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Africa Rising – Fallacy or Fact?

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Africa Rising – Fallacy or Fact?

Man with lightbulb against sunset sky

  • April 1
  • Tags Our news, Leadership, Africa

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*This article was written by MBA students as part of a group assignment for the module Perspectives on African Frontiers.

 “Africa Rising”, a narrative that portrays Africa as a continent of opportunity, has received much attention over recent years. Yet, are we on a path to realise or relinquish this potential?

Dr Pali Lehohla, former South African statistician general, expresses that this is an “exaggerated narrative” and that Covid-19 has revealed “how feeble the Africa Rising narrative has been”. The continent continuously faces a barrage of challenges, but initiatives such as the newly signed African Continental Free Trade Area (AfCFTA) agreement bring hope and have the real promise of unleashing Africa’s potential, says Lehohla.

Hosted by Dr Nthabiseng Moleko, senior lecturer in Managerial Economics and Statistics at the University of Stellenbosch Business School, a panel of experts were brought together to share their perspectives on Africa with a cohort of MBA students. A key conclusion from a cautiously optimistic panel is that focused changes are needed if the continent wants to fully benefit from the potential opportunities created by the AfCFTA.

Firstly, the role of Multilateral Agencies (MLA) was debated. Musa Kalenga, CEO of BridgeLabs, expressed that MLA’s have been “regressing as opposed to advancing the continent, doing more of an extraction job than a development job”. While Lehohla questioned whether projects by the International Monetary Fund (IMF) and The World Bank have had a destructive effect on education and wealth in Africa, Andre Kruger, CEO of PPP Training Online, contended that MLA’s have a significant role to play in social development projects. However, he warned that MLA’s “should not push out private sector financiers”.

Next, the influence of China’s development model was scrutinised. Besides the growing presence of Chinese firms, imports from China into Africa already exceed the African continent’s collective export to China. The Chinese compete intensely with local producers, and panel experts jointly shared concern about its consequences.

Kalenga contended that Chinese investment is “not translating into the wholesale development of Africa”, arguing that through expensive debt and unethical lending, it is unclear whether there is an earnest intention to develop the continent. He raised concern that African countries focus too much on short-term relief, taking an eye off the long-term damage to the continent. Lehohla added that, without a common strategy, Africa might eventually become “the product being consumed”.

 

Is Africa geared to build its economies?

Moleko stated that comparing to Brazil with an engineer-to-population ratio of 1:227, some African countries face a severe shortage of skills reflected in a ratio of 1:6000 or worse. According to Kalenga, the education system must be fundamentally redesigned to increase the supply of much-needed skills across the continent and to prepare Africa for a digital future. Lehohla expressed that “education is a right for everyone and must be paid by taxpayers as an investment in society”. 

 

So, is Africa rising?

According to Kruger, the key to economic rebound post-Covid-19 is an investment in trade corridors, infrastructure development and commercially oriented projects, while Lehohla asserts that intervention is required at a policy level for such projects to be successful. Combined with a redesign of education, prioritised focus on these aspects might just be the catalysts needed to help Africa rise. 

*The MBA students are Lauren Arendse-Trantaal, Alicia Dean, Tanya Dramat , Moritz Fuerst, Nerita Singh , Zubeida Rajie, and Deon van der Westhuizen.

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Langa, one of the many townships on the outskirts of Cape Town

Prof Brian Ganson: It’s time to celebrate small businesses and human rights

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Prof Brian Ganson: It’s time to celebrate small businesses and human rights

Langa, one of the many townships on the outskirts of Cape Town

  • March 19
  • Tags Opinion, Dispute Settlement

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By Professor Brian Ganson, head of the Africa Centre for Dispute Settlement (ACDS) at the University of Stellenbosch Business School

In Cape Town’s townships, the inter-relationship between small businesses and human rights is a concrete reality of daily life. Yet, government policies and actions tend to downplay if not outright undermine their important role in social cohesion, human dignity, and economic resilience. Required are changes in attitudes, laws and behaviour that better recognise and nurture the critical place of local businesses in South Africa’s human rights landscape.

To see this, we need only to look at Langa, founded in 1927 as Cape Town’s first township, and where on 21 March 1960 citizens were also killed and wounded as police brutally suppressed peaceful protests against apartheid pass laws. Despite its challenges as one of Cape Town’s poorer and more violent suburbs, today Langa celebrates its rich history and continuing legacy of political and social activism, the arts, and entrepreneurship.

