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ESKOM and Government Policy : Ignoring South African entrepreneurial spirit and history! July 26, 2013

Posted by warwicksworld in Uncategorized.
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Eskom and a host of related energy issues supported by daily TV energy reduction pleas, the 49M campaign and a host of official and unofficial websites, offering practical energy ideas, continue to dominate South African media. It’s time to look beyond the media noise and assess just how Government’s Eskom policy is negatively affecting South Africa’s long-term growth rate.

South Africa has a proud history of creativity, ideas, inventions and entrepreneurship. There was a time that we could have led the world in renewable energy. Solar panel development, lithium ion batteries and the ‘Joule’ our very own battery-powered car, are all South African pioneered. Include in the list, Elon Musk the South African born and raised founder of Tesla the 2012 USA car of the year, (a battery powered world-beater). Today, all these inventions and inventors count for nothing as they have subsequently closed down or left our shores.

Fossil-based energy will come to an end at some time. It could be due to environmental issues, carbon output, water shortages or renewable energy replacement. As a country, we need new ideas and Eskom is just not well-suited to the task. It’s old news that the R115Bn Medupi is late, over- priced, over engineered and over budget. Eskom, like 99% of all electricity utilities, is stuck in the past. If Mr Westinghouse (power transmission pioneer) and Mr Edison (light bulb and power grid inventor) – were to walk into Eskom’s head office, it is probably a fair bet that they could join a board meeting without too many adjustments to their inventions and insights. In fact if they were to ask: “What happened whilst we were away for the past 100 years?” The board members would struggle to announce anything more interesting than the CFL (compact florescent light) bulb. That’s how little power generation has changed over time! Put another way, electricity utility companies don’t have the ideas or answers and lack the motivation to find them.

It is inconceivable to expect a monopoly to change its modus operandi. Why should they? Salaries, bonuses, status, return on Investment – are all guaranteed. After all it’s their job to make sure that if any consumer ‘switches on’…power is available. And for that, they are guaranteed a financial return. But that doesn’t make it right for us for the future. And leaving aside issues such as Eskom’s value for money, cost and remuneration structures, project management competencies etc, there are actually far bigger issues at stake.

The industrial age, as we know it, was built on cheap energy. Free market thinkers (and I am one of them) have always believed that the market sets the price and in the process balances supply and demand. Yet in the case of energy it is mostly an illusion. Much like the infamous post 2008 financial crisis, saying ‘ privatising profits and socialising losses’ – the same applies to the existing energy utilities. The price of energy does not factor in the long-term social costs at all. Balancing prices in energy supply-and-demand relates to today, the present, and certainly not the cost to society in 10 or 20 years time.

Eskom now represents the very worst of old ideas and industrial strategy. A top down -‘one too many ‘ monopoly – a sort of ‘one size fits all’! It’s just not the way to engage, implement and manage in a connected society. Furthermore, the more we attack Eskom about annual price increases (the nuclear vs coal debate etc), it just serves it perfectly and our attention is deflected from asking the really tough questions that should be asked of them. The Business Report’s 18 July 2013 article about Eskom seeking exemption from pollution targets just reinforces the argument relating to incorrect pricing, long term social cost and distraction from the real issues. The simple fact is that Eskom has no compelling reason to change the way it has worked. And it has no idea how to reinvent itself – as it has never had to! It cannot be the champion of new ways and ideas and be the enforcer of its own monopoly. That’s like running with the hares and hunting with the hounds, which is bad news for all South Africans and particularly entrepreneurs.

Somebody should tell the government that we are well into the collaborative, connected age. There is a new energy revolution on the way. Every electricity and energy consuming device will eventually be connected to the internet or a smart-phone and it will dwarf the size of the internet as we know it now. Consumption patterns, costs, possible savings and carbon footprint measurements will be available in real time. Low consuming households will even be able to sell carbon credits to higher consuming users. Companies and countries who embrace this vision will enjoy a comparative trade advantage over those who don’t. Hundreds of thousands of skilled jobs will be created in this new revolution. ESKOM’s top down (take it or leave it style) is simply just not the way to get the solution you want or that which we as a country need. And the idea of saving electricity as a national strategy is neither satisfactory or nation building. Nor does it encourage economic growth, increase employment or stimulate entrepreneurship. No wonder we can’t get beyond 2% annual growth rates.

