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Posts Tagged ‘South Africa’
Q&A with Michael Goldman, author of case study: Kuyasa (South Africa)

Michael Goldman is a Senior Lecturer at the University of Pretoria’s Gordon Institute of Business Science in Johannesburg, South Africa. He lectures, researches and consults in the area of Marketing, including topics such as Marketing Strategy & Management, Base of the Pyramid business strategies, Customer Centricity and Strategy, and Sports Marketing and Sponsorship. He is an active member of the W.K. Kellogg Foundation funded BoP South African Learning Lab. Michael studied for his B.PrimEd degree from the Nelson Mandela Metropolitan University in Port Elizabeth before completing the Programme for Management Development and his MBA from GIBS. He is currently completing a doctorate through GIBS in the area of marketing.

To download the Kuyasa case study from the GIM database, please click here.

What is Kuyasa’s basic value proposition and what makes its financial model sustainable?

What I found most interesting about the Kuyasa case were their efforts to create a sustainable funding model for energy efficiency within one of the poorest urban areas in Africa.  Their “business-like” approach to implementing a project that was languishing without strong management, is a lesson for similar initiatives.  Their understanding of the carbon credit funding environment and application of strong financial engineering skills may give Kuyasa an edge in being able to make this happen on a larger scale.

What have been the biggest challenges hindering the implementation of Kuyasa?

The initial hurdles, before the current team took on the challenge, related to the lack of a suitable implementation partner that was able to finance the implementation within the limited resources available.  The more recent challenges relate to the delays in sourcing suitable solar-water geysers, of an appropriate quality standard and at the budgeted amount.

What are the main opportunities for CDM projects benefiting the poor in a country like South Africa?

South Africa faces the related challenges of rapid urbanisation, lack of adequate low-cost housing, and increasing energy costs.  CDM projects, that are able to be implemented and funded on a large scale (millions as opposed to thousands) within the coming few years, have the potential to have both an immediate positive impact on the energy costs of poorer residents of urban townships, as well a longer term positive impact on the health of the population and the reduction of emissions.

What is the promise of using renewable energy for human development?

This case provides strong evidence for the tangible immediate and longer term benefits of government policy choices that unequivocally favour renewable energy.  It promises more affordable, cleaner, and healthier energy that can also contribute to the dignity, pride and economic empowerment of poorer urban residents.

What has been your personal experience going through the GIM training and case research process?

It has been a significant learning experience working with the GIM team and engaging with different Kuyasa & Tedcor stakeholders to prepare and write these case study reports.  I am very appreciative of the openness and cooperation received from the teams at Kuyasa & Tedcor, and applaud their efforts to make a real difference to their communities and the greater sustainability priorities.

 
Q&A with Michael Goldman, author of case study: Tedcor (South Africa)

Michael Goldman is a Senior Lecturer at the University of Pretoria’s Gordon Institute of Business Science in Johannesburg, South Africa. He lectures, researches and consults in the area of Marketing, including topics such as Marketing Strategy & Management, Base of the Pyramid business strategies, Customer Centricity and Strategy, and Sports Marketing and Sponsorship. He is an active member of the W.K. Kellogg Foundation funded BoP South African Learning Lab. Michael studied for his B.PrimEd degree from the Nelson Mandela Metropolitan University in Port Elizabeth before completing the Programme for Management Development and his MBA from GIBS. He is currently completing a doctorate through GIBS in the area of marketing.

Tedcor started its community-based waste removal system in 1992. Today, using Tedcor’s model, over 80 trained entrepreneurs operate their own small businesses in 16 local authorities. They provide employment to more than 1,000 historically disadvantaged people and supply waste removal services to around 400,000 households.

To download the Tedcor case study from the GIM database, please click here.

What is Tedcor’s basic value proposition and what makes its financial model sustainable?

The Tedcor model works because of the strong business and financial capabilities supporting the contractors (entrepreneurs), ensuring quality delivery of the service to communities and local government, and financially engineering the working capital and cash flow arrangements.

What have been the biggest challenges hindering Tedcor’s development and growth?

The Tedcor model works because of capacity constraints and service delivery failures within local government structures.  Equally, the expansion and uptake of the Tedcor model faces delays and hurdles due to the capacity constraints and service delivery failures within local government structures.

What is the importance of effective waste management for a country like South Africa, and how the poor can benefit from such services?

Waste management is a basic public service that is taken for granted in most of the developed world.  It can be regarded as a human right as part of living in a clean and healthy community.  The failure by governments to provide this basic service has a significantly negative impact on the health and wellbeing of poorer communities, as well as encouraging pollution and environmental degradation.  The Tedcor model not only efficiently and effectively addresses this basic need, but does it profitably by employing significant numbers of community members, who gain skills, employment and in some cases financial capital.

