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Brazil’s Economic Miracle What SA Can Learn from a Nation that’s Headed in the Right Direction?

Under President Luis Inacio Lula da Silva, Brazil has reached a level of economic growth that has some pundits wondering whether it’s the next China. With its income gap narrowing, interest rates falling, and a number of its companies near the top of the Forbes Global 2000 list, South America’s largest nation is clearly set to earn the moniker “powerhouse”. What can South Africa learn from a country with which it has much in common? KEVIN BLOOM reports

Kevin Bloom

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An article in the June 11th edition of The Economist opened with the suggestion that Brazil, the last country to fall into a recession, may be the first to grow out of it. As proof for the hypothesis, the magazine’s Sao Paulo correspondent cited the fact that Brazilian interest rates had just dropped below ten percent for the first time since the 1960s, that its stock market and credit creation system were back to pre-September 2008 levels, and that the economy had performed better than expected in the first quarter of 2009. “I published a piece a few weeks ago called ‘Zuma should learn from Lula’,” he said. “You may want to read it.”

A few reasons were put forward as an explanation. “Brazil was overheating in the early part of [2008], and the Central Bank raised interest rates. Now looser monetary and fiscal policy is speeding recovery. The financial system is sound, and domestic demand has remained robust. Brazil’s changing trade patterns have also helped to shield it.”

But what really got Brazil into this enviable position, some have argued, is the underlying health of its economy. Characterised by large and well developed agricultural, manufacturing, mining and resource sectors, South America’s wealthiest country ran record trade surpluses from 2003 to 2007. According to the CIA World Factbook, “Productivity gains coupled with high commodity prices contributed to [its] surge in exports.”

What, then, is the historical track record that enabled the country to arrive here?

Throughout Portugal’s colonisation of Brazil, which lasted from 1500 until 1822, the country’s economy was based on the export of primary products – chiefly sugar, gold and coffee. Initially dependent on African slave labour, after abolition of the slave trade in the late nineteenth century these sectors were able to rely on relatively cheap wage labour, aided in the main by mass immigration.

A period of huge economic expansion followed, lasting from 1875 to 1975. By 1885, Brazil was producing more than half of the world’s coffee, and a decade later, when production began to surpass consumption, the country controlled prices in the global market by storing a percentage of produce. But the coffee economy collapsed in the 1930s, a result of the Great Depression and a fall in demand, and Brazil’s terms of trade deteriorated rapidly. To offset this, the government suspended part of the country’s debt repayments and imposed exchange controls.

The most important consequence of this protectionist philosophy was a leap in industrial growth. In the late 1930s, when it became apparent that the coffee economy was not going to make a comeback, Brazilian bureaucrats actively encouraged economic diversification, an effort that paved the way for mass industrialisation in the second half of the twentieth century. Another core strategy that would lead to Brazil’s future economic success was the development of small industry, specifically in the manufacturing sector.

Post World War II, despite regular boom-and-bust cycles, economic output grew steadily. The hyperinflation that was a feature of successive military regimes was finally dealt with in 1994, when the Brazilian currency, the real, was pegged to the US dollar. Overnight, tens of millions of citizens turned into consumers. In 2002, though, with Brazil unexpectedly on the verge of another financial crisis – partly due to fears that it would default on its debt and move towards the populist left – former trade union leader Luis Inacio Lula da Silva won the general election.

Lula promptly confounded his critics, achieving what most South Africans would dearly love to see Jacob Zuma emulate. “In Brazil a labor-union leader has presided over an amazing period of social and economic progress,” said Newsweek recently of the Brazilian leader. “It is also one of the few countries that have successfully managed to reduce economic inequality at a time when everywhere else inequities are deepening. Successive Brazilian governments, of rival political parties, have succeeded in improving education, health and the living standards of millions of impoverished citizens who have now joined a growing middle class.”

The economic situation in Brazil is so sound, in fact, that a June 2009 article in BusinessWeek wondered whether the country might not be the next China. As BusinessWeek editor Spencer Ante wrote: “Investors are planning to increase their exposure to emerging markets, and Brazil is becoming a more attractive place for investments, according to an April 6th survey by Coller Capital, a secondary investment firm that buys stakes in venture capital. Brazil ranked as the second-most-attractive choice for private equity investments, behind China but ahead of India. Last year, Brazil ranked fourth.”

