On this Thursday afternoon, in Stellenbosch, a small university town, east of Cape Town, the sky is blue and the air crisp. In the gentle light, dressed in khaki pants and a checkered blue shirt, he doesn’t look much like a multimillionaire but Michiel le Roux has done for banking what Bill Gates did for software and Muhammad Ali for boxing. He has created a bank that in 15 years has forced its way into the top five in South Africa. He wears his $530-million net worth lightly, but behind the smile and humility, is a hint of power with a firm handshake that means business.
“We said let’s build a bank and we were not going to experiment on a small scale, we always stayed very close to our clients and we knew what we wanted to bring to the industry,” says Le Roux.
About a decade ago, few deposited their salaries into Capitec, most had never heard of it. Today, Capitec has over 7.3 million active clients, 720 branches, 11,440 employees and holds R13.7 billion ($1 billion) in shareholders’ funds. For Capitec, simplicity is everything.
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“When I was young, everyone was a Sir in the corporate industry and I hated it. There is a woman here who used to serve tea when we started and she couldn’t get herself to call me Michiel so she called me Mr Michiel,” he laughs.
“Here, there is no distinction between people. Nobody flies business class. How you fly, where you stay, the rental car you drive is the same whether you are the CEO or the junior in the company. Everyone gets the same treatment.”
There is a business reason for this.
“After the army, I worked at a company I thought was a very smart company but there was too much hierarchy. I found it very awkward and terrible. [Imagine] you have meetings out of town and you wait for your flight with your colleagues and you chat while you wait; then in the plane you sit in front and they all pass you to go sit at the back. I find it very stupid. The natural thing is to continue talking,” he says.
At Capitec, they take simple seriously. No suits, the CEO’s office is the same size as everyone else’s, the CEO shares a personal assistant, no personalized parking spots, even the guard at the gate calls him Michiel, while the receptionist jokes freely about his sense of style — or lack thereof.
This simplicity and business acumen has made Le Roux a rich man; the 38th richest in Africa to be exact, according to FORBES. In just 15 years, this fortune has grown rapidly. It has nearly doubled from around $290 million in 2011.
Capitec had big friends early on, on the other side of Stellenbosch. One of the earliest and biggest was PSG Group, an investment holding company, owned by former FORBES AFRICA cover, Jannie Mouton, who is worth $970 million. One day PSG called Le Roux to listen to what they had to say; he believes this was an attempt to lure him into its micro-lending business.
“I said I am not interested, this is not the type of business I want to be involved in because it’s a terrible business; they charge exorbitant interest rates. Those were the old pin and card days. When you wanted a cash loan, they would take your card and your pin number and they would withdraw whatever you owed and then give the card back to you. It sounded, and still sounds, terrible,” says Le Roux.
PSG convinced him to visit their branches and he was fascinated by how the micro-lending company treated its clients. According to Le Roux, in banking, the lower income consumers in South Africa were poorly treated, but not by PSG.
“A bank always determines the value of the client based on their net worth which to this stage in my mind doesn’t make sense because a guy with high net worth might be very frugal with the use of his credit card whereas a guy with a much lower net worth might be exorbitant with his credit card use. The guy that is exorbitant should be much higher in the rankings but banks don’t look at it that way.”
“If you are a factory worker and earn very little, they were not that interested in you and that to me was a failure on banks not accommodating the lower income people,” he says.
In this, Le Roux saw a gap. He was bored at work and he decided to build a bank that would right these wrongs. He joined forces with PSG Group.
Before the bank was called Capitec, it was called Daxacom.
“We had about three branches that we put up and put on the logos and when we looked at it, it didn’t work. We had many other names but I am ashamed to say them,” he chuckles.
Le Roux says it took a long time to find the right name because they didn’t want a name that reflected they specialized in servicing lower income groups.
“We didn’t want to call it people’s bank for example, if anything, we wanted something that sounds modern and as if it could have been an electronic bank only, although we are also a physical bank.”
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Capitec won. The next problems were timing, licensing and money.
According to Le Roux, there was a small banks crisis just before they opened. Timing was not of the essence.
“In the late 90s, South Africa granted a number of new banking licenses and as far as I know, that was the last time they granted new banking licences. Most of those banks folded quickly. A bank called The Business Bank, which was about three to four years old, folded and PSG took them over and we sort of bought the license through taking over a failed bank. If it wasn’t for that, I don’t know if we could ever have got a license,” he says.
As Capitec was about to launch, Saambou Bank, one of South Africa’s significant players in the industry, went bankrupt. It was a very public collapse that did the image of banking no good at all. Lines of people appeared on TV news desperate to get their money out.
“The Reserve Bank closed them on a Saturday to minimize the impact on the markets and we listed Capitec Bank Holdings Ltd on the Johannesburg Stock Exchange on Monday, 18 February, 2002, the week later. That was a terrible time to list a bank and it also meant it was a terrible time to get finance whatsoever. I know I sound like an old man saying you learn from your mistakes but it’s true. Starting a business in good times is always very dangerous because you will think business is easy when the wind is blowing from behind and the sailing is smooth. When you start with wind blowing from ahead, then you know business is tough and you grow,” says Le Roux.
To survive when others failed wasn’t easy.
“It’s a hard slog to create the infrastructure, to network, to decide what you want to do. We take pride in the fact that at that stage, when we were also starting, Old Mutual had a retail banking license and they wanted to start a retail bank. They were looking for systems when we were looking for systems and the rumour mill had that they paid out R800 million ($60 million) for their system and that was when the rand was about R4 to the dollar but they never opened that bank because they couldn’t make it work.”
Capitec kept it cheap and simple.
“Other banks use systems that are designed for them which means that they have to maintain that; when the coders that wrote that leave, you are left with a gap. We made right calls because we had a good management team and we had a good management team because we hired the right people when we started. We don’t spend where there is no need,” he says.
Persistence and good planning helped them survive.
“We have been creating new branches but we try to be creative in the way we do that, we don’t over invest in a branch, we don’t build a branch, we don’t have specialized buildings and we don’t own a single branch, we lease all of them so we have the ability to cut back in future if things change.”
Although they want everything to be digital, they want to keep branches open for their clients.
“Our clients like the one-on-one interaction. In January, 6.7 million people came into the branches. It means, on average, our clients visit a branch at least once a month. Most importantly everything should be done on mobile. We suspect that is the future of banking but we are not quite sure what it’s going to be,” says Le Roux.
While other banks turn a blind eye to South Africa’s “unbanked” or “unbankable”, Capitec has made these customers their market. Over time, Capitec slowly transformed its micro-lending clients, who mainly relied on it for loans, into transactional banking clients who deposit their salaries and manage their transactions through their Capitec accounts.
International banking advisory group Lafferty has ranked Capitec Bank as the best bank in the world in its inaugural 2016 Bank Quality Rankings. According to the report’s findings, Capitec came out on top, with the only five-star rating out of the 100 banking groups listed. In South Africa, Barclays comes second with four stars, while Nedbank, Standard Bank and First Rand have three stars. Lafferty uses a combination of financial and non-financial disclosures in the latest annual reports to determine the quality of the organizations and their respective business models.
“South Africa’s Capitec was the only bank to achieve five stars. The bank has a level of focus, geographically and strategically, which boosted its scores across all of the metrics in the ratings process,” says the report.
Capitec is giving South Africa’s banking industry a run for its money. Michael Lafferty, Chairman at Lafferty Group, says it’s because its founders understand their customers’ needs and they developed an innovative strategy and business model aimed at addressing those needs better than the established players. He says the best quality banks in the world are found in South Africa.
“Capitec is doing well because of its focus on the consumer&#8230; We only found two or three banks in Europe that were near to the top quality rating we saw and only one in the United States. There is something remarkable about South African banks,” says Lafferty.
That focus on the consumer is also visible in Capitec’s decision to open on Sundays. In 2011, according to reports, Capitec’s marketing and corporate affairs executive, Carl Fischer, said the idea has always been to operate like a retailer as a lot of people went to malls over the weekends.
Many people sing the praises of Capitec. But, says Le Roux, you can ignore your competition in other industries, but not in banking.
“If you bank with Standard Bank and I convince your friend to open an account with Capitec and you want to pay money to your friend, your bank must be prepared to pay money to Capitec. If you use a Capitec card and you are in a restaurant and they have a Nedbank machine they must cooperate. We all have to be in agreement and work together.”
Banking is a tough industry. Capitec’s closest rival, African Bank, collapsed in August 2014 as bad debt soared and the lender failed to increase provisions.
“When African Bank went bankrupt, it was terrifying. We thought African Bank were over optimistic with their credit assessments but we thought they were a big strong company. When they closed their doors it practically felt like a funeral. If they can sink, anyone can sink,” says Le Roux.
