Coronavirus Covid-19

USB hosts book launch for ‘Fault Lines’ that explores the lasting effects of race and racism in South African society

USB News

USB hosts book launch for ‘Fault Lines’ that explores the lasting effects of race and racism in South African society

  • JUL 02
  • Tags Fault Lines, Book launch, Race, Science, Society, Black Lives Matter, Research

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A book exploring the lingering consequences of race and racism in South Africa and globally was launched during an online event hosted by the University of Stellenbosch Business School (USB) on Thursday, 25 June 2020.

‘Fault Lines: A primer on race, science and society’ delves into challenging questions such as, What is the link, if any, between race and disease? What are the roots of racial thinking in South African universities? Are new developments in genetics simply a backdoor for the return of eugenics?

Co-editor Prof Jonathan Jansen, distinguished professor of education at Stellenbosch University, said the issue is how to educationally address these concerns when people so often scream at each other when it comes to issues of race.

“When you talk to people about terrible racist actions and they say in response to the crisis, Wat het ons verkeerd gedoen? (What did we do wrong), my initial gut reaction was to say, Get real. But I then realised these were genuinely real responses,” he said.

“People don’t have a lot of patience with people who respond with, I really don’t know what I did wrong. Yet the more I thought about that for the past ten years or so, the more I realised that that is true.

There isn’t a moral consciousness that kicks in that says, ‘This is horrible’.
– Prof Jonathan Jansen

“My colleagues, my friends, my students really did not know what they did wrong. There isn’t a moral conscience that kicks in that says, This is horrible. And unless we understand that, you are not going to change the underlying behaviour,” he said.

Dr Cyrill Walters, lecturer on the MBA programme at USB and who co-edited the book, said that “when we talk about ‘Fault Lines’ it would be remiss of us not to mention Angela Saini’s book, ‘Superior: The Return of Race Science’.

Even when people have all the facts, they don’t necessarily want things to change.
– Dr Cyrill Walters

“She touches on ignorance. She says ignorance is probably part of the problem, but the problem is not only ignorance. Even when people have all the facts, they don’t necessarily want things to change,” she said. “Even if people know it’s wrong there’s absolutely no reason for them to commit.”

Ferial Haffajee, associate editor at the Daily Maverick, was a speaker and made reference to UCT Professor Nicoli Nattrass’s research that made headlines recently (the research suggested that black South African students are less likely to consider studying the biological sciences than other students).

“I didn’t know how to approach it because I don’t think its primarily an issue of academic freedom; it’s much more than that. She sent junior researchers out at lunch and they asked 112 students if they had pets, wanted to study conservation, and believed that Rhodes must fall.

“Stupid questions like those were going to beget the stupid answers that she got into a piece of research that to me is quite deformative, and I think Prof Nattrass knows that,” she added.

There are reasons why we should raise our voices against such research while standing up for the rights of academic freedom.
– Ferrial Haffajee

“We sit with three pages of work that finds black students are materialistic and not really interested in the natural science. There are reasons why we should raise our voices against such research while standing up for the rights of academic freedom,” Haffajee said.

She added that it was easy to debunk the Nattrass research with facts. “All I did was call up SANParks to find out that 13 of our 20 beautiful national parks are headed by black South Africans and all of the senior conservationists at SANParks are black South Africans. I think the kind of crude science-based research is really passé and should be on its way out across our campuses,” she said.

Journalist and political commentator Max du Preez, who was also a speaker, said the timing of the book could not have been better “even though the authors could not have known that its publication would coincide with the extraordinary worldwide movement #BlackLivesMatter, unleashed by the murder of George Floyd”.

“I am a bit of a cynic when it comes to human beings’ ability to change in a short amount of time but the scale and intensity of the present movement suggests that history would one day point out that this was a moment when attitudes and sensitivity towards race shifted meaningfully,” he said.

Things can go wrong for a very long time, but we only sit up and notice change when something dramatic happens that gets lots of media coverage.
– Max du Preez

He added: “This is how we roll as human beings. Things can go wrong for a very long time, but we only sit up and notice change when something dramatic happens that gets lots of media coverage.”

Prof Piet Naudé, USB Director, said in his introduction that the book appeared on the cusp of both national and international hard debates about race and other forms of isms in our society. “The reason why it is so important for us at the USB to part of this, is because we are part of South Africa.

“Our students, academics and international students are subject to the same kind of socialisation processes in South Africa. Therefore, there is no reason why we are less prone to racist attitudes, dismissive gender attitudes and issues of sexual orientation,” he said.

Dr Armand Bam, Head of Social Impact at USB, was the facilitator.


Watch the video here >>

Fault lines book launch

 

The book is available at:

Google Books: https://bit.ly/2X7tBN8

Amazon: https://amzn.to/3bJUNFV

ITSI: https://bit.ly/2wOV5wc

Takealot: https://bit.ly/3fII9c2

African Sun Media: orders@africansunmedia.co.za / 021 201 0071

In the media

New book Fault Lines explores the lingering effects of racism in academia; Daily Maverick

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Grief during covid-19

Society is grieving: How can we make meaning of it?

USB News

Society is grieving: How can we make meaning of it?

Grief during covid-19

  • JUN 17
  • Tags Opinion, Society, Meaning, COVID-19, Values, Emotions, Pandemic

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This opinion piece was written by Prof Arnold Smit, Associate Professor of Business in Society at USB, and was used as an exclusive on Fin24.

In a gripping poem, Warsan Shire[i] narrates how, one night, she was sitting with an atlas on her lap with her fingers running across the world while she whispers the question, “where does it hurt”. In return, the atlas answered “everywhere, everywhere, everywhere”.

Since discovering Shire’s poem I used it as a lens on people’s experience of the current context we are in. Not a day goes by without an update on the statistics of the Coronavirus sweeping wildly through countries, communities and households. Nor can we avoid the scenes playing out in hospitals, the mourning of the bereaved and the preparation of graves for what is yet to come. Where does it hurt? Everywhere.

Exactly two weeks after the death of George Floyd in Minneapolis, I used it to open an online workshop on values. Not only did this group of men and women associate the poem with the rising tide of anger and grief across the world, for them it ripped open their own painful memories of what apartheid did to them, their families and communities.

Where does it hurt? Everywhere.

In a workshop with a group of executives from one of South Africa’s leading retail groups, I listened in on their narratives of coming to terms with the impact of COVID-19. The initial business projections for 2020 turned into a nightmare as budgets had to be revised while doing everything possible to soften the impact for employees, suppliers, tenants and customers.

Where does it hurt? Everywhere.

Dealing with students in a remote learning environment becomes a window into their domestic challenges during lockdown. For some, job loss is already a reality. Many have to cope with work, their studies and familial responsibilities at the same time. Some had to alter their wedding arrangements while others are dealing with bereavement in their families and social networks. For many it feels like a curtain has been drawn on their future plans.

