By Jeanine Walker for SA Promo Magazine
“The end of the line is coming soon,” economist Mike Schussler told the Sunday Times over the weekend.
“We are in a deep crisis, we cannot save every state owned entity (SOE) and I think at this point in time Eskom is much more important than SAA”
His comments come at a time when SAA requested another R4 billion from the government in an attempt to keep the struggling airline afloat. BusinessTech reports the airline continues to operate at a loss and has a R3.5-billion short-term loan, which will be depleted at the end of this month (June 2019), along with a long-term R9.2-billion loan.
SAA board member Martin Kingston is quoted as saying that the board was worried about the state of the economy and how it may impact the government’s decision to bail out the airline.
Schussler says the airline is “indebted to the nth degree”, and that it probably wouldn’t survive.
Meanwhile labour union Solidarity says SAA needs urgent, radical intervention from outside. Responding to the resignation of SAA CEO, Vuyani Jarana, last week, Connie Mulder, head of Solidarity’s Research Institute says since President Cyril Ramaphosa’s election a spirit of excitement prevailed about a new beginning. “However, it now seems as if the faces on the pictures may have changed but the facts on the ground have not. Mr Jarana’s resignation leaves Solidarity with no choice but to update its court papers for business rescue, making a final end to the cadre merry-go-round at the SAA.”
SAA ‘is unsalvageable’
He says he finds its extremely disconcerting that in his letter of resignation Mr Jarana cites all the challenges Solidarity had highlighted in 2018 as the reasons for the airline’s failure. “This is proof that while the airline is state-owned it is unsalvageable, regardless of who is at its helm. In 2018 Solidarity reached an agreement with Mr Jarana in terms of which he would give us regular feedback on progress being made with the turnaround strategy. It is now clear to us that this strategy is not going to be implemented for as long as the SAA is owned by the state,” Mulder added.
The SAA’s status as a going concern is still in jeopardy, and it would appear as if little progress has been made as far the implementation of the turnaround strategy is concerned.
“To give a new CEO another chance, yet again, will be irresponsible given the history of the SAA,” Mulder added.
Solidarity considers the SAA business rescue application to be a precedent-creating case of vital importance, not only for the SAA, but also for taking back other, bigger state-owned enterprises from the hands of the state.
“To sit back now and let the SAA continue with another bailout and a new face will be akin to treating a patient who needs heart bypass surgery with a Panado. The SAA and other state-owned enterprises need radical, external intervention, and Solidarity will provide it,” Mulder concluded.
When Jarana resigned he said he would vacate the post on 31 August. However, the Sunday Times reported that he would now vacate his position immediately and would be succeeded by Zukisa “Zuks” Ramasia as acting CEO of SAA.
Eskom – as a state-owned entity – has a legal obligation to provide electricity to the people of South Africa, says Elaine Bergenthuin, MD at De Beer Attorneys.
De Beer Attorneys is preparing to take legal action against Eskom for losses suffered by businesses and commercial entities as a result of load shedding.
If the business in question had a specific contract with Eskom regarding the provision of electricity, then Eskom’s failure to supply power will form the basis of its claim.
If a business bases its claim on delict, then De Beer Attorneys will again need to prove that Eskom’s conduct was wrongful or negligent.
De Beer Attorneys expects Eskom to argue that load shedding, per se, is neither wrongful for negligent – in so far as it is a rational, responsible response to the electricity crisis, ensuring that SA’s electricity grid will not collapse, which would be an unmitigated disaster.
The law firm, however, argues that the electricity crisis itself is something which is of Eskom’s own making – due to its negligence in maintaining the electricity infrastructure.
As such, they should still be held accountable for the losses suffered.
De Beer Attorneys will evaluate each case on its own merits.
De Beer Attorneys is calling on all affected businesses that have suffered clear, quantifiable losses as a result of Eskom’s scheduled power outages, as well as public interest groups who wish to hold Eskom to account to please contact it at firstname.lastname@example.org.
By Prinesha Naidoo for Bloomberg/Fin24
Businesses in South Africa have spent the past week struggling to operate amid rolling blackouts that affect their operations for as many as five hours at a time.