Capitec however was much more conservative. They set aside cash to cover bad debts and stuck to strict budgets.
The globally-awarded retail bank increased its active client numbers by 1.03 million, to a total of 7.3 million for the year to 29 February, 2016. This bolstered headline earnings to R3.2 billion ($234 million) for the financial year ended February 2016, up 26% on the previous year. Net transaction fee income increased by 16% to R3 billion ($220 million), the value of credit advanced increased by 25% year on year to R24.2 billion ($1.7 billion) for the 2015/16 financial year.
Capitec Bank CEO, Gerrie Fourie, on its website, says the brand acceptance continues to grow substantially in the market and there has been a 26% growth in total retail deposits to R37.8 billion ($2.7 billion).
“We are excited about the continued growth in client numbers and in particular the higher income clients who are finding our offer the best value in the market, which is an important consideration for consumers in the current economic climate,” says Fourie.
As rivals hobbled through two banking crises, Capitec sailed through. The advantage, says Le Roux, is that they thought big from the beginning.
For Le Roux, confidence in yourself and the belief that you can achieve something is the starting point and not money. He says many young potential entrepreneurs see the lack of money as an excuse.
“Money is a valid problem but the bigger problem is management and getting the right people to do the job. We started, knowing it was going to be a difficult journey. At one stage during the founding phases, we reduced the rates we charged for loans by about 40 percent. That meant we had to do 40 percent more loans to break even. To do 40 percent more loans, you need 40 percent more capital and it took about four months before we came to that point where we had 40 percent. In the first month, we made a loss, and in the second, we ran out of money. We had to put our own cash into the company but we knew that if the boat doesn’t turn next month, we won’t have any more cash,” he says.
They also had Riaan Stassen; Capitec’s pioneering CEO from 2004 to 2013. Stassen has been friends with Le Roux for years and served as the Managing Director of Boland PKS from 1997 to 2000, a division of BoE Bank Limited.
“Riaan is a very smart guy. I believe he built Capitec Bank. If I may claim some role, I would claim that I had a dream of creating a bank and Riaan made that a reality. He actually made a different reality. My vision was that we should be a bank for low income people, for instance, to my shame, I must admit that at that stage I said we should have books. Riaan laughed and said ‘you are crazy; we are in the electronic age’. He said ‘we are going to build an electronic bank for the new age and not for low income people but for everyone’ and that’s what we have done.”
As a travel enthusiast, Le Roux wanted to take Capitec across Africa, but, he says the longer they are in business, the more the dream recedes. Emerging market countries such as Brazil, Chile, Turkey or Poland are preferred.
“We don’t think Africa is a natural habitat for Capitec Bank, we are based on a digital financial environment, our client base are more salaried people and if we go into [for example] Zambia only 10 percent of the population earn a decent salary  and most of the people are [in the informal sector]. Even Nigeria is a tough country, it’s not like they have a massive urban digital employed population. We could do business there but we will have to redesign our products,” says Le Roux.
As we leave, the fiery red ball is dipping towards the mountain. This sun may be setting but it seems Capitec is just rising.

‘A Terrible Time To List A Bank’

We step off Analjit Singh’s blue Lexus into a picture postcard. Such is the scenic beauty greeting us.
Singh is immaculately dressed in blue – shirt, turban and Nehru jacket – and poses with the panoramic mountains, also blue, in the background.
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We are standing under a benevolent April sun in Leeu Estates, Singh’s farm in Franschhoek, a picturesque wine town in South Africa’s Western Cape province.
A few moments earlier, the Indian multimillionaire had driven the car to his farm, pointing to a large white cross perched permanently – like a beacon – on the slopes of the Dassenberg Mountain.
“Everything below that cross is mine,” he said.
We are on 68 hectares of farmland featuring vineyards, pomegranate and plum fields, oaks, olive trees and herb gardens. Men are at work, briskly laying bricks, building and restoring Cape Dutch edifices, putting together the many elements of what will be a boutique winery and 25-room five-star hotel set to open next year as part of the Leeu Collection.
“Leeu is our name [in South Africa]. In Afrikaans, it means lion, just as Singh in Sanskrit means lion,” says Singh. For the record, the number plate on his Lexus SUV is – no surprise – LEEU 1.
Singh cannot conceal his excitement, pointing to the vistas and the valley and everything in between.
We are soon negotiating a plywood plank, connecting precariously two mounds of earth, to the dining room areas of the under-construction manor house. Singh informs the building will also include a library containing both Gandhi and Mandela memorabilia.
The manor house overlooks a manicured garden with art occupying center stage – life-size bronze sculptures by South African artist Deborah Bell hand-picked by Singh.
“I know all the people in the art world in Cape Town; we have been acquiring art and sculptures all of which will be displayed at our estate,” he says.
Singh has 18 sculptures for the farm, he tells us, valued from $50,000 to $200,000.
Leeu Estates is a composite of three adjoining farms – Dieu Donné, Klein Dassenberg and Von Ortloff – that Singh bought in a year. The total investment in the development is $35 million.
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The estate will include a gym and spa – “that will be the best anywhere in Stellenbosch, Franschhoek and Paarl” – and a winery producing the Mullineux &amp; Leeu Family Wines, overseen by husband-wife winemaking duo Chris and Andrea Mullineux. Winners of the 2014 Platter’s Winery of the Year Award, the couple will develop a Leeu range of premium wines for release end of 2016.
Singh also has shares in their Riebeek Kasteel winery in Swartland, a wine region 50 kilometers north of Cape Town where he has another farm, only for viticulture. The Swartland winery specializes in Chenin Blanc and Syrah wines, specific to the terroir of the region.
Leeu Estates is but one component of Singh’s interests in Franschhoek. In this charming one-road town, he also acquired Rusthof, a country house now being renovated as Leeu House, a soon-to-open 13-room boutique hotel that will be “very Cape Dutch” with a large garden in the front.
And at the Heritage Square piazza a few meters away, he is set to open the town’s first Indian and Oriental restaurants, which will also include a bar. And alongside Leeu House, again a first for Franschhoek, he will open a microbrewery making craft beer.
“So that’s our story in South Africa,” says Singh.
Ranked by FORBES as one of India’s richest, with a net worth of $975 million, Singh is the Founder and Chairman of Max India Limited, with diverse interests in life insurance, healthcare, health insurance and senior living.
Max India has a successful joint venture with Life Healthcare in South Africa since 2011. André Meyer, Chief Executive Officer of Life Healthcare, calls Singh “a friend”.
“To me, Analjit is best described by the quote ‘the true character of a man is best measured by how he treats those who can do nothing for him’. No matter who they are, Analjit always treats people as his equal, with dignity and respect. To call Analjit a friend is truly an honor and a privilege,”
says Meyer.
A self-made entrepreneur, Singh is highly respected in India’s corridors of power. He was awarded the Padma Bhushan, one of India’s highest civilian honors, in 2011.
The son of Ranbaxy founder Bhai Mohan Singh, he passed out of The Doon School in Dehradun in 1971, and is an MBA from Boston University. He lived in the United States for seven years before founding Max India in 1985. The 61-year-old Singh, who is also the non-executive Chairman of Vodafone India, lives in New Delhi with his wife Neelu and children Veer, Piya and Tara.
His stately bungalow at 15 Aurangzeb Road, in the Indian capital, sits on a three-acre garden estate. It was renovated with a neoclassical look in 2008, and Singh is known to only serve South African wine at home.
“But why am I [in South Africa now]? Was this a part of my plan and vision? Absolutely not,” says Singh.
Singh visited Johannesburg for the first time in 2010 for the FIFA World Cup with his wife and elder daughter Piya, when they also traveled to Cape Town for two nights. There was a reason why he did.
“The year before, my younger daughter Tara had flown to Cape Town for a wedding. [Before her trip], when she asked me if she could go, I said ‘absolutely not’, and I asked her, ‘how the heck do you get there?’ She [finally did], phoned me and said ‘it’s your kind of place and you have got to come’. I came here out of intrigue; I wanted to know if Tara was pulling my leg or if it was for real. So I arrive here, see the airport, see the town and see this is Africa. I never imagined you would have this little European jewel sitting out here and which otherwise was called Africa.”
Singh vividly recalls the following day when the driver took the family to the Cape of Good Hope and to Franschhoek, for the first time. Ironically, they stopped for breakfast at Grande Provence, the farm right next to Singh’s current estate.
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“When we arrived there, I got off the car, and said ‘where are we?’ I was like a kid in a toy shop. I looked around and there was such a sense of strong energy, a sense of beauty and a sense of place that I imbibed. It was like this is an unfinished piece of work; I have to come back and explore. Just what is this place on earth?”
