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Sol Kerzner’s life is a classic rags-to-riches story. Born to Lithuanian-Jewish immigrant parents in the Johannesburg suburb of Troyville, he was the youngest of four children. Kerzner wanted to be a mechanic when he grew up but his father persuaded him to go to university.

After qualifying as a chartered accountant from the University of Witwatersrand, he became a junior partner at a large auditing firm. In 1964, after buying an old cottage on the Umhlanga beachfront near Durban, the intrepid entrepreneur built the famous 88-room Beverly Hills Hotel with a hefty price tag of R1-million — at the time this was South Africa’s first five star hotel. From then he never looked back.

Having founded the country’s two largest hotel groups — Southern Sun and Sun International — he helped transform the tourism industries at home and internationally in destinations such as Dubai, Mauritius, Maldives and The Bahamas. Kerzner was awarded the Lifetime Achievement Award for his contributions to the industry during the International Hotel Investment Forum (IHIF) in March, 2019. He died on 21 March 2020 at the age of 84.

Sol Kerzner has been called many things: charismatic, blunt, controversial, notorious, genius and the Sun King. One thing we can be certain of, South Africa’s most famous billionaire and legendary hotelier was, undoubtedly a true business visionary.

Five business principles Sol Kerzner lived by

People form the backbone of a business

A good leader is someone who will do whatever is necessary to ensure they’re surrounded by the best people – a team that can effectively communicate with personnel will get the best out of any business.

“I always made a point of recognising the good work of staff”. – Sol Kerzner

Be a leader not a follower – stay ahead of the competition

Be prepared to start at the bottom and work your way through to the top – that is a valuable learning curve. It helps to be creative if you want to stay ahead of the competition.

“Get the best possible experience and learn from it”. – Sol Kerzner

Conceptualise something exciting

Never let realism stand in the way of a good theme, make it mind-boggling, huge and remember that anything that might be perceived as ridiculous will be swallowed whole.

Blow away the customer” – Sol Kerzner

Your currency should be dedication and commitment

Dream big and be committed to fulfilling those dreams.

“No dream is too ambitious for the man whose imagination has no boundaries”Sol Kerzner

Calculate your risk

“You take a chance… Calculate the odds, research the international market properly, and establish the Southern Africans’ taste, style, appetite and enjoyment, aim at giving them a good time at the best quality that they can afford – then go for it!”Sol Kerzner

South Africa is home to a number of foreign and domestic institutions with services including retail, merchant and commercial banking as well as insurance, investment and mortgage lending. The country boasts a developed banking system that is well-regulated, comprising a central bank, large banks and investment institutions, plus a few smaller banks. In comparison to leading industrialised countries, South Africa’s banking sector compares favourably – and there are a number of foreign banks and investment institutions operational in South Africa.

In September 2017, ratings agency Moody’s upgraded its outlook on South Africa’s banks from negative to stable, pointing to the resilience that the banks had shown in the preceding few months. Moody’s said it expected the banks’ creditworthiness to remain resilient for the subsequent 12 to 18 months.

KEY TRENDS IN THE BANKING SECTOR

South Africa’s banking sector has historically been profitable for the four big players (Standard Bank, FirstRand Bank, Absa and Nedbank). However, there are three trends developing in the market that could potentially disrupt the banking landscape. These are:

• The emergence of digital solutions and lower-cost models launched by adjacent financial services players

• The emergence of sector- and industry-specific banks, closely integrated with broader supply chains, launched by non-financial services players

• Ongoing transformation of the four universal banks to address changing customer, regulatory and technology needs

Speed and agility

Increasingly, non-traditional players are entering the market, creating what is referred to as a “marketplace without borders”. There are a number of hungry newcomers to the financial services industry, aggressively challenging the more traditional players and legacy systems and circling around new market opportunities – all generating rapid change in the state of financial services in South Africa.

Akash Maharaj, Private Capital Transactor at Investec, says: “The financial needs and requirements of consumers and businesses are constantly evolving. They demand innovative, cost-effective technology solutions to help them easily transact, save and invest, both locally and abroad.”

South Africa is primed for change, having as it does the continent’s most advanced financial system. According to the 2017 Finnovating for Africa report, South Africa was home to 94 of Africa’s 301 fintech startups, of which 22 focused on some form of lending support.

EVEN ACCOUNTANCY MUST CHANGE

Technology is altering every aspect of how we live and work. If you’re an accountant, here is what you should be doing this year, says Colin Timmis, SA Country Manager for accounting software company Xero.

Making friends with automated accounting

Automated technology has the power to help you do your job better and faster. Picture yourself no longer burdened with administrative tasks after hours or on the weekend.

Equipping yourself with the right skills

New technology can be daunting and you might battle to keep up. Regular training is crucial. This could involve demonstrations of cloud accounting software using dummy data or online courses like those offered by the Microsoft Virtual Academy.

Choosing software that works together

Choose new software carefully and make sure that it integrates with your current systems and processes seamlessly. This will save time and make life easier.

Making the most of data

Information is priceless, but its real value comes from how it is curated and used. Smart accountants understand the importance of data analytics to provide better services. Create one master-set of organised data to work from effectively and save time.

Shifting focus through tech

The right technology can take care of a host of mundane tasks for you, letting you focus on your clients’ objectives and building new business relationships.

BIG 5 FINTECH TRENDS

1 BLOCKCHAIN According to a 2017 report by PwC, 20% of finance businesses will incorporate blockchain by 2020 and it is expected to become more mainstream within the financial industry soon.

2 NEXT GENERATION CHATBOTS More banks are seeing the value of using chatbots in customer service. Chatbots offer improved quality of interactions, greater accuracy and speedy responses.

3 FROM STARTUPS TO REAL BUSINESSES Historically, the fintech market has been made up of small startups looking to innovate swiftly. Now, more established firms are adapting to these new technologies too.

4 AUTOMATION No more manual processes. Platforms and apps that help automate people’s lives are the new ‘in thing’. As banks become more automated, they will develop smarter workflows that prevent bottlenecks in their operations and improve process efficiencies.

5 CYBERSECURITY The fintech space is rooted in technology and technology is vulnerable. Keeping ahead of the curve will be how players stay in the game.

 

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 HELP SAVE THEM.

Imagine this: You’re in the middle of a financial year-end when a blue-screen message pops up on your computer that reads: “Your operating system has been locked. Type in the encryption key. Visit website blah-blah to pay the ransom.” BOOM! Your company’s entire (and highly-sensitive) financial database has just been compromised and held hostage by cyber-extortionists. The timing is awful. The deadline is tomorrow.

What do you do? Do you remain headstrong; refuse to pay the ransom as a counter-offer? You threaten with legal action in the hope they’ll crack first and unlock your computer. Or do you just suck it up and pay the $300 (R4 500) ransom in Bitcoin in the hope that these cyber-blackmailers restore your server’s functionality before tomorrow’s cut-off. Most people opt for the latter.

