Issue 01 \ July 2012 Controlled Distribution UK+SA
Homegrown shoe brand goes global
Cashing in on the housing boom
Switch on to Africaâ€™s emerging middle class
Coffee chain expands rapidly
How industry survives a coup
African art - good investment?
News | People | Innovation | Trade | Investment | Growth | Lifestyle
4 \ Contents \ July 2012
30 Zimbabwe auto industry taps middle class
High-end models from Mercedes Benz and Chevrolet were on display at the recent Zimbabwe Motor Show,
GatewayToAfrica.com is a multi-platform title for businesses looking to take part in expansion opportunities in Sub-Saharan Africa Editor: Irene Madongo Publisher: Gordon Glyn-Jones Art Director: Jackie Lampard Sub-Editor: Paul Christopher Daniels Researcher: Nicole Holgate Contributors: Pete Guest, Phumzile Tshuma, Rose Nankabirwa, Tanzeel Akhtar and Daniel Harder Illustrator: Bianca Bird Directors: P Atherton, J Durrant, N Durrant and R Phillips
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BRICS set to take eurozone slack
ANC shies away from nationalisation talk
Country focus: Mali
South Africa’s contemporary masters
South Africa’s trade focus is set to shift towards its BRICS partners as the long-term effects of the eurozone crisis pan out, explains Rob Davies, South Africa’s Minister of Trade and Industry.
Investors are keeping a close eye on South Africa’s business environment, as the ANC’s perceived closeness to trade unions and debates over nationalisation raise concerns.
Life is starting to move on and business is picking up in the West African state. Randgold CEO Mark Bristow, a South African, is the country’s biggest investor. He talks about how a business can survive political turmoil and reap profits in challenging environments.
The South African art market, currently valued at £100m, is benefiting from an appetite for cultural expression.
Ghana Home Loans
Nairobi Java House
An Ethiopian start-up has taken traditional sewing skills to create an African footwear brand that is on shelves in Europe, America and Asia.
A South African social enterprise has turned conservation education into an industry, preparing young people for jobs in tourism.
Entrepreneurs Dominic Adu, Kojo Addo Kufuor and Ellis Atekpe have taken a model for housing finance from South Africa to Ghana.
Kenya’s emerging middle class has boosted trade for coffee shop chain Java house.
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July 2012 \ Contents \ 5
Publisher’s Letter “You just can’t do it from a suitcase anymore” has become quite a common Switch on to refrain amongst Africa’s emerging middle class investors in Africa. For some it is a lament, for others it is a statement of relief - that finally their legwork is paying off with some competitive advantage. It is quite rare that anyone asks why they should invest in Africa. The headline numbers have looked compelling for the past five years. For the past decade, ‘now’ has been the time to get into the continent’s thriving and growing markets. But despite the crippling economic problems in the developed world, there is still a degree of reticence amongst some investors to follow the growth and head south. Saying that “working in Africa is not for the faint of heart” is a cliché trotted out by the kind of investor that talks up the risks in the bar on a Friday night, but the truth is that sometimes business means holding on until your knuckles turn white - if you are sure you know more than the market. That is the approach that Mark Bristow, who has guided Randgold through political instability in Ivory Coast and Mali, has taken successfully in the past couple of years, making brave calls on when to stick or twist. Hard graft means a lot. Getting in early, embracing the local idiosyncrasies and making sure that you are part of the landscape means a lot, but, as the diversity of African entrepreneurship we have unearthed in compiling this issue shows, sometimes a good idea is enough. Innovation is a powerful force for driving successful business growth across the continent. The companies that really thrive manage to balance both. With decades of experience across Africa, SABMiller continues to find new ways to make its products accessible to African consumers and developing brewing techniques using local staple crops. It is innovation, but one born of long heritage. As Mark Bowman, the brewer’s Africa head says: “You can’t just turn up and expect to do well.” Issue 01 \ July 2012 Controlled Distribution UK+SA
Homegrown shoe brand goes global
Cashing in on the housing boom
Coffee chain expands rapidly
How industry survives a coup
African art - good investment?
News | People | Innovation | Trade | Investment | Growth | Lifestyle
18 COVER STORY
Africa’s emerging middle class
The emergence of a wealthy class of urban Africans is driving rapid growth in the fast-moving consumer goods sector. Among the biggest beneficiaries are the global drinks companies, who are investing heavily and innovating in order to keep their footholds in this huge and growing opportunity.
Gordon Glyn-Jones: Publisher Be sure to subscribe to our weekly enewsletter, subscriptions@GatewayToAfrica.com or visit our website, www.GatewayToAfrica.com
6 \ News \ July 2012
Shell, PTT Battle For Cove Energy
NEWS IN BRIEF ETG Gets $250 Million To Expand Export Trading Group, an African soft commodities trader, has received $250 million in a syndicated loan from Standard Bank. The Kenyan-based company, which has operations in production, processing and trading in grains and oilseeds, said that it plans to use the facility to improve its stock management and expand.
Nigeria To Create $1 Billion Fund Nigeria is set to use proceeds of its oil industry to create a $1 billion sovereign wealth fund, after the country’s powerful state governors agreed to end their opposition to the plan. The fund will be used to invest in infrastructure and as a stabilisation mechanism to guard against oil price shocks.
Total To Look For Oil In Kenya French oil giant Total will explore Kenya’s Lamu Archipelago in a search for new oil resources, the company said in a statement. The country, which recently struck oil in its northern Turkana region, has signed a production sharing agreement with the company.
Ivory Coast Gets $4 Billion Debt Relief International lenders have agreed to a debt reduction of more than $4 billion for Ivory Coast, as the new government attempts to bring Francophone Africa’s biggest economy back on track after a violent disputed election in 2010.
Kenya Airways Secures Financing Pan-African airline Kenya Airways has tapped Afreximbank for funding to purchase 20 new aircraft from Embraer and Boeing. The company has announced plans to spend $3.6 billion in the next five years on expanding its footprint.
Brazil has taken a poultry dispute to the WTO (U.S. Department of Agriculture)
Brics pair wrangle over chicken imports Brazil has complained to the World Trade Organisation (WTO) over South Africa’s decision to impose tariffs on the importation of chickens. The Pretoria government put the measures in place to protect domestic players against what it believed was “dumping” - selling at uncompetitively low prices by Brazil, which made up more than 90 per cent of the country’s total imports of boneless chicken. The tariffs range from 46.6 per cent to 62.9 per cent on whole chicken and chicken breast imports. The move is estimated to cost the Brazilian economy $70m a year. The Brazilian poultry association says that it had tried various means to negotiate with the South African government without success, and hence ended up asking its foreign ministry to approach the WTO.
