SOUTH AFRICA’S SEVEN KILLER APPS

I came across this article in this magazine (Acumen, Issue 2, Fourth Quarter, 2012) that is published from South Africa and it was about how South Africa has readied itself to take the African market. They are the eyeing of a billion people in Africa and they have what it takes to dominate. I wonder what our National economic strategists are thinking about. 

SOUTH AFRICA’S SEVEN KILLER APPS

Words of Professor Nick Binedell 

In a flat and competitive world, every country has to dig deep to make sure that its sense of self and its approach to the future is based on realism about its location, economy, politics and social structure, says professor NICK BINEDELL, dean of GIBS.

South Africa has seven “killer Apps” at play. Following the reasons of well-known historian Nial Fitzgerald, these killer Apps are critical strategic factors that define the business landscape for South Africa. They will play a critical role in determining our long-term economic growth, prosperity and overall success. I list them in no order of strategic importance.

KILLER APP NO. 1: PRIVATE SECTOR STRENGTH

No country of similar –sized economy has produced more world-class companies. In a variety of industries, South Africa has a company in the world top ten. It begins with our history in Agriculture, then to mining and now a complex diversified economy with a strong financial sector. We have always attracted capital to these shores, starting with a discovery of diamond and gold and we stand out among emerging economies of our size in this regard. Our stock market, the JSE, is ranked 20th by the world federation of exchanges in terms of market capitalization, but first by the world Economic Forum in terms of regulations of securities exchanges. Although there is always room for improvement, we have a strong capital raising capability. A significant number of entrepreneur have built businesses from scratch into sizeable enterprises-among them companies like Discovery, RMB, Holdings and Aspen pharm care.

KILLER APP NO. 2: INSTITUTIONAL STRENGTH 

Despite complaints and difficulties, we have a strong institutional framework. We are a constitutional democracy driven by the rule of law. We have a functioning parliament and a state bent on ensuring transformation and development. Institutions in civil society are also effective, having played a strategic role in our transformation in the 80’s and 90’s. They continue to be a lively source of ideas, contestation and support to many. Even though these institutional dynamics are contested, they are, relative to other emerging economies of our size, a tremendously competitive advantage.

KILLER APPS NO. 3: INFRASTRUCTURE

We have a highly sophisticated for an economy of our size. This is a great legacy and a critical one in terms of our future, in capturing value in both the continent and the global economy. 

KILLER NO. 4: AFRICA’S ONE BILLION PEOPLE

Many citizens of Africa are largely untouched by effective government or by the private sector. This is true of many places and spaces in Africa and these billion people are the centre pin for many company strategies for the next decade. Africa has not reached its economic potential for two reasons: It has not used its human resources effectively and undoubtedly, its natural resources are going to be key to the world’s economic development. Africa will thus receive the appropriate strategic attention. 

“….THIS FRONTIER MENTALITY HAS SERVED US WELL……”

KILLER APP NO. 5: OUR FRONTIER MENTALITY 

In South Africa we have an attitude of resilience, competitiveness and contestation, which flows from our history, whether it’s about politics, how we run the country or the economy. Johannesburg became the country’s largest business city in the space of just six years after gold was discovered in 1886. By 1892, it had overtaken Cape Town. South Africa as a whole remains the largest economy in Africa, even though Nigeria is making great efforts to catch up. Although this frontier mentality has served us well, in the years ahead it is going to be strongly challenged by East and West Africa. We need to be ready for the fight.

KILLER APP NO. 6: ENGLISH LANGUAGE

Our main business language, if not dominant spoken language, is a soft asset, giving us access to world markets. Compare, for example, the struggle of the Japanese in the 1970s and 80s, and the Chinese now, where understanding each other in English is a major challenge. It is a great advantage to South Africa, as well as to many other countries on African continent. 

KILLER APP NO. 7: GEOGRAPHICAL LOCATION 

South Africa benefits from its location in a central time zone and the multidimensional nature of our strategic relationships. We have a long history on linkages with the west. We are also building a linkage to Asia. To the north, lies an entire continent inviting us to grab the opportunities presented. 

To View video: www.gibs.co.za /acumen/binedell/killerapps

The Rise and Fall of Pioneer Bus.

Over 20 years back, Uganda government got compensation from its neighbor Kenya for the EAC assets. Uganda lost when the EAC broke up in 1977. The present Kenya airways with all the routes were the famous East African airways. There were many other such assets which Uganda lost as a result of the breakup. As good neighbors, Kenya agreed to compensate Uganda. You know Uganda is Kenya’s largest market. Kenya gets edgy if Uganda gets angry. But it is never worried because there is nothing Uganda can do for the time being to out compete Kenya. Uganda got over 100 buses and they were given to people’s transport, the Jinja based Government Company and Ugandan Support Company and the Kampala based company. After a few years, the buses were no longer on the road and the companies wound up. Nobody knows why but it could be attributed to government, management or market failure. I suppose it was a management problem. The problem with all parastatals in Kampala and government enterprises is management failure. There is the story pioneer bus launching a bus company with about 100 buses mass transport market. All I know about pioneer is what I have read in press but I gather they got a loan of USD 10m to import 100buses. The costs consisted of an estimate of USD 5.5 million including freight. When the buses arrived they were Godsent, UTODA was about to strike and this private company and government want on to solve problems allowing them to operate before paying taxes on the buses and without number plates( government failure). In less than a year, pioneer was dead. They had failed to pay (management failure) the original tax when they imported the buses to the URA despite the easy payment plan that government negotiated for them (government failure). The stories you hear are that there was no system of managing the finances. I am not sure whether this was correct but if they collected the money and failed to pay it, then it would be correct. The other stories were about who was managing, influence of relatives and at the end of the day the company had to collapse. Questions. If this investment was owned by government, would it have survived? If this investment was owned by some Indian or Chinese investor, would it have survived? What would be the survival tactics? Why are Ugandan owned businesses failing to succeed?