AMSA vs the Steel Downstream … and the Trump factor

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The whole world, including role players in South Africa, is up in arms about President Donald Trumps’ introduction of 25 percent import duties on steel.

According to Trevor Kincaid, for Reuters, this step can, among others:

  • unravel the global trading system;
  • raise prices on basic goods;
  • make American businesses less competitive; and
  • drive a wedge between the US and its European allies.

Economists agree that these duties, while protecting US steel companies, will lead to increased costs for US consumers and to more jobs lost than saved.  ‘There are many, many more US manufacturing workers who would be adversely affected by tariffs than workers who would benefit from them’, according to Justin Fox, writing for Bloomberg.

In respect of the prevailing 22 percent duties in South Africa, aimed at keeping AMSA operating, all these factors find application – obviously within a different context and unique outcomes. The point is this: duties are detrimental, whether implemented in South Africa, in the USA or elsewhere.

The risk to South Africa of losing US market share is real and cannot be replaced with other export markets – as a result of already lower price competition in those markets. Equally, more cost effective competitive mills will now shift their focus to find replacement markets, which would include South Africa and Africa, beckoning the question: would AMSA need even more protection? What makes the South African situation far worse is that AMSA is a monopoly with vastly higher production costs than the world average.

One difference between South Africa and the US is this: while the worlds’ protest might cause Trump to consider exemptions (in fact already has), the plight of the South African downstream has gone unnoticed by the global steel industry, and locally deliberately disregarded by the dti, ITAC and AMSA.

Ludicrously, all this more affordable, high-quality steel, now needs to find markets, but will be prevented from entering South Africa – as a result of the duties protecting AMSA. The Downstream desperately needs this steel to stimulate growth in the South African Steel Industry, which will contribute towards stemming the tide of persistent job losses.

ITAC should not procrastinate in removing the 22 percent duties currently in place. This is a golden opportunity which should not be missed.

It remains our expectation that, in the not too distant future, AMSA will be forced to partially close down – as a result of global and local economic realities. This is long overdue due to AMSA’s antiquated technology and high production cost.

When will common sense eventually prevail?

Kind regards

Gerhard Papenfus

NEXT GENERATION SOUTH AFRICA


The British Council is pleased to announce the much anticipated launch of the Next Generation South Africa report compiled by researchers Carmel Marock and Candice Harrison-Train from Singizi, a Johannesburg based research, monitoring and evaluation organization that specialises in studies in South Africa, the continent of Africa and globally. South Africa has witnessed fierce struggles over the years with the more recent #FeesMustFall protests positioning the youth at the forefront of these struggles. Young people are still challenged with access to economic opportunities. The Next Generation South Africa Research – focusing on South Africans between the ages of 15 and 34 – aims to provide a window into their world.

Colm McGivern, Director British Council South Africa, says:

“This research is the first opportunity to hear the voices of the Ramaphosa generation in South Africa, and it gives the President and his government a clear indication of the challenges ahead for the booming youth population. Young people here are resilient and committed to their communities and their self-development, they’ve told us they see a better future and they want to work hard to achieve it.  This report is required reading for those planning that future.”

In 2016, 66 per cent of people between the ages of 15 to 24 were unemployed; the unemployment rate for those aged 25 to 34 was 41 per cent. This constrains the ability of many young people to successfully transition into independence and adulthood. Since a large proportion of young people in South Africa were born after May 1994 – and are known as South Africa’s ‘born-frees’ – this is a misnomer for many young people. If young people cannot access jobs, they remain in a suspended state where there is a lack of equity and an absence of many freedoms. 

However, what is also evident from this research is that even where young people have the resilience to make it happen, transitioning successfully requires an ecosystem that can provide the resources and environment to support young people.

The South African National Youth Policy (2015–2020) opens with the statement ‘Youth-targeted interventions are needed to enable young South Africans to actively participate and engage in society and the economy. The marginalisation of young people is primarily manifested in high youth unemployment’ (April 2015). This highlights that for young South Africans, the priority issue is how to access the economy.

It is in this context that Next Generation South Africa sought to understand the thoughts, opinions and circumstances of young South Africans, most of whom have been raised in this young democracy. Have the members of this young generation, who are entering adulthood in post-Apartheid South Africa, inherited a world different to that of their parents, or do they continue to bear much of the legacy of older generations?