East Africa-focused explorer Cove Energy is at the centre of intense bidding by global energy giant Shell and Thailand’s national oil company PTT. Cove has an 8.5 per cent stake in the Rovuma Offshore Block, off the coast of Mozambique, at the heart of a new rush for the region’s gas. The company also has operations in Tanzania, which is seen as a major future gas producer. Shell has now twice extended the deadline for its offer of around $1.6 billion for the company, giving itself more time to convince shareholders of the merit of the deal, which would give it a presence in a region that is fast emerging as an important source of natural gas. In June, Anadarko, which is also active in the region, made a fresh discovery in the Offshore Area 1 block off Mozambique, increasing analyst estimates of the total reserves to between 30 and 60 trillion cubic feet of gas, equivalent to three to six times the total annual consumption of Germany, France, Britain and Italy combined. The new gas field is reportedly entirely in the block that Anadarko shares with Cove. Tanzania also recently upgraded its estimates of its gas reserves to nearly 29 trillion cubic feet onshore and offshore. The region, on Africa’s east coast, is wellplaced to ship liquified natural gas to Asian markets, which remain some of the largest consumers and most promising growth markets for the fuel. In June, the Export-Import Bank of China agreed to finance a $1.2 billion, 532km natural gas pipeline in Tanzania. PTT, which is 51 per cent owned by the Thai government, outbid Shell, offering 240p per share, or $1.8 billion. The company has been looking to expand its global footprint and find new sources of gas. Currently, around 25 per cent of its requirements are sourced from Myanmar, and it is heavily exposed to Asia.
Africa in numbers
Growth in Johannesburg’s property prices over the past decade, outpacing London and New York (source: IPD)
The sum of offshore contracts in Angola and Nigeria won by Italian oilfield services group Saipem (source: Reuters)
July 2012 \ News \ 7
Interview | Rob Davies
Davies: Trading with BRICS is the New Normal
China & Turkey to build Ethopian rail.
Ethiopia Signs $3.2 Billion Railway Deals The Ethiopian Railways Corporation has signed two major deals with Turkish and Chinese companies to build a line connecting the potash-producing Afar region with the coast. The Turkish firm Yapi Merkezi has won a $1.7 billion deal to construct a 447km stretch of railway connecting Ethiopia to the port of Tajoura in Djibouti. China Communications Construction company was awarded a second, $1.5 billion portion of the line. Currently much of the country’s exports are channeled through Djibouti’s main port in the capital. The Tajoura port is being renovated and expanded in partnership with Allana Potash Corporation, a Canadian mining company which is developing projects in Afar. The country has been working on an intense, five-year infrastructure plan which will see it construct thousands of kilometres of railway lines. Contracts for another 656km line connecting the capitals of the two countries was commissioned in December 2011, with the China Civil Engineering Construction Company and the China Railway Engineering Corporation winning tenders for various sections of the project.
35,000 tonnes Rio Tinto’s first shipment of coal to India from its Benga mine in the Mozambican province of Tete (source: Rio Tinto)
Davies says South Africa’s trade with BRICS will grow. (World Economic Forum)
The crisis in the eurozone is hastening a long-term shift in the global economy, meaning that Africa’s trade will increasingly be refocused towards the emerging markets of Brazil, Russia, India and China, as well as towards other African countries, according to South African trade and investment minister Rob Davies. South Africa’s formal inclusion in the “BRICS” group of developing nations has enhanced the country’s ability to act as a focal point for African investment, as the continent’s economies endeavour to break down trade barriers and integrate their markets, he told Gateway to Africa in an interview. “I think that our membership of the BRICS is an important statement in two respects, first of all that it recognises South Africa and South Africa’s strategic role in Africa, and secondly it’s a statement of the [global] significance of Africa,” Davies said. “I think there is a long term shift that is taking place, and we need to recognise that,” Davies said. “We are not wanting to, as it were, build relations with new emerging markets
at the expense of old trading partners. We want to strengthen the relationship with them. But we’ve got to face the realities. Those realities are that last year, we saw our trade with Europe very flat, and our trade with no member of the European Union has yet recovered to the levels it reached in 2008.” This is something that may worry the continent’s traditional trading partners, a fact which Davies acknowledges. “I think traditional partners need to recognise the reality of new entrants. From our point of view, more competition is better,” he said. These newer partners, however, have less preconceptions about political risk and are less likely to be deterred by the debates - which continue to rage - over the government’s role in the economy and key sectors. “It’s no longer the case that what one or other analyst in the developed world is saying about our investment climate shapes the way in which investment relations proceed. It’s not so straightforward as it used to be,” he said. For full interview go to : www.GatewayToAfrica.com
July 2012 \ News \ 9
ANC To Push State Participation In Mining Investors are keeping a close eye on South Africa’s business environment, as the ANC’s perceived closeness to trade unions and debates over nationalisation raised concerns ahead of last month’s vital policy meeting. by Irene Madongo
Members of the Congress of South African Trade Unions. (Cosatu)
South Africa’s ruling African National Congress party may drive further state participation in the mining sector and in the ownership of land, but has shied away from talk of nationalisation at a much-anticipated policy meeting. Some members of the party have advocated state takeovers in the lucrative mining sector as a way of reigning in the inequality and unemployment in South Africa that continues to create divisions in society and between the ANC and its backers in the trade unions. In an hour-long speech to close the policy meeting, however, president Jacob Zuma gave no indication that full nationalisation would be on the cards, at least in the near term. He did, however, speak at length of the need to
The party has a muddled policy. A million plans and very little implementation. [International investors] question the overall policy direction. - Anne Fruhauf. Eurasia Group
address the wealth and employment gaps in the country. A windfall tax targeting the mining industry, similar to one established in Australia, could be one way that the party looks to increase the sector’s contribution to state coffers. The government has stated repeatedly
that nationalisation is not its policy, but its spectre still haunts South Africa. While a distant prospect, the noise generated by the debate has unnerved current investors and threatens to hold back those who might otherwise be considering using the country to gain a foothold in Africa. Few international businesspeople and economists support the idea of nationalisation, but elements of the ANC and its supporters continue to insist that it is a catch-all solution that will reduce poverty and inequality, and go some way to addressing South Africa’s unemployment crisis. Opponents say the threats, however, are a major disincentive for investment, holding back job creation. Just how the ANC can strike a middle ground, with frightened businesses on one side and angry ideologues on the other, is unclear. “For business, the uncertainty perpetuated by the conference is clearly problematic. Policies were not discussed on the basis of their merit. Most policy debates seem to have served as proxy battles for the leadership race. So the policy conference has brought deadlock, but without reassuring investors about the future direction of the country,” Anne Fruhauf, an analyst at political risk consultancy Eurasia Group, said. “There seems to be broad consensus around the need for greater state intervention, signalling a tighter regulatory and fiscal regime in future years,” Fruhauf added. “The party has a muddled policy,” she said. “A million plans and very little implementation. “International investors question the overall policy direction. The ANC is increasingly on the defensive from populist pressures. The ANC needs a clearer line.” The opposition Democratic Alliance (DA), meanwhile, says that the ANC’s ties to unions are directly hurting the economy. Shadow Minister of Trade and Industry Dr Wilmot James told Gateway to Africa that COSATU’s demands have created an environment where employers are reluctant to hire people because, should the market turn, it will be too difficult to dismiss them. James said that while workers must be protected, the current regime makes companies reluctant to hire at all, and forces them to pay “inflated” wages.