Where does it hurt? Everywhere.

Life as we were used to, has been extensively disrupted, whether we look at it from an individual, relational, organisational or societal perspective.

COVID-19 was certainly not in our script for 2020. Suddenly it has become the code word for an all-encompassing experience of change and loss sweeping through everything that previously felt familiar, comforting and even predictable. Life as we were used to, has been extensively disrupted, whether we look at it from an individual, relational, organisational or societal perspective. It will not be an overstatement to say that we are a society in grief at the moment.

It hurts everywhere.

Tough as it is, it may do us well to make to make sense of what we experience at the moment. One way of looking at it, is from the perspective of Elisabeth Kübler-Ross’s model of what people experience around death and dying[ii].

Although her idea of a grief cycle as such has been criticised by many, there is sensibility in the five core emotions that she identified.

  • Denial is often the first response and expressed in the assumption that something is either not true, or as bad as reported.
  • Anger represents the desire for a scapegoat, the possibility that something or someone is to blame for the challenge that you are facing.
  • Bargaining is to look for a way, some sort of compromise, to avoid or soften the impact, to be able to continue with what you were always used to.
  • Depression represents a despairing realisation that the crisis will not dissipate, that circumstances will not change, that the change is permanent and that there will be no turning back to what was before.
  • Acceptance is about embracing either the loss or the inevitable change that is going to occur, making peace with what you cannot change, and focusing on that which you can influence or have some control over.

Making the COVID-19 connection with the Kübler-Ross framework is not difficult at all. Since the start of the pandemic, and especially since the announcement of lockdown, you may have experienced some or all of these emotions as well. You may have experienced some sort of sequence, going from the one to the other as if they represented stages in your experience. You might have experienced different ones at different times depending on what kind of COVID-19 related impact you have been dealing with. You may find yourself somewhat stuck with a particular one, due to a variety of challenges you have to deal with at the same time.

Applying the Kübler-Ross framework, we may say that we experience these emotions because of grief resulting from loss: loss of future certainty, loss of employees, loss of suppliers, loss of income, loss of normal connection and socialisation, loss of life, loss of freedom, loss of dreams.

Where does it hurt? Everywhere.

So how do we make meaning of the COVID-19 challenge?  David Kessler, a world-renowned expert on grief work, co-wrote with Elizabeth Kübler-Ross and added a sixth element to her framework, namely meaning. In this context meaning refers to coming to terms with and integrating the impact of the change or loss and finding new courage and direction for what may be yet to come. In discussion with a group of Harvard Business Review staff[iii], Kessler said that “acceptance is where the power lies”.

Once we have accepted what is, we can start working on a balanced approach in terms of what we think and do.

Once we have accepted what is, we can start working on a balanced approach in terms of what we think and do. We can take precaution for not getting affected, we can appreciate the things we still have access to, we can reach out to those who are sick or suffering bereavement, we can use technology to stay connected, we can share and help others as well to express the emotions that we are feeling.

It hurts everywhere. There is no use in fighting or denying it. But we can make meaning through how we deal with it. In a webinar[iv] aimed at leaders and managers in business, I shared the following guidelines:

  • Make sure that you have those things that provide the foundation of your organisation under firm control. Inasmuch as it is under your control, plan carefully, stay creative, spend wisely. You and your people need this for stability.
  • Make sure that you stay in touch with every individual, even daily if you can, so that you may know where they are, how they are, what they experience, what they can or can’t cope with. This is not just about their continued performance, but about their personal and relational wellness. They need to know and feel that you really care.
  • Do not try to talk people out of how they feel, or prescribe to them how they should feel, or sell them cheap comfort. If you do this, you only create unnecessary distance and resistance. You may have felt the same and now it is your turn to take them seriously and show them that you understand what they are going through.
  • Be prepared and available to be cared for by your team members as well. There may be times some of them may be better equipped to deal with certain emotions and experiences than you are. There may be challenges that some of them have already worked through that you still need to deal with. Allow them to be helpful.
  • Maintain the necessary safety disciplines, keep the workplace clean, make sure everyone wash their hands, wear masks, and keep the right distance. Keep the virus out; once it is in it is already too late.

It hurts everywhere. Life will never be the same again.

It hurts everywhere. Life will never be the same again. We will have to rebuild our dreams for ourselves, our communities, society and the economy. Inasmuch as we are hurting together, even if in different ways, we’ll have to learn how to rebuild together. While the pandemic, and its related effects, will leave us with an indelible collective sense of grief, it can also become the rebirth of imagination for a better, more balanced and more compassionate world.

References

[i] https://www.goodreads.com/author/quotes/5431334.Warsan_Shire

[ii] Kübler-Ross, E. (1969). On Death and Dying. Routledge. ISBN 0-415-04015-9.

[ii] https://hbr.org/2020/03/that-discomfort-youre-feeling-is-grief

[iv] https://www.youtube.com/watch?v=W0QvxPvplHg&t=289s

About the author

Prof Arnold Smit is Associate Professor of Business in Society at the University of Stellenbosch Business School. His academic work is focused on the integration of ethics, responsibility and sustainability in management education and organisational practice. He also facilitates training programmes on values-driven leadership, sustainability management and director development. Prof Smit holds a Master’s degree in Philosophy and a Doctor’s Degree in Theology from Stellenbosch University. He is also a non-executive director of The Ethics Institute, a trustee of SEED Educational Trust and the immediate past President of the Business Ethics Network of Africa.

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Africa covid-19 economy

Is COVID-19 Africa’s economic curse or cure?

USB News

Is COVID-19 Africa’s economic curse or cure?

Africa covid-19 economy
Source: Pexels)

  • MAY 28
  • Tags COVID-19, pandemic, coronavirus, Africa, economy, African Frontiers

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African business experts converse about COVID-19 and its impact on Africa’s economy.

Will COVID-19 propel Africa to new economic heights? Or will it cause more people to die from starvation and leave Africa’s economy in ruins? These were some of the questions that were addressed by four African business experts who participated in an MBA panel discussion for a module called Perspectives on African Frontiers.

Dr Nthabiseng Moleko, who hosted the event for USB, quantified that due to COVID-19, 30 million people have lost their jobs in Africa, and a third of the continent’s countries are now at risk of debt distress. Africa is also estimated to lose half of its GDP growth, which is expected to plummet from 3.2% to 1.8%.

“The impact of Corona will be felt for decades to come,” said Dr Louis van Pletsen, the Founder and Director of InAfrica Holdings. He added that 580 million informal workers in Africa had seen their average income decrease by 80% in the last month. Van Pletsen emphasised that the impact would be five times that of the 2008 financial crisis.

