Tag: growth

South Africa’s economy rebounds by 66.1% in Q3

Source: eNCA

The latest GDP data has just been released and as expected, the third quarter of this year saw a rebound after a major contraction in the second quarter.

The country’s gross domestic product saw an expected surge in growth between July and September this year.

It rose by an annualised rate of 66.1% after contracting by 51% during the lockdown in the prior three months.

Manufacturing, trade, and mining were the biggest drivers of growth as lockdown restrictions eased in the third quarter.

However, the recovery remains vulnerable, with power shortages and slow structural reforms likely to weigh on sentiment.

The country needs a growth rate of at least 5% to remedy its unemployment crisis.

But current projected growth for the year is expected to be -8%.

 

By Mike Anderson, founder and CEO of NSBC

As a business owner you’ve probably been asked to give a discount. How did that make you feel? Your response to that request is critical to the sustainability of your business – as well as to your confidence.

Because after all, you’re either worth the price you’re asking or you’re not. No discussion. This may sound harsh, but if you don’t believe you are worth it why do you expect your clients to believe it?

Reasons to stop discounting your pricing:

  • It’s no fun
  • It requires a time and energy you can use elsewhere
  • It creates a standard for other clients
  • You’re not getting paid what you’re worth
  • It can lower confidence in your business

Once you’ve made the decision not to discount your prices, it will be much easier for you to simply say this in a friendly and relaxed way if you’re asked. Your mind is already made up, so the answer flows naturally.

If a prospective client is not able, or willing, to pay your prices then they probably aren’t a good fit for your business. Moving on from people who are not a match allows you to create space for clients who are willing and able to purchase from your business.

There will always be someone offering something similar to your offerings for the absolute lowest price. I hope you don’t aim to be that business.

The key is to focus on the value your services and products deliver, not what they cost. People who truly understand the benefits they will receive when they buy from your business will accept the prices you have set because they understand the value they are going to get.

If negotiating is the norm in your business, there is still a way to be true to the value your business delivers without discounting. First, get clear about the total value of the offering. Then if you choose to, you can reduce the amount you deliver, along with the price, which means you are not discounting.

Another way to avoid discounting when negotiating is to stick to your original price and add a one-time, additional bonus for new clients.

While you’re thinking about eliminating discounting, please consider increasing your prices. Seriously, when is the last time you raised your prices? And when you did, what was the percentage of the increase? If it’s been awhile since you raised your prices, it’s probably time.

It’s natural that your expertise expands and deepens over time so why shouldn’t your pricing reflect that. Whether or not you decide to increase your pricing, at least be willing to stand firm on your current pricing and don’t discount.

Think about it: you’ll save time and energy if you stick to your pricing; you will feel confident about the value you deliver to your clients; and be more profitable.

So make the decision today that discounting your prices is not part of your business philosophy. Focus on the value your business creates for your clients and watch your business grow.

 

By Mpho Lakaje for EWN

On the evening of 23 March, South Africans gathered around their television sets to listen to arguably the most important announcement of this year. At the time, the nation was on edge. The rate of COVID-19 infections was accelerating here at home and the rest of the world. Very little was known about the virus other than the fact that it was ruthless to senior citizens and people with comorbidities. Italy, one of the hardest hit countries in Europe, became a point of reference. Although there were 340 000 reported cases worldwide at the time, compared to over 40 million today, it all looked scary. Nobody knew what was going to happen next. The South African government decided to take action.

“The National Coronavirus Command Council has decided to enforce a nationwide lockdown for 21 days with effect from midnight on Thursday 26 March. This is a decisive measure to save millions of South Africans from infection and save the lives of hundreds of thousands of people,” President Cyril Ramaphosa said that Monday night as his government imposed a lockdown on the country.

This strategy appeared sensible, especially as the country looked to buy itself time to prepare for the inevitable spread of the coronavirus. But a prolonged lockdown came at a heavy price. In the months that followed, businesses were bludgeoned. A staggering 2.2 million South Africans lost their jobs. Unemployment now stands at over 30%. Government admitted “the punch in the gut was severe”.

