The world is still reeling from the shock of the financial crisis of 2008. For South Africa, the biggest takeaway was there are no substitutes for strong institutions.

It has already been 10 years since the collapse of Lehman Brothers in the United States (US), an event that shook the world and triggered the biggest financial crisis since the Great Depression of 1929.
People from New York to London, Hong Kong to Johannesburg, lost billions as stock markets crashed and the global economy plunged into recession.
Watching it all happen was Russell Loubser, the former boss of Africa’s largest stock exchange, the Johannesburg Stock Exchange (JSE), located on Gwen Lane in the plush suburb of Sandton. For him, memories of September 15, 2008, are as clear as day.
“I will never forget it, I was too scared to leave the building,” says Loubser.
<div id="attachment_37534" style="width: 210px" class="wp-caption aligncenter"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-37534" class="size-medium wp-image-37534" src="https://www.forbesafrica.com/wp-content/uploads/2018/10/GettyImages-94887185-200x300.jpg" alt="" width="200" height="300" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/10/GettyImages-94887185-200x300.jpg 200w, https://cms.forbesafrica.com/wp-content/uploads/2018/10/GettyImages-94887185-300x450.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/10/GettyImages-94887185-600x900.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2018/10/GettyImages-94887185-768x1152.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2018/10/GettyImages-94887185-683x1024.jpg 683w, https://cms.forbesafrica.com/wp-content/uploads/2018/10/GettyImages-94887185.jpg 1365w" sizes="auto, (max-width: 200px) 100vw, 200px" />Russell Loubser.</div>
<blockquote>“I was convinced the world financial markets were on the brink of collapse.”</blockquote>
He wasn’t alone.
Never before had the world seen such a crash of that magnitude. Finding an investor that thought rationally was almost impossible. Panic was the name of the game. This showed in the 40% plunge in share prices across the JSE. The JSE all-share index nosedived from about 32,000 points to just below 18,000 as investors tried to save as much money as possible by exiting the risky bourses. The rand’s fortunes were no different (it weakened from XXX to the dollar and settled at XXX).
And despite repeated calls for calm, there was very little bosses like Loubser could do.
“I remember I was contacted by my regulator, the FSB (known today as the Financial Sector Conduct Authority or FSCA) and the South African Reserve Bank (SARB), and asked what we were doing about stabilizing markets.
“Other stock exchanges stopped trading and banned short selling. I said we would not do the same thing because short selling is a vital exercise that allows overvalued share prices to be brought back to market levels under controlled circumstances. And we had that,” he says.
Turns out, the former JSE boss made the right call as stock exchanges in New York and Europe that had banned trading, eventually reversed what they had panicked into.
So what was really behind the crisis?
<a href="http://www.forbesafrica.com/focus/2012/05/01/time-africa-cash-now/" target="_blank" rel="noopener">READ MORE: The Time For Africa To Cash In Is Now</a>
Simply put, greed, reckless lending, poor management and loose regulations. Bankers from mainly America cashed in on opportunities to make big bucks from buying up cheap US home loans, packaging them with better quality mortgages and then selling them on as risk-free assets known as mortgage-backed securities.
They lent recklessly even to people whose credit scores were not up to scratch. In 2006, when interest rates in the US started rising, many Americans could no longer afford their home loans and defaulted. House prices subsequently fell and the securities initially deemed risk-free were revealed to be toxic resulting in big losses. The collapse of Lehman Brothers was the match that set the crisis alight.
Big US banks like Citibank, JPMorgan and Merrill Lynch had to be bailed out by the Federal Reserve. Then chair Ben Bernanke, along with other central bank chiefs in Europe, entered uncharted waters. They printed trillions of dollars to starve of the drought of liquidity in the financial system. These unconventional monetary policies were known as quantitative easing (QE), something Japan had been doing prior to 2008.
Many South Africa banks, however, suffered minimal losses and remained sound. Even those with their headquarters in New York and London like Citibank, Goldman Sachs and HSBC. The South African Reserve Bank (SARB) governor at the time, Tito Mboweni, explains why.
“Mine was a basic Tzaneen approach”, says the former governor referring to the tropical garden town located in the Limpopo province of South Africa. “You don’t adopt what you don’t understand,” he adds, speaking of the synthetic derivative products used by American bankers in the build-up towards the crisis.
“Thank God I didn’t understand a damn thing. Growing up in Tzaneen helps, it kind of makes you slower but that saved the situation,” he says with sarcasm.
Looking back at what the former South African governor describes as a traumatic time when headline inflation reached 11.5% &#8211; the worst in two decades – and prime lending rates spiraled to 15%, he says one of the most revered institutions in the country did the right thing by sticking to its mandate of inflation targeting.
He says its ability to act independently during that time was and still should be, sacrosanct.
Sizwe Nxasana, the former CEO of FirstRand, one of the biggest banks in South Africa, agrees SARB played a big role in averting a banking crisis in the country and a run on the banks.
“Clearly, there was a lot of concern at that time. What helped calm people down was the messaging from the SARB that the risk for retail depositors (losing their money) was low. That assurance helped.”
He also agrees that global central bankers made the right call by implementing QE.
“When you look at what was going on at that time, the response was absolutely correct. They injected liquidity, which is the lifeblood of the banking system. The impact was that confidence was returned to the banking system, although this has had some unintended consequences,” he says.
One of these consequences that arose with tighter lending criteria has made banks more cautions to lending to small business and startups, deemed more risky, even though these enterprises are pitted as the future economic-spinners and job creators for Africa’s economies.
So what are the lessons learned from the biggest stock market crash the world has seen?
For Donna Nemer, the ex-CEO of Citibank South Africa, one of the American banks that lost billions during the crisis, it’s a return to basics.
“What we saw after that were very significant changes that happened in banking. There was a far greater focus on compliance, security and risk… I believe the world has learned a lot, some of that regulation may have been too tight but the bulk of regulation was good,” she says in reference to the Twin Peaks and Basel codes that caution banks to exercise greater prudence in lending and risk management.
For governor Mboweni, the biggest lesson is to never allow the banks to run away with products that banks can’t regulate. And for the former boss of the JSE – the biggest takeaway from the historic crash is that there are no substitutes for strong institutions like the SARB and the FSCA. “People come and go but institutions must be left to continue.”
When I asked the experts whether the 2008 financial meltdown is the last the world has seen or are we at risk of another crisis? The response of caution, that there would be another seismic event that would shock the financial system, was unanimous. It’s not clear, however, where it would come from.
One of the potential triggers was the looming trade war between the world’s biggest economies – China and the US. The end of QE, rising US interest rates and lower US corporate taxes, was also flagged as a risk. Unconventional monetary policies benefited emerging markets, which offered investors better financial returns than their US counterparts, helping their currencies strengthen. The risk is that the reverse will happen or the unexpected may occur because the reverse of QE has never been tested before. The 2008 crisis took the world by surprise and many continue to worry about it 10 years on. The world is wiser, but really, is it?
&#8211; Fifi Peters

