By Carl Bates, Founder and CEO of <a href="http://www.sirdargroup.com">Sirdar Group</a>, and a YPO member
When an investor opens the paper these days they expect to read insights into the latest financial scandal or corporate disaster. Indeed this year started with a bang with the <a href="http://cnbc.africa/category/insights/steinhoff/">demise of Steinhoff</a>, although it have not been the only company hit by governance failures and the resulting pressure on its share price.
Yet what about the thousands of business owners who walk through the door of their own offices every day? How are they performing? What impact does poor governance have on them? While not as news-worthy as failures such as Steinhoff, the evidence shows that these businesses are impacted by the same poor governance and lack of understanding of the true value of a board as big corporates can be. However the impact is less relevant to us as a society and therefore not reported in the same way. Many of these shareholders believe that because it is their own business the concept of a board is not even relevant to them. Well what if the truth was somewhat different? What if boards drove performance for these companies as well?
For those enlightened privately-held companies and family businesses who embark on the journey of implementing a high-performance board, it is not necessarily plain sailing. Due to the low engagement by such businesses in the concept of a formal board, good guidance can be challenging to find.
One such question they immediately ask is “What should we pay our non-executive directors?” Type that question into Google and you will find the answer for directors that sit on JSE-listed companies’ boards. What about all the other South African and African-based family businesses or privately-held companies?
Those sitting on the boards of these private and family entities can experience very diverse remuneration as non-executive directors, even though, as the Korn Ferry Institute puts it: “Today’s NEDs [non-executives directors] must be more engaged, more numerate and more technically competent than ever before”.  For these numerous non-executive directors and the companies whose boards they serve, there are few guidelines that reference directors’ rightful compensation.
Having served on boards such as these for many years and being passionate about empowering business owners to break through the barriers that confine them to little reward, I have identified a huge knowledge gap regarding non-listed African board practices, particularly relating to privately-held company and family business board fees, through a proprietary research project.
In all these private and family entities I have been engaged with across the continent, I have observed three subjects where the knowledge gap is particularly obvious, namely:
<ul>
<li>The structure and quantum of fees earned by the non-executive and independent directors of these businesses.</li>
<li>The perceived performance of these boards and the obstacles they face according to those who sit on them</li>
<li>Board diversity with respect to gender, ethnicity, age, and the impact, if any, of board diversity on the perceived performance of these boards.</li>
</ul>
With my company, Sirdar Group, I decided to launch unprecedented research: <a href="http://bit.ly/SirdarSurvey18">Africa’s first non-executive and independent directors’ fees, performance and diversity survey for privately-held companies and family businesses</a>. This is because every business owner wants and deserves to know what he or she should ask when trying to attract the best directors for their company. They also deserve to understand the best practices in implementing a board with the right makeup. It is far from being a simple undertaking, even for big corporations that are used to it.
Through this research we want to support the achievement of meaningful economic impact by companies across the continent. This is achieved through supporting their ability to have truly high-performance boards. To make this happen, we will send a complimentary copy of the report to every director who completes the survey and will share with them the precious insights we will learn. I truly believe in the great potential that lies in African companies to drive economic prosperity over the long term and that the establishment of well-structured and representative boards can boost business success and will ultimately make a meaningful impact on the quality of life of citizens through job creation, and the provision of quality goods and services.

Gauging non-executive director remuneration in Africa

By YPO Africa Member, <a href="https://www.linkedin.com/in/vishalagarwalafrica">Vishal Agarwal</a>, Senior Leader, ex-PwC &amp; GE Africa. Driving Infrastructure Outcomes in SSA.
Summed up, localisation to me means: having a global mindset with a local heart. True economic growth isn’t achieved by superficially working towards localisation.
Localisation is critical for businesses wanting to achieve sustainable growth in Africa. Yet, when we talk about localisation we must be careful not to approach it superficially, as I mention in my interview below and in this article.
One might look for examples of localisation in contexts such as <a href="https://en.wikipedia.org/wiki/Black_Economic_Empowerment">black economic empowerment</a> like in South Africa, achieving quotas set by affirmative action. There&#8217;s also an understanding of a type of localisation that seeks to appease the political class in a particular country. Not to take anything away from those approaches but to copy them (in other African contexts) may be missing the point.
An all-rounded and whole-hearted approach must be taken. Only when companies see localisation as efforts to making local strategic partnerships, or investing and empowering locally, are we creating a runway for sustainable growth.
Hire local, partner local, and empower local!
Today, having a representative on the ground as a company, but having three layers of bosses sitting in headquarters far away is something that customers, suppliers and talent can see through. For a company to genuinely contribute towards localisation it must understand the local business ecosystem. The majority of the hands in a company need to be on the ground for effective decision making to happen.
Likewise, localisation must involve investing in the supply chain on the ground. This means that it not only falls on governments to invest in local infrastructure; but the private sector as well. There’s a lot more work that needs to go in from both parties in terms of will and intention.
CEOs have pressure to achieve company growth, but there’s only so much success they can enjoy in an environment with structural inefficiencies. To be on the ground also means that companies must collaborate and learn from customers, while at the same time empowering and investing in native talent.
Doing all this creates the next generation of customers and supply chain, and for foreign companies to find the balance between investing in the next generation and the now, is vitally important for their own sustainable success.
&nbsp;

