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Financial Sustainability For Sustainable Development

It is not unusual to come across the mention of ‘poverty’ and ‘Africa’ in the same sentence. 

This association of Africa as the poverty-stricken continent is one which is being fiercely contested. Africa will become a prosperous continent, according to the African Union’s Agenda 2063, even if it takes decades. This transition requires, among other factors, a focus on sustainable development.

This focus on sustainable development is being championed locally through the National Development Plan (NDP) and abroad, notably through the United Nations’ Sustainable Development Goals (SDGs). Sustainable development ensures that as we meet our present needs, future generations will, too, have the ability to meet their own needs. At the heart of sustainable development is the need to provide people with quality of life, a life not plagued by poverty.

As one of South Africa’s leading development agencies, Kagiso Trust (KT, the Trust) appreciates the fact that our country’s sustainable development efforts will ultimately be impacted by the continent’s own. South Africa’s development resolves cannot escape the context of its geographic location. It is, therefore, through this understanding that Kagiso Trust’s development work is aligned with both the NDP and SDGs, and through its entity Kagiso Africa Investments (KAI), endeavours to share best practice and garner lessons from other African countries.

The Trust has resolved to overcome poverty in South Africa through the implementation of its tried and tested, replicable and sustainable development models. KT’s programmes are focused on its four strategic objectives: Education Development, Socio-economic Development, Institutional Capacity Building and Financial Sustainability. The latter focus area is one which we identified as obligatory to share with fellow not-for-profit organisations (NPOs). The logic is straightforward: without financial sustainability, there is no sustainability and growth for NPOs to execute their development work in communities.

While Kagiso Trust actively supports local NPOs through the Institutional Capacity Building’s civil society programme, the Trust set up KAI to play a similar role outside the country. KAI’s footprint is currently 4000km away with the Kenya Community Development Foundation (KCDF) a Nairobi-based development organisation that supports poor, marginalised and disadvantaged communities to initiate and drive their development agenda.

Having found a like-minded development organisation, in 2012 KAI set up KCDF Investment Holdings (Pty) Ltd. The investment holding company was founded to generate dividends to ensure that with its 60% shareholding, KCDF becomes a self-funded development agency, independent of grant funding.

A lesson learnt by Kagiso Trust during the dawn of South Africa’s democracy when international donors redirected funding to the new government, an investment holding company (then Kagiso Trust Investments) provided the Trust with a steady flow of dividends year on year, enabling the Trust to continue operating in the development space for more than 20 years independently. We believe that this model can be successful with KCDF Investment Holdings in terms of generating income for development work and programmes rather than self-enrichment.

The sustainable development agenda has forced Africans to be innovative as we formulate ways to ensure a better life for all. KT has repurposed the traditional profit-driven investment company model to one that is financial sustainability-driven for sustainable development. As we look forward to expanding our reach to other African countries, we continue to drive our strategic objectives in South Africa and support the NDP. It is the culmination of our joint efforts, both in South Africa and the continent that will, ultimately, lead to us overcoming poverty and becoming the prosperous Africa envisaged by our continent’s leaders.

 

Article Source:  Leadership Online

 

 

 

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Overcoming Poverty: Mrs. Mankodi Moitse

Sunday Times-Business-Times Q & A: Mrs. Mankodi Moitse 

Since the dawn of democracy addressing issues around poverty, unemployment and inequality have been on South Africa’s agenda. These areas form government’s priority and to address these triple challenges government has adopted a National Development Plan (NDP) as a guiding framework to eradicate poverty, reduce levels of unemployment and address inequalities by 2030. The NDP targets on the triple challenges, are to eliminate income poverty by reducing household income below R419 per person to 0 by 2030, reduce inequality to 0.6 Gini coefficient, increase employment to 24 million by 2030.

Kagiso Trust under the Heart of Gold Campaign will be calling on all sectors of society to partner and collaborate in the formulating and implementing of community-centred development models to address poverty.

In this editorial, the CEO of Kagiso Trust (KT) Mankodi Moitse shares her insights.

  1. What are the key drivers that informed the Trust’s strategy refresh in order to continue its development work of overcoming poverty?

