500 NEWS

In 2016 alone, the South African Reserve Bank (SARB) processed payments to the value of R140-trillion – 30 times the gross domestic product (GDP) of South Africa. Significant change has occurred in the financial services space recently, attracting much interest in these innovations. The Deputy Governor of the SARB responsible for financial stability shares his views

The exterior of the South African Reserve Bank in Pretoria, South Africa, Wednesday, March 23, 2005. Photographer: Naashon Zalk/Bloomberg News

MANY SOUTH AFRICANS ARE AWARE THAT THE SARB PRINTS MONEY, BUT NOT MANY KNOW ABOUT THE NATIONAL PAYMENT SYSTEM. WHAT IS THE SARB’S ROLE IN THE SYSTEM AND HOW IS IT LINKED TO ITS MANDATE TO PROTECT THE VALUE OF THE CURRENCY?

The SARB is responsible for establishing, conducting, monitoring, regulating, and supervising all the payment, clearing, and settlement systems in South Africa. It executes this mandate through its National Payment System Department (NPSD). NPSD is the owner and operator of South Africa’s real-time gross settlement system, better known as the South African Multiple Option Settlement (SAMOS) system. SAMOS allows all interbank transactions to be settled in central-bank money and ensures that all interbank payments become final and irrevocable; it concludes economic transactions between parties, thus ensuring that legal certainty is achieved.

South Africa’s national payment system is made up of various payment streams within the large-value payment systems and the more familiar retail payment systems. These payment streams include cheques, cards, and electronic fund transfers such as Internet payments and debit orders.

The SARB plays an important role in ensuring that the payments financial market infrastructure remains efficient and safe, thus supporting the SARB’s role in maintaining financial stability and ensuring the public’s confidence in the financial system.

TECHNOLOGY IS DISRUPTING LIFE AS WE KNOW IT ON A DAILY BASIS. HOW IS THE SARB, IN ITS MULTIPLE ROLES IN THE FINANCIAL SECTOR, ENSURING THAT THE BANKING SYSTEM IS CYBER-SECURE?

The SARB addresses cybersecurity through the microprudential supervision of banks, the macroprudential regulation of the financial system, and oversight of the financial market infrastructure.

The SARB is responsible for the regulation and supervision of banks in South Africa. One of its functions is promoting the soundness of the banking system and contributing to financial stability.

An Information Technology (IT) Risk Division was established in 2012 with the primary responsibility of looking at IT risks for the banking industry. While conducting on-site visits to banks, this division has addressed various IT governance topics, including information security and cybersecurity.

In 2013, the SARB assessed mobile-devices and Internet-banking fraud in the South African banking industry. No significant findings were made, other than the need for a more collaborative approach between the banks and other industry players, including critical infrastructure providers. Also in 2013, a short IT survey was issued to the industry, touching on some aspects of information security. In 2015, a more substantive survey was issued, covering both information security and enterprise architecture management. Neither survey highlighted any material weaknesses, although the need to be constantly aware of new modi operandi in the cybersecurity space was emphasised. Cybersecurity was subsequently added as a topic for discussion with banks’ boards of directors.

From a regulatory perspective, the SARB applies international principles, such as those in the Basel frameworks, to the South African context. In 2016, the Committee on Payments and Market Infrastructures as well as the International Organization of Securities Commissions, issued cyber-resilience guidance for financial market infrastructures. The SARB issued these guidelines as a guidance note to the banking industry.

Maintaining payment security is required of all entities that store, process, or transmit cardholder data. In terms of retail payment systems, the SARB, through the Payments Association of South Africa, requires all banks, system operators, and certain merchants who store, process or transmit card information to adhere to the Payment Card Industry Data Security Standards. Cross-functional working groups within the SARB are currently considering how to make the financial system more cyber-secure. This includes looking at regulation, incident reporting, and responding to incidents. The SARB also collaborates with role players such as the South African Banking Risk Information Centre on their cybersecurity initiatives, and engages with financial industry computer security incident response teams.