There, Zone 17 is a new entrant to the hospitality industry. It offers Capetonians and others a comfortable base to call home for the weekend, an “integrator” to accompany them, and a curated array of local “eats and hangouts” where visitors can engage in conversations with Langa residents, immerse themselves in Langa culture, and, importantly, spend on truly local businesses. Operating in stark contrast to large-scale commercial tour operators that engage in drive-through “poverty porn” ¹, Zone 17 emerges from a family with deep roots in the community, committed simultaneously to local upliftment and to reconciliation across South Africa’s geographic, economic, and racial divides.

Zone 17 joins other, similarly socially-minded Langa enterprises, including the 16 on Lerotholi Gallery “that uses art as an essential tool to foster understanding, empathy and solidarity within the Langa community”, and Jordan’s Way of Cooking, which serves local fare to international standards while providing employment, training, and job placement to local youth.

These local examples mirror global research finding that small businesses are often key peace and development actors, both as vital job creators and because of their deep ties in their communities.² They have been found to be more likely to play a role in conflict prevention activities³ or reconciliation than their larger counterparts.

Yet, government at many levels does not appear to have recognised their critical role in advancing human rights, and in many instances, is experienced as hostile to their aspirations.

Complaints we heard in our research on small businesses in Langa range from zoning that favours corporate developers of shopping malls and supermarket chains in the townships over informal traders and small businesses; to government agencies that seek to suppress and control rather than to develop and support emerging businesses; to police engaging in theft and racketeering that undermine honest enterprise.

At the core of government policy and action may be counterproductive mindsets and beliefs. “Growth will come from big companies, with their scale economies, financial muscle and market access opportunities”, said DA MP Toby Chance, Shadow Minister of Small Business Development until 2019, who also stated that “leaving the townships”—to be “absorbed” into “formal and often export-focused businesses”—“is necessary to achieve upliftment”.

These statements echo uncomfortably close to those that led to the creation of Langa as a “concentration camp” meant only to supply—and control—black labour for South Africa’s larger enterprises.

And yet, even globally, such attitudes towards small, local businesses appear common among those whose focus is GDP growth, as well as among those who see businesses primarily as generators of tax revenues that government will then re-distribute to provide for the poor. They lead to a preference for investment in large over small, formal over informal, export-oriented over locally relevant—blind to small businesses’ more profound social role.

Small businesses in the township are demonstrably much more than minor cogs in the larger economic machine.

Rather, they are community institutions deeply embedded in social networks—including families, churches, neighbourhood associations, sports clubs, jazz clubs, and other civic organisations and businesses in Langa and elsewhere—that provide people a port of call for emergency child or elder care, hunger relief, emotional support, employment leads, legal and political advocacy, and business development support. Small businesses are both dependant on, and contributors to, these webs of multi-faceted relationships.

If we want to unleash the potential of business to help address violence, social ills, and economic decline, then we must abandon excessively technocratic views of the role of small businesses in our society. We must acknowledge their special potential as economic actors embedded within the township social system to—in ways that outside and large enterprises never can—recognise trauma, celebrate resilience, build community, and situate economic development within a more humane context of empowerment and healing.

When we embrace this broader perspective on small businesses, we will be more true to our Constitution’s imperative to “heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights”.

  • The research article on which this opinion piece was based (Ganson & Hoelscher), was written as part of the project Working Through Violence: SMEs and the SDGs in Fragile Urban Spaces (UrbanSMEs) funded by the Research Council of Norway under the NORGLOBAL program. 

¹Doward, J. 2020. Slumming it? Township tour reviews ‘gloss over poverty’. The Guardian (UK), 16 August 2020.

² World Bank. 2018. Pathways for Peace: Inclusive Approaches to Preventing Violent Conflict. Washington, DC: World Bank.

³ Felgenhauer, K. 2007. Peace Economic: Private Sector Business Involvement in Conflict Prevention. New School Economic Review, 2(1): 38–48

Strachan, AL. 2017. Linkages between private sector development and peace. K4D Helpdesk Report. Brighton, UK: Institute of Development Studies.

Ganson, B and Hoelscher, K. 2021. Theorising MSMEs in Contexts of Urban Violence. Journal of Illicit Economies and Development, 2(2), pp. 222–241.