For the past 30 years, the Trust has had an impact on over a million beneficiaries and spent close to R2 billion on development programmes mostly in education development.  Consequently, Kagiso Trust went through a process of identifying which parts of its existing strategy needed to be deepened and strengthened in order to chart a long-term vision for greater impact over the next 30 years. The principal drivers for the strategy refresh was the need to adapt and learn from the past 30 years of the organisation’s existence as well as positioning Kagiso Trust’s development programmes as seeking to overcome poverty through scalable, innovative, replicable and sustainable models. The strategy refresh looked at how we can further scale and grow our programmes to address the triple challenges (poverty, inequality and unemployment) facing our country.

This gave us an opportunity to reflect and identify gaps within our development models for each of our strategic objectives in consultation with various stakeholders to ensure that we were on the right path with our programmes.  It is only through structured systemic interlinked interventions in education and socio-economic development that we can grow the economy, increase the productive base and empower marginalised and vulnerable groups in our society.

 

  1. Why is Early Childhood Development (ECD) critical in the education pipeline?

South Africa’s development and future highly depends on the extent to which it can unlock the potential human capital inherent within its youngest population. By making investments in ECD, we are more likely to observe long-term benefit in terms of keeping learners in school longer, addressing a challenge in terms of learner throughput in the education system (a measure introduced to evaluate learner retention). Studies done by the Department of Social Development and UNICEF South Africa suggest that participation in early learning and development programmes contributes to an increase of between 5 and 10 percent of lifetime labour income. Early childhood, especially the first 1000 days from conception to two years, is particularly sensitive

Early childhood, especially the first 1000 days from conception to two years, is particularly sensitive for development, however, ECD statistics show that 8 out of 10 children do not have access to quality ECD centres.  Therefore, the shortfalls of minimal ECD intervention means that it becomes more difficult to rectify and intervene in a learner’s long term academic development as they consistently have to play catch- up.

Our interventions need to start at the beginning of the education pipeline if we are to ensure that all the learning outcomes, class appropriate competencies and early childhood cognitive development is built early.  Our programme will also assist existing community ECD centres with comprehensive skills required to run effective and sustainable centres.

 

  1. Economic growth and transformation is geared towards fundamentally changing current structures within the economy, what programmes has the Trust put in place to support entrepreneurs in high impact sectors of the economy?

Economic growth and transformation should not be seen in isolation, the two are co-dependent.  The international economic outlook shows slight economic growth improvement and South Africa should be growing above 3%, but we hope the current 2.5% growth of the real gross development product in this current quarter will be sustained.

Inequality is still evident in the patterns of economic participation in the country as economic ownership remains imbalanced.

It is against this outlook that we will be working towards developing and supporting sustainable small, medium and micro enterprises (SMMEs) by providing a holistic enterprise development programme, focusing on high impact sectors in agriculture, construction and real estate.  We aim to achieve this by providing access to markets, funding, mentorship and business support in collaboration with the private and public sector.  We also aim to launch an entrepreneurial fund in order to action this vision and call on like-minded partners to collaborate with the Trust.

We believe this programme will contribute towards getting SMMEs to organise themselves and become industry disruptors in order for them to grow into industrialists that will create much needed decent jobs and contribute towards the reduction of the current 27.7% unemployment rate.

 

  1. Local government is the sphere of government closest to communities and plays a critical role collecting and generating revenue to provide municipal services while providing e free basic services to indigent households. What solution is the Trust proposing to municipalities?

Our local government solution aims to provide municipalities with the ability to use different sets of data as a tool to improve the overall functionality of municipalities. We aim to provide assistance in building in-house capacity within municipalities through sustainable and cost-effective solutions. The solutions assist in improving municipality revenue streams, which in turn results in better service delivery and local economic development, as well as enable municipalities to play a bigger role in servicing indigent households who need them the most.

 

  1. Poverty is a key challenge for development in social and economic terms; not only in South Africa but throughout the developing world. Does the sole responsibility of the vision 2030 sit on government’s shoulders?