“We will have more people die of starvation than of COVID-19,” said Andrew McLachlan, the Managing Director for the Hilton Hotel Group in Sub-Saharan Africa. McLachlan stated that jobs should be created in this time rather than taken away.

“We need to understand the catastrophic nature of complete lockdown and look at other ways to live with this virus in our midst,” said Moleko, who asserted that a balance should be found between restrictions and possible labour activities.

Even though the negative impact of COVID-19 is evident, this crisis might also be the trigger that Africa needs for economic development. “COVID-19 represents an opportunity for the continent to re-enter global markets,”, she said.

“After the Great Depression and even after World War II, many countries had to restart from scratch. Now we all have an opportunity to rebuild, reconfigure and restructure.”

Van Pletsen asked: “Africa, do we have to stand back for anyone else in the world?” when he compared Africa’s resources to those of India and China. Africa is home to 1.2 billion people, roughly the equivalent of India and China. Africa is also ten times the size of India and three times the size of China geographically. Half of Africa’s population is younger than 18 years old. “If this was material to work with, you would not find a better place to do so,” he stated.

Dr David Monyae, the co-director at the University of Johannesburg Confucius Institute (UJCI), pointed out that only 12% of Africa’s trade takes place within the African continent. This is another opportunity for Africa to look inwards for development, given that exports and imports are limited.

In closing, Wilmot Magopeni, the Executive Head of Business Development for FNB, shared a quote from Shakespeare: “There is nothing good or bad, but thinking makes it so”. Wilmot added that he sees vast opportunities in the continent.

It is clear from the panel discussion that Africa finds itself at a crossroads. And while it has the resources and the opportunities to make an economic come-back, the only people who will bring this to fruition will be Africans themselves.

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

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COVID-19 business finance futureca

The future of business finance

USB News

The future of business finance

COVID-19 business finance futureca
(Source: Pexels.com)

  • MAY 18
  • Tags COVID-19, coronavirus, pandemic, lockdown, business, finance, entrepreneurs, SMMEs, South Africa

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Traditional models of business funding need a re-think if South Africa’s small businesses and entrepreneurs are to emerge from the financially crippling “winter of coronavirus” into a spring of growth and rejuvenation.

Accepting that downturns, recessions and economic crises are inevitable, one needs to shift the focus into building “Zebra” companies – sustainable businesses with steady growth, strong balance sheets and cash flows, and able to withstand downturns – rather than “Unicorns that will die without the next round of funding”, says University of Stellenbosch Business School (USB) Senior Extraordinary Lecturer, Daniel Strauss.

We will be forced to combine the profitability and cashflow of traditional businesses with the growth strategies of start-ups.

“In the past we had a mindset of ‘or’ – we either had a traditional SMME that was funded through debt or we had a start-up that was funded through equity. Each of these types of funding proved to be effective where applicable and we know how they work, but the time has come to consider an ‘and’ mindset.

“We will be forced to combine the profitability and cashflow of traditional businesses with the growth strategies of start-ups. This will change the way in which entrepreneurs think, operate and grow forever,” he said.

This will change the way in which entrepreneurs think, operate and grow forever.

Strauss proposes a future of business finance that is a peer-to-peer network of like-minded entrepreneurs who invest and support one another within the same frame of reference.

He said groups of entrepreneurs who had been buying equity in each other’s businesses for years were the ones to emerge stronger from every financial crisis, able to pick up additional revenue from weaker competitors once the storm has passed.”

Entrepreneurs see opportunities and threats in a different light…

“Entrepreneurs think and operate differently. If they invest in your business you will benefit not only from funding but from a mindset that no banker can offer you. Entrepreneurs see opportunities and threats in a different light and once they have invested, they will become your partner to ensure that growth is a given, not a pipe dream.”

“If we are willing to change our mindsets around SME funding, we have a chance to withstand future downturns like the man who built his house upon the rock. There’s nothing wrong with South Africa that cannot be cured by what is right with South Africa,” he said.

He said most SMMEs will emerge from the COVID-19 crisis with severely weakened balance sheets, and “relief” funding in the form of bank loans might ease cashflow in the short-term but, until it is repaid, they will be more fragile than before.

“Entrepreneurs just don’t seem to catch a break. The dot-com bubble of the early 2000s, the global financial crisis of 2008, and the COVID-19 crisis of 2020 preceded by two technical recessions in as many years in South Africa.

We can expect a recession or economic crisis roughly once a decade and it is time to adapt or die.

“It is time to realise and concede that macro-economic turmoil is and will be a part of our lives going forward. We can expect a recession or economic crisis roughly once a decade and it is time to adapt or die,” he said.

Entrepreneurs’ ability to approach a local bank manager for a business loan changed significantly after the 2008 financial crisis, he said, when regulations on capital requirements “rendered banks virtually handcuffed and incapable to provide the capital necessary to grow your SMME”.

While small businesses became too risky for bankers’ mandates, on the other side of the spectrum, venture capital firms could provide equity funding to entrepreneurs with high-growth ambitions for their businesses.

“But what about the SMME owner who wants to build a sustainable business with a steady growth trajectory but has reached the limit of the amount of surety and security that they can provide to the bank for further funding?”

“It has become too risky to start a company with a bank loan and bootstrapping in the hope of building a foundation fast and strong enough to withstand the next downturn. Recessions are going to occur, there is no denying this, and the more debt you have, the less likely you are to recover before the next wave hits. It’s nearly impossible to grow whilst drowning in debt,” Strauss said.

Coming out of the winter of the COVID-19 pandemic, SMMEs can experience the “growth, rebirth and rejuvenation of spring” if they are willing to change their thinking on funding, he said.

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What is our right to health?

USB News

What is our right to health?

  • MAY 05
  • Tags COVID-19, coronavirus, pandemic, lockdown, leadership, healthcare, South Africa, NHI

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Prof Renata Schoeman, head of the MBA in Health Care Leadership programme at USB, says COVID-19 highlights the need for people to take personal responsibility for their health.

The public health crisis of COVID-19, requiring citizens to be vigilant about hygiene measures like hand sanitizing, has not only turned the spotlight on the basic human right of access to healthcare, but also on the need for people to take personal responsibility for their health.

“If nothing else, the vulnerability to COVID-19 infection of people with serious underlying medical conditions that are not well-managed, such as respiratory conditions, asthma, diabetes, hypertension, heart disease and compromised immune systems,[i] has shown that achieving the healthy nation that South Africa needs for productivity and economic growth will take more than universal free healthcare,” says Prof Renata Schoeman, head of the MBA in Health Care Leadership programme at the University of Stellenbosch Business School (USB).

Social determinants of health – such as safe living environments, access to healthy food, education, employment, and the health of the surrounding environment – play as much of a role in creating healthy communities, along with lifestyle choices such as diet, exercise and substance abuse.

“…we confuse health care with health – having access to care is not a promise of health.”