Lehman Brothers Files For Bankruptcy Protection

The Crash – 10 Years On

It was a gloomy winter’s day outside the domed Good Hope Centre in the heart of Cape Town. Table Mountain peeped through the clouds and a slight drizzle pattered gently against the concrete roof. It was July 18, 1998, the day that saw the money of poor people stand shoulder-to-shoulder with the rich. A day the dream of turning $840,000 into $628 million took root.
This was the moment when Brimstone Investment Corporation Limited listed on Africa’s largest bourse, the Johannesburg Stock Exchange (JSE). It carried the hope of small shop owners, fishermen and teachers who had put their life savings on the line.
“It was early days at the Good Hope Centre, which is at the foot of District Six, what was then called the Fruit and Veg Market. We had this view we were taking the people to a different kind of market, the market of high finance,” chuckles Fred Robertson, Executive Chairman of Brimstone.
Many of the thousand shareholders that gathered ran the same streets as Robertson. The future entrepreneur and millionaire sold newspapers, apples and popcorn in cinemas in District Six. The company’s choice of District Six as the launch pad for wealth for the people was no accident – rather an unspoken statement. In the 1970s, the apartheid authorities moved Robertson and 60,000 of his neighbors to make way for white residents.
“You must remember there were forced removals across the country, not only in District Six. But we were thrown across this piece of wasteland called the Cape Flats. Families were taken apart. Friends and neighbors were all thrown. We were a family of nine children. My sisters were in different townships. Our family started disintegrating at the time,” says Robertson.
All this was a distant, if painful, memory as the shareholders in the Good Hope Centre stood nervously staring at two large computer screens as they flickered into life. Most knew little about the shares their money had bought. They were a cross section from the margins of Cape Town: the sort of people who walked to work with little money to spare.
This listing was also proof of the promises from Robertson, a former teacher, and his partners Mustaq Brey, a self-taught chartered accountant from Wynberg, and Lawrie Brozin, another chartered accountant who joined the company from his family business in Illovo, Johannesburg; three men, three worlds, three religions; one fear shared with their shareholders – a loss.
“We are talking about a community that was previously disadvantaged that didn’t know about stocks. We listed at R4 ($1.12) and came off at about R6 ($1.68),” says Brey.
“Life was good then, hey?” laughs Brozin.
Since that soggy day in July 1998, the investment company has gone from strength to strength. Brimstone these days claims assets worth $628 million, with an intrinsic net asset value (INAV) of R17.09 ($1.48 in June 2014) a share, a far cry from R4 ($1.12 in 1994) on day one at the JSE.
After 20 years of investment, the group employs around 3,300 and has 16,000 subsidiaries. Its associates are among the biggest names in Africa: Life Healthcare, Oceana, Sea Harvest, Lion of Africa Insurance, Old Mutual, Nedbank, Tiger Brands, Grindrod Limited, The Scientific Group, House of Monatic, Taste Holdings, Afena Capital and Rex Trueform.
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Chili Poppers
The Brimstone trio reflect on leaner times in their humble offices at the back of Newlands cricket ground on a brighter day. Around the boardroom table the mood is easy. In between questions, at least one of the three will reach out to snap up a steaming spring roll or a chili popper, made by Brey’s sister Bibi.
“Your sister is the best cook, I am telling you now,” says Brozin to Brey.
Bibi’s spicy tidbits are a small reminder of how everything, as Leonardo da Vinci said, is connected to everything else. In 1994, Bibi, along with her chili poppers, was at the first Brimstone shareholder meeting in the small Newlands Grounds South Club, a stone’s throw from this boardroom.
“We called in a whole lot of people together and explained to them what we wanted to do. The meals we ordered were from Bibi, she then brought us a bill the next morning,” says Robertson.
“For R5,000 ($1,400),” says Brey, ever the accountant.
“And we then gave her a share certificate,” says Robertson.
“I then said ‘you owe me another R12,500 ($3,503)’. She said ‘I owe you money?’ And I said ‘yes’. She ended up paying the extra money and landed up with 5,000 shares,” says Brey.
“Six thousand seven hundred and fifty shares [in total],” corrects Robertson.
Back in 1994, it wasn’t just the chilies that were popping. In that year, the shareholders spotted their first hot deal. They called it the Oceana deal: a 9.73% stake in Oceana Group, a collection of operating subsidiaries in the fishing and cold storage industries along South Africa’s west coast.
“The bank told us they would give us a loan of R4 million ($1.1 million). We had to raise another R3 million ($842,000) in six weeks. We went door to door. I even remember organizing a bond on the one shareholder’s house to get some money,” says Brey.
“At the time you were starting a company. It’s not like you were buying a company. It was an idea. You were backing guys,” says Brozin.
By 1995, the deal was done; the first drop in an ocean of investments that was to make more than a few waves. Word spread to the ear of former head of state Nelson Mandela.
“Mandela was one of our first shareholders. He paid for shares, like everybody else paid for shares. He saw it in the newspaper and then called us to the presidency and said he also would like to invest, like everybody else. And we said ‘yes of course,’” says Robertson.
“He bought 240,000 shares with
a cheque of R300,000 ($85,000),”
says Brey.
Foul Weather On The Horizon
It was not all fair winds and following seas. Storm clouds loomed over the horizon as foul weather threatened to sink Brimstone.
“In 1995/96, it was the start of a huge boom in the stock market. South Africa was in a fantastic space. Everyone was listing. We used my house as an office in Illovo, a study at the bottom. We had cigars and whiskey. It was just such a crazy time. We became quite substantial after about a year because the market carried us. Then the music stopped,” says Brozin.
The financial storm hit in August 1997.
“The world financial markets were in turmoil. At the listing time it had been up to R6 ($1.68). Our INAV, if you did a calculation of what our values were, it was then R2.50 ($0.35) at that stage,” says Brey.
By 1998, Brimstone’s share price almost hit the seabed.
“Then the vultures came out and said they wanted to buy us out. They told us we could make R150 million (around $30 million)… A financial group in Johannesburg came to us and said why don’t we delist Brimstone, buy the shareholders out at current market price. Buy them out at a rand. Sell all the assets and then make R1.50 (30 US cents) profit,” says Brey.
“But we said we don’t want to leave Cape Town. We’ve taken money from the people from the [Cape] flats; we’d have had to run out of Cape Town if word got out that we’d do something like that. It was unethical. What we then decided to do was sell off all liquid or listed stocks, the easily sellable stuff. Turn that R1.50 and give back capital of R1.50 to our shareholders. Our shareholders liked it, but the market didn’t. Our price went down to about 20 cents ($0.03) in October 2001,” he says.
“The lowest of the low our share was 18 cents,” says Brozin.
In those days, you couldn’t even buy chewing gum for that.
Brimstone weathered the storm and looked to the ocean for salvation. In 2003, they doubled a stake in Sea Harvest to 61.44%, one of the largest hake producers along the west coast – its gross value in 2014 was at just over R557 million ($52 million). The waters appeared to have calmed and the shares rose with acquisitions into Old Mutual (now at $22.4 million), Nedbank (now at $47.5 million), Life Healthcare (now at $202 million) and Oceana (now at $162 million).