The power cuts by cash-strapped utility Eskom, which provides about 90% of the country’s electricity, are a “hugely damaging reality check,” President Cyril Ramaphosa said Thursday amid a fifth straight day of blackouts.
The reductions may cost the country as much as R5-billion rand a day, according to the Organisation Undoing Tax Abuse, a civil-society group.
Bloomberg visited some businesses during blackouts to see how they were coping with the situation.
Suzanne van Weely said she is throwing out as many as 15 loaves of unbaked bread daily – about a 10th of what she produces at her Supercalifragilistic bakery and coffee shop in Linden, Johannesburg.
“People don’t get the things they want and they walk out,” Van Weely said. With fridges shut down, cheesecakes, mousses and trays of tiramisu “are going off. It’s all stuff that costs money to make,” she said.
Across the road, trading at her father Ronald’s store, Magnificent Paints and Hardware, is at a standstill. When the power goes out, his regular customers – local contractors – stop working and so do his orders and sales.
Three of his six delivery trucks are parked in the yard while he sits in a back office lit only by a rechargeable lamp and the light from his smartphone screen.
“The power outages are way too long,” he said. “Four and half hours is way too long – most people work for eight hours so more than 50% of the workday is lost. They should make it two hours then we can at least get some business done.”
Around the corner, the screens on electronic fuel pumps at the Linden Garage gas station are blank. While owner Marco Dalle Ave jokes that his old mechanical pumps were seemingly more advanced and better suited to rolling blackouts, he is worried about turnover and having to pay staff.
“If you can’t operate, you can’t make money,” he says. According to him, a generator would cost more than R100 000 rand – which he can’t afford.
Francois Labuschagne, who also can’t afford a generator, said electricity shortages are killing business at Print2Go, his printing shop.
“It is like the economy has just been cut in half – half of the economy is operating half of the day and it is not like there is a plan,” he said. “As a business owner, this is a ridiculous situation, we’ve got staff to pay – if the business goes under then staff lose their jobs.”
While the Rembrandt butchery has a back-up generator, power cuts still have a devastating effect, said Marco Huisamen, its manager.
With petrol prices close to record levels, running the generator is expensive and doesn’t provide nearly enough energy to keep all the lights on, fridges cold and meat band saws working all at once.
The trade union federation has warned doing so would not solve the struggling utility’s governance and debt problems.
The Congress of South African Trade Unions (Cosatu) says it does not support a proposal to split up Eskom into three different entities.
The trade union federation has warned that doing so would not solve the struggling utility’s governance and debt problems.
The proposal to split Eskom into three separate firms was reportedly made by a task team appointed by President Cyril Ramaphosa.
Cosatu’s first deputy president Michael Shingange says any unbundling would result in retrenchments.
“When you unbundle and turn debt into equity, as they say, we [Cosatu] view that as part of retrenchment. Even if you don’t pronounce that you’re going to restructure or privatise, we view it as privatisation because you are going to invite private ownership.”
By Michael Holder for BusinessGreen
Upcyclers turn old desks, chairs, and carpets into new office furniture, saving money and delivering environmental benefits.
Making sure products and materials can be used again – rather than going to waste – is good for for both businesses and the environment. That is the premise that underpins the concept of the “circular economy”, an emerging sector the government estimates could deliver £23-billionn a year of benefits to UK businesses if resources were used more efficiently.
For example, one third of our office furniture – 300 tonnes per day – ends up in landfill.
Firms such as Rype Office create sustainable furniture from items that would otherwise get thrown away and is employing ‘upcyclers’ across its growing business to help turn the circular economy vision into a reality.
The business cycle in South Africa, where the economy entered its first recession in almost a decade in the second quarter, is in its longest downward phase since records started in 1945.
It entered a 58th straight month of declines in September, central bank data showed Tuesday.
The regulator monitors about 200 indicators representing economic processes such as production, sales, employment and prices to determine the direction of the trend.
Source: August Free Press
There are many goods and services that are vital to businesses and one of the key ones is stationery. It is important for businesses of all sizes to be able to access the stationery products and printing services they need, as without access to the necessary stationery it can be difficult to maintain a professional image and difficult to operate on a day to day basis.