Whilst the Eskom debate continues to contaminate our economic outlook – all around the world new options and energy solutions are proliferating. It is immaterial where you stand on the issue of renewable energy as the general trends are clear and some facts speak for themselves. For instance On June 16, 2013 Germany achieved a record 60% renewable energy contribution to national electricity demand. Three years back it was forecast that solar panel costs per watt would drop below 5.00 US dollars by 2013. Today it’s around 0.70 US cents per watt. The Tesla battery motor car can out-perform a BMW turbo motor car from 0-100 mph. Earlier this week in the UK the first human pedal-powered helicopter ‘took off ‘ and remained aloft for 60 seconds at a height of 3 meters, and a few months back a solar powered aircraft flew day and night. This week Hyundai released their new fuel cell prototype motor car. In June 2013 Los Angeles also implemented a city-wide feed-in tariff system. Worldwide, progress is being made in every energy discipline from flexible solar panels, wind turbines, fuel cells, micro turbines, flywheels, battery storage systems, etc. – and it is accelerating. So is smart grid and smart meter development! Where once there were a handful of smart phone apps measuring electricity usage there are now dozens – all in a year or two. The best minds in the world, from Bill Gates to Elon Musk, are passionately striving to drive renewable energy technologies. With smart phones proliferating all over Africa, entrepreneurs are setting up charging stations. The truisms are basically this. Fossil-based energy, as we know it, will get more expensive and renewable energy will get cheaper. In a collaborative world consumers want more control, input and to be part of the solution. We want to be ‘prosumers’(proactive consumers). To top it all, Eskom is seen as a bunch of fat cats. But it could have been so different if they could have involved every South-African on a more meaningful and genuine level.

Can you imagine if the following call to action had been adapted by Eskom (to quote from Lord Beaverbrook’s call for aluminium to manufacture fighter aircraft in 1940)? He was quoted as requesting the public to: “Give us your aluminium. We want it all, and we want it now! New and old, of every type and description – and all of it. We will turn your pots and pans into Spitfires and Hurricanes! The need is instant. The call urgent. Our expectations are high.” Maybe ESKOM should have been calling for installation of solar panels on all our rooftops a long time ago. Unlike pots and pans…the availability of sun is not limited!

Perhaps Lord Beaverbrooks’ call to action was one of the first examples of harnessing ‘people power’. More importantly it raised the awareness of the impending Luftwaffe peril facing Britain and united the whole country. Everybody felt involved and part of the struggle. It was an astute decision by Sir Winston Churchill who respected Lord Beaverbrooks abilities but with whom he often disagreed. Fighter aircraft production soared within months of Beaverbrook’s appointment. The mood in South Africa is not united – in fact we feel let down, disconnected and force fed.

Not many South Africans have benefitted from the spending hundreds of billions on Eskom’s top down energy solution. Certainly this is the case when compared to what could have been achieved. Medupi has cost South Africa a new future. Right now a completely new vision is needed. One that embraces the fact that we are in a world where solutions are driven through collaboration and engagement, enhanced by a connected world where information is available 24/7 and where consumers become prosumers. Tough but logical decisions are needed. Here are some ideas.

1) We need a Warren Gatling approach (the Lions 2013 rugby coach who realised that to win the third test and the series in Australia last month, he had to dump his most experienced player and sentimental favourite – Irish centre, O’ Driscol). So, strip Eskom of its renewable energy mandate and put the best people with the best ideas in charge.

