Vongani – Groceries Series

Is It Possible To Buy Groceries At No Cost?

A buyer’s journal to secure additional wealth.
Author: Vongani Nkuna

Several years ago, I opened a stock brokerage account at a reputable firm. I deposited a few thousand and then, as a natural result of exploring other interests, I let it roost.

Month after month a statement from the broker would show up in my inbox. In it, the only activity would be the broker’s collection of monthly administration fees and the interest earned on the account balance.

The interest earned would offset the fees by a modest margin, fostering steady growth on the original deposit. This is normal of interest earning accounts that carry a decent positive balance; after all, the interest would compound monthly whilst the fees were generally fixed over long intervals.

With increased curiosity, I closely watched this mundane trend of income from a financial asset (when held in generous sums) running, almost in leaps and bounds, further ahead of its fixed costs.

Mundane as the trend was, it lead to my belief that its likely, in the long-term, my spending costs will be surpassed by income earned from the corporations wherefrom those costs originate, provided I own sufficient dividend earning shares and the corporations have some measure of financial soundness.

In other words, if chunks of my monthly budget is used to buy from a chosen corporation, shouldn’t I (where viable) try to own as many shares of that corporation as possible so that at some point the income renders my buying cost-free, so to speak?

Approaching it more broadly, if I generally spend in a particular industry, shouldn’t I have exposure to some of the corporations in that industry, for the cited outcome?

Convinced I was on to something, I got carried away…If I considered myself poor, wouldn’t this, in the long-term, bring an end to my poverty, or at least break the cycle for my family and the generations to come?

The latter notion may be somewhat far-fetched but I fantasised about the possibility and tranquillity of absolute financial freedom and its quietening effect.

After buying shares and earning dividends from the corporations of our patronage, the Nkuna Groceries Project www.nkunagroceries.co.za seeks to discover the point at which we’ll deem our historic grocery purchases, cost-free. It’s a public experiment and a practical response to the questions I’ve been asking myself.

The project is virtually a journey of a thousand miles and, to accommodate our shoestring budget and any interested persons, we started at the laughable first step.

There are two project-owners, the principal and the assistant. Each invests up to 20% (total 40%) of our past grocery spend in the shares of grocery corporations at which we buy from.

pic 2

Shares are purchased from time to time as grocery bills accumulate: We pick dividend payers that demonstrate some level of good health.

The nature of the project drives the grocer into an unofficial, but unavoidable ‘cash-back’ policy with the customer as a result of the cash dividend.

For interest’s sake, if I wanted an immediate 100% ‘cash-back’ on the latest dividend from Pick n Pay Stores Ltd (a corporation we own) the point of cost-free purchases would roughly be at the convergence of these figures…

Our Groceries Costs: R26 419.85, from May 2016 to May 2017

Latest Dividend per Share: R1.464, final dividend with a record date of 9 June 2017

Estimated After-Tax Dividend per Share: R1.171

Minimum Number of Shares Required: 22 562

Share Price (close): R60.75, day before last day of trade in order to earn dividend

Minimum Cost of Shares excl. Fees and Charges: R1 370 641.50

Estimated Dividend: R26 420.10

We, unfortunately, didn’t have R1.37 million disposable to buy the requisite number of shares to achieve instant gratification as far as cost-free groceries (using this method) are concerned; we must, therefore, endure the long haul.

Since dividends come after a period of inflationary corrosion, it would make sense to buy more shares to achieve inflation-adjusted cost-free purchases.

The chart below shows the project’s gross totals since inception in May 2016 to June 2017.

pic 4

Things are still embryonic and although it seems an impossible feat looking at current figures, I expect a single financial period’s inflation-adjusted Dividends Earned (bar) to wipe-out total Groceries Costs (bar) at some point in a generation or two, if not sooner.

Until then, any Dividends Earned (bar) are referred to as unofficial partial cash-backs, as seen with the latest scanty pre-tax dividend of R51.63; an insignificant cash-back against the total Groceries Costs (bar) of R26 990.87.

The recorded dividend is not adjusted for inflation and, at the moment, it’s completely consumed by brokerage costs.

I make no mention of capital growth from rising share prices; this, together with adequate Dividends Earned (bar), would raise the Portfolio Value (bar) above our capital Contributions (bar) at the broker. After transaction fees and charges, a liquidation of all our 32 shares now, would result in a loss based on the difference between Contributions (bar) and Portfolio Value (bar).

It’s all good and well if share prices rise, but our generational outlook silences the noise of price fluctuations. Plummeting or “bargain basement prices” are more favourable for our downward cost averaging. Besides, this is largely a contest between costs and dividends.