Ransomware is probably one of the most feared cybersecurity threats in today’s digital age. It’s a class of malware that encrypts (kidnaps) all files on your computer and only releases them (kept hostage) when a ransom is paid through an untraceable Bitcoin account to the hacker holding the encryption key (pay-off).

In the past two years, there has been a significant increase in ransomware attempts on financial services companies throughout Africa. However, figures remain inconsistent as many corporates and companies are reluctant to reveal the extent of their compromise.

Whether you’re an individual or institution, everyone is at risk of ransomware attacks. But there is a higher degree of risk attached to businesses, more so those that handle confidential and sensitive information, to whom the effects of ransomware could be devastating from both a financial and reputational perspective.

David Jacoby, senior security researcher at Kaspersky Lab US’s global research and analysis team, has witnessed an increase in the number of professional cyber-gangs using ransomware in the last two years. “It’s a game of cat and mouse,” says Jacoby. He believes that the Internet makes malware available to virtually anyone with criminal intent.

“It’s increasingly becoming a problem in South Africa and companies are reluctant to report any instances for fear of reputational damage. It’s quite embarrassing to tell clients that the company lacks security,” says Jacoby, “but it also depends on the institution, especially those that handle sensitive data.”

Cyber-hackers even target government institutions like hospitals, compromising patients’ sensitive medical records. Doctors are unable to access your personal medical files due to the encryption, making it impossible to check things like your blood type or allergies. By compromising your files, it doesn’t just affect the hospital but also you as a patient.

Globally, ransomware has become a lucrative business. Experts at security software company, Norton by Symantec, reported that nearly 3% of compromised users paid the ransom. Although the percentage seems small, it pays off for the hackers.

EXTORTION

Norton by Symantec experts put it over in figures. According to their study, they recorded:

• 68 000 infected computers in a single month (average 5 700 per day)

• Hackers ransom between $60–$200 (R850–R3 000) to unlock the computer

• If only 3% of victims pay the ransom, hackers earn up to $33 600 (R480 000) per day

• Some criminals earn up to $394 000 (R5.6-million) per month

But it’s not just Africa that’s a target. “Bad guys don’t care about regions,” says Jacoby. He says that these cyber-hackers develop malware that’s applicable for all regions. The only difference is that each region (whether it’s Africa or Europe) has different players in the game, localising emails and phishing attacks.

Jacoby says that these cyber-gangs have various players within each region. Some develop the actual code while others set up infrastructure and distribute the malware, making sure systems get infected. Those who distribute the malware will often localise the content of phishing emails. It might look like an authentic email from your local bank. “But ransomware itself is the same you get anywhere in the world. The only difference is in the way they distribute it.”

Phishing emails are a common hook and sinker for cyber-criminals. But why are so many people still clicking on dodgy email links? Jacoby says that it’s not all about clicking on the wrong email and that cyber-criminals are using known vulnerabilities in computer software to gain access.

“If not regularly updated, programmes like Java, Internet Explorer, Google Chrome, Firefox or even your media player are eventually vulnerable to something. If you don’t patch your computer, the bad guys only need to exploit one of these vulnerabilities to install the encryption code without you having to click on any links,” he says.

It’s a domino effect. Cyber-criminals can now hack normal websites, infect it with malicious code and every visitor on that website with an un-updated version of Internet Explorer or VLC Media Players can get infected too.

Jacoby says cyber-criminals are getting smarter too. Attaching malware to email increases the chances of security codes detecting compromised files. Hackers now include links to websites that have already been compromised. Hackers won’t often register new domains, but rather compromise existing ones, making it harder for security companies to blacklist them.

Let’s say you find a vulnerability in a semi-popular South African website or forum. You can’t really blacklist the website as there are too many users who depend on it. Hackers will even infect Dropbox, Cloud and Amazon accounts.

THE RISK OF RANSOMWARE

“Ransomware is risky business,” says Ryan van de Coolwijk, product manager of cyber and HBM liability specialist at Hollard Broker Markets. The core risks include interruption to operations and financial losses resulting therefrom. This would include things like incident response costs, including the investigation and mitigation of the incident, lost productivity, cost to recover operations, staff overtime costs and legal fees.

“Apart from the risk of the full fallout from a data breach should data be compromised and subsequently publicised, reputational damage could lead to potential resulting loss of client and investor confidence and corresponding financial loss,” says Van de Coolwijk.

Another risk faced following the payment of ransom is that there’s no guarantee that your data will be returned or that you’ll receive the decryption key to unlock systems or devices. “There’s also no guarantee that you won’t be attacked again shortly after,” he says.

Van de Coolwijk refers to an instance where an online gambling service provider was hit with a ransom attack related to a DDoS attack. DDoS, or ‘Distributed Denial of Service Attacks’ are where an attacker takes an online service or website offline.

The initial attack is typically for a relatively short period of time and payment is demanded to avoid sustained attacks. Locally, several instances have been reported, especially online betting companies before the Durban July horse race. “The online gambling services company paid the ransom only to be hit by the same perpetrators a week later – demanding a higher ransom than the first attack.”

BEST PRACTICE ADVICE

What we also need is training that helps people develop better ‘cyber hygiene’. This includes teaching people to frequently update anti-virus software, appropriately program firewalls, and routinely back up their computers on discs that are then disconnected from the network. In addition, people should be taught how to deal with a ransomware attack and stop its spread by quickly removing connected drives and disconnecting from the Internet.

Jacoby advises companies to “back up, back up, back up.” Should you get infected, instead of having the headache of paying ransoms, you can simply reinstall your machine and put the backed-up files back on your computer. “Have an external drive backup that runs daily and make sure that you unplug the backup when it’s not running, otherwise, it may also get encrypted,” says Jacoby.

He also says that common sense should be applied. “People often think: ‘Well, I’m not a target. I have nothing to hide or information that hackers can use. These bad guys don’t care who you are as an individual. They target the masses and you are part of the masses.”

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.

South Africa is strategically positioned at the tip of Africa and is regarded as one of the economic powerhouses of the continent.

Comparing favourably to other emerging markets, the country has world-class infrastructure and a labour force comprising affordable semi-skilled and unskilled workers.

The local offshore business process outsourcing (BPO) market has, according to the Department of Trade and Industry (dti), seen a compounded average growth of 25% year-on-year, with more than 30 000 offshore jobs.

Leading buyers of South African BPO services:

• United Kingdom

• Australia

• United States

AUSTRALIAN OFFSHORE BPO CAMPAIGN LAUNCHED

Business process outsourcing company, Merchants, partnered with iSelect – an Australian insurance, utilities and personal finance comparison website – and will manage its contact centre in South Africa.