2) Give South African entrepreneurs a chance. Winning a ‘prize’ from Eskom for saving electricity may prevent the need for expensive electricity buy backs from the mining industry, but it really does nothing for establishing an economic growth mindset. We need to open up our grid from being top down only, to a smart grid that allows any South Africans to invest even R10,000 in any renewable energy system to save both power and make a return on investment by selling it back to the grid. It’s a government policy decision with few technical barriers but with so many benefits from entrepreneurship and employment and even education. Its’ a no brainer. Devolve power production then watch South African entrepreneurs take up the challenge. Watch then how employment levels will rise. Some of these entrepreneurs will switch to more intensive energy production as their primary business activity. That is just what we need. At the very least, don’t just tell me to switch my geyser off from 5-9pm. Rather tell me that from 12-4 am in the morning electricity is half price! That would get me to change my consumption patterns. With the right financial incentives, businesses and households can easily become active energy producers and managers; rather than remain as passive users. Encourage entrepreneurs to build solar panel and solar heater factories. They are relatively simple labour-intensive operations and perfect for reducing unemployment.

3) Involve all South Africans in a meaningful way. Let every school install, measure and maintain a renewable energy system. It’s not about the size of the system (it can even be a model), but about the process of discovery. It’s a far better way than being taught out of a text book and it will ignite an interest in the sciences like nothing else can. The next batch of engineers and scientists will come from this program in their tens of 1000’s.

We just need to imagine what’s possible and extend that imagination to a belief in the power of all South Africans to contribute to energy production and management. It’s not just about keeping the lights on anymore… but rather being able to be economically competitive as the new energy order slowly unfolds. This should not be left to Eskom – under any circumstances, any longer. See this article in our Renewable Energy Section and on our Editor’s Blog page: https://warwicksworld.wordpress.com/ Warwicksworld Visit: www.bizassist.co.za and see our Renewable Energy section for tips and advice on starting your own energy business.


New licensing bill – The only way it will work for small business: April 26, 2013

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It is clear that much like numerous other well intended laws -in this case to help combat illegal trade activities from fake cigarettes to unscrupulous scrap merchants- the unfortunate reality is that most enforcement agencies (municipal, provincial and national) could not organise a piss-up in brewery.

That said, the whole business licensing process from CipC (Company Intellectual Processing Centre) to the regional liquor registration boards, is fraught with inefficiency, vested interests and a limited sense of urgency. The typical ‘móre is nog ‘n ander dag’ attitude.

In the new connected economy, old solutions such as top-down compliancy just does not work as they used to. New innovations and solutions are required.

Our suggestion at BizAssist.co.za is that the state offer a self-regulatory process via a web-based (and this includes smart-phone) enabled range of apps and solutions where by self registration can take place at NO cost. Information (as Google maps) about where we live & work, copies and details of ID’s, and Bank details can be loaded- and safely stored.

Finally, produce a Registration Number and Certification online. Let the state make an appointment with the owner to verify if indeed further verification is required. Put the sense of urgency on the shoulders of the state to check our details.

This mentality simply continues with the national ‘skimming ‘ attitude where fees are collected in the name of burdensome, parochial and often needless licenses, tolls etc. Any system that makes entrepreneurs wait for verification is just simply old fashioned, out of touch and an extension of a top-down mindset.

Just who is South Africa’s most famous entrepreneur? December 13, 2012

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Well the recent passing truly great South Africans such as Arthur Chaskalson and Prof Jakes Gerwel and Madibas recent hospitalisation got me thinking about just who are our up and coming entrepreneurial icons. South Africa is endowed with successful entrepreneurs. From Raymond Ackerman to Toyko Sexwale, Patrice Motsepe et al, the list seems endless as is the equally long list of infamous tenderpreneurs. To me at least, the title of SA’s greatest ever entrepreneur goes to Elon Musk.