The recent statistics released by Stats SA paint a bleak picture of the current state and future of South Africa. It shows a regress in the achievement of the past ten years that saw a significant reduction in the levels of poverty and now we see over 50% of South Africans living in poverty and unemployment at 27.7%, the highest it’s ever been since 2003.

The NDP provided a framework to guide all sectors of society to work towards.  Government has to continue creating an enabling environment with the right policies, legislation and regulation.  Without the full participation and support from the private sector, labour and civil society the end- in -mind will be difficult to reach.  NGOs can play a more active role in development as they are at the interface of communities and operating in areas where government is unable to reach. What we need to ask ourselves is, what are the right scalable development models that are needed to ensure participation of communities to implement the NDP effectively? The NDP puts active citizenry at the centre of the cycle of development leading towards actualisation of their rights, responsibilities.

Through our Heart of Gold campaign, we would like to encourage you to engage with us and work towards overcoming poverty in our communities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Dr. Somadoda Fikeni: Overcoming Poverty

Sunday Times-Business-Times Q & A: Dr. Somadoda Fikeni 

Since the dawn of democracy addressing issues around poverty, unemployment and inequality have been on South Africa’s agenda. These areas form government’s priority and to address these triple challenges government has adopted a National Development Plan (NDP) as a guiding framework to eradicate poverty, reduce levels of unemployment and address inequalities by 2030. The NDP targets on the triple challenges, are to eliminate income poverty by reducing household income below R419 per person to 0 by 2030, reduce inequality to 0.6 Gini coefficient, increase employment to 24 million by 2030.

Kagiso Trust under the Heart of Gold Campaign will be calling on all sectors of society to partner and collaborate in the formulating and implementing of community-centred development models to address poverty.

In this editorial, Political Analyst & Advisor to Unisa’s Principal and Vice-Chancellor and Director Special Projects Dr. Somadoda Fikeni shares his insights.

  1. What type of leadership qualities are needed to move the country forward in order to realise a prosperous, peaceful and just society?

 The scale and extent of challenges we currently face will need more than one messianic leader but a team of leaders drawn from different sectors of our society. The character of leaders is perhaps more important than any other attributes as values, norms and ethics of leaders has now proven to be the most important element. South Africa need honest, ethical servant leadership driven by deep convictions for social justice for all. The leaders should focus on balancing two seemingly contradictory and yet essential aspects of our society: unite the previously divided society while at the same time making sure that there is a genuine transformation that seeks to redress historical apartheid socio-economic geography to give rise to a just inclusive society. Leadership should be a shared competence in different sectors of our society.

  1. Is it fair to expect inequality, poverty and unemployment to be resolved in 23 years?

It is not always the case that social and economic change comes incrementally and gradually over a long time. If there is political will and deep conviction or commitment to profound change. Sometimes the risk of not effecting swift change is very high and may open an opportunity to populists who may promise instant change even if in a reckless manner. We witnessed Burkina Faso under Thomas Sankara fundamentally transform society in a space of four years just as we saw the same with Silvia da Lula who almost eradicated poverty and drastically reduced poverty and inequality in Brazil. We are currently observing Rwanda under Paul Kagame rising from the ashes of a genocide into a serious model of post war reconstruction. Status quo is often maintained and find friends in those who believe in gradualism and incremental approach over an extended period. It is possible to drastically reduce poverty, inequality, and unemployment if the right policies, proper and efficient deployment of resources within a framework of a clear vision and policies that are effectively implemented.

  1. What are your thoughts on radical economic transformation and what policies do you think need to be amended or drafted to achieve this?

I do think that there is an urgent need for genuine transformation of socio-economic as this has been lagging behind in the last two decades. If properly conceptualized and implemented this would create an inclusive economy that will unleash the true potential of this society and optimize its productive capacity. Policies for agrarian transformation and rural development, policy on undoing concentration of economic power in the hands of few dominant corporate companies in each sector of the economy, reforms in the financial sector to enable small and medium black business to assess credit or financial support. Simplification of compliance laws and empowerment laws. Perhaps building state capacity to implement and professionalization of civil service. Rapid redistribution of land and dealing with legacy issues in a creative and comprehensive manner.