10 \ Views \ July 2012
The future looks brighter for renewable energy in SA By Mike Peo; Head of Infrastructure, Energy and Telecommunications: Nedbank Capital.
Nedbank’s Mike Peo - ‘Green economy is within reach’
Unlike a typical infrastructure undertaking, like the building of a road or laying of water pipes, the provision of renewable energy has no end date.
The Department of Energy’s announcements of the preferred bidders to become South Africa’s first Renewable Energy Independent Power Producers (REIPPs) marked the start of an exciting new leg of the country’s journey towards a truly green economy. Of course, there is far more to such a green economy than just the establishment of renewable energy infrastructure and capacity. Which is why the completion of these important phases of government’s previously much-maligned REFIT programme represent more than just a first step towards so-called green energy procurement - it also has far-reaching long term social and economic benefits for the country as a whole. In particular, the confidence shown in South Africa’s renewable energy future – both by local and international stakeholders – augurs well for the job-creation potential of this sector in the years to come, through the localisation of participation in the sector. This confidence is clearly evident from the vast investments that many of the IPP bidders have already made towards meeting the local content requirements. Global manufacturers, too, have shown their commitment to investing in the country through the establishment of manufacturing facilities for renewable energy components in South Africa and numerous other upstream and downstream opportunities. Of course, all of these manufacturing and infrastructure facilities will require manpower to operate, and that manpower will be sourced from South Africa’s communities. Possibly more importantly, the vast majority of jobs created by the renewable energy programme will not be on a short-term contract basis, as is so often the case with infrastructure projects, but will be jobs for life. For the first time ever in South Africa we are seeing the realisation of a procurement process that extends way beyond a single, finite project. Unlike a typical infrastructure undertaking, like the building of a road or laying of water pipes, the provision of renewable energy has no end date. In fact, the potential for investment and job creation will grow exponentially for many years to come. Public and industry support has an equally important role to play. While there is most certainly more than enough demand for energy to justify the provision of additional supply, making sure that the weighting of renewable energy sources over fossil fuels steadily increases requires that public preference for ‘green’ energy is never seen to wane.
July 2012 \ Views \ 11
Frugal Innovation: Opportunity out of Necessity Fernando Faria, Founder of InnovaBRICS
Fernando Faria says innovation is a means, not an end
Awards and corporate sponsorship are good, but they often come after the fact. The key is finding ways to identify early stage innovation and help it succeed.
InnovaBRICS - 5 September 2012 in London - convenes innovators, entrepreneurs, large corporate and global thought leaders from Brazil, Russia, India, China and South Africa. Its objective is to discuss the socio-economic and political drivers of innovation.
When someone asks me how innovation can be fostered in Africa I often make a distinction between “frugal” and “rocket-science” innovation, pointing out that a country doesn’t need to be a hi-tech hub to be innovative, nor do its people need to be software engineers to be innovators. But what exactly is frugal innovation? We all know of the Hippo Water Roller, an easy-to-carry container that holds up to 90 litres of water, invented in 1991 by two South Africans, Pettie Petzer and Johan Jonker, to tackle the frugal yet critical problem of access to clean water. By June 2012, nearly 42,000 Hippo rollers had been distributed to 21 countries serving 300,000 people, but mainly as donations by individual companies focused on social responsibility, not as part of a wider programme to spread this invention across Africa. But it’s not only on global issues like access to clean water that frugal innovation can make a difference. In 2006, in a poor village in India, Arunachalam Murunganantham (or Murunga, as he likes to be called) was dealing with another frustrating situation. His wife had to decide between buying sanitary napkins to use during her periods and buying milk, because the only available napkin was unaffordable. Mr Murunga decided to manufacture a cheaper version his wife could afford and in 2009 he was awarded with the Best Innovation Award by the Indian President. Awards and corporate sponsorship are good, but they often come after the fact. The key is finding ways to identify early stage innovation and help it succeed. I can only imagine how many of these incredible ideas didn’t come to fruition because the difficulties were too big to overcome. One day I watched a video of Samuel Kinoti, a Kenyan entrepreneur who in 2007 had the idea to use manure to produce biogas; simple and brilliant. His invention seems to have changed the lives of many farmers around Nairobi, but on the video Mr Kinoti was saying that his product is not yet in the “renewable energy” category and for this he still struggles with heavy taxation whereas, in my opinion, he should be getting incentives. Frugal innovation is where necessity and entrepreneurship meet. So much can be done to help entrepreneurs make a difference but they must continue to push for incentives. It’s not easy, but it’s not impossible either. Ask Messrs Murunga and Kinoti.
12 \ Views \ July 2012
Rebuilding Zimbabwe’s business sector Welshman Ncube, Minister of Industry and Commerce, Zimbabwe
Ncube: Zimbabwe’s business nightmare not yet over
The indigenisation policy is also inhibiting our capacity to attract foreign investors whom we need to partner with in local business.
Professor Welshman Ncube has been the minister for commerce and industry of Zimbabwe since 2009, and serves as the president of the Movement for Democratic Change Mutambara. He is a qualified lawyer and professor of law at the University of Zimbabwe.
The country was virtually on the edge when I took on this role. Just about everything in economic terms was on the brink of collapse, if not in collapse. There was a sense of enormous challenge. We had also introduced the multi-currency system – adopting currencies like the US dollar. This meant business was starting on virtually zero balance. The commerce and retail sectors were the same. I felt a sense of inadequacy. The only thing I had studied was law – not economics! I was also quite fearful of working with a team of staff whom I did not know and who had been implementing polices that they did not understand. Some were trapped in a political system that did not work. Looking back, I can say the most important thing that we did was to open frank dialogues with the business community, including the Zimbabwe National Chamber of Commerce and the Business Council of Zimbabwe. We had input on macro-economic issues and we were able to agree on some policies very quickly. Prior to this, there was no dialogue between the business community and the government – just commands from government. Another important development was to work with the financial sector to access new lines of credit which benifitted the banks were able to benefit from this. We were able to approach international banks and use our multi-lateral agreements to get assistance from the likes of PTA and Afriexim banks. That helped to inject some liquidity in the system. However, there are still several challenges. Expanding access to lines of credit is going to be key. In the last three years the capacity of industry to grow and recover has plateaued. We can’t make the leap forward because of liquidity problems, nor can we give the banking sector any kind of domestic stimulus. Another problem is the underperformance of the enablers that are vital for industry, such as the water and electricity utilities, and the infrastructure for the transportation of raw materials in and out of the country. The most challenging is power – we are simply not generating enough electricity, which causes a lot of issues. The indigenisation policy is also inhibiting our capacity to attract foreign investors whom we need to partner with in local business. When we talk to foreign investors we are able to engage on various issues including the political risk. And the question we are asked is how sensible our indigenisation law really is. Now, if you are continuously having to explain and be on the defensive, it means you are losing. So for now some potential investors are saying “maybe after the elections.”