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We do, however, only intend to sell shares for a princely profit.

I admit, I wouldn’t off load my other holdings to make way for this operation. This is nothing more than a calculated manoeuvre in my investing playbook.

As a value investor at heart, this assignment forces me to buy shares outside my criteria of comfort. In times of adversity, these shares may fold, therefore, this operation will always be the bridesmaid never the bride.

There is, however, and you may have sensed, this stern capitalist thought hidden between the lines: Why should I contribute to the other’s wealth by circulating my money – of my potential future wealth – for the other’s short-term wares that carry limited long-term benefit for me?

I want to deal with this thought in more detail later.

Author’s biography

Vongani Nkuna

Vongani is a passionate self-taught value investor at large who owns a proprietary investing company, Nkuna Equity (Pty) Ltd. He graduated from advertising school with a diploma in copywriting, but never used his qualification in industry. Instead, his fascination with the stock market lead him to join commodities trading companies such as Trafigura where he learned more about the commodities and financial markets over and above his own informal learning initiatives. He created the Nkuna Groceries Project that seeks to promote one’s investing habits by taking advantage of one’s spending habits.      

 Profile Photo

Junk Hype- What's in a rating?

On 3 April 2017, S&P Global Ratings downgraded South Africa’s sovereign credit rating from BBB- to BB+ i.e. sub-investment/speculative grade or our new favourite catch phrase “junk”. Panic and pandemonium was the order of the day given that the decision was made shortly after President Jacob Zuma announced a cabinet reshuffle that resulted in the dismissal of former Finance Minister Pravin Gordhan.

Opinions and protest were shared by many from business leaders to fashion bloggers all weighing in on how catastrophic this is for the country. But why? In order for us to answer this it is  important to understand what a credit rating is. In my previous article (Bills, bills, bills) we explored the concept of credit worthiness and the possible effects of a credit downgrade. In summary, a credit rating is an indication of a debt issuer’s willingness and ability to meet their obligations. The rating scale represents different qualities of credit with the best quality rated AAA and the worst D for “default”.  Below is the S&P BB+ rating definition:

“An obligation rated ‘BB’ is less vulnerable to non-payment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.” S&P

South Africa as per the above definition is certainly facing uncertainty with respect to economic conditions. Growth prospects are low albeit a momentary slight uptick in the commodity cycle. But why does it matter that foreign agencies has rated the country as speculative grade? Let me introduce my favourite new concept from

Yuval Noah Harari “Inter-subjectivity”, the theory that the collective belief in a concept by large groups of people is the only thing that gives credence to its perceived existence. In other words, it only exists in our collective imagination. Credit ratings are an inter-subjective concept. I raise this as there was a growing number of people on social media opining particularly on the fact that the rating should not matter and who are these agencies are anyway? Unfortunately the investor universe believes in the inter-subjective idea of a credit rating; it gives them comfort when deploying their funds, it provides issuers with opportunities to tap markets on a “fair” basis such that those with weaker credits should compensate investors for the higher risk they take. It is fundamental to the financial system and the theory markets are predicated on. Much can be said on the credibility of the agencies themselves, having played a significant role in the 2008 financial crisis however until we collectively decide that ratings should play no role in investment/lending/borrowing decisions.

So here we are, speculative grade, what are the implications?

  1. Government bond yields increase, making SA Incorporated (Inc) obligations more expensive. It must be noted however that due to low and in some cases negative bond yields in developed markets, this has actually increased foreign investment in local bonds because investors will now be paid more. The concern is to what extent can SA Inc continue servicing debt at these new levels? My opinion, all things being equal, a considerable amount of time until the risk breaches thresholds.
  2. Interest rates increase. The South African Reserve Bank (SARB) will likely start to increase rates towards the end of the year should inflation not behave thus depreciating the Rand (ZAR). This increases the cost of living for us ordinary citizens.
  3. Exports increase. Our current account deficit should theoretically reduce as exports become cheaper for our offshore trade partners. Imports naturally will become more expensive due to the deteriorating ZAR.
  4. Banks cost of funding increases. Our banks cost of funding will increase, ultimately passing these costs onto consumers
  5. Diminished economic growth. The effects of the above will most certainly weaken gross domestic product (GDP) as interest rates increase and consumers stop spending and investors retreat.
Source: Google Images

This is undoubtedly a dire situation. S&P downgraded our foreign currency rating while our local currency rating remains investment grade. This means that our ZAR denominated bonds are still investment grade and good credit quality. At the time of writing, Fitch confirmed a downgrade of both our local and foreign currency rating to sub-investment grade with a stable outlook. Should S&P downgrade our local currency too, South Africa will be removed from a number of emerging market indices. It may take the country on average 5-7 years to return to investment grade, this is the new normal.