Op-Ed: If Africa wants sustainable growth it needs localisation

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Joining CNBC Africa to explore the latest drone technology is Jason English, YPO Member and CEO of Prommac.

Exploring the latest drone technology for commercial, industrial use

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The YPO Global pulse survey is the only CEO economic sentiment indicator to span the globe on a quarterly basis. Joining CNBC Africa is Sneha Shah, MD of Thomson Reuters Africa and Dion Shango, CEO of PwC Southern Africa.

A focus on the YPO Global pulse survey

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With South Africa having entered its second recession and a dim growth outlook, what needs to happen to restore the confidence of businesses? Joining us to discuss this is Dr Terrence Kommal, CEO of the Medical Expert Consulting Group and YPO Member.

Restoring confidence in SA’s economy

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Economists have long argued that marriage rates are lower in poorer and less well-educated areas because men in those communities aren&#8217;t good financial bets. Without steady incomes, they can&#8217;t reliably contribute to a household, so while women might have children with them, they won&#8217;t commit to men for life. That&#8217;s been the assumption, anyway.
Fracking booms gave two researchers in the Economics Department at the University of Maryland, College Park, a perfect chance to test the hypothesis. What happens when money pours into a place, enriching the men, specifically, and giving them good jobs? More of them will get married, right?
As they discovered, to their surprise, the answer is no.
<div id="inline_movable_ad"> Melissa S. Kearney and Riley Wilson published their findings in a <a class="inline_asset" title="http://papers.nber.org/tmp/96135-w23408.pdf" href="http://papers.nber.org/tmp/96135-w23408.pdf" target="_self">new paper</a> covered by <a class="inline_asset" title="https://www.washingtonpost.com/news/wonk/wp/2017/05/16/women-just-arent-that-into-the-marriageable-male-anymore-economists-say/?utm_term=.70583aaa1b45" href="https://www.washingtonpost.com/news/wonk/wp/2017/05/16/women-just-arent-that-into-the-marriageable-male-anymore-economists-say/?utm_term=.70583aaa1b45" target="_self">the Washington Post</a> that concludes, &#8220;there is no evidence of an increase in marriage rates. The pattern of results is consistent with positive income effects on births, but no associated increase in marriage.&#8221;</div>
In other words, fracking money made more men dad-material, but it didn&#8217;t make them husband-material.
<div id="dart_wrapper_responsiverectangle" class="dart_wrapper dart_ads_noniframe_responsiverectangle badge-ad">Though in more conservative parts of the country like Appalachia, infusions of steady jobs for men in the 1970s and 80s led to more marriages and then more children born in wedlock, the Washington Post reports, this time, though fracking-related wealth produced a localized baby boom, there wasn&#8217;t a corresponding boom in marriages.</div>
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Kearney tells the Post, &#8220;There was a different response this time, and it&#8217;s sobering,&#8221; adding, &#8220;The commitment to childbearing with marriage in the 70s and 80s is just no longer there.&#8221;
The decline in marriage rates in the working class has been going on for long enough now that, in 2012, The New York Times printed a column titled, &#8220;<a class="inline_asset" title="https://economix.blogs.nytimes.com/2012/02/06/marriage-is-for-rich-people/?_r=0" href="https://economix.blogs.nytimes.com/2012/02/06/marriage-is-for-rich-people/?_r=0" target="_self">Marriage is for rich people</a>.&#8221; It concludes, &#8220;Rich men are marrying rich women, creating doubly rich households for them and their children. And the poor are staying poor and alone.&#8221; <a class="inline_asset" title="http://www.pewsocialtrends.org/2015/12/17/1-the-american-family-today/" href="http://www.pewsocialtrends.org/2015/12/17/1-the-american-family-today/" target="_self">40 percent of all babies</a> now are born to single moms or to unmarried partners.
That can be rough on families for numerous reasons. Pooling resources can make many aspects of life easier, from affording a home to being involved at school. Coupling up also helps people stay healthier and live longer, especially <a class="inline_asset" title="http://www.health.harvard.edu/newsletter_article/marriage-and-mens-health" href="http://www.health.harvard.edu/newsletter_article/marriage-and-mens-health" target="_self">men</a>.