As part of its responsibility to protect and enhance financial stability, the SARB also manages cyber-risk through the Financial Sector Contingency Forum (FSCF), which has become a statutory body in terms of the newly enacted Financial Sector Regulation (FSR). The FSCF comprises key financial sector decision-makers, including the SARB, National Treasury, other financial-sector regulators, financial market infrastructures, and financial industry associations.

The FSCF was established to help coordinate the process of financial sector contingency planning and crisis management. In terms of the FSR Act, the forum’s objectives include the identification of potential threats to the stability of the South African financial system as well as the development and coordination of appropriate plans, mechanisms, and structures to mitigate these threats.

Excerpt from an article published in the 9the dition of Top 500: South Africa’s Best Managed Companies.
Subscribe to the publication and other Topco publications here.

After a period of prolonged volatility, the world economy appears to be entering a more stable phase – that’s if the opinion of 1 300 CEOs surveyed by PwC is anything to go by.

As reported by Fortune, PwC’s Davos-released survey results showed that 57% of CEOs predicted improved growth for the global economy this year; nearly double the percentage from the same time
last year (https://tinyurl.com/y9n3vcbe). Even more intriguing is a recent report by the New York Times stating that “a decade after the world descended into a devastating economic crisis, a key marker of revival has finally been achieved. Every major economy on earth is expanding at once, a synchronous wave of growth that is creating jobs, lifting fortunes and tempering fears of popular discontent” (https://tinyurl.com/y89dub6a).

So what does this mean for the South African outlook? In the wake of SONA 2018, which finally took place on 16 February, and Cyril Ramaphosa’s taking up the reigns of the Presidency, ratings agencies like Moody’s and Fitch are cautiously upbeat; the South African currency is trading skittish jabs at the US dollar (advance, retreat, repeat) and both business and consumer confidence are up. The Goldman Sachs pronouncement on South Africa being the next boom economy has probably sent out the biggest ripples of all. Here’s Goldman Sachs MD (sub-Saharan Africa) and Top 500 Awards VIP Speaker Colin Coleman, on the “new dawn”: https://tinyurl.com/y7x7tqvj.

Analysts are interested in the parallels between South Africa and other nations predicted to surge in the next five years. Among these are Ethiopia; Uzbekistan; Nepal; India; Laos; Cambodia and the Philippines (World Bank: Global Economic Prospects). Like South Africa, they are all emerging economies with little to stunt their growth bar high levels of public debt.

Last year’s big success story was, of course, Brazil – with whom South Africa has a host of similarities. Both countries have colonial and post-colonial trajectories, multi-ethnic demographic patterns, advanced constitutions and a plethora of natural resources. Crucially, both are also transitioning from a time of constant allegations of corruption in government, into an era of renewed hope and optimism on the back of a new, cleaner slate.

Politics left to the politicians (with our fervent hopes that they’ll Do The Right Thing), Top 500 Companies & its media partners will be sure to grill the leaders of South Africa’s top 10 companies on their own personal opinions, when the Top 500 Awards takes to the stage on 10 May and the ‘Best Managed’ organisations are named in a host of industry sectors – retail, finance, basic industries and more. Collectively, their outlook and their investment decisions will be powerful factors for the year ahead.

In Chinese astrology, 2018 is the Year of the Dog. Let’s just hope it’s a greyhound rather than a dachshund. Gareth Pike

MD of Goldman Sachs, Colin Coleman speaking at the Top500 Awards

JG Afrika is a South African consulting engineering and environmental consulting firm with a strong commitment to both transformation and sustainability, around its mandate to provide the highest quality of consulting engineering services.