Coetzer, N. 2016. Building Apartheid: On Architecture and Order in Imperial Cape Town. Routledge. DOI: https://doi.org/10.4324/9781315570433

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Prof Charles Adjasi’s new book Contemporary Issues in Development Finance

Exploring current issues in development finance

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Exploring current issues in development finance

Prof Charles Adjasi’s new book Contemporary Issues in Development Finance

  • March 15
  • Tags Development Finance

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A new book provides comprehensive coverage of contemporary issues in development finance from both domestic and external finance perspectives

The impact of the Covid-19 pandemic on economies around the world has been extensive – businesses have lost out, trade came to a halt, and health infrastructure has been struggling. These challenges show the huge gaps that exist in access to infrastructure development, says Charles Adjasi, a professor in Development Finance at the University of Stellenbosch Business School (USB) and editor of a new book titled Contemporary Issues in Development Finance.

“We need resilient, inclusive and sustainable economies; we need to be able to utilise technology to drive development and growth. This draws our attention to a key challenge – to attain equitable growth and development we need to be able to address some of these gaps we have,” he says. “We need to invest in education, health, infrastructure, and industrial strategies that can help grow small and big businesses.”

He adds that the financial system of a country must be well-oiled to address these issues. “If the financial system is not efficient we would not know how to mobilise resources, both domestically and internationally, to do this.”

The book, which covers topical issues such as microfinance, private sector funding, aid, trade finance, and sovereign wealth, was recently launched during an online engagement hosted by the business school. Prof Adjasi and fellow editors Prof Joshua Abor and Prof Robert Lensink unpacked current coverage of policy issues in development finance from both domestic and external finance perspectives. They were joined by contributors Prof Victor Murinde, Dr Pieter Opperman, and Dr Hanna Fromell.

Foreign banks’ impact on domestic economies

Prof Adjasi says the presence of foreign banks in countries positively contributes to the competitiveness of the domestic financial sector. “Typically foreign banks would locate into another local environment as a means of diversification to seek areas to make more profit or to expand. From a receiving economy’s point of view, it is important to look at a few things: If a bank gains entry into the local economy, is it going to promote competition and efficiency? Will it deepen the financial sector? Will it encourage outreach and will it make the financial sector stable?”

He says the empirical evidence so far shows that the presence of foreign banks in financially constraint environments with structural gaps in the financial market, has increased the competitiveness and efficiency while growing the depth in the financial markets. However, he warns that the presence of foreign banks can also pose a risk as they can imports risks from the country where they are coming from or they can easily leave when a crisis strikes.

“We must allow foreign banks but we must just watch the risks. Within Africa there’s Equity Bank Kenya that is spread around east Africa and seems to have been doing quite a lot in inclusive finance by increasing the technological-enhanced financial products,” he adds.

Relooking global financial architecture

Prof Abor, who lectures in the Department of Finance at the University of Ghana, says some issues need to be addressed in terms of reforming the global financial architecture.

“The issue of reforms of the global financial architecture has been on the drawing board for a very long time, even before the global financial crisis. As much as there has been some improvement in terms of improving global finance, a significant amount of reforms are still needed to enhance the ability to safeguard global financial stability and also address a global crisis,” he says.

He adds that it is important to look at how African countries are managing their resources and economies. “In the book, we try to capture some cases such as the Structural Adjustment Programmes (SAPs) in countries like Uganda and whether they have been successful or not.”

Abor says the Bretton Woods system, and international and regional development banks should concentrate on their core mandates. “The International Monetary Fund (IMF) needs to focus more on surveillance of the world economy and also ensuring that macroeconomic stability among member countries is attained.

“The IMF needs to look at its role as lender of last resort to member countries that are affected by crisis and countries should focus on being pre-qualified for assistance as opposed to imposing conditionality because conditionality hasn’t worked and we need to take a second look at that,” he cautions. “Conditionality is biased against developing countries and Africa. Developed countries don’t face or experience the kind of conditionality that is often imposed on developing countries.”

Abor adds that a reconsideration of the entities themselves is also needed. “Emerging economies need to be allowed to also contribute resources as opposed to always being net borrowers. If we are seen as borrowers then we take whatever is given to us. We should be giving greater representation on the board, the issues of voting rights need to be looked at, and the appointment process must be open,” he says.

Microfinance vs financial inclusion

Lensink, a professor of Finance and Financial Markets at the Department of Economics, Econometrics and Finance at the University of Groningen in the Netherlands, says the global discourse around financial development has shifted towards financial inclusion, “which is much more important so that we include everybody in the financial system of financial development”.

