From state capture to large-scale corporate wrongdoing, 2018 will hopefully see the South African business society experience an age of ethical enlightenment, or run the risk of potentially alienating entire generation millennials (also known as Generation Y) and replacing the millennials, Generation Z.
While taking part in a King IV panel discussion hosted by Mazars in Johannesburg, Michael Judin, a notable South African attorney and member of the King Committee, stated that he believes millennials and Generation Z can play an integral role in ensuring local corporates apply a more ethical approach to corporate governance and comply with the King IV report. Judin was a member of the Task Team that wrote King IV released on November 1, 2016.
“The coming of age of millennials and Generation Z together with the rise of social media, have changed the global corporate environment. Businesses vehemently protect their image, by ensuring they adhere to strict ethical standards. When they are seen as having acted in an unethical manner, or have associated themselves with individuals or entities that are perceived to be unethical, more often than not, millennials Generation Z will demonstrate their disapproval,” he explains.
Judin uses the incident between Nestle and Greenpeace as a prime example of how public opinion can change a business. In 2010, the environmental organisation started a campaign against the world’s leading nutrition, health and wellness company for its use of suppliers that were responsible for causing deforestation in the Indonesian rainforest.
“The campaign, commonly known as the Kit-Kat campaign, was so powerful that the food giant had no choice but to change its ways. This proves that corporates can no longer avoid embracing good governance while still expecting an unblemished image,” he says.
King IV – No longer a tick-box approach
“The King IV report on corporate governance has moved away from the previous ‘tick-box’ approach and towards an outcome-based method, which means corporates actually need to enforce King IV and prove that they have done so. This is exactly what millennials and Generation Z are looking for,” he says.
Millennials and Generation Z have evolved into a generations that want to associate themselves with brands and organisations that are ethical and environmentally friendly. “Corporates spend millions each year to ensure that they change their business to be more environmentally friendly, in order to attract millennial and Generation Z clients,” says Judin.
King IV has also simplified and reduced the amount of governing principles to just 17, from the previous 75, enabling millennials and Generation Z (and those not falling within those categories) to easily understand what good governance entails.
“The King Committee has gone to great lengths to simplify the Code in King IV. Not only is it easier to understand, but it fits onto ‘one page’, which will cater for the ease of use millennials and Generation Z are always striving for,” explains Judin.
King IV must be part of corporate DNA
He stresses that the only way South African corporates will experience an age of ethical enlightenment, is for businesses to make King IV a part of their DNA.
“Every single employee must have ethics at the heart of everything they do. It doesn’t matter what industry you are in, ethics and good governance should be the basis. Not only will it create an ethical environment in our country, it will also empower employees to stand up if they start seeing something that doesn’t completely adhere to King IV,” says Judin.
The King principles have always been at the heart of Mazars and products it creates for its clients, says Frank Burgers, Director at Mazars Berenschot Africa in Johannesburg.
“We have a special relationship with the King Report, it has inspired us to further develop our services related to Good Governance. Like King IV, we didn’t develop a tick-box tool, but rather a guideline for a tailor-made approach for a client to assess their compliance with the King IV principles and outcomes. We start off by doing research (documents, media, interviews, etc) to understand the current status and then have interactions with the Governing Body to further check potential gaps and opportunities. It is very much a journey on which we embark with our clients,” says Burgers.
He adds that the perception in the corporate world is that King IV is just “another” requirement they must follow.
“Organisations should rather see it as an opportunity to improve their businesses. Our journey with our clients benefits them in three ways, firstly, they get a better understanding of the King principles and outcomes. Secondly, they can gauge their progress with regards to complying with the principles and outcomes. Lastly, and most importantly, they get more insight into how they can improve their businesses,” he explains.
Burgers is confident that 2018 should see a more ethical approach from corporates. “The media has done a great job in highlighting unethical behaviour in the industry and that is set to continue. This, in conjunction with the information available online, will see many more South Africans asking questions about doing business with unethical companies. Soon organisations will have no choice but to take an ethical approach in everything they do.”
Mazars is leading by example and is currently conducting its own King IV “audit” on itself.
Global Guide For Entrepreneurs, Innovators Launches In Johannesburg
Startup Guide partners with SAP Next-Gen, Tshimologong Precinct to bring global guidebook to Johannesburg innovation ecosystem; calls for nominations.