Five years later, another whirlwind hit. This time it was the 2008 global financial crisis, in which the whole world got soaked. Companies floundered after the United States (US) property bubble burst. Sub-prime mortgage-backed securities on US property price estimates crashed. The knock on effect hit Cape Town with a vengeance. Brimstone’s headline earnings went from just over R752 million ($69.9 million) in 2007, to a headline loss of about R77 million ($7.1 million) in 2008.
“Looking back over the past year, it was a period that brought some extraordinary challenges. The turbulent and perhaps up to this point, unprecedented deterioration of the global financial market, has and will for the foreseeable future continue to impact on economies, businesses and ordinary people across the developed and developing world. Like many other companies, Brimstone has not escaped the effects of the negative market,” wrote Jakes Gerwel, former Director-General of the Presidency when Mandela was in office and the Non-Executive Chairman of Brimstone in 2008.
By the end of 2008, Brimstone’s net asset value had declined to $204 milion, an erosion of 7.7%.
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Turning Point – Life Healthcare
Joy came in the morning. To the rescue was a lifesaver in more ways than one. The Life Healthcare deal, struck in 2005, matured in 2010 just in time to save the company.
“Life Healthcare issued almost double equity on our shares. In June 2010, we unbundled Life Healthcare and created significant wealth for our shareholders,” says Robertson.
The unbundling threw off the recession and stabilized Brimstone’s name in the investment business. It was a good time to be in the South African private healthcare market with a growing and aging middle class and a cash strapped public health system.
These days, Brimstone’s 5.04% share in the private hospital operator is valued at over $202 million. It’s an important part of the $628-million company. Brimstone’s share price now sits at R17 per share, a far cry from the dark days of 2008 and $0.03.
So, do they think that their shares are undervalued or overpriced on the JSE?
“We’ve always been selling at a discount. We trade at about a 20 percent discount. You will see most investment holding companies will trade at this,” says Robertson.
In the last year, the company has been busy. In April, they sold their shares with the diagnostics group, The Scientific Group (SG), to Ascendis in a deal worth R284 million ($26.7 million). In July, they also led a R1.6 billion ($151 million) transaction giving them an 4.97% share of Grindrod, the South African-based freight holdings company.
“Over the past 10 years, Brimstone has delivered an annual total return of over 40 percent to investors. Over the past year, Brimstone’s exposure to the fishing industry in particular, through Oceana Group and Sea Harvest, as well as its investment in Tiger Brands, has boosted its performance. The underlying assets offer investors the opportunity to get exposure to unlisted companies with good earnings growth. As the company is relatively closely held by investors, with a small free float, liquidity is an issue for new entrants,” says Mia Kruger, Director, Equity Analyst &amp; Portfolio Manager at Kruger International.
“Grindrod has been in existence in Africa for over 100 years. The infrastructure sector which we are busy with at the moment is exceptional. Grindrod, in Mozambique, is doing well with port and the rail,” says Brey.
Other investments include the purchase of a R125 million ($11.7 million) fishing trawler from Norway called The Harvest Atlantic Peace that works for Sea Harvest out of Saldanha Bay, 120 kilometers north of Cape Town.
“She is, touch wood, fishing absolutely phenomenally. [Sea Harvest] certainly is one of the biggest economic drivers along the west coast. I think people underestimate the importance of Sea Harvest. In Saldanha, we must be the biggest consumers of electricity; pay the most taxes; pay the most rates and employ the most people. Again, the knock-on effect from that is an economic driver along there and it keeps hundreds of small shops open,” says Robertson.
A study by the University of Cape Town concluded that this single business was the largest economic driver along the West Coast of South Africa. It employs 2,400 people, of which 51% are female.
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Largest AGM In Africa
Brimstone’s ticket to billions lies in the hands of hundreds of shareholders’ homes across Cape Town. Most of them are working people; one reason why Brimstone hold their AGMs after hours, in the evening.
“In the early days, we had one shareholders’ meeting in the day. People came up to us and said ‘are you going to pay me for my day I am not going to work?’ We’ve learned that part of setting up Brimstone and developing Brimstone was we had a new wave of shareholders, who had never invested in the market before. Shareholders for the first time got shares in a listed company. We had to educate them. I think more of this should have been done in the country to be honest,” says Brey.
“I’ve learned from Brimstone that one takes for granted that you have a stockbroker, you go and buy a share and all is well. But that isn’t the way life works for the shareholder we have. They don’t know what a share is; they don’t know what a share certificate is; they don’t know what a CSDP [Central Securities Depository Participant] is. It’s very confusing. We’ve been very accommodating and I don’t think there is a company today that actually manages that process for our shareholders,” says Brozin.
“Three hundred people come to our AGMs. It’s one of the biggest in the country. I think you can’t go on doing business as usual, offered to us in our new democracy. You couldn’t do this before,” says Robertson.
Empowering the previously disadvantaged remains a core aspect to Brimstone’s success.
“They are saying today one percent of the world’s population owns half of the world’s wealth. That’s why we have some of the issues we have got today,” says Brozin.
“People say [Black Economic Empowerment (BEE)] is dead. I don’t believe that. I believe it’s very much alive. We are going to have to do much more of it if we are going to get this country into the right economic shape that it should be in… We are going to have to rethink in this country for its own good how we’re going to do BEE going forward. It’s going to have to cascade more and go broader.”
When it comes to Africa investing in Africa, they say it’s simple.
“The people of Africa should have more stakes in those businesses than what they have ever had before. That also counts for any region you invest in. You can’t go in and just do business and not employ the people there and not leave the profits behind. You have to leave the country in a better place than what you started in,” says Robertson.
Almost 20 years to the day, it’s a fair walk on a gusty summer’s day as the trio trudge into the wind up Signal Hill. A former teacher and two accountants, who turned an idea into an investment company, look down the valley beneath Table Mountain. In the hazy distance is District Six, the former home of Robertson. It’s one of the only parts of Cape Town that has been left fallow. This is land Robertson and his 60,000 neighbors are claiming back.
“It was our home after all,” says Robertson.
“Oh, I didn’t know you had submitted for that?” says Brozin.
“My family did a while ago. But we’re waiting to hear from the government. Hopefully they won’t give us our piece of land back. We’re hoping they’ll mix it up and give us one higher up on the hill instead. The views from there were much better,” says Robertson.
All three laugh at the joke and the analogy. You could argue Brimstone is always looking to move up the hill.
As the sea crashes onto the Cape Town shore, the sound is another reminder of yet another analogy that even the sturdiest vessels can be wrecked by a violent storm. Just
ask Brimstone.