He says the concepts of microfinance and financial inclusion should not be confused. “Although related, these are two different concepts. Microfinance predominantly deals with credit to a particular group of poor people, while financial inclusion is much broader; it is not only credit from a microfinance institution to poor people but it is the financial inclusion of everybody in the economy.”

He adds that it is different in the sense that microcredit while focusing on the poor, is very often not available to the very poor. “When you talk about financial inclusion, you want everybody in the economy to be included; not just the moderately poor. Microfinance in itself will never lead to the financial inclusion of everybody but rather forms part of financial inclusion, which is much broader. We need financial instruments and institutions to enable each person to be included in the financial system in the end.”


The full recording of the event is available on the University of Stellenbosch Business School’s YouTube channel. Watch it here

If you would like to order a copy of the book, click here

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2021 Stellenbosch Business School year

Looking at the year ahead

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Looking at the year ahead

2021 Stellenbosch Business School year

  • March 11
  • Tags Leadership, News

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The University of Stellenbosch Business School (USB) inaugurated the new year under the theme of A New Horizon: The Year of Recovery and Opportunity with an Academic Opening Series during the week of 26 – 28 January 2021. In 2021 we will face challenges both familiar and unexpected, but we will also see transformation as the world recovers from the Covid-19 pandemic.

Prof Mark Smith, Director-Elect of USB, was the keynote speaker at the Ceremonial Academic Opening where he evaluated both the challenges and opportunities that lie ahead for 2021. On what the post-pandemic future holds for USB, he said: “We need to transform and differentiate ourselves as a business school, and we need to provide a sense of purpose for us and for our stakeholders.”

He said a business school should be a space “where we can challenge ourselves and our thinking”.

Smith added that the business school will only be doing its job if it transforms teaching and learning and provide responsible leaders who can transform organisations and serve society. “As a business school we need to aim high in terms of our sense of purpose. This is how we will improve the well-being of society.”

On what makes USB unique, he listed fields of expertise, ability to deliver high-level blended learning, and the focus on responsible leadership and entrepreneurship as key differentiators.

“USB is a transformative school, a different school, and a school with a purpose.”
– Prof Mark Smith

“USB’s sense of purpose is to shape responsible leaders who can make ethical decisions, and responsible researchers who can help to orientate research towards the big societal challenges so that we can improve society in incremental ways.

“USB is a transformative school, a different school, and a school with a purpose,” he added. “Our areas of expertise include hidden gems such as strategic foresight, conflict resolution, women at work, social transformation, entrepreneurship, and our ability to push the boundaries of blended learning.”

Smith said he sees the primary outcomes from USB’s efforts in coming years as providing a transformative learning experience to its students. “This is our service to society. We will also continue to undertake research that has an impact, and to provide a sense of purpose for the school and for our stakeholders. Business schools need to step up and say we are here to develop managers for the future.”

The other speakers talked about the importance of research. Dr Lara Skelly, Research Manager and Head of the PhD in Business Management and Administration, said research is important because it makes the world a better place. “At USB we see research as evidence-based decision-making. Better decisions help to make the world a better place.”

PhD alumnus Dr Candice Booysen said her PhD journey taught her resilience, humility and the importance of staying curious. “To serve and support – this is how I’ve experienced the ethos of the faculty at USB.”

The year ahead as it relates to Covid-19 and vaccines

Prof Portia Jordan, Executive Head of the Department of Nursing and Midwifery at Stellenbosch University, said 2020 was the year that everything changed. “Across the globe we have seen businesses, schools, institutions have closed. It has caused a lot of suffering – unemployment, loneliness, amplified gender-based violence, corruption, poverty – but above all that, there was innovation as well.”

Prof Jordan listed the following long-term effect of the coronavirus: morbidity and public health implications; cardio-vascular alterations; chronic fatigue; musculo-skeletal pain; anxiety; rehabilitation; and productivity and organizational performance.

On the opportunities for the year ahead she said that the worldwide crisis that the pandemic brought “allowed us an opportunity to rethink business models, health care and education systems, operational capabilities, leadership styles what is required of a 21st century leader, organisational culture and performance, and approach towards digital world-telemedicine”.

Workplace traditions

Dr Natasha Winkler-Titus, senior lecturer in Organisational Behaviour at USB, presented on the meaning of work and the physical manifestation of culture, when we are not all in the same building.