“I think I later realized [why I took to the place]. As a Delhi family – until all the problems in Kashmir – for about 17 years, we were [regular visitors] to Gulmarg, [a hill station] in Kashmir. And ever since childhood, and probably because of the Kashmir experience, my preference became hills, mountains, fog, clouds, rain and snow and that carried into [my years at] The Doon School, where the topography was much the same. And then I went to [study in] Boston, also a very pretty city. So my whole leaning and preference became that way. And when I saw nature here in winter, I saw the hills and greenery. What is unusual is many places have hills and similar topography, but not at this proximity. Here, you feel like you can walk to them, and that’s a very powerful, energetic feeling.”
After that first inspiring visit, Singh returned to Cape Town, not once, but twice over the next six months, for what was a personal quest.
“I was entering a phase in my life where I was looking for some stillness. I was looking for places to be in that are tranquil, that encourage inner peace; I was looking for settings that are meditative in nature. I then realized this is the place for me. And so the idea was to get a small manor house as a form of retreat, and come here for a few weeks and escape Delhi’s summer. That’s how the story started,” says Singh.
After a fairly exhaustive search, Singh decided on his first property, Klein Dassenberg in Franschhoek, which – “look at the serendipity of the whole thing” – abutted Grande Provence.
“There’s another reason why we ended up there. It’s Vastu-compliant,” says Singh, an ardent believer of Vastu Shastra, an ancient Indian science of construction and architecture.
“The property is high on the south west, low on the north east. The directions are all correct but it had two problems: it had the kitchen in the west when it should have been in the east, and the living quarters were in the east which should be in the west.”
Renovations are on so they now conform to Vastu Shastra. When Singh bought the farm, it had a manor house, guest cottage, and a slave cottage, now renamed The Pomegranate House.
“We got going, until somebody suggested the farm next to us was on sale. Then there was an expansion opportunity on an adjoining farm with a winery on it. So I showed up, liked the site and we acquired that farm too, all in less than a year. And then the farm at the other end was also on sale. So we acquired that as well. And then, we had enough hectares to farm on our own, so we hired a farm manager.”
Luckily for Singh, he got top talent. He was introduced to acclaimed South African viticulturist Rosa Kruger.
“I was lucky to find the right people without looking for them. I told Rosa, ‘I don’t know the first thing about winemaking, would you mind taking my farm on contract?’, and she said, ‘I like you, so I will help you, but I can’t take on the responsibility’. Rosa told me about a boutique wine company called Mullineux, they had two angel investors, and were looking to exit. She said ‘if you acquire, you get an ongoing successful wine company’.”
In October 2013, Singh flew in from London to sign the deal. As with every aspect of his journey into South Africa, this too had a story.
“On the British Airways plane, the stewardess handed out the menu cards and what do I see on the wine list? Mullineux Wine! Again, I felt like a kid in a toy shop.”
Singh says his new venture has made him appreciate wine more. Every year, he visits a new wine-growing area. Last year, he was at Napa Valley in California, and is now a member of The Napa Valley Reserve, one of the world’s biggest wine clubs.
“I have started the whole journey of appreciating wine and the world of lifestyle around wine, which has to do with food and so on. Frankly, now it does not seem so much of an accident as it did before, as actually, it is all the things that I like as a person, and not as a businessman. We give too much emphasis on the aspect of a business person, and too little emphasis on the person. I don’t believe, now at least, that the sole purpose of my life is business,” says Singh.
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“Business is one part of my life but the person is more permanent and more holistic in a manner of speaking. So when I think of myself as a person and my likes and dislikes, and I don’t have many dislikes, what I like most are all the things this life embodies. This place gives me greenery, nature, mountains, fog, and science and technology, as wine-making is all about technology [with regard to] the maturation process, and the way the fruit is extracted. These are the things I like. I don’t like sitting in front of a computer screen trying to trade off the New York Stock Exchange. It’s not my cup of tea. I have therefore really begun to think of this lifestyle, even though my days are busy when I come here. But whilst you may call it work, for me, it’s the most pleasurable thing to do… I am in the moment when I am here. It’s the most restful state for the mind. I feed off natural energy.”
For the moment, until his wine farm and hotels come online, Singh can be found at the Le Quartier Français, where he stays each time he is in Franschhoek. He has blended in well, and earned the town’s respect.
“I am like a local here, everyone is so nice to me,” he says.
“Analjit Singh is a part of the family,” agrees Susan Huxter, the owner of Le Quartier Français. “He is a truly perceptive, inspirational and intriguing individual. We feel [in him] an aura of tranquillity and spirituality that intrigues us and puzzles us at the same time. His journey in Franschhoek will be eventful, exciting and bring a whole new vibrancy to the village, as he is sensitive to his surroundings and the people, and soon – I believe – we will be able to converse with him in Afrikaans.”
Singh’s neighbor at Leeu Estates is Virgin Atlantic’s Richard Branson, whose property Mont Rochelle, is a luxury hotel and vineyard next door.
Singh says it’s a good thing.
“There is an element of novel excitement in the way Mr Branson lives his life and I hope that zeitgeist of Franschhoek in general and our neighborhood in particular, would benefit from his legendary joie
de vivre.”
Clearly, Singh’s is a story that will keep evolving. The South Africa sojourn is perhaps only the beginning of his journey into Africa.
“The show must go on,” says Singh, even as he is mobbed by locals, admirers and colleagues from India in the little South African wine town he now calls home.

IMG_2067

The man pouring millions into a rich slice  of Africa

He’s slowing down now, but with Paul Harris you can tell; time is money. He doesn’t look much like a multimillionaire, but on this Thursday morning the banker, with piercing blue eyes and a hint of power behind a firm handshake, is one of the brains of Africa, who wears his eminence and his fortune of around $200 million lightly.
“I suppose I stumbled into it. I went to Stellenbosch University and my interest was in sport. I had a sports bursary for cricket and rugby. I ended up becoming intrigued in studying and ended up coming out with a Master’s degree in Commerce.”
These were the first steps, in the right place at the right time, for Paul Harris, the unassuming man who built fortune on banking and bright ideas. He, along with two other millionaires, his university friend GT Ferreira and colleague Laurie Dippenaar, took $10,000 and forged the $2.1 billion FirstRand empire, the largest bank in South Africa, by market value, according to Reuters.
You could say Harris is: the father of FirstRand; the grandfather of Rand Merchant Bank Holdings (RMBH); and the great grandfather of First National Bank (FNB), OUTsurance and Discovery Health –all pillars of South African business.
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“A lot of tech in Africa has been quite far behind the developing world. But the new wave of the world, the internet and mobile, has enabled Africa to leapfrog. The opportunities lie in using technology in creating different business models. The African can go into industries that have been doing something from the 1980s and in one shot update them into [the 21st century],” says Harris.
Harris has grown a thick skin in 37 years of business; he had to. He battled through the 2008 financial crisis, cricket scandals – which really hurt – and a public spat with an Australian pen pal named Jeff. On this bright bustling spring morning, amid the affluent sparkling skyscrapers of Sandton, he held forth with a masterclass for young entrepreneurs.
“Young people should know something about everything and everything about something. You must find areas you are obsessed about and must become the world expert in that particular field,” he says.
Harris takes his cellphone in his left hand.
“This thing put the man on the moon. There is so much space for African entrepreneurs to re-engineer business.”
It’s hard to believe that this man, in a plain blue collared shirt and black pants, who calls himself an unemployed former investment banker, is a multimillionaire and one of the most influential minds in Africa.
It’s a journey that began way back in 1977. It was a time when people went to discos to listen to Rod Stewart’s Tonight’s The Night; Star Wars was in the cinemas and the force was with the rand, which was worth a dollar. In this year: Dippenaar, Ferreira and Pat Goss left their safe banking jobs to set up Rand Consolidated Investments (RCI), with $10,000 and a secretary.
Eight months later, Harris, who worked with Dippenaar at the Industrial Development Corporation (IDC), a South African government institution that bankrolls industrialization, was a last minute substitution; called on when Goss left the company.
“When you start as a new business the thing you need to do is get the next deal done, you have to pay your bills, you have to work really hard at surviving; exploiting the opportunities that come your way,” he says.
Opportunity knocked after four hard years in the trenches. RCI grew from $10,000 capital to profit, after tax, of $48,000 (R657,000).
“Everything we really did was start-up, and then we acquired some companies. It was always a new way of doing things. It was always a new approach. We grew from being a very small group of guys to become huge.”
In 1983, six years into the business, billionaire Johann Rupert, the fourth richest man in Africa, whose family is worth $6.3 billion according to FORBES, approached the group of guys to sell his bank, Rand Merchant Bank (RMB). Rupert was going back to the family business, Rembrandt Group, that sold everything from luxury watches to cigars; he needed to offload.