Mandela And Billions…  Then The Vultures Came Out

It took the prestigious, New York City-based Columbia University two years to snag Wale Tinubu as keynote speaker at their annual Africa Economic Forum. Not surprising, Tinubu maintains an extremely busy schedule running Oando Plc, the first Nigerian company to list on the Johannesburg Stock Exchange as well as the Nigerian Stock Exchange, with a market capitalization of $1.4 billion and more than a thousand staff.
The forum, in its eleventh year, was held at the Ivy League school’s sprawling campus on the Upper West Side of Manhattan. It highlighted the rise of Africa and provided perspective from various industry titans from the continent. Tinubu, the group chief executive officer of Oando, the sub-Saharan African indigenous integrated energy group, joined Raila Odinga, the renowned politician and former prime minister of Kenya, Rosalind Kainyah, the managing director of Kina Advisory Limited and Emmanuel Nnadozie, the executive secretary of the African Capacity Building Foundation (ACBF) to discuss the continent’s economic rise.
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It has been more than two years since the African oil magnate featured on the cover of FORBES AFRICA. Back in November 2011, Tinubu ended his first interview with the magazine, saying &#8220;Africa is a challenging continent; you fight for water, you fight for food, you fight for shelter. We compete by nature, so it&#8217;s always difficult but we don&#8217;t always know it is difficult because we have a spirit of survival. Here at Oando, we deliver on the tough things.&#8221;
Fast-forward to 2014, it seems that Tinubu still has that philosophy.
Standing in the lofty hallways of the university, dressed in denim jeans, crisp white shirt, dark-colored suede blazer and his signature horn-rimmed glasses, one could have easily mistaken Tinubu for a professor; fashionably modern but unassuming even though he sits at the helm of a $1.7-billion energy conglomerate.
During the chat with FORBES AFRICA, Tinubu discusses his company’s acquisition of the Nigerian upstream oil and gas business of ConocoPhillips, an American multinational energy corporation, in a $1.7 billion transaction.
“We were looking to acquire a company that was three times our size. We had to do several rounds of fundraising, which we successfully did. We did a rights of issue first, then we did a private placement, and then we organized a corporate facility. We had about five or six work series running simultaneously in an environment where we were deemed not to be able to do the transaction because anybody wanting to do a $1.5 billion or $1.7 billion transaction in such a short space of time is unheard of. Finance is still a challenge; it’s always been a challenge in Africa.”
The London-trained attorney-turned oil baron is known for being innovative in identifying funding opportunities from across the globe as well as from different classes of institutions. In 2012, Oando’s upstream business, Oando Energy Resources, became the first Nigerian indigenous company to be listed on the Toronto Stock Exchange with a market capitalization of $184 million.
His company started off as a trading company in oil and gas. It then went into downstream marketing, where they filed registration and diversified into gas, built three different gas fire systems, 130 kilometers of pipelines went into the services industry and now they are finally in the upstream sector.
“Our ultimate goal was to diversify our business to the upstream — exploration and production of oil and gas — because there is a substantial amount of profitability that exists and there’s an incredible value that we can add towards our indigenous participation in our oil industry.”
Tinubu explains that Nigeria is producing around 2.3 million barrels of oil a month but should be producing 4 million barrels. He also says that 65% of the reserves are on land but most of the focus is offshore because of the better return it offers.
“It is not unrealistic for us to build a $10 billion exploration and production indigenous company. When we started 20 years ago, we had no money. Today, we are probably an enterprise of $3.5 to 4 billion and by the time we complete this acquisition we will be around $6 billion and that is with zero equity.”
This is the result of delivering on the tough things.

The Nigerian  Oil Baron  Buying Up America

A deep horn blast was used in a slice of history at Africa’s biggest stock exchange. It was from the lungs of Rakesh Wahi, founder and vice chairman of Africa Business News (ABN), signaling the opening of the Johannesburg Stock Exchange (JSE), as CNBC Africa crossed a new frontier in business broadcasting on the continent.
CNBC Africa – the sister of FORBES AFRICA in the ABN stable – became the first African broadcaster to beam shows from the JSE. It came on the eve of the company’s seventh anniversary.
“It’s an exciting time; I haven’t stopped smiling since yesterday. It is to the credit of the people around you who have all done a fantastic job,” says Wahi.
CNBC Africa is emulating the example of CNBC in the United States (US), which has broadcast from the New York Stock Exchange since 1995. This move is all part of a bigger plan.
“Our vision is to be in all 48 countries in sub-Saharan Africa. We have to be in all the major exchanges and report from the smaller ones. We need to be able to integrate all these exchanges through information flows. We need to be able to go out and educate people about what markets are,” says Wahi.
The new studio is state of the art. It includes an eight cube video wall, six interview positions and robotic cameras &#8211; which will be fully controlled out of the gallery and will minimize additional camera crew. The main anchor desk, resembling a star, is a copy of the one used both in Europe and the US.
It will host Open Exchange, Power Lunch and Closing Bell, with regular crossings to Nigeria, Kenya, South Africa, Mauritius, Uganda, Zambia, Namibia, Rwanda, Mozambique, Botswana, Gabon and Ghana.
Jean Landsberg, the head of technical and operations for the ABN Group, traveled to New York and Singapore to check out the latest technology.
“When I traveled to the SGX in Singapore and New York, I got an idea how they put their infrastructure in place… whereas Singapore still link in to their [stock exchange], from the main studio, we will be actually running everything and all the operations from the JSE studios. So it’s a little more advanced than what Singapore is doing,” says Landsberg.
LED technology will be used to reduce the power consumption by the studio lights and the video wall. Landsberg says, as time goes by, small technological frills will be added.
The new technology is in the interest of keeping business people better informed about what’s happening inside Africa’s biggest bourse.