14 \ Cover Feature \ July 2012
Africa’s Emerging Middle Class
Buying Power From shopping malls to breweries, the emergence of a new acquisitive, aspirational and increasingly wealthy class of urban Africans is driving growth in fast moving consumer goods businesses. by Pete Guest
Sub-Saharan Africa’s population is growing at a faster rate than any other region, passing 900 million in 2011. With North Africa, the total population now exceeds a billion people. In 2050, that could be two billion. They are also rapidly urbanising. In 2010, the United Nations’ Human Settlement Programme predicted that by 2030, more than half of all Africans will live in cities, up from the more than 400 million today. By some time in the 2040s, a billion individuals could be crammed into the continent’s metropolises. On current trends, those individuals are likely to be wealthier and more acquisitive, fuelling a massive boom in fast moving consumer goods. Research by the African Development Bank showed that in the past decade, Africa’s middle class had expanded to more than 300 million individuals. These individuals are richer and have higher expectations and aspirations than previous generations, creating
July 2012 \ Cover Feature \ 15
a huge opportunity for companies and entrepreneurs who are able to overcome the logistical difficulties inherent in many of these markets to provide modern retail experiences and high quality brands. Formal dining, one manifestation of the consumer story, is also taking off. Yum! Brands, owner of KFC and Pizza Hut, announced in February that it would look to add 130 new stores across the continent this year. Others, such as South African chains Steers and Nandos are also plotting expansions. In Kenya, local favourite Nairobi Java House has taken an investment from Emerging Capital Partners to take its brand regional. [see Entrepreneurs: Nairobi Java House, p.17] Even Walmart has taken notice, finally moving to complete its 2010 deal for Massmart, taking it into 14 African countries. Among the most visible beneficiaries of this demographic
One has to pay one’s school fees by understanding the dynamics in the market, how to operate... you can’t just turn up and expect to do well. - Mark Bowman, SABMiller
dividend have been drinks makers. It is often reported that Nigerians drink more Guiness than the Irish, and while dismissed as an amusing piece of trivia by many, it is a fact that reveals the growing importance of African markets for brewers. The four major players Diageo, Heineken, Castel and SAB Miller - have pushed into nearly every market on the continent. Their African units continue to generate considerable returns against a backdrop of moribund markets in Europe and the rest of the developed world, as population and economic growth drive the consumption of beer and spirits. The size of the African opportunity has been laid out for international investors in the results reported by the major listed players. Consistently, these units have grown in size and profitability. “We have a fairly simple hypothesis,” Mark Bowman, who heads SAB Miller’s
African operations, told Gateway to Africa. “You have superior population growth in Africa of around 2.4 per cent compound; you’ve got GDP growth of 4.6 per cent and very low per capita consumption [of beer].” Those consumers are already drinking alcohol, he explained, but it is bought in an informal, unregulated market of home brews. Even in the more established markets, beer is only around 20 per cent of the alcohol category, according to Bowman. Beer is aspirational, and as the per capita wealth of African countries increases, individuals transition into drinking beer. Figures from research company Plato puts African beer consumption at around 9-10 litres per capita - less than 20 per cent of the average in global developed markets. “The work we’ve done suggests that alcohol consumption in Africa is not that much different to other parts of the world, but that by far the bulk of it is below-the-radar, more home brew and the like,” Bowman said. This means that the company can expect growth above that of the overall economies. “We have to see 6-8 per cent beer growth as a standard trajectory,” he said. SAB has been expanding its brewery network in the past few years, building new facilities in Nigeria, Uganda, Angola and Zambia and doubling the capacity in its South Sudan operation. It expects
Africa’s urban population African populations are increasingly urbanising, clustering into megacities across the continent. Cairo, Accra, Johannesburg, Kinshasa, Lagos and Nairobi are all emerging as massive hubs for their regions and centres of wealth generation for countries and individuals. (source: UN Habitat)
16 \ Cover Feature \ July 2012
310 million The size of the African middle class
Middle Class Foreign Investment Sales of Consumer Goods
Africa’s middle class has tripled to more than 310 million in the past decade, driving massive growth in sales of consumer goods, from cellphones to motorbikes. It has driven the creation of urbanised, acquisitive societies and attracted international brands, such as the brewers in the piece, the US retail giant WalMart and restaurant chains, including Pizza Hut and KFC. (source: African Development Bank)
to keep investing around $500 million annually over the next few years. Such stellar growth being exhibited in African divisions is unlikely to have passed unnoticed by other major drinks players. The world’s largest brewer - Anheuser Busch InBev, for example, has only a limited presence on the continent. While there is still considerable slack for growth on the continent, the incumbents are well entrenched, having invested heavily in joint ventures and built controlling stakes in domestic operations in almost all of the major markets. Heineken, Diageo, SAB Miller and Castel currently make up 80 per cent of the beer market, according to research by the rating agency Moody’s; while Diageo and Distell combined make up more than 70 per cent of the formal spirits market. Driving the cost of beer down is one way that the established players can make the economics of the continent look less attractive to global competitors. Both SAB Miller and Diageo have experimented with brews using local ingredients in order to localise cost bases and drive down prices [see sidebar: Going Local] Doing business in Africa can be difficult, due in no small part to infrastructure constraints - particularly transport and power. Most of the breweries are self-contained, generating their own power and operating their
own water and effluent treatment plants. Brewing is capital intensive, and any breaks in operation can seriously dent profitability. Although there are improvements to infrastructure, it will be some time before that equation changes enough to allow manufacturers to rely on national utilities. Add to this the relatively poor connections between regional markets and building economies of scale looks difficult for anyone without local connections and knowledge. This is perhaps why the incumbents are able to remain bullish. “There’s no doubt that the level of competitiveness is going up significantly, and because there’s less virgin territory available from a multinational perspective, it is much more likely that we’re going to start stomping on each other’s patches. That’s inevitable,” SAB Miller’s Bowman said. “But I think you have to be rational about it. For someone who’s not currently operating in Africa, I think it’s quite difficult. You have to learn, it takes time. One has to pay one’s school fees by understanding the dynamics in the market, how to operate. I think there’s tremendous opportunities, so FMCG companies, and companies in general, would be churlish not to consider opportunities in Africa... Each country has its own dynamics, you can’t just turn up and expect to do well. You’ve got to find your way, and that takes time.”
