Economics and profits

Yesterday I was explaining to my oldest daughter a few economics principles. I had one of those moments where you consciously stop yourself and say, "Remember this point, and ensure to apply it!" Maybe it is just me that experiences these moments?

We were discussing how the lowering oil prices are great for the general consumer. Lowering prices means that we are able to save more money on our daily activities, leaving more funds available to be spent on things more important to us than fuel that we burn up. However, life and economics is a balancing act that is always moving, needing a constant eye on it and the response to various policies to keep the balance.

The problem with lowering oil prices is that companies that invest into that industry and sector are holding back their investments due to the lower returns based on the present oil price and perceived lower pricing for the near future, can't blame them on this. This has meant the laying off of hundreds of thousands of oil industry employees and contractors. As we personally benefit from the lower oil prices, impacting many parts of our lives with lower transportation costs, which impacts every industry, there are many peoples personal stories that have been far more adversely effected by the lower oil prices.

I am not advocating for $100/ barrel oil pricing just to keep people in jobs. I am advocating that for every action there is an opposite reaction. Every time you save money on an item you purchased at a store, you are in reality taking that money out of that persons or companies bottom line. Don't feel too guilty, they agreed to it and most likely they had overpriced the product, hence why no one had purchased the product until the new price.

I do though advocate for longer term views on investment and deployment of growth. I advocate that with the long term in mind, perhaps being low on cash flow initially but having a cash cow in the long term, businesses and investors should look further out than 6 months. Not all investments are sound and should have the business or investor walk away, however did they contemplate the longer term and bigger picture?

Curruption and Africa

It has been very pleasing to see some of the latest developments out of the new heads of states and presidents of African countries. Seeing presidents cracking down on over spending and lavish lifestyles in exchange for allocation of funds to human rights, is very moving!

John Magufuli, the newly elected president of Tanzania. Has recently been followed up by the president of Malawi, Mr. Peter Muthurika. Both of these presidents have decided to lower the governments expenses and utilize the tax funding for services to the people. To the normal rational person, this sounds like a logical thing to do, however these two presidents have really stepped out from the fray.

The peer pressure from African leaders in the past has been to take the opportunity and redeem what is deserved, deserved in their opinion. As South Africa emerged from Apartheid, Nelson Mandela lead with a conviction from prison, to have a country free of oppression. However as time has rolled on, South Africa has now been nominated as the most corrupt country in Africa!

It is so refreshing to see how the now Nigerian president, Mohammadu Bahari, has created a new standard and peer pressure in Africa. The standard that says that you as a president were elected by the people for the people! Elected to operate and represent the country and people not only to the world, but to the people of their own country.

Being a president or in a position of power, influence, is a position of privilege, the privilege of serving others and helping them to achieve more every new day! As business leaders,, what are you doing today to leave those around you in a better position for tomorrow, in a better position to be more efficient or productive for your business?

Giving thanks and reflections

So last week we celebrated Thanksgiving here in the United States. All over the web and places we saw advertising and discussing Thanksgiving and being Thankful!

In order to be thankful, it requires you to be reflective and internally considerate of your history and actions taken by yourself and others. I have much to be thankful for, and if you are reading this, so do you! We have all been granted life and breath this day and this is quite a big thing to be thankful for.

However, I wanted to use this post to look at the process of being thankful, the process of being reflective and introspective, and how this discipline could or should be implemented on a daily basis in all areas of our lives. We need to be thankful for the history, as it has taught us what we know and needed to know for today to be a successful one.

In my years of training and business, I am always amazed how so many people do not seem to learn from their experiences and apply these learned lessons and experiences to their future and future decisions. So I wonder if people truly follow the chain of thanksgiving, facing the reality of truly has occurred in the past.

So what are we doing to prevent our history from repeating itself?

This is a tough question and something that needs to be consciously considered on a daily basis especially during decisions and planning periods. So lets thoughtfully look at the reality of our past, not for judgement, but from a perspective of learning and improving how we do business, being thankful for the lessons, and grateful for the opportunities that lie before us, opportunities that we are well positioned to take advantage of, but only if we apply the lessons learnt from our past!