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<div class="embed-container image">Staying single can be a better bet for women, though, many of whom appreciate having more flexibility in terms of how to structure their personal lives than they did several decades ago. Sociology professor Pepper Schwartz <a class="inline_asset" title="http://www.cnn.com/2014/10/15/opinion/schwartz-single-women/" href="http://www.cnn.com/2014/10/15/opinion/schwartz-single-women/" target="_self">writes</a>, &#8220;Women now have choices that allow them to customize the arc of their lives and some of them find that it is best for them to put marriage aside.&#8221; Husbands who are &#8220;nonworking, noninvolved,&#8221; she points out, can be &#8220;useless.&#8221;</div>
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Schwartz concludes that, now that they generally have economic and cultural freedom, women no longer are willing to settle: &#8220;While most women still want marriage, they don&#8217;t want it at just any price. They don&#8217;t want it if it scuttles their dreams.&#8221;
A lengthy article in Yes! Magazine makes the case that <a class="inline_asset" title="http://www.yesmagazine.org/issues/gender-justice/why-not-getting-married-is-smart-economics-for-women-20160512" href="http://www.yesmagazine.org/issues/gender-justice/why-not-getting-married-is-smart-economics-for-women-20160512" target="_self">this is both a logical and positive development for women overall</a>. And that assessment seems to be shared by popular recent TV shows ranging from the sweet (CW&#8217;s &#8220;Gilmore Girls,&#8221; whose four-episode epilogue was released in 2016 on Netflix) to the salty (HBO&#8217;s &#8220;Girls,&#8221; which just finished its six-season run). Despite their differences in tone, both shows foreground a version of success for their heroines that has a lot to do with individual fulfillment and little to do with marriage.
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That said, affluent, professional women usually have an easier time being single by choice, and two-parent households, which tend to have more time as well as more money, have been shown to be good for kids. &#8220;Children whose mothers are continuously married grow up to make higher incomes at age 40 than children raised at some point by single parents,&#8221; <a class="inline_asset" title="https://www.washingtonpost.com/news/wonk/wp/2014/09/08/children-with-married-parents-are-better-off-but-marriage-isnt-the-reason-why/?utm_term=.128d0dffd1ab" href="https://www.washingtonpost.com/news/wonk/wp/2014/09/08/children-with-married-parents-are-better-off-but-marriage-isnt-the-reason-why/?utm_term=.128d0dffd1ab" target="_self">reports</a> the Post. &#8220;Children with married parents also have more engaged parents, and it&#8217;s the engagement that really matters.&#8221;
Given that the Times also <a class="inline_asset" title="https://www.nytimes.com/2015/06/11/upshot/the-north-south-divide-on-two-parent-families.html" href="https://www.nytimes.com/2015/06/11/upshot/the-north-south-divide-on-two-parent-families.html" target="_self">finds</a> that &#8220;the sharp rise in single-parent families has <a class="inline_asset" href="http://www.nytimes.com/2012/07/15/us/two-classes-in-america-divided-by-i-do.html" target="_self">contributed to</a> sky-high inequality,&#8221; many economists have struggled to figure out how to induce working-class couples to marry. But if a steady income doesn&#8217;t make a man marriageable anymore, what does?
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<div class="pro-video-chapters fall dyperf dyMonitor" data-adid="535383||4729|||">Well, larger <a class="inline_asset" title="https://www.nytimes.com/2015/06/11/upshot/the-north-south-divide-on-two-parent-families.html" href="https://www.nytimes.com/2015/06/11/upshot/the-north-south-divide-on-two-parent-families.html" target="_self">religious and cultural expectations</a> can help. But <a class="inline_asset" title="http://www.pewsocialtrends.org/2015/12/17/1-the-american-family-today/" href="http://www.pewsocialtrends.org/2015/12/17/1-the-american-family-today/" target="_self">education certainly seems to help most</a>, possibly because it speaks to a person&#8217;s long-term job prospects and earning potential.</div>
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Kearney and Wilson say as much in their intro, noting, &#8220;non-marital childbearing has become the norm among young mothers and mothers with low levels of education.&#8221; And according to the Times, states with high rates of education also tend to produce stable families: In &#8220;Minnesota, New Jersey, Massachusetts and Connecticut, at least 51 percent of teenagers are being raised by both biological parents, among the highest rates in the nation.&#8221;
If you want your son to be marriageable one day, tell him to stay in school now.
Reporting by <a href="http://www.cnbc.com/ester-bloom/">Ester Bloom</a>
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Economists: Men now need more than just money to be ‘marriageable’