The opportunity was too good to miss. RCI sold into RMB and got a controlling stake of the company, which they named RMBH; RMB remained a subsidiary. The deal gave Harris and the guys a banking license. By 1988, RMBH was making profits of $964,000 (R13.5 million) a year.
Harris set off for Sydney to set up another subsidiary, Australian Gilt Securities, now RMB Australia. By the time he returned to African shores, in 1991, he had a burning desire to implement lessons learned abroad.
In 1992, the company bought Momentum Life, a life insurance company that formed Discovery Health, now the largest private healthcare company in South Africa. In 1998, it added Southern Life and First National Bank (FNB), bought from Anglo American.
RMBH needed to raise $370 million (R5 billion) in new capital in order to seal the Southern Life deal. Harris and his crew did it in two days.
“Funnily enough I don’t think about that too often. It was quite a compelling proposition and it made a lot of sense. I don’t remember that as being hugely stressful,” says Harris.
Stress or not, FirstRand was born.
“It’s only after you have got some more stability that you start looking at bigger things. Once we got into that mode, we started to get people around us as partners. The opportunities were painted on a bigger canvas,” says Harris.
The 1998 merger with FNB promised greater things. Harris didn’t just want to own banks, he also wanted to change the way people used them. Along came the means, the internet.
“There was no doubt that we were pioneers… It was the early 1980s when I first heard about [the internet] from a chap we did business with in Chicago. One of the guys that was very involved in our option trading. I didn’t understand it for about five years. He used to talk about these network computers that you can access. I didn’t get it at all.”
“In the nineties, you would go to a board meeting; people would say ‘what’s the internet?’. I then went and registered this proposal called Cyberbank. We put together a small team. They used the internet in the business under the name Origin. It eventually became RMB Private Bank. Right from that stage we were into the internet.”
“I still don’t fully understand [the internet]. It really helped that I hooked up early on with Michael Jordaan. I mean he was my PA. He is an incredibly sharp guy. We liked this concept of using the internet, using mobile phones.”
Jordaan is a success in his own right. A venture capitalist and wine enthusiast who started his life as an officer in the South African navy, went on to build Montegray Capital. He also was the Chairman of social media platform Mxit; the CEO of FNB; and is an Executive Committee Member of FirstRand.
“[Harris is] always the lateral thinker who comes up with a range of new and unconventional ideas. At first this could be very frustrating if you interpret them as instructions; as would be the case in an autocratic environment. Over time you learn that his ideas as not orders but the start of a rigorous debate about what is possible and practical. If you engage properly the outcome was inevitably better than the conventional resolution. But it took guts to debate with Paul,” says Jordaan.
Jordaan first crossed paths with Harris in an interview for the self-starter workshop Class Of spearheaded by Harris in the 1990s.
“I had researched the bank so well that I could even quote Paul in some of the questions that were asked. Nevertheless I felt completely unprepared. RMB had an open bar on Fridays after work. Paul would work the crowd and I was mildly terrified of whatever questions he would ask of me. So I had a strategy of always having some questions prepared for him should he join our group,” says Jordaan.
“One day in a passage, in the old RMB building, he asked if I would become his Executive Assistant. I was bowled over and could not say no. It ended up as a hugely valuable part of my career, learning how a bank was run by being in close contact with one of the founders,” says Jordaan.
Harris’ vast office in Sandton speaks of the man. His desk is surrounded by paintings and sculptures from African artists, his bookcase lined with cricket books and photographs of him shaking hands with the strong and powerful. It is a world away from the simple farm home in Greytown, in the KwaZulu-Natal province, where he grew up on peanut butter and bread. He left home at the age of eight to go to Maritzburg College, 77 kilometers away in Pietermaritzburg, coming home at weekends.
“We grew up fairly modestly. I think the first time I was ever on a train was when I was chosen to play for Natal in rugby as a school boy. It was the first time I was ever out of Natal,” he says
“I went to Stellenbosch speaking only English and came out speaking Afrikaans fully.”
It led to a life of gadgets, golf and art, a far cry from peanut butter.
The ideas that changed African banking came in offices like this. It took eight years to convince hundreds of millions of Africans to use their phones rather than a bank teller.
“We said we needed to have a land grab&#8230; Very early on we saw [banking] was going to go mobile. We always said banking was going to be electronic and on the internet. People don’t realize this but when was the first iPad sold? In 2010. The iPad is only five years old. It’s a phenomenal story. We always said internet banking was going to be a big thing. That’s why we had Cyberbank and made a big push for it. Mobility only came in in the last five or six years,” he says.
The crowning glory was eBucks – the loyalty reward system that gives discounts and money to customers every time they swipe.
In the life of an African entrepreneur it’s amazing how often ideas that make millions start at odd times in strange places. In Harris’s case, eBucks hit like a bolt from the blue to the crash of waves in Plettenburg Bay, on South Africa’s east coast, on his Christmas holiday. He was supposed to be resting at the time.
“I clicked. I sat down and then I wrote a strategic document on how this thing could work. I still have the document. And we pretty much still follow it. A team of thinkers built the product and the rest is history.”
“If you are in the business of ideas, you have to accept that to get a good idea you have to have a lot of bad ideas. People have to understand that’s what you are. You aren’t the oracle of all wisdom. But you have to create the idea, but you also have to evolve the idea and take it to the next level.”
In 37 years at the helm, Harris has learned to run with the great and the good taking a few kicks along the way. His hardest kick was the 2008 financial crisis. It hit FirstRand like a hammer destroying R1.4 billion (around $100 million) in overseas earnings.
“If you were to take a plot of any financial index; it was almost impossible to conceive that the drop could be so dramatic. Equity markets went from a factor of a hundred to a factor of ten. Banks that were capitalized at hundreds of billions of dollars were suddenly worth nothing.”
“I woke up and on one specific day and FirstRand had a bigger market cap than Citigroup bank. That was the most terrifying day of my life when I just realized this huge bank had just now become smaller than us. All I could think of was this is going to happen to us. We didn’t have the infrastructure like theirs.”
In 2008, it was happening to anyone who had money. The United States (US), built on the shifting sands of sub-prime mortgage-backed securities on US property price estimates, sank. Banks like Citi, the largest bank in the world at the time, realized they had overextended credit and couldn’t pay the people back.
“The reason there was a crash was because there was a lot of things that slipped into the system that was ill discipline. People were buying things they should’ve been buying. From our perspective we survived it. At our worst, our return on capital was higher than our competitors. It was the worst year that we ever had,” says Harris.
“We were hit, but we weren’t dealt a mortal blow. We had a very good diversification. I’ll never forget the presentation we had to make to our board members. I had to make it. I still have the YouTube clip. And I said ‘big s*** is coming’, we had to take drastic measures.”
Harris took a bearish approach to the markets.
“From our perspective we survived [2008]. At our worst, our return on capital was higher than our competitors. It was the worst year that we ever had… We were seen as being extremely negative. I must say we didn’t get very good press about it. But hindsight says we recognized the problems and we immediately did something about it. That’s why we came out of it much quicker than the others. The others hung around for a while and hoped for the best,” says Harris.
It was a hard lesson to learn.
“It’s like a sportsman. You put on weight and you get a little unfit and one day you get found out. That’s what happened to the financial world.”
And speaking of sports: Harris had to make some more painful decisions for the sake of the game he loves.
He played an important role in exposing a R4.7-million ($671,428) bonus scandal involving Gerald Majola, the CEO of Cricket South Africa (CSA), in the wake of the 2009 Indian Premier League (IPL) in South Africa.
“I was involved in a public thing where effectively I was chairman of the remuneration committee. There were dodgy things going on with the IPL. I was the one that objected and set off this whole process which eventually ended with the CEO being fired,” he says.
Harris, an independent director on the board’s remuneration committee, objected to CSA handing out bonuses to 40 people. The president of CSA, Mtutuzeli Nyoka, ordered an audit of the bonuses but was dismissed by his board through a vote of no confidence. The board also pushed out Harris and Hentie van Wyk, the board’s treasurer.
Nyoka wrote a book on how he fought for three years to see justice. In 2012, after a series of investigations, Majola was suspended.
“It shook the foundations of my life. I was plagued by so many emotions and sentiments, anxieties and fears. It was a significant event in cricket, there was a deep resonance in the rest of society,” says Nyoka.
Battered and bruised, Harris has also locked horns with an Australian pen pal named Jeff. Jeff, who sent Harris a number of articles that put South Africa in a bad light, never expected the response he got; a letter from Harris promoting it.
It read: “I often get e-mails like this from “concerned friends” worried about us, which is sweet of you guys. Of course we are concerned. Some worrying things have happened but we have been through and survived much worse in much more volatile environments. Including the Boer War, two World Wars, apartheid, the financial crisis without a bank bailout, the rinderpest, Ge Korsten and Die Antwoord!”