  1. What can be done by all sectors of society to ensure that the NDP is implemented effectively and efficiently with the ultimate goal of bridging the poverty and inequality gap? And what role can development NGOs play?

The first assignment should be mobilization of business, government, Labour and civil society into common purpose of rebuilding society and consciously reduce mutual distrust and antagonisms among these role-players into appreciating their interdependencies and strength of collaborative effort. A new consciousness that does not allow any of the role-players to abdicate from their responsibilities and disabuse the society of the notion that government alone can ever transform society. NGOs can play an important role in community development. NGOs must also be conscious of possibilities that donor funding may come with conditions that may take them away from prioritizing their communities. Much of the country’s wealth and GDP is in the hands of the business sector and yet this sector is not playing a prominent role commensurate with their power beyond profit maximization. Corporate social responsibility would be one avenue where business could play a prominent role in development.

 

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Education Conversations Radio Interview: Sizakele Mphatsoe

Education Conversations Radio Interview:

Kagiso Trust Programme Manager Sizakele Mphatsoe interviewed on Jozi FM on Tuesday, 25 July 2017

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Aspirations for Freirian Classrooms

Aspirations for Freirian classrooms – lessons for teaching and learning

Paulo Freire’s ‘Pedagogy of the Oppressed’ of the mid-nineteen seventies espoused an emancipatory philosophy which he conceived in the nineteen-fifties and -sixties. He recognised the academically ‘unfranchised’ Brazilian proletariat as being cognitively disempowered and hence rendered mute and by an education system that was dialogically deprived. The unidirectional deposition of knowledge by teachers resulted in the cognitive alienation of learners that resided in their muteness. Reflective practice was anathema for learners and teachers alike. Freire diagnosed that his people would remain forever critically voiceless within their poverty if teaching was not replaced by education. He deemed the engagement of teachers with learners, and learners with teachers through

Freire diagnosed that his people would remain forever critically voiceless within their poverty if teaching was not replaced by education. He deemed the engagement of teachers with learners, and learners with teachers through dialogic exchange as the remedy for liberating minds and for developing conscientised learners. Freire’s educational philosophy of emancipatory education through dialogic praxis, and his unintentionally semiotic literary methodology for eliciting classroom dialogue, resulted in the self-actualisation of many of his students, and their cognitive and social emancipation. Freire’s philosopy and methodology is more relevant in South Africa today than it has ever been in terms of its value for transforming education – for envisioning classrooms of the future. As South Africans we should strive for an education system that promotes the conscientisation of all our people, teachers and learners.

Freire diagnosed that his people would remain forever critically voiceless within their poverty if teaching was not replaced by education. He deemed the engagement of teachers with learners, and learners with teachers through dialogic exchange as the remedy for liberating minds and for developing conscientised learners. Freire’s educational philosophy of emancipatory education through dialogic praxis, and his unintentionally semiotic literary methodology for eliciting classroom dialogue, resulted in the self-actualisation of many of his students, and their cognitive and social emancipation. Freire’s philosopy and methodology is more relevant in South Africa today than it has ever been in terms of its value for transforming education – for envisioning classrooms of the future. As South Africans we should strive for an education system that promotes the conscientisation of all our people, teachers and learners.

Freire’s philosopy and methodology is more relevant in South Africa today than it has ever been in terms of its value for transforming education – for envisioning classrooms of the future. As South Africans we should strive for an education system that promotes the conscientisation of all our people, teachers and learners.

Conscientisation presupposes thought which presupposes language, and its vocabulary. Without the words that constitute concepts we have no capacity to engage at any meaningful cognitive level to enquire, critique or contest what we are taught. And this largely, from my mathematics vantage point, is where our learners find themselves. Our pedagogies are procedural and our expectations of our learners, therefore, cannot exceed a rote reproduction of fallible knowledge. As teachers, if we cannot expound a concept with an appropriate and exact language peculiar to the content then we indulge, sometimes inadvertently, in deceiving our learners. It results in a depositional pedagogy that is responsible for muting learners because they do not have the words with which to think or the language with which to become engaged in the process of education. Our charges trustingly receive contaminated knowledge that finds little cognitive resonance that ultimately renders them mute. Education requires of teachers their devotion and dedication to firstly emancipate themselves from their traditional perceptions of what teaching is about and secondly to relinquish the impoverished models of teaching which they witnessed and inherited while seated and facing their own youthful chalkboards. The reciprocity of the teaching-learning interchange stimulates engagement and conversation, and opportunities for learners to ponder content and question meaningfully.