“The continued focus on health as a human right, and on the accessibility of care, disempowers people from taking responsibility for their own health. And we confuse health care with health – having access to care is not a promise of health,” she said.

Prof Schoeman, a practicing psychiatrist said that viewing health as a personal and social value, rather than exclusively as a right, would increase personal responsibility and “investment” by people in their health – a critical factor in curbing the spread of COVID-19.

“When people are given the opportunity to be active participants in their own care, instead of passive recipients, and their human rights respected, the outcomes are better and health systems become more efficient.

“It doesn’t help to have free healthcare, such as the proposed National Health Insurance (NHI), but people make poor lifestyle choices – in terms of healthy eating, exercise and substance abuse, for example – and don’t take responsibility for their own health,” she argues.

“The NHI alone, as a strategy to fund healthcare, is only part of the solution.”

Prof Schoeman points out that health goes beyond the absence of disease and is influenced by genetics along with social and economic factors such as poverty, unemployment, housing, education, nutrition and the health of the surrounding environment.

The NHI alone, as a strategy to fund healthcare, is only part of the solution, she says.

Pointing to the success of disincentives to unhealthy lifestyles, such as “sin taxes”, and incentives such as discounts and loyalty rewards for healthy food purchases, as measures for promoting health and preventing disease should be extended to the public sector, and would be “significantly more affordable” than the NHI.

“Ensuring access to healthcare is a social and government responsibility, but this needs to go along with promotion of health, which goes beyond the health system to entrenching health as a shared, social value, and this is the task of all those involved in shaping and influencing values – families, schools, the media and the legal system,” Prof Schoeman said.

She emphasises that governments need to think beyond simply the accessibility and funding of healthcare, to the quality of the health care as well as “getting the basics right” in terms of addressing poverty and unemployment, health promotion and prevention strategies, and safe and healthy living environments.

 

Reference
[i] https://www.cdc.gov/coronavirus/2019-ncov/need-extra-precautions/people-at-higher-risk.html


More about Prof Renata Schoeman

Prof Renata Schoeman (MBChB, MSocSc, MMed, FC Psych, PhD, MBA) has been in full-time private practice since 2008. She practises as a general psychiatrist (child, adolescent and adult psychiatry) and has special interests in cognition (i.e. disorders affecting attention, concentration, learning and memory – such as ADHD and dementia), eating disorders (anorexia, bulimia, binge eating and obesity), mood disorders and anxiety disorders.

Renata also holds appointments as associate professor: Leadership, as well as head of the Health Care Leadership MBA specialisation stream  at the University of Stellenbosch Business School.

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Not all leaders are equally well during COVID-19

USB News

Not all leaders are equally well during COVID-19

  • APR 30
  • Tags COVID-19, coronavirus, pandemic, lockdown, leadership, mental health, coaching

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USB’s Dr Nicky Terblanche explores the underlying truth of leadership during a pandemic.

Not all business leaders are handling the workplace crises of COVID-19 as well as they should, with those who combine a war-like approach tempered with humanity and compassion proving the most effective, say their executive coaches in a recent study.

Dr Nicky Terblanche, Senior Lecturer in Management Coaching at the University of Stellenbosch Business School (USB) interviewed 26 executive coaches across South Africa, the UK, USA and Australia to uncover the underlying truth of leadership in a real-time crisis.

“In times of crisis, leaders are severely tested. What is evident is that not everyone coping.”

“The saying ‘when the tide goes out, you see who’s been swimming naked’ appears to be true from a leadership perspective during this pandemic. In times of crisis, leaders are severely tested. What is evident is that not everyone coping,” observes Dr Terblanche.

He says a common theme emerged of a notable increase in weak leaders being exposed by this pandemic.

“Some senior leaders who were able to ‘hide’ before, have already been demoted or pushed aside because they are not up to the job. This of course places enormous pressure on the people who have to take over their roles.”

Dr Terblanche said he was surprised to learn that a number of middle managers in large South African organisations were not receiving the expected guidance, communication and support from their superiors – with management coaches filling the gap instead.

“Their leaders were ‘missing in action’, leaving it up to managers to figure things out. Many coaches in the USA found themselves fulfilling the role of a manager in having to assist their clients in thinking through and finding answers to operational problems due to leaders’ inability to think through options and alternatives available.”

“In a crisis, followers want a reassuring leader who can point the way. However, war-like directiveness must not be confused with control.”

Dr Terblanche found a ‘war-time’ leadership stance during this catastrophic time seems to be effective.

 

“By communicating frequently and clearly, leaders are able to be directive and provide focus to the team. In a crisis, followers want a reassuring leader who can point the way. However, war-like directiveness must not be confused with control. A war commander cannot control all aspects of a war, but instead, after communicating uniform direction, setting clear values and expectation of how we’re going to function, leaders must know when to step aside and trust that their followers will execute.

“This is certainly not a comfortable space for those who have a micro-management style. With remote working, anxiety can build up if leaders are used to relying on ‘looking over their staff’s shoulders’ in order to stay in control.”

Dr Terblanche uncovered that a war-like directive leadership should not come at the price of showing a humane, compassionate side.

“People may forget what you said, but they will remember how it made them feel. If the leader has always showed compassion for staff long before the pandemic, their caring stance should pay off during this uncertain time and reduce levels of anxiety.”

Leaders who show their vulnerable side in confessing that even though they don’t have all the answers, yet are working collectively with the entire team on solutions and coping strategies, will instil a sense of focus and reassurance amongst staff.

“In such instances it is important though for leaders to be mindful of not sub-consciously projecting their fear onto the situation. Make sure you understand your own fear and anxieties before you communicate with your team,” says Dr Terblanche.

The research uncovered that by being authentic and honest, and putting oneself in the shoes of employees, leaders can help staff to, in some ways, normalise the situation.

“Each person’s reality at home is different and as a leader you are now invited into your employees’ home through virtual meetings. Put your staff at ease about working from home by acknowledging for example the additional stressors of having to care for children whilst attending to deadlines, or that disruptions of family members or pets walking in during a meeting is a given.”

“Good leaders in this time are the ones who can sift through the piles of information and use holistic and systems thinking to try and see the bigger picture.”

Dr Terblanche says the research clearly warns against information overload versus radio silence.

“Good leaders in this time are the ones who can sift through the piles of information and use holistic and systems thinking to try and see the bigger picture. This is not the time to be overwhelmed, become insular as a result whilst trying to frantically plan without communicating to the team, leaving staff in a state of limbo.”

During this time of crises coaches are observing the levels at which leaders are struggling with their own identity. In some instances, leaders are confronted to act in a way that may violate their own value system.  Dr Terblanche says one USA coach’s client was questioning herself after having to fire 200 staff over Zoom, asking herself “Who am I? Is this what I signed up for?’