Some of the reasons put forward for this scenario reflect the features cited above: a large and growing economy; a modern financial system that has effectively dealt with the crisis; a legal system that respects property rights; and robust capital markets. South Africa, although on a much smaller scale, can arguably place a tick in all four boxes – our economy may

officially be in recession, but the Reserve Bank seems to be making all the right moves and the JSE is holding up relatively well. On the final point, though, robust capital markets, we appear to be lagging.

While Johannesburg and Cape Town house a respectable spread of private equity firms, venture capital concerns and investment banks – many of which are committed to growing local industry – the de facto attitude of the South African government to small enterprise is an economic liability.

An article published in this magazine in July this year argued that the two major governmental organisations established to support entrepreneurial initiatives in South Africa have so far failed. The Umsobomvu Youth Fund (now the National Youth Development Agency) has been fraught with problems such as nepotism and inadequate resources, and the Small Enterprise Development Agency, although recently placed under new management, has little to show for itself as of this writing.

To reiterate, it’s not as if South African small enterprise can do without governmental assistance. According to the latest Global Entrepreneurship Monitor (GEM) survey, which measures entrepreneurial indicators in countries throughout the world, we fare quite poorly. In the “new firms” category, for example, where countries are compared on the basis of the percentage of businesses that are older than three months, we are 38 out of 43. And in the established business category – older than 3½ years – we are even worse: 41 out of 43.

Brazil, on the other hand, places in the GEM’s top ten in the world for total entrepreneurial activity (TEA). At ninth position in the TEA rankings, Brazil has the equivalent of 15-million enterprises, a number that has very much to do with the fact that small local industry has been encouraged in the country since the 1930s, when the coffee economy went bust. And although the level of red tape in the country appears to be a lot closer to the developing world than to the United States or Scandinavia – it still takes 17 steps to register a business in Brazil, according to Fortune magazine – the World Bank applauds new online registering initiatives in some states.

Red tape, of course, is something that South African entrepreneurs know a lot about. There are other negative similarities between the two countries, all of which make the discrepancies in investor potential even more noteworthy. “Brazil has its share of challenges that may make some investors think twice about putting money into Latin America’s largest nation,” observed Ante in the aforementioned BusinessWeek article.

“Compared with the US, taxes are high and labor laws inflexible. Brazilian taxes can account for nearly forty percent of an employer’s payroll expenses. And under Brazil’s extensive labor laws, workers are entitled to long paid vacations, mandatory bonuses, and free transportation, food, and health insurance.”

Sound familiar? Brazil, it seems, is a lot like home on a number of fronts; except it has numerous times the land mass and four times the population. Like us, it has vast natural resources, a young-ish citizenry, and frightening income inequalities. Unlike us, though, under Lula it is improving its Gini coefficient (the measurement the United Nations uses to measure inequality). Also, Brazil shook off its colonial shackles almost 180 years ago, versus an effective fifteen years in our case. This means it’s had a whole lot longer to come to terms with itself.

A final comparison is worth mentioning. In the 2009 Forbes Global 2000 – which uses an equal weighting of sales, profits, assets and market value to rank the world’s major companies according to size – Brazil has 31 entries on the list. The country’s top-ranked company, oil and petroleum giant Petrobras, comes in at number 25, with assets of $121 billion and a market value of $111 billion. Second largest is mining company Vale, in 74th place, with assets of $79 billion and a market cap of $66 billion. Of all Brazil’s companies on the list, it has six in the materials sector, six in utilities, five in banking, and three in oil and gas. Amongst others, its remaining companies are drawn from telecommunications, aerospace, transportation, financial services, and food retail.

South Africa, meanwhile, counts 17 companies on the Forbes 2009 list. Our largest, the Standard Bank Group, with assets of $161 billion and a market cap of just under $10 billion, comes in at 223rd place. Five of our companies are placed under the category “materials”, meaning entities involved in mining – Impala Platinum (772nd place), Gold Fields (1 097), AngloGold Ashanti (1 408), African Rainbow Minerals (1 664) and Harmony Gold Mining (1 958). We have two companies on the list from the banking sector, two from telecommunications, and two categorised as “conglomerates” (Bidvest and Remgro). The remaining entries are all standalones.