A new way

Every market and business has its own challenges. I have always seen that no matter what industry or position that you find yourself in, you will come across the part of your job or industry that is dirty and creates many headaches.

To be involved in that position, you either need to know the industry and demands well enough to create solutions that accommodate or overcome these, or make sure that you get compensated commensurately with the aggravations and gray hairs.

The one manager that I used to have in the manufacturing operations that my company ran would always say to me, "Get the laziest person in the company to perform the hardest job, they'll find the easiest and least painful way to get it done!"

As I have said before, entrepreneurs are great and hold special skills sets to solve nagging issues. Not that they are lazy, however their unique way of looking at the world allows for them to see different options etc.

My company is presently working on infrastructural projects in Africa, and it is great to see the new different approach taken by this sector. In an industry steeped in a tradition of payment issues creating huge shortfalls in operational income, the governments and different groups involved are approaching this sector with a whole new mind set.

Now change is not easy and always faces many obstacles, however these solutions will not only increase the collections, over time it will slow the rate of increase due to the more efficient collections and ability for the funds to be collected and pay for the costs of service.

Efficiency and new approaches can reduce costs and increase profits, allowing for investment into areas that can continue to increase your companies profitability and sustainability, what are these areas under your control?

Perception is ...

Perception is, for the most part, is seen as reality. Perceptions are not always correct (we have all judged a book by the cover, and been surprised), and most likely based upon beliefs that may or may not be the reality.

So what are your perceptions about Africa, the African economy and African people? One of my funniest questions asked so often is, "How hot is it in Africa?" to which I so often reply about the snow that falls on the Drakensburg, mountains in Kwa-Zulu Natal, South Africa.

Being a "legal alien", finding myself as an African in the US, I have some across many people that have shared their perceptions about Africa with me. Not every Nigerian is sitting at a Western Union waiting for scam money to be sent to them, not every citizen of Africa lives in absolute poverty in tin houses and certainly not every African is a ruthless war lord, wreaking havoc through communities.

Perceptions point out to me what people do not know, not what is assumed as general knowledge. Perceptions are a form of gossip that we hear round the coffee table in the office or at the kids sporting events as we catch up with those around us. Since these perceptions reveal a lack of knowledge, then I am amazed at why so few people take the time to study and learn the truth about the area or thoughts covered by certain perceptions.

Most people with perceptions about Africa have never been to Africa, and therefore their reality about Africa is not based on truth and facts, rather gossip heard from others including the media. They are not aware of the thriving young people that are peaceful and love community, they love to be part of the global community and to be given the opportunity to show off their intellect and inspiring ideas.

In what other ways have your perceptions about business plagued your career or small business?

Small beginings, great finish!

I was listening yesterday to a news headline highlighting a wealthy Chinese business person that had just purchased a $170 million piece of art. This business person had started his professional career as a taxi driver. Through investments and a strategic approach, over time this gentleman has built a successful operation where he funds 4 museums!

It is always so easy to look at the present situation and think that it will always be such. BIG companies think that they will always hold positions of dominance and market share, and struggling small businesses can easily not see the light at the end of the tunnel. However nothing stays the same way forever.

BIG businesses lose vision and purpose and easily can be overtaken by emerging competitors.Take Motorola for example, when Flip phones were all the craze, they ruled the cellular phone market. In less than 5 years of the introduction of the "Smart phone", it is hard to even find a phone made by them anymore. There are so many examples of companies that go from shinning brands to forgotten and bankrupt losers.

In the same way that a taxi driver can rise to a multi millionaire, so too can small businesses and business owners rise. It takes a lot of hope, a lot of hard work and a lot of reflective study in the approach and business activities undertaken.

Africa is full of small enterprises that will take on the giants, what about you and your ambitions, are you taking on the giants, but more so, are you ready to take them on?

Back to the Future!

Imagine if our politicians and governments were as creative as movie creators. Where would the world and people find itself? Sure we could all be living in space ships in galaxies far, far away, or crammed into Paris as our love comes to town, but what about a movie that thought into the future, a future date, that we recently surpassed, a movie like Back to the Future 2,.