“On a very pragmatic level, leaders are struggling with their identity due to the physical change in their work environment. Some identify strongly with their corner office or the respect shown by staff when they enter the building, but now they are at home, in cases having to share domestic duties and schooling children from home. No more jetting off, business class, all over the world. It’s about moving off one’s pedestal towards ‘we are all in the same boat – or at least, trying to weather the same storm’.

“The coaches interviewed observed that leaders who know themselves, have a sense of centeredness and calm and are able to take a step back and look at the bigger picture are coping far better than those who are traditionally mostly task focused.”

The study showed that resilience is most probably the deciding factor in whether leaders will be able to weather the storm or not.

“Resilient leaders are those able to consider the bigger picture, are able to look beyond the doom and gloom and seek opportunities. Leaders who have studied and understand systems thinking and complexity theory seem to manage better and are able to see opportunities.  Also, those who draw on their experience from challenges faced such as civil wars or the 2008 financial crisis, are far better placed. ‘Never waste a good crisis’ is how one USA coach’s client is relating to the pandemic, actively looking for new opportunities for his organisation.”

Dr Terblanche says part of maintaining resilience is looking after one self. “Coaches from all four countries shared how the leaders they are coaching and who are coping well with this pandemic, are making a concrete effort to maintain their personal well-being. Strategies include exercise, eating healthy, and finding the right balance between working from home and family responsibilities.”

“Coaching has always been a powerful space to reflect – guided by a professional who can use theories and frameworks from psychology and adult learning.”

The major benefit of coaching in this time has been the ability to assist leaders to stop and reflect, in a way ‘moving from the dance floor to the balcony’ as one of the interviewed coaches aptly described.

“Coaches guide leaders to not only think and make plans but first to make as much sense as possible of what is happening on multiple levels. Coaching has always been a powerful space to reflect – guided by a professional who can use theories and frameworks from psychology and adult learning – to sift through information, offer different perspectives and challenge assumptions. By assisting leaders to be self-aware, coaching can help to identify stressors, shape responses and leadership styles. Only once a situation is properly understood can effective plans be made.”

The following recommendations, in summary, from the research, provide practical advice to leaders:

  • Communicate often with your team and personally with each individual that reports to you
  • Provide direction and reassurance based on what you know and be candid about what is unknown, without projecting your own personal anxieties
  • Harness the collective wisdom and knowledge of your team
  • Acknowledge what is in and out of your control and trust your team to execute the vision and direction you have set
  • Show compassion and understanding on an individual level towards your team
  • Re-evaluate who you are as a leader. What is your identity now and what is expected of you?
  • Take a holistic view on this pandemic. Use Systems Thinking and Complexity Theory tools
  • Actively seek opportunities
  • Draw on previous experience in similar crisis situations
  • Look after your own emotional wellbeing and health.
  • Employ the services of a professional coach to help you with the above and more.

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covid-19 survival and recovery

South Africa’s survival and recovery options

USB News

South Africa’s survival and recovery options

covid-19 survival and recovery

  • APR 28
  • Tags Lockdown, COVID-19, coronavirus, impact, businesses, economy, development banks, government, public sector, markets, pandemic, GDP

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Guest lecturer in corporate and development finance at USB, Jason Hamilton, says South Africa needs a long-term growth plan after lockdown ends.   

The full impact of the pandemic and the health-related counter measures taken is starting to come through in the economic and financial forecasts. We have seen the South African Reserve Bank (SARB) in short succession review its outlook of the 2020 Gross Domestic Product (GDP) growth from 0.2% retractions (in March) to a 6.1% retraction at the last Monetary Policy Committee (MPC) rate announcement in April, which confirms how sharp and severe the impact has been on the economy.

South Africa is still in the beginning stages of the fight against the pandemic, with the view that SA’s infection rate will peak in September, although it seems as if positive impact has been gained when considering the flattening of the new infections curve. It is too early to accurately forecast how the coming months will play out which in turn, being directly correlated to any estimate of a recovery, makes predicting the full economic impact and recovery very difficult.

What has become clear is we will likely not see a sharp and quick economic bounce back many has been hoping for but will in all likelihood see a 12 to 24-month gradual recovery, once the pandemic is under control.

This is based on a few assumptions but mostly driven by the fact that the economy will take time to gain traction once the lockdown has been lifted as any form of claw back will be directly linked to a global recovery and ability to trade.

The ability to recover and its pace will also be directly linked to the ability of our trading partners to recover, this will add to the complexity to any recovery phase and also impact the timeline directly.

We also base the timeline of recovery on the assumption that the pandemic will be under control within the next few months, something that can only be certain once a vaccine is found and rolled out at scale, which could be 24 months away. In addition, the risk of a flare up remains high and we have seen this risk highlighted in China with increasing numbers of new cases.

Any narrative related to recovery and growth should be seen in context of what returning to ‘normal’ means and if this is even possible. Globally we have seen a slow down over the last few years with most developed economies’ GDP growth coming under pressure (can refer slowdown in China and very low growth in Germany and other EU countries), hence returning to normal will see us returning to a world that’s under pressure and possibly not able to sustain the levels seen historically.

In South Africa this is a slightly easier debate (and to understand) as our economy was under pressure for years prior to the pandemic and will remain so for the foreseeable future. The SA deficit which will be revised upward shortly was projected at 6.8% of GDP (R370bn) and this will breach the 10% mark to settle at some point between 10% – 12%, although we could see 14% being tested, resulting in a R544bn to R652bn deficit or at the upper end up R760bn which must be addressed in the revised budget and recovery plan.

What has become clear is we will likely not see a sharp and quick economic bounce back many has been hoping for.

We are predominantly dealing with a health crisis and all actions taken to date has been to limit the loss of human life, this is also clear with the updated stimulus package with significant allocations made to health and health response rated expenses. However, the impact of the pandemic is financial and could easily lead to a financial or economic crisis if not managed correctly through the short/medium term action taken and through the deployment of a carefully crafted long term recovery plan.

It is imperative that government and private sector remain focused on the immediate response and support required, hence spending on healthcare and protecting employment (and by default limiting as many bankruptcies during the process), we have seen further social stimulus provided to assist the vulnerable and unemployed through further grand allocations made. We will, however, require a strategic forward-looking view to be taken to ensure an integrated recovery plan is crafted.

We have seen elements of this coming through already if we look at the action taken by the MPC: It has reduced the repo rate by 225 basis points this year already. This will reduce debt costs and provide some reprieve but the full effect of rate changes take between 6 to 12 months to fully filter through the economy, which mean this action is also being done with a forward looking view and recovery in mind.

Given that South Africa has limited fiscal headroom there still remains a few viable options and strategies that can be explored in conjunction with the private sector to not only assist with the health crisis and bridging requirements, but also to be deployed in preparation and during the recovery phase.