Established in 1922, the firm is headquartered in Johannesburg, with offices around South Africa and in Botswana, Mozambique and Lesotho (all ISO 9001:2015 certified). It provides consulting services in all fields of civil and structural engineering, as well as environmental services, throughout Africa. Apart from the main operating company, the Group comprises specialist companies operating in the fields of geotechnical, environmental and geosciences consultancy, pavement technology, traffic and transportation, materials testing, and institutional support. The firm has a complement of some 300 staff led by the vision of MD Paul Olivier and Board Members Seetella Makhetha, Phaks Ngqumshe, Ms Jan Norris, Ms Martha Makhetha, Harold Tiganis and Ms Nomsa Mkaza.

For more information, visit www.jgi.co.za.

Over the past decade sub-Saharan Africa has become one of the fastest growing regions in the world, showing a significant uptake from the past 60 years when development was still very much varied and sporadic. Though the growth in the region is mainly due to primary exports such as unprocessed agricultural and forest products, minerals and fossil fuels, structural transformation still remains subdued. Foreign investment in the region is increasing, there’s a boom in innovation, despite challenges like poverty, poor infrastructure and climate change.

Big on mobile

According to new data gathered from a study conducted by the GSMA – a trade body that represents the interests of mobile operators worldwide – sub-Saharan Africa accounts for more than 50% of the 227 mobile money deployments globally, with the number of live mobile money schemes reaching approximately 140 across 39 countries.

Since the launch of M-Pesa in Kenya in 2007, the growth in mobile money services has grown steadily for 10 years, and according to the same study by the GSMA, more than 40% of adults in seven sub-Saharan markets are active mobile money users. These markets are: Zimbabwe, Uganda, Namibia, Tanzania, Kenya, Ghana and Gabon.

The evolution of mobile money

The use of mobile money has evolved in recent years. From person-to-person payments and topping up airtime, to paying bills and sending money abroad. Known as ‘ecosystem payments’, they account for approximately 17% of all mobile money transactions, and has quadrupled between 2014 and 2016.

At the end of 2016, across sub-Saharan Africa, there were 277 million registered mobile money accounts. Historically, the majority of mobile money users have been situated in East Africa, in countries like Kenya, Uganda and Tanzania, but according to recent data, West Africa is becoming a key driver of user growth. Today, approximately 29% of active mobile money accounts in sub-Saharan Africa are based in West Africa, compared to 8% five years ago.

According to the GSMA, sub-Saharan Africa will have 500 million mobile subscribers by 2020, and with more than half of mobile money services in the world situated in the region, it remains one of the fastest growing mobile markets in the world.

The GSMA’s The Mobile Economy: Sub-Saharan Africa 2017 report states, “Mobile is a vital tool in delivering digital and financial inclusion in sub-Saharan Africa.”

Order your copy of Top500 now to read more on other developments in sub-Saharan Africa.

The focus on small improvements in energy efficiency, client service, as well as the design and architecture of new restaurants is helping global restaurant chain McDonald’s South Africa to grow organically, says CEO, Greg Solomon – a man who has transformed the business through his coach-like leadership style.

Quick-fire Q&A with Greg Solomon

Q: Your biggest wish for South Africa?
That we start cultivating a winning culture.

Q: Books you’re currently reading?
I don’t read any books at the moment. Being a modern leader, I let digital streams like TEDTalk, LinkedIn and Twitter populate my news feeds with information that I’m interested in like sports, health and leadership.

Q: How do you relax?
I stay active by running, walking, going to the gym and spinning. I’m also a wildlife guy and I take my family to the Kruger National Park at least twice a year.

Q: Who or what inspires you?
I don’t have just one mentor, I have several. I study my mentors very carefully to build a mosaic of who I want to be, duplicating their strengths and eradicating the negatives. My mentors range from my friends, wife and kids, to Maggie – hostess at McDonald’s Woodmead. I also draw inspiration from leaders like Churchill and Madiba.

Order your copy of Top 500 now to read the full interview with Greg Solomon.

In today’s disease-ridden cyberspace, companies in Africa are falling victim to malware infection, and ransomware attacks are becoming more frequent on the continent because users don’t employ adequate protection and neglect key security steps that could save them.