I love to compare what the creators of Back to the Future2, thought up back in the late 80's and what we have achieved by now. There have been many advances in medicine, computers etc. but wouldn't you like to choose fly mode on your car so  that you didn't need to drive into the potholes?

I have been preaching that Africa needs to be far more future and technology focused, building infrastructure that will be sustainable as Africa takes its place in the global economy as a power house.

From Johannesburg to Accra, Lagos to Nairobi, Africa is presently building some technology advancement infrastructure. Have a look at some of the top technology cities in Africa,. 

Without knowing it, Africa is adopting technology at a far faster rate than what is seen in the west. With mobile networks and operations, Africa will be well positioned to continue successfully growing the economy with an infrastructure that will allow for the flying cars and hover boards!

Entrepreneurialism - It is a matter of life and death

Being an entrepreneur in the US or Europe is always viewed as a means to escape the corporate world. A way for those that do not want to conform to the hierarchy telling you what to do! People searching for "Freedom" from the rat race!Sometimes people who go out to create a future and hold their destiny in their own hands are looked down upon and scolded by family due to the risks and apparent failure rates.

Some of us starting a business, do so for social reasons, as a means to create new exciting opportunities through projects, products and employment. But sometimes those entrepreneurs are merely trying to survive. They have very little training and knowledge and expertise to ensure success, but for them it is not a matter of choice, rather a choice of life or death!

The African continent presently has 600 million people under the age of 25 with 72 percent of this youth living on less than US$2 per day according to the Mastercard Research Foundation,. These young people need to find a way to live, they need a solution to having nothing and so they are forced to become entrepreneurs with very little funding, expertise or relationships to leverage.

African's are looking for respect and opportunities, but how can they succeed in general if they not only have nothing to start with, but no education and mentors to guide their new endeavors? 

Africa not always entrepreneurial.

I had posted last week about the successful and sustainable entrepreneurial spirit that I saw in Zimbabwe during my last visit there some time ago. As much as this is the case in so much of Africa due to the fact that governments have left their people to fend for themselves, it is interesting to note the recent uproar in South African universities.

The entitlement attitude seen by these young people is partly due to the lofty promises made by the government. Promises that can not logically be followed through on, but promises that sway voters.

The fact is that nothing in this world is FREE, and it cost someone, something, even if it didn't cost you anything. I believe that there is an education bubble looming in the US, mainly because someone can create a $250,000 debt in obtaining an education, only to earn $40,000 per year. I am not at all against furthering an education, and you can bet that I as a parent will do everything in the world to make sure that my children obtain an education that will enable them to reach for the stars, but with such stagnant wage growth in the US, there is no humanly possible way that a salary of $40,000/year will make a dent into student debt of such magnitude.

I started with how South African students were rioting over being extended student debt over being given FREE education, and so to finish I need to address this issue. Again, nothing is free, but we all need to play a role in creating solutions to the problems that we face. Entrepreneurialism is a solution mandate, which sometimes gets in the way of those just accepting the status quo. I can assure you that there are people in South Africa graduating from University without debt, and without government assistance or wealthy parents, they have seen the challenge of what lies ahead and thought creatively through the options to make their dreams a reality.

What situation are you facing that requires a little more creativity, even if it may mean a little pain?

Fundamentals over short term profits

I fortunately or unfortunately was travelling in South Africa last Thanksgiving. Unfortunately I was not home to enjoy the time with my family, but fortunately I could not participate in the binge of Black Friday shopping. The most interesting thing while in South Africa, is that they too now have Black Friday shopping specials and activities, no Thanksgiving turkey, football, but the shopping!

It is amazing how living in this global community and internet age, how cultures and traditions are engulfing the borders and barriers that once stood in place to segregate different countries, people groups and cultural beliefs. South Africa and other parts of the world have embraced the shopping and retail therapy option for the "good of the economy", but at what cost?

Very few people stop to think that in order for them to participate in the shopping, that it requires other people to be there in service of them. So as much as Black Friday offers great bargains and opportunities for the shoppers, have you ever stopped to think about the burden this puts onto other people and families?