Calling all entrepreneurs, accelerators, innovators, co-working spaces and experts in the City of Gold: Startup Guide, the leading global guide for start-ups in high-growth innovation hubs in Europe, the US and Middle East, is open to nominations in Johannesburg.
Founded in 2014, Startup Guide is a creative content and publishing company that produces guidebooks and tools to help entrepreneurs to connect to communities and resources in the leading start-up cities around the world. Its global footprint covers some of the most innovative and thriving start-up ecosystems in the US, Europe and the Middle East, including those of London, New York, Berlin, Tel Aviv, and Stockholm. After launching in Cape Town earlier in the year, Startup Guide now moves to Johannesburg.
According to Sissel Hansen, Founder and CEO of Startup Guide, South Africa’s largest city is emerging as a key innovation hub for start-ups.
“Johannesburg has recently emerged as a growing ecosystem for start-ups and entrepreneurs in Africa, particularly in the tech industry. We’re thrilled to have the opportunity to create a comprehensive guide of resources for aspiring founders wanting to do business in South Africa’s largest city.”
Startup Guide Johannesburg was launched at Wits University’s Tshimologong Precinct, one of Johannesburg’s newest high-tech addresses in the vibrant inner-city district of Braamfontein. Tshimologong, which means “new beginnings” in Setswana, focuses on the incubation of digital entrepreneurs, commercialisation of research and the development of high-level digital skills for students, working professionals and unemployed youth. Lesley Williams, CEO of Tshimologong Precinct, says: “South Africa is fast-becoming a go-to source for innovation, especially in the tech sector. We believe the introduction of a dedicated resource for the startup ecosystem in Johannesburg will unlock significant opportunities for innovation hubs such as ours to more easily connect with entrepreneurs, experts and other roleplayers, ultimately providing a more supportive environment for growth.”
Startup Guide has partnered with SAP Next-Gen, a purpose driven innovation university and community for the SAP ecosystem enabling companies, partners and universities to connect and innovate with purpose linked to the UN Sustainable Goals for Development. Ann Rosenberg, Senior Vice President and Head of Global SAP Next-Gen says:
“We strive to connect digital innovators in an open innovation community to drive the future success and growth of industries through the use of technology. As we have witnessed in other high-innovation cities around the world, the introduction of knowledge resources – supported by opportunities for collaboration and partnership in an open ecosystem – enhances the overall success of entire start-up communities. Johannesburg’s world-famous energy and business acumen will greatly benefit from the launch of Startup Guide Johannesburg and the support of industry partners, including SAP Next-Gen and the Tshimologong Precinct.”
Cathy Smith, Managing Director of SAP Africa, adds that the partnership with Startup Guide aligns well with the company’s commitment to the UN Sustainable Development Goals. “As an organisation we are committed to achieving the high ambitions set out by the SDGs. However, it is virtually impossible to do so alone: the concept of partnership with likeminded purpose-driven organisations and initiatives is vital not only to realising the SDGs but to foster a greater and more inclusive innovation ecosystem in Johannesburg and across the African continent.”
Nominations for the Johannesburg edition of Startup Guide are now open. If you know a start-up, entrepreneur, programme, space, accelerator, or experts and would like to see them featured in the book, please visit https://startupguide.com/shop/startup-guide-johannesburg and submit your nomination.
Aspirations For SMMEs In South Africa
Research released earlier this year, revealed that there are only 250 000 formal SMMEs in South Africa.
Entrepreneurs who have started up a business over the past 10 years have done so in an environment that has been largely negative, with slow economic growth and an unstable political landscape. “So, all in all, a very difficult setting to launch, grow or even maintain a business,” says Bizmod MD, Anne-Marie Pretorius.
Pretorius says that many entrepreneurs who operate in South Africa can be forgiven for often wondering if the slog is worth it. Yet they continue – despite economic uncertainty, strikes, retrenchments and downscaling. “It is this tenacity that sets entrepreneurs apart, and I often wonder how much more successful they would be in an easier and more supportive environment.”
Below, Pretorius shares her ideal pro-entrepreneur outlook for the future:
- Greater policy certainty on all key government policies from land reform to regulations surrounding labour broking.
- Being able to do away with bad policy faster. An example of where this did not happen was in the changes of visa requirements; leading to an unnecessary dent in our tourism industry, an industry that should be targeted for growth.