<figure><figcaption>Kenya topped the Africa medals table at the Rio Olympics last year. But this outstanding performance was overshadowed by the incompetence and corruption of its team management. The problems are so deep-rooted that the International Olympic Committee recently threatened to suspend the country after national affiliate officials voted against reform. Wycliffe W. Njororai Simiyu, explains the background <img loading="lazy" decoding="async" src="https://counter.theconversation.edu.au/content/74996/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /></figcaption></figure>
What ails the Kenya national Olympic committee?
The National Olympic Committee of Kenya’s inherent problems are <a href="http://www.nation.co.ke/news/How-Kenya-lost-the-London-Olympics-plot/1056-1477232-a42pl9/index.html">not new</a>. What’s new is the alarming decline, which burst into view during the Rio Olympics last year. Numerous <a href="http://olympics.nbcsports.com/2017/03/09/ioc-suspend-kenya-olympics/">instances</a> of gross mismanagement came to the surface during the games involving accreditation, accommodation, travel and allowances. Corruption was also evident in the disappearance of official team kit and theft of cash.
What we are seeing today is a long-drawn fallout from Rio which set in with the arrest of several senior Olympic team officials soon after the games. These officials now <a href="http://www.capitalfm.co.ke/sports/2017/01/03/nock-officials-drop-stain-kenyas-brilliant-2016-athletics/">face charges</a> of using their positions to procure fraudulently Team Kenya kit provided under contract and stealing cash and uniforms meant for athletes.
Not even Kenyan athletes’<a href="http://www.iol.co.za/olympics-rio-2016/kenya-tops-african-medal-table-2059816">sterling</a> performances on the track were enough to mask the hurdles they had to overcome. The athletes had to endure haphazard travel arrangements, inadequate training gear and questionable allocation of places in the Olympic Village.
On top of this, a Kenyan official was <a href="http://www.nation.co.ke/sports/athletics/Michael-Rotich-recalled-from-Rio-after-doping-bribe-report/1100-3334866-format-xhtml-3obonq/index.html">ejected</a> from the games on doping-related bribery allegations. And a senior athletics coach, who arrived in Rio <a href="http://www.nation.co.ke/news/The-scandal-of-Kenya-s-Rio-Olympics/1056-3343980-kvao27z/">unaccredited</a>, was expelled from the games for using an athlete’s pass.
What is at the root of the current crisis?
The crisis in Kenya’s Olympic committee’s stems from the questionable integrity of its long-serving office holders. The officials seem to have perfected the art of misusing the resources to the detriment of sport and the athletes.
Unfortunately, change will not come easily. The current constitution gives incumbent officials disproportionate power in any general assembly vote &#8211; which they often deploy as a <a href="http://olympics.nbcsports.com/2017/03/09/ioc-suspend-kenya-olympics/">bloc</a> to retain their positions.
But it’s clear that IOC wants to see change in the governance structure of the Kenyan committee. It would like to see a new constitution adopted that would bar incumbent officials from casting their vote at the general assemblies. This would change the current arrangement where the incumbents are virtually guaranteed retaining their seats during elections.
There have been reports that Kenya could be suspended from the Olympic movement. What’s the background.
The national outrage that greeted the Rio 2016 scandal led the sports minister to dissolve the national Olympic committee. He also set up a team to investigate the Rio affair. The IOC, which frowns on any official interference, threatened to suspend Kenya.
This dissolution was popular at the time. A cabinet secretary <a href="http://www.nation.co.ke/news/I-am-also-a-victim-of-Rio-Olympics-cartel-says-minister/1056-3352298-95os78/">accused</a> Olympic officials of “living large in Brazil” and being “a law unto themselves”. But a judge quickly <a href="http://www.nation.co.ke/news/nock-still-intact-after-Rio-Games-scam/1056-3802404-em7ehlz/">overturned</a> the government’s action after the national Olympic committee head Kipchoge Keino took the matter to court.
As a compromise, a <a href="http://www.aipsmedia.com/2016/09/03/19454/ioc-kenya-government-kipchoge">tripartite</a> group was convened, bringing together the national committee, the sports minister and the IOC. Its aim was to improve governance through a new constitution that would allow for change in the membership of the national committee. As things stand, the incumbent officials outnumber the rest of the delegates.
But because the old constitution was used to convene the special general meeting called to ratify the new regulations, current officials used their superior numbers to <a href="https://citizentv.co.ke/sports/kenya-risks-ioc-ban-after-nock-bosses-shoot-down-constitution-159921/">defeat</a> it.
One of the key consequences of not passing the new constitution has been the swift withholding of <a href="http://www.reuters.com/article/us-kenya-olympics-idUSKBN16P0C4">funds</a> by the IOC. More sanctions could follow if a new constitution is not put in place.
What would the impact of such a suspension be on Kenyan sport?
A suspension would put Kenya in the company of oil-rich <a href="https://www.olympic.org/news/suspension-of-the-kuwait-olympic-committee">Kuwait</a>, which was sidelined for passing a law that ran counter to the <a href="https://www.olympic.org/ioc-governance-national-olympic-committees">mission</a> of the Olympic movement.
A suspended nation loses money to develop sports programmes and infrastructure. It also loses representation in IOC sanctioned events at the international level. But athletes can participate in events as individuals under the Olympic banner, similar to political refugees.
Is the IOC’s interest in Kenya warranted? Are there other countries on its radar?
I think the push for improved governance in sport is a worldwide phenomenon and not just a Kenyan issue. At the global level, there was worldwide attention when FIFA officials were in the <a href="http://nypost.com/2015/05/27/top-fifa-officials-arrested-in-corruption-case/">spotlight</a> in 2015. The then powerful FIFA president Sepp Blatter was forced out of office following allegations of bribery, corruption and general mismanagement.
These high profile scandals elicited international outrage and unprecedented action. US law enforcement led the way in <a href="http://miami.cbslocal.com/2015/12/03/two-top-fifa-officialls-arrested-in-pre-dawn-raid-in-zurich/">arresting</a> FIFA officials that were suspected of engaging in questionable deals.
The Rio fiasco presented the IOC with a good opportunity to intervene and demand action for long-term reform. This was better than responding with a suspension for political interference. The IOC’s collaboration with the government and the national committee to create a more responsive, transparent and responsible organisation is commendable.
And if the stalemate continues, the IOC may suspend Kenya due to a lack of goodwill and desire for change in governance by its own affiliate.
<a href="https://theconversation.com/profiles/wycliffe-w-njororai-simiyu-293508">Wycliffe W. Njororai Simiyu</a>, Professor, Health and Kinesiology, <a href="http://theconversation.com/institutions/university-of-texas-at-tyler-2703">University of Texas at Tyler</a>
This article was originally published on <a href="http://theconversation.com">The Conversation</a>. Read the <a href="http://theconversation.com/kenya-runs-the-risk-of-an-olympic-ban-thanks-to-boardroom-power-games-74996">original article</a>.