It is safe to say, then, that while the South African economy still appears to be relatively heavy on natural resources, Brazil has diversified to the extent that it’s far from reliant on any one sector. The implosion of its coffee economy eighty years ago saw to that. South Africa is unlikely to have the luxury of a similar lesson – the best we can do, perhaps, is visit Rio de Janeiro and Sao Paulo regularly. And take meticulous notes. n

Kevin Bloom, an award-winning South African journalist, is currently a writing fellow at the Wits Institute of Social and Economic Research (WISER). His first book, Ways of Staying, a narrative non-fiction journey through selected concerns of contemporary South African life, was released by Picador Africa in May 2009.

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Business Landscape

Load Shedding – How To Stay Productive

We’ve all already had massive interruptions from load shedding and it’s not going away anytime soon so, instead of being caught out each time and losing productivity, let’s stay steps ahead of the outages and make sure that our productivity stays where it should be…

Warrick Kernes

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They say that prevention is better than cure and with load shedding the best cure is to have a generator, backup power inverter or UPS (Uninterrupted Power Supply) set up to kick in when the lights go out. If you don’t have this in place then you will want to understand when you will be affected and how to minimise the impact of this on your work.

The first step is to know when your area is scheduled for load shedding. You can find out by downloading the free app called Loadshedding Notifier which tells you when Eskom has scheduled areas to be turned off. We’ve already seen that the lights don’t always go out when they are scheduled to do so but it’s better to be prepared than to be caught in the dark.

Many entrepreneurs rely on their normal routine to drive their productivity but once you know that your routine is going to be interrupted then it’s time to re-plan your day. You could plan to get up earlier to avoid traffic or to start work super early so that you get through your priority work before the power goes off.

Arrange your to-do list so that you can get through the highest priority and income producing activities first and then you can get around to the rest of your work. Prioritising your daily actions becomes even more crucial when you have limited time. You can also plan priority work for when the power is out; just imagine how many sales calls you can make when not being interrupted by emails.

If you work from home check if the neighbouring suburbs will have power so you can go work at one of the cafes. Most cafes have free wifi but it can be slow and these networks aren’t always secured so it’s preferable to have your own 3G dongle so that you don’t rely on others for internet.

A few more load shedding quick tips:

  • Work in the cloud so that all your work is backed up automatically and not lost if you suddenly lose power.
  • Unplug devices when the power is out to avoid damage from potential surges when power is restored.
  • Keep your electronics charged up such as; headphones, cell phone, laptop battery, powerbank, 3G dongle.

If your computer battery dies or you run out of things to do then create a list of work that you and your team can do which doesn’t require computers or internet. An impromptu team building lunch or a good old brain storming session could prove incredibly valuable or if your team isn’t up for that then the storeroom could probably use a clean.

If all else fails don’t panic as you can always just go for a walk, meditate, spend time with the kids or go to the gym to clear your mind.

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Business Landscape

4 Tips To Create A Great Conference / Workshop / Event In 2019

Being able to host a great workshop or event is an essential skill for anyone in creative and innovative businesses. Your event will have a major impact – that is guaranteed. However, whether it is a positive or negative impact depends on the how well the event was put together and executed.

Revel Africa

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Your business is fantastic. You work with amazing people, and your industry is dynamic and evolving. There are so many exciting ways available to you to share your good stories: social media, podcasts, videos, live streaming, emails. But the trend we’re seeing of more workshops and conferences is the most exciting, and effective. Why? Because people still do business with people, and face-to-face still has more impact than anything digital.

Being able to host a great workshop or event is an essential skill for anyone in creative and innovative businesses. Your event will have a major impact – that is guaranteed. However, whether it is a positive or negative impact depends on the how well the event was put together and executed.

Here are 4 top tips to create and host amazing events this year

1. Purpose

Identify the purpose of the event. Is it to train clients or future clients on the latest trends in your industry in a bid to position yourself as the subject matter expert? Is it to bring a large multi-campus business together into one space to unite them and refocus and energise them? Is it to bring creative minds together to solve a problem? Answer these questions and you will know if you need a small, vibrant workshop, a large, slick event, or a creative team-building conference.

Plus, having a really clear understanding of why you’re doing this event is the best way to deal with the stress of putting it all together. Anchor yourself to the core reason behind the event, and it will not only propel you forward through the process, but will also make a lot of the decisions easier to make as you go.

2. Prepare

If you are going to host an event, then embrace the reality of late nights, money stress, volatile emotions and extended periods when your nearest and dearest, your social life and your free time take a back seat. There’s no nice way of saying it – an event is a huge responsibility and one that will take up a lot of your time.