Fortunately, there are various options available when it comes to stationery providers, which makes it easier for businesses to find the right provider for their needs. There are many important factors that need to be considered when it comes to selecting the most suitable stationery for your business, and the one you choose can have a big impact both in terms of business finances and business operations.
How to make your selection
So, what do you need to consider when it comes to selecting the right stationer for your business? Well, there are a number of different factors that you need to take into account before you make your choice. Selecting the right provider can make a difference to the professional image of your company, to the outgoing costs you are faced with, and to the service you receive when it comes to your stationery deliveries and processes.
There are all sorts of products and services you can get from the right stationery and printing services provider. This includes everything from a simple rubber stamp through to high quality, low cost posters printing. Finding a stationer that offers a wide variety of services and products will make life far easier for you because it means you can get all the stationery and related services you need from the same place rather than having to shop around each time. This will save you time, hassle, and inconvenience, which means you can get on with running your business rather than getting tied up with stationery ordering.
Another thing that is very important for most businesses is finding a provider that offers affordability. All businesses have to be careful about their budgets and spending these days and without finding a competitive provider you could end up paying way over the odds for your stationery and services. You therefore need to make sure you check the cost of the services and that you find a provider that offers good deals and affordable pricing.
The service levels you receive are also important, as you need to ensure you get reliability and timely deliveries of your stationery. For businesses, things can grind to a halt when stationery runs out so you need to be able to get the items you need when you need them. Finding a provider that has a reputation for solid service and reliability will help you to benefit from peace of mind as well as reduce the risk of operations being affected. In addition, it means you can look forward to an excellent level of customer service from your provider.
By Tracy Bolton, director: General Business at SAP Africa
On 25 May this year, a new piece of legislation came into effect in Europe that could have severe consequences for non-compliant South African businesses. The General Data Protection Regulation – or GDPR for short – is a regulation under European Union law that aims to give control over personal data back to EU citizens.
The regulation applies to any organisation that collects or processes data from EU citizens, even when that citizen or organisation is based outside the EU. The European Commission defines personal data as “any information relating to an individual, whether it relates to his or her private, professional or public life”. This includes names, home addresses, photos, email addresses, bank details, social media posts, medical information, or even a computer’s IP address.
The fines for non-compliance are severe and could spell the end of a business practically overnight: the maximum fine is as much as €20-million, or nearly R300-million. What’s more, the regulation is far-reaching: any company with an EU citizen among its workforce, or a customer based in the EU, or even if only one of the subscribers to a company newsletter is based in the EU, that company can be held liable under GDPR. Few if any mid-sized South African firms could afford such a steep sanction, and legacy issues compound problems around compliance, increasing their risk and potential liability.
In response, technology firms are taking unprecedented steps to ensure they and their customers remain within the confines of the new regulation, especially considering the volume of trade and collaboration between African countries and their European counterparts.
Legacy processes add complexity to compliance
Most mid-sized firms have deliberately or inadvertently built up internal siloes related to how customer, business and other operational data is stored. For example, in a typical retailer’s marketing department, the data storage systems that processes newsletter subscriptions via email may be entirely removed from and non-integrated to the WhatsApp number where much of the customer communication takes place. This means a customer that unsubscribes to a newsletter via WhatsApp may still receive the newsletter until such a time as the retailer can integrate the two sets of data.
As GDPR comes into effect, companies will not only stand liable for fines should the above scenario play out, but they need to be able to provide customers with complete clarity on how their data is stored and managed at any point in time. Any costs incurred in the process of showing how customer data is stored is also for the company’s own account, which adds not only complexity to standard business processes but also potentially additional costs.
Considering the prevailing trust deficit between consumers and brands, the potential of being exposed for treating confidential customer data poorly is immense. Once trust is breached, affected customers are unlikely to engage with the brand again, and will leave a searchable and public trail of comments on social media for all to see. The recent case of Facebook – which now faces a fine of as much as $2-trillion – has brought this to the forefront of consumer consciousness, but other examples of poor customer data management abound.