On The Pulse Of The Markets

Growing up was not easy for Daphne Mashile-Nkosi, but it prepared her for the troubles of mining. The manganese tycoon had a tough time breaking through the sector, especially as a woman. She was ousted from her own company, Kalahari Resources, but has since returned to reclaim her rightful throne and is recruiting more women to join her.
Born in Pilgrims Rest in Mpumalanga, South Africa, as the youngest of four children, Mashile-Nkosi lived with her grandmother until she moved to Soweto in Johannesburg, to join her mother. Her family moved around constantly and rented backrooms in the township. Her mother, a seamstress, would go hungry to ensure that she could provide as much as possible for her children, who she was raising single-handedly. It was from her that Mashile-Nkosi learned the power of staying. Her father, a general dealer who owned a football club, was quite the opposite and had little to do with his family.
The children at school looked down on her because she once brought a soggy sandwich for lunch, had a second-hand uniform and walked for kilometers to get an education. Poor families, such as hers, received a parcel of peanut butter and powdered milk from the government. Because of her humble beginnings, she vowed to rise above poverty.
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“I think those are the things that actually shaped me and made me the strong person that I am,” says Mashile-Nkosi.
There was much she would have to endure first. Teachers called her an ugly duckling and kept her from certain activities because her clothes were worn. But Mashile-Nkosi was a bright child who soared through school. In 1976, she needed $0.17 (R1.80) to write her final exams. She did the washing and ironing for her neighbor to pay the exam fee.
“What you put in is what you get out, there’s no manna that is going to fall from heaven,” says Mashile-Nkosi.
These humbling experiences made her conscious of her words and actions. Today, she has an undisputable love for clothes that stems from growing up in a time when, as a black person, your appearance showed that you had made it big.
She believes that one is shaped by numerous factors: school, parents, the environment and the status quo. This philosophy stems from the help she received throughout her journey. It is she who lends a helping hand to others these days.
Mashile-Nkosi’s next struggle was against apartheid. In her final school year, she participated in the 1976 Soweto Uprising that saw thousands of black pupils take to the streets in protest against the compulsory use of Afrikaans in schooling. The backlash killed many school children and caused uproar around the world.
It was among the activists that Mashile-Nkosi felt she finally belonged. Between 1976 and 1991, she became an underground operative for the African National Congress (ANC). In 1991, when it was clear that democracy would be imminent and the ANC was unbanned, she was a member of a welfare organization that helped return 1976 exiles.
She paid for her activism with her time as she was detained on several occasions. The first of which was a nine-month stint in solitary confinement. The authorities labeled her “a threat to the security of the state,” according to section three of the Security Act. They were long and desperate days under lock and key.
Mashile-Nkosi was so determined to speak to the person in the neighboring cell that she used a blanket to soak up the water from the toilet, her neighbor did the same. Then she covered her head with the blanket, so as not to be heard, and used the toilet as a telephone.
Years later she worked at retail and furniture stores and then at an IT company, but always struggled to settle.
“I was fired so many times. I then realized that I can never be employed. I was a performer at work but my big mouth wouldn’t allow it. I became a troublemaker because I asked the difficult questions,” she says.
This led her to establish an IT company, Temoso Telecommunication. She won a $9.03-million (R100-million) contract, but gave it away because she felt that she did not have the experience, money or the capacity needed to deliver on the project.
“I was not ready for it. Rather than mess up my name I’d rather give it to someone who could deliver,” she says.
It was in 1998 that Mashile-Nkosi’s foray into mining began, when mining businessman Sipho Nkosi, of no relation to her – who had occupied senior positions at Anglo-American Coal Corporation and BHP Billiton – approached her to start a coal mining company, Eyesizwe Coal, with him.
Mining was in her blood. Her grandfather, like many in those days, was a miner for Transvaal Gold Mining Enterprise. As the only woman in Eyesizwe, she wanted to bring more onboard. Her partner gave her a 24-hour deadline to do so. Strangely enough, she found a chartered accountant from the women’s consortium that had fired her by fax years earlier.
The story goes like this: a member of the consortium called to ask that she wait by her work fax machine for a very important document. An excited Mashile-Nkosi was not expecting what came next. Hurt and ashamed, she hid the letter in her bag and sat alone, until another member mentioned that she too had received the same fax.
Mashile-Nkosi became a rebel at Eyesizwe. After two years, she decided to start a mining company, Kalahari Resources, with the hope of pushing the role of women in mining. When she started the company people called her “the mad woman”, and said that she would never see the light of day in mining.
“We are Africans first and Africans are brought up to believe that women cannot do certain things… And also we are not brought up as women to support each other.”
In 2006, Eyesizwe merged with Kumba Resources’ non-iron ore assets to form Exxaro, which would be run by Nkosi. Today, it is the second-largest coal producer in the country with an annual production of 40 million tons and is listed on the Johannesburg Stock Exchange (JSE) Limited.
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Overnight, disaster struck Mashile-Nkosi and her brother as they were removed from the company’s list of directors and eight names were put in their places.
Speaking to FORBES AFRICA, at last year&#8217;s Mining Indaba, Mashile-Nkosi said: “I listened to some of the comments. The more I told my story, the more certain people doubted whether these assets belonged to me.”
One of those names belonged to Sandile Majali, who was an $1-million (R11-million) ANC donor in 2003. After a court battle, Majali was arrested for fraud and offered to pay Mashile-Nkosi’s legal costs. The siblings were restored to their company. In late 2010, Majali was found dead in his hotel room. He was no stranger to bad press and was reportedly involved in the Iraqi Oil-for-Food scandal.
Mashile-Nkosi pushed on with the Kalagadi Manganese project, in the Northern Cape, as a protest project on behalf of women. This was at a time when manganese was the territory of two multinationals – Anglo American and Assmang. After a long wait, Kalagadi’s license was awarded in 2005. A $1.13-million (R12.5-million) loan from Investec paid for the prefeasibility study. The favorable results landed them a $5.42-million (R60-million) loan from South Africa’s state-owned Industrial Development Corporation (IDC), which finances developmental projects.
Kalahari resources has a 40% stake in Kalagadi – 62% of which belongs to Mashile-Nkosi – while the IDC holds 10% and global steelmaker ArcelorMittal holds the remaining 50%. The contenders for a partnership on the Kalagadi project were ArcelorMittal, as well as French and Chinese mining companies. ArcelorMittal won the bid because it is a consumer of manganese, while the others are producers who, at the worst of times, may choose to sell their product first.
But the relationship with ArcelorMittal soured and went to court. The steelmaker alleged a lack of corporate governance, which left Mashile-Nkosi and her team no option but to buy them out. They signed a $350.25-million (R3.9-billion) buyout deal in December 2012 and the relationship is the best it has ever been. It was a difficult time, having to raise billions for a smelter as well as the $350.25 million (R3.9 billion) for equity. Discussions for the equity are, as of going to print, being held with the Public Investment Corporation, one of the Africa’s largest investment managers.
“You need to take the initiative of making sure people believe in you, by doing it.”
The project involved sinking a shaft (±R1.5 billion), building an operational plant (±R2 billion), a sinter plant (±R3 billion) and a smelter (±R6 billion). A $650-million (R7.2-billion) framework agreement for the smelter has been signed. The team is working on the commercial terms, after approaching a number of funding institutions.
Mashile-Nkosi is the first black women to own a manganese mine and sinter plant. Her husband, Dan Nkosi, was her greatest supporter, but never got to see her dream fulfilled. The struggle veteran and former Robben Island inmate died from a throat operation that went wrong. She poured the pain of losing her partner into her work.
Black people have historically bought mines that are known to have plentiful resources and well-established infrastructure. In her case, and what sets Kalagadi apart, the land was bare. There was no electricity, water, rail or roads. And the diesel for the generators alone cost $25.30 million (R280 million).
The underground ore has 37% manganese content and three million tons will be mined. Once sintered, it will be transported to the Coega Industrial Development Zone, in the Eastern Cape, for smelting. Projected net sales revenues for the financial years ending 2015, 2016 and 2017 are $100 million (R1.1 billion), $433 million (R4.8 billion), and $632.63 million (R7 billion) respectively.
The mine launch was attended by government officials, including President Jacob Zuma, economic development minister Ebrahim Patel, and minister of mineral resources Susan Shabangu.
“We are proud that as we celebrate 20 years of democracy, we can count amongst this government’s achievements in the mining industry, the fact that we have more women in the sector. We hope that Ms Daphne Mashile-Nkosi’s example can serve as an inspiration to all women and remind them that it is indeed possible to achieve great things in a sector that has traditionally been male-dominated,” says Shabangu.
Thirty thousand jobs were created during the construction phase and the production phase will provide 3,000 full-time jobs. According to the South African Chamber of Mines, 10 people are supported for every job created in the mining sector. In the near future, Kalagadi wants half of its workforce to be women. All this at a time when mining is struggling in South Africa.
Mashile-Nkosi encourages people to nurture a culture of selflessness and upliftment, which she believes can also boost personal growth. The entrepreneur condemns, what she refers to as, the prevailing sense of entitlement.
“My grandmother [an orphan that became a domestic worker at 13] said to me one day: ‘I, or your mother, don’t owe you anything, we don’t have to work for you, we don’t have to feed you, we don’t have to clothe you. You are in this life on your own and you must get through this life.’”
The manganese tycoon believes that it is her calling to encourage fellow African women to become entrepreneurs through the words of her grandmother.