In the news this week has been a retail company who decided to buck the trend of opening earlier and earlier, or maybe not even closing for a good old traditional family meal day. REI decided that they are not going to do any Black Friday shopping this year or for the future, and I have to say congratulations! Business done right, does not put profits above the good of people, and I am glad to see a company make a stand and allow their staff to take one of the few days available to develop the relationships in their family and community, knowing that the customers will still be there the day following Black Friday!

Entrepeneurial Africa!

A few years ago I was excited to visit Zimbabwe, for some business. I was heading to Harare, the capital and it magically coincided with the last elections to be held there.

I have long time family friends that had remained in the country while so many were fleeing from the governments crack down and forced removal from farms etc. It was really insightful to have a local business owner drive me around for the week, allowing me to see parts of the city that a normal business visitor or tourist would not be exposed to.

It was very sad to see as I disembarked from the plane, old rusty and forgotten planes off the side of the runways, and this theme continued as we drove into town to the hotel I was staying at. Everywhere I looked I saw remnants of what must have been glorious times. As the economy of Zimbabwe crashed  and hit ground bottom, in the early years of the 21st century, the government either did not have the funds or had not allocated the funds to maintain and continue investing into the infrastructure. This has left Zimbabwe with infrastructure crumbling and fading away.

I recall thinking to myself  as we drove around the city, "Even if I had the money to buy a luxurious car in Zimbabwe, I wouldn't waste my money!" The number of pot holes and condition of the roads, ruins every car, what was the point of ruining a $50,000 car when the ride was just as bumpy as in a $10,000 car.

However, as much as the city of Harare and country of Zimbabwe were not engulfed in luxurious infrastructure, the country and economy continued to tick, grow and create wealth for people within the communities. One of my fundamental business beliefs is; "Where there are people, there is an economy!"  The people of Zimbabwe embraced a more entrepreneurial economy where less than 10% of the population were employed in formal employment structures. The rest of the economy traded and bartered their goods and services, making a living, paying their bills, building an economy. I left Zimbabwe thinking, what if the government did more to assist these entrepreneurs, where could the economy grow to? What role and activities should the government undertake to support entrepreneurs?

Technology has changed your life!

I live in an area of Pennsylvania very close to the Amish farms and our visitors always marvel at and enjoy driving out to see them living life oblivious to the first world amenities around them. They choose to live a more basic and simple life, but many people in this world don't have the choice!

Technology has changed our lives so much! Can you imagine landing on an island with nothing, and no way to access the outside world? If it was just you and nature, you would very quickly come to understand how technology, no matter how small or somewhat insignificant, has changed your life.

I was explaining to someone just yesterday an example of something that some people in the world view as a right, and not a development of technology. This technology, as some what basic and insignificant to most people in the western communities, has made huge strides in impacting our way of life.

"Technology reduces tasks to the most minimal amount of time, and time is our most valuable and priceless commodity."

Think about taking a shower, Most of us in the western communities expect this activity to happen on a daily basis and take no longer than 5mins. We get ready  and head to the shower, turn on the tap and adjust the temperature to the desired level. All in all it is very painless and a quick activity that makes a daily option very painless and easy to do.

Now lets see what some people in rural parts of Africa would have to do in order to achieve the same thing that took you 5 minutes. They would first need to head down to the nearest water source, lake river etc. Lets just say that it is a 30 minute walk to the water and the same back. We won't add in any time for  the actual water collection, so an hour later they are back home, sweaty and certainly ready for a shower. Your shower takes 5 minutes because you have an endless supply of hot and cold water, theirs only lasts 2 minutes, as that is all the water that they were able to bring back home in one trip.

A shower in rural Africa takes 1 hour 2 minutes, compared to the 5 minutes it takes you. If taking a shower was this much effort for you, would it still be a daily activity?

The simple expected technology of water distribution and water heating, has allowed you an extra 57 minutes to be productive. The lack of technology and infrastructure in Africa, causes on a daily basis a great divide between the African developing economies and the western developed economies.

What other technologies do you take for advantage that gives you an advantage over the developing world daily?

Growth of economies

The United States grew their economy after World War 2 through various infrastructural developments, building roads, bridges, tunnels and entire cities. The infrastructural development played a major role in the growth of the economy by creating jobs, tax revenue, but more importantly creating an infrastructure that the future economy and generations could stand upon and build upon.