On the basis of consent
For South African businesses, however, new technology tools could play an invaluable role in mitigating risks associated with GDPR and its South African counterpart, POPI. A recent investment by SAP into Consent is simplifying the business processes associates with creating trusted digital experiences within the limitations of GDPR and POPI compliance.
Part of the SAP Hybris suite of applications, Consent enables SMEs to centrally manage customer preferences and consent settings throughout their full lifecycle, while putting them in control of their own data. Consent enables companies to be transparent, gain loyal customers and protect their business from costly fines as well as potentially disruptive business processes related to proving to customers how their data is being stored and managed.
In line with modern business demands, Consent is also provided in the cloud, making it quick to implement and easy to prove ROI. Every time a policy changes, customers can receive an automated notification that they actively accept, with a record of such forms of consent stored centrally to allow SMEs to quickly and accurately prove responsible customer data management.
Whether you run an online retailer with customers around the world, or a news website where a European citizen may occasionally offer a comment on an article, GDPR holds inherent risks to your business. But with the correct technology tool, a potential R300m liability can be transformed into a competitive business advantage that furthers the cause of trusted and trustworthy digital customer experiences.
Seems an easy choice, no?
Property-related and business interruption losses as a result of fire and weather catastrophes have increased dramatically in South Africa, with 2017 having the highest underwriting losses on record.
Insurers incurred material underwriting losses driven by major natural catastrophes including the Knysna bush fires, the Transnet Rossburgh warehouse fire (the single largest fire loss) in Durban, a large hexane plant fire, a tornado in Gauteng and multiple heavy rainfall, hail and flooding events in Gauteng and KZN.
Reinsurers no longer regard South Africa as a low catastrophe risk region due to the high frequency of large loss events, resulting in adjustments and price increases.
“Given that the principle of insurance is that the losses of the few are paid for by the many, and the losses of the few have been greater than the total premium collected, insurers have had to respond by increasing premiums for all clients – even those with no claims at all,” says Clive Boyd of Aon South Africa, insurance brokers and risk consultants.
Insurers are also reviewing the types of risks they are prepared to take on, paying particular attention to high-hazard industries such as paint, plastics, wood, packaging, refrigeration, recycling and warehousing.
“Insurers are far more stringent when taking on risks, and clients will need to demonstrate their commitment to risk mitigation and prevention. In terms of fire risks, insurers may make the installation of Automatic Sprinkler Inspection Bureau (ASIB) approved sprinkler systems mandatory, and require that, in the event of a fire, the insured must prove that valid electrical and occupancy certificates had been obtained and that the premises was SANS 10400 compliant. In the absence of any of these, a fire-related claim can be rejected in its entirety, so the importance of managing compliance with fire-risk management requirements cannot be emphasised enough,” explains Boyd.
Risk management is another focal point for insurers. In the absence of a demonstrable risk management process, a business could find that an insurer may opt not to renew cover if it believes the risks are uninsurable. In order for a risk to be underwritten, there must be a survey report on file, indicating that the risk meets minimum underwriting guidelines and that the insured has adopted and implemented the risk control recommendations made in the report.
“After a decade of declining rates and profitability for insurers, battered by consecutive years of major losses due to natural catastrophes, it took a particularly bad year in 2017 to trigger the inevitable hardening of rates that 2018 is continuing to experience,” says Boyd.
“In order to remain insurable, risk managers need to review their formal risk management and audit programmes, ensuring that they comply with all national building regulations, installing ASIB approved sprinkler installations where recommended and adhering to risk control requirements as set out in underwriting survey reports. Mitigating fire risks requires close collaboration between insurers, risk managers and brokers to ensure that the current risk management programmes are still compliant with a significantly more stringent underwriting process. Failure to comply with the statutory requirements and codes of practice for fire protection can leave businesses in severe financial crisis and with potential legal ramifications.