But even in our darkest hour, there was a glimmer of hope. The pandemic became a blessing to some sectors of the economy.

“I think the use of internet and the use of digital technology during COVID because of a lack of movement, obviously surged upwards. I think in the last quarter, if you look at the Statistsa release in the last quarter alone, telecoms was one of the growing sectors in COVID and in the [contraction] time, when everyone else was contracting up to 90% in terms of business activity and output,” says Nthabiseng Moleko, PhD graduate in development finance at the University of Stellenbosch Business School.

Johannesburg businessperson Donald Valoyi can attest to this. As companies were downsizing or shutting their doors, his grocery delivery service, Zulzi, experienced a different reality. It grew at a pace he never predicted.

“Our orders increased 500 times immediately and that means we had to increase capacity. We had to bring in more drivers. It was very difficult because it was during lockdown. Now you have to get guys who are brave to come and work for you. So yah, I think it was challenging. That type of growth comes with a lot of pain,” he told Eyewitness News.

Valoyi started Zulzi in 2013. He says: “We were just an e-commerce platform. We were selling books online to students.” But the business morphed over time. It offered anything from pharmaceutical products and alcohol to fast food. Today, it’s an inspiring company that focuses on delivering groceries. As a customer, you send a list of your grocery items to Zulzi, through an app or website. Your order will be received at the company’s call centre, before it’s sent to someone who will do all the shopping on your behalf. The shopper will then give your groceries to a driver, who will deliver to your doorstep.

“We cover all the major cities. If you talk about Pretoria, Durban, Cape Town and Jo’burg, we are there. We have about 45 guys who work in the office. So, this includes software engineers, the marketing team, the guys who run logistics and the customer service team. Then we have personal shoppers. We are sitting at around 250 shoppers currently. We have about 300 independent drivers at the moment. It’s an Uber-type model. Obviously that number always changes depending on how much demand we have at any given time,” says the former FNB employee. “COVID was very good for online businesses actually. Any business that’s online really took off. Everywhere I look worldwide, groceries were doing well. Valuations for the start-ups shot up,” he says.

Another entrepreneur who’s been smiling from ear to ear in recent months is Graham Wallington. He runs WildEarth, a media company that broadcasts live safaris. The company has a group of camera operators who capture images out in the wild. Those visuals are then sent to television sets, computers and mobile devices around the world, through a control room in Johannesburg. At the same time, safari guides interact with viewers in real time. “All we’re doing is, we’re just watching the unscripted process of nature unfolding, and I think that the majority of our viewers come to have this experience oftentimes because they are stuck, maybe because they are not well, maybe they are depressed, maybe they are lonely, or maybe because they are locked down and can’t access nature easily. What WildEarth offers is a way for people to feel like they are transported into the wild,” says Graham.

The concept is innovative and has become a massive hit in the coronavirus era. “Our global traffic increased five-fold between March and April 2020. Also, we saw an increase 15-fold in our South African audience during March and April 2020,” he says. The growth he is referring to hasn’t turned into financial returns yet, but it increased WildEarth’s valuation.

“I think these are businesses that are going to last because there has been a shift in the way we work. When you are talking about, for example safaris, the way we work has changed. Certainly the way we have fun has to change. The way we relax has to change”, says economist Xhanti Payi.

Developments in the local digital economy are not surprising though. A StatsSA report released earlier this year shows that over 36 million South Africans out of 59 million now use the internet. Most people consume content on mobile devices. This means the ground is fertile for innovative digital businesses or companies with a strong online presence.

“We were always moving into a relatively more online society, more online purchases. Whether we are talking about our food, we are talking about our clothes, that’s where we were going. But I guess it was accelerated even for people like me who were not particularly keen on that sort of thing. Now we are sort of there,” Payi says.

But as our nation looks to recover from the scourge of COVID-19, are we capitalising on the strength of digital businesses? President Cyril Ramaphosa recently announced an economic recovery plan with bold promises. He said his government would create 800 000 job opportunities in the coming years. The plan covered many sectors including forestry, energy, construction and farming. But he said very little about developing start-ups, particularly in the ICT space. Although he spoke of supporting 5,000 young entrepreneurs in passing, few details were given on the plans to help them.