So what can you do to survive these uncertain times?

  1. SAVE, I cannot emphasise this enough…that rainy day is closer than you think, control your spending.
  2. DO NOT TAKE ON UNECCESARY DEBT, buying a new property is probably not the smartest thing to do if you are relying on a mortgage. Interest rates will only go one direction and that’s up in the medium to long term.
  3. STAY POSITIVE, the only way we can get through this is to do the best we can do and remain resolute in the goodness, strength and perseverance of our society. We are survivors.

Article written by: Nswana Mwangu

Nswana is an investment banker working in debt capital markets. She is a founding member of Mbewu Movement and her passions include women empowerment, travelling, fashion and music.One2one (260 of 318)

Mbewu Movement SELF WEALTH Masterclass


Dear Mbewu Community
We invite you to our first Mbewu Movement Masterclass titled ‘SELF WEALTH’
In this Masterclass you will receive lessons on personal financial planning, including investment products, savings habits, debt management and property investment:Bekithemba Mafulela (Business Development Manager – Allan Gray) will be providing insights and learnings on the day, covering questions such as:

1. What are the various asset classes and investment products to be considered for short term, medium term and long term needs?
2. What are the optimum levels of debt and how to manage debt effectively?
3. How do issues such as ‘Black Tax’ impact young professional savings and investment opportunities?

Kgaogelo Mamabolo (Property Asset Manager – Stanlib) will be providing insights and learnings on the day, covering questions such as:

1. Is Property and worthwhile investment for young professionals
2. What are the fundamentals one should consider before investing in property
3. How does one build a property portfolio on the securities exchange?

Breakfast will be served. Please note limited seating.
We look forward to seeing you there!!
Mbewu Movement.
For more information email us on mbewu.events@gmail.com or visit our website www.mbewumovement.com

Loyal to you or loyal to our economy?…

On my way to work the other day, I was listening to the radio and the guest speaker touched on a very interesting but sensitive topic. He went on to expand on how young people should consider the economic needs at the time of selecting their career paths. I must say he raised some really valid points but as I drove, I couldn’t help but ponder about this issue from a different angle.

There is a paradox inside of me around this. On the one end I am a patriot of my nation and I really believe that the wisdom and the resources to solve most of Africa’s issues do not lie overseas but within the borders of our glorious continent. So I really would like to see our economy flourish.

On the other end though, anyone who knows me knows just how passionate I am about purpose. I often echo in my circle of friends, family and colleagues about the importance of living a “purpose driven life.” I am passionate about purpose because when my purpose unfolded I understood why my life mattered.

So a question that continues to linger on my mind is, encourage young people to go into career paths that address the immediate needs of the economy or encourage young people to do what they passionate about?

But for me to truly answer this, I had to ask the question of what factors are important in aiding with a country’s economic growth/development. I opened this question up on social media and my friend’s shared some interesting insights below:

“Widespread skills; Common vision, Trust in government; Absence of corruption; Too many people studying for corporate jobs-focus on entrepreneurship from primary school; Visionary Leadership; Job creation and a focus on trade.”

You may contest that there are so many other factors that influence economic growth but the aim was not to make this an academic paper, but a simple reflection shared by an ordinary South African fascinated about the happenings in the country.

I still ponder on whether we can advise young people to cement their future on an economy that’s ever changing? And yet as I say this I am also saddened by the escalating high unemployment amongst graduates.

I am opening this up for us to have digital and face to face dialogues. My viewpoint is that we need a healthy economy. When the economy is healthy, we will have very limited dependence on the Government to supply free housing, social grants, public clinics etc. A healthy economy ensures a sustainable livelihood for the country and its occupants. I believe we need to engage more in wealth creation dialogues’ as opposed to the obsession around job creation.

The other catch 22 situation with “you have to finish university and get a corporate job mentality” is that there seems to be a rise of individuals who have great corporate jobs but are miserable. I always seem to meet people in corporate who complain about their jobs and make mention of other things they passionate about and believe that if they were courageous enough to see those passions through, those could actually be the door way to wealth.

I really like what Liz Davidson (CEO of Financial Finesse) said in her article “Eight Ways to Build Wealth like Millionaires Do – Make It A Game” She made some truly powerful reflections but there are 3 points that really stood out for me. These points were;

  • “Invent something and sell the concept”
  • “Turn your hobby into a business”
  • “Solve a problem”

These stood out because they carry the undertone of purpose and that wealth flows through engaging in society transforming actions.

