Keeping score: Business journalism

A collection of work featured in finweek magazine and online for finweek.com

Ten things you need to know about Starbucks

Is it the end of credit card payments?

Seven lessons to guide your investment plan

How tax havens are widening the inequality gap

What do employees want? 

Policy reforms can’t come soon enough

Smart things to do with your money in your 20s

Saving is a matter of discipline

Can Africa still rise?

What lies ahead for SA?

Fostering good partnerships between government and business

Africa rising despite the headwinds

Is SA following Brazil to junk status?

SA to struggle with low growth going forward

Digital – The new business tsunami

Young, black and and angry – Can SA’s economy transform?

Fancy yourself a 3D illusionist?

What SA businesses can learn from Starbucks

Lessons for businesses to embrace digital change

Beading for social change

Lessons for success from Silicon Valley

The future of advertising: Reaching consumers where they are

Nando’s: Three ingredients for global success

Family flooring business set for a solid future

How to pick a winner: Investment tips from PSG

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New app gives grain farmers an edge to hedge

After working in the agricultural trading business as an option writer, Andries D’Alebout found that grain farmers had limited options when making hedging decisions because of delayed and limited access to Safex market updates. Having graduated from the University of the North West with a Master’s degree in Mathematics, D’Alebout used his expertise and experience in grain trading to develop the Dalevest app which is transforming market reporting in the industry.

Combining his love for mathematics and agriculture, former option writer Andries D’Alebout, founded a mobile application to provide grain farmers with real time Safex market updates.

Andries d'Albeout

MATHEMATICAL GENIUS: Founder of Dalevest, Andries d’Alebout combined his love for mathematics and farming to create an app that delivers market updates to grain farmers in real time. Photo: Provided

The delay in communicating market data to farmers prompted D’Alebout, ‘Zuckerberg’ of agriculture service provider Dalevest, and his team of six to develop the application. Having grown up on a farm he noticed how his father’s decision making was impacted by the limited market information available. “I started this without knowing if it would go anywhere besides helping my father a little bit,” D’Alebout told Finweek.

The free application is a first-ever for the industry in South Africa. It has grown “exponentially” through word of mouth and social media, boasting with 2500 users across the country since its launch at the beginning of the year.

The application serves as an “information hub” providing grain farmers with JSE prices for maize, beans, sunflower and wheat. Two daily reports are released at 8am and after 12pm, when the market closes. Graphs and information about commodities, with technical analysis are also provided.  A chat function is available for grain farmers to engage with each other, ask questions and share information, explains D’Alebout.

Dalevest also offers a grain trading platform. Farmers can send information about their grain which is sent to about 14 trading houses partnered with Dalevest. The farmer is then partnered up with the trading house that offers the best price for their grain. “We are sort of a connection hub too,” says D’Alebout.

I started this without knowing if it would go anywhere besides helping my father a little bit.

The market information is sourced from an in-house Reuters terminal, different companies in the US and the Chicago Board of Trade, says D’Alebout.  A lot of the information is also supplied from local farmers, making the market more transparent and accessible for stakeholders.

Programming for the application started over a year ago, but the development process is continuous. Following the Facebook model, D’Alebout says updates are introduced every month and a new feature, a profit monitoring tool, is being built. One of the recent technical issues was dealing with the large volumes of users, especially during 9am and 12pm when 1500 users access the application to check prices, he says. It took a month’s worth of programming to iron out.

So far Dalevest has received positive feedback from users. “The process in which they [farmers] make decisions has changed drastically,” says D’Alebout. Although many farmers aren’t open to working with technology, D’Alebout says Dalevest’s presence on social media has connected them directly with farmers already using technology.

The application is freely available for download from Apple IOS and Google Play Store for Android. Currently, most of the revenue is generated from advertising, says D’Alebout. Businesses have approached Dalevest to partner and incorporate ideas and products with the application.

Dalevest will be hosting the Grain Farmer of the Year competition, which will be launched on 1 October 2015. By incorporating the application, the farmer with the best yield and the Safex price the grain was hedged by will be awarded the winning prize of R500 000 in August 2016, and will receive a R500 000 prize.