The best advice we can give you is to find an event planner straight off to help you put your best foot forward at your event and deliver on your vision for the event. That way, once they’ve done all the heavy lifting, all you have to do is arrive on the day of the event looking fresh, fabulous, and stress-free and allow yourself to revel in its success. Your event planner would have handled everything for you, from haggling with suppliers, to sourcing the best locations at great prices, and should even handle the headache of RSVPs. In the Western Cape and Gauteng we highly recommend Revel Africa for bespoke events and innovative ideas that fit your budget.

Whether you use an event planner or not, you will need to think these through.

  • Decide on a theme – A theme helps to unify your ideas, source expert speakers, and market to the right people. Pick something simple, catchy and on topic. You can even go so far as creating a mission statement for the event to keep your efforts focused, such as, “We care a whole lot about this topic / industry / situation and we couldn’t find a conference that matched what we want and need. Our goal is to bring something that is welcoming and inspiring, where the talks are fresh, and the snacks are even fresher. We’d love you to join us and celebrate the people (including you!) who make this industry great.”
  • Prepare a budget and make bookings – Knowing what your budget is will help you set the price for delegates if it is not an in-house event. Here are the most common items you need to budget for, and book:
    • Venue – Once you’ve found a venue within the price and date range that you had in mind, you can fix the date for the event.
    • Transportation – For out-of-town delegates.
    • Catering – Events can rise and fall on the quality of the food provided. Shop around for this one and request taste-tests.
    • Speaker – Start thinking about speakers very early on, as all the good ones get snapped up fairly far in advance, so if you want your top choices, secure them as soon as possible. For interactive staff sales training we recommend Mark Berger, and for your MC / Inspiration needs, we recommend Warrior Ric.
    • Activities – Think of icebreakers and activities to get people out of observation mode and into participation mode.
    • Marketing – If this event is for external delegates, invest in a good marketing agency for social media, printed marketing collateral, banners, brochures, website updates, and paid media.
    • Team members – Select, and brief the team that will help you with this event.
    • Invitations – Once you have a date, venue, and keynote speakers, you can send out your invitation. Managing RSVPs and payment effectively is critical. Quicket can be a useful payment portal for events.
  • Daily emails: Once the conference has started, send out a daily email outlining the itinerary for that day. Keynote speakers and times, social events, meal plans, highlighted sessions, even the daily weather report can all help the attendee feel more prepared and connected when they reach the event. You can use Mailchimp or any other of the great bulk mailer platforms available.
  • FAQ: An FAQ is great for questions that come up again and again. The answers can be published on an event FAQ page on your website and the link sent in the daily mails. Questions like:
    • Are sessions be recorded? When will they be available?
    • Is parking available?
    • What’s the Wi-Fi password?

3. Productivity

Be mindful of who is attending the session and whether or not the session’s content is suitable to them. A talk that is too basic, too advanced, too demographically narrow, or too far off-topic for the conference – no matter how famous the speaker is – will bring the session’s productivity to a grinding halt.

Another great thing to consider is self-directed co-ordination as a great way to meet new people or to connect with people you’ve known for a long time. Using a Twitter hashtag, a Slack team, a Telegram group, are a great communication channel for the event to ensure attendees easily find information about how to network with each other. If your event is more technical, you could also create a wiki during the event to enable sub-communities to self-organise on the day and share content.

When it comes to how productive the sessions are, as the event planner it might be tempting to participate in the day’s events. However, as a facilitator your role is to remain objective and observe. You can’t facilitate and participate at the same time. Keep scanning the room to sense the mood and energy; keep discussions on track by asking great questions; constantly keep the end goal in mind. Typically, a good facilitator or event planner is often invisible on the day of the event.

4. Participation

There are many creative ways to structure the day’s proceedings to facilitate maximum participation.