Going Local In response to a number of the challenges in its local markets, SAB Miller has created new sub-categories, developing the processes to brew beer using staple crops, such as cassava. This, Bowman said, has a multifold impact. Cassava beer, such as Impala in Mozambique, reduces costs, as locally-grown crops do not attract import duties from the government, and helps to mitigate some of the infrastructure and supply risks that manufacturers face on the continent. Cassava is rarely grown at commercial scale, and providing a guaranteed market and price allows farmers to move beyond subsistence to create small businesses. The brand retails at around 75-80 per cent of premium brews. “We recognise that in Africa one has to be seen as part of the community,” Bowman said. “The best way for us to do that is to be involved in agricultural initiatives that help us manage our costs. It localises our costs into local currency, so we get more stable cost bases.”
Share of the African beer market, 2011 SABMiller 35% BGI (Castel) 21% Heineken 18% Diageo 17% Other 15%
(source: Moody's Research)
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18 \ Entrepreneurs \ July 2012
Bethlehem Tilahun Alemu, Sole Rebels
SoleRebels An Ethiopian start-up has taken traditional sewing skills to create an African footwear brand that is on shelves in Europe, America and Asia. by Tanzeel Akhtar
Growing up in Addis Ababa, Ethiopian entrepreneur Bethlehem Tilahun Alemu witnessed a lack of employment opportunities. As a child she recalls watching her mother and other relatives spin cotton with hand spindles the way it had been done for centuries in Ethiopia, working on the same wooden looms that wove fabric for Emperor Hailie Selassie. Alemu recalls vividly the the frustration she felt growing up - the extreme poverty, stigma, marginalization - as many in her community struggled to find even small jobs. “This was devastating for me as I grew up with them — they were my neighbours, my family members,” she tells Gateway to Africa. “I knew that anything that I did for the community had to be business-oriented. I wanted to show people that if we all worked hard we could have jobs that pay decently, we could all have regular work and we could all start to feel the pride that comes with financing ourselves and not waiting for handouts.” It was in 2005, at the age of 31, when a determined Alemu set out to
change this with the launch of a shoe manufacturing company that uses indigenous materials and crafts, with the now-traditional tyre sole as their products’ distinguishing feature. Alemu recalls, “we riffed and recreated the traditional selate and barabasso recycled car tyre soled shoe that has existed in Ethiopia for a while now. We took an age-old recycling tradition - one that’s endured here since the original Sole Rebels strapped used tires to their feet and fought off the invading Italian forces back in the day - and married it with a bunch of our historical and amazing Ethiopian artisan crafts, and turned it into a market beating export brand that is retailed around the world.” She was confident with her idea, safe in the knowledge that the community already had artisan skills that were in need of being channelled. Her goal was to create a market-leading product and brand, and in turn create jobs Zenabwork, the small village near Addis Ababa, where the factory is located, has virtually no employment at all, Alemu says. Before the launch Alemu - an accountant by training - had been working in the leather and apparel sector in a variety of capacities, which gave her enough industry knowledge to strike out on her own. She had seen charity brands in the international market, but none which used local Ethiopian labour and designs. “After working in the private sector for a while I had a strong desire to start to focus my business skills on my community, which is one the most impoverished areas in Addis. I knew that there were so many talented people there who could do great things if only given a chance. I repeatedly saw what a lot of these people could do in terms of various craft and creative skills.” says Alemu. In 2006 SoleRebels began a two year process that culminated in the company becoming the first ever World Fair Trade Federation (WTFT) fair trade certified footwear company, with every part of its value chain certified as compliant. Fast forward to 2012 and SoleRebels is a fast growing footwear brand sold in the US, Japan and Europe, through stores including Urban Outfitters and Rakuten Javari, as well as online through Amazon. com; is rolling out branded corporate
July 2012 \ Entrepreneurs \ 19
and franchised retail stores around the globe, and is on track to achieve over $15 million in annual revenues by 2015. The company hopes to add 300-500 domestic full time paid jobs over the next 12-36 months and over 600 global jobs by 2015. Growing in scale has not changed how the company works, however. “The ethos that we founded the company with still resonates,” Alemu says. “Even though we have grown we still recruit and employ local folks from inside the wider community, people who might otherwise have a hard time finding a well paid job close to their home.” She highlights the fact that SoleRebels takes in people who may not have experience but have talent, and rewards them accordingly. “We pay for them as they are trained in our methods of craftsmanship and then we allow their talent to flourish and let them reap the financial rewards for that,” she says. “I am proud that we have shoe designers in our company who make more than surgeons; and that we have sewers who make more than bank managers, and that we employ people that have been able to buy their own houses.” Alemu is a role model for many Ethiopians. She believes first and foremost in the value of education - not a given for women in the country - but warns that equally, her success is built on hard work. She that adds a lot of people flippantly throw around the phrase “overnight success” but there is no such thing as “overnight success”, so get ready to work extremely hard. “I am proud to say that when we have big deadlines to meet I am right there side by side at the production table with my artisans assembling shoes. So you have to have a mentality of being ready to do whatever is needed to make your customer absolutely ecstatic from your work. If that means getting dirty, and staying up late be ready for that,” says Alemu. Her aim is to push on continue creating widespread and lasting prosperity, “Ethiopia and Africa need to create and control more globally successful brands,” she says. “Those brands create great products for their customers and great jobs for their workers. It is the same formula that nations around the world have used to create prosperity for their nations and people.”
Andrew Muir, Wilderness Foundation
Wilderness Foundation A South African foundation has turned conservation education into an industry, preparing young people for jobs in the tourist industry. by Tanzeel Akhtar
Some of the world’s most important habitats, South Africa’s wildernesses are under threat from the expansion of human populations. At the same time, that growing and young population is struggling to find gainful employment and escape the cycle of poverty. Set up in 1972 by conservationist Dr Ian Player, the Wilderness Foundation
finds ways to use these hinterlands to achieve social change in South Africa. Since its inception, more than 100,000 participants have benefitted from the organisation’s projects – the majority of whom are youth from disadvantaged and vulnerable backgrounds. Conservation is heavily dependent on economic and socio-political conditions, and the foundation aims to use development in one to support the other. So far over 200 000 hectares of African wilderness have been rehabilitated and expanded in the interest of conservation. One of the highly successful projects initiated by the organisation’s current executive director, Andrew Muir, is the “Umzi Wethu” model, for which he was recently awarded African Social Entrepreneur of the Year by the Schwab Foundation for Social Entrepreneurship. At the three Umzi Wethu academies in South Africa, young men and women between the ages of 18 and 25 are trained in specific vocational skills to prepare them for jobs in the eco-tourism and hospitality sectors. These sectors have been identified through a needs-based analysis of the market current job market in South Africa. Approximately 40 vulnerable youth are selected annually to join the programme. Following graduation, all students are assisted with job placements or internships with Wilderness Foundation partners. “It tackles the issues of unemployment, poverty and lack of adequate workplace skills in vulnerable and previously disadvantaged youth,” Muir said. The Umzi Wethu model builds on the success of the Wilderness Foundation’s existing environmental education projects Pride and Imbewu. These introduce previously disadvantaged youth to local wilderness areas, where they experience physical and emotional healing through identifying with their natural heritage as well as coming to an understanding of their place and purpose in the world. The project includes a strong conservation ethos together with skills training. Muir said the success of the Umzi Wethu model lies in its holistic approach to training. “It is not just a skills-based educational programme. It also includes individual counseling for personal growth and development of the students, life skills education and environmental awareness training,” he explained.