Struggle And Strife For The Woman  Who Gave Away  A $9.3-Million Deal

For many years, property has been a safe haven. It is an asset that guarantees appreciation over time. However, due to the investment amount required, many middle-class buyers are able to own only one property at a time – at most. More affluent people have the privilege of investing in more than one property, sometimes in several cities.
But thanks to the stock market, individuals are licensed to buy real estate shares, which are far more reasonable. However, there is a certain amount of risk attached, depending on the cycle of the property market.
Before I go into the real estate sector of the stock market, I want to look at property in Africa in general. Property can range from a house to an office, from retail to commercial space.
As African countries develop at a phenomenal rate, due to resource exploration, the need for property infrastructure has escalated. Africa, which was once a continent that investors shied away from, has become a rough diamond. More and more investors are attracted to the sub-Saharan reg-ion’s Gross Domestic Product (GDP) growth of more than 5%.
According to real estate agency RE/MAX: “There has been a massive shift towards encouraging foreign investment in Africa and the continent is on the move. Large businesses are seeing the potential that the continent is currently yielding and are eager to expand into the region and take full advantage of the opportunities.”
Furthermore, a McKinsey report states that the continent’s consumer-facing industries are expected to grow to $400 billion by 2020‚ representing Africa’s largest business opportunity. The rapid urbanization and the blossoming middle class in Africa are contributing to the success factors for retail. Modern shopping malls and office complexes are being built across sub-Saharan Africa.
Property investment is growing rapidly, particularly in Nigeria, Ghana, Kenya, Mozambique, Uganda and Zambia. It is attracting a lot of property developers, private equity funds and high-profile global investors. As a result, shopping malls are mushrooming in Nigeria, Kenya and Zambia.
South African retailers are also exploring the potential in the rest of Africa, with MTN, Shoprite, Woolworths, Game, Standard Bank and Pick n Pay moving north to expand their businesses.
Shoprite, which aims to have bet-ween 600 and 800 stores in Nigeria, partnered with the Resilient Property Income Fund to build 10 shopping malls in the West African nation in 2010. The deal was worth more than R1 billion ($100 million) and also involved Standard Bank and construction giant Group Five Holdings. Shoprite has also opened stores in Maputo, Matola, Chimoio and Beira in Mozambique.
Other retailers like Walmart-backed Massmart‚ Pick n Pay‚ Woolworths‚ Mr. Price‚ Foschini Group and Famous Brands are also expanding into Africa. Pick n Pay set the ball rolling after opening stores in Mozambique in 2011, and another five in Zambia.
Woolworths has a mixture of franchise, joint-venture and wholly owned stores in Africa. The company is negotiating to buy its franchise business in Botswana, which comprises 22 stores. Currently, Woolworths has a presence in 12 African countries, including South Africa.
As the hospitality sector reaches maturity in South Africa, many hotel groups are eyeing the rest of the continent, which seems to have a lack of quality hotels. Protea Hotels recently signed a deal that will see it moving into Rwanda. It is also building new hotels in Zambia, Ghana, Nigeria and Uganda at a total cost of more than $100 million. Protea is planning to expand into at least three more countries within the next couple of years.
Research conducted in 2013 by the W Hospitality Group consultancy has reported that the companies leading the way are Hilton Worldwide, with 6,230 rooms in its African pipeline; Carlson Rezidor with 5,947 rooms; Accor with 5,165, and Marriott with 3,900.
Housing in Africa is a necessity, but nowadays the type of house takes precedence. Property owners are becoming more lavish and certain areas in the continent’s cities are appreciating exponentially.
Some of the properties in Lagos, Nig-
eria, which has a population of about 20 million people, are among the most expensive in the world. Two-bedroom flats cost more than $1 million in upmarket areas.
The most popular units fall within a price bracket of N20 million – N35 million ($124,000 – $218,000). Nigeria’s middle class, which makes up about 23% of the population, earns about N80,000 – N100,000 ($500 –$620) a month, according to a report by investment bank Renaissance Capital.
In addition, Nigeria’s construction and real estate sectors are growing at more than 10% and 12%, respectively, which is a big winner for local companies.
In Kenya, the economic recovery that started in 2003 influenced a
revival of real estate prices. At first, only the luxury market capital values were rising, but recent indicators show a resurgence in the lower middle-income segment.
After five years of stability, house prices are increasing significantly. According to real estate company Knight Frank, the Nairobi sales market can be divided into two. The first consists of the owner-occupier buyers, which dominate the KSh10 million – KSh20 million ($115,000 – $230,000) market, which is where most of the transactions occur. The second is the investors and speculators that operate above KSh20 million ($230,000), and are mostly wealthy individuals and institutions. Foreigners in Kenya can freely buy ‘commercial class’ land, which is land for income or revenue-making purposes.
JHI Real Estate has had to open several branches in Mozambique as the country experienced a strong demand for retail that reached the masses. It has other projects on the cards, including plans to transform downtown Maputo. The 380,000m² FACIM (Maputo International Trade Fair) development is located on prime land and will include retail stores, hotels, offices and a residential component.
With its picturesque islands, private investors are looking at buying residential properties in Mozambique as second homes. Prices range from $275,000 to $1 million, depending on the ocean view.
Now that I have given a brief outline on how development in Africa is becoming opulent, let us look at the property real estate shares on the stock market. Not forgetting the construction companies, for without them, there would be no property development.
When applying my technical analysis expertise and looking at property in the longer term, the construction sector, as I said recently on CNBC Africa, is my “new black”.
The Construction Index lost almost 60% of its value in the 2008 crash and has been struggling to replicate the same bullish momentum it had before. Instead, it has traded sideways over a five-year period. How-ever, recently, the index has breached the major resistance trend line that has kept the bear trend at bay for the past five years.
This is a significant move, which seems to have warmed the hearts of many investors who were reluctant at first to dabble in an industry marred by negativity and recurring bad earnings.
With the construction sector showing some green shoots, we expect the index to recover its previous losses and possibly repeat the bullish years of 2003 to 2008. In other words, current levels are very attractive, and this bullish call is a one- to five-year forecast – a buy-and-hold investment.
This call applies to the Real Estate Index as well. I have analyzed a few construction shares listed on the Johannesburg Stock Exchange (JSE) below, which I find to be good long-term investments.
Group Five Holdings broke out of a five-year bear trend. I expect upside above 4,650cps to add further gains to the 6,200cps highs of 2008. However, a short-term retracement may be on the cards, thus presenting another buying/reloading opportunity.
Murray &amp; Roberts Holdings has recently broken out of a four-year bearish base, with potential upside to the prior high of 6,000cps.
Basil Read is gradually clawing back its previous losses. A move above 1,035cps looks attractive, with potential gains to 1,370cps. Upside beyond that level would end the five-year bear channel, with the target set at 1,830cps.
Besides the property and construction shares listed on the JSE, this industry is rebounding in Africa in general, driven by demand locally and internationally.
Property prices all over the world are bouncing back from lows and are likely to retest previous 2008 highs. It seems as if the burst of the real estate and construction bubble in 2008 is patching up and reflating, but hopefully in a more gradual and practical manner. Investors have hopefully learned from their previous mistakes.

