New finance programme to benefit unemployed African youth

Some 200,000 low-income youth in sub-Saharan Africa will benefit from a United Nations-backed initiative announced this week to increase access for them to financial services in a region where youth unemployment rates are two to three times that of adults.

The programme will identify and support up to 12 financial institutions to pilot and roll out sustainable financial services tailored to African youth
YouthStart, co-sponsored by UN Capital Development Fund (UNCDF) and the MasterCard Foundation, which has made a four-year, $12 million contribution, is a competition-based programme that will identify and support up to 12 financial institutions to pilot and roll out sustainable financial services tailored to youth.

"We are excited about the potential for YouthStart to accelerate the establishment of youth financial services in sub-Saharan Africa," UNCDF Executive Secretary David Morrison said.

"Our strong expertise in ensuring that more households and small businesses gain access to credit, savings, insurance and other financial services that expand opportunities, combined with the Foundation's network and resources, presents another boost for reducing poverty and accelerating progress towards the Millennium Development Goals (MDGs)," he added, referring to UN targets to slash a host of social ills by 2015.

UNCDF will encourage collaboration among financial institutions and providers of non-financial services to spur innovation and influence policy decisions, enabling youth to participate in inclusive financial sectors.

Today, more than a quarter of the population of sub-Saharan Africa are between the ages of 12 to 24, making this group of youngsters the largest ever to be entering adulthood. Half of them remain illiterate, and young women in particular face a more challenging transition to the workplace and independent adulthood since they are more likely to fail to complete primary education and face increasing insecurity and discrimination in the labour market.

Early findings suggest that financial services aimed at youth can best promote asset-building and sustainable livelihoods when complemented with entrepreneurship and financial literacy training. However, less than 5 per cent of youth in the region have access to financial services. Few financial institutions have experience serving youth or working with youth support organizations to design and deliver youth-centric programmes.

Through the provision of technical assistance, market research and advice on how to partner with youth support organizations, YouthStart will help microfinance providers develop effective channels to deliver demand-driven services to youth.

"The MasterCard Foundation is committed to helping youth start out right," said its President and CEO, Reeta Roy. "Through YouthStart, The MasterCard Foundation is opening up pathways for 200,000 sub-Saharan African youth, half of whom will be girls and young women, to gain access to financial services."

UNCDF, the UN capital investment agency for the world's 49 least developed countries, creates new opportunities for poor people and their communities by increasing access to microfinance and investment capital. It focuses on Africa and the poorest countries of Asia, with a special commitment to countries emerging from conflict or crisis.

It provides seed capital - grants and loans - and technical support to help microfinance institutions reach more poor households and small businesses, and local governments finance the capital investments - water systems, feeder roads, schools, irrigation schemes - that will improve poor peoples' lives.

UN News

Patrick Awuah -- Educating Africa's future entrepreneurs

Young entrepreneurs honoured at SAB awards (South Africa)

Visionary South African entrepreneurs were rewarded this week at the 14th SAB KickStart awards at the Sandton Sun hotel. Finalists included companies in hospitality, design, manufacturing and construction.


Business of the Year: Sooveir Rajkumar with his Meatalicious products
The KickStart program is an initiative developed and funded by SAB, the world’s second largest brewery, to give previously disadvantaged youths aged between 18 and 35 an opportunity to start or grow their own businesses.

Business of the Year
The award for Business of the Year went to Sooveir Rajkumar and his company Meatalicious (trading as the Boastful Butcher). Rajkumar received prize money of R200 000 for his success in developing a range of healthy, innovative and Halaal burger patties. He is also the creator of the first commercial prawn burger patties in South Africa, sold in Spar and Checkers outlets in Kwa-Zulu Natal.

The brothers Lonwabo and Lubuyo Rani of Silulo Ulotho Technologies in Khayelitsha, Cape Town, won second prize of R150 000. Their company provides computer access, training, sales and repairs at seven centers and Internet cafes in Khayelitsha and Guguletho.

Third place went to Reggie Makheta, owner of the Roots Restaurant and Gallery in Soweto. His restaurant is the first in Soweto to combine traditional Sowetan meals with an art gallery, and is helping to change the culinary landscape of the township.

