIKE ART, AND IF DONE WITH PASSION, IS JUST AS REWARDING.

MIKE BUYSKES MD – MIKE BUYSKES CONSTRUCTION PTY (LTD)

+27 (0) 12 809-8900 | OFFICE@MIKEBUYSKESCON.CO.ZA | WWW.MIKEBUYSKESCON.CO.ZA

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INDUSTRY FOCUS: PROPERTY

the world which makes us very much a mall-centric country,” he explained, “and malls have very much become the town squares of old, where people get together to socialise.

“South Africa as a whole has an oversupply of shopping centres in the urban areas and old towns but we’re in

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the last quadrant of the country that still has opportunities for new mall developments.”

As with any so-called leap into the unknown, at its inception MPD was viewed by many industry peers as something of a risky concept, but the success experienced over the intervening

years, has seen the emergence of a number of competitors also opting to shift focus from their operations in urban areas. “The big change is that my father was the only person doing it for a long time but now there’s a massive influx of developers trying to get involved in rural areas because of the over-saturation in urban areas,” McCormick clarified. These businesses are significantly disadvantaged by the absence of MPD’s wealth of experience to back them, however.

“Many of them have failed quite spectacularly,” McCormick continued, “because the models that we use to develop even a fancy mall are very different to what others are used to in the urban areas. Rents achievable per square meter are lower, building costs aren’t significantly lower but we have the advantage of 30 years of defining models; financial models, construction models, building models; to suit the same return on investment but at a lower rental income.

“We’ve changed as we’ve moved.

MCCORMICK PROPERTY DEVELOPMENT

// WE’RE A DEVELOPMENT, MANAGEMENT AND LEASING COMPANY ALL ROLLED INTO ONE SO WE ARE A FULL TURNKEY SERVICE PROVIDER // I’ve been in the business for 14 years, we saw the influx of competition coming and we now we have in excess of 30 land parcels that we will develop as and when the need arises.”

It is such developments that have been the source of a steady influx of news in recent times. The opening of the Alex Mall saw the culmination of the largest private investment into the township to date, hosting more than 90 stores and spanning 30 000sqm, offering unprecedented levels of retail

and a unique entertainment element to Alexandra. The inclusion of state of the art 5-a-side soccer courts and a ‘Living Museum’, meanwhile, highlights the Mall’s aim to be more than just a pure retail centre.

Also noteworthy are those projects still busy being realised and brought into existence. In February this year the City of Tshwane, for example, gave the green light to Capital Mall, the R1.2bn corner stone of the ‘Capital City’ mixed-use development, a development set to revolutionise both the Pretoria West region and the McCormick Property portfolio, as Jason McCormick, underlined. “We have seen the potential of this area for decades,” he commented, “and know that this development will be a game-changer for the community of Pretoria West as well as the retailers that are included in this iconic development.”

McCormick Property Development added another first to its portfolio with the commissioning of a rooftop photovoltaic system at its ‘Olievenhout

Plaza’ in Gauteng, with the solar system forming an integral part of the company’s long term sustainability strategy and the pilot for what will become a standard in all McCormick’s developments going forward. “One of the major goals of this project is to gather sufficient production data to build the financial models to allow the roll out of solar power plants across our portfolio,” McCormick said.

All of this combines to set MPD up for many more years of pioneering dominance, as Jason McCormick concludes. “We manage all of our own properties and we have by far the lowest vacancy rates in the industry, we have the lowest expense ratios and we monitor things meticulously.

We’re a development, management and leasing company all rolled into one so we are a full turnkey service provider.”

WWW.MCCORMICK-PROPERTY.COM

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EXHIBITION CALENDAR

KEY UPCOMING EVENTS ACROSS THE INDUSTRY Our regular update to help you keep track of important events and exhibitions taking place across the spectrum of industry sectors.

SEAMLESS AFRICA APR 10 | CAPE TOWN Seamless Africa provides a platform for businesses to succeed.

The event aims to take this heritage forward as we continue to enable delegates, sponsors and visitors to obtain the most relevant and innovative content and experiences that lead to genuine business opportunities.

The payments, ecommerce and retail industries are experiencing unprecedented growth and this requires an all-inclusive platform to bring its key contributors and influencers together in one place.

As Africa’s leading event and conference, Seamless Africa brings together leading minds, entrepreneurs and innovators across the payments, ecommerce and retail sectors to allow new business opportunities and valuable connections to be made.

Driven by generating genuine business connections, Seamless Africa is committed to showcasing your products, ideas and innovations and ensuring they are shared with the right customers in a new and exciting way.

MOZAMBIQUE MINING & ENERGY CONFERENCE APR 25 | MAPUTO This established event has become a firm fixture in the global extractive industries business event calendar. Building on the

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success of the 2016 edition which featured: over four hundred delegates, one thousand visitors who originated from twenty-seven countries. MMEC 2018 will continue to showcase and explore developments in our country’s thriving Oil & Gas, Mining and Energy sectors and to also focus attention on the potential opportunities, lessons learned by key investors and the creation of new business partnerships.

Mozambique’s economic transformation agenda continues. The government of Mozambique is committed to continue to strengthen the economic growth and create a world class investment destination.

MMEC 2018 will also give stakeholders the chance to assess scalable impacts from social inclusion programmes and their influence on sustainable and inclusive development and growth.

ZIMBABWE INTERNATIONAL TRADE FAIR APR 24 | BULAWAYO The annual multi-national expo provides a convenient trade hub for the region, and welcomes both trade and public visitors.

The ZITF extends an invitation to the local, regional and international enterprises and corporates of all sizes within the business community, to participate in ZITF 2018. The exhibition will be held from 24-28 April at the Zimbabwe International Exhibition Centre in Bulawayo.

SEAMLESS AFRICA Cape Town International Convention Centre APR 10 – 11 GARAGEXPO AFRICA Gallagher Convention Centre APR 10 – 12 TYREXPO AFRICA Sandton Convention Centre APR 10 - 12 WTM AFRICA Cape Town International Convention Centre APR 18 - 20 AGRITECH ZAMBIA GART Research Centre APR 19 – 21 ZIMBABWE INTERNATIONAL TRADE FAIR Zimbabwe International Exhibition Centre (ZIEC) APR 24 – 28 MMEC - MOZAMBIQUE MINING & ENERGY CONFERENCE Centro Internacional de Conferencias Joaquim Chissano APR 25 – 26 SOUTH AFRICAN CHEESE FESTIVAL Sandringham Estate, Stellenbosch APR 27 - 29

Giving hope to people in need

KINGJAMES 43358

Hard work.

Commitment.

Service delivery.

It all adds up to Imbasa Yegolide.

At Sanlam, we are committed to delivering service excellence to all of our clients.

Which is why Sanlam Employee Benefits is proud to have received the Risk Benefit Underwriter of the Year Award at the 2018 Imbasa Yegolide Awards, as voted for by the trustees and principal officers of retirement funds in South Africa.

Sanlam will continue to work diligently with our clients to maintain and improve on these high standards of service. It’s what makes us Wealthsmiths™.

Sanlam is a Licensed Financial Services Provider.