Said Minister of Trade and Industry, Rob Davies, “Merchants, which has multiple locations in Cape Town, Johannesburg, Durban and Pretoria, has been one of the pioneers in developing and supporting South Africa’s business process offshoring value proposition over the last 14 years.”

The Minister added that the partnership between iSelect and Merchants is indicative of the working partnership with government and that strategic objectives of the BPO sector are met in relation to foreign direct investment, job creation among the youth, export revenue generation and the implementation of career pathing.

JOB CREATION

Industry body, Business Process Enabling South Africa (BPESA) aims to increase jobs in the BPO sector from the current 30 800 to 80 000 by 2021.

According to BPESA’s head of marketing and communications, Melissa Wippenaar, this goal will be reached by:

• Building on the strength of voice processing

• Developing skills in non-voice processing functions – in particular legal process outsourcing and knowledge process outsourcing

GEOGRAPHIC PROFILE OF THE SA BPO INDUSTRY

GAUTENG
EMPLOYED: 22 110
KEY VERTICAL SECTORS: Financial services; telecoms
OFFSHORE (FTES): 25%

WESTERN CAPE
EMPLOYED: 6 334
KEY VERTICAL SECTORS: Telecoms, retail, financial services
OFFSHORE (FTES): 48%

KWAZULU-NATAL
EMPLOYED: 3 600
KEY VERTICAL SECTORS: Financial services, insurance, government, IT and telecoms
OFFSHORE (FTES): <10%

EASTERN CAPE
EMPLOYED: 330
KEY VERTICAL SECTORS: Operations: 10+ (2005)
OFFSHORE (FTES): <5%

SOURCES

https://www.brandsouthafrica.com

http://www.bpesa.org.za/

Frost & Sullivan

According to a recent report by Global Entrepreneurship Monitor, South Africa’s entrepreneurial activity is at the highest level since 2013. This can be partially attributed to the high unemployment rate and new opportunities that have become available to small business owners.

Bolstering these factors are the Department of Trade and Industry’s (dti’s) Preferential Procurement Regulations, which require government procurement departments to favour historically disadvantaged individuals, with a particular focus on youth- and woman-owned businesses.

“Those who work in procurement departments within government must see themselves as enablers to achieve service delivery promises,” says eThekwini Deputy Mayor, Fawzia Peer. “Under the Preferential Procurement Regulations, one of the new requirements is that at least 30% of the value of contracts above R30-million must be sub-contracted to assist in the development of emerging suppliers. We would actually like to see all suppliers subcontracting to SMMEs, cooperatives, as well as township and rural enterprises, irrespective of project value.”

A survey of more than 1 200 entrepreneurs conducted by Seed Academy revealed that only 18% of respondents have attempted to secure funding from banks or development funding institutions like the Industrial Development Corporation (IDC) or dti.

Donna Rachelson, CEO of Seed Engine, the ICT accelerator that runs Seed Academy, says: “Some entrepreneurs indicated that they simply don’t know where to go for funding especially in light of the fact that most early-stage business funding requirements are below the R100 000 threshold.

“There is certainly a case to be made for funding providers to revise certain requirements to better accommodate the unique needs of small and early-stage businesses. Of course, one unfortunate implication of self-funding is that growth potential is limited to the owner’s own pocket and diminishes the ability for a small business to increase capacity, hire more staff and make a more meaningful impact on the South African economy.”

FOCUSED ON FUNDING
The South African government has created several departments and agencies focused on business development by providing assistance in the form of either finance or grants.Loans, which must be serviced and repaid in full, fall under the umbrella of finance. Incentives or grants, on the other hand, are non-repayable contributions to a business and are typically disbursed as a percentage of the overall cost of an intervention. By way of example, if an abattoir owner purchased a new meat processing plant at a cost of R10-million, government would provide a percentage of the investment amount as funding

Agencies such as the Small Enterprise Development Agency (Seda), the IDC and the Land Bank (for agricultural finance) provide development finance on a national level. Regional and smaller development finance agencies, like the Mpumalanga Economic Growth Agency (MEGA), the Gauteng Growth and Development Agency (GGDA), Wesgro in the Western Cape and the KZN Growth Fund, focus on particular provinces. Other institutions are sector-specific, for instance, the Technology Innovation Agency (TIA), which aims to stimulate technological innovation in South Africa.

Incentives and grants are provided by Seda, the Department of Small Business Development (DSDB) and the dti. Such funding helps to catapult small businesses into the mainstream economy by subsidising their investment into core business activities such as machinery, business support services and software.

DEVELOPMENT FINANCE AGENCIES
The Small Enterprise Finance Agency (SEFA) provides access to development finance in the form of loans. While interest rates vary depending on the applicant’s risk profile, rates are higher than commercial banks. Loan sizes vary from R50 000 to R5-million and borrowers should expect to pay between 2% and 5% above the prime lending rate in interest.

Entrepreneurs seeking loans exceeding R5-million need to approach the IDC.Focusing on key industries driving our economy, the institute funds startups and existing businesses with minimum funding requirements of R1-million to R1-billion. The IDC provides a variety of funding instruments such as debt, equity, guarantees and bridging finance. Again, interest rates depend on the applicant’s risk profile and, in certain instances, can be lower than those offered by SEFA and other finance agencies. When combined with a grant from the dti, significant savings and favourable payment structures can be achieved for businesses.

GRANTS AND INCENTIVES AGENCIES The dti is the primary source for grants and incentives. In 2014, the DSBD was created to focus on small business development; Seda and some programmes offered by the dti were integrated into this newly formed department.

GRANTS OFFERED BY THE DTI There are a number of grants offered by the dti; many are sector-specific.

When applying for a grant, it is prudent to verify its status, as many that are still listed on the website have been closed or placed under revision.

Some of the programmes worth exploring are the Black Industrialist Scheme (BIS), the Agro-processing Support Scheme (APSS), 12I Tax Incentive scheme and the Strategic Partnership Programme (SPP).

The BIS is a cost-sharing grant, offering a grant of 30% to 50% to approved entities, up to a maximum of R50-million. The grant will depend on a number of factors, including the level of black ownership and management control, and the project value. The grant may be utilised for capital investment costs, feasibility studies towards a bankable business plan, post-investment support and business development services.

GRANTS OFFERED BY THE DSBD The Black Business Supplier Development Programme (BBSDP) is another cost-sharing grant offered to black-owned small enterprises. It is aimed at assisting these companies in improving their competitiveness and sustainability to become part of the mainstream economy and create employment. The programme provides grants to a maximum of R1-million on a cost-sharing basis.

The Co-operative Incentive Scheme (CIS) is a 100% grant for registered primary co-operatives that consists of five or more members. The objective is to improve the viability and competitiveness of co-operative enterprises by lowering their cost of doing business through an incentive that supports Broad-Based Black Economic Empowerment. The maximum grant that can be offered to one co-operative entity under the CIS is R350 000.