 
Moladi (South Africa) – an affordable housing solution for the poor? Case study now available.

Pierre Coetzer is an associate at Reciprocity, a development consultancy based in Cape Town. He holds an MA in International Relations and Public Affairs from the University of Louvain (UCL) in Belgium, and a BA in Business Management from ICHEC in Brussels. He has seven years experience in Finance and Investment banking with Arthur Andersen in Luxembourg and Euroclear Bank in Brussels. He moved to Cape Town in 2007 to work as an independent analyst on socio-economic and political issues affecting countries in transition, with a special focus on Southern Africa. Within Reciprocity, Pierre is mainly in charge of researching, writing and publishing factsheets on inclusive business models and other initiatives aimed at expanding choice and opportunity for people at the base of the economic pyramid. He holds dual South African and French citizenship and is fluent in French, Afrikaans, English, and German.

Moladi is a South African company that utilizes a unique plastic injection molded technology to produce cast-in-place mortar structures. The process allows unskilled laborers to use indigenous materials to quickly and cheaply construct high standard permanent buildings that are earthquake, cyclone and tsunami resistant.

To download the Moladi case study from the GIM database, please click here.

What has been your personal experience going through the GIM training and case research process?

The GIM training was an excellent experience as it allowed me to get a clear understanding of the needs and wants of the GIM team and meet with several of the key personalities involved in the process. The research process back in South Africa took a while to gain momentum, as it took some time to convince Moladi to become a subject of a case study. Once the site visit and interviews had taken place, however, it was much easier to liaise with the company’s founder, and visualize the technology and understand what gave Moladi so much potential.

What is Moladi’s basic value proposition and what makes its financial model sustainable?

Moladi produces and sells a revolutionary construction technology based on pre-cast plastic panels, which are then assembled into casts into which concrete is poured to form extremely solid walls. The openings for windows, sewage and electricity are all pre-cast and don’t need to be cut out later on. One the basic frame of the building is cast, a roof is installed and the unit is ready for use. The technology can be used to build schools and clinics, for example, and this has great potential all over the developing world. By far the most interesting application, however, is for low-cost housing: a functional 40m2 unit can be built for the equivalent of US $ 6,500 – 7,000, a much lower amount than the equivalent built with traditional brick-and-mortar methods. Moladi makes its money by selling this technology to contractors in building projects around the developing world.

What have been the biggest challenges hindering Moladi’s development and growth?

It was clear, speaking to the founder, that political factors played a big role in hindering Moladi’s development and growth inside the country. Low-cost housing projects in South Africa are steeped in politics and winning tenders sometimes has more to do with political connections than with the quality of the offering. This might explain why Moladi has been much more successful in winning contracts outside of its home market: it has been very successful in other emerging markets such as Nigeria, Ghana, Mexico and India.

Another challenge is perhaps the founder’s fear of losing control over his company. Viewed from the outside, Moladi could probably gain significant scale by partnering with an outside investor.

What are the main challenges in terms of providing housing for the poor in South Africa and also more broadly in developing countries?

The main challenge is political. Housing policies and urban planning in South Africa are still heavily influenced by factors inherited from apartheid, and despite one of the world’s biggest housing programmes, driven by government, shantytowns and slums keep growing in size near the big cities. It may even be misguided to think that the solution resides in more formal housing in the wrong places and futile attempts to “eradicate” slums (as some of the official terminology would have it).

Better long term solutions may involve accepting that “slums” are likely to remain part of the urban landscape of developing countries for some time to come, and resources could be better spent at providing access to services such as efficient energy, sanitation, sewage, and the gradual upgrading of shacks. This is not to say that shacks are preferable to formal housing, of course, but current housing policies in many parts of the world sometimes fail to take into account the dynamics that drive people to build shacks where they do, and why.

Moladi should maybe seize on the opportunities presented by the upgrading of informal dwellings, as its wall-building technology could prove to be affordable, job-creating and very reliable.

What are the promises in terms of human development of access to affordable housing?

A house provides security and shelter, two of the most important pillars of material human well-being (the third and fourth being health and income). So gaining access to affordable (and adequate) housing is a fundamental indicator of human development. However, it must be said that owning a house is not automatically a step out of poverty: the maintenance costs of a formal dwelling compared to a shack can actually aggravate poverty in some cases. This is why, in South Africa at least, so many people who are allocated a low-cost house in terms of the government housing programme rent it out to others and move back into a shack: from an economic point of view, this is a perfectly rational decision that maximizes return on assets. In the long run, of course, access to affordable adequate housing promises to significantly improve the lives of the poor and form one basis of material progress.