As I continued to read her article, her concluding remarks really hit my core as she said “…if you can pair up your skills and talents with what you love to do, you can actually build wealth by having fun. Isn’t that how it should be?”

my-picIf we really want a future for Africa we have got to emancipate peoples thinking. I guess this might be one of those on going paradoxes but I leave you with something to ponder about. I close in the words of Ralph Waldo Emerson “To be yourself in a world that is constantly trying to make you something else is the greatest accomplishment.”


Guest Blogger Bongeka Mhlongo considers herself as a vessel of insight and an agent transformation for her generation. She believes that one day her name will go down in history books for impacting the world positively.

She currently works as a Change Management Specialist and shares most of her insights on her blog called PenTheVision. 

The Theory of Diminishing Returns


In his book, the elusive quest for growth, William Easterly illustrates the well-known economic theory in a manner that is hard to forget- using pancake batter. The theory measures how much gain or [financial] benefit can be realized if one factor of production is increased while other factors are held constant. The concept holds that the output per unit of the variable factor will eventually diminish.

I was reminded of this theory as I listened to the SONA last week, and again this week end as I read the opinion pieces of a Sunday publication in anticipation of the budget speech. Every year the budget speech is purported as the toughest one yet to be delivered; however, this year I think this may be particularly true. The year 2015 closed off with a whirlwind of activity which had intended and unintended effects on an already sluggish economy. One notable one was the #feesmustfall movement, which sparked nationwide student protests from institutions of higher education.

In reflection of the #feesmustfall movement, and in light of my own predicament I wondered if the class of 2015 quite understood the struggle that still awaited them, one that would go beyond their access to education, one which would challenge their ability to use that hard earned education. Unemployment, the word is so loosely reported that we have become desensitized to its far reaching impact. Over the past 20 years the number of unemployed graduates has increased drastically, and yet nothing seems to change. More and more school leavers enter into the higher education system with the hope of a better future, however the return are not as promised. With the increasing intake in higher education we are seeing an increase in unemployed graduates. These are just two of the many explanations of why this is happening;

  1. The quality of higher education is decreasing with every year and increase in intake. The cost of the poor quality is then passed on to prospective employers who have to upskill graduate employees, which decreases the opportunity for bigger in takes by employers.
  2. Conversely, the governments push for an increased enrolment in higher education could possibly lead to students lower than marginal quality having entered the system. This is not to say that there is not place for such students, but the school leaving generation is not being properly educated on their options and the forecast demand of the labour market.

There are many different reasons that could explain what I observe as the theory of diminishing returns playing out in South African higher education and graduates. The problem of negative returns on higher education is a powder keg, one whose explosive ramifications we had a taste of last year with the #feesmustfall protests. A well researched opinion piece by Jabulani Sikhakhane in yesterdays Sunday publication presented a great account of the Chilean and Colombian predicament with higher education; one which this country should heed as fore warned. With the budget speech for the nation coming up this week, and subsequent Ministry budget speeches I am anxious to see if the actions of the #feesmustfall uprising have lead to any insight in addressing the looming revolution of the unemployed.

As South Africa seeks to improve access to higher education, policy makers need to pay greater attention to quality and labour market driven education. Increasing higher education in take alone, does not sustain quality, and poor career guidance leads to unemployable graduates. It is important for the policymakers to remain mindful that policy mistakes are costlier to the young and poor. It is our responsibility as the ones who have gone ahead to use the knowledge and experience we have acquired, to plant a seed for the future of those who came after us.

Thabisa Faye


Thabisa is a Masters graduate, as well a seasoned ICT consultant in policy, governance and regulation.

Bills, bills, bills- A guide to the South African economy and what this means for you

#BudgetSpeech, #Downgrade, #Deficit, #Dollar/Rand, #Barclays are all trending topics at the moment and they will affect you as a citizen or resident of South Africa directly. In this post, I will attempt to unpack these topics in the simplest terms so you as the reader will understand how these moving parts affect your pocket.

Budget Speech

Last week, I had the privilege of being a panelist of the ABSIP (Association of Black Securities and Investment Professionals) Budget Speech Powertalk. My view of the speech was that while the Minister presented a number of plans to reduce the budget deficit over the next three years not enough detail was provided on how this will be achieved by way of policy reform. I was however encouraged by the Minister’s emphasis on the importance of collaboration between business and government which is tantamount to stimulating growth in our stagnant economy. But perhaps the biggest shocker of the budget speech was the lack of income tax hikes. Analysts were adamant in the weeks leading up to the speech that an increase in personal income tax, VAT or company tax was more than likely. Neither of these tax metrics were adjusted and the intention was to stimulate much needed growth.