AN ENTREPRENEURIAL OUTLOOK Apart from government agencies, there are seed investors, crowdfunding organisations and other private enterprises that provide financial assistance as part of their corporate social investment contribution. These include the Old Mutual Foundation, Masisizane Fund, Sasol Siyakha Fund and the Anglo American Zimele Fund, among others.

South African entrepreneurs are privileged to have access to such a large variety of funding options. There is, however, room for improvement when it comes to making funding accessible to all businesses. Entrepreneurs need to be better informed about available funding options and government needs to be proactive in simplifying the process for applying for finance and incentives.

ENTREPRENEURSHIP IMPROVES PRODUCTIVITY Entrepreneurship injects the economy with a fresh batch of higher productivity firms, increases competition among existing businesses and pushes out less productive ones.

ENTREPRENEURSHIP SPURS INNOVATION New firms are disproportionately responsible for commercialising new innovations, particularly radical innovations that spawn entirely new markets or substantially disrupt existing markets.

ENTREPRENEURSHIP CREATES JOBS New and young businesses, not small businesses, are the engine of net job creation in the economy.

KEEPING CUSTOMERS HAPPY IS BECOMING EVER MORE CRITICAL TO ORGANISATIONS’ SURVIVAL. CAMERON BEVERIDGE, REGIONAL DIRECTOR OF SAP SOUTHERN AFRICA, HIGHLIGHTS HOW CUSTOMER SERVICE CAN BE TURNED INTO A MAJOR ASSET.

Let’s start with a provocative thought: the new battle lines between successful and failing businesses are defined by customer experience. A Walker study predicts that customer experience will overtake price and product as the key brand differentiator by 2020. I’d argue that that future has already arrived.

Gartner expects more than 50% of organisations to redirect their investment toward customer experience (CX) innovations in 2019. As many as 89% of organisations already compete primarily on the basis of customer experience – up from a mere 36% in 2010.

Most think they’re doing a great job. Organisations are self-rating their customer experience efforts highly: a Bain study found that 80% of companies believe they deliver super experiences. Only 8% of customers agree.

This disconnect between expectation and experience is driving a divide between organisations on the path to success and those on the road to obsolescence. A battle is playing out between those that can capture data and produce insights leading to improvements in customer experience (organisations with so-called intelligent enterprise capabilities) and those that still rely on outdated best-guess approaches to deliver great experiences.

ON-DEMAND SERVICES ARE RESHAPING CUSTOMER EXPECTATIONS

The technology companies that power much of the world’s innovations are themselves under immense pressure from the on-demand economy, typified by the cloud services providers and pushed into mainstream consciousness by the likes of Netflix and Uber. Traditional vendors would develop software solutions, sell them to customers, implement the solution directly or via partners, and then maintain those environments. This was an often costly and time-consuming process that left organisations without the ability to make massive changes or to innovate with agility in those environments. Inevitably, further investment would be required to maintain the organisation’s competitiveness.

This dynamic completely changes in a cloud-first world. Cloud providers run core parts of their customers’ business environments on their behalf. Because the vendors manage important aspects of an organisation’s business, they become intrinsic parts of it.

The way cloud services are provisioned has elevated business expectations as to how those services are consumed and charged for. Companies want to consume services and apps only at the rate at which they need them. Services become cyclical in nature, following an organisation’s natural ebb and flow, to deliver direct quantitative value.

Time-to-value in a cloud environment is also quicker. Once an organisation has identified an opportunity, the cloud provider can provide assets – a platform, specific services and apps, or capacity – to deliver that value. A flexible pay-for-what-you-use costing model further removes risk from the process, which is important in a fast-changing environment where market opportunities can shift quickly.

In the long term, we may see cloud providers adopting a pay-for-outcome model that places tangible business outcomes at the centre of its customer offerings, although they’ll have to overcome several obstacles to achieve this.

In the immediate term, the opportunity sits with proactively identifying value opportunities in collaboration with customers and building offerings that take advantage of those opportunities.

This is where the customer experience becomes paramount. A technology provider’s ability to closely collaborate with customers, jointly identify value opportunities and co-create solutions that capitalise on those opportunities, rests on the quality of the experience it can offer its customers. And this depends heavily on its ability to drive a customer-first culture within its organisation.

THE NEW BUSINESS BATTLEFIELD

Today, end-customers are only loyal to a perfect total experience. Until recently, it was nearly impossible to prove the business impact of customer experience through quantifiable data. Part of the issue was confusion around measures, metrics and value – all of which contribute to the success of customer experience initiatives.

MEASURES include anything you can count; for example, the number of feet through the door or the amount of time a customer spends with the call centre to resolve an issue.

VALUE points to the financial levers that are influenced by customer experience; for example, profit-per-customer or total revenue.

METRICS are outcomes of something that has happened; for example, customer satisfaction scores following the implementation of a new initiative.

The underlying technologies that enable positive, seamless customer experiences were introduced to companies through an at-times painful process of digital transformation. A wave of digital transformation that has swept across industries globally over the past decade left in its wake a new generation of modern, nimble, effective and customer-centric organisations. If you think of digital transformation as only a buzzword, consider this: cumulative spending on digital transformation will reach US$2.1-trillion this year, according to an Industrial Development Corporation study.

Today, digitally transformed organisations are extending their evolution to becoming intelligent enterprises. Intelligent enterprises operate with visibility, focus and agility to deliver best-in-class customer experiences.

Using technology, intelligent enterprises collect and connect previously disparate data to uncover hidden patterns, direct scarce resources to areas of maximum impact, and respond quicker to changes and opportunities in their markets.

Data is the key: customers want to enjoy experiences that are tuned to their needs and expectations throughout their engagement with a brand. They want value-driven outcomes that are delivered via a harmonised experience; in other words, they want to gain something from their interactions with a brand or organisation, and they want those interactions to be consistently good. Really great brands make those interactions memorable too, prompting positive word-of-mouth.

THE DNA OF A CUSTOMER-FIRST CULTURE

Organisations can no longer consider it ‘a job well done’ when a sale closes or a project is implemented. The ongoing disruption wrought by technology requires constant change and adaptation. Businesses must constantly evolve, change, improve and optimise their systems and services. A once-off implementation or acquisition is not going to deliver the competitive advantage needed to succeed. A single innovation or disruptive technology could reshape entire industries overnight.

What organisations should strive for in the age of customer experience is an unwavering commitment to customer success. By creating a unified and outcome-focused experience for customers, organisations can more easily become business or innovation partners to their customers. This shifts the dynamic away from once-off sales and lengthy deployment projects, to ongoing transformational support as the customer travels along the path of their innovation journey.