Ransomware on the rise

35% – The increase in global ransomware prevalence from last year, according to the Norton by Symantec 2016 ISTR report.
220 – The number of ransomware attacks in South Africa, according to Kaspersky Lab report released earlier this year. From the 114 countries that the Locky ransomware variant was detected in, South Africa was the sixth highest by number of attacks and the highest in Africa.
2.3% – South African computers may have been infected with malware over the last 24 hours, according to Kaspersky Lab data.
$1.22-billion – Lost business from malware events were recorded in the US from 2011–2015. First losses in the US were only noted in 2011. In 2015, these, combined with the business interruption claims, accounted for this amount and $23-million in recovery expenses. This is according to the NetDiligence cyber claims study.
40% – percentage of South African companies that are able to identify a ransomware threat, according to Kaspersky Lab.
$325-million – Estimated cost of a single ransomware attack according to a report on the Cryptowall v3 ransomware campaign, issued by the Cyber Threat Alliance in 2015.
38.1% – Increase in victimised enterprises (compromising mostly small businesses) paying the ransom (to remove malware from electronic systems and devices) since 2012, according to ISACA (previously known as the Information System Audit and Control Association). The figure has increased from 2.9% to 41% in four years.

Types of ransomware to look out for
Malware can enter a company’s network through an email attachment. Some of the malicious software programmes include Trojan-Ransom.Win32.Onion | Trojan-Ransom.Win32.Locky | Trojan-Ransom.Win32.Scraper (TorLocker). Ransomware programmes typically encrypt user files on computers, including pdf, doc, docx, xls, xlsx, ppt, pptx, jpg, jpeg, bmp, tiff, png, mpg, mpeg, avi, 3gp, mp4, m3m, mp3, wav, zip and java extensions.

Order your latest edition of Top 500 to read the full article.

The whisky industry is more dynamic now than ever. We look at the trends in the industry.

From phenol levels to cask finishes, artisan distilling and designer whiskies, there’s a trend among consumers who are showing interest in the finer details of this brown spirit.

While Irish, Scottish and American whiskeys have enjoyed long-standing popularity, countries like Japan and India are becoming major players in the premium whisky game. New markets are also starting to open up, as indicated by a study by Bank of America Merrill Lynch, which noted that India consumed over 1.5-billion litres of whisky in 2014.

Gone are the days of the “anything goes” drinker: we have entered the era of the whisky connoisseur. Judd Zusel, Rémy Cointreau’s Vice President of Marketing and Innovation, says that consumers continue to seek out artisan spirit products.

“It’s clear they want to know who made it, how it was made and the terroir of the raw materials. They want to know that people are involved in every step of the process.”

Buzzwords like ‘craft’ and ‘handmade’ have been tossed around recklessly for too long and lost their flavour. Instead, consumers are getting wiser and looking deeper into the production methods of these products.

Premium whisky brand Glenfiddich’s national brand ambassador in South Africa, Luthando ‘Jezz’ Tibini, has conducted nearly 20 000 whisky/food pairings over the past five years and points out that it is a misconception that these pairing evenings are merely about drinking. “It is about lifestyle, networking and building relationships with outlets, such as restaurants, lounges, bars and hotels.

This is where we conduct our tastings, pairings and all other forms of brand engagements,” he says. In days past, Glenfiddich was perceived as a brand for ‘old people’, but the company has been successful in drawing a lot of younger consumers to the brand.

“Whisky is an innovation game that keeps on evolving, just as customers evolve. We still have our core range, but these are the everyday expressions that define us as a brand and these speak to our everyday consumers,” Tibini adds. When it comes to whisky trends, bars, hotels and restaurants are offering great services, such as whisky cocktails served with pairing snacks and cigars.

“The best food pairing is the Glenfiddich 12 Year Old and salmon. The one compliments the other in flavour, texture and finish,” explains Tibini.