Development Banks

The liquidity of emerging markets is under further pressure with foreign direct investment (FDI) being withdrawn and moving to what is perceived as safer assets and currencies. Since the beginning of the year over $100bn has been withdrawn.

Many nations are also reliant on remittance flows to fill the gap. In some cases this is significant, ranging between 10% to 20% of GDP. This will also reduce and could remain low for some time.

Both these implications can be addressed by increasing the special draw rights (‘SDS’) to assist nations with foreign currency that was lost due to FDI and the lower remittance levels seen. South Africa is a very well traded market albeit speculative and should be able to manage its foreign currency reserves through the cycle and is not reliant on remittance flows.

The impact of the pandemic is financial and could easily lead to a financial or economic crisis if not managed correctly.

In the emerging markets on average over 20% of budgets are used to service debt, In South Africa this is around 12%. Restructuring current debt terms and condition can assist in freeing up significant cash flows and provide much needed headroom over the coming 24 months. This can be done by freezing interest and/or placing a general moratorium on debt payments, either under current facility/bond terms or through a formal restructuring approach.

Development banks will need to look to increase lending and hence its allocation received to enable further funding to be provided. This could take the form of loans and even grants. Any additional funding provided now will need to be aligned to the crisis duration. Those provided for growth must be aligned to the underlying projects. As such, we should see increased tenors coming through to provide for longer lead times.

A significant portion of latest stimulus package of R500bn announced on the 21st of April will be sourced from global partners, the IMF, African Development Bank and Brics Bank, although the detail of this has not been announced as yet.

Development Finance Institutions

DFI’s are well placed to assist now and during the recovery as they are already invested and have direct local access in many cases. They further have local knowledge and a proven track records. They are best placed to assist current clients with support and new debt facilities, however they will need to relax credit and return criteria to increase the investment scope. They will also be required to provide funding likely linked to the profits of the company or project to provide the scope for the company to recover.

They will also have to consider providing debt moratoriums on current and new investments made to assist with the short- and medium-term liquidity requirements, again this can be done under current facility terms or through a formal restructure request.

In conjunction with co-investors on the private and public sectors (asset managers, government, PE firms, etc.) DFI’s can be accessed to fund recovery and growth projects, specifically health, manufacturing and infrastructure programmes. It is likely to be achieved by way of a convertible note point where additional risk is being taken.

Companies with strong ESG (environmental, social, governance) principles or alignment to the sustainable development goals (SDG) will be best placed to secure new investments and funding (Impact Investment) during the recovery as they will not only offer financial returns but also long-term sustainability.

Commercial Banks and Private Sector

Similar to DFIs, commercial banks and other financial services providers have well established processes and distribution systems in place with direct links to companies and individuals which enable them to assist in providing access to short term liquidity and bridging. This assistance will however still be provided on commercial assessment and risk terms, although we have seen regulations being adjusted (capital adequacy and liquidity ratios) to allow banks further headroom to increase its lending scope. Further movement here can be taken although care should be taken to not overextend in terms of risk and long-term viability.

Commercial banks can be used to provide further liquidity into the market over the short to medium terms and is best placed to also provide debt to firms during the recovery phase. However, if low or no interest rate borrowings is required or lending that is too far from the adjusted risk return profile, then external guarantees will be required, which has now been announced with a R200bn allocation made to be made by government, initially this will focus on firms with turnover less than R300m.  We can refer to the 2008 financial crisis to see what the implication can be if banks provide facilities to risky clients and hence if they are required to move beyond the regulated framework the support will need to be provided.

We will, however, require a strategic forward-looking view to be taken to ensure an integrated recovery plan is crafted.

Private debt held by institutional, local and foreign investors is a key funder and provider of liquidity for South African corporates. Companies can access liquidity here as well, if they are able to negotiate three to six months debt payment moratoriums. However, this has proven difficult if we look at what has happened in the US and EU private debt markets. Companies should however review their agreements to see what options are available to them. Governments have already provided opinion and guidance to the sector to motivate aligned action. We will likely see a step up in these actions if the market isn’t accommodating.

Government/Public Sector

Restoring confidence is one of the major factors needed to attract FDI. Specifically to fund a 3 to 5-year recovery drive. Despite investors seeking safer assets they are also still hunting for yield. Prior to the crisis, Emerging Markets and Africa provided great prospects. This appetite still remains, but to sustainability attract long term FDI governments will need to have a clear plan and act decisively in execution.

The budget was announced in February 2020 and will be reviewed. We will see funds being reallocated; we will also see further cost cutting taking place to free up needed headroom to ensure a focus on efficiency. In the latest announcement R130bn will be freed up through reallocations and details will be provided in the revised budget.

We could also see the selling of non-core assets being progressed as this option was noted during earlier announcements (including the revenue from selling broad bank spectrum).

The UIF and Government Employees Pension Funds have significant surplus funds available that could be accessed. There is also an under allocation across some of the mandated investments leaving headroom for allocation of additional funds which can be deployed as directly or co-investment. This can be a viable source of capital to assist during the rebuild and recovery phase. Access to the UIF funding reserves has been noted in the updated stimulus package as part of the R500bn package.

Private sector savings can be accessed directly or through the asset managers with regulatory adjustments (adjustment t prudential limits), which will increase the funds available for local deployment. This will require the review of return profiles and investment criteria to ensure alignment. As with DFIs, increased investment will be aligned to ESG/SDG projects and companies. This will require careful considerations as the funds have obligations to its beneficiaries which in most cases are the most vulnerable in our society, such as pensioners. But its technically is a viable funding source.

We will also see a renewed focus on the already established regional trade zones which can effectively be used to leverage trade and enhance relations. What is required is a unified approach, both during the crisis and for any recovery plan.

The African Continental Free Trade Area is an agreement that unifies the African continent and its 1.3 billion people which, if managed correctly, can put Africa in a very strong position by forming a unified trading bloc and creating a regional value chain. This could be the secret sauce that the content has been looking for and execution over the next 5 years is going to be crucial.

Stimulus could also be provided through reducing the tax burden on the private sector, ensuring more funding is available for reinvestment and investment. This can be done by reducing VAT and reducing company tax rates. However, this can likely be achieved through other incentives to drive right behaviour. What we have seen announced is the deferment of VAT, PAYE, Tax and other levies to assist and these have now been revised to provide further assistance.

South Africa is Africa’s most industrialised nation with a very sophisticated financial system, which provides it with a few options to consider and even the private markets that can be successfully accessed by government and local companies.

All the ratings agencies have SA at sub-investment grade, however this now provides the platform to rebuild and design plans to support a growth programme without having to worry about downgrade risk. A very slim but silver lining.

The pandemic has also proven that we are a global economy and reliant on each and every market for our own success. This unity and joint action will be the crucial factor that will determine our successful rise and recovery.