The objective here is to provide guidance and support to customers to ensure they utilise their technology tools to their full potential. Technology providers need to instil a customer-first culture throughout their organisation to provide a positive experience to customers. This, in turn, builds trust; when there is trust, the quality of collaboration improves and it becomes easier to deliver value consistently.

Customer experience is not the sole reserve of the CEO or the chief marketing officer (or even the newly created position of customer experience executive); it is the responsibility of every person within the organisation. Tools such as Qualtrics support businesses by generating quantifiable data that point to deficient experiences and highlight opportunities for deepening brand affection and loyalty among customers that enjoy positive experiences. With the support of a team working in a customer-first culture, this can turn customers into fanatics, products into obsessions and employees into ambassadors.

BRINGING INTELLIGENCE TO EXPERIENCE

In the Experience Economy, having intelligent enterprise capabilities provides organisations with the best tools and platforms from which to consistently deliver excellent experiences to customers. But there’s a catch: how do you measure customer experience success? How do you quantify the business outcomes of delivering consistent experiences to customers? And how do you make sure your investments into digital transformation and customer experience reap the rewards you want? Do you even know what rewards you’re after?

One aspect that adds complexity to measuring CX success is how we define value. Aspects such as customer experience have become critical to businesses’ success. But quantifying the value of a CX-inspired digital transformation project is tricky. Our assumptions about why we conduct digital transformation projects aimed at improving the customer experience is part of the problem of how we measure the value of those projects. We boldly claim that digital transformation is what customers want. We assume it will deliver better experiences or replace existing experiences. We make the dangerous assumption that digital transformation will increase the amount of value the organisation can deliver to its end-customers.

These assumptions are broadly driven by our view of value as something that is measured in cost. But cost is one-dimensional; value in the modern sense of the word is multi-dimensional and focuses more on qualitative aspects such as customer affinity.

“CUSTOMER EXPERIENCE WILL OVERTAKE PRICE AND PRODUCT AS THE KEY BRAND DIFFERENTIATOR BY 2020”

than it does on rands and cents. Key performance indicators such as “improve customer subscription renewals by X%” or “reduce inventory costs by X%” remain prevalent. But they don’t always speak to the deeper challenges faced by CEOs and the organisations they lead. They take a static view of value: the outcome of their projects becomes a destination – better experiences, happier customers, more revenue – where value is delivered as a windfall.

Very few – if any – organisations will find success in this model. In fact, McKinsey estimates that 70% of large-scale change programmes never reach their stated goals. The pace of disruption and the need to innovate have placed immense pressure on organisations to transform and build intelligent enterprise capabilities. The risks a business faces at the onset of a project may be completely different by the time the project concludes. How then do you illustrate value?

The first step is to change your own thinking about value and move away from business value (an internal measurement that focuses on what the organisation gains from a CX or digital transformation project) to customer value, which forces you to think along customer-centric lines. This gives you a better chance to affect deep change within the organisation and continuously deliver value throughout each iterative step of the project. Instead of creating outcomes that meet only internal expectations, you create products and services that your customers want to use. It’s a win-win no-brainer.

The second step is to move away from cost measurement to value measurement. In other words, stop thinking about rands and cents and instead try to measure the success of a project or initiative by gauging its benefit to your customers. Admittedly this is difficult. Assessing costs is easy, as organisations’ accounting practices are set up to track costs. A value-driven measurement forces organisations to become adept at finding value metrics for smaller iterations of work. How, you ask? With data.

Many organisations can’t even tell if they are delivering value because there’s no benchmark from which to work. And data sets the benchmark. If an organisation can articulate its current-state metrics and then match each iterative step of the customer experience project to an improvement in those metrics, it’s far easier to illustrate value.

When the organisation then collaborates with a global partner that specialises in measuring and analysing customer experience data, also gains visibility over trends among similar organisations and makes appropriate adjustments along the way to ensure each iteration of the project delivers optimal value.

Why settle for less?

 

 

Former Finance Minister Trevor Manuel was recently called back into public service by President Cyril Ramaphosa, who asked him to serve as an investment envoy along with former Finance Deputy Minister Mcebisi Jonas and businesspeople Phumzile Langeni and Jacko Maree. Their task is to attract $100-billion of investments into the South African economy over the next few years. Manuel spoke to Ryland Fisher during this wide-ranging interview about service to the people and investing in South Africa’s future.

“I am betwixt and between at the moment. I have a number of non executive roles in the private sector, but I also work with universities and NGOs. I don’t think there is a contradiction between the two. We have to do the best that we can.

“It is about delivering quality service. It’s about understanding the complexity of building a new state because that’s the mindset that we must have over the next few years.

“We should not blame the International Monetary Fund (IMF). We should blame poor governance. If we end up with a harsh IMF programme, it is because of a decade of poor governance. It is because we did not do what we are capable of doing.

“We need to keep Eskom afloat, and that means that government must provide it with a guarantee or a cash injection.”

Manuel added that there needs to be an insistence on clean government from the ground up.

“We need to ensure that the push for change is strong and articulate in this environment.”

He refused to be drawn on what he and the President spoke about on their walk on the Sea Point Promenade immediately after Ramaphosa’s election.

“One of the reasons I enjoy spending time in Cape Town is because I walk every day. I didn’t set up to meet the President. “

I was walking and when I passed the SABC, I saw him get out of the car and then we just walked together.

“We have known each other for a long time. For instance, when I chaired the National Planning Commission, he was my deputy.

“We both put a lot of time and emotion into ensuring that the National Development Plan (NDP) was durable and we need to talk about how we take it forward. There are so many issues to resolve.”

THERE ARE MANY WAYS TO CONTINUE SERVING THE PEOPLE

“I’ve never made a secret about my general approach. I became an activist at a relatively early age. The only thing I knew was activism really. You would get a job to put some food on the table, but it was activism that concerned an entire generation of us.

“If you asked any of us during the mid-1980s how we were preparing to govern the people, I don’t think anybody could tell you that we were. I can say without fear of contradiction that ending up in government was never part of any plan.

“You only thought of life as an engagement in struggle. There were some people who were the most incredible activists, but they just couldn’t fit into government roles. It was all just horses for courses and things could have turned out differently.

“I ended up in Cabinet, but that is not the only place to serve.

There are a number of ways in which we can do it and we have to find equilibrium, a point where we can continue to serve. “For me, the big issue is how we rebuild a local leadership, because we must give a voice to people through their own organs. We had it in public, civic and youth movements before, and they’re not there in quite the same form anymore.”

“THERE’S NO QUESTION ABOUT THE DEEP COMMITMENT THAT WE HAVE TO SOUTH AFRICA”

Manuel said he was confident that he and the other three investment envoys would succeed in their task of attracting investment into South Africa.

“We are still trying to find our feet. All of us were called at short notice and we needed first to decide how we could collaborate. We can’t all work together like a herd. We have to play to our various strengths.

