Ninety ‘Hidden Gems’ Chosen To Present at Tourism INDABA

Posted on May 4th, 2017
Tech

Today's Top Entrepreneurship and Business Stories (4 May)

A total of 90 small businesses or “Hidden Gems” from around South Africa have been selected to receive expert coaching ahead of their sponsored debut at INDABA in Durban in May, courtesy of the National SME Market Access project.

This initiative is funded by the National Department of Tourism through its Tourism Incentive Programme and is being executed by South African Tourism in partnership with the Southern Africa Tourism Services Association (SATSA). It is aimed at broadening the variety of tourism products on the market while upskilling and empowering black-owned small enterprises operating in this sphere, explains South African Tourism chief executive Sisa Ntshona.

The main component of the project is getting the SMEs “market ready” for their participation at South African Tourism’s INDABA, to be held at the Durban ICC from 16 to 18 May 2017. They will also have the opportunity to present their businesses to the trade during a speed networking event.

After a rigorous process during which the SMEs had to present their offerings to a panel, 90 were selected out of an initial cohort of about 300 based on the relevance of their product and their potential to be sold into the international market. They hail from each of the nine provinces, and range from safari tour operators to adventure tourism experiences, from African day spas to township restaurants, from B&Bs to boutique hotels, and from horse riding operations to helicopter rides.

SATSA chief operating officer Hannelie du Toit explains that the 300-plus businesses received initial training in their respective provinces. They were shown how to enter the tourism channel by being priced right, how to negotiate contracts with the trade and how to sell their offering. The training also included elements that will assist them in running their businesses effectively after INDABA.

Now, the 90 selected SMEs have embarked on six weeks of peer-to-peer mentorship by SATSA members who have volunteered their time to help prepare the “gems” for their two-minute “elevator pitches” to local travel buyers at INDABA.

At the trade show, their offerings will be grouped according to the themes Cultural Roots, Active Adventure and City Lifestyle. They will also have the opportunity to set up meetings with international buyers and other delegates via the online diary system.

Cash Costs South African Consumers R23 billion a Year – Mastercard Study

Cash costs consumers R23 billion or 0.52 percent of the country’s Gross Domestic Product in 2015, according to a new Mastercard study released today at the World Economic Forum on Africa. These costs are disproportionately carried by low-income earners, serving as a major barrier to financial inclusion.

Despite an increase in the number of banked adults from 63 percent in 2011 to 77 percent in 2015, cash transactions still account for more than 50 percent of the total value of all consumer transactions. This suggests that being formally banked may not be enough of a driver for consumers to move away from cash.

“Adoption of products is an important first step for financial inclusion, but usage is equally important,” says Mark Elliott, division president of Mastercard, Southern Africa. “From the consumer’s perspective, the perceived benefit of using cash is largely driven by the misconception that cash is cheap. While South Africans are generally aware of the direct fees associated with accessing cash such as bank transaction fees, they do not consider the indirect costs such as traveling to cash-in and cash-out points, the often billable time lost spent accessing cash, as well as the risk of theft.”

Conducted by Genesis Analytics, the Mastercard Cost of Cash for Consumers in South Africa Study measures both the direct costs of cash (ATM, branch costs and cash-back at Point of Sale) and indirect costs of cash (travel costs, time-related costs, foregone interest and theft) for consumers across low, middle and upper-income segments, taking into account the different behaviours and preferences of each group.

The study found that the indirect cost of using cash accounted for 61 percent of the total cost of cash to consumers, with low-income earners carrying a heavier burden than middle- to high-income earners. Low-income earners, who tend to make several low-value cash payments a month, forfeit four percent of their earnings to the cost of cash, compared to the national average of 1.1 percent. This is largely driven by the higher indirect costs including travel time, travel costs and low access to alternative channels such as internet banking, which is generally cheaper than traditional ATM and branch withdrawals.

“Cash is the enemy of financial inclusion and the poor. Too many South Africans still need to trade off the demands of an hourly job with the need to travel long distances to access cash, or stand in line to pay a bill. Many consumers also face the dangers of being robbed when they come home with their wages,” says Elliott.

The study further reveals that low-income earners – 46 percent of whom are banked – tend to use cash as a result of very limited card acceptance at micro-merchants, particularly in rural and peri-urban communities where there is no alternative to cash.

This slow adoption of alternative channels is also evident in remittance payments. The cost to remit cash both locally and to the rest of Africa accounted for eight percent of the total cost of cash to the consumer, with the bulk of the cost comprising informal remittance channels, which are most dominant in remittance flows to the rest of Africa.

Africa’s CEOs Confident About Growth Prospects Despite Uncertainty

Despite the current economic and socio-political uncertainty, numerous companies in Africa are still positive about the growth potential of the continent. PwC research across the continent shows that 91% of CEOs are confident about their own companies’ growth prospects in the medium term. “This is the highest level of confidence since we started our research on CEOs in Africa in 2012,” Hein Boegman, CEO for PwC Africa says.

Boegman was speaking on the challenges and opportunities facing Africa’s CEOs at a press briefing held by PwC at the World Economic Forum on Africa 2017 in Durban today.

One of the reasons why Africa CEOs are positive is that they tend to look to the upside and seize on the opportunities uncertainty brings. Facing a climate of muted growth at best, CEOs recognise that while they focus on organic growth and cost reductions, they also need to prioritise investment in strategic alliances and joint ventures to expand their markets and grow their customer bases.

Despite the level of optimism for growth, CEOs are concerned about uncertain economic growth and the impact this will have on their business. “The returns for doing business on the continent are high, but so are the risks. Africa’s CEOs are operating in difficult times – infrastructure on the continent remains a challenge, finding and retaining the right talent for their businesses, dealing with many of the hurdles that come with working with governments, and managing growth plans across the continent,” Boegman comments.

Given the major changes we are currently seeing in the world – such as the recent US elections and the UK’s vote to leave the EU – a key feature of the current environment is just how difficult it is to read. A single event can trigger a need for wholesale strategic changes. A case in point is the recent political and policy uncertainty in South Africa, and more particularly the recent downgrade in the country’s sovereign debt to junk status. Exchange rate volatility, an increasing tax burden, social instability resulting from inequality, and corruption remain problems in many countries.

“It is no longer enough for business leaders to steer their organisations through a complicated and challenging environment – they will need to adapt swiftly to change,” says Dion Shango, CEO for PwC Southern Africa. CEOs will need to focus on their business strategies and processes and will be expected to play a part in the broader community. CEOs will also need to consider the changing expectations and demands of current and future stakeholders. “For CEOs, their customers, government and competitors have a big influence on business strategy. Understanding their needs and working towards addressing them can help build trust, maintain reputation and lend a license to operate.”