Property industry shows some green shoots

The year was 1994. South Africa’s political climate was changing; a new president promised democracy and opportunities for all. For Romeo Makhubela life was just beginning. After years of teaching, he decided to register at business school. He put down the chalk and left the classroom, and today he is the CEO of a 100 percent black-owned investment company, a world away from high school teaching.
This epiphany turned him into one of the country’s emerging financial services providers. The reason Makhubela was in the classroom in the first place was no surprise. For most black South Africans at the time, that was the highest you could reach. You could either be a policeman, nurse or teacher.
It wasn’t that he didn’t like teaching. He had studied for a Bachelor of Commerce degree and topped it with a teaching diploma, which led him to become a commerce teacher for final year students, in the North West province of South Africa.
“The most exciting part as a teacher, especially a high school teacher, is when the [matric] results come out, and you realize that the investment that you made [has paid off]. I remember one year ‘I’ had a lot of distinctions and for me that was so fulfilling because you could see people going to university, some are now working and you know that you were part of that product,” says Makhubela.
“I started teaching in 1990… Around 1992 or ’93 I started noticing that a change was coming in South Africa and clearly businesses would start transforming and there would be huge opportunities, especially for people who had a Bachelor of Commerce qualifications,” says Makhubela.
It was never easy, amid the political turmoil of his country. During his university studies, Makhubela was also politically active.
“I matriculated in 1983. Things were quite tough at that stage; I think the upheavals were starting… It was terrible in those days and I had [to take] a break in ’84, then in ’85 I started doing my Bachelor of Commerce degree ’till around ’88. There was one year where we didn’t write exams because of the [political] problems.”
“Politics then was something that you just couldn’t avoid because there were a lot of injustices in this country… Especially at [university] because you started seeing the world and seeing that certain things weren’t correct… The way some lecturers conducted themselves, I can tell you one example; [In our first year] the one [lecturer]… just came and said ‘Look this is such a big class, I’m not used to teaching [so many people] and I can assure you that in third year 80 to 90% [of you] will be gone’. And you sit down and say ‘How could you make such a statement?’.”
Today, he is no longer in politics; he sits at the head of Vunani Limited. The eight-year-old company was launched in 2004 following a management buyout from African Harvest. In 2007, the company listed on the JSE AltX Exchange raising R175 million ($21.4 million). They currently have offices in Johannesburg and Cape Town, in South Africa and Harare, Zimbabwe.
He worked his way to the top, starting out at an insurance company as a graduate trainee, then he became a financial analyst for an asset management company and after around six years in the asset management field, he was recruited as chief investment officer for a life insurance company. And now he is heading Vunani Limited, an emerging company that wants to leave its mark as South Africa’s leading black-owned financial services provider. Vunani Limited is listed on the JSEAltX; it is currently listed 19th in the financial services sector, with R204.5 million ($24.96 million) of market capitalization. The company has a diverse portfolio, which consists of Vunani Fund Managers; Vunani Capital; Vunani Technology Ventures; Vunani Securities; Vunani Capital Markets and Vunani Properties. Now it is going up against the best in the financial services industry and is forging its own way. One challenge they, like many other companies, are facing is growing the industry.
Makhubela’s focus now is on getting his countrymen to start putting away more for a rainy day.
“One of the biggest gripes about South Africa is that if you look at our saving ratio, it’s quite low and clearly that tells to the culture or the environment from which people [come from]. My sense is that, maybe in the white culture it’s much better because at least that kind of information was instilled but in the broader black community… the kind of savings that you generally see within [them] would be pension funds, which is forced, because when you work you get your pension fund automatically.”
Last year, South Africa’s minister of finance, Pravin Gordhan, said that South Africa’s savings rate was low and that it “needed to increase its saving rate if it were to become the ‘China of Africa’”.
Makhubela agrees.
“Savings are critical… look at the Chinese for example. The savings rate there is extremely high—but you could argue that it’s influenced by a number of facts because they don’t have a proper social system… But that helps because if you look at the global crisis we are experiencing now… the Chinese have played an important role in terms of lessening the impact of the global crisis because of their savings.”
According to The South African Savings Institute (SASI), South Africa is the lowest ranking member of BRICS when it comes to saving.
“The International Monetary Fund (IMF) statistics show that since 2001, compared with its BRICS counterparts, SA’s rate of national savings has remained flat… In China, gross savings are over 50% of GDP, in Russia 30% and Brazil over 18%. In South Africa that figure is about 16.5%… It’s 72nd in the world behind Algeria (3rd), Morocco (25th), Nigeria (27th), Zambia (32nd), Namibia (34th), Botswana (42nd) and Lesotho (62nd)”.
The poor argue that saving is the last thing on your mind when you are living from hand-to-mouth, while the middle class chooses to splash out, so where does that leave the future of the fund management industry?
Makhubela says that when the rate of unemployment decreases, and more people start earning and being forced to save, then the tide will change. But while there is no growth in savings right now, Makhubela and his team are looking beyond borders, with Zimbabwe under their belt, they are also currently setting up in Namibia.
From marking exam papers to signing off millions, Makhubela is trying to teach one of the greatest lessons in life—how to save even when it hurts.