The increase in personal income tax is quite simple to understand, if you were paying 41% tax last year and 42% tax this year then you are contributing more to government coffers. However, don’t be fooled, Treasury will still be earning more tax from you, despite no official increase in income tax this year, by way of what is termed the “fiscal drag”. Tax brackets for middle to high income earners have not been significantly adjusted for inflation, this means that if you receive an annual salary increase you may be forced into a higher tax bracket and therefore pay more tax. Without the inflation adjustment in real terms you may not be earning more than you did before your increase. This is likely to affect those earning approximately R400 000 per annum or more. Those earning less will receive some relief from the inflationary adjustments and the increase in the minimum tax threshold to R75 000 per annum.

I am not a proponent in the increase of a regressive tax such as VAT. A progressive tax system ensures that the more you earn the more tax you pay. Increasing VAT will hurt low income earners across the board and not only reduce aggregate demand but threaten public’s trust of the government. An increase in company tax is an absolute “no-go” zone, the ramifications of this would be widespread across income groups and will likely trigger capital flight i.e. foreign companies withdrawing from South Africa. Instead, significant increases in capital gains tax and transfer tax (for properties above R10 million) were announced as well as the usual suspects- sin tax, fuel levy and now sugar tax. I’m quite amused by the sugar tax and wholly support the health benefits that underlie the intention of its implementation however I may need more convincing as to whether it will really change consumer behavior. I applaud the Minister for not touching the direct tax and rather focusing on indirect and wealth tax.

Downgrade and Deficit

National Treasury have adjusted the economic growth forecasts to 0.9% this year and 1.7% in the next fiscal year. This is one of the key metrics that inform the credit rating decision undertaken by the top 3 credit agencies- Standard and Poors (S&P), Moody’s and Fitch. Credit agencies exist to inform investors on the creditworthiness of a company or country. What is meant by creditworthiness is the ability to meet debt repayment obligations. A simple example would be a typical clothing account or bond. The bank will charge you a rate based on its perception of your creditworthiness, the more favourable your profile the better the interest rate charged. This works more or less the same for sovereign debt i.e. a country’s debt obligations. Why we have sovereign debt in the first place is largely to fund the budget deficit which is the gap between what is earned by the government through tax and what the government spends. Below is an example of credit grading matrix used by the top 3:

grading table

The 2016/17 budget deficit is 3.2% and Minister Pravin Gordhan has announced that this will reduce to 2.4% in the 2018/19. News headlines in the weeks leading up to the budget speech were dominated by the possible downgrade of South Africa’s sovereign credit rating to sub-investment grade. The current credit rating is one notch away from being deemed junk (sub-investment grade), this means that there is at least a 1 in 3 chance of South Africa defaulting on its debt obligations. The worst case consequences of a ratings downgrade would be the calling up of South African bonds i.e. lenders demanding settlement of the outstanding balance. However, demanding settlement is an unlikely scenario. What will definitely happen if sovereign debt is downgraded to junk, is that bonds and loans will be repriced at higher interest rates further straining the country’s ability to meet its obligations and its ability to borrow. This causes a domino effect on the wider economy including, but not limited to, foreign capital flight and currency depreciation.

The Rand

The dollar/rand exchange rate is on everyone’s lips and it’s the one economic indicator that everyone can and wants to relate to. The oscillation of the exchange rate inspires fear and hope in many but it may not always clear to the layman what drives movements and what the consequences are. The Rand traded at a record high of R17.99 to the Dollar when the previous Minister of Finance Nhlanhla Nene was fired in an unprecedented move. In the wake of the 2016 budget speech, the Rand depreciated against the dollar. These two incidents are reflective of investor confidence. Perceptions of political and economic growth drive investors to either buy or sell the Rand. Below is graph illustrating the Rand/Dollar exchange from 1/11/15 to 2/3/16:

Rand_Dollar exchange rate No_March

Selling the Rand (for Dollars) creates excess supply in the market thus decreasing price for every 1 Dollar bought. Depreciation is not all doom and gloom, it helps the current account deficit by making our exports cheaper. The converse is, of course, imports become more expensive so an exceptionally strong currency for a developing economy or an exceptionally weak currency is not ideal. South Africa is a net importer of goods and services.

How a depreciating currency affects your pocket directly is rising prices for imported goods and services and increases in interest rates which affects any debt obligations you may have. Interest rates are likely to continue to rise to curb inflation. My advice is to reconsider any major asset acquisitions such as property and save more, you can find more savings and budgeting tips here.