By making the market more transparent to farmers, D’Alebout plans for Dalevest to be the “number one” information hub and communication channel for farmers. “I started this company with the idea in mind to help the farmers in South Africa… We definitely want to be a big force in the South African agricultural market,” he says.

this article was featured in Finweek magazine.

Tips from a security expert

Frank Abagnale’s life as a conman and fraudster was depicted in the film Catch Me If You Can, but he has spent close to 40 years, since the age of 26, working for the FBI as a consultant to prevent fraudulent crimes. Crimes committed today are 5000 times easier to do than they were 50 years ago.

Online fraud, identity theft and cybercrime are rising and prevalent in 79% of surveyed organisations across Europe, the Middle East and Africa. Cybercrime costs the global economy more than $400bn (R5.1tr).

TOP SECURITY: Frank Abagnale has spent 40 years working with the FBI to prevent fraudulent crimes. Photo: Provided

TOP SECURITY: Frank Abagnale has spent 40 years working with the FBI to prevent fraudulent crimes. Photo: Provided

These criminals are not looking for a challenge, but rather an opportunity to attack the weakest link.  This is according to International expert on fraud, identity theft and securities, Frank Abagnale, who spoke at the Experian Insight Conference held on 4 August at the Maslow Hotel. Over the years he has seen crime evolve as cyber technology was introduced.

Every security breach in companies and government offices Abagnale has worked on in the past 20 years occurred because someone did not do what they were supposed to, he says. “I have not found the master hacker. There is no master hacker.” Human error by employees opens doors for hackers. For this reason, Abagnale stresses the importance of education to fight crime.

I have not found the master hacker. There is no master hacker.

Companies should educate their employees on the importance of their jobs and protecting the information entrusted to them. “They are smart enough to do something about it, but they need to know.” Abagnale works with Experian to develop solutions and educate corporate customers and employees about fraud prevention. Education allows people to be proactive, staying ahead of fraudsters.

One of the solutions developed by Abagnale and Experian is the 41st parameter technology. This is a device authentication technology for customers transacting online or electronically. Over 100 parameters are used during the verification process, this is beyond the 40 parameters initially developed to identify individuals 20 years ago. It provides the intelligence to identify and validate any device interacting online whether it is a laptop, tablet or mobile device. The technology also detects malware that may intercept transactions.

As an emerging market, South Africa is one of the most targeted economies in the world for internet fraud. Internet penetration is increasing, but consumer education on the risks of transacting online is not as rapid. Fraudsters recognise and take a line of least resistance, says Michelle Beetar, Managing Director at Experian South Africa. Identity theft costs the South Africa almost R1bn a year, reported by the South African Fraud Prevention Association (SAFPS). Additionally research indicates that three in ten respondents surveyed in 2014 had been a victim of card fraud.

Abagnale and Beetar advise on ways consumers can protect their information:

1. Be discerning about the information shared on social media

Individuals should be wiser about the information they share. Giving away your date of birth and the location of your birth on Facebook gives the fraudster 98% of the capability to steal your identity. Fraudsters can read the information and resell it or misuse it.

Individuals should take care not to use “passport-style” profile pictures of themselves as facial recognition technology makes it easy for fraudsters to find you online. Rather pose for a picture with friends, or in a sport activity, or have the picture taken at an angle.

2. Keep a shredder

It is useful to have a shredder to discard phone bills, credit card and bank statements or any documents with personal details. Additionally, never save passwords on electronic devices.

3. Use a credit monitoring service

Having personally used one since the 90s, Abagnale uses the service to make sure no one else has used his name to make purchases. Subscribing to a credit monitoring service allows you to check your data as often as you want, and if you identify a breach you can report it to authorities.  South Africans can view their credit reports for free, once a year. Individuals can also make use of an “alert” service, at a nominal fee, which will inform them via sms or email if something on their credit record has changed. You will immediately be aware if someone has tried to open an account in your name, or if someone is transacting in your name.