His favourite cigar pairing is the Glenfiddich 21 Year Old Caribbean Rum Cask Finish and Romeo y Julieta Exhibicion #4. “The combination gives a fruity, nutty flavour with hints of spices and sweetness.” He adds that a noticeable trend is that more women are drinking Scotch on the rocks.

At the end of 2016, Glenfiddich launched two expressions from their Glenfiddich experimental series called Project XX (pronounced Project 20) as well as the Glenfiddich IPA. The Glenfiddich IPA is finished in casks that were seasoned with Indian Pale Ale Beer created specifically for this whisky.

Heinrich Göttsche, food and beverage manager of the Protea Hotel Fire and Ice by Marriott Pretoria Menlyn, says that the Glenfiddich Rich Oak 18 Year Old is by far their bestseller, closely followed by the Glenlivet 15 Year Old and other ranges of premium whisky brands, which include Balvenie, Highland Park and Abelour.

The hotel orders whisky stock based on consumer requirements and target market. He adds that the entry of the affluent black market has had a significant impact on whisky sales. “Apart from the popular brands, hotels also need to stock a good selection of blended, Irish and American whiskeys to complement the single malts on offer.”

Drinking whisky has become a status symbol with a noticeable trend towards single malts as opposed to blends. Whisky is also no longer a drink that is enjoyed by the elite in a cigar club, but rather enjoyed by people from a variety of social spheres. More women are starting to appreciate the art and sophistication synonymous with whisky, explains Göttsche.

Whisky trends in 2017/2018

Whisky attracting a youthful crowd
Millennials love bourbon and are now drinking rye and Scotch too. Whether as a sipper or in cocktails, this new and growing appreciation for whisky amongst the younger crowd has helped jumpstart the global whisky revival. In South Africa, from Sandton to Soweto, whisky has become popular with the aspirational middle class, and it is the fastest-growing spirit in South Africa, with its growth outpacing even cider and beer. The annual Whisky Live Festival in Johannesburg and Cape Town has proven so popular that Durban has now been added to the list of exhibition venues. Co-organiser of the festival, Sian Neubert, says that there’s been growing interest from women and the 25 to 35-year-old age group.

Whisky footprint in Africa
Johnnie Walker whisky is one of the top selling brands in South Africa and Africa is one of its best whisky markets. So much so that it has launched a brand new whisky called Johnnie Walker Platinum Label. Brandhouse, a joint venture between Heineken, London-listed Diageo and Namibian breweries, has hinted at plans to take this whisky to parts of West and East Africa. Head of brown spirits portfolio at Brandhouse, Nyimpini Mabunda, says that there is a lot of activity in certain markets in Africa, such as Angola, and there are plans to extend Johnnie Walker Platinum Label’s footprint on the continent. “In South Africa, whisky is growing at three times the total market. That is about four-million nine-litre cases sold per year,” he says.

The ‘premiumisation’ of whisky
Pernod Ricard also competes in the premium whisky space in Africa with its Jameson Irish Whiskey, Chivas Regal Scotch whisky and The Glenlivet single malt Scotch whisky, among others. Research has shown that there are four whisky tiers in South Africa: The value sector (retail price of under $9 per bottle), standard sector (retail price $13 per bottle), premium sector (retail price more than $15 per bottle) and the super premium sector ($120 per bottle and more). Although every tier has shown growth, it is the premium sector, which has shown to be the most impressive. This is due to a steady rise in the middle class and whisky’s aspirational status as well as the industry’s investment in education.

Know your whisky
Classes and workshops are one way to top up on whisky knowledge and the result is smarter consumers and savvier connoisseurs across all ages and demographics. “Customer-based knowledge is skyrocketing,” says Göttsche of Protea Hotel Fire and Ice. “A few years ago, terms like ‘nondistiller producer’, ‘mash bill’, and even ‘angel’s share’ were gibberish to 95% of casual whisky drinkers. Things are changing.”