Development category
In the development category the winner of R150 000 was Tshepo Makhavu of Mabunga Toilets. The 33-year old won first prize for his initiative of installing cost effective and durable stand-alone concrete toilets of his own design in the rural community of Thohoyando.

Other awards in the development category went to Tebogo Mashego, a 27-year old woman who runs Diep K Steel & Aluminum, a manufacturing business in Booysens, Gauteng and Vusi Sibisi, owner of Vuma Tech Engineering in Soweto.

KickStart class of 2008
This year’s KickStart finalists were selected from a group of about 120 candidates chosen to attend business skills training courses, before preparing a business plan. The most successful business plans were rewarded with a seed capital grant of between R50 000 and R150 000.

After six months of mentoring, three businesses were selected from each region based on their use of the grant money, the performance and sustainability of their businesses and the impact KickStart had on their companies. Top performers won further mentoring and additional grant money.

Program success
South Africa has one of the lowest levels of entrepreneurship in the world with entrepreneurs contributing around 35% of GDP, compared to 60% in countries like Brazil and India. Fewer than 20% of those who start their own business survive past the first two years.

According to SAB, 81% of the companies that received KickStart grants since 2001 were still in business 3 years later. The combined turnover of grant winners was more than R95 million per year and the growth in full time jobs created was 100%.

“SAB has always been determined that KickStart be a sustainable program. I am delighted that this year’s finalists have taken as much from the mentoring program and training as they did from the monetary grants they received,” said Dr Vincent Maphai, SAB Executive Director of Corporate Affairs and Transformation.

SAB has invested more than R45 million in funding grants in the KickStart program since 1995.

Angela de Joseph Salutes African American Entrepreneurs

Financing Your New Business

Many people see funding as their biggest stumbling block on their journey of entrepreneurship. In this section, we’ll look at various options with regards to funding your business.

In this introduction, I would like to share the following tips with you.

Firstly, if you can possibly avoid it, don't borrow money. Obviously, many business paths require funding, such as buying a franchise or buying an existing business. These have a lower risk association because they are generally turnkey operations, meaning that you will start to earn money almost immediately. When you are starting a business from scratch however, making money is often much more difficult in practice than in theory. When you owe money to a lender it puts immense pressure on your business, and it is often the lender who forces you to shut down the business prematurely. If you can start your business without borrowed money it can help to prolong your opportunity to buy the time you require to succeed.

Please remember that personal overdrafts and credit cards are even more risky than borrowing start-up capital. Avoid them at all costs.

If you need small amounts of start-up capital to buy equipment or stock for instance, rather rely on personal savings or friends and family. I know this might sound strange, but 80 percent of businesses in the United States are funded by personal savings and friends and family, and it is very similar here in South Africa. The risk is lower this way, providing you keep the lender fully updated with the progress of your business.

If you do need to borrow larger sums of money, then consider your options carefully. Don't just go for the first institution that offers you funding. There is often more than one option, and you should look for the one with lower risk associated with it, as well as preferable payment terms and interest rates.

Lastly, most institutions frown on funding personal salaries and expenses. Try to cover these yourself as much as possible. Also, try and reduce your monthly costs in every way possible. Starting a business while you have personal overdrafts and credit card debts is unwise. Banks can become very sticky when it comes to personal finance facilities, especially when they don’t see regular income coming in. Don't make a mistake here, because cutting down in the short term is far less painful than losing it all

Brian Walsh

Internet Businesses and Traditional Businesses

In today's world of the Internet it is interesting to note the massive differences that have occurred even in the last decade.

At the ripe old age of 41 I am fortunate enough to have grown up, along with my business partners, having known the old business world and being able to embrace the new.

When we had our first major foray into the business world through our original company, Nexxus (UK) Limited In 1995, we tried to avoid all the "pitfalls" of traditional business and branch into distribution as opposed to manufacture, thereby avoiding warehousing, and excessive staffing, crippling rules about health and safety and the usual expenses such as lorries, forklifts etc.

What did we end up with? Warehousing, staffing, lorries forklifts, racking, 50 000 square feet of warehousing and a pile of overheads.

Thus, when I created the concept of our current business three years after selling Nexxus, I think that one of the primary directives was to avoid the aforementioned traditional costs.