Trading The Classroom For The Boardroom

It was a phone call in the fast lane. The call on the highway told Ndaba Ntsele, co-founder of Pamodzi Investment Holdings and chairman of Rand Uranium and Foodcorp, that his company was soon to be no more. It ushered in his worst day and was the start of a long, tiring battle to save Pamodzi Gold Limited (PG). The call was from a journalist asking how he felt about his company being liquidated. A shock, especially when creditors had assured that liquidation was not on the cards.
With members of his management team calling to confirm the news, Ntsele knew he had his work cut out for him—you could call it his worst year.
At stake was a black-owned and controlled gold exploration and mining company, formed in 2004, and listed on the Johannesburg Stock Exchange (JSE) in 2006. With a market capitalization of more than R700 million ($112.5 million), PG was all set to be a success. The company acquired mines in the Free State and Gauteng that were no longer viable for the big mining companies. As not all the mines were bought with cash, share options upon listing were offered as compensation. The biggest shareholder was Harmony Gold.
“The mines were in a terrible state at first. We knew we’d have to raise cash to rehabilitate them. Thirty million rand ($3.9 million) would just about do it. You can’t play the game if you don’t have any marbles,” he says.
Ntsele is a self-made entrepreneur who started out selling apples for his aunt to earn money for the movies. He graduated to running busy street corners and hiring vendors to man them. Then he made it in property during the apartheid era and rose to be the CEO of Pamodzi Investment Holdings.
Following the mine deal, the company needed money. The R200 million ($24.5 million) secured from the Industrial Development Corporation (IDC) —a national development finance institution—with security of R800 million ($98 million) was not going to be enough and another R200 million was needed.
By 2009, the company had its Free State assets—a mining complex and plant, along with Orkney mines and East Rand assets, running well. Then the black cloud of liquidation descended, a mere four months after signing the five-year loan with the IDC. Five thousand three hundred jobs were on the line.
“People were gunning to liquidate us,” says Ntsele. He wanted more time. The Free State assets and Orkney mines were, on his account, valued at a joint R1.4 billion ($146.5 million). Nevertheless, the IDC applied for PG to be liquidated, to the surprise of Ntsele.
“We went to them, we asked them if they would do this and they said no,” says Ntsele.
Things were set in motion; the provisional liquidation of the mining company’s assets began and its shares were suspended from trading. The vultures were circling.
Harmony Gold became the front-runner for the Free Sate assets. The company and its assets, now under the authority of the provisional liquidators—headed by Enver Motala—steadily deteriorated and soaked up more and more money.
Everyone went to their corner and prepared for a fight. Ntsele went all over the world to secure funding, from North America to the Arab states, but the global meltdown proved a formidable opponent. Investors and countries were closing shop.
The company had a lot of support from its employees, one of whom introduced a company called Best Rock Investments to Ntsele during one of his mine visits. At first sight everything looked great.
“These were Americans. Americans are smart, they were speaking of places I knew, had fancy degrees on their walls, the funding was approved and all that was left was to wait for authorization codes.”
The deal came to nothing and it was back to the drawing board for PG’s management team. Time was against him.
The Chinese were not fazed by the meltdown, they had money to burn. Ntsele came out to say he had secured R626 million ($65.5 million) from the China Africa Development Fund. Nonetheless, skepticism was rife.
Ntsele still cannot understand why it was so hard to believe they were capable of this; they had managed to raise R1.3 billion ($140 million) for Rand Uranium, an independent resource company, before.
“I have the letter from the Chinese in my office. They had a balance sheet,” says Ntsele.
According to him, a meeting was set up at the PG offices in Melrose, a Johannesburg northern suburb, by the Chinese to negotiate a compromise with Motala. The Chinese were willing to cough up some interim cash.
While the Chinese and PG’s management waited in the boardroom, Motala was 10 minutes away at the CNBC Africa studios to announce that PG was to be liquidated in its entirety and Aurora Empowerment Systems’ interest in PG’s assests.
It was again an annoying telephone call that informed Ntsele of the company’s fate.
“They [CNBC Africa] gave me a chance to get there and be part of the show. I’ve known this boy [Zondwa Mandela, managing director of Aurora] his whole life. I told them that I don’t think that he has the money or experience to buy,” a trace of betrayal showing on his face.
Ntsele says he managed to have a private chat with Motala, who told him (Ntsele) his own brothers had told him to do it.
“These things happen. That’s the nature of this biz called business,” Ntsele says in all his philosophical glory.
As the whole saga played out, Ntsele went from saying: “We will try to retrieve everything. It will be a battle. It won’t be easy, but we will try to save jobs and everything,” to a final: “I’ve thrown in the towel.”
Why the drastic change of heart? you might ask. It’s simple: “It was difficult to fight all these people; the cost to the company would be too much. I asked myself: ‘Should I keep on fighting?’”
Ntsele’s biggest qualm is that people were blind to the fact that PG accounted for only 3% of the whole Pamodzi portfolio and chose to see it as one company.
A last word from the businessman, who sold apples for his aunt, is that this [PG] was not the only bad apple. It just happened to be the only publicly listed one.
<h3>What did he learn?</h3>
“Protect yourself, even if you think you know all the players very well. As an entrepreneur, the first job is to trust your gut. It’s got you this far, but always have something to back it up. Lastly, this is a money game, but most importantly, it’s an assets game. You need to have more marbles [money] than you need.
“Property taught me to always have a war chest, but we forgot that. There was no need to give the IDC R800 million ($98 million) as security; half of that would have been enough and we could have had some security of our own.
“You learn as you go. You need to see failures as good lessons and you don’t get that from business schools.”
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Hello?  Your Business  Is Closing

Russell Loubser rose from humble beginnings to take over the sleepy Johannesburg Stock Exchange, turning it into one of the world’s top 20 bourses and the best regulated exchange on the on the planet.
Loubser grew up in a small town near Mafikeng in South Africa’s North West province, a million miles from the rapid international trades of the JSE.
“No-one in those days, black or white, ever mentioned stock exchange or shares,” he says.
Loubser was the youngest of four boys and admits life was not easy. Both his parents were uneducated and struggled to bring them up. His father was a boiler maker in a cement factory and they never owned a share or property in their lives.
“They were good, hard-working people and smart, despite not being educated,” he says.
The way up, Loubser, decided was to pursue what he calls “hard degrees” that is, qualifications with practical use. He was good at mathematics so he enrolled for a Masters in Statistics at the University of Pretoria. After completion, his rugby friends convinced him to train as a chartered accountant.
Following a successful career in investment banking, where he was highly critical of the JSE, he was approached by the exchange and offered a five-year contract. Five years turned into 15 and Loubser oversaw the transformation of the JSE into a modern exchange.
Loubser is concerned about South Africa’s high youth unemployment rate and warns of the consequences.
“This country is  good at talking and researching, but does too little implementing,” he says.
Solutions? Firstly, he believes South Africa has enough leaders but those leaders need to be placed in the right roles. Secondly, he recommends, a better education system which can produce graduates with his so called “hard degrees”. He adds getting graduates work-ready and trained should be left to employers. Lastly, he points out that instead of jobs, the focus of governments should be on creating a conducive environment in which entrepreneurs and business can thrive.
Following his retirement from the JSE, on December 31, this respected executive is keeping himself busy with three non-governmental organizations and three boards that he sits on. We have not seen the last of this battle-hardened executive from Mafikeng.

Tag: JSE

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Struggle And Strife For The Woman Who Gave Away A $9.3-Million Deal

Property industry shows some green shoots

Trading The Classroom For The Boardroom

Hello? Your Business Is Closing

Pearls Of Wisdom Born Of Struggle

The plucky young eaglet who soared above outrageous fortune