“It means utilising opportunities; sometimes with the President, sometimes without the President. We will work mostly as individuals, using our networks – both domestic and international.

“We have also been talking to business leaders in South Africa, because we can’t go outside if business in South Africa is not ready.

“There are residual problems with the Mining Charter, for instance. If we don’t sort these out, we are not going to get the investments. Sometimes, as a group, we factor in all these observations that investors are sharing with us.

“I have been talking to my networks in New York, London and Dublin. Jacko [Maree], because of his links with Standard Bank, has visited China and Japan. Mcebisi [Jonas] has already been to the United States. But these markets are big and all of us can be in the United States at the same time, in different cities, talking to different networks. A lot of that will happen over the next period.

“There is a lot to be done. But we can’t fail. If we raise

US$50-billion, collectively we’ve won. If we raise US$10-billion, we’ve won. It’s a stretched target but one that we must commit to.”

He remains positive about South Africa’s future.

“I don’t have a foot in any other country. I don’t own property in any other country. I don’t carry the passport of any other country. My family is here. I’m very confident. There’s no question about the deep commitment that we have to South Africa. If you have this commitment, you have to look at where you can influence the situation and improve on the observations that we make and share with many other people.”

With economic growth considered the main driver of corporate travel, emerging economies such as South Africa are increasingly adding to the international pool of business travellers. Predicting positive growth in 2020, analysts say there is good news for South African SMEs, whose bargaining power they see rising with the market’s size and spend.

Based on the World Travel & Tourism Council’s (WTTC) last annual review of the economic impact and social importance of the sector, South Africa’s Travel & Tourism economy remains the largest in Africa. “It is a formidable and resilient sector, contributing around 8.9% to South Africa’s Gross Domestic Product (GDP) in 2018,” comments Oz Desai, General Manager Corporate Traveller. “This includes 1.5 million jobs and R425.8-billion in turnover, the data shows.”

According to the WTTC’s economic report, business travel accounted for approximately 36 percent of total travel spend in South Africa in 2018, and projections for the corporate travel sector have remained largely positive.

Desai explains: “Corporate travel demand, which includes government travel, traditionally slows down around election time, and 2019 was a national election year. However, we are seeing more companies become aware of the benefits of travel and having a strong travel policy.”

Case in point, Desai says, a recent study by Oxford Economics claims companies realise US$12.50 (R185.98) in incremental revenue and US$3.80 (R56.53) in new profits from every dollar (R14.87) invested in business travel.

Similarly, a 2019 report by the Harvard Business Review reported that businesses that see travel as an investment see up to 47% revenue growth. Based on the research, travelling companies saw double the rate of improvement in areas such as customer loyalty and retention (50% vs 21%), market share (43% vs 22%), and employee satisfaction (35% vs 15%). 


The growth in business travel has benefitted the SME sector, traditionally overlooked, with suppliers increasingly rewarding loyalty and expanding products and services for this market. That includes perks associated with loyalty programmes and discounts usually reserved for firms with sufficient volumes says Desai. The result is that the traveller experience is improving across the corporate line: from smaller SMEs to large corporations.

He maintains: “More than any other year, 2019 has been about people and improving the traveller experience. Travel Management Company (TMC) services are now as concerned with meeting the needs of the traveller as they are with managing and optimising company spend. Furthermore, blended technology – the mix of Artificial Intelligence, machine and human interaction is improving service levels and offering travellers 24-hour live support.”

Rand weakness and economic instability will remain a challenge for local customers, Desai says. However, he maintains, it is for the TMC to create efficiencies and provide a travel policy that fits each company.

Desai concludes: “Looking ahead to 2020, all signs suggest the corporate sector will continue to grow as businesses pursue new opportunities. With the right TMC partner to guide them, entrepreneurs don’t need to feel disenfranchised. Our message to South Africans SMEs is: Make 2020 the year to maximise your business travel investment and commit to a travel management policy that reflects your business’ needs and specific requirements.”

Fast facts
Three stunning stats showing the state of the global business travel market:

1. The Global Business Travel Association predicts global business travel spend will grow to US$1.6-trillion in 2020 and could reach US$1.7-trillion by 2022.
2. Oxford Economics claims companies realise US$12.50 (R185.98) in incremental revenue for every dollar (R14.87) they invest in business travel.
3. In the US, approximately 1.3-million people travelled for work each day in 2017 (Travel tech insights 2017 – DCSPlus/GBTA).

ONOMO Hotels celebrates its 10th anniversary in 2019 by looking to the future with ambitious plans to double its substantial footprint in Africa. By the end of this year, ONOMO will be operating 20 hotels in 11 countries across the continent, offering a total of 2 800 rooms – making it the leading pan-African hotel group in the mid-scale segment.

A decade of innovation to take African hospitality to the next level
ONOMO opened its first hotel in Dakar in 2010, followed by expansion into Abidjan the following year, and a third in Libreville in 2012. In 2019, ONOMO hotels has properties in Senegal, Ivory Coast, Gabon, Mali, Togo, South Africa, Guinea, Rwanda, Morocco and Cameroon, with Tanzania to follow soon.

“We’ve come a long way in 2019 alone – at the start of the year, we had 14 hotels in 9 countries under our stewardship,” says ONOMO Hotels CEO Cedric Guilleminot. “Being able to establish properties in new territories like Morocco and Cameroun and opening in the coming weeks new hotels in Mozambique and Tanzania, this year has been a tremendous privilege. Seeing our reach and room capacity increase to reach 2 800 is a truly remarkable achievement, worthy of celebration alongside that of our tenth year of operation”.

ONOMO Africa’s Finest: Where magic happens…
Under the brand ‘Africa’s Finest’, ONOMO Hotels will be celebrating African culture and helping showcase it to the world. Senegalese designer Adama Paris, who recently opened Dakar Fashion Week, will be opening brand stores for her SAARGALE label across all ONOMO Hotels, starting with ONOMO Casablanca City Centre this week. Ivorian Chef Moulay Fanny will also be bringing his vision for the African culinary arts to ONOMO Hotels, hosting cooking sessions and recreating traditional local dishes from each region, with a modern twist.

ONOMO integrates the best of the creativity and know-how of African craftsmen and designers into the architecture and design across its offering. By partnering with local resources, it has become a driver of regional economic development, aiming also to favour ecological initiatives and social responsibility. This has created opportunities in job creation, training, sourcing from local suppliers and artisans and helped the group make a positive impact, wherever it has settled.

South African Market as ONOMO’s new “nice challenge”
In South Africa, ONOMO Hotels operates hotels in Cape Town, Johannesburg and Durban, some of them under the brand name Signature Lux by ONOMO.

Set in the heart of Sandton, Signature Lux Hotel ONOMO Sandton is just steps away from the Sandton Gautrain station.