Jason Hamilton is director at First River Capital. He has over 15 years of experience in the banking and the financial services sector where he focused on corporate finance, project finance, leveraged and acquisition finance. He is Guest Lecturer on USB’s Development Finance Programme, present on Capital Raising for Public and Private Projects. He is also Guest Lecturer on USB’s MBA programme, present on Corporate Finance, Mergers & Acquisitions and Funding Strategies. He serves as Faculty at USB Executive Development, and Facilitator for USB’s International Affairs programme. He has been appointed to the Thought Leadership and Business Ethics Committee of AICPA (The Association of International Certified Professional Accountants) | CIMA (Chartered Institute of Management Accountants) effective 1 June 2020.

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Philanthropy lacks imagination.

USB News

Philanthropy lacks imagination. It’s time for radical change!

(Source: pexels.com)

  • APR 23
  • Tags Coronavirus, Philanthropy, Social Impact, Business in Society, Redistribution of wealth, Inequality, WHO

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Dr Armand Bam, Head of Social Impact at USB, encourages philanthropists to shift focus from traditional philanthropic models in order to genuinely effect positive change.

For the upper and middle class, the inconvenience of working from home and limited social engagements can seem challenging for an entire month. While these are legitimate concerns and speak to issues of health and well-being, we must bear in mind that certain social determinants of health will place others at greater risk during and beyond this period. Where you were born, the fact that you work, the community you grew up in and other environmental factors will play a role in your experience (“WHO | The determinants of health,” 2015). In South Africa it is evident that inequities persist and are held up by social, economic and political influences ensuring that money, power and resources insulate some citizens while exposing others to a more dire consequence. South Africa faces major challenges if we consider that one in three South Africans lived on less than R797.00 per month (StatsSA, 2017). On top of this government spend on social development has recently increased from 259 Billion in 2018 to 278 billion in 2019 – 15% of the total national budget.

Consider this – even if all of South Africa’s billionaire philanthropists decided to donate one billion rand a year to a solidarity fund it would take them more than a century to share their collective wealth. It would appear to be easier for a camel to get through the eye of a needle. What has led to such a dehumanising experience and existence? How have we come to tolerate living in a society where abject poverty is contrasted by such extreme wealth? A simple answer would be that even with a new political dispensation a culture of silence has been maintained. We have failed to rise and unshackle ourselves from our oppression.

Even if all of South Africa’s billionaire philanthropists decided to donate one billion rand a year to a solidarity fund it would take them more than a century to share their collective wealth.

Recently the media has drawn our attention to the “good” being done by a few elites at a time of collective need. What is concerning is it that we are made to feel that the social impact being delivered by these elites is greater than the collective effort of ordinary citizens some of whom will not be returning to employment after lockdown. How is it we are expected to applaud the same people who have a hand in creating such inequities? We need to rid ourselves of this imagery! Surely, the sacrifices made by those who could ill afford to be under lockdown should receive our adulation. Should the strength of their conviction, the immediacy of their actions and mere fact that so many citizens have made this sacrifice not be lauded instead? This is where true social impact lies.

But let us for a moment accept as Braverman (2014) claims that inequity is avoidable and a “collective moral obligation” exists to reconstruct the structures and practices that place socially disadvantaged citizens at greater risk. In order for us to claim as Rawls (1971) suggests to be living in a just society, a society, “that renders the most vulnerable less vulnerable” action and collaboration is required across all spheres of society. It is clear an imbalance needs to be addressed and needs to transcend our traditional efforts. Henry Mintzberg’s suggestion that we require nothing less than reformation, on a global scale, to rebalance our heads, our societies, and our world comes to mind. He cautions that despite all the effort to deal with our problems—climate change, social injustices, the demise of democracy, and more—we will make no headway until these efforts consolidate around common cause, namely the restoration of balance. Until we all understand that combating inequality is that common cause, we will continue to fail. It is at this juncture that one should take exception to calls for a new type or modelling of philanthropy. Instead, philanthropy needs to do some soul searching.

It is at this juncture that one should take exception to calls for a new type or modelling of philanthropy. Instead, philanthropy needs to do some soul searching.

While the Coronavirus has moved with speed to cover the globe it has exposed the soft under belly of philanthropy, the slowness with which it delivers. Let’s be real – modern day philanthropy has become a means of shielding wealth. It is and will be no different to its anachronistic self. The elite build house next to house and join field next to field exclusively for their benefit. The emergence of family trusts and foundations of the elite with a social aim amongst the already 220 000 NPOs in South Africa merely serves to create a circular economy to maintain control over their “own money”. No attempts at achieving social cohesion is truly possible because philanthropy will not be able to rid itself from believing it knows best and wanting to maintain control over the purse strings. Philanthropy lacks humility to do so, it fails to apologize, listen to and include those in hurt in order to repair our society.

Any suggestion that we require new ways of philanthropy represents a type of psychogenic blindness and lacks imagination, radicalism and wisdom. It is an affront to those most at risk of contracting this virus and suffering a real economic hardship. In South Africa, the richest 5%, control 56.5% of our wealth totaling $435 billion. The top 1%, approximately 360 000 people, control 34,6% or $266.4 billion of our wealth. Those who seek to predict a future any different from what we are experiencing today without addressing the true source of our inequities runs the risk of fueling an egoistic pursuit of having. In this regard questioning where philanthropic wealth originates, why it only enters the public capitals ‘willingly’ when a life-threatening virus emerges, who manages, allocates and spends it must be answered. If money is value neutral, our attention must be directed to the values of those in possession of excessive wealth.

So where does a solution lie? What philanthropy should more earnestly concern itself with is the vaccine for a virus far more detrimental to our society. Edgar Villanueva describes the “colonizer virus” as a greater threat to our society and one that urges us to divide, control and exploit. It represents the true embodiment of how we deal with wealth and subsequently inequities in our society. It perpetuates the trauma we have experienced over generations. The vaccine, greater tax responsibilities for the wealthy, is available yet a radicalism is required to inoculate the elite. Philanthropy with its savior mentality needs to face up to this as it does nothing more than fuel the divisions within our society. In its shadow lies the promotion of an inalienable right to owning more shielding the violence committed on those Freire explains are cast as the “rejects of life”.

The vaccine, greater tax responsibilities for the wealthy, is available yet a radicalism is required to inoculate the elite.

If philanthropy was to be helpful, radicalism is required not a self-indulgent remodeling. If we want to rebalance our society, the answers must come from the most marginalized, the 50% of our population living below the upper-bound poverty line, the communities suffering daily under gang violence, the women and children brutally assaulted by men, people with disabilities willfully excluded from employment opportunities. Philanthropy must surrender itself to this. To achieve balance, we need to redistribute resources and ensure the most vulnerable no longer live at risk. No form or fashionable philanthropic modeling or gimmicking will achieve this.