Barclays Plc announced on 1 March 2016 that it would be unwinding its 62.3% shareholding in Barclays Africa/Absa over the next 2 to 3 years. This is an example of foreign capital flight, although the main impetus of the divesture is due to the greater operation and profitability efficiencies at a group level it does have a negative impact on investor confidence. The market did take a slight hit but not as badly as one would expect.

Political instability, SARS wars, student protests, falling commodity prices, stagnant growth, rising electricity prices, rising interest rates all sound like the beginning of the end. But it isn’t. The best way to ride this wave is to implement a few austerity measures of your own, save as much as you can, review your investment portfolio and most of all remain positive about the future of South Africa.



Co-founder of Mbewu Movement

Nswana Profile Pic




8 Things Youth Should Know About the African Economic Outlook

Africans and the youth in particular are engaging much more actively in topics that impact us every day such as race and politics. One area that needs more focus and attention among the African youth is economics. The economy of Africa, the cornerstone of its renaissance, has more impact on the African individual, however we find external parties scrutinise and analyse the economy more than those directly affected by it. The onus is on us to do our research and share informed opinions.

This month Professor Mthuli Ncube, Professor of Public Policy at Oxford University and former Chief Economist at the African Development Bank, shared his views in a lecture in Johannesburg. He gave a diagnosis and possible solutions on African regions, their bottlenecks and their opportunities and pointed out 3 things that will impact Africa’s economic outlook in the short to medium term: the Chinese economy, US interest rates movements and Commodities market.

These points are discussed below along with others you, as a (young) African, should know about Africa’s economic outlook:

  1. Africa’s rising stars and countries to watch

East Africa is a prime example of how inter-regional activity can insulate global economic volatility. The rising stars in the region include Rwanda – Dubbed the ‘Singapore of Africa’, their success has been largely attributed to leadership and good governance. Kenya, Tanzania and Ethiopia, which grew at 10% in 2014, are also countries to watch.

In the West, Professor Ncube is particularly enthusiastic about Cote d’Ivoire, en route to becoming an emerging nation by 2020, their services industry has contributed significantly to GDP. Ghana and Nigeria will continue to be strong despite debt challenges and other economic issues.

  1. Commodities price dip has impacted the continent negatively

Countries like Nigeria, Ghana and Angola have been negatively affected by the drop in the oil price. Nigeria’s economy in particular is highly dependent on the oil price movement and has suffered currency depreciation. Further, China, the world’s second largest crude oil consumer, is experiencing a slowdown in growth.

As a net exporter of commodities, Sub-Saharan Africa has been hurt by lower prices, however according to Makhtar Diop, World Bank Vice President for Africa, “The end of the commodity super-cycle has provided a window of opportunity to push ahead with the next wave of structural reforms and make Africa’s growth more effective at reducing poverty”.

  1. South Africa (SA), will continue to experience slow/no growth. Unless…

Since 2008, SA’s GDP has slowed to 1.8% per year, with unemployment hovering around the 25% mark. Labour issues, energy constraints and a weak currency have contributed to the contraction of the economy by 1.4% in the first quarter of 2015.

McKinsey Global Institute released a report in September identifying 5 opportunities that should reverse the negative trend, growing GDP by 1.1% per year and creating 3.4 million jobs. These opportunities include advanced manufacturing, infrastructure productivity, natural gas, service exports and raw and processed agricultural exports. The effective implementation of these various initiatives and SA’s National Development Plan are central to achieving the growth figures Cyril Ramaphosa, the deputy president has claimed.

  1. The youth bulge and the next billion

The United Nations (UN) estimates that Africa will have a population of 2.5 billion by 2050 – The Next Billion. “Currently 41% of the population is below the age of 15 and another 19% are between the ages of 19 and 24”, the UN director of the Population Division, John Wilmoth has stated. These statistics present a great opportunity, provided the proper planning for and management of this population growth takes place.

Source: BBC
Source: BBC
  1. #BringBackTheDiaspora

The African Diaspora are a very important factor in the rise of the continent. Africans in various parts of the world can come back home and exercise their school of thought, build businesses, provide services and invest in their countries. Together, leaders and the diaspora should develop innovative solutions for growth.

An example of this is the Grand Ethiopian Renaissance Dam (GERD) that used what is termed as ‘Diaspora Bond’ to raise finance for the construction of a hydro power dam in Ethiopia. While it has its challenges, it’s a great step involving those scattered across the globe.

  1. The impact of China’s slowing growth

China recently suffered a knock in its financial markets due to the slowdown of growth in its economy. Contagion resulted and the stock markets across the globe and emerging markets currencies plummeted (In SA, R14 to the dollar!), on what analysts have called ‘Black Monday’.