Ultimately, reviewing such programmes is a task best undertaken with a professional broker who will work with the client to ensure that the fire prevention strategy is linked to an insurance program that fully addresses the needs of the business. With the assistance of professional partners, Aon assists clients with practical knowledge of building codes, fire codes as promoted by various specialist bodies, as well as knowledge of construction materials, manufacturing processes and storage practices and the relevant hazards involved therein. By linking this to an aligned insurance program that covers virtually all the ‘what if’ scenarios of not only the physical damage but the knock-on implications for business continuity, clients get to experience the real value of a comprehensive fire risk analysis and the support of a professional and experienced broker at their side to guide them through the process.
South African businesses need a different mindset to address ongoing stock losses and fraud.
In the absence of a “proper” risk mitigation plan and loss control blueprint, South African business owners will never really address the critical levels of theft and fraud impacting on our economy, according to commercial investigator and international risk consultant, Kyle Condon (Managing Director at D&K Management Consultants).
“Experience has taught me that trust and effective loss control do not go together. We live in a society that has criminal presence constantly lurking around us. Old style security measures and trusting of everybody have left businesses open to losses like an open wound exposed to a sewer. Employees need to be watched continuously and loss control tactics need to be revised to accommodate this,” says Condon.
With many businesses operating on shoe-string budgets, security is often one of the first things to go. Ironically, says Condon; “it should be one of the portfolios that get additional budget assistance. When, companies cut security, those employees that were always dissuaded from going through with criminal action often go over the edge and ‘raid the cookie jar’.”
While South Africa has one of the most corrupt governments sketched on the political portrait, expecting every employee to behave in a moral honest way is far from realistic. We see what our leaders do and follow suit.
Sadly, most companies choose to ignore this red flag and continue to fool themselves into believing that the presence of a uniformed security officer or two is adequate to prevent and deal with internal criminal activity. Condon believes that “old school” security is a thing of the past. “It is time we accept that our businesses, like our homes, require proper defences,” states Condon.
So, what exactly does this mean?
“Our business sector has major structural employment weaknesses, due largely to political pressures, window-dressed appointments and fear of union retribution, this has led to a breakdown of strong policies and procedures that existed in the past. Many managers are just too afraid to confront the issues or speak out in fear of being branded or painted with the race brush. And, as a result, policies and zero tolerance are eroded. Unions have gained a lot of power, often holding companies to “ransom” when it comes to enforcing strong security measures. Polygraphs, for example, are always declined by Union reps, searching procedures get labelled as an invasion of one’s privacy, etc. Old school security methods have been watered down to create a mere ‘illusion of loss control’,” he says.
Modern day loss control and security plans must include the following key concepts:
• Internal investigation specialists (undercover agents) deployed as, I like to say, ‘modern day spies’.
• Quarterly sweeping and debugging of executive offices and meeting rooms.
• Strike action plans, designed specifically for the individual company and its employees to provide proper Duty of Care during strike action.
• Alignment with a reputable forensic investigator or company who understands the methods, methodology and principles of fraud and financial crimes, in the workplace.
• Thorough pre-employment screening of new candidates, including checking of criminal records through fingerprinting.
• A steadfast CCTV viewing plan conducted off site by an independent viewer, providing monthly viewing reports covering all aspects of risky behaviour, suspicious actions and overall health and safety concerns.
• Travel risk reports, for employees traveling to potentially hostile environments both locally and internationally. This would include arranging VIP protection, where needed.
• Annual security surveys to address all shortcomings of the physical security measures of the business.
• Due diligence must become part and parcel of the sales teams’ portfolios, before stock or material leaves for suspicious clients an investigation unit should first check out that all is above-board, and that you are not being scammed.
• Handing over the time consuming and demanding security portfolio to a dedicated and qualified loss control manager.
“I do not agree with companies splitting up the security portfolio and contracting various players for various things. Managing this portfolio is a job that requires full time participation. This is exactly what D&K Management Consultants does for its clients. We provide the correct expertise in one unique portfolio designed around modern-day risk,” says Condon. Sexual harassment attorney San Francisco covers the cases of employment breaches.
“We are in many ways a country at war with itself, and business is not spared any of the risks that a ‘war’ environment brings. Therefore, defending your company requires a modern day ‘warfare’ approach. Intelligence, logic, expertise and strategy have replaced uniforms, guns and electric fences to a large extent”, Condon says, as he smiles.