Business experts Nthabiseng Moleko and Mark Swilling say we need to think differently. The two academics from the University of Stellenbosch Business School and the Centre for Complex Systems in Transition respectively, argue in great detail, through a document they released a few weeks ago that, “continuing on the current path, reliant on mainstream economic thinking and use of existing micro-economic solutions, is unlikely to deliver different outcomes in the future”.

 

TymeBank enrolls 110-120k new customers each month

By Samuel Mungadze for ITWeb

African Rainbow Capital (ARC) injected R750-million in TymeBank in the last financial year ended June, a tough period for the relatively new digital bank, which saw it experience a drop in footfall to its kiosks under national lockdown.

Announcing its year-end results today, ARC says the bank onboarded 1.9 million customers, during the period under review, which was ahead of business plans.

The Patrice Motsepe-controlled ARC owns 70% of TymeBank equity.

The company says TymeBank is one entity in the ARC Investments portfolio that experienced some initial difficulty due to the COVID-19 lockdown.

“TymeBank experienced a drop in footfall to its kiosks located inside Pick n Pay stores in March and April under national lockdown levels five and four. With the easing of the lockdown regulations, the bank managed to increase its customer onboarding rate to pre-lockdown levels. As before, it now enrols about 110 000 to 120 000 new customers each month,” says ARC.

It adds that TymeBank is now signing up between 3 000 and 3 500 customers per day, with about half of the customers actively using their bank accounts.

“TymeBank is well-positioned within the SA banking sector to implement its unique low-cost banking fee model,” it says.

TymeBank is one of the new digital banks that launched to challenge the incumbents.

In July, the bank revealed it had introduced a fast mode of transaction, SendMoney, which allows users to send and receive money through their electronic gadgets, as a way of adding value for its clients.

TymeBank clients can now send cash to anyone with a valid South African cellphone number and the recipient will receive it immediately.

The service costs R4 per transaction when the recipient opts to cash the money out using the voucher, which it claims is one of the lowest rates in the industry, and is free when the recipient has a TymeBank account.

Commenting on the overall ARC performance during the period, Johan van der Merwe, co-chief executive officer of ARC, says: “Our performance in the period under review was first impacted by the poor trading environment as a result of a pedestrian economy.

“Subsequently, with the onset of the COVID-19 pandemic, the challenging operating environment was exacerbated. Interestingly, some of our investments experienced a significant acceleration in business activity, while others experienced a marked slowdown.

“In this instance, we have clearly benefited from a diversified pool of investments in our portfolio. This has helped us to perform satisfactorily on a relative basis to our peers, as well as other listed investment holding companies. On an absolute basis, we missed our key performance metric as a result of a poor trading environment. We are certainly not pleased with this performance.”

Notwithstanding the setback with TymeBank, ARC’s telecommunications business Rain benefitted from the COVID-19-induced lockdown.

The data-only network saw a sharp increase in its subscriber customer base as a result of people wanting access to cost-effective data, says ARC.

It says the Rain 4G rollout has also progressed well, with 5 500 active sites live as at the end of April.

The ARC Fund’s investment in Rain also increased from R2.5 billion at 30 June 2019 to R3.11 billion at 30 June 2020,which the company says was mainly as a result of a fair value write-up of R479 million.

“The business experienced a surge in subscriber numbers during the national lockdown period as people were required to work from home. Economic and social activities have increasingly moved online, including schooling, entertainment and connecting with family and friends,” says ARC.

“Going forward, we expect the difficult trading environment to persist over the short- to medium-term,” says Van der Merwe. “The impact of COVID-19 on our economy has been widely reported, with the economy now in a contracting phase. This does not bode well for many companies, including companies in which we have invested.

“As a result, we have already made plans with the management teams of key companies in our portfolio to see how we can align the business’s growth objectives with the prevailing economic environment. It cannot be business as usual over the medium-term.”