Craft distilling
Similar to the evolution of the craft beer movement, whisky has also gone that route. In South Africa, there are several small artisan distillers making whisky. Some distillers are actually buying their ‘beer’ from brewers, thus focusing their efforts primarily on distilling and ageing. Because this industry is still young, so are many of their whiskies.

Designer whisky
Some distillers are making tiny quantities of time-intensive, high-cost and high-quality whiskies. They are using the finest wood, the best barley, the purest water and carefully monitor them through each phase of their production life – but with a price tag to match.

Africa is set to become the next mega-infrastructure giant of the world. But many challenges still hinder its development, despite being rich in resources and home to some of the world’s fastest growing economies.

A lack of quality roadways, marine ports and railways have been the thorn in Africa’s side – stemming the growth from a developing to a developed continent. But all that’s changing. Economic juggernauts like China and India are pumping billions of dollars into Africa to help transform the continent’s fortunes while staking a claim in the world’s next high-growth territory.

Infrastructure development is a key pillar of the China-Africa relationship. The Asian powerhouse has become the single largest trade partner for many African countries (Nigeria, Kenya, Somalia, Mozambique and many more). It has also become the major source of financial support for various development and infrastructure projects in Africa.

But progress has been a tad slow. Three years ago, the African Development Bank (ADB) and the Africa Foundation launched a fundraising initiative for Africa 50 – a project aimed at speeding up infrastructure ventures on the continent.

Alassande Ba, Director at ADB and acting CEO of Africa 50, remains positive about Africa’s progress but adds that its people must utilise the opportunities to further sustain growth on the continent.

Currently, renewable energy is a hot commodity in Africa, but Ba says that the continent is not generating enough of it. “Only now, people are recognising the need for renewable energy to help sustain Africa’s development. This is why ADB has increased its intervention for energy.”

ADB have not only created new managerial roles for renewable energy on the ADB board, it’ll also pump in more resources, double up on partnerships and include specific activities for renewable energy in Africa over the next few years.

Ba says that ADB is working closely with the African construction and infrastructure sector for several reasons. One is to learn how to get more private equity in Africa, especially for infrastructure. “Infrastructure projects can generate lots of business for the insurance industry. We also believe that we need to make use of more risk management products, which the insurance industry can provide.”

While Africa has its challenges, Ba believes that it presents new opportunities to improve the living conditions of the African people. “The biggest challenges are to make sure public utilities are more bankable and to improve the quality of governance on the continent.”

He says that the ADB will try to improve advisory services to make sure African countries get the right framework, tariffs and operating contacts.

Top 5 mega-infrastructure projects in Africa

West African Rail Network
The Grand Ethiopian Renaissance Dam
The Mombasa-Nairobi SGR
Konza Techno City
Modderfontein New City Project

Be sure to order the latest edition of Top 500 to read more. Email ingrid.johnstone@topco.co.za

In February 2017 the Department of Environmental Affairs reported a 10.3% reduction in rhino poaching for 2016, compared with statistics from 2015. Though there as been a decline, the stats are still dire: 1 054 rhinos were killed in 2016 in South Africa alone – meaning approximately three rhinos were killed daily. Since January 2017, 529 rhino have been poached. And, according to Save the Rhino, poachers are moving beyond South African boarders, into other African countries who don’t necessarily have the resources to effectively protect wildlife. We interview Grant Bodley, CEO of Dimension Data for the Middle East and Africa, about ‘connected conservation’ and how the use of sophisticated technology helps combat the incursion of poachers and proactively prevent the killing of not only rhino, but other animal species too.

Order your copy of Top 500 to read the full article.

It was 11:00 on a Friday when we made our way to the Nando’s Central Kitchen in Lorentzville. Not native Jo’burgers, we questioned the accuracy of Google maps as it led us through a myriad of twists and turns. Rounding a corner, we saw the recognisable red and black of the Nando’s brand and very audibly breathed a sigh of relief – we were indeed at the right place.