The question for the African governments, is how and what can they do to kick start the economies, and infrastructure for the countries? With a young average population throughout Africa, Africa has the workforce eager to get involved in the projects that will lead to employment and a brighter future.

When I met with a new airline that was looking to operate short range national and local flights within the central African region.  One of their interesting comments were about his part of Africa with all the mountains and rugged terrain. Building roads would not only be very expensive but difficult and time consuming. Operating aircrafts opposed to buses and trucks in their opinion would create more accessibility and at much lower upfront costs and hurdles.

This conversation got me to think how African governments look into investing into an infrastructure that will position the economies for job growth but an infrastructure that will position the continent for the future.

Snowballs and momentum

As we in the northern hemisphere transition through Autumn into the colder winter months, I am reminiscent of the warmer, sunny days of the summer, longing that the cold dark days fly by quickly. Last winter, we had plenty of snow and I did manage to have one day of rolling snowballs with the result being my family's best snowman ever.

As you roll a snow ball for the snow man, starting with a small clump of snow it grows in size as you roll it along. The snow clutches on to additional snow as it rolls over and past increasing in size and weight as you continue to roll it. Standing downhill from one of these can be catastrophic!

I can not help but think of the similarities in business practices and the principles in place with physics. I believe that successful and sustainable business practice includes the understanding and  principles keeping in mind that the major principle in place is "reaping what you sow".

A principle of Momentum-
In the same way as rolling snow balls will gather snow, so a growing business will continue with the momentum to grow. The downside is that companies can easily find themselves contracting and the same principle  of momentum seems to be like a noose closing round the company more and more.

I believe that at the moment that the global economies are facing consequences and fighting the unwinding momentum triggered by the Chinese slowdown. Africa as a developing market is adversely affected and grouped together with the Chinese, having many international investors pulling away from their investments. With Africa's market so heavily invested into the resources and minerals sector, the bump in China's road has left the economies scrambling, kick starting the downward roll of this economic snowball.

All is not lost, especially if the momentum is tackled early, reversing the shift and momentum. We are seeing more and more the US and European central banks involved in this activity, but each business and person in our global economy can play their part in restricting the downward movement and reinforcing the growth. You can see from this article publish in the Star newspaper today, that the research is done with people that choose their view.

In our daily roles, within the global economies, are your actions and decisions impacting the growth or contraction in your communities economy. Your actions ripple throughout the global economy, so act in a way that will reverse the downhill slide for the path of growth.

New Africans

In some communications that I had over the weekend with some potential business partners from Africa, I was reminded that I was dealing with the new African's. This point was being raised as a means to confirm that the world that for so long has taken advantage of the continent reaping huge profits from the exploitation of the continents resources and people.

I will be the first to show the evidence that Africa has been exploited. I and my company are working hard to move investments into the continent to beneficiate from the resources at the disposal of the people of Africa. For too long, Africa has shipped away the profits to China and the West, it is now definitely the time for Africa to create the infrastructure and invest into the means to create more jobs and more profits for the local companies.

Having said this, I am concerned that these "New African's" will take the page of the western book of history. For Africa to be "new", they need to have a "new" mindset and approach to business, one that is balanced and beneficial to the communities that they are found in. A mindset that embraces the environment, the stability of the economy and the futures of the African children!

If there is a time and place for this to be done, now is the "New African" time! With people that are so community focused, I look forward to seeing how they can look within their communities to build a great economy.

What investments in Africa do you think will be beneficial to growing companies, jobs and communities?

Democracy in Africa

I recently read an article in the New York Times where they discussed the health and stability of the democracy in South Africa. South Africa has had various struggles since the 1994 elections where Nelson Mandela became the first Black elect president of the country.

I recall always thinking how South Africa could be the shinning light for the continent, right at the bottom, burning with a flame to the top of the continent with a message of tolerance, unity and as Mr. Mandela put it, with no person oppressing the other, no matter the race, religion or background.

It although seemed to be a disappointing dream, with the following presidents openly sitting at the feet of the various dictators of the continent, learning the skills and art of manipulation and self empowerment.