 

By Sibongile Khumalo for News24

The South African economy shrank by 1.4% in the fourth quarter of 2019, according to new Gross Domestic Product numbers, released by Statistics SA on Tuesday.

This followed a contraction of 0.8% in the third quarter, which means that the economy was in recession for the last half of 2019. South Africa last entered a recession – when the GDP falls for two consecutive quarters – in the second quarter of 2018. This is South Africa’s third recession since 1994.

For the whole of 2019, the South African economy grew by only 0.2% (in real terms). In 2018, it saw growth of only 0.8%.

The fourth-quarter decline is larger than economists had predicted, as the economy battles the fallout of load shedding.

Seven out of 10 industries contracted in the fourth quarter, with agriculture (-7.6%) taking the biggest hit.

The manufacturing industry shrank 1.8% in the fourth quarter, while the transport, storage and communication industry saw a decline of 7.2%.

Stats SA reports that household spending increased by 1.4% in the final quarter of 2019, but spending on clothing and footwear was up by 8.5%.

The weak growth is likely to add more woes to President Cyril Ramaphosa’s government, as the economy under his leadership continues to suffer, amid internal and external pressures.

The revival of personalised stationery

By Anne Quito for Quartzy

It can be argued that dread of receiving another unsolicited e-mail conjures the opposite feeling from the delight of getting a handwritten letter. Escaping our cluttered inboxes is one factor fuelling a renewed interest in paper goods and the range of analogue props used in handwritten correspondence. Analysts report that the global market for stationery is growing and expected to reach the $128-billion mark by 2025.

Apart from traditional stationers like Crane & Co and Smythson, a slew of e-commerce startups like Sugar Paper, Minted, Moglea, and StudioSarah are helping spread the love for paper beyond wedding planning and socialite circles. The choices for personal stationery are so plentiful these days that it can be intimidating. Letterpress or offset? Baskerville or Copperplate? To emboss or deboss, that is the question.

A Canadian startup called Maurèle wants to simplify the task of specifying tasteful personalized paper goods. Founded by husband and wife duo Nick D’Urbano and architect Cece de la Montagne, its e-commerce platform offers obsessively designed templates inspired by the beautiful letterheads of historical figures like Albert Einstein, Salvador Dali, and Frank Lloyd Wright (some of which are documented in the addictive site Letterheady).

De la Montagne, whose family is in the printing business, says they labored over Maurèle’s six minimalist templates to appeal to discerning customers, choosing just the right paper stocks, sourcing eco-friendly vegetable inks, and working with independent type foundries to select the fonts. “From a business standpoint, we feel that the design-conscious customer just wasn’t being spoken to,” adds D’Urbano. They believe that type nerds in particular will appreciate the proper kerning and letter spacing for each of the 13 font options on the site. Custom notecards start at $28 for eight and $34 for 16 sheets of letter paper.

Beyond stationery fanatics, De la Montagne adds that Maurèle’s quiet luxury aesthetic might appeal to acolytes of the thriving mindfulness movement seeking to disconnect from the chaos of technology. Writing by hand, she explains, is fundamentally seizing a moment to gather your thoughts without distraction. Maurèle reflects a similar sensibility to her line of minimalist work bags for creative types, produced under the label Atelier YUL.

Stationery is just the start, D’Urbano explains. A week into their launch, they’re already planning a line of pens, leather goods, and reprints of books in the public domain, leveraging their connection with type and graphic designers. Their ultimate dream is to erect physical stores where one can sit down to write or read in an unhurried manner, says De la Montagne, who worked at a boutique architecture firm in New York until last year. “What would a library-cafe look like in the 21st century?” she muses.

If it’s an alternative to co-working coffee shops populated by caffeinated zombies on their laptops, we’re all for it.

Image credit: Cerulean Press

The increasing migration of flexible office space and co-working locations to areas outside of major metropolitan cities globally is creating a ‘flex economy’ that could contribute more than R3.8 trillion to global local economies in the next decade, according to the first comprehensive socio-economic study of second-city and suburban workspaces. It also revealed that in South Africa, on average 265 new jobs are created in communities that contain a flexible workspace, with an extra R30.8 million per workspace going directly into the local economy.