Introduce internet business -- at Citylocal, we are able to conduct a successful, communications-based business encompassing several countries without entering into the traditional problem-infested areas of international transport, late goods, letters of credit & warehousing.

We are able to conduct business using technology rather than physical goods and even perform presentations using 21st century systems that 10 years ago would have seemed impossible.

In a sense we are able to conduct business in a manner that perhaps in the 1980's, for example, was only available to the money or stock trading markets.

As one is probably well aware, why trade the physical stock if it possible to trade the price of the commodity? Ultimately, of course, the physical stock or money will have to move but why dirty one's hands?

This is essentially what internet business can deliver for people that are able to free themselves from the mindset that they have to be involved in moving the physical goods or indeed the service necessary to satisfy the customer.

With an increasing amount of people using the net as a search facility or knowledge accessibility forum, the internet is gaining ground every week on traditional business.

What does this achieve for people apart from the obvious benefits of being able to work at home more effectively or gain instant access to vast amounts of information?

Put very simply it enables people to reach a previously untappable audience and, given the right work done with search engine optimisation experts, enables people to reach massive potential customers.

The whole approach to the internet is what is important and the realisation that one does not necessarily need to physically transport certain goods to be an effective market maker is essential.

This all being said, the age-old necessities of a business hold true- the service or product must be desired, good quality and the right price to make the potential transaction attractive.

Thankfully this is one area that I personally hope will never change and good old economics should see us through on this one - opportunity and choice.

All About the ‘Chocolate Lady’: A Young South African Entrepreneur

One of the main purposes of this blog is to introduce inspirational social entrepreneurs and innovative organizations to a wider audience outside of their home countries.

In Cape Town at the end of November last year, I met Nontwenhle Mchunu, a formidable, yet cautious young woman from a small town in Kwa-Zulu Natal, South Africa. She is on a mission to create Africa’s first prestigous, world-class chocolate brand, using only ingredients from African soil that have been sustainably produced.

She is well on her way already: in 2008 she won the South African Businesswomen’s Association Regional Business Achiever Awards in the social entrepreneur category for her newly established company, Ezulwini Chocolat; she has trained at one of Europe’s top culinary institutes, Leatherhead International, and in Switzerland where she learned from the world’s leading fine-chocolate makers.

Her ambition is to build a successful chocolate business in the townships of South Africa to create jobs (where unemployment runs as high as 40%), expand access to vocational education for many youth through her business, and use only cocoa and ingredients from sustainable African sources.

Mchunu, or “Chocolate Lady”, has a passion for both sustainable change and chocolate, and South African supermarket chains and hotels, like Pick-n-Pay and Protea Hotels, have already begun to retail her products. With her lofty expectations, entrepreneurial drive, and plans to become South Africa’s leading Chocolatier, I expect we will see her chocolate around the world in the not too distant future.

I met Mchunu at the Evian Group at IMD’s capacity building workshop in Cape Town that was focused on inclusive growth in Africa.

Csonke.com: Zibusiso Mkhwanazi & Neo Mothlabane

With little more than R2 000 and dreams of greatness, two entrepreneurs have built a giant

Zibusiso Mkhwanazi and Neo Mothlabane were 18 and 20 years old respectively when they started Csonke.com. Between them they had nothing but their IT and accountancy skills, R2 000 start-up capital and a dream to be in the top five IT companies in the country within five years. “We didn’t have a car so we used to take taxis to see clients. On the days that it rained, we’d have to cancel meetings because we’d get so wet walking in the rain,” remembers Mkhwanazi. But, as John Barry, founder of Adcorp, says in his interview at the back of this issue, South Africa is one of the last great countries where, if you put your mind to it, you can achieve anything.

This was their thinking exactly. In January this year, Csonke.com bought 30% of Krazyboyz Digital, for an undisclosed sum, forming one of the largest African digital agencies. Mkhwanazi is Executive Chairman and Mothlabane Managing Director of the Johannesburg office. Csonke.com also has the option to acquire a further 21% of Krazyboyz Digital which will, in future, allow it to attain majority shareholding. The rise and rise of Mkhwanazi and Mothlabane is a story that’s nothing short of remarkable. Mkhwanazi relates how it all began: “With the little capital we had we needed to focus on one thing that would land us a big client.“ They scanned the market and decided that web development was the way to go. But, there was one small problem. Neither of them was a designer. Refusing to be discouraged, they approached design students at the former Technikon of the Witwatersrand and asked them to submit examples of web design work. “We took the work and started selling it and landed our first significant client, Mazwai Securities, now Barnard Jacob Mellet,” explains Mkhwanazi.