But as the African Renaissance continues to build momentum, the flames are fanned by the likes of yet another great leader in Africa, President Muhammadu Buhari of Nigeria.  Nigeria is the largest economy in Africa with a population of 180 million people. My company does business in Nigeria with one of our board members born and raised in Nigeria, and I always feel for the people of the country since their whole reputation was so tainted by the 402 scams of a few years ago.

President Buhari though, seems to be winning the approval and respect of the people of Africa and the world, with nothing but honesty and treating others as he would have them treat him! This is part of the continued effort to place Africa firmly in the global economy, not to be patronized but respected with their seat at the table.

African's tend to be the most pleasant and joyful people, have you met one that made you ponder why you are not quite so jovial?

Withdraw from developing markets

Logical investing says that when everyone else is running we should run too! This is what causes such large swings in the stock markets. I have often heard trainers say that you should be happy to sit in the middle of the market, not being the first to enter or exit the market, but ahead of the majority.

Not that I am advising or giving investment advice, but you can see how the shaky commodities and Chinese  markets have shaken the US and European markets to the point of selling off and waiting out for the stormy waters to die down.

"Fortune favors the Brave" not the crazy! But as the western investors leave the developing world and Africa in drives for better times, investors that setup the long term infrastructure will reap the rewards. I am not condoning crazy investment, however as I have learnt from being involved in the African economy, where there are people there is an economy.

One of the attractions to Silicon Valley is the leadership and their approach to taking on risks, read this article about the likes on Elon Musk.

Leadership of Silicon Valley

If you were the leader of a company that could benefit from long term investment in Africa, would you be running away or to the continent right now?

Africa - Business not Charity

I am often met by a broad smile from people and comment to the tune of "Good for you!" when I discuss my businesses activities in Africa. Although once the penny hits, they then ask how we are able to fund the business and outreach?

The perception by so many within the US and western communities is that Africa is a place that you go to with your charitable gifts or assistance. "The poor African's!"

For many years it has been said that Africa has the greatest mineral and resource deposits in the globe, so then why do we view Africa as the poorest continent, when in fact they are the wealthiest continent and people in the world?

I can assure you that Africa is not full of poor people, the wealthiest African is a Nigerian, Mr. Aliko Dangote with a net value of $25 Billion. This places him as one of the top 25 wealthiest people in the world above the likes of George Soros, Jack Ma (Alibaba) and Carl Icahn.

Africa similar to most the world today has a great divide between the haves and have not's, but the questions has to be asked, Why? My skeptical brain has to assume that Africa has been kept in its place to maintain the wealth of the Western communities, since they benefit so much more from a continent that can be exploited!

This is not a rant about Africa being put into the debt of the world, but how the world should start to view Africa as a serious economy that can offer a great marketplace to sell its products and an excellent source for labor and creativity for products.

Trade with Africa between and the US only equals $10 Billion opposed to $50 Billion in aid. This underscores the perception that Africa is not a source of business partnerships opposed to Charity partnerships! 

Trade, the glue holding our economies together!

Trade has created cities, countries and territories due to the fact that people need food to eat, clothes to wear and tools to make new things. We can not all build, make or do all things, we don't have the time in the day to do this (as the od adage says, time is money!) So that means that we have trade or purchase other services or products in order to have the quality of life that we want.

I SO enjoy the study of macro economics and how we the people the world are dependent on each other! Imagine for a minute what would happen if the person that removes your trash decided to not work for a week, we would all very clearly see the impact in the street of the excess trash. Well in the same way our economy is dependent on traders, people who can find products and move them to a place that the communities can find them. Traders are people who know how to find a deal and advantage and exploit it, better than other people in the community! Without them, our houses would be very empty and you would only be able to source products from those made in your nearby community.

Trading has become so much more specialized in the world we live today, with traders being experts in their fields and industry sectors. A trader of fruits, can not trade textiles with you, even though the fundamentals of buying and selling remain the same, the knowledge and expertise of the products needs to adjust.

Really good traders and trading companies also have the ability to foresee the markets needs and demands, preparing the stock for these demands before they happen. They do their homework and travel  the world to find that right product.

Do you know a trader? What would be missing from your house if they didn't make their goods available to where you could find them?