The traditional trade relationship between Africa and China has been that Africa exports raw materials and imports manufactured goods from China. They are also the leading partner in our infrastructure development, these deals are linked to extractive industries proving China’s slowing growth is unfavourable to African countries.

That said, Africa needs to make sure it gets “the best deal possible” for its natural resource exports, particularly with its largest trading partner China, to protect itself from global market turbulence, according to the new president of the African Development Bank, Akinwumi Adesina.

Source: Project M
Source: Project M
  1. US interest rates speculated to increase

In the US, there’s been speculation about the rise of interest rates, which after the recent plunge in financial markets and a strong US dollar, would be especially detrimental to African countries as, among other factors, debt commitments will be more painful to service.

An overall trend observed recently is that the world’s developed economies and their markets are converging upwards, whereas emerging markets are slowing down and vulnerable.

  1. Lack of Infrastructure and slow structural transformation stifling growth

The infrastructure deficit is commonly referred to as the single most important factor stifling Africa’s growth. If we don’t have adequate roads, buildings, commercial hubs, public transport systems, industrial plants such as power plants etc. we won’t be able to unlock all our opportunities. Lack of access to suitable funding (structures), inadequate strategies and collaborative and integrated planning are probably the most important challenges in infrastructure development.

Critical however is, the structural transformation of the economy with growth strategies sensitive to equity and sustainability. This will help diversify the economy and pull the continent out of the commodity-dependent state it’s in right now. This involves a value addition/beneficiation focus, investing in the services and manufacturing sectors (sometimes at the cost of the economy in the short-run). Of significance is education and skills development with investment in social infrastructure for health and well-being of the populace.

2015-09-15 09.12.26-01

Article by Lilitha Mahlati, an investment banking associate and co-founder of Mbewu Movement. She describes herself as a transformation, youth and gender activist. Follow her on twitter: @misslilitham

Women and Wealth

In honour of Women’s Month, we as Mbewu Movement hosted our first women’s day event this past Saturday (22 August). Our discussions covered two very distinct yet equally important views about “wealth”- Wealth of Self and Financial Wealth

Wealth of Self

Happy Ralinala, Head of Business Banking Absa (Barclays), took us on a journey of spiritual wealth. What resonated most with me is the notion that women are apologetic about things that make us whole and happy. It is in our nature as women to compromise at the expense of our own fulfillment but that in itself is not only a disservice to ourselves but to those around us. How many times have you conceded to do the grunt work in your workplace or agreed to eat dinner at a place you don’t really like purely to keep the peace? These may be trivial examples but it speaks to the daily sacrifices we often make as women, depleting our own personal wealth. We owe it to ourselves to enjoy the things that bring joy to our lives. So live a little, eat that cupcake, take that holiday, and go on that yoga retreat. However we should be mindful of how much emphasis we place on material possessions. Happy asks, if we lose it all today, what will be left that will truly define you? Fulfill yourself spiritually by contributing in your community for a lack of humanity is a lack of integrity. Be brave enough to accept who you are, see your flaws as opportunities and use your strengths to speak your truth.

Building your Financial Wealth

Thandi Ngwane, Head of Emerging Markets at Allan Gray, provided us with invaluable advice when approaching our financial wealth. She says the relationship between women and money is somewhat dysfunctional. On the one hand, we are very practical and resourceful and have that unique ability to stretch the Rand however we tend to be short term oriented, impatient and inconsistent. We don’t take long term views when it comes to savings and investments. There is a plethora of investment and savings products in the market and it’s often daunting to a first time investor, Thandi advises us to consider the following when starting our investment portfolio:

  • Time– take a long term view, the magic of compounding interest can only work in your favour
  • Risk-understand the difference between investing and saving. The former is more likely to carry risk
  • Have your own plan– herd mentality may not be in line with your investment objectives
  • Product choice– make sure the products you choose to invest in align with time horizon as well as your risk and return objectives

When looking for an investment partner, ensure you can answer these three questions:

  1. Does this asset manager have a long term track record?
  2. Is there consistency in the investment team complement?
  3. Are my expectations realistic?

In conclusion, Thandi’s message was to invest invest invest! By age 23, all things being equal, we should start saving for retirement. Cut out the plastic and pay yourself first. Thandi left us with this very apt quote from Sophie Tucker: “From birth to age 18, a girl needs good parents, from 18 to 35 she needs good looks, from 35 to 55 she needs a good personality, and from 55 on she needs cash.”