Key Findings:

 

    • South Africa’s youth population is growing, is highly mobile and is generally moving towards more urban areas, and away from rural areas. Modern youth mobility in South Africa can be characterised in two ways: temporary migration and permanent migration.
    • Migration can come with myriad challenges, including even more difficulty finding jobs than those born and growing up in cities, as well as the challenges that come with living in informal settlements with high transport costs to the city hubs. However, the findings in this report, which points to improved services, suggest that the young people who have moved have found ways to improve their living circumstances.
    • Educational performance is strongly associated with socio-economic status, so those young people who emerge from conditions of poverty invariably have an inadequate formative education, which negatively affects their educational outcomes and, therefore, their pathway into the labour market.
    • Surprisingly #NextGenSA18 Young people believe a #TVET qualification is better for getting a job than a University education. Research challenges a commonly held national perception that TVET and Matric are not valued by young people
    • While there is increased participation in schooling and higher education, completing matric continues to be challenging, especially for black and coloured South Africans.
    • The internet is supplanting family as the giver of advice on issues like health, well-being and livelihoods. Despite poor access to many resources, young South Africans have high levels of access to the internet and use it as the primary source of news and information – often before family
    • The ‘born-frees’ do not appear to have a more positive commitment to democracy, with similar attitudes as those of adults being shaped by the conditions in the country.
    • Young people increasingly see politics as transactional rather than a strengthening of democracy.
    • Young people are highly involved in Civil Society and see it as a critical space to ‘remain woke’. Being socially connected helps young people develop resilience

Find more details on the Next Generation South Africa report. 

Visit the project page: https://www.britishcouncil.org.za/next-generation-south-africa 

Africa agrees to a giant trade bloc, South Africa and Nigeria sit it out

The African Union started talks in 2015 to establish a 55-nation bloc that would be the biggest in the world by member states, in a bid to increase intra-regional trade, which sits at a measly 15 percent of Africa’s total commerce.

Rwandan president Paul Kagame, host of an AU summit called to conclude the initial negotiations, declared the meeting a success after 44 African nations signed up to establish the free trade bloc within 18 months.

It was not immediately clear why South Africa and Nigeria stayed on the sidelines. Others staying out of the bloc were Botswana, Lesotho, Namibia, Zambia, Burundi, Eritrea, Benin, Sierra Leone and Guinea Bissau.

“It would have been great if the two biggest economies on the continent, Nigeria and South Africa, had signed, but the most important is that the rest of the continent is sending a right message to these two biggest economies that we are moving ahead without you,” said Michael Kottoh, an analyst at Confidential Strategies in Ghana.

The project needed a minimum of 22 countries signing up to get off the ground and Kagame hailed the effort so far.

“What is at stake is the dignity and well-being of Africa’s farmers, workers and entrepreneurs,” he said.

According to the business community, African countries agreeing on the
highly anticipated intra-Africa trade regime will go a long way in positioning
Africa as one of the biggest markets, consequently inspiring innovation, industrialisation and growth.

Ali Mufuruki, Tanzanian businessman and founder of Infotech Investment Group,  said one of the reasons he is excited about the Continental Free Trade Area is that it will not only open trade borders for Africans making mobility less expensive, but it will also restore African “dignity.”

“As a businessperson, there is nothing that frustrates me like traveling across Africa. It is extremely expensive and difficult; it takes a long time, you need visas and when you get to the border you are told to wait and you see people from Europe and Asia being waived through like they live there. It is so sad.

‘‘But to get into the country and I am being valued and I am appreciated simply because I am African, makes my life happier. I think that is one reason I am very happy about this single market framework,” Mufuruki said.

Linda Ndungutse, the founder of Haute Baso, a local clothing brand, said that the reduction of trade barriers within the African market will lessen the cost of doing business for young entrepreneurs while widening their consumer market.

Patrick Nsenga Buchana, the Chief Executive Officer of AC Group – the brains behind the smart technology in public transport payment model (Tap and Go) that operates in Rwanda and Cameroon – said that the need to grow opportunities across borders and give young African companies the scale to compete on the global market is also a unique opportunity  that the continental free trade market presents.

Richard Branson Succession Tips for Family Businesses

TRUST

One of the most important factors in a thriving family unit is trust, and the same can be said for business. Trusting someone’s opinion and judgement makes doing business a lot more enjoyable and efficient – and fun!

Office politics can be harsh, and while disagreements happen within families too, there’s a solidarity that tends to win out and propel agendas forward.