Ours is a vocation – a service to humanity that requires the growing of a rapport that facilitates mutual trust between teacher and learner to ask questions that provoke thought and debate meaning. Our learners so often have the answers to the most searching of questions. We need to ensure that what we say means to our learners exactly what it means to us. Teachers and learners are equal participants in the educative process – we learn and teach each other. The implications are that we need as teachers to cultivate a humane mood of caring in our classrooms. We need to grapple with our subject content to the extent that nothing about what we teach is mysterious or intimidating. We need to learn how to ask questions that even challenge us. We need to develop our agency – and in critical realist terms challenge the status quo as revolutionised change agents.

So it is the imbibing of knowledge, internalising it and making it the cognitive threads of our corporeal fabric that moves us towards our self-realisation. Our classrooms need the invigorating contributions of its singular and collective minds. And the responsibility falls to our teachers to strive for cataclysmic metamorphoses.  Students in initial teacher education programmes need to be nurtured in the development of their potential agency and their subject prowess – ingredients that will breathe life into learning. And as classrooms become crucibles of teaching and learning so our teachers and learners will find their lost voices – and a confident identity. There will be time for questions, and time for answers. Life will take on new meaning where poverty will be one stepping stone closer to heaven, closer to the dream each one has for realising the freedom of knowing who they are and the aspirations they hold.

We need to hold dear the Freirian philosophy of education where dialogic classrooms provide for authentic conversations about who and what we are, teachers and learners alike. To be free to experience what it means to be heard and understood, and free to question until our minds are satisfied. We should never underestimate our charges, never be afraid of their questions. We must challenge them beyond the height of their potential. And to achieve this we must always remember that our expectations of our learners are directly proportional to our understanding of what we teach.

 

Dr Pete van Jaarsveld

Lecturer in the Wits School of Education

University of the Witwatersrand

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Honouring OR Tambo’s Legacy

In 1980, as the African National Congress (ANC) celebrated its 68th anniversary, Oliver Reginald Tambo addressed the congregation:

“The need for the unity of the patriotic and democratic forces of our country has never been greater than it is today… Our unity has to be based on honesty among ourselves, the courage to face reality, adherence to what has been agreed upon, to principle.”

OR Tambo’s words are just as relevant as they were then and are applicable to Kagiso Trust and South Africa as a whole. Unity speaks to a group’s shared vision and mission and a strong leader with unwavering integrity at the helm. As Kagiso Trust we entrust our Board of Trustees with the responsibility to lead us to the realisation of our vision of a prosperous, peaceful, equitable and just society. Equally, we entrust our employees with the responsibility to deliver on our mission and contribute to development through sustainable funding, with like-minded partnerships and innovative scalable development models. Integral to these responsibilities is what OR Tambo stood for: unity and integrity. He urged us to be honest among ourselves, no matter how difficult; courageous as we face the realities of our context and purpose; and adhere to our mandates to principle, which for Kagiso Trust is overcoming poverty while upholding our values.

Kagiso Trust has long realised that unity is power. This is why, 31 years since our inception, we are still proactively forging and encouraging partnerships and collaborations. As a united organisation, Kagiso Trust is confident that our vision will be realised and South Africa will see poverty become a thing of the past.

As South Africa and the world celebrate what would have been OR Tambo’s 100th birthday this year, let us hold fast to the values he passed down to us and dedicated his life to fulfilling.

 

UbunguMkhonto weSizwe, iQhawe lama Qhawe.

Kagiso Trust salutes you, Oliver Reginald Kaizana Tambo.