It was a taste of things to come. Blue IQ followed, then Lotto and then Thebe Investments. “We just grew and grew - it just exploded,” he remembers, “And importantly it gave us the confidence we needed. Because as a small start-up you have to first convince a giant that you can deliver what they need, and then you have to actually deliver it. It’s a really big challenge.” In both instances, the pair proved successful and income slowly started coming in, eventually funding the company’s growth. But, ever aware that IT was a high-risk market, particularly at that time in the aftermath of the dot.bomb, Mkhwanazi and Mothlabane made an important strategic decision to keep overheads as low as possible. “We were very clear on one thing: the only salaries we were going to pay were our own and a secretary’s,” he recalls. They bought one car to share and instead of taking on staff, continued to outsource the design work on a contract basis, a practice that remained in place right up until Csonke.com bought into Krazyboyz Digital.

Mkhwanazi explains the thinking behind the merger. “We needed new markets and to expand our services for the existing clients that we had grown with. We were strong on web design but we weren’t strong on things like presentations and digital signage. And we were approaching that five year mark and still weren’t in the top five!” They started scanning the market but in the end Krazyboyz, which was also looking for a partner, found them at a serendipitous tender briefing. The deal was eventually financed through assets and cash. The merging has presented Mkhwanazi and his new team of directors with an array of challenges. “When you combine two companies there is always the risk that you will get two separate camps. There was the perception that people would lose their jobs and be replaced because there was now empowerment in the business. You have to get people to trust you,” he says, adding that communication and a united group of leaders who publicly come out in support of each other has made all the difference. To date, not one staff member has resigned. “It’s all about leading by example,” concludes Mkhwanazi. Small wonder then that Krazyboyz is at an all-time high.

Article from Entrepreneur Media SA (Pty) Ltd. All rights reserved

The Premature South African Entrepreneurs’ Success Story.

Internet and Tech billionaires around the world share amazing stories of success and struggle they went through for that success. What about the South African stories?


The determinants of success or failure: Ideas are plentiful, but only a few people are willing to risk everything to create something different. South Africa is at an “ideas” tipping point. The stories that will be told by successful individuals will be captured on camera, placed on YouTube and instantly the risk takers will be viewed by millions. It’s time for our own Steve Jobs, Bill Gates, Mark Zuckerbergs to emerge. We have them. But have you heard of Justin Stanford’s story, Zibusiso Mkhwanazi, JP van der Spuy, Tshepho Mashigo, maybe Justin Hartman? Or better yet Vinny Lingham? Most South Africans haven’t, and that’s a pity.

My name will soon be mentioned with these pioneers, I will call them friends, or at least industry buddies, guys I know on a first name basis or something like that, wait I know, il attend conferences with them, yes that’s it. The reason is simple, I’m willing to take the risks, I’ve made that leap and I will land on soft ground.
But with every name there’s a story, I mean how did these South African Internet Entrepreneurs “make it”? how did their ideas take off in a South African internet climate that’s as cold as the North Pole? Maybe someone should take the time to ask them, to get their stories out there and inspire a generation of entrepreneurs that will take this internet monster buy the dragon horns, tame it and ride it!


I have a story, it’s dramatic and filled with hardships, failure and basically all the ingredients for a moving success story, only thing is that the success part hasn’t quiet taken place yet. Regardless, it’s important to know what it takes to pursue a passion and live a dream. Similar to the likes of Justin Stanford, Mark Zuckerberg and Steve Jobs to name a few, I didn’t like what I was studying at Stellenbosch, it was great, but just not for me, but I kept at it for the years I was required to, more to tell the truth. But always my passion was entrepreneurship, I wanted to start something, not just become part of an already existing machine, it didn’t move me at all. When I was in high school in Durban, I started making t-shirts that sold like hot cakes, my mother saw that I was doing well and helped me out with capital to get t-shirts to print on, some ink and screen printing equipment, some of which I stole from the school art department. I loved making money from work I had done, but that venture soon bored me and I stopped, later on in varsity I started an events company with two friends, we did well, were able to feed ourselves and party often, perhaps too often for students.