20 \ Entrepreneurs \ July 2012
Kojo Addo-Kufuou, Ghana Home Loans
Ghana Home Loans Three entrepreneurs have taken a model for housing finance from South Africa to Ghana’s crowded cities.
It might look like the ultimate in sub-prime instruments, but Ghana Home Loans, which has driven the resurgence of a mortgage market in the West African country, wants to take its products across the region and finance their portfolio by securitising their portfolio. The company launched in 2006 after a few years of fundraising by its founders Dominic Adu, Kojo Addo-Kufuor and Ellis Atekpe. Adu and Addo-Kufuor were working in Lagos for private equity company
Actis and for Citigroup, respectively, while Atekpe was in Accra running the mortgage operations of HFC, a local bank. “The view we took was that Ghana was really transitioning into middle income status, and with middle income comes various things - acquisition of homes, cars, credit cards, certain must-haves of every middle income countries,” Addo-Kufuor, now chief operating officer, explained. HFC had been in the market for 20 years, but its housing finance operations were only a small part of its banking business. They settled on a model pioneered by South Africa Home Loans, which raised capital from development finance institutions and the capital markets and then tailored mortgages to match the terms of the loans. Simon Stockley, SA Home Loans’ founder, joined as chairman, and a number of investors came on board, including Standard Bank, the Dutch development financier FMO and the International Finance Corporation. Since then, GHL has raised funding from FMO, the French private sector development fund Proparco, the US Overseas Private Investment Corporation and Sheltafrique. The team had got to the point of discussing further financing from private sector investors from Europe in 2008 when global conditions changed dramatically. “They were getting comfortable at the point when the credit crunch hit, and mortgages were suddenly off the table. And the same with pension funds and other people we would have been talking about it with,” AddoKufuor said. “Gradually that interest is returning, and it’s coming back at a time when we have an even better story to tell, because our loans have a five-year story.” Ghana made the transition to middle income status in late 2010 - before its began pumping oil commercially. The country is forecast to grow around 7.5 per cent in 2012, following more than 14 per cent growth in 2011. This has translated into a huge and growing demand for modern housing, which developers are struggling to keep up with. Even so, mortgages have been a hard sell in some cases. Ghanaians still
prefer to build their own houses from scratch, a practice that is entrenched and hard to change. “What you would typically do in Ghana is, you would buy land from a chief or the government or some other institution, you would get an architect and a builder together, give them some money and build your own house,” Addo-Kufuor explained. “The problem with that is, if you don’t have ready money sitting in the bank account, you get stuck. If you drive around Accra, you see a lot of uncompleted houses, for that reason.” GHL has been marketing direct to a younger generation to educate them about the benefits of mortgage finance, and they are, he said, making ground. For those that insist on the old ways, the company has developed products - home construction and home completion mortgages - to meet their needs. The group also hopes to expand into deposit-taking and insurance, and may look at entering the construction business “as a last resort” if the undersupply in the market persists. It is also looking to diversify geographically to other countries with similar demographics. That, in light of the mortgage market crash in the US, might look a little too speculative for most international investors - until they look at the underlying portfolio, he insisted. “The difference between what we do here and what your typical investor might be used to in New York or London is that we’re still very much in the 80s or 90s, we’re pre-credit crunch,” The vast majority - 85-90 per cent of customers - are first time buyers. They are two income households, often with additional sources of revenue, such as taxis or buses, alongside their day jobs. The family lives in the house, and they fight to make the payments despite fluctuations in currencies and interest rates, according to Addo-Kufuor. “There’s no social housing, there’s no council flats. There’s no halfway situation. Here, people really think long and hard before they default,” he said. “I know it’s counterintuitive, because an institutional investor will think it’s coming out of sub-Saharan Africa, it must be a bit questionable, but that’s the reality.”
July 2012 \ Entrepreneurs \ 21
Nairobi Java House, Kenya
Nairobi Java House A coffee shop started by relief workers has become a local favourite, attracting private equity investment to expand regionally.
International visitors to Nairobi tend to remember Java House as the crowded café in the departure lounge at Jomo Kenyatta International Airport, where tourists missing their Starbucks fix get the nearest Kenya has to offer. The company, started with modest ambitions by three US relief workers in 1999, is the country’s leading branded food chain and now runs 14 branches in the Kenyan capital, as well as four “Planet Yoghurt” frozen yoghurt outlets. In May, Nairobi Java House signed off on an undisclosed investment from private equity house Emerging Capital Partners, and is now planning its expansion first outside of Nairobi - starting with Nakuru, Mombasa and Kisumu - then outside of Kenya into the rest of East Africa. “We wanted to open up a place where we could have a good cup of coffee, without any idea about setting up a brand or anything like that. It just took off from there,” Kevin Ashley, Java House’s CEO and cofounder, said. Unlike the airport branch, the vast majority of the chain’s customers are Kenyans, whose increasing wealth and consumption have driven
the company’s expansion. The country’s economy has been growing consistently for the past decade, dipping only once, in the violent aftermath of the disputed 2007 general election, and with economic success has come an emerging middle class, who expect higher quality, more formal food outlets. This kind of business stands or falls on its ability to maintain its quality and consistency of service, which means its supply chain and management teams. As Bryce Fort, managing director at ECP, said: “Restaurants in the region are a combination of a branded seating area and a big logistics chain in the back, with a kitchen in the middle. We thought the guys at Java really demonstrated their ability to manage all elements of that value chain.” Ashley believes that Java’s current supply chain architecture can handle a doubling of the company’s business, even when it moves away from its home base in Nairobi, due to the size of the tourism industry. For Ashley, the expansion is going to create a whole new set of challenges - not least that of turning a quintessentially Kenyan brand into something with international appeal but he is confident. “I’d never run a chain of 14 restaurants before,” he said. “You learn it as you go. We’re going to learn to run a branch in Mombasa as we go, and we’ll learn to run a branch in Uganda without having all the answers before we start.” One thing he is certain of, however, is that he is not going to go the route taken by some of the world’s larger chains and make Java House into a franchise. “I grew up in Southern California, so I have sort of a negative view of corporate chains generally, because you’re surrounded by them,” he said. “It’s Jenny’s, Chili’s, Appleby’s. You lose that human touch. You feel there’s a disconnect... My view is that if someone wants to establish a franchise model for Nairobi Java House, maybe they can buy the company from us, but it’s not something that we think is good for our brand right now.”