ONOMO Hotel Durban is located near the International Convention Centre and close to North Beach, Moses Mabida Stadium; Kingsmead, Kings Park and UShaka Marine World.

In Cape Town, ONOMO Hotels Group has a diversified offer to satisfy different types of clients. The brand-new Signature Lux by ONOMO Foreshore few steps from the Convention Center; ultra-central Signature Lux by ONOMO Waterfront and ONOMO Hotel Cape Town – Inn on the Square, set in a historical building at the heart of the African Art Market, which is getting ready to undergo a refresh starting November.

Read our quick-fire Q&A with Cedric Guilleminot, CEO of ONOMO Hotels, here.

ONOMO Hotel Inn on the Square

ONOMO Hotel Inn on the Square rooftop with pool – perfect for summer sundowners

Signature Lux by ONOMO Foreshore dining area

Since it was founded in 2013 by South Africans Timothy Stranex and Marcus Swanepoel, Luno, a platform which allows customers to buy and sell cryptocurrency like Bitcoin, has grown to serve more than two million customers in 40 countries. Today, it has more than 250 employees at hubs across the world.

Marius Reitz, Luno’s country manager for South Africa, says the company is in the process of appointing a pan-Africa country manager dedicated to forging relationships with local regulators, central banks and financial institutions.

“We know Africa is on the cusp of the cryptocurrency revolution as more and more people acknowledge certain limitations of the traditional financial system,” he says, adding that the company’s operations in Nigeria – where it has an office – have been going “from strength to strength with a rapidly growing user base”.

Despite its phenomenal growth, Luno has had at least one major regulatory hurdle to overcome: Malaysian authorities briefly froze the company’s bank account in the country in December 2017. Reitz points out that as the cryptocurrency industry is new and mostly unregulated, local authorities often lack precedent or guidance.

“Many are struggling to define Bitcoin – it has the properties of an asset, a payment mechanism, a currency … therefore new or unique regulation for cryptocurrencies has been slow. In many jurisdictions, it will take years to be properly regulated, hence us self-regulating in the meantime.”

Reitz says the company expects to hire between 50 and 100 people in South Africa over the next few months. While Luno has an office in Cape Town, it is also considering opening a second one in Johannesburg, to be closer to financial institutions.

De Hoop Nature Reserve is about three hours’ drive up the east coast out of Cape Town . Well, that is if the traffic is flowing, but being squeezed through Somerset West after 16:00 on a Friday afternoon can add substantially to travel time.

Stretching over 34 000 hectares, this World Heritage Site is one of the largest reserves managed by CapeNature – its coastline is a marine reserve (think Whale Trail) and is home to one of the world’s six floral kingdoms, the Cape Floral Region.

Offering a range of accommodation for up to 180 guests that includes something for everyone – from self-catering, to camping, to luxury units – the De Hoop Collection is the first private-public partnership in the South African hospitality industry and has been in operation since 2007.

Having arrived just before the gates closed, we were shown to our luxury suite (aptly called The Vlei) by torchlight. The Vlei is part of the old stables situated in the huge quadrant that faces inwards over a lawn bordered by aloes and home to magnificent Ficus trees, planted in 1956 in truckloads of soil imported from KwaZulu-Natal. Our beautiful room, furnished in the Cape vernacular, had twin four-poster beds, rietdak ceilings and a fabulous huge bathroom with a Victorian bath taking pride of place.

By the time we had unpacked, it was time to make our way to the Fig Tree Restaurant underneath a breathtaking night sky, with the Milky Way in all its glory framing our brief walk. Warmly greeted by the staff and a blazing log fire, we were shown to our table in the newly renovated dining area. The menu offers a choice of two dishes per course and a fabulous wine list from a well-stocked “cellar” in the Silo. Each dish is prepared with fresh ingredients and arrives piping hot – delicious home-style cooking at its best. As a perfect accompaniment, we ordered one of the best bottles of wine I have had in a while – a 2012 Elgin Viognier.

The wonderful thing about arriving at De Hoop after dark is the magnificent surprise that awaits you upon awakening after a regenerating night’s sleep. The surprise is not just the beautiful location, etched in shades of dove grey and olive green atop a pristine hilltop overlooking the fully enclosed shimmering vlei, but the dawn symphony (chorus is too small a word) as the prolific birdlife that inhabits the surrounding wetland greets the day with celebratory gusto (underscored every now and then by the grumpy, tone deaf hadidahs).

Walking out of our suite in the soft morning light, I was immediately greeted by blacksmith plovers, francolins, mousebirds, weavers, sunbirds and a group of female ostriches – and that was only in my immediate vicinity. In the vlei itself, pelicans, flamingoes, coots, grebes, darters, ducks, herons and gulls crowded a mid-water island and the shore. Suddenly the symphony was shattered by the frantic beating of hundreds of pairs of wings as all the birdlife scattered. Looking up into the sky I realised why – a fish eagle was making its emporial way across its territory, and as 70% of its diet is made up of fellow winged creatures, no one was hanging around to become a takeaway.

Walking back to the restaurant past its namesakes, we realised the branches had come alive with a troop of baboons also having breakfast.

Seeing the Fig Tree restaurant in daylight really does it justice. When dining, you can choose to eat from the sumptuous buffet on the patio overlooking the water and have as your companions house sparrows and friendly francolins whilst inhaling the truly awesome setting.

The 16-kilometre-long vlei is a Ramsar site and home to 97 aquatic bird species. We opted to go for the two-hour eco-boat trip to fully appreciate this natural wonder. Ably guided by William (“I do not consider this a job, I consider it an honour”) and escorted every now and then by curious otters, we ploughed our way through the tilapia-rich water and came up close and personal to the birds I had seen in the early morning light. Avian drama erupted in the skies when a lone gull spotted the fish eagle and went in for the attack. The eagle was four times its size – but attitude is everything and we witnessed a “dogfight” of note with David as victor and Goliath disappearing into the horizon.

As the sun set, William cut the engine, served snacks and chilled wine/bubbles and we savoured the perfect sounds of silence, watched all the while by a lone Klipspringer perched on a cliff’s edge.

De Hoop has an entire ecosystem to explore and other activities include guided bird walks, an interpretive marine walk, guided mountain bike trails, viewing the endangered Cape Vultures, a nature drive experience in an open safari vehicle – and for a spot of pampering there is a spa on site.

The Western Cape has a Mediterranean climate and autumn and winter months are some of the most pristine. We visited the reserve in May, with daytime temperatures reaching a gorgeous 19 to 20 degrees and not a breath of wind to ruffle our feathers.

Driving towards the gates on our way home we passed a herd of the endangered bontebok and a family of Cape Mountain Zebra. We stopped to watch a pair of yellow mongooses making like meerkats and standing on their hind legs to better survey their ‘hood.