We made contacts with the right people in the club scene and were able to throw parties in clubs without paying for the venues and keeping the money we made at the door. It was good and a small success. That also came to an end and so did mu varsity career and I had to find a job, that’s how it works. I got into an online marketing agency in Cape Town and that’s where I fell in love with the internet. The possibilities literally drove me insane. I wanted to be a leader in this industry, to somehow make a success of my life through the internet, the ideas were endless, I’d read up about young internet entrepreneurs daily, I still do. After working for three different companies in the online marketing industry, I found myself without a job, far from home and coming close to becoming homeless. I experienced a few nights of no food at all during my job hunt, some friends were good enough to give me their couches for some time and my lovely girlfriend basically fed me. It was/is the struggle of my life. I was in a city far from home and too ambitious to just give up and run home. After a year or more of constant rejection from companies I finally gave up.

I moved to Johannesburg for two months to live with a good friend under the hope of finding a job in my line of work in the bigger city, but that came to nought too. It was during the days on my friends couch that I came up with Three internet business ideas, All three inspired by three successful and brave internet entrepreneurs, namely Alex Tew, Tony Hsieh and Google’s’ Larry Page and Sergey Brin. I have started with the first project Adbuzz, an online advertising platform, very simple, nothing fancy, but a great way for businesses to be noticed without spending hundreds of thousands on advertising and also not being listed as just another company on a boring online directory that no clients or customers even visit.
These three projects are going to be my life’s work. I haven’t made a single cent yet, but success is along the path, the ideas are great and the risk is huge. The passion is burning and the faith is endless. South Africa could do with a public internet success story, I’m willing to hand it over.

थे इन्टरनेट इस गोने!!!!!!!

Great Entrepreneur. Maybe Not African, But Worth Learning From

As an entrepreneur, you've probably set your sights high. You dream of a reality that others would brush off as, well, simply a dream. You envision creating a brand that crosses oceans and continents in its importance and recognition. You don't think in multiples of one, but instead in hundreds, perhaps thousands. And you might even be calculating not if but when your business will officially cross the threshold from the millions to $1 billion. And even in the throes of a recession, you hold on to that vision, knowing that if you can build the foundation and survive now, you will thrive later.

We recently caught up with two individuals who have survived turbulent waters, skillfully navigating their companies through the dotcom bust and building billion-dollar companies before age 40. Here's how they made a billion happen--in their own ways and on their own terms.


The Entrepreneurs
Michael Chasen, 37, travels extensively every month and values meeting people and sharing ideas. He has been doing that since 1997, when he co-founded Blackboard Inc., a Washington, DC-based provider of enterprise software that enables colleges, schools and other educational institutions to bring their processes online. (To interview him, I had to trail him down to Mexico, where he was attending a networking event with 60 other successful entrepreneurs.)

Tony Hsieh, 35, is a smart investor who placed his bets on a small startup called Zappos.com in August 1999 but then became so convinced of the potential in the marketplace for an online shoe retailer that he joined full time, ultimately outlasting even the founder. Over the past decade, he has taken the Las Vegas-based company well beyond shoes into apparel, bags, housewares, electronics and cookware.

Building the Foundation
There's no better way to build a billion-dollar company than by starting off with an idea that has billion-dollar potential. Even at a time when the internet hadn't yet become such a prominent shopping destination, Hsieh knew Zappos.com was a business concept with potential. "At that time, footwear in the U.S. was a $40-billion-a-year industry, and paper and mail-order catalogs were 5 percent of that, or $2 billion a year," he explains. "In our minds, it seemed the web was going to at least surpass paper catalogs." For Hsieh, the equation spelled success, and he didn't hesitate to move forward, confident that the numbers would work in his favor.

Zappos.com weathered the dotcom bust by focusing less on attracting new customers and concentrating more on retaining old ones. Word about the service-friendly business spread quickly, and the number of repeat customers increased. It introduced free shipping long before it was a common business practice, and the company continues to go above and beyond for customers. It has a 365-day return policy and even relocated the entire warehouse from California to Kentucky to be near UPS's hub and ensure faster delivery of its merchandise. Customer service got the company through hard times and has become an identifying characteristic of the business. Hsieh says it's the No. 1 driver behind Zappos.com reaching $1 billion in gross merchandise sales.