  1. Campfire sessions – These start like a traditional presentation, with a speaker at the front of the room presenting an idea to a group of people. However, after 15 or 20 minutes, the presenter becomes the facilitator and shifts the focus of discussion to the audience, inviting comments, insights and questions from those around the room. Campfire sessions allow attendees to drive their own learning and share experiences with others, which also assists with networking.
  2. Birds of a Feather (BOF) – BOF groups are small, informal gatherings of people with a common interest or area of expertise who join up to work together, typically over lunch or during the morning coffee break. You can suggest BOF groups for attendees to join or they can create their own. Sessions don’t have a pre-planned agenda and are aimed at encouraging discussion and networking.
  3. Lightning Talks – As the name suggests, lightning talks give speakers no more than 10 minutes to make their presentation. Because speakers don’t have time to waffle, the presentations are to the point, which keeps audiences focused and energised. A window of between 30 to 60 minutes is usually given to lightning talks, which can allow for up to 12 speakers to be heard.
  4. Silent Disco Talks – This is where many speakers present at once within the same room, while delegates – wearing wireless headphones with channels that they can switch between – choose who they want to listen to. Delegates enjoy bite-sized pieces of information and are always tuned in to something that interests them.
  5. World Café – This simple, effective, and flexible format is ideal for hosting large group discussions. Start the first round of discussion with groups of four to six people sitting around a table, and present each group with a question. After 15 minutes, each member of the group moves to a different table. Once all rounds have been completed, key points from each table are presented to the whole group for a final collective discussion.
  6. Storytelling – This is where speakers tell real-life stories that help illustrate or enhance themes in the conference. The story should contain a beginning, a middle and an end, with characters and plots, like adversity and triumph. Stories should be 15 minutes long, with 10 minutes provided for Q&A afterwards.

Here’s to hosting many great workshops and events this year.

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Business Landscape

What Is Business Insurance And Why Does Your Business Need It?

Your business asset insurance cost will go up if you add on more items, but this is common with all insurances. Not sure why you need it? Find out more information below.

Amy Galbraith

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You need to protect your business against all eventualities. This means that you need to have the ability to pay for any physical or legal damages that might occur, such as a client claiming that they were injured while on your property or an asset being stolen from your property. And business insurance in South Africa is a necessity if you want to apply for business finance, as the bank will need to see that your assets are insured.

You might be wondering now, as a business owner, “What is business asset insurance?” It’s insurance which insures your assets, such as vehicles, electronic equipment, and your business premises. You can also opt to have business car insurance if you have a company car that is used by your employees. Your business asset insurance cost will go up if you add on more items, but this is common with all insurances. Not sure why you need it? Find out more information below.

It protects your assets

Whether you are a small business just setting up or an established company, you likely have assets that are important to keep your business functioning. This could be a business vehicle that you use to transport goods to clients or computers that are vital to your employees.

If you do not insure these assets, you will need to pay for repairing and replacing that might need to happen out of your own funds. And this can become extremely expensive, depending on what has been damaged, lost or stolen. Another reason why you need business asset insurance is that there might be a natural disaster or “act of God” that occurs, such as a fire or flood, which could damage your equipment, meaning that it needs to be replaced.

It protects you from legal issues

Some of the problems that businesses face include legal issues, which can become costly and tiresome. These issues can be handled easily and efficiently if your business insurance to help pay for legal fees and settlement fees with the client or employee who is issuing the complaint.

In the case of being sued or taken to court, it is useful to have a business insurance offering available to help you. If you do not have this type of insurance, you will soon see that legal costs can become exorbitant. Legal issues can also reflect negatively on your company in the eyes of other clients or employees, but having business insurance can help to clear up any problems effectively and without any drama.

Your business will not shut down due to incidents

If your business vehicle is stolen or if the equipment is damaged, this could lead to your business closing for a period while you try to recoup your loss of money. This could lead to you losing even more money which could be highly detrimental to the success of your business.

Your insurance company will be able to compensate you the lost funds, granted that the issue is covered by the insurance cover you have in place. This will allow you to stay open despite the fact that you are experiencing difficulties due to equipment not working or other problems. You could even opt for emergency assistance if there is a natural disaster which will keep you, your employees and even your property safe from damage.

Your employees will be protected

Your employees are the backbone of your company. And, as such, you should have protection in place for them. You should have workers’ compensation coverage in place so that should your company lose money or be unable to pay your staff, their needs will still be covered.

And business insurance will protect them from any possible lawsuits that could be lodged against them by clients or customers. It can become highly expensive to pay for these out of your own pocket. Protecting your employees protects your business, so be sure to invest in insurance which offers workers’ compensation as well as disability cover to protect your employees.

Think smart for your future

Having business asset insurance and business insurance is important to both small businesses and large corporations. This is because your assets will be protected from theft and damage, which can be costly to replace and repair. You will also be able to weather any legal storm that might come your way, as well as being able to protect your employees and their welfare.

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