 

Mankodi Moitse

Kagiso Trust Chief Executive Officer

 

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Social Innovation

Amandla Kwinana explores social enterprises as a possible solution to the sustainability of NGOs in the ever-decreasing access to funding.  

The long-term sustainability of any organisation is not child’s play, more so when it comes to non-profit organisations such as non-governmental organisations (NGOs). Most NGOs attribute their lack of sustainability to lack of funding. Where this challenge has been perceived as a hindrance to growth and longevity by some NGOs, social enterprises have turned it into an opportunity.

According to social entrepreneur Shrey Goyal, few non-profits such as Kagiso Trust have created robust earned income streams, though there is an increasing trend to do so. NGOs cannot continue to rely primarily on charitable contributions, public funding and foundation grants to support their programs and cover their administrative overhead. If, due to a bad economy, donations, grants, and public sector subsidies dried up, they may even have to shut down, says Goyal.

While NGOs and social enterprises both focus on building the social good, social enterprises differ in that they are first and foremost a business. Social enterprises run like any other company and the nature of their work allow for them to constitute the social sector.

NGOs however, despite their representation of 93% of the total number of organisations registered in terms of the Nonprofit Organisations Act (with trusts at 1% and social enterprises at 6%), often do not yield the expected returns. This could be attributed to the mismanagement of funds, inadequate or lack of governance, irregular reporting and accountability structures, and other factors which are mandatory for businesses. After all, the main goal of an NGO is to create social value, without much regard for the business bottom-line, while the social enterprise aims for sustainability in the financial, social and environmental sense. While there are numerous NGOs who prescribe to sound business practices, there are just as many who simply seek to carry out their social prerogative and strictly focus their resources on executing their projects and fundraising.

Fundraising is crucial for NGOs and social enterprises alike. However, whereas funds given to NGOs carry little or no consequential clauses, funds directed to social enterprises are in the form of loans and contractual obligations. Furthermore, social enterprises create self-sustaining social programmes. For example, a social enterprise can use funds to build a market place to address the unemployment of youth in a disadvantaged community and charge a minimal fee of R10 a day for the vendors. The market would provide vendors with access to a larger market such as tourists and surrounding businesses while making the facilities affordable enough for the vendors. The minimal fee would, in turn, cover the costs of maintaining the market. In the long-term, more youth would be employed, addressing the community’s unemployment challenges.

Self-sustainability is therefore at the heart of social enterprises. Without a solid sustainability strategy and revenue generation projects, the social enterprise will not embark on its social endeavours.

This emergent ‘social innovation’ is perhaps what is needed to ensure the sustainability of NGOs. The sector has seen increased allocation of capital due to the rise of impact investing, among other factors (refer to table below).

Some concerns have emerged based on the propriety and feasibility of the possibility of an organisation to serve two bottom lines simultaneously, reaping both financial and societal rewards. Unless the organisation’s social objectives and impact are compromised to some degree in pursuit of profit maximization, such debates hold no water. Nevertheless, there is a need to scrutinise organisations which could possibly be masquerading as social enterprises in hopes of greater financial gain.

As stated by Yoyo Sibisi, Kagiso Trust’s Head of Institutional Capacity Building, the environment in which NGOs find themselves today is not as it used to be in the past decade or two, so naturally there would be a need for innovation in the sector.

Sibisi highlights two important factors for NGOs to continue servicing their purpose. “NGOs should remain as independent as they possibly can otherwise they run the risk of being pulled in all directions by funders who may have a different agenda. Secondly, it is critical to remain relevant to the needs of the communities they serve in order to reclaim their space and make an impact” he says.

“Kagiso Trust views social enterprises as one of the avenues of self-sustainability for non-governmental organisations” Sibisi adds. “But it is important to note that this route is effective when the services provided by such entities are in line with their key mission; projects are self-sustainable, and the organisation retains what they purport to stand for.

As citizens and business look to more long-term solutions to the country’s social challenges, social enterprises may just be the kind of innovation NGOs should pursue.

 

Factors driving growth in the number of social enterprises and capital allocated to the sector

 

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Managing Your Money

Managing your money and finances in a sub-investment grade economy

In light of the recent local economy’s downgrade, finance expert Samke Mhlongo-Ngwenya gives invaluable advice on how to make your money work for you.