4. Do not write cheques

As often as you can, avoid writing cheques as they have personal details like your name, address, phone number and bank details. If a shop clerk has your identity number, it puts you at risk of identity theft

5. Protect your PC

Make sure your laptop or personal computer is equipped with firewalls and is protected with the most updated spyware or malware security. Security software comes at a nominal cost, but this is worth it relative to the cost of having your information stolen. Never click on hyperlinks, and always type out your bank or financial institution’s full web address or email.

Cybercrimes may be financial now, but the danger is that in the next five or 10 years, these crimes will evolve to terrorism and murders, says Abagnale. Currently, cybercriminals use stolen money to commit worse crimes like human trafficking, drug trafficking and child pornography. Technology breeds crime, he says. But technology can also be used to prevent crimes. “It is just a matter of doing the right thing and doing it ahead of time.”

This article was featured in Finweek magazine.

Beading for social change

BEADING JUSTICE: Co-founder of Relate, Lauren Gillis was inspired to create social change through beaded bracelets and gifts. Photo: Provided

BEADING JUSTICE: Co-founder of Relate, Lauren Gillis was inspired to create social change through beaded bracelets and gifts. Photo: Provided

Inspired by Lance Armstrong’s LIVESTRONG bracelets, which raise cancer awareness, Lauren Gillis wanted to create handmade bracelets that would “change people’s lives”.

Gillis had been working on crafted gifts for conference packages since 2004. In 2008 she woke up with “Nandos!” screaming in her head, so at 2am that morning she Googled Nandos and saw that the restaurant was celebrating its 21st birthday – she took it as a sign.

Gillis contacted former Nandos CEO Robert Brozin with the proposal to partner with Nandos and sell handmade bracelets that would raise money to feed orphaned and vulnerable children. Brozin agreed and Gillis got an order to make 600 bracelets.

With the help of her domestic worker, Gillis found unemployed elderly women from townships who were willing to bead the bracelets. During the 2010 FIFA World Cup, Nandos got involved in working against malaria, resulting in Relate’s first United Against Malaria bracelet. Soccer stars promoted the United Against Malaria campaign and to date, R8.5m has been raised in four and a half years.

“Those were the humble beginnings and we’ve gone from strength to strength,” says Neil Robinson, who joined Relate Bracelets as its CEO last year.

After 23 years in the corporate sector, Robinson says he wanted to make a difference to other people’s lives and his own. He calls it his version of a mid-life crisis.

HANDMADE: CEO of Rekate, Neil Robinson with two of the women, Thembeka Mguqulwa (left) and Alicia Radasie (right) who bead the bracelets. Photo: Provided

HANDMADE: CEO of Rekate, Neil Robinson with two of the women, Thembeka Mguqulwa (left) and Alicia Radasie (right) who bead the bracelets. Photo: Provided

Cape Town-based Relate still collaborates with corporates like Nandos and charities to create awareness of important causes. Bracelets are designed to match the brand DNA or the specific cause, explains Robinson. Some brands and causes differ, but all designs are intended to establish a long-term identity.

A ‘simple but complex’ model

Each bracelet is priced at R35. A third of the proceed goes towards covering the cost management of the organisation.

Another third goes back to the community, which includes the 300 women that bead the bracelets. These women often take care of orphaned, HIV positive children, some of whom they are not related to. Some of it is invested in skills development and upliftment programmes for youth in Cape Town’s townships. Currently 27 matriculants – who have few employment opportunities – work for Relate while they receive skills training. They do courses ranging from medical and social work to soccer coaching. The plan is to empower these matriculants to find careers beyond Relate in the future.

This third also includes enterprise development. Of every bracelet sold, R3 goes toward supporting the development of small businesses that have been able to establish a footprint, but need assistance to grow.

The final third goes to charity partners, such as United Against Malaria, Endangered Wildlife Trust, Reach For A Dream and the Amy Biehl Foundation. About 65 different charities are supported by Relate. Causes are selected through a process of due diligence, says Robinson. Brands that are equitable, have a ‘solid reputation’ and have transparent financial records are selected.

Bracelets are sold via various retail partners, such as Woolworths, Foschini, Clicks, Sorbet and the Protea Hotels group. The various distribution outlets are critical to Relate’s success, says Robinson, as they ensure income annuity.