Dr Armand Bam is the Head: Social Impact and Senior Lecturer in Business in Society at the University of Stellenbosch Business School.

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#WTFuture: Post-COVID-19 possible futures in Africa

USB News

#WTFuture: Post-COVID-19 possible futures in Africa

  • APR 22
  • Tags COVID-19, coronavirus, pandemic, futures, Africa, business, technology, disasters, entrepreneurship, opportunities, foresight, strategic thinking

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Even if COVID-19 is soon eradicated, will it ever be business as usual again on the African continent? Earlier this month (April) we hosted our first online USB Leader’s Angle where speakers Dr Njeri Mwagiru, Senior Futurist at the Institute for Futures Research (IFR), and Dr Lize Barclay, senior lecturer in Futures Studies and Systems Thinking at USB, navigated the uncertainty of post-COVID-19 futures in Africa.

>> Click here for the full recording

COVID-19 and Disasters: Africa’s Preparedness and Resilience

COVID-19 is a public health crisis facing the whole world with multiple challenges. How is Africa positioned in terms of preparedness to respond, and resilience to disasters such as COVID-19?

Dr Mwagiru says it is necessary to apply strategic foresight to respond to disasters like COVID-19 in the best ways possible thinking about alternative futures. “I want to frame it around concepts of disaster risk management.

“COVID-19 is a global disaster – a public health pandemic – and it is not the only disaster we are currently facing. We are facing multiple disasters, like climate change as well,” she says.

She says COVID-19 offers an opportunity to think about Africa’s preparedness and resilience in a broader context as well. “Prior to the disaster we are all quite familiar with the statistics around the continent. We have low human development index performances, we have a low per capita income, our infrastructure development is not up to scratch and we have a high disease burden. We already have multiple challenges so I think COVID-19 also offers an opportunity to think about our preparedness and resilience in terms of that,” she says.

“It is an opportunity to respond to band aid solutions to this particular crisis as one possible situation amongst many but it is also perhaps an opportunity for meaningful and deeply rooted change and transformation so that we really begin to build our priorities,” Dr Mwagiru says.

Preparing for Disasters Using Technology: Gaming Simulation

What role can technology play in understanding and preparing for the future, in terms of disease and other potential disasters? Dr Barclay says gaming simulation plays a significant role and is important in terms of disaster and disaster readiness.

“Shakespeare wrote, All the world’s a stage, and all the men and women merely players. Now what gaming simulation does is, it sets a stage to rehearse possible futures,” she says.

“This is because systems have players, rules, golds and teams that can collaborate or compete. Gaming simulation provides the freedom to run your infinite scenarios so it plugs into those things we don’t always think about or want to think about. The ‘What if?’” she says.

COVID-19 and Insights for African Futures

What lessons are we learning amidst this pandemic that can provide insights to Africa’s futures?

Dr Mwagiru says: “We do have the tools, access and methods like foresight and futures thinking that can assist us to anticipate possible alternative futures and allow us to play a number of possibilities using for instance, scenario planning.

“Another lesson we are learning is the need for agility in our planning and this is very important to keep in mind going forward for organisations and communities. We’re beginning to see the agency of different axes. I think the COVID-19 pandemic has really shown the cooperation and collaboration possible at leadership level,” she says.

Opportunities for Tech Start-ups in Africa

What opportunities have been created for tech start-ups in Africa in dealing with the virus itself and the social and economic dimensions associated thereto?

“The technology start-ups, and not just medical technology, has been absolutely invigorated in many parts of Africa,” says Dr Barclay. “We’ve seen a strong growth in Rwanda, South Africa, Kenya, Nigeria and Morocco, the countries that were most impacted by COVID-19, but their tech eco system mobilised almost immediately.”

She also adds that a lot of mobile money platforms were taking off, even in very remote areas. “It’s specifically designed to work on a lower level or cheaper type of mobile phone with slower internet speed. We’ve also seen a growth in app development,” Dr Barclay says.

Focus on South Africa

In this video Prof André Roux, head of the Futures Studies programmes at USB, is in conversation with Doris Viljoen, senior Futurist at IFR, about what the possible short and medium term futures for South Africa could be.

Post-COVID-19 possible futures in Africa

>> Watch it now

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Oil price south africa

Plunging oil price and SA economy

USB News

Oil price plunge and what it means for SA’s economy

Oil price south africa
(Source: https://www.pexels.com/photo/car-refill-transportation-gas-9796/)

  • APR 22
  • Tags Opinion, oil price, economy, South Africa, Sasol, lockdown

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Prof André Roux, head of our Futures Studies programmes at USB, comments on the plunging oil price and what it means for the South African economy.

The sensational drop in the oil price to -$37 a barrel on 20 April was recorded for West Texas Intermediate (WTI) crude, the benchmark for US oil prices. This crude is usually extracted from US oil fields in Texas, Louisiana, and North Dakota. The reasons for this unprecedented state of affairs are partly of a technical nature linked to pricing in the futures market for oil, along with the collapse in demand (some 30%) in the wake of international travel restrictions and lockdowns affecting 90% of the world population. Although OPEC, along with Russia and others, recently agreed to cut production in May by 10%, supply still far outstrips demand – to such an extent that storage capacity at land and at sea is becoming more and more difficult to find.

The Brent crude oil price is the international benchmark price used by the Organisation of Petroleum Exporting Countries (OPEC). While the price of Brent has not moved into single figures, it has nonetheless fallen to its lowest price in some three decades.

In the absence of a meaningful recovery in global demand (which will depend on how the health crisis unfolds), the major producers, including OPEC, Russia and the USA will have to slash production significantly in order to support the oil price. Meanwhile, one of the world’s largest and most powerful industries faces a plethora of risks – credit risks, banking risks, and unemployment risks.

Somewhere down the road (second half of this year), we could see a sharp recovery in oil prices as demand recovers in a post-lockdown era.

For financially-stricken South Africans and producers the lower oil price comes as a welcome respite, as record declines in the petrol price are being recorded (although price decreases are being neutralised to some extent by the weak Rand exchange rate). Bear in mind that the price could rise later in the year.

The biggest loser in South Africa is arguably Sasol and its shareholders and stakeholders. Sasol’s financial position had already been pressure due to its controversial Lake Charles Chemicals Project, which has been hit by monumental cost overruns. This, together with the oil price plunge, has seen the company’s market value plummeting to some R30 billion, from a R411 billion high in 2014. In the light of its debt burden of R120 billion, Sasol will have to either sell assets and/or exercise a rights issue.

*Professor André Roux is head of the Futures Studies programmes at the University of Stellenbosch Business School (USB). He was previously Director of the Institute for Futures Research (IFR) at USB from 1996 until 2015. Prof Roux’s areas of expertise are business economics and labour economics.

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