We made our way into the building and were immediately taken by the beautiful, creative office space: art hanging against every wall (all original pieces), beautifully handmade chairs, and statement pieces in almost every room. The vibrant, positive energy in the building was contagious and we soon found that our fatigue had miraculously subsided. We were excited to be there.

The Nando’s story is a remarkable one. It all started with peri-peri chicken in a small restaurant in Rosettenville three decades ago and has since grown into a global brand. We chatted to Mike Cathie, CEO of Nando’s SA, who told us more about the Nando’s journey, its heritage and plans for the future.

Get the latest edition of Top 500 to read the full interview. Email Ingrid.Johnstone@topco.co.za to order your copy.

By Lorenzo Fioramonti

When I began to teach in 2012, I decided to start my course with an analysis of how money affects social order. I kicked off by criticising the conventional idea that money is just a store of value, a medium of exchange and a unit of measurement. My point was that there can be many different types of money, each impacting our collective behaviour and the quality of our democracies differently.

What my students found particularly fascinating was the then-nascent world of cryptocurrencies, which I described at length as a crucial feature in the future of money. Some colleagues criticised my approach, accusing me of indirectly encouraging students to invest in what they saw as a shady, crime-ridden world of financial misgivings. In reality, I was simply exposing young minds to a fast-evolving, complex phenomenon that in my view would have a major impact on power distribution in the global economy. Behind most cryptocurrencies is a simple technology known as “blockchain” – a system residing in multiple computers that allows for peer-to-peer financial ledger recording of all transactions occurring in a network.

This results in a transparent open-access registry of monetary flows which makes the intermediation of banking authorities unnecessary. Thus, it challenges the conventional belief that money can only work through central planning.

Mainstreaming cryptocurrencies

As I explain in my book, Wellbeing Economy: Success in a World Without Growth, our money systems are undergoing an unprecedented transition from centralised authority (as represented by the ‘fiat’ money minted by states) to peer-to-peer networks managed in decentralised fashion. This is not a peripheral phenomenon: it is fast replacing most financial processes. Take Bitcoin as an example. Invented by a mysterious coder in 2009, it has quickly become the most valuable currency in the world, presently worth almost three times as much as an ounce of gold. A student buying the equivalent of 100 dollars in BitCoin in 2012, when I started my lectures, would now possess roughly 32 000 dollars. Those who invested 1 dollar in BitCoin at its inception would now own over 300 000 dollars. No other form of investment in the history of mankind has ever generated so much value in such a short period.

Since the time of my lectures, cryptocurrencies have taken the world by storm (and some of my students have become rich). Bitcoin has a market capitalisation above 50 billion US dollars. Other currencies, too, like Ethereum, Ripple, Litecoin and Dash have reached significant value and growing market caps, almost matching Bitcoin’s. Of the ten most valuable currencies in the world, eight are cryptos. Despite high volatility in the short-term (which is to be expected for such disruptive innovations), the long-term trend is impressive. So much so that states are warming up to this burgeoning phenomenon, especially in times of low growth, when conventional money is less likely come by.

In April 2017, Japan accepted Bitcoin has a payment method, opening the way for this currency to enter its mainstream retail markets. In the US, cryptocurrencies are becoming increasingly accepted as both a method of payment and store of value. Starting July 2017, the Australian government “will make it easier for new innovative digital currency businesses to operate”, exempting traders and investors from goods and services tax.

In August, the Bitcoin network split into two, through what tech specialists call a ‘hard fork’. This meant that a new currency was generated by users, the so-called Bitcoin cash. It is quite astounding not only that Bitcoin did not lose value during the fork, but that it has skyrocketed to over 3 000 dollars since. Moreover, this transition was made possible by the coordination of hundreds of thousands of users (both developers and ‘miners’), an extremely complex task that even veteran central bankers often fail to achieve. In my view, this is an important testament to the ability of new currencies to grow and acquire further strength.

Read the full article in the 2017 edition of Top 500, available in November. Pre-order your copy for R145.00 now, by emailing Ingrid.Johnston@topco.co.za.