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July 2012 \ Destination \ 23
Mali Capital: Bamako Head of State: Dioncounda Traoré Population: 14.5 million GDP (2011): $18.3 billion GDP Growth Rate (2011): 5.3% Currency: Communauté Financière Africane Franc (XOF) Main Exports: Gold, Cotton and Livestock Randgold mining facility, southern Mali (Randgold)
Despite a reputation as one of Francophone Africa’s more stable democracies, in March of this year Mali things changed swiftly and dramatically. The president, Amadou Toumani Touré, was deposed in a coup that seemed almost accidental, replaced by a military junta fronted by Captain Amadou Sanogo. The country’s current troubles can be linked directly back to the fall of Muammar Gaddafi’s regime in Libya. Gaddafi routinely deployed Tuareg mercenaries, paying them well with petrodollars and equipping them with modern weaponry. These fighters returned to Mali after the revolution, turning a long-simmering insurgency in the north into an unstoppable advance that saw a combination of Tuareg and Islamist groups marching into key cities. The government in Bamako, long criticised as being ineffective and out of touch with its people, was slow to respond to the threat. As the war clearly turned against them and casualties mounted, citizens began to protest. On March 21, a protest by soldiers against the defence minister north of Bamako escalated into a riot. The troops armed themselves, stormed the presidential palace and Touré went into hiding. Turareg forces continued to make gains in the north, capturing the northern capital of Gao and surrounding Timbuktu, and in Bamako the coup leaders struggled to maintain control. However, by mid-April the junta had handed control over to an interim president, Dioncounda Traoré, and a prime minister, former Microsoft executive Cheick Modibo Diarra, had been appointed to
24 \ Destination \ July 2012
assist in the transition to civilian rule. In a sign that control was far from complete, Traoré was injured after a mob broke into his office and remains in Paris for medical treatment. Regional groups spoke out strongly against the coup, but since the moves towards constitutional rule, they have begun to declare their support for reinforcing Mali’s institutions and helping to tackle the threat of the northern rebel groups, who are said to include fighters from the radical Islamic groups Al Qaeda in the Islamic Maghreb and Boko Haram. Nigeria, Niger and Senegal have pledged to provide troops for a 3,000-strong force to prevent further fragmentation of the Malian armed forces and, if peace talks fail, to drive back the insurgents in the north. However, the UN has as yet refused to back any military engagement.
Mark Bristow, CEO of RandGold, Mali’s largest investor. (Randgold)
Mali Business Case Study
When restive soldiers took over the presidential palace in Bamako, Mali’s biggest international investor - and taxpayer - was already on the ground. Mark Bristow is the chief executive of Randgold, which operates three mines in the country, and a long-time advocate of the country’s potential. As the political transition progressed, Bristow was on the phone to international and trade media outlets trying to reassure investors that
the business was not under imminent threat. From the outside, the change of government looked like a return to the bad old days of junior officer coups in West Africa, but Bristow insists that this was “absolutely, fundamentally different.” Parliament was never dissolved and the organs of government, by and large, remain intact, Bristow said in an interview with Gateway to Africa. “When it happened, within 24 hours we had met with the junta. At no stage did anyone try and dismantle government or interfere in any contractual obligations from investors. If anything, there’s been constant reassurance,” he said. “We’re the biggest investor in the country and the biggest taxpayer. We certainly haven’t been harassed or picked on, and everybody including the junta leaders have gone out of their way to ensure that we were able to continue to operate and deliver on our side of the bargain.” A veteran of working in Africa, there is a sense that Bristow feels vindicated by his early stance that Mali’s turmoil would not dissolve into the kind of chaos that typified transitions in the 80s. Bristow also managed Randgold throughout a violent transition in Cote d’Ivoire in 2010, bringing the company through broadly unscathed. The reason, he says, is engagement. His senior team are on the ground, they “know the lie of the land”, invest in local communities to ensure they maintain a “social license to operate” and pay their taxes. He feels that it is this that enabled him to make the right calls to stick to his guns in Cote d’Ivoire and Mali when others were looking for the panic button. “I would just point out, I made those decisions [in Cote d’Ivoire and Mali] at the moment and I have been right. I did not make those decisions after the event,” he said. As for Mali, he remains optimistic, saying: “I have no doubt in the medium term Mali will benefit from this more than they will suffer from it. I know the Mali people and it’s made them realise how precious democracy is, and how much the world really looked at them as a glowing example of being able to manage a democratic institution in the form of government in a country which is one of the poorest in the world.”
26 \ Business Life \ July 2012
Investing in African Modern Masters South Africa’s artists are gaining in profile both in Africa and internationally. As well as being important cultural touch points for the continent, they are also emerging as sound investments. by Louise Niemann
Global investors are only now beginning to wake up to the value of Africa’s resurgent consumer and financial markets, despite a decade of high growth. The success of many economies, including South Africa, has created a concurrent appetite for cultural expression - which can be equally lucrative. The South African art market, currently valued at £100m¹, has experienced phenomenal growth during the past decade. Prices for top South African art are estimated to have increased by more than five times during this period, according to Strauss and Co., the market leader for South African art auctions. This growth has been accompanied by increased international attention, due to emigration of wealthy South Africans, the development of a global art market, and an increased pool of capital seeking alternative assets. Auction records for four of South Africa’s top 10 artists (see Table 1) were attained abroad. This extended collector base has resulted in an increased demand for quality art from top artists. The attention and publicity of the past decade was predominantly focused on Irma Stern and Jacob Hendrik Pierneef. A shift in collectors’ sentiment towards less recognised artists, who present good relative value, has recently been acknowledged by Strauss & Co. This has shone light on South Africa’s black modern masters: Gerard Sekoto, George Pemba, Sydney Kumalo and Lucas Sithole. These artists are remarkable for their sublime natural ability and their perseverance under hugely difficult and compromising conditions, such as exclusion from education and limited outlet for work. They created poignant, unconventional and fearless work in the face of poverty, alcoholism, confinement, and exile. The following is an introduction to six of these masters.