“…My message is, please don’t stress about us in South Africa. We are fine. We are cool. We know we live in the most beautiful country in the world with warm and vibrant people. There are more people here with smiles on their faces than in any country I have ever been to…”
The letter went viral.
So did Jeff’s response:
“Kids don’t get text books, pregnant women sleep on the floors of ill equipped public hospitals, tenderpreneurs keep the luxury car market buoyant but fail to build the roads they were contracted to&#8230; it’s a farce mate. And I won’t even mention the succession of dodgy police chiefs you’ve suffered. So please Paul, take off those expensive rose tinted specs of yours, smell the raw sewage and stop pretending you have a functioning government&#8230;”
Harris backs what he said in his letter.
“What I wrote is what I feel. It’s all in there. I think South Africa has got a hell of a lot going for it and you mustn’t let that get on top of you,” he says.
The future? Harris has teamed up with his daughter and son to venture into property, asset management, solar technology and sponsoring education projects. You could say Harris has started again. He argues any entrepreneur, young or old, has a mountain to climb for success.
“We worked incredibly hard. Sometimes I look at young entrepreneurs and I think it’s not possible to be one and have a balanced life… forget having a nine to five. The sad thing is a large proportion is going to fail, we know that statistically. The ones that are going to make are the ones that have got resilience, that are prepared to overcome incredible obstacles. And obviously have a good idea and work ethic,” says Harris.
According to Harris, entrepreneurism is even riskier if you don’t understand the market.
“I always say young people should know something about everything and everything about something. You must find an area you are obsessed about and must become the world expert in that particular field. If you just know a little about something and then go into a market and compete, unless you know more about that niche than the next guy, forget about it.”
“Wherever we have gone it’s always been grassroots and a new approach to something. Innovation and change is what we are all about.”
So says the farm boy who grew up in the middle of nowhere, who got somewhere, survived the 2008 financial crisis, and changed the way Africans bank.

The $200-Million Pioneer Who Changed The Way Africans Bank

Nestled on a ridge overlooking the sea to the left and Durban’s beachfront to the right, with Moses Mabhida Stadium on the horizon, is the view from the balcony of a multimillionaire. Michael Attridge is one of the guiding spirits of one of the world’s biggest pharmaceutical companies.
His stride is that of a man who knows where he is going in life. The handshake is firm but welcoming and his warm smile reassures you that Durban may be hot, humid and sticky but it’s a fun place to live.
Attridge, who’s been called Gus since his school days, is a charted accountant by training and the deputy group chief executive of Aspen Pharmacare, a R125-billion ($11.8 billion) company as of the beginning of April according to Reuters, listed on Africa’s biggest bourse, the Johannesburg Stock Exchange. If you bought $10,000 worth of shares, valued at R2,36 in 1998, what would it be worth now?
Attridge is one of four founding shareholders who built this business in their backyard in Durban.
It all began in an old Victorian house, converted into offices, near Greyville racecourse in 1997.
“It was in a rather less fashionable part of Durban, at that time this was sugar cane,” says Attridge, referring to their current offices in La Lucia.
Attridge made his debut on FORBES’ list of Africa’s richest in 2013, coming in at number 37, with an estimated net worth of $525 million. A listing he says he didn’t know about and would rather be without.
The debut was down to Aspen’s stock shooting up nearly 75% in 2012/2013 thanks to its booming business in Asia and Australia, says chief executive, Stephen Saad. Attridge is the second biggest individual shareholder, owning a 4% slice, with co-founder, Saad, who is also on the FORBES list with a net worth of $1.5 billion.
How two friends from Durban came to be worth $2 billion is an African story worth telling.
In 1981, Attridge completed a bachelor of commerce degree from the University of Natal [now University of KwaZulu-Natal] in Durban. He added a diploma in accounting, a year later, followed by another in datametrics before his training with Coopers &amp; Lybrand, now PricewaterhouseCoopers. This is where he met Saad. They worked together on assignments; Attridge was Saad’s senior, who was to climb the ladder at Coopers &amp; Lybrand to become a manager in the corporate finance division in London.
“I’d always set my objectives on becoming a partner in one of the firms. That was kind of my pinnacle as a trainee in the accounting profession,” says Attridge.
Just before the end of apartheid, he returned to South Africa to establish a corporate finance division in the Durban office of Coopers &amp; Lybrand.
During that time, Saad left the company, leaving Attridge behind, suffering from the entrepreneurial itch. But Saad returned. Not to the company, but to Attridge, whom he approached with a lucrative business idea.
“The day he [Saad] could first get out of there, he got out of there. I initially had some career ambition there. But I quickly realized that selling time was not very entrepreneurial and it was difficult to get rewarded effectively for your efforts when you were selling time because it did not measure what value you added to things. I was eager to find an opportunity in business,” says Attridge.
Saad and Attridge put their heads and money together.
“And that’s where my business partnership with Saad began, probably 20 odd years ago,” says Attridge.
He left his job at Coopers &amp; Lybrand in 1994, the year South Africa held its first democratic elections. Their first venture was to buy Varsity College, a struggling private tertiary institution, for R1.5 million ($142,000) and to apply a fresh idea.
“We embarked on quite a differentiated, let’s call it, advertising campaign where essentially we guaranteed students who attended all their lectures and did all their assignments that we would give them their tuition fees free the next year if they failed under those circumstances.”
“It was all built around adverts that went into the press which were around the F-word. It was F***, being fail, but it provoked some reaction generally as well because it was a bit provocative I suppose,” he says.
Few students fell foul of the F-word.
“In a student’s DNA, to go to all lectures is foreign. But really, with that diligence required to attend all lectures and to submit all your assignments and so on, you will pass. Unless you chose a course incompatible with your skills set,” Attridge says.
He and Saad also bought a private primary and secondary institution, Crawford College, one of which is opposite their head offices in this suburb of La Lucia in Durban. It worked. The partners turned the losses of Varsity College and sold it in 1996 for R10 million ($948,000).
This paved the way for another adventure.
“We’re not people with 10-year plans. We don’t even have a three-year plan. It’s a good thing we haven’t because we would have never stuck with any of those plans because we move too quickly, things change quickly,” says Attridge.
Three years into the pharmaceuticals business, Aspen took a big risk. It was a highly leveraged hostile takeover of South Africa’s oldest pharmaceutical business, South African Druggist (SAD), for R2.4 billion ($227.5 million).
“That changed our business forever and changed our business model,” says Attridge.
SAD worked in a number of areas, including the development, production and marketing of pharmaceuticals, within South Africa.
Aspen’s initial business plan was to avoid manufacturing. Its plan was to be a small business selling good margin products to build its name.
The takeover wasn’t going to be easy.
At the time, Fedsure owned 34.9% of SAD, but its attempt to buy the remainder of the company and then sell Pharmacare to Adcock Ingram was opposed by the South African Competition Board. Pharmacare was the main pharmaceutical unit of SAD.
“I remember I was driving from work and I was listening to a business program and I heard this deal had been cancelled or disallowed. I walked in the house, picked up the phone to Steve and I said, ‘you know a lot more about the history of SAD, you know their products well but I’ve just heard that this is cancelled, this deal is not going ahead,’” recalls Attridge.
It got even more complicated.
There were other companies involved in the acquisition. A business called Macmed Health Care initially did the running to buy SAD. They specialized in medical devises rather than pharmaceuticals. They had an agreement with Aspen to divide up SAD in a way that would allow other players, who wanted other parts, to enter into a consortium.
“We had to put up guarantees. It was a hostile arrangement. Management at SAD had their own ideas about acquiring the business for their own benefit. So there were a whole lot of different issues going down. We weren’t allowed to do due diligence,” says Attridge.
Luckily for them, SAD was a public company and Saad had a good knowledge of the product. Financing the deal was a problem but they were helped by property entrepreneur Jonathan Beare, who relished backing small businesses like Aspen. Beare introduced Attridge and Saad to Investec’s chief executive, Stephen Koseff. The two businessmen put up money and Aspen led the deal.
“We didn’t think we were going to buy the whole pharmaceutical business. I don’t know whether its fate or what, but we got it.”
With the deal done, the business grew to a $11.8-billion global corporation with Saad as the chief executive and Attridge the deputy.
The irony of this story was that Aspen were the new kids on the block but survived and prospered. Within 18 months of the transaction, Macmed went bust, about three years later, Fedsure followed.
“So we were the only ones from that consortium that survived and we were the small kids on the block. Those kind of things were instrumental in some of our thinking we try and impart on our staff. We now have a lot of management teams trying to impart on our people that you can never be complacent because you could be succeeding today, because both Fedsure and Macmed were highly rated at the time,” says Attridge.