This rise in local working is being largely driven by big companies adopting flexible working policies; moving away from relying on a single, central HQ and increasingly basing employees outside of the major metropolitan hubs in flex spaces. Most are doing so to improve employee wellbeing by allowing their people to work closer to home, and also to save money and boost productivity.

Jobs creation and the ‘sandwich economy’

Across the 19 countries analysed, the average individual workspace sustains 218 jobs. This includes temporary jobs created during the fitting-out stage of the office space, permanent jobs to run the office, including reception, maintenance, cleaning etc., plus the jobs associated with the occupancy of the workspace.

Economic impact

As well as direct job creation, flexible workspaces benefit the local area through an uplift in Gross Value Added (GVA), the measure of the value of goods and services produced in an area.

For the greater good

Aside from the direct financial impact, local office space has been found to benefit workers and local regions in other, societal ways.

The next 10 years

As well as assessing the impact of individual centres, Regus also looked at the estimated potential of each market to host a larger, national portfolio of local flexible workspaces.

Mark Dixon, CEO for Regus’ parent company IWG, said: “When people commute into major cities their wallets commute with them. Working locally keeps that spending power closer to home. What this study shows is that providing more opportunities for people to work closer to home can have a tremendous effect, not just on them, but on their local area too.”

Black Friday sales expected to soar in SA

Source: African News Network

South African business have begun preparing for what looks to be another bumper Black Friday trading day, with sales predicted to be up 30% from last year, online largest payment service provider PayGate said.

South Africa has like several other countries adopted “Black Friday”, the informal name for the day after Thanksgiving in the United States which marks the beginning of the Christmas shopping season. This year, it will fall on November 29.

Data from retail tracker Black Friday Global shows interest in Black Friday deals in South Africa has grown by 9,900 percent over the past five years, PayGate said in a statement on Tuesday.

“PayGate’s tracking of payments for Black Friday, meanwhile, shows the number of transactions doubling every year for the past three years, and payment clearing house BankservAfrica says it saw a 55 percent growth in transactions in 2018 compared to the previous year,” it said.

“PayGate expects 2019 Black Friday transactions to grow by 30 percent this year.”

It however said South Africa’s e-commerce growth was generally coming off a very low base, having really taken off only in the past three years or so.

The company said it had processes some 64 percent of Black Friday transactions last year, and expected this to rise to as much as 70 percent in 2019.

South African business have begun preparing for what looks to be another bumper Black Friday trading day, with sales predicted to be up 30 percent from last year, online largest payment service provider PayGate said on Tuesday.

By Charlotte Mathews for MiningMx 

The under-performance of Eskom’s fleet of coal-fired power stations is currently being concealed by falling demand. Even a 0.1% uptick in GDP growth would result in a resumption of load-shedding, Nelisiwe Magubane, chairperson of Matleng Energy Solutions and a member of the Eskom board, said on Wednesday.

Nelisiwe said Eskom was reviewing its system availability. The previous energy availability factor report of a few months ago predicted 75-80%. At this point availability was 69-70%.

Mike Rossouw, CEO of Independent Energy Thought Leader and a former chairman of the Energy Intensive Users Group, said if demand picked up, South Africa would experience loadshedding twice a day.

Magubane and Rossouw were speaking at the Afriforesight Future of Coals & Bulk Commodities Conference in Sandton.

Rossouw said the root of the problem facing Eskom was that its pricing policy was wrong. It was devised when Eskom was stable and smaller and not building new power stations. “Today it is the worst medicine for Eskom. The good news is that it can be changed overnight, without parliamentary processes, and things will start improving,” he said.

He said price and demand were inextricably linked. About 75% of Eskom’s income was derived from industry and mining, who were paying too much for power. A comparison of South Africa’s industrial and mining tariffs (rather than its average price) with the same sectors globally showed Eskom’s prices were far higher.

For some smelters, 60% of costs are electricity. At the moment 47 South African smelters were shut. Several South African mines were now smelting offshore because they could get better prices elsewhere.