Dumile Feni Master of Turbulent Drawings Feni Dumile, Man drinking (240cm x 102cm), Johans Borman Fine Art, Cape Town, South Africa
July 2012 \ Business Life \ 27
Gérard Sekoto (1913 -1993)
Dumile Feni (1942 – 1991)
Dumile was the troubled brother of the Modern African Masters. His work and lifestyle provoked the authorities, which led to self-imposed exile in 1968, at the age of 26. He lived in London and New York, and despite well received exhibitions, never managed to escape humiliation, poverty and loneliness. His powerful, intense and expressive drawings inspired artist, such as William Kentridge. Man drinking is a cutting example of his best work, which was created between 1965 and 1968. His drawings of distorted figures, depicting a magnitude of emotion, turbulence, and human debasement stemmed from deep-rooted anger and despair at the repression he observed and experienced increased demand as Africa Continues to Grow The extraordinary achievements of African Modern Masters are not yet fully grasped and recognised. Continued economic development in key African economies, with a resulting rise in middleclass, will increase the demand for the art and artists of South Africa. To quote The Economist, “From Ghana in the west to Mozambique in the south, Africa’s economies are consistently growing faster than those of almost any other region of the world.” – Dec 3rd, 2011, Africa’s hopeful economies. Aside from investment value, these artists’ legacies provide a fertile ground for the development of Africa’s contemporary artists.
Sekoto, a self-taught pioneer of Modern South African Art, is renowned for his unique ability to portray dignified, colourful and anecdotal glimpses of township life. Schoolgirls is a telling example of his fearless use of bold colours and engaging subject matter to create work of instant emotional appeal. His defining years, spanned the decade before his self-imposed exile to Paris in 1947, at the age of 33. In Paris, he lost his way. Lack of recognition, poverty, and alcoholism took a toll on his health and art. Sekoto remained in Paris until his death in 1993, unable to recreate the masterpieces of earlier years, with the exception of the“Blue Heads” series painted between 1960 and 1965.
Gérard Sekoto Master of Anecdote Gérard Sekoto, Schoolgirls, Sophiatown, Graham’s Fine Art Gallery, Johannesburg, South Africa
Sydney Kumalo (1935 – 1988)
Kumalo created distinct, powerful African expressions that combine strong local identity with European Modernism. He joined the Polly Street Art Centre in 1953, first as student, then as assistant to Cecil Skotnes, and later as teacher. In 1964, after several successful exhibitions and commissions, Kumalo embarked on a full-time professional art career, a monumental feat for a black South African artist at the time. A true role model, Kumalo inspired students, such as Ezrom Legae, Leonard Matsoso and Louis Maqhubela, who in their own right became outstanding artists.
Sydney Kumalo Master of African Expression Sydney Kumalo, Leopard. Collection of the Village Trust
£11, 000, 23 hammer price Sold by Bonhams, UK
Ephraim Ngatane (1938 – 1971) Ngatane developed a unique style of abstraction, which captured the hustle and bustle of township life, and stood out from traditional township expressionism. His vibrant, visual chronicles of music, sport and social life, e.g. Township scene with donkey cart, revealed the warmth that existed in these overcrowded, deprived communities. This accomplished jazz alto-saxophonist and artist, who was taught by Cecil Skotnes at Polly Street Art Centre, died of tuberculosis at the age of 33.
Ephraim Ngatane Master of Township Abstraction Ephraim Ngatane, Township scene with donkey cart, Johans Borman Fine Art, Cape Town, South Africa
28 \ Business Life \ July 2012
Lucas Sithole (1931-1994)
Sithole, a leading contemporary sculptor of his time, is renowned for his poetic work in indigenous woods. His art, unmistakably African, is universal in its ingenious and compassionate expression of emotion and human condition. In Mother and Child, the sculpture’s surface was coarsened to further enhance its vulnerability and emotional qualities. The opposite technique, i.e. a high polish, was often used to evoke illusion and mystery. Sithole’s work has received much recent attention, with three top auction results achieved during the past 12 months.
George Pemba (1912-2001)
Pemba gained recognition as a supremo of Social Realism in his late seventies, at the end of an art career that spanned 6 decades. Poverty, responsibility for a large extended family, and alcoholism precluded him from painting full-time until 1979. He worked mostly in isolation and was inspired by books on French Impressionists, Rembrandt and Velásquez. Pemba’s oeuvre provides a visual history, as in Portrait of a Young Man, of the impoverished impact of apartheid on an urban black working class. He is also renowned for his portrayal of rural tribes and customs.
Lucas Sithole Master of Visual Poetry Lucas Sithole, Mother and Child (LS6902).
£40, 196 hammer price
Sold by Strauss & Co, South Africa
Based on total auction results of between £35m-£40m (2010 VANSA report, results from Strauss & Co and Bonhams). It is further assumed that auction turnover represents between 30%-40% of the market. References: Strauss & Co, Review 2011 Esmé Berman, Art & Artists of South Africa, 1994, Southern Book Publishers www.pelmama.org www.johansborman.co.za www.everard-read.co.za www.sahistory.org.za www.straussart.co.za www.stephanwelzandco.co.za www.artprice.com
George Pemba Master of Township Realism George Pemba, Portrait of a Young Man,
£37, 233 hammer price
Sold by Strauss & Co, South Africa
July 2012 \ Business Life \ 29
The South African Sale Wednesday 17 October New Bond Street, London Entries now invited
Closing date for entries: Friday 3 August +44 (0) 20 7468 8213 firstname.lastname@example.org Irma Stern (1894-1966) Washerwomen ÂŁ200,000 - 300,000
International Auctioneers and Valuers - bonhams.com/southafricanart
30 \ Final Word \ July 2012
Zimbabwe Motor Industry Back on the Road? by Moses Sibanda
“Isn’t this the car that James Dean died in?” The man asking the question is captivated by a 1967 Corvette Stingray displayed on the Chevrolet stand from Autoworld at the Annual Zimbabwe Motor Show that took place in Harare in May. I tell him that James Dean died in the fifties in a 1955 Porsche 550 Spyder and he moves off to admire the brand new Chevrolet Lumina, the type of muscle car that has become a favourite of emergent Zimbabwean businessmen in recent months. There are also glittering displays from Land Rover, Mercedes Benz, Isuzu, Chevrolet, Nissan, Hyundai, VW and BMW, and the circa 10,000 visitors at the event seem to bear testimony to the potential new market for cars in Zimbabwe. However, with an economy on shaky ground and import regulations a Spaghetti Junction of bureaucracy, how can the average Zimbabwean afford such vehicles? Little ones at the bottom: Zimbabwe Motor Show 2012
With Japanese used imports outselling new vehicles at eight to one, it is easy to see that the majority of the motoring public cannot afford new cars on Zimbabwean salaries. Who is buying the cars then? There are the returning residents who are exempt from duty and the big fleet corporate customers. However the expensive models are clearly aimed at the upper middle-class emergent businessmen who have cash to burn and an image to build. Prices ranged from as low as $11,625 as represented by the likes of Chinese brand, ‘Chery’ to the truly stratospheric represented by the likes of the new Mercedes $153,000 M Class. Finance is slowly becoming available through banks like Banc ABC and Credfin, although interest is from 25 per cent upwards. All but the most luxury brand exhibitors had a range to suit many pockets. Could a new car once again become affordable to the man in the street? It could for middle income earners who are eligible for the finance schemes. One gets the feeling that the Zimbabwe motor industry which has been in the workshop for so long might be getting back on the road.
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