“You should never be arrogant about your success, because success can be fleeting. You never know how the wheel is going to turn and who’s actually going to need who in the future. I do hope that our people [Aspen staff] understand that. When you’ve lived through and seen what happened to the management team with those businesses and so on, it’s actually very insightful because they all thought they were bulletproof.”
However, a business with a staff of 200 taking over a firm of around 3,000 was no mean feat. One newspaper called it a mouse trying to eat an elephant.
This little company had to get the buy-in from the staff at SAD. They had a small management team that was now going to manage SAD. It all played out at their old Victorian house turned into an office.
“The company which we still own today, Pharmacare Limited, was a company within the SAD label that housed the pharmaceutical business and we invited the chief executive of that business, Kobus Nel, to come to Durban and to meet us and talk about our plans and strategies and get to know him a little better. I think he took one look at that house and the day after he handed in his resignation,” laughs Attridge.
“I think he thought no, look at me sitting in this office park with a view of Johannesburg with a golf course and these guys are sitting here looking into the backyard of someone with a washing line.”
Today, Aspen supplies medicine to more than 150 countries, manufactured in 16 sites in: Kenya; Tanzania; Australia; Mexico; Brazil; Germany; South Africa; the Netherlands and the United States (US), with a French-based site becoming effective in May. It is the largest manufacturer of generic medicines in the southern hemisphere. Aspen is the first company on the continent to launch a generic anti-retroviral for the treatment of HIV and AIDS patients, thus becoming the largest supplier.
On the continent, Aspen has long-term plans for sub-Saharan Africa. Their challenge lies in its fragmented countries but they’re working on it.
“It’s not a big part of our business today but I think the investment in those difficult markets will pay back in time,” says Attridge.
In East Africa, Aspen bought 60% of Shelys, which has businesses in Kenya, Tanzania and Uganda. He says they hope to move away from the tender business into more of a business focused on brands.
They’ve also consolidated some of the manufacturing in East Africa, supported by the South African business, which Attridge hopes will help it to have its best year this year.
The business opened Aspen Nigeria last year. This is a collaboration with GlaxoSmithKline (GSK), a British multinational pharmaceutical company, where they share products and everything else, which has resulted in a strong business in Nigeria that is exceeding expectations.
“We’ve managed to get better market penetration than we thought we’d be able to, early on. It’s very small; it’s not going to influence anyone’s thinking on Aspen today. Everything has to start small. We know that very well at Aspen because we started small,” he says.
And that is how their Australian business grew. They started out with just two employees, but today it is one of their biggest revenue streams. Aspen aims to perform ahead of the market in Australia.
“We’re one of the top players in Australia now. The Australian business is getting to a certain stage of maturity. And the Australian market is challenging at the moment. It has had a series of price cuts which has taken a lot of profits off the table,” says Attridge.
Aspen has an agreement with Nestle that is helping the business ease into Australia. They plan to cut costs of goods through migrating product manufacturers from Australia back to South Africa and Asia.
“There is a big consolidation of manufacturing already well progressed and it continues well into Australia. When we bought the Sigma Pharmaceuticals unit, it had five manufacturing facilities and our target is to end up with one. We’ve got three at the moment,” he adds.
Aspen is Australia’s eighth largest pharmaceutical company by scripts generated. Following its October acquisition of the active pharmaceutical ingredient (API) manufacturing sites in the Netherlands and the US.
Aspen is ranked the ninth largest generic pharmaceutical producer out of 60 generic companies in the world by EvaluatePharma in 2013. It employs around 8,200 people.
But their success comes with problems they have no control over. The beginning of the year saw South Africa’s currency weakening steadily against the dollar, straining Aspen’s South African business.
But because Aspen has become diversified, its money comes in different currencies.
“The rand denomination results have a lot of protection against the weakness of the rand as a group,” says Attridge.
In January, Aspen Global, a subsidiary of Aspen Holdings, acquired the brands and business worldwide of Arixtra and FRaxiparine/Fraxodi, except in China, Pakistan and India, from GSK. As of May, Aspen Holdings will have acquired a specialized sterile production site that manufacturers the brands in France, a total consideration for the acquisition made through its subsidiary at an estimated R9.79 billion ($929 million).
Aspen has an expanding presence in Latin America and South East Asia. Their expansion plans will stretch as far as Russia and the former Soviet Republic, as well as to Central and Eastern Europe.
Attridge attests that though it’s going well, they’ve had some tricky times when they started out in Latin America. Their aim is to create a business model structured for success, similar to Varsity College’s plan.
“Varsity College was about getting an overhead base and would be covered by the revenues and we take the same approach in every business that we look at, that we have to make sure it’s a business model that’s sustainable,” he says.
They changed the business from one that relied on tenders to one based on brand equity.
“We restructured the business and got rid of some of the manufacturing which was not core to what we wanted to do… We’ve had a lot of challenges with management in Latin America. But in Brazil, we got that right a couple of years ago. It’s really doing well. It’s got a good foundation there.”
Brazil has been Aspen’s biggest part of the business in Latin America but the Spanish region of Latin America will soon overtake Brazil.
Spanish Latin America is a region where Aspen has struggled because they only had operations in Mexico and Venezuela. However, in the last 12 months or so, Aspen made a transaction with Nestle to acquire the infant milk business they bought from Pfizer; increasing their product portfolio offering. This has helped Aspen make inroads into Columbia, Chile, Argentina, Peru and Costa Rica.
Attridge hopes that the Latin American business will be as big as South Africa’s in the near future. Before that happens, they need to decrease debt from the latest acquisitions in Latin America.
This will be done through their cash flow from the business. Attridge says they’d rather use debt to build their business.
“We don’t see having money in the bank as a productive use of funds. If you’ve got money in the bank, you better have a very good investment plan and or you should give it to your shareholders. You shouldn’t be sitting with it in a government bank account,” says Attridge.
He believes the business model must produce a good return of cash. Aspen has also avoided giving equity as it is the most expensive way of raising funds.
“We’ve developed that model in all our businesses, so the profits from our business flow through to the business and to cash very efficiently. And most years our cash flow per share have exceeded our earnings per share before investments. But that’s a very important fundamental.”
Aspen made its way into Russia in January, with around 80 employees on the ground, promoting products acquired from GSK and Merck Sharp &amp; Dohme (MSD) SA.
“One of the philosophies we have is that the more challenging the market, the greater the opportunities that may exist. So Russia has been on our radar for some time as a potential investment area, a market with good growth fundamentals and evolving health sector. But it’s not the easiest market to operate in. If you can succeed in difficult markets, then you can succeed in any market and sometimes in the difficult markets you don’t actually have as much competition as you do in markets where it’s easy to operate in. People are scared of the circumstances,” says Attridge.
In Russia, Aspen will compete with a lot of local businesses who will defend their space and territory from the South African company. Attridge says Aspen is competing with a lot of products not as regulated as theirs.
“It’s not unique to Russia, but being able to access the distribution networks into the pharmacies is critical, so establishing and building on the relationships with the people (wholesalers) who are taking the products… they dictate a lot of what can be achieved. You can’t reach Russia on your own,” says Attridge.
But he says these are challenges they’re willing to take head on. He believes good leadership in other regions is one of the factors to their success of running Aspen from their modest offices in Durban.
“You’ve got to have the right people leading your businesses. We stumbled on that initially in America. We didn’t have the right leadership in place there. We inherited some that weren’t aligned with what we were trying to achieve.”
Besides challenges, the group hopes to enter into the two biggest markets by population, China and the United States (US), as well as making an entry into the Japanese market.
“That’s not to say we are going to rush in tomorrow. We now have a small portfolio in the US and one or two products in China.”
A family man, this father of two doesn’t take work home. He says with all the traveling, he makes sure that when he is home he spends it with his two sons and his wife. This 53-year-old, who celebrates his birthday this month, is a former rugby player, who played for the Kwa-Zulu Natal provincial under-20 team in 1981. He is also a cyclist, like his partner Saad, having taken part in the Argus and Amashova races.
He’s also an accountant who’s not afraid to take risks and this has made him rich.

How A Mouse  Ate An Elephant

It’s a warm, overcast, spring afternoon in Julius Nyerere Avenue in the heart of Maputo amid the hooters and rattle of people driving home from work through the potholes. On the side of the road in front of brand spanking new bank headquarters, a group of urbane bankers chat quietly and shift from foot to foot in expectation.
The building used to be a hotel as rundown as the streets that run by it. “This was a ruin; now look at it,” says one of the senior managers proudly. A small curious crowd has gathered. The word is out that one of the richest men in the world is about to arrive. A car sweeps in like a summer breeze off Maputo Bay; a group of people jump out. “Which one is he?” says someone nearby.