- Lower compliance requirements for companies with a turnover under R50 million. The cost of compliance for smaller enterprises is significantly higher in comparison to their income and the cash they have available. Smaller companies need simpler frameworks where compliance is required. A portal similar to SARS e-filing, which makes compliance across various pieces of legislation clear and simple, would be ideal.
- The Labour Relations Act is a key piece of legislation that has done a lot to protect the rights of the employee. It has attempted to balance the power relationship between employee and employer. Some innovation is however required in labour practices, allowing for mutually beneficial flexible working relationships that keep pace with the changing work environment.
- Buy small, buy South African! A framework whereby large corporations and government would have to allocate a certain minimum percentage to buying from smaller local companies. There are encouraging signs that this is happening more, however this is still not an ingrained practice. In addition, consumers should be more informed on what items are South African produced, in order for them to be encouraged to purchase locally.
- Easier access to funds enabling entrepreneurs to grow their businesses. There are currently a few options available, but all of the options require significant governance and red tape. Whilst this is understandable from the lenders perspective, it does hamper the agility and growth of companies.
- Make good financial governance aspirational, attractive and easily accessible.
- The process for tenders to be corruption free and fair, enabling more companies to add value.
- Pay SMME’s on 30 days or less. Enormous pressure exists on smaller companies when not paid on time. They simply do not have the cash flow to carry a debtor’s book of 90 days and this inevitably hampers their growth.
- Tax SMME’s at a lower tax rate. Profit tax should be lowered in order to drive entrepreneurship.
- Creating a platform that makes it simpler to employ young individuals with potential and create support programmes for SMMEs to upskill them. There is a significant financial and time investment required to train a young person, which can make SMME’s sometimes wary to do so.
“If we are able to make only some of these ideals a reality, there is no doubt that we would see economic growth, entrepreneurial growth, and more employment opportunities,” concludes Pretorius.
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South African Students Win R50 000 In The Universities Business Challenge
Students from Mangosuthu University of Technology beat 500 students from 13 different universities across South Africa.
The Overlings from Mangosuthu University of Technology are the 2018 winners of Cognity Advisory’s Universities Business Challenge (UBC), sponsored by General Electric (GE). The winning team of four students are walking away with R50,000 to turn their business idea into reality.
Launched in July this year, the UBC has seen 500 students from 13 different universities across South Africa participate in a business simulation competition designed to develop entrepreneurship skills.
When the competition launched, all teams were challenged to form virtual companies and to virtually manufacture and sell bicycles.
The final 10 teams were from the University of Limpopo, Mangosuthu University of Technology, Vaal University of Technology, University of KwaZulu-Natal and North-West University.
During the two-day final, the teams played six rounds of simulations. Each simulation gave the teams a chance to re-evaluate their progress and better certain areas that needed improving. The winning team realised during one of their simulations that in order to maximise profits they would need to introduce two new products and market it differently from their initial product. They paid special attention to their customer’s needs.
The aim of the UBC was designed to tackle South Africa’s high level of youth unemployment. Statistics South Africa (Stats SA) that South Africa’s official unemployment rate increased by 0.3 of a percentage point to 27.5% in the third quarter of 2018.
Nkosinathi Sokhulu from the winning team said, “Even though we didn’t have a great presentation we made the most profit. This experience taught us a lot about ourselves and business. Most of the decisions that we made came from serious debates. We learnt that market research is crucial when starting a business. We learnt that marketing starts and ends with the customer.”
“Based on this market research information we realised that it was important for us to introduce two new products and this, in addition to the main product we were selling, helped us to maximise profits. We saw an opportunity to add more products and it paid off” said Mbali Tshozi.
Tope Toogun, development advisor and CEO of Cognity Advisory said, “All the teams showed tremendous promise and I was very impressed by their levels of engagement with one another and their tenacity.”
“We really want to ensure that students are equipped with the necessary skills to not only start a business but to run it effectively. While we have selected one winner, our hope is that each team has benefitted by having learned the skills needed in the workplace.”
“The competition is designed to develop the ‘soft skills’ that are important for those wanting to set up their own business or simply be successful at work. With rising unemployment and ongoing talent shortages, having these skills is crucial for those wanting to get a job.”
The UBC, now in its second year in South Africa, will continue into its third year in 2019 and will run as the Africa Enterprise Challenge (AEC).
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