PASSION

In order for a family business to succeed, it’s so important that each member is encouraged to find their passion points.

Not everyone is motivated by the same things, or shares the same skill- set- this is still true in families, despite genetics giving us a helping hand – so it’s crucial that everyone hones in on an area in which they can contribute and excel.

And once they do, they will be proud of what they do and the family business – which is of utmost importance, because when the day comes to hand over the reins, your team will need to be motivated and inspired to carry on the future success of the business.

FAMILY VALUES

A family business doesn’t have to be restricted to those that share your genes.

At Virgin Group we recognise that togetherness is a hugely important aspect of life and we refer to each other as a family.

In fact, the reason we have been able to grow into a global group is because family values are the cornerstone of the brand’s culture. Bonds of love and friendship encourage collaboration, and help to create productive working

environments that are fun and energetic.

The family is led in each different business by a different brilliant CEO, and all over the world and across many different sectors, we love to collaborate and exchange ideas.

RELATIONSHIPS

The nature of work is changing – the hours, the contact and the responsibilities are nothing like they were 50 years ago.

Today, most people spend more time with their colleagues than anyone else in the world. With this in mind, it makes sense to turn professional relationships into real friendships, or better still work with your loved ones. Your business will benefit in the long run. So that’s my advice for successful succession planning. But don’t worry; I’m not going anywhere yet!

Economic empowerment, key to poverty alleviation, says Elumelu

Frontline businessman and founder of the Elumelu Foundation, Mr Tony Elumelu, on Wednesday said the surest way of tackling poverty was economic empowerment of the people.

Elumelu spoke in Lagos at the 2017 Philanthropist of the Year Award organised by PerSecondNews.Com, an online medium.

Newsmen report that Elumelu was presented with the award which had its theme “Philanthropy as an Emerging Contributor to Development’’. The businessman said Africa would rise above many of its development challenges if given the requisite support for entrepreneurship. He said the Tony Elumelu Foundation recognised entrepreneurship as the catalyst for economic growth, hence its focus on mentorship and funding for start-ups.

Elumelu also said the ultimate objective of the foundation was to produce an “army of young African entrepreneurs” who provide economic opportunities in their respective countries. “The Tony Elumelu foundation believes that the best way to eradicate poverty is through economic empowerment of citizens. “That is why we are investing in entrepreneurship ideas across Africa through funding and mentorship support for start-ups, especially those conceived by young people. “We believe these young people can help achieve the dreams of the continent through opportunities creation if the right support is given to their business ideas,” he said. According to him, the foundation has mentored 1,000 young entrepreneurs annually across the continent with seed grants to start up. Elumelu added that the main target was to create 10,000 entrepreneurs in agriculture, manufacturing and others in the next 10 years, who were expected to create one million jobs across Africa.

He said the foundation would give assistance annually to the distressed regions of North-East and Niger Delta. He said philanthropy was a way of life for him, adding that he was overwhelmed by the award. “I am positively overwhelmed by this award and I dedicate it to the beneficiaries of the foundation who are changing lives across Africa,” he said. The Chairman of the Niger Delta Development Commission (NDDC), Sen. Victor Ndoma-Egba, who presented the award, described Elumelu as Nigeria’s gift to Africa. He said the businessman had done a lot to impact on the lives of many people across Africa.

Earlier, the Publisher of persecondnews.com, Mr Femi Soneye, said the organisation considered Elumelu for the award because of his humanitarian activities. “What we celebrate most in this country is entertainers, movie stars, and politicians; we hardly recognise people based on their philanthropic activities. “So, we sat down and said who do we recognise for the great impact they are making on lives and Mr Tony Elumelu’s name emerged. “Through his foundation, he has empowered many people and we think we need to celebrate him to encourage other people,” Soneye said. He urged well-meaning Nigerians to emulate Elumelu by giving support to others. Newsmen report that a group — Dream From The Slum (DFTS) — a private free school initiative based in Ajegunle in Ajeromi-Ifelodun Council Area of Lagos State, was also honoured at the occasion. It runs free education for children of the poor in the slum area of Ajegunle with volunteer-teachers. Former spokesman to ex-President Goodluck Jonathan, Dr Reuben Abati, Mr Emeka Mba, former DG of National Broadcasting Commission (NBC) and popular actress and singer, Jennifer Eliogu were dignitaries who graced the occasion.