<div id="attachment_147" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-147" class="size-large wp-image-147" src="/wp-content/uploads/2017/04/290-647-1024x683.jpg" alt="" width="474" height="316" />Banco Unico branch in Maputo, Mozambique; 15 September 2011 &#8211; Photo by Brett Eloff.</div>
Closing the door behind him is the man himself, dressed in grey suit, with a red-striped shirt and matching tie; Américo Amorim—the 212th richest man on earth, according to FORBES in 2010, worth an estimated $4 billion. With a gentle smile and handshake, he blends into the waiting crowd of bankers and could be one of them. If you are looking for a billionaire who wears his eminence lightly, look no further than this man; a man who not only admires Nelson Mandela, but also appears to subscribe to the great man’s approach to humility.
Make no mistake, there is an iron will behind the smile and a reputation in Maputo—born of his latest deal—as a tough negotiator. Amorim, who made a fortune from putting corks into the world’s bottles, was in Maputo to see where a chunk of his fortune has gone. The 77-year-old entrepreneur’s empire is in a joint venture with Portuguese conglomerate Visabeira, which owns 61% of Mozambique’s newest bank, Banco Unico, which has opened in Maputo with $20 million in initial equity share capital. The remainder, aside from a small stake for management, is owned by Mozambique-based private companies and pension funds.
<div id="attachment_166" style="width: 484px" class="wp-caption alignright"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-166" class="wp-image-166 size-large" src="/wp-content/uploads/2011/11/290-76-683x1024.jpg" alt="" width="474" height="711" />High-rise construction in Maputo, Mozambique; 14 September 2011 &#8211; Photo by Brett Eloff.</div>
Amorim, speaking through aninterpreter, is not fazed by his lofty FORBES ranking: “I am indifferent to that. My passion is to build companies&#8230; My happiness is to be busy.” Amorim has certainly been busy for almost his entire adult life. He took over the management of the family cork business at the tenderage of 18, when his parents died; from that moment, according to his close colleagues, Amorim has worked at least 12 hours a day in more than half a century as an entrepreneur. The Amorim Group has its roots in a small family cork business started by Amorim’s grandfather in 1870. The business is based in the tiny town of Mozelos, 19 kilometers from Porto, near the Portuguese forests, which hold more than half of the world’s cork. The young Amorim took to the family business with a will and travelled the world to sell cork.
In 1958, he journeyed to the then unfashionable Soviet Union and Eastern Bloc to strike deals. It made his company Portugal’s biggest exporter to Eastern Europe. In 1962, Amorim invested 75,000 euros ($102,000) in the business, to modernize and mechanize; the company consolidated cork production in Portugal and down the years expanded into Spain, Tunisia, Morocco, Algeria and Sardinia.
Nearly 60 years on from the young Amorim’s first day in the office, the family empire declared sales of 457 million euros ($621 million) in April and posted profits of 20.5 million euros ($27.8 million) for 2010. The company is the world’s largest manufacturer of corks, making three billion a year. One in four corks popped around the globe is made by Amorim’s company. Like the corks, Amorim’s investments have also popped up far and wide, including: 33.44 % of GALP, Portugal’s energy company; a share in Spain’s third largest  financial institution, Banco
Popular; and in BIC, a commercial bank in Angola. Despite this vast wealth, Amorim has no time for fast boats and private jets—corks are his business and passion. In fact, rare passion flows in the interview when the thorny subject of plastic bottle stoppers comes up. “Plastic is not appropriate for wine.
Nature never spoils. The champagne industry has been in existence for 320 years and it has never stopped using corks. Corks are always preferred by people with good taste. It (plastic stoppers) is a bad taste idea,” he says. So why is this man, with a passion for corks, throwing millions into Mozambique’s often uncertain banking sector with its past allegations of corruption? Legendary investigative journalist Carlos Cardoso was gunned down in a Maputo street in 2000 while at the heart of an investigation into corruption in banking in Mozambique.
<div id="attachment_167" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-167" class="size-large wp-image-167" src="/wp-content/uploads/2011/11/290-289-1024x683.jpg" alt="" width="474" height="316" />Portuguese billionaire &amp; majority shareholder of newly launched Banco Unico, celebrates the opening of the bank&#8217;s headquarters in Maputo, Mozambique; 14 September 2011 &#8211; Photo by Brett Eloff.</div>
A lot has changed in the last 10 years, but there is still talk among sources in the know in Maputo of murky goings on in the banks. But Amorim is unconcerned. “I don’t consider Mozambique a risk. It has stability and its institutions are functioning. It is a rich country with a lot of raw materials and minerals… I have investments in 37 countries around the world, including Europe, and even there, there is corruption. It’s not a thing that bothers me.” The rewards for risk in Mozambique could be high for those with light feet and an eye for a fast return. In the week that Amorim landed in Maputo, the first coal exports from the mighty Moatize project, near Tete in the north-west corner of the country, was railed down the Sena railway line and exported through the northern port of Beira.
The Moatize expects to ramp up to four million tons of thermal coal a year, for electricity production. It has a target of 52 million tons by 2026, according to consultants working on the project. On top of this, BHP Billiton runs the Mozal smelter, just to the south of Maputo; South African energy giant Sasol is investing $300 million into the Pande gas field 600km north east of the capital. In Maputo itself, foreign investors have brought the swinging construction cranes back to the skyline as they build offices and homes for the newly wealthy.
Mozambique, once the poorestcountry in the world, where less than two decades ago even food was scarce, is growing fast and the financial industry is growing with it.
A report by KPMG in 2009 said the banks of Mozambique were highly profitable, despite the international financial crisis, seeing a profit of $116.4 million for the year, up 17.9% on 2008. Revenue from loans grew by 13.3% and bad debts were less than 2%. New anti-corruption laws are on the way, even though they are greeted with scepticism by many Mozambican business people. “It will exist only on paper,” chuckled a young Mozambican entrepreneur over a beer in a nearby restaurant.
One Mozambican who is bullish about his economy, to say the least, is Joao Figueiredo, the home-grown CEO One of the many cranes operating in the heart of Maputo of Banco Unico. He predicts that the economy will grow at 10.5% by 2013, compared to the current growth of 6.6%. Even so, Banco Unico could struggle to lend in the early days in the face of high interest rates. The International Monetary Fund is urging Mozambique to keep a tight monetary policy to fight inflation of around 12.8%, even at the risk of a slowdown in the economy.
Despite this, the repo rate came down in August, but before anyone got too excited, it went down to 16%. Couldn’t this be a problem for the new bank on the block? Not exactly, says Figueiredo. “When you look at the market you have to look beyond the short term to the long-term possibilities of Mozambique… The economy appreciates in terms of long-term. There is potential for the future, especially in the mining sector. The stability of the inflation rate and itsdecrease from the beginning of the year is a good sign.” Banco Unico is trying a different approach to break into a market which is dominated by four major banks. Its branches are all designer furniture and soft background music, more airport lounge than bank; there are no queues and there’s coffee while you wait for your consultant to deal with you one-on-one.
It is clear that the bank is aimed at the moneyed middle class, which, the cynics point out, excludes most of the population. Fernando Lima, a veteran Maputo journalist, says: “There are inefficiencies in the banks here. They are expanding but don’t have the human resources to keep pace. There is a lot of poaching of top staff. People also want to see more competition among the banks.” Figueiredo says: “The four biggest banks have 90.2% of the market. It is a concentrated market. There is competition, but there is room for more.
Room to grow as a financial system… The system is not yet mature and that contribution we can give to the market. There is space for more banks, but there are things you need to know before coming to Mozambique. You can’t come with foreign concepts because they won’t work here.” Banco Unico plans to go regional in the future; it appears the world’s 212th richest billionaire is in for the long haul. The interviews in the offices overlooking Maputo harbor, conducted to the crash of waves below, are over. It is night now and the many colored lights of the ships in the harbor shine forth like beacons.
As I thank Amorim for his time and patience he says, through the translator: “You don’t get tired when you love what you do.” For now, Amorim loves putting foreign direct investment into Mozambique, an emerging economy that needs it more than most.

Popping Millions Into Mozambique

Every household has a dirty carpet and that’s where I literally made my first buck as a businessman,” says Base Sebonego, beaming at the memory. 
That first buck came in 1995 with a one-man carpet cleaning company. Sixteen years later, Sebonego is a multimillionaire through turning ideas into money. 
In a highly educated and developing country, where the private sector has relied heavily on government patronage for its survival, Sebonego is the exception. In fact he shatters the historical mould of a successful Motswana businessman in a country where you find well-schooled university graduates in the most menial of jobs. He failed high school; has never been to a business school; started his business with no bank loan or help from government empowerment schemes. Yet, at the age of 37, he has rubbed shoulders with Botswana’s movers and shakers and amassed a fortune. 