Retailers receive a small margin of the sales. The wholesale price is R25 and the standard sale price is R35. Every cent is accounted for and Relate is run as a commercial organisation. A lot of the retailers invest the proceeds in Corporate Social Investment projects. “Good begets good,” says Robinson.

More than money

The real value for Relate, however, is not in the R35, but in connecting to people and conveying its message. This echoes Gillis’ initial vision.

“[The bracelet is] actually not worth anything, but it’s worth everything,” says Robinson. People are connected by the experiences they share with the causes, whether it’s breast cancer, mental illnesses, or endangered species.

DESIGN: Each bracelet is designed to represent the unique identity of a brand or cause. Photo: Provided

DESIGN: Each bracelet is designed to represent the unique identity of a brand or cause. Photo: Provided

Relate does not receive donations. Ironically, it donates funds towards an enterprise development project by Nandos. “In what day and age do you have a non-profit giving back to a corporate?  It’s completely turned the model on its head,” says Robinson.

Relate’s vision is to have every employed, tax-paying South African buy one bracelet each year and, in doing so, annually raise a quarter of a billion rand for good causes.

Relate faces numerous challenges. Establishing retail partnerships is difficult, with the positioning of bracelets in stores is critical to strategy. Reaching decision makers in top management of corporates to this end is oftentimes hard. Furthermore, brand upliftment, brand awareness and brand education is crucial; informing and getting consumers to understand the non-profit goal of Relate bracelets is important.

Robinson believes the business model is sustainable. Relate is currently a small brand but he says they want to grow it in South Africa’s heart. The plan is to create micro-franchises in the market that sell the product.

Future plans

Relate has sold 1.7bn bracelets and raised R27m in five years, according to Robinson. In 10 years’ time he hopes Relate will be a well-known, equitable, proudly South African brand, employing 3 000 women and 270 youth, with expansion  beyond the Western Cape to the Eastern Cape and Gauteng. Relate also hopes to move beyond creating bracelets. There are plans to introduce other beaded products, while maintaining the ‘raw skills’ element of the programme, without turning it into a manufacturing plant or factory.

Relate’s vision is to have every employed, tax-paying South African buy a bracelet per year and, in doing so, annually raising a quarter of a billion rand for good causes..  “You can literally turn around some of the biggest challenges in this country,” concludes Robinson.

This article was featured in Finweek magazine.

Are exports SA’s solution for economic growth?

South Africa is in a challenging position, with low growth hovering around 2%-2.5% when it should be 5% and above. Exports are very important. If the economy is going to grow, there needs to be an increase in local trade, export trade and support for infrastructure, says Greg Nosworthy, head of Euler Hermes South Africa.

Treasury’s forecasts have downgraded significantly, from 4.5% in 2010 to the current level of 2%-2.5%, says Nazmeera Moola, economist and strategist at Investec Asset Management.

INDUSTRIALISATION: Ludovic Subran, Chief Economist at Euler Hermes says South Africa should manufacture and export finished goods.

INDUSTRIALISATION: Ludovic Subran, Chief Economist at Euler Hermes says South Africa should manufacture and export finished goods. Photo: Provided

The country’s biggest problem is the lack of export earnings, explains Moola. Import expenditure exceeds export earnings. The bulk of GDP is generated by the services sector, not from exports, which has resulted in the current account deficit, she says. More exports are needed to reduce the deficit, says Ludovic Subran, chief economist at Euler Hermes.

There has been a downward trend in export prices since mid-2013, says Moola. Prices have come down by 40% in total. The collapse in oil prices offered some benefit, however this highlights that there is a problem with the items being exported.

The country has been exporting commodities for the past 50 years. In 1964, SA mainly exported farming goods. By 1994 this changed to commodities like gold, platinum and iron ore. Not enough manufactured goods are exported and this is due to the energy crisis. There is limited electricity supply for manufacturing plants, explains Moola. Electricity intensity in the manufacturing sector is down 30%.

Comparing SA to other African countries, Nigeria’s economy has evolved from a soft commodity exports like crude and petroleum in 1962, to purely oil in 2012. Kenya has a more diversified economy. Besides commodities, it exports manufactured goods like clothing and cleaning materials, says Moola.