“During Covid-19 a renewed focus came to all workers, both formal and informal sectors. Apart from doctors in the medical fraternity, lower paid workers and those in frontline jobs shouldered much of the burden in South Africa, and these still very much include women and previously disadvantaged groups.

“These groups suddenly became the unsung heroes. Much of these workers, however, do not always form part of the formal employment labour force. South Africa has a long tradition of work casualisation, not always with positive associations. Casualisation of work is positive and should be encouraged as it holds enormous potential for job creation,” she said.

She warned that higher levels of uncertainty and opportunity for exploitation remains. “The challenge, however, over and above our good governance and labour laws covering even the unemployed, is that in reality, there is little protection for those working in the informal sector,” she said.

“A great opportunity in the workplace is to embrace responsible leadership.”
– Dr Natasha Winkler-Titus

“Therefore, a great opportunity in the workplace is to embrace responsible leadership. How do we do this? Organisational leaders should consider all workers in their operational process, through a humanitarian lens. This does not imply full-time employment for all. But rather, a level of accountability for human rights and dignity,” she said.

“I see a new kind of leader emerging. Leaders who pay attention to science. Leaders leading with compassion and courage, who are not afraid to consult experts and science, and who act responsibly and take accountability.”

Winkler-Titus emphasised that the biggest conversation remains how we work with specific emphasis on virtual collaboration. “Why I use that phrase, because it is not only about working remotely or from home, it is about achieving engagement and collaboration in a virtual space.”

She said virtual collaboration needs to consider job and workplace design, employee and team engagement, work life flow and the enabling environment for collaborative spaces and practices.

“Workplace traditions must be re-imagined towards the greater good of humanity. The workplace is an expanding concept and Prof Theo Veldsman reminds us to get beyond organisation and embrace future fit ideas of organising around purpose. Who is working should become the concern of everyone. Virtual collaboration can hold immense benefits if applied correctly, ensuring technology and psychology is in balance,” she said.

“Let’s use this crisis to propel us toward greater courage, compassion and significance to re-imagine work, worker and the idea of organising around purpose.”

An economic outlook for 2021 and beyond

Prof Charles Adjasi, professor of Development Finance and Economics at USB, said the South African economy before Covid-19 has been struggling for the last decade, stating “sluggish manufacturing sector, increasing public debt and fiscal slippages, and increasing unemployment” among contributing factors.

He said that efforts to resuscitate the economy showed positive signs by 2018. “But the worst was to come. Covid-19 and a hard lockdown in March 2020 meant that all activity came to a standstill and there was immense pressure on the health care system and related infrastructure, with a knock-on effect on productivity,” he said.

He mentioned data from Stats SA showing that in April – May 2020:

  • Year on year growth in manufacturing production had contracted by 48.7% the largest slump ever;
  • Utilisation of production capacity had dropped to 58.9% compared to 80.3% in previous years;
  • Income from tourist accommodation fell by 98%;
  • Wholesale trade and retail trade reduced by 42% and 49.9% respectively;
  • The proportion of people with no income had practically trebled from 5.2% pre-lockdown to 15.4% in immediate post-lockdown; and
  • The proportion of people who experienced hunger had increased from 4.3% pre-lockdown to 7% in immediate post-lockdown.

“It is recovery that will be tough and depends a lot on government’s leadership and commitment.”
– Prof Charles Adjasi

However, Adjasi said it’s not all doom and gloom and that four factors would guarantee an overall positive outlook for the South African economy, namely:

  1. Government leadership and commitment;
  2. Global and regional growth;
  3. Financial state of the economy; and
  4. The reduced probability of a third wave of Covid-19 and/or problems with vaccine rollouts.

“But this is a tough path of recovery and does not mean the economy immediately gets back to a desirable and sustained growth path. It is recovery that will be tough and depends a lot on government’s leadership and commitment,” he said.

Surviving as an entrepreneur during a pandemic

Huenu Solsona, owner of The Galileo Open Air Cinema, listed five key skills entrepreneurs require to survive through Covid-19. They are:

  1. Adaptability: Set goals but be flexible and embrace change;
  2. Innovation and teamwork: Ideas are always better as a team and be the leader that gets the best out of people;
  3. Perseverance: Believe that there is always a way;
  4. Positive mindset: Surround yourself with positive people; and
  5. Good negotiating skills: A good negotiator creates win-win situations for both parties.

Watch the video recordings here

Academic Opening 2021

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