Which entrepreneur can say that they have changed the world 3 times…successfully? (See our article http://bit.ly/STmLSh ). Starting off with Elon’s first venture (now) called Pay Pal he then moved on to start addressing the most important economic issues facing the 21C namely transport and renewable energy (Tesla Motors and more recently Space X and Solar City). His fusion of engineering and business has been brilliant, the total commitment and belief in each venture not to mention his total personal investment in SpaceX – had SpaceX rockets not connected with the International Space Station, the financial fallout would have been catastrophic, is awe inspiring.

In my Jan / Feb issue of SA Guide to Business Opportunities magazine I have no hesitation naming Elon Musk SA’s greatest entrepreneur – ever. To hear about what Elon has achieved we have edited to 15 minutes The Oxford-Martin ‘think tank speech’ made by Elon at Oxford University on 22 November 2012 http://bit.ly/12n4tgy.  To top it off the head of Oxford Martin ‘think tank’ is also a South African and Pretoria Boys High old boy as is Elon Musk!

ACSA tender illustrates hurdles SME’s have to face daily October 4, 2012

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It’s well known the difficulties experienced by SME’s daily, but a recent article in the Cape Times points out the “hurdle criteria” facing prospective bidders in the construction of new pedestrian walkways and carports at the Cape Town International Airport (CTIA).

It also goes on to list “Pre-qualification criteria”, with each point attributing to the 100 point total. With 70/100 being the minimum requirement, which in itself is noteworthy.

As it is, it paints a vivid if not somewhat unbelievable picture of basic criteria set by the Airports Company South Africa SOC (ACSA), i.e.  Where needing to be competent could prove to be a hurdle.

The seven point Hurdle Criteria states that bidders should be registered with the Construction Industry Development Board (CIDB), and that “bidders must achieve the minimum qualification points”.

The latter can go one of two ways, either the notion of the person best suited for the job no longer applies, or achieving the minimum is preferred. Either way, it wouldn’t cast any of the parties involved in a good light.

The “Pre-qualification criteria” is the punch line to the entire piece, ranging as from “Relevant Project Experience” to “Resources”. This begs the question – Do they know how this article comes off? Or worse – Is it completely accurate?

Flying with Mango turns out to be a brilliant business decision August 29, 2012

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As a frequent business flyer it is probably fair to say that I am not easily impressed with the levels of service and offerings by our domestic airlines.  I was pleasantly surprised to find that Mango were offering internet access on domestic flights and that as a promotion free access would be allowed to Facebook and Twitter instead of the usual R50 – per flight access cost.

I spent the entire flight updating our company Facebook and Twitter accounts and researching our competitors’ sites as well. The access speeds were better than expected considering we were flying at 11000 M.

My return flight the following evening surprise exceeded my wildest expectations. Soon after takeoff I logged on only to find that I had forgotten the passwords and username I had assigned to myself. Amazingly a little window popped up on my notebook screen and Elize (I think that was her name) said to me – “having problems with your connection – can I help?”

I tapped away my problem and within 90 seconds I had my username and password and I was back on Facebook and Twitter.

Outstanding is all I can say. This level of service went way beyond anything any reasonable person could have expected at 11000M or on the ground…

You have an impressed a client – who cannot stop spreading the ‘news’…Well done Mango and G Connect.

What’s hot in franchising in South Africa July 6, 2012

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The International Franchising Expo (IFE) was held at the Sandton Convention Centre in Johannesburg from the 17th to 19th  of May this year and approximately 5,000 visitors attended. Of the questionnaires returned from attendees at the IFE over 4,000 were found suitable for data capturing and analysis. Three aspects stood out from the data in the questionnaires

1. The Concept of Franchising Will Continue to Boom
18% (631 people) of respondents indicated that it would be possible to franchise their business. Considering that the IFE is targeted at potential franchise buyers, not potential franchisees, this indicates that there is definitely depth in franchising opportunities in the market, across sectors.

2. It’s a Male Dominated Industry
With approximately 66% of the respondents being male it indicates that people in the franchising and aligned industries at this stage have a tendency to be male with women in franchising only accounting for approximately a third.