For Chasen, competitors already existed when he entered the space, so it was a matter of creating a better product, building a better business model and meeting the right people. He chose to build Blackboard using a subscription model in which the school would pay annually to continue using the software. This simple decision would later become the company's lifeline. When the tech bubble burst and financing dried up, Blackboard stayed afloat thanks to $40 million coming in from annual subscriptions.

But before any of that could happen, Chasen had to get the word out. He attended networking events, signed up for business plan competitions and met with as many investors as possible. As a result, Chasen not only raised about half a million dollars in his first round of angel financing, but also met a group of Cornell University students who had developed tools for bringing teaching and learning online. He persuaded them to come on board after graduation. "Talk to as many people as you can and get as much feedback as possible," Chasen says. "It's only by tapping that greater collective of knowledge that you can really succeed."

Want to build a billion-dollar business?

Here are some tips from Bill Bartmann, CEO of BillionaireU.com, an online business educational resource.

Think big. Think exponentially--shoot for 200 percent growth vs. 20 percent.

Do the unconventional. No one ever became a billionaire doing what "everyone else" is doing.

Believe in yourself and your idea. If you're unwavering in your belief, you'll infect all those around you.

Share your vision. Tell everyone what you plan to accomplish. Some will help.

Execute. Get off the couch. Great ideas are a dime a dozen.

Focus. Do one thing extremely well. Multitasking is multistupid.

Never give up. Every successful person achieved that status after plowing through tough times and failures.

Growing the Business
Reaching $1 billion requires scaling a business effectively. Chasen has kept one step ahead by making sure the right management team is in place every step of the way. He says, "We've continued to hire and expand and improve our management team along the way, always looking not at where the company is today, but where the company is going to be five years from now and making sure we have the right team in place to get us there."

He has also mastered the art of M&A, which has contributed largely to the company's growth. He saved money and time by acquiring businesses or technologies that fit with the company's product offerings. Through acquisitions, Blackboard added Blackboard Transact, a student ID card that doubles as a debit card, as well as Blackboard Connect, an emergency notification and alert system. "With M&A, it's not an either/or vs. organic growth," Chasen says. "It's really something that's additive, and when we reach a certain size, it's often one of the better ways to deploy capital."

Hsieh has been able to stay ahead of the curve by creating an environment where his employees feel empowered to contribute ideas and take charge. He invests time in teaching his employees, knowing it will pay off in the long run. In fact, the company just rolled out management and leadership training classes to equip employees with the know-how to grow within the company.

Hsieh also advocates creating a strong company culture. Ten core values make up the culture at Zappos.com--"Embrace and drive change" and "Create fun and a little weirdness" top the list. Culture is so important that it's integrated into the interview pro-cess: Applicants are asked to rank their weirdness on a scale of one to 10, for example--and qualified people have been rejected because they didn't fit the company culture. Says Hsieh, "The most important thing is that there's a culture you believe in and are willing to hire and fire based upon."

Moving Forward
Today, Zappos.com stocks millions of shoes and more than 1,000 brands, and requires the work of approximately 1,600 employees. Blackboard serves more than 3,000 colleges worldwide and more than 400 K-12 districts. The company went public in 2004 and employs 1,100 people.

These businesses' successes didn't happen overnight, nor are they immune to hard times. At the end of 2008, Blackboard's stock price was down by 30 percent due to the economic downturn. But Hsieh and Chasen aren't anywhere close to slowing down. "Less than 200 schools in China and 30 schools in the Middle East are using Blackboard technology, and there are hundreds of millions of learners in those areas that are not yet using technology in the education process," Chasen says. "In places like those, we are in the very beginning. So if you look at it as a global opportunity, which we do, we still have a very long distance to go."

For Hsieh, selling shoes online was just the launching point. Now he's working toward making people forget that Zappos.com ever sold only shoes by expanding into different product lines. Hsieh has even fielded customer requests to start an airline. He doesn't make any promises, but he considers it a real possibility in the future. Anything is possible. Such is the attitude of a billionaire entrepreneur.