Sebonego’s investment portfolio straddles property, insurance broking, textile manufacturing, road construction and he has recently added mining to his repertoire. 
Sebonego’s life is the quintessential rags to riches story. Standing at just over 5’4”, his unpolished English vocabulary belies the medley of ideas his brain is constantly digesting. Doing this interview was not easy either. With several appointment cancellations, more than a couple of double bookings that resulted in postponements, the piecemeal interview suffered the interruptions of a mobile phone that rang incessantly and streamed a barrage of SMSes. 
“I have so many things happening at the same time, but nowadays I have come to accept that I do need a personal assistant,” he says rather apologetically. As disorganized as he is, that is his modus operandi, and it seems to have worked well for him. 
Sebonego was destined to be a businessman. Despite being one of the best students doing pure sciences at high school in Maun in the late 1980s, he often skipped school and spent much of his time at the “driving school of a family friend, fascinated by the number of clients he had and the money this guy was making”. 
“I was&#8230; (he counts with his fingers) &#8230;just 15 years old. What else was I supposed to do with my father away on trips half the time?” 
In 1994, after obtaining a certificate in Animal Health and Production at a technical college, Sebonego worked for the government for six months before absconding to sell insurance. This helped him buy his first car, a brand new Toyota Tazz, a far cry from the Range Rover Sport and CLK 63 AMG he currently drives. 
The following year, armed with a bucket, brush and a car wash pressure machine, he headed for Francistown, Botswana’s northern city. He did his insurance work alongside washing carpets. 
“I targeted schools where government housed teachers in a village set-up. I would literally knock at any of the front doors and offer to clean their carpet for free. The neighbor would see the carpet hanging on the fence to dry, and by the end of the week all the carpets in that neighborhood would be clean and my pocket would be full.” 
But charging 20 pula ($2.95) to clean a carpet was not enough. He moved to a bigger client, Supreme Furnishers, a furniture company where he charged an unbelievable P9,000 ($1,330). This job, he says, was a watershed that showed him he could actually make a lot of money. 
It was at this time that Sebonego met a woman who operated a cash loan business from Palapye, 160 kilometers away. The two of them talked, she liked his entrepreneurial intuitiveness and determination; the following week, Sebonego was in Palapye working as a partner in the business. In 2001, cash loaning by non-commercial banks was a relatively new business system in Botswana. Sebonego’s contribution to the business was the introduction of a commission-based sales team, a concept he borrowed from his three-year stint in the insurance industry. He targeted people like teachers, unions, bank employees and even parastatal institutions. The pair opened up outlets in four other towns because, like Sebonego observes, “people will always need money, and how far it comes from, they don’t care”. 
The money and power bug bit him and he wanted more. He wanted to be in control, so he parted ways with his partner and took over the Palapye operation. 
I ask him if he is a greedy businessman. The man, who never fails to extol God and his eternal belief in Him, jumps out of his chair before settling back down. 
“Let me tell you something, I am a seriously, seriously, seriously spiritual guy. When I see someone struggling I feel really bad. I once pounced on the property of a client of mine who worked for a local bank. She was dodgy because she had evaded me several times instead of renegotiating her repayment plan. I took possession of her TV and radio set. I remember feeling terrible about it, but I was going to sell them off if she hadn’t come to pay me, which she did that evening.” 
Even though the cash loan business gave him more than a healthy bank balance, it was to be his next business that would catapult him into the multi-millionaire league. It began with a chat over a barbeque with some lawyer friends and gave rise to his next big idea. His friends complained of having trouble with their clients, many of whom were unable to settle their legal bills. Sebonego’s brains were already in overdrive. 
After a year of research and product development, Sebonego launched Mosele Legal Services in 2004. The idea was simple; a legal aid subscription-based business that would outsource clients’ cases to other law firms. He approached the Citizen Empowerment Development Agency (CEDA) for a P100,000 ($14,730) loan but was turned down. “They said it was not a viable project even though I had no competitor, it was a tried and tested model in South Africa and if they had the capacity to give millions of pula worth of loans, what was the problem?” 
Once again drawing on his past experience as an insurance consultant, he carried on with the concept of sales reps. He offered shares to an attorney, whose responsibility was to interact with fellow lawyers. The company soared to dizzying heights, reaching around 20,000 subscribers in a couple of years. 
“A very productive and ambitious young fellow who always aimed for greater heights,” says Paul Chitate, Sebonego’s former boss at Botswana Life Insurance. Chitate now owns First Sun Alliance, a successful insurance broking firm. “I am proud of him as a person I trained who went on to use his experience as an insurance consultant to develop his own products.” 
Booze flowed, women were plentiful and entertainment was endless until everything came down like a pack of cards. In 2008, the company was dragged before the high court by its underwriter, the Botswana Insurance Company (BIC). BIC sought an audit of Mosele Legal Services after reports of illegal insurance practices, fraud and money laundering. BIC flexed their muscle. Comprising a consortium of political, business and legal heavy-weights, including former president Festus Mogae, it was a given that battling with a giant like BIC was going to be messy. It was. It was also a public relations nightmare for Mosele. 
“They just wanted to rattle my business from under me,” says Sebonego. He spreads his hands on the table as if distracted. “I saw it as a hostile takeover. These guys are the titans of the economy and I don’t have a big surname or the money on my side, but the truth set me free.” The high court threw out the claims as unsubstantiated rumors. 
Sebonego claims Mosele now has 34,000 subscribers. But with such an extensive investment portfolio, how much is Sebonego really worth? Getting such information as the net worth of any businessman is a tough business in Botswana. A culture of secrecy tantamount to the culture of Swiss banks prevails amongst businessmen who refuse to divulge their investment interests. Even a bill that seeks to compel politicians to declare their assets has been floating around parliament for over a decade. But for Sebonego, divulging details about his worth is a particularly sensitive subject which borders on paranoia. 
“There is a serious problem of the ‘pull-him-down’ syndrome in this country. When people see you climb the ladder or when they know how much you are worth, they want to see you down—down—down,” he jabs the air with his index finger pointing downwards. “We don’t band together like the Chinese or Indians or Zimbabweans to help each other. This country is dirty,” he continues. “You survive best when people don’t know anything about you.” Sebonego says this kills entrepreneurship which survives on role-modeling for upcoming entrepreneurs. This reference to the ‘pull-him-down’ syndrome is such a common thread throughout the interview it is hard to imagine it as anything but the truth. 
Seasoned Sunday Standard journalist Prof Malema admits to the difficulty of finding information on the assets of businessmen in Botswana. This is compounded by the fact that many of these businesses are not floated on the Botswana Stock Exchange. He concurs that Sebonego may be a multi-millionaire, but he says the Mosele Legal Services court case dealt a huge blow to his net worth. “His construction business is not so big but his new company, Home Assist, the one modeled on Mosele, has the potential to become big.” 
Home Assist is one of Sebonego’s latest pet projects. It is a home maintenance guarantee scheme for subscribers. Another is the setting up of a weekly newspaper to report “the real stories”.
Preparations are at an advanced stage and the weekly is expected to hit the streets within the next two months. 
“Five years from now, I want to be the biggest small-stock producer in Botswana or the region and have my own commercial bank,” he giggles and rubs his hands together as if he can’t wait. 
For a man claiming to be the cleanest businessman in the land and to win business without political connections, it sure would be a giant leap from the carpet cleaner of 1995.
<h3>Sunrise Economy?</h3>
Sebonego’s rags-to-riches story mirrors that of his country. At independence in 1966, Botswana was one of the poorest countries in the world with a largely illiterate rural population. The country has since observed the highest average growth rate in the world, thanks to huge diamond deposits and a government that exercised prudent fiscal management. 
The economy is slowly recovering from the hard knocks of the 2009 global recession. 
But the International Monetary Fund says the economy is staging an impressive recovery with the help of rapidly rising prices for rough diamonds. The IMF says since the second quarter of 2010, Botswana’s pace of economic growth has been one of the strongest among middle income countries. 
The government of Botswana expects the country’s 2011-2012 GDP to surpass the P101.5 billion ($15 billion) mark in current prices. The country continues to enjoy good credit ratings internationally. Unemployment stands at 17.5% with more than 30% of the population living below the poverty line. The government has embarked on a privatization drive and outsourcing of non-core services, albeit at a slow pace.
<div id="attachment_39" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-39" class="wp-image-39 size-large" src="/wp-content/uploads/2011/10/iStock_000003898766Medium-1024x682.jpg" alt="" width="474" height="316" />Okavango Delta</div>
Foreign exchange reserves stood at P54.9 billion ($8.1 billion), enough to cover 18 months of imported goods and services. The average year-on-year inflation was 6.9% in 2010 according to the country’s Ministry of Finance.

Tag: Multimillionaire

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