The speed limit is 40 km/h and I had no difficulty adhering to it as we were in no hurry to leave the De Hoop haven.


Contact

Phone: 021 422 4522
Email: res@dehoopcollection.co.za
Webstie: www.dehoopcollection.com
De Hoop social media handles:
Twitter/Instagram: @dehoopreserve
https://www.facebook.com/DeHoopCollection
or
info@capecountryroutes.com
www.capecountryroutes.com

Stephen Timm investigates Artificial Intelligence and its possible impact on job security

A concerning debate is growing over jobs and the effect that artificial intelligence (AI) will have on the world of work. A 2016 study by Cape IT Initiative (CITi) and the Oxford Martin School at the University of Oxford estimates that AI could result in the loss of as many as two-thirds of jobs in South Africa. A more recent estimate from Accenture, in January 2018, puts the figure closer to 35%.

Frans Cronje, co-founder of machine learning specialist company DataProphet, is pretty frank when it comes to job losses: they are definitely going to happen. He admits that AI – because it amounts to intelligent automation – will eliminate some jobs.

However, he points out that in some cases it has also helped assist workers with better information. Despite this, he says that there is the desire in manufacturing to further automate processes to the point that plants are run by just a handful of operators.

“Once AI has gained the necessary trust and use cases in manufacturing, I would expect it to be used in a similar manner,” he adds.

The manufacturing sector will not be the only one affected. Ryan Falkenberg, co-CEO of AI firm Clevva, believes that in a developing country like South Africa, there will be significant job losses in any area where staff perform repetitive work, the kind that machines can easily replace. While his AI platform – by using algorithms to better analyse data – has helped a local bank to increase sales of financial products by 52% and an oil company’s call centre to resolve nearly all suppliers’ technical issues, it’s not clear how many jobs this has cost. He says while developed countries have the luxury of workforces that have high skill levels and the ability to move up the value chain, in South Africa many lack the capability to do so because of poor education.

“As a result, they need to rely on their emotional intelligence as well as multilingual and cultural skill sets to offer a differentiator to AI,” he says. Falkenberg believes that it is therefore critical that South Africa focuses policy and investments on augmenting staff with digital intelligence rather than simply focusing on full-automation alternatives.

“We need to help people transition to different roles, and companies need to be incentivised to invest in AI solutions that existing staff can leverage to increase existing productivity without being excluded altogether,” he argues.

For CITi CEO Ian Merrington, of particular concern in South Africa is the effect automation will have on the the youth, specifically those with a basic or low-level education. Merrington argues that AI-run machines are being trained to occupy roles that are most likely to be replaced.

“This is likely to increase social inequality, as it will hurt the poor the most – unless we can create appropriate upskilling interventions,” he says. To counter this, he believes South Africa needs to adopt an agile school and college curriculum. Teaching methodology will need to be designed for the needs of a digital economy; not the economy of the past, as is currently the case, he says.

“We also need much less emphasis on three-year degree courses and a greater focus on the new proxies for talent, particularly competencies, which will involve an ongoing learning approach, in order to cope with the rapid change that the digital economy places on job needs,” he argues. He points out that the financial services sector is already bearing the brunt of the efficiencies created through the digital value chain and AI. Agriculture and public transport are also going to be heavily impacted, he adds, but says manufacturing will probably be the sector that will shed the most jobs in the medium term. The jobs most at risk from AI will be mechanical or production and administrative tasks, but with the current advances in computing power – and the decrease in cost thereof – all jobs that require only knowledge are likely to be replaced by machines as knowledge is easily codified.

“Creativity is therefore going to become an important characteristic for any employee wishing to future-proof their career,” he points out. To address these challenges, CITi is currently scaling up its various training programmes to place 3 000 unemployed youth in tech jobs over the next three years. Merrington says the participation of corporate South Africa will be critical to the success of this initiative. While the National Treasury’s Jobs Fund has put in R75-million and Telkom’s BCX has added R100-million, CITi needs to raise another R125-million. He argues that corporates need to see critical skills development as an investment in their own organisational future, rather than a cost.

It is not just jobs that are at risk. In a report released in November 2017, the global Financial Stability Board (FSB) said replacing bank and insurance workers with machines risks creating a dependency on outside technology companies beyond the reach of regulators. Among other things, AI could, for example, lead to unsustainable increases in credit by automating credit scoring. In addition, if a major AI provider went bust, it could lead to operational disruptions at a large number of financial firms, especially if AI is deployed in ‘mission critical’ applications, the report said. Regulators could also find it difficult to identify who was behind any key financial decisions that went wrong.

Consultancy firm Accenture said that three-quarters of bankers surveyed believed that AI would become the primary way banks interact with customers within the next three years. There will also be tax implications. University of Johannesburg (UJ) Deputy Vice-Chancellor of Research Tshilidzi Marwala points out that because AI will likely reduce the number of workers, it could potentially lower the amount of collectable tax. This will also likely exacerbate the gap between rich and poor.

In addition, if people are going to be put out of their jobs, who will buy the goods that these robots will produce? Where will these customers get the money to buy these goods? What it essentially means, says Marwala, is that governments will need to consider hiking corporate taxes. Alternatively, the state could tax robots themselves – something Bill Gates proposed in 2017. However, robots and AI have become so ubiquitous that it will be difficult for authorities to decide exactly what to tax. After all, even Microsoft Word uses a degree of AI when the program’s spelling and grammar checker is used. Does that mean one should tax such programs and firms that develop or use them?

Governments will also need to give serious thought to a universal income grant – an idea first proposed by Tesla founder Elon Musk. Marwala says that, ultimately, AI will give rise to a new kind of capitalism. While it may help business to become more productive and could be deployed to replace dangerous jobs such as firefighters or miners, it also risks increasing inequality and joblessness. But he says while the government has initially been slow to respond to the threats and opportunities posed by the Fourth Industrial Revolution (4IR), there are now encouraging signs that things are changing.

At the BRICS Leaders’ Summit held in Johannesburg during July 2018, President Cyril Ramaphosa called upon BRICS countries to collaborate with one another to better prepare for the changes that new technologies are expected to bring about. To tackle this challenge, the BRICS ministers of industry agreed to set up an advisory group comprised of policy-makers and experts from all these states.

Adding to this, the University of the Witwatersrand, University of Johannesburg, University of Fort Hare and Telkom announced in September 2017 that they were working together to develop a national response to the 4IR for South Africa. The partnership explores the impact of the 4IR on the economy and the new digital economy; higher education and the future of work; inequality; citizens, society and the state; and other critical factors.

“Politically, there is much more engagement, there are more people talking about the 4IR than before,” says Marwala.

A key question that remains is how one allocates research into AI and the 4IR. Marwala adds: “The first thing is to talk about it, but that is not sufficient. You still need to pursue matters that are of importance to South Africa.”