3. Franchise Sector Interest
Probably the most interesting result was the expressed sector of interest by respondents, with multiple answers being allowed. The statistics are worth considering if you are potentially looking to franchise your business and provide valuable insight.

1) Food concepts 54%
2) Retailing 33%
3) Entertainment and Leisureb 26%
4) Building and Home services 20%
5) Automotive   19%
6) Health and Body 18%
7) Other 15%
8) Children and Education 14%

Please note that 87% of respondents came from Gauteng.

Zuma hits the jackpot with 40,000 house private jet. June 29, 2012

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For some South Africans the price tag of the Zuma’s new Boeing 777 Dreamliner aircraft will be R2,000 million. For 40,000 South African families the wait continues.

Perhaps it’s worth reflecting on the various economic discussion threads that were top of mind this week. At the ANC’s policy meeting lack of black control and participation in the economy was attributed to sunset clauses negotiated as part of the new South Africa in the early 90’s. Nafcoc (National African Chamber of Commerce) have called for the creation of a black owned bank to support black businesses.

They have also suggested the creation of two extra ministries – one for black economic empowerment (BEE) and the other for small business. Controversy abounds about the meaning and intention of mooted wage grants and employment subsidies. Somali traders are seen as a problem to township wannabe entrepreneurs. To top it all the president wakes up every morning stressing about what can be done to alleviate poverty.

Maybe it’s time to introduce a new currency unit. 1RDP house = R50,000 Only then will the context of a billion here or there hit home to ordinary South Africans how consumption oriented our economy has become. Call like it actually is. For instance a R100m rand tender irregularity should be renamed ‘Fraud worth 2000RDP houses uncovered’.

The value and the dignity provided in the form of property ownership is the greatest driver of economic growth and participation by the disadvantaged in any emerging economy. There is no question in my mind that a consumption oriented economy will always grow slower than a production oriented one.

Unfortunately the ruling elite have perfected the art of skimming either for personal use or enrichment and it is showing up – in shocking annual growth rates and unacceptably low economic participation by the masses of our citizens. As a final thought, “If a free society cannot help the many who are poor, it cannot save the few who are rich.”
― John F. Kennedy, Kennedy’s Inaugural address of 1961.

The Joule is a Joke April 30, 2012

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The first recorded government finance venture capital flop took place in 1821 when Charles Babbage propose the worlds ‘first computer’ called the Differential Engine

It’s a fascinating story and well worth reading about. Britain’s government at the height of the Empire decided to finance this project and whilst it was way ahead of its time it was just too ambitious a project (many of the parts could not be made at all) but at least the various prototypes can be seen in a museum!

Almost 5 years later and with R100’s of millions of public cash our very own Joule is a joke. It was always going to be too-little-too late.   Besides any developer connected to the cash-guzzling Rooivalk helicopter project should have been employed as a technical consultant. But with a total development cost now estimated to exceed over R9billion – my suggestion is that Optimal energy be liquidated as soon as possible and let some other energized entrepreneur acquire the rights to the blueprints and carry the baton.

Entrepreneurship is not about getting the job done at any cost. Nor is it about the manipulation of strategic national interest such as renewable energy, job creation etc. It’s about delivering a product somebody wants to buy at a reasonable cost and on time. The truth of the matter is that electric vehicles are simple to design.   For example retro fitting of electric motors into old cars is a growing hobby in the USA. The ‘White Zombie’  is a 1972’s Datsun 1200 vehicle retro fitted with an electric motor and has become famous prowling the streets of the USA dicing and destroying Maserati  and other famous sports cars. And that was in 2007.

With this type of performance possible the opportunity to create real interest would have been possible.

The sad thing about the Joule is that it carried the hopes of many South-Africans. We have a proud history of innovative products from the Kreeply Crawly to Prattleys Putty. But there was always something odd about the Optimal Energy’s set up. For instance for years there was no video on You Tube –just how on earth are you supposed to build up a loyal band of followers – without YouTube.