Tony Elumelu recognised as an African Philanthropist

Frontline businessman and founder of the Elumelu Foundation, Mr Tony Elumelu, on Wednesday said the surest way of tackling poverty was economic empowerment of the people.

Elumelu spoke in Lagos at the 2017 Philanthropist of the Year Award organised by PerSecondNews.Com, an online medium. Newsmen report that Elumelu was presented with the award which had its theme “Philanthropy as an Emerging Contributor to Development’’.

The businessman said Africa would rise above many of its development challenges if given the requisite support for entrepreneurship. He said the Tony Elumelu Foundation recognised entrepreneurship as the catalyst for economic growth, hence its focus on mentorship and funding for start-ups. Elumelu also said the ultimate objective of the foundation was to produce an “army of young African entrepreneurs” who provide economic opportunities in their respective countries. “The Tony Elumelu foundation believes that the best way to eradicate poverty is through economic empowerment of citizens. “That is why we are investing in entrepreneurship ideas across Africa through funding and mentorship support for start-ups, especially those conceived by young people. “We believe these young people can help achieve the dreams of the continent through opportunities creation if the right support is given to their business ideas,” he said.

According to him, the foundation has mentored 1,000 young entrepreneurs annually across the continent with seed grants to start up. Elumelu added that the main target was to create 10,000 entrepreneurs in agriculture, manufacturing and others in the next 10 years, who were expected to create one million jobs across Africa. He said the foundation would give assistance annually to the distressed regions of North-East and Niger Delta. He said philanthropy was a way of life for him, adding that he was overwhelmed by the award. “I am positively overwhelmed by this award and I dedicate it to the beneficiaries of the foundation who are changing lives across Africa,” he said.

The Chairman of the Niger Delta Development Commission (NDDC), Sen. Victor Ndoma-Egba, who presented the award, described Elumelu as Nigeria’s gift to Africa. He said the businessman had done a lot to impact on the lives of many people across Africa. Earlier, the Publisher of persecondnews.com, Mr Femi Soneye, said the organisation considered Elumelu for the award because of his humanitarian activities. “What we celebrate most in this country is entertainers, movie stars, and politicians; we hardly recognise people based on their philanthropic activities. “So, we sat down and said who do we recognise for the great impact they are making on lives and Mr Tony Elumelu’s name emerged. “Through his foundation, he has empowered many people and we think we need to celebrate him to encourage other people,” Soneye said. He urged well-meaning Nigerians to emulate Elumelu by giving support to others. Newsmen report that a group — Dream From The Slum (DFTS) — a private free school initiative based in Ajegunle in Ajeromi-Ifelodun Council Area of Lagos State, was also honoured at the occasion. It runs free education for children of the poor in the slum area of Ajegunle with volunteer-teachers. Former spokesman to ex-President Goodluck Jonathan, Dr Reuben Abati, Mr Emeka Mba, former DG of National Broadcasting Commission (NBC) and popular actress and singer, Jennifer Eliogu were dignitaries who graced the occasion.

 

South Africa the most developed startup ecosystem in Africa

South Africa has the most developed startup ecosystem in Africa,  ahead of Kenya, Egypt and Nigeria according to a new report released by Startupblink, a global startup ecosystem map with tens of thousands of registered startups, co-working spaces, and accelerators.

Startupblink’s global ranking index comprises of 125 countries and 900 cities measuring startup ecosystem strength and activity, and finds the top countries in Africa are South Africa, Kenya, Egypt, and Nigeria, ranked 38th, 53rd, 54th and 57th respectively. Their top cities were Cape Town, Nairobi, Cairo, and Lagos.

The United States (US), United Kingdom (UK), Canada, Israel and Germany took the top five places on the ranking, with North African countries Tunisia (65) and Morocco (67) the next African markets to feature.

Mauritius (73), Ghana (83), Cameroon (85), Uganda (88), Zambia (89), Botswana (93), Mali (99) and Ethiopia (100) were the other African ecosystems to make the global top 100.

Two African countries were also ranked joint last of the 125 startup ecosystems Startupblink has data for. The Democratic Republic of Congo (DRC) and Sudan scored the same total as Cuba and Afghanistan to prop up the rankings.

Those interested can check out the ranking tables here.

What the judges see

I sometimes get asked to be an assessor at business plan competitions. The plans are mostly submitted by youth entrepreneurs, some from under-resourced rural and peri-rural areas, who had gone through a process of training and the competition is part of the evaluation process to select those that would receive seed funding and mentorship.