The month of April saw South Africa’s sovereign credit rating downgraded to sub-investment grade by ratings agencies Standard & Poor’s and Fitch. This sub-investment rating, or junk status as it is known colloquially, resulted in many South Africans going into a state of panic as evidenced by the nationwide public demonstrations following the ratings announcements.

There are several technicalities surrounding the current credit ratings that explain why the Rand has not depreciated as much as one would expect with a “full blown” junk status rating, or as much as it did with the removal of Finance Minister Nhlanhla Nene in December 2015. However, with South Africa being placed on negative watch by all three ratings agencies, it would be prudent for individuals to start making financial decisions that anticipate the full adverse effects that could result from us being in true junk status.

A typical junk status economy is subject to rising interest rates; rising inflation as food, petrol and electricity prices increase; increased unemployment as companies retrench and the retrenched struggle to find new employment as companies are not hiring; rising cost of imported goods due to a lower local currency; and decreasing government expenditure as tax revenues decline and the cost of borrowing increases. The golden investment principle to remember even in the face of such grim circumstances is that one should not panic. Instead, the following steps can be taken to minimize the adverse effects of a junk status economy, and create the necessary buffer to allow one to navigate the different financial permutations one could find themselves in:

  1. Increase cashflow capacity

The easiest way to increase cashflow capacity is to review current expenditure and take up more affordable options that still meet your changing needs. An example is a review of your current medical aid and insurance plans.

  1. Stress-test your finances for changing interest-rate levels

One way to stress-test your finances is to set your prime-linked instalments at 1% higher than the current interest rate and assess how your cashflow and lifestyle are impacted. Conducting this exercise ahead of time allows one to make the necessary lifestyle adjustments without risking default. If your outflows still exceed your inflows even after stripping out luxuries and minimizing optional expenses, then approach your financial services provider in advance to discuss available options.

  1. Create an additional income stream

There are simple ways of supplementing your income such as taking up a board position, selling your skills on a consultancy basis after-hours, or embarking on a capital-light entrepreneurial venture. This may seem counter-intuitive but a junk status economy does present opportunities that can be leveraged for personal gain.

  1. Rand-hedge your investments

One of the major knocks that personal wealth takes in a junk status economy is brought about by the depreciation of the local currency. Investors can take proactive steps to build in a Rand-hedge into their investment portfolio and this can be done without necessarily transferring monies out the country. Some options include buying shares in companies that have foreign revenues, or in companies that trade commodities that are foreign currency denominated, or buying Gold ETFs. It is strongly suggested that this is done with the assistance of an investment professional to avoid risking losses.

  1. Have 9-12m salary equivalent available (outside of your pension)

Financial advisors typically advocate that one should have access to cash that is your 6-month salary equivalent. I would advocate that this provision be increased to at least 9-12months’ salary equivalent (excluding the proceeds of your pension) in an economy that is retrenching. There are a number of options in which this funding can be made available by a finance professional that would be an optimal mix of debt (given rising interest rates), and investments (given that some investments may currently be sitting at a loss).

The worst may not be over for South African consumers and the best stance individuals can take is to be proactive in structuring their finances to minimize loss and create liquidity. All this is best done with the assistance of a finance or investment professional remembering that even during what looks like a very difficult economic climate, there will still be opportunities to preserve, and maybe even create, personal wealth.

Samke Mhlongo-Ngwenya is an ex-private banker and founder of The Next Chapter (“TNC”) Wealth Partners.

 

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#HireAGraduate Campaign

Graduates question the value of their degrees amidst high unemployment rate among graduates. Chulekazi Charlie explores their frustration.

In February this year, unemployed graduates from several Eastern Cape universities took part in a #HireAGraduate campaign, in an effort to draw the attention of government and private sectors to the sad reality of unemployed graduates. The disgruntled youth made it clear that they are fed up with the high unemployment rate of graduates.