When I visited their premises in 2010 I was left with a lasting impression that the energy was definitely neither entrepreneurial nor inspirational – in fact I was relieved to get out of their offices. It always bothered me that delivery dates were being extended. Seriously a battery car is a car without cooling systems, starter motor, gearbox etc etc, far simpler than your average fossil fuelled sedan.

What are the lessons for entrepreneurs?

1) Prove the concept – even in less conventional ways. In the case of Optimal Energy converting 20 year vehicles to battery motors would have proved passion and desire. This was entirely absent in the entire Optimal Energy culture.

2) Build citizen, company and government support and participation.  In the case of Optimal Energy the decision to take advantage of the interest in Renewable Energy solutions and the Joule via Social Media should have been a no brainer.  Right now there should have been over 100,000 disappointed South Africans but there aren’t because Optimal Energy thought they didn’t need an army of unpaid volunteers! With 91’ likes ‘after 5 years, it’s a sign of chronic disengagement.  Contrast this to the Nissan Leaf electric vehicle which has 180,000 ‘likes’ on Facebook.

3) Investors, and  clients love a product that has its origins in a garage or small workshop.  This was definitely not the case with Optimal Energy who always seemed to have a need to aim so high that delays were made to seem as if they were normal. There was a time when the Joule could have been a ground  breaker. This is definitely no longer the case. The lesson to entrepreneurs – concentrate on demonstrating core expertise, unbridled passion and commitment to technology and product. In fact the Joule operation reminds me of the well known securities scam movie called  ‘Boiler Room’. It had all the ingredients of a remake . ‘Working prototype, fossil fuels are on the way out – just need R8.5 billion- Invest now’.  As if a handful of electric cars and 91 likes on Facebook warrants a further R8.5 billion rand of public funds.

The sad  thing about this entire unhappy project is that the potential was always there. Unlike the Differential Engine which failed in 1821 – I have no desire to see the Joule again neither do I expect it to even end up in a South-African museum!

Truly the Best 15 Marketing and Business Trends for 2012 March 1, 2012

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Trends article often give the impression that they were written as a filler article. But not this batch of 15 Marketing and Business Trends written by Rohit Bhargava .

They are outstanding. This is what’s really happening out there folks and there is no reason why these trends should not be hitting our shores ..soon.   Get ready for a host of new concepts and terminologies, At the end of the 15 trends  you will know what Corporate Humanism, Ethnomimicry,  Charitable Engagement,  Social Artivism, Change Sourcing , Retail Theatre and Digital Life mean I the context of emerging business trends.

But as Barry Ronge always says.. I am not going to spoil it because there is a whole lot more.

<div style=”width:425px” id=”__ss_10766634″> <strong style=”display:block;margin:12px 0 4px”><a href=”http://www.slideshare.net/rohitbhargava/2012-edition-15-business-marketing-trends-that-matter&#8221; title=”2012 Edition: 15 Business &amp; Marketing Trends That Matter” target=”_blank”>2012 Edition: 15 Business &amp; Marketing Trends That Matter</a></strong> <div style=”padding:5px 0 12px”> View more presentations from <a href=”http://www.slideshare.net/rohitbhargava&#8221; target=”_blank”>Rohit Bhargava</a> </div> </div>

Let Bizassist.co.za publish your article February 29, 2012

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Interested in expanding your online writing portfolio, or want to increase exposure for yourself or your business online? BizAssist is always looking for new content.

General Business AdviceGetting published on the BizAssist website offers you the possibility to reach many more potential readers as our website has a high number of readers visiting us on a daily basis.

Whether you are a budding young writer or in business looking to promote yourself online getting published with BizAssist will positively benefit your brand as well as increase traffic to your website. Preferably articles related to the South African marketplace are preferred as we focus on South African businesses.

So, if you have something to say and can put it down in words email us a text or Word document to info@bizassist.co.za or submit it at our Get Published page on any of the topics listed below:

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