Thank you to all the ladies and gentlemen in attendance. Be sure to join us next year for another amazing event!



On behalf of MM

Nswana Profile Pic

Nswana (co-founding member) holds an MSc in Investment management and currently works in debt capital markets

Mbewu Movement Annual Womens Day Event – Women and Wealth

Mbewu Movement invites you to our 1st Annual Women’s Day Event with guest speakers Happy Ralinala and Thandi Ngwane

The theme of our Women’s Day function is WOMEN and WEALTH – defining the holistic meaning of wealth, addressing the importance of financial independence for women and to receive practical lessons on how to make the right investment decisions.

To purchase tickets click here

Happy Ralinala
Happy Ralinala is the Head of Absa Business Banking South Africa. She has a career that spans over 15 years in Financial Services. Her experience and knowledge span a broad range of financial services, covering the end-to-end value chain of a business. Happy holds a Masters in Business Administration, a Diploma in Financial Management and has completed a Women Development Programme with the University of the Free State.

Thandi Ngwane
Thandi is the Head of Emerging Markets at Allan Gray who has been at Allan Gray since 2009 fulfilling the Head of Private Clients and Strategic Markets roles. She is a lawyer by profession and has completed an executive education programme at Harvard Business School and a leadership programme at the Fuqua School of Business (Duke University)

Event Details:

Date: Saturday, 22nd August 2015
Time: 10am

Tickets: R100 on quicket.co.za
Venue: Level 1, Oxford Corner, 32a Jellicoe Avenue, Rosebank
Purchase tickets by Tuesday 19th August

To purchase tickets click here

We look forward to sharing this momentous occasion with you!

Mbewu Movement

Financial Advisor 101

When it comes to finding the perfect financial advisor, the most crucial thing for me is trust. I’m looking for someone competent that will walk my financial journey with me, to protect and grow my income and assets and that I will have a sustainable professional relationship with. Finding a great financial advisor should not be seen as a daunting experience but rather as a step that you take towards fully understanding your financial status and future needs.

Here are a few basic Q&As to help you find your trusted advisor.

When is the right time to get a financial advisor?

According to experts, the right time to get a financial advisor is as soon as an individual starts to earn an income. This is primarily because income is the most valuable vehicle that allows individuals to sustain and grow their lives. Financial advisors are there to:

  • advise and service you in order to ensure that your income is protected
  • advise on the required policies for emergency funds, short term saving and medium to long term investing

In some cases individuals that do not earn an income will inherit money from their family. These beneficiaries should also seek advice on the right investment tools to ensure that their inheritance continues to grow and can sustain their lifestyle.

Why is it important to have a financial advisor?

Financial advisors are important because there is a very wide range of financial products and financial service providers. They have been trained on the specific products that they are mandated to advise on and are able to assist and tailor the correct product for you. Advisors also have a wealth of information on how to structure your investment by conducting a personal risk analysis to establish your risk profile. Further to this, as life-changing experiences occur (marriage, purchasing of a new home, starting a new business, becoming a parent etc.), advisors are able to re-adjust your investments and policies accordingly.

Where do I start when looking for a financial advisor?

The simplest place to start is to go onto a Financial Service Provider (FSP) website (Discovey, Momentum, STANLIB, Absa Financial Insurance and Financial Advisors, Investec, Mapheq Financial Solutions etc.)and contact the head office stating that you are looking for an advisor. They should put you through to their advisor departments and an advisor will be allocated to you. This is the simplest way however not the most ideal because you probably will not know much about the advisor you are speaking to. In my opinion, the best way to find a financial advisor is to contact your friends and family that already have a one. They will be able to tell you how knowledgeable, efficient and effective their advisor is and the quality of the service received. It also works to your advantage to find an advisor you can relate to in order to build a sustainable and progressive relationship with them.

What should I expect when sitting with a financial advisor?

Expect a professional that has sound knowledge on the specific products on which they are mandated to advise. You should also expect to answer some personal questions such as your date of birth, salary, highest qualification, assets and marital status/family structure. It is in your best interest to provide your advisor with the most accurate information as this will assist in tailoring the best products for you. The process of obtaining your information is done by conducting a Financial Needs Analysis (FNA). This is why it is important to find a person that you are comfortable with and that you can trust.

Remember, the Working Gal should become comfortable and confident in her finances. She embraces every opportunity to plan properly and ensure that her future is a financially fruitful and prosperous one.

A big thank you to Thinasivuyile Nodada (Financial Planner) – for his invaluable insights on this piece and being my go-to source financial advisor expert 🙂 Give him a shout on +27 82 770 6766 or thina@mapheq.co.za for more information.