Participants present their business concept to a panel of assessors and are then interrogated on their business plan (of which we have a copy).

I am often impressed with the presentations by most participants however the following common themes come up for me, and most of the other assessors, and these are areas that challenge prospective and current entrepreneurs that I work with too.

Lack of thorough research
There is a general lack of evidence that the business model will be successful. It felt more like a bakery will be successful because it is a bakery not because of a explicit measurable need from the target market.

Lack of information on product costs and profits
It is vitally important to know what your product or service cost, yet I battle to find entrepreneurs who know the actual cost of the items they sell. I can only surmise that they don’t know how much profit they are making then and therefore are not in control of their business.

Lack of provision for funding of working capital
When working out the starting costs of a business, as a judge, I find that the participants are accurately adding all the items that needed to be purchased for their venture to commence operations. However they often do not include running costs. Therefore the businesses would have a negative cashflow from inception and no funding to mitigate this. Basically a non-starter.

Lack of knowledge of personal financial
A question I ask entrepreneurs often is what is the salary that they are taking from day 1 and what are their personal costs. This generally turns into a debate, with the entrepreneur explaining that they will not take a salary in the beginning or ensuring me that the amount they have budgeted as a salary is adequate for their needs, however they cannot tell me what their needs are. A business cannot survive if its income is less than its expenses and neither can you.

Adequate distribution planning
If your business requires transport to collect your stock or distribute your product to customers, you need to have developed a strategy for this and have arranged the necessary resources. This may mean buying a vehicle and having a licensed driver or arranging transport and knowing the cost of this transport as well having a reliable schedule.

And most importantly the X-factor
This is the most important component of the competition for most of the judges.

Are you the person to make this happen? Are you the person to make this happen NOW?

Are you excited and passionate about your business idea? Can you answer the questions specifically? Do you have any experience in that field?

Funders fund people not ideas. As people implement and execute ideas and strategies.

Practice before you pitch your idea and don’t be afraid to let judges, funders or investors see your passion and belief in your idea and your ability to make it happen. If this is backed up by solid research and facts, you will be successful.

Stories of struggle

For most entrepreneurs, there comes a time when you need to share, often around a fire with beers or over a glass of wine, your stories of struggle.

Big deal, not

Here is one of my positive ones regarding big deals, contracts or the like:

The first time I exhibited at a trade show was Hostex, at the time, the premier event for the hospitality trade in South Africa. We had a small corner stand and we went to considerable effort to be noticed (within a very limited budget.) It was not as difficult as we thought and we used very bold colors, shiny black and bright green throughout, even the floor was black and green carpet tiles. We trained hard to be different and draw many potential customers to our stand.

And it worked, we had a tremendous increase in business attributed directly to the show and (the war story) one of the top 3 German motor vehicle brands negotiated that we install espresso machines in all their branches nationwide. What an achievement, what a great deal, we would increase our current turnover by almost 70% for the next 2 years. I unfortunately still had a lot to learn about negotiations in those days and did not close all the loopholes. So although the motor vehicle manufacturer had an agreement with us, the individual dealerships order from whom they wanted and we only supplied 2 outlets.

Always start at the beginning

There are also stories about bad luck or challenges, such as:

I was called by one of the external sales people that there where glasses missing out of a case that we had delivered. This was not the first time I had got a call and it was now time to upgrade our systems to stop this stock loss.

I worked with the warehouse manager and we developed a system to mitigate the risk of pilferage by our warehouse staff and our drivers. We had stock checked and doubled checked in the warehouse. Stock was checked again on loading and signed for by the drivers and I was feeling very optimistic almost arrogantly so that we had beaten this internal problem of theft.

To my amazement, we kept getting calls that stock was missing and eventually I decided to drive to a customer myself and see what was wrong with his order, what was missing. I thought that some how, by seeing the physical evidence, I could work out how my delivery staff where stealing from me.

After apologizing profusely to the customer and working hard on developing the  trust that was lost, I went and had a look at the evidence.

It was a case of beer glasses. The glasses are packed in 2 rows of 24, one on top of the other and it was in the bottom row that there where 3 glasses missing out of the 24.

I then realised that it was not my staff stealing but rather the staff in the factory who produced these glasses or faulty equipment, who knew?

Not sure if the customer believed me but I had a huge grin on my face as it proved the innocence of my staff and laid the blame squarely at the manufacturer’s doorstep.

What’s your story?