Other diversified economies like Ethiopia, Zambia and Mozambique are faring well. Given the commodity bust, countries built on commodities like Angola and Nigeria are having a hard time, with less investment and infrastructure spend, says Subran.

SA is a mixed case. It is a diversified economy, but commodities are a big market mover for GDP. There is potential for services and manufacturing sectors to contribute more to GDP, says Subran.

It’s quite a massive investment but they’re cutting the middle man and they’re making huge labour opportunity for thousands of individuals.

There should be more investment in the manufacturing sector. “You have commodities, you have the people who work, you need to industrialise the country,” says Subran. There needs to be a “game changer”. SA has the skills and commodities to develop entire industries downstream, this will equip the middle class through the “rebirth” of the manufacturing sector, he explains. This means developing the extraction and refining processes. “Why export to China to reimport to South Africa?”

This year Indonesia banned the export of raw nickel to China. The refining will take place in Indonesia and then materials will be exported. “It’s quite a massive investment but they’re cutting the middle man and they’re making huge labour opportunity for thousands of individuals,” says Subran. He admits this is not easy and private investment is necessary.

Countries move too fast from a commodity-based economy to a service-based economy. This only works in small countries where there are fewer people to feed and employ. Industrial revolutions are major job providers and they structure the private sector, says Subran.

Ways to Move SA Forward

Ralph Mupita, CEO of Old Mutual Emerging Markets highlights three options to take to move the SA forward.

1. Convert the trust deficit in the country to a trust surplus.

“South Africa is a very unequal society,” says Mupita. The trust deficit emanates from inequality. Government, businesses and the labour sector should engage to solve the problem by promoting minimum wage and improving productivity levels. SA is the fifth-most unequal society in the world, according to the Taylor Commission Report. Moola says that the high inequality does not mean that there has been no progress in alleviating poverty. There have been improvements in education, health and living standards.

2. Implementation of the NDP

“It is not a perfect plan, but no plan ever is,” says Mupita. It is still capable of creating economic growth, dealing with challenges of unemployment and inequality to achieve the 2030 goals. Aspects of the NDP that should be prioritised include resolving the energy crisis, which calls for investment by the private sector. The model in China should be adopted where power generation is handled by the private sector and distribution is handled by the public sector.

Says Subran: “The electricity problems need to be solved stat, it could be a massive disincentive for future investors.” The infrastructure deficit should also be addressed. The private sector should invest long-term capital projects that generate returns to overcome growth challenges.

Mupita says: “Private sector investment will alleviate government’s burden to try and fund everything.”
Lastly, the education system should of good quality and be affordable for accessibility. More people should graduate from the school system with the right skills relevant for the future, which will be digital- and technology-based, says Mupita.
Adds Moola: “If we don’t solve education, we will not solve the other problems that we want to.”

3. Play a meaningful role in the economic integration in the rest of the continent

Intra-Africa trade is lower than it should be and SA needs to play an active role in the effective integration in the SADC region. East Africa’s integration works best in terms of regional business integration. However there is not enough economic interdependency in SADC, says Mupita.
SA is isolated form other markets, which is why it needs to engage with neighbouring countries, and ultimately expand trade across the continent, says Moola.

Subran adds that a lot can happen out of SA, it can be used a springboard to develop the rest of the continent, in turn fostering development in the country too.

This article was featured on Finweek.com

INFOGRAPHIC: SA youth believe in political engagement for change

A recent survey conducted by the Gordon Institute of Business Science (GIBS) found that South African youth are indeed interested in the politics of the country.

Over 1 000 learners were surveyed at the annual GIBS CareerExpo, held in Johannesburg as part of the GIBS Spirit of Youth Leadership Programme. The initiative is run by the GIBS Centre for Leadership and Dialogue and is made up of top learners in Grade 11 and 12 from a diverse range of township, inner city, former Model C and private schools.

Phyllis Byars, associate director of the GIBS Centre for Leadership and Dialogue said: “The feedback from this survey reveals that the youth of today are generally positive about their careers, current educational prospects and personal safety in South Africa.

The infographic below indicates some of the results from the survey:

gibs

This article was featured on Finweek.com