As Eskom increased its tariff, demand for electricity was falling. As a result, Eskom did not have the revenue to pay for its current scale of operations, which were 500% bigger than they were in 2001 measured in number of plants, Rossouw said. The tariff allowed Eskom by the regulator should reward the utility for good behaviour and punish it for bad behaviour.

Rossouw said Eskom’s average price should not be more than 90c/kilowatt hour (kWh), and ideally it should be about 80c/kWh. Eskom has some power stations that can produce at 30-35c/kWh, but others were generating at a cost of 90c/kWh.

A price of 80c/kWh presupposed that Eskom could bring costs under control. “It makes no sense to raise prices because costs are not under control,” he said.

Rossouw said Eskom’s high costs resulted from three main factors. Firstly, it was paying excessive costs for coal as a result of too many small operators supplying bad coal intermittently and destroying road infrastructure at the same time. “(Former Eskom CEO Brian) Molefe’s ‘I don’t want the bakery I just want the bread mantra’ is nonsense,” Rossouw said, because coal and power stations were inextricable.

A second problem was that Eskom had too many assets. Breakdowns were now 20% of capacity from 3% in 2001 and fixing breakdowns required three times as many resources as planned work.

The third problem, Rossouw said, was staff and other costs. Eskom could address those costs, if it was allowed to do so. It should not be stopped from retrenching. “Every company in the world that is in trouble cuts back operations and staff,” he said.

By Mark Sweney for The Guardian

The internet is about to lose its mantle as the fastest-growing sector of the global advertising market for the first time in two decades, as brands seeking risk-free space to spend their ad budgets turn to traditional media such as cinema, billboards and poster sites.

Next year the global internet advertising market, which is dominated by Google and Facebook, will surrender its position as the fastest-growing ad medium for the first time since the early days of the dotcom boom and bust at the turn of the century.

Internet advertising is forecast to grow by 10% globally next year, the lowest level since 2001, according to research by the global media agency group Zenith. The shrinking growth rate means that cinema advertising, which is forecast to surge more than 12% next year, will become the fastest-growing ad medium.

Major companies have expressed their concerns over digital scandals – such as Cambridge Analytica, “fake news” and ads appearing next to inappropriate YouTube videos such as extremist material – putting pressure on internet platforms.

The movie industry is experiencing a golden age, with UK attendance last year hitting its highest level since 1970 and global box office records being smashed, and advertisers are looking to cash in.

Investment in technology, from the special effects used in blockbuster movies to the plush experience of cinemas sporting leather reclining seats, sofas and restaurant menus, has fuelled a renaissance despite the proliferation of streaming services such as Netflix.

“From Wonder Woman to the Avengers, Black Panther or The Favourite you have such as diverse range of films with a captive audience that advertisers know they can get a specific message to,” said Tim Richards, the founder and chief executive of the international cinema chain Vue.

“What we are also seeing is that companies are getting tired of bombarding the internet with messages when they can’t be sure who is seeing them. Audiences have a higher level of trust and confidence on what they see on the big screen than something that may have been thrown at them on the internet.”

While the growth rate of internet advertising was always eventually going to slow with scale – in 2020 it will account for half of the $650bn (£520bn) spent on advertising globally – there are signs of a wider shift in the market. This month, the British competition watchdog launched a probe into the £13bn UK digital ad market.

The outdoor advertising sector – which includes billboards, the sides of buses and railway stations – is also expected to grow at a healthy 5% globally in 2020, bucking a downturn in ad spending on other media including newspapers and TV.

“Outdoor advertising is now very much a digital experience, it’s pixels not paste any more, and that’s attractive to brands,” said Phil Hall, the incoming co-managing director of media company Ocean Outdoor.

“But you also can’t ignore the issue of brand safety. Given the well-publicised issues faced by some of the digital giants outdoor advertising has a great pitch to advertisers about being a trusted haven for brands.”

Zenith’s report says that while much of the growth in internet advertising comes from small, local businesses that spend all their budgets on platforms such as Google and Facebook, the majority of big brands still prefer to spend most of their advertising money on traditional media.

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