Graduates from universities and TVET institutions alike, gathered to make their voices heard about the lack of job opportunities that are available to them, despite their qualifications. Siphamandla Khasag, the chairperson of the #HireAGraduate campaign, speaking to Jacaranda FM, said the graduates’ main motive is to bring back the dignity of education. High school pupils are no longer motivated to pursue tertiary education, he said, due to the astounding number of unemployed graduates.

The echoing statement of the whole campaign was “there is great frustration and discouragement regarding the value of having a degree when it doesn’t result in economic upliftment.”

 

The protesting graduates do not want preferential treatment from the government, but rather, to raise awareness about the unemployment issues, and encourage discussions around the severity of this matter in our country.

The #HireAGraduate campaign gained huge traction on Twitter in South Africa. Kagiso Trust’s Head of Human Resources, Isabella Liba, supports the campaign’s sentiments, “I honestly understand their frustration. I was excited in 1998 when the Skills Development Act (the Act)was approved, I thought it would eliminate and address the high rate of unemployed graduates.  Sadly it did not… mainly because the said law is not imposing on the employers to do so but merely encouraging.”

The Act, as outlined is Section 2, encourages employers to provide opportunities for new entrants to the labour market to gain work experience; and to employ persons who find it difficult to be employed.  20 years down the line employers are still being encouraged to do so.  The reason that most employers do adhere to this is because there is no penalty for employers who choose not to afford employment opportunities to new entrants.

“I am of the view that the Act needs to be amended so as to include consequences for employers who do not employ graduates, similarly to what we have with businesses who do not pay tax.” Liba continued, “In the meantime, I am of the view that discussions around the severity of this matter must be encouraged, not only by students, but our tripartite; government, business and labour must be part of these discussions.  To all employers who are hiring graduates, I commend you. Continue to make a difference in our country.’’

 

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Translating SA’s Vision for Education into Reality

The Department of Basic Education schooling vision 2030 captures how government would like to see South Africa’s education by 2030.

According to the National Development Plan “By 2030, the schooling system is characterised by learners and teachers who are highly motivated; principals are effective managers  who provide administrative and curriculum leadership; parents are involved in the schools their children attend; where schools are accountable to parents; committed and professional teachers have good knowledge of the subjects they teach; schools and teachers are supported by knowledgeable district officials; the administration of education (including appointment and disciplining of teachers) is the preserve of government with the unions  ensuring that proper procedures are followed; learning materials are readily available; basic infrastructure requirements are met across the board, and high speed broadband is available to support learning.”

South Africa’s education has come a long way since 1994 bringing access to schooling to all children. However, 23 years into our democracy there are still many challenges that still face the education system. These include mud schools and farm schools in rural areas, late delivery of textbooks and learning material, rural area teacher migration to urban areas, basic infrastructure backlog, low learner motivation, minimal parental or guardian involvement and other socioeconomic dynamics such as affordability of sanitary towels for the girl child, teenage pregnancy, nutrition and food.  Government alone cannot overcome these challenges and there needs to be a collaborative approach developed where government provides an enabling environment through policy and legislation where all sectors of society partner to achieve Vision 2030.

These are some of the challenges that will be discussed at the Kagiso Trust Education Conversations in partnership with the University of Johannesburg’s Faculty of Education.  The primary objective of these conversations is to engage in debate and knowledge exchange by providing practical solutions to challenges in education which can be tabled to the Department of Basic Education for consideration as well as integration into Kagiso Trust’s Education Development Programmes.

University of Johannesburg (UJ) students, together with the public at large, have submitted their visions for South African education which will be published in a limited edition booklet available at the event.

Television and radio presenter, Masechaba Ndlovu will facilitate the conversation which will include the Deputy Minister of the Department of Basic Education Mr Enver Surty as the keynote speaker.

Event details

Date: 25th July 2017

Time: 15:00 to 17:00

Venue:  University of Johannesburg, Soweto Campus Library

Keynote speaker: Mr Enver Surty, Department of Basic Education Deputy Minister

Facilitated by:  Masechaba Ndlovu

RSVP:  Chulekazi Charlie ccharlie@kagiso.co.za

 

Kagiso Trust

 

 

 

 

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