Kenya runs the risk of an Olympic ban, thanks to boardroom power games

By Joe Brock
Namibia&#8217;s Herero people are heartened that Germany is keen to atone for the genocide of their ancestors, but they expect something Berlin says it is not in a position to give.
&#8220;What we want is our land,&#8221; said 74-year-old Alex Kaubtauuapela, whose parents survived the extermination of 80 percent of the community, a precursor to the Holocaust.
She lives much as they did, in a community dependent on cattle herding.
&#8220;The Herero are poor because of German people,&#8221; she said, hunched over a walking stick as one of her grandchildren chased a stray dog around her crumbling house in the Herero ancestral homeland of Okahandja north of the capital, Windhoek.
About half of the arable land in the country in south west Africa which Germany annexed in 1884 is owned by descendants of German and Dutch immigrants, who make up just six percent of the 2.3 million population.
Land used by the Herero, also known as OvaHerero, and smaller Namaqua community for grazing was seized and thousands were executed after they rebelled in 1904. The rest were driven into the country&#8217;s vast tracts of desert to starve.
The call for land restitution by indigenous groups is mirrored in countries across Africa, and any reparation agreement for the Herero could set a precedent to other groups seeking redress from European colonial powers.
Momentum for a settlement with Namibia increased last year after Turkey&#8217;s President Recep Tayyip Erdogan called Germany hypocritical for recognising massacres of Armenians by Ottoman Turks as genocide but not confronting its dark past in Namibia.
A month later, in July, German Chancellor Angela Merkel&#8217;s office said Germany would acknowledge the genocide of the OvaHerero and Namaqua peoples and offer a formal apology. Five rounds of negotiations have been held since, although German officials emphasise talks have been going on since 2012.
One difficult issue is how to address demands for the return of skulls of victims that were taken to Germany to try to prove racial superiority: Berlin has given some back but says others are hard to locate. Another sensitive area is calls for monetary compensation.
But front and centre, for the community, is land.
&#8220;We are willing to go and take our land,&#8221; said Herero Paramount Chief Ombara Otjitambi, a former attorney general who says his followers have been excluded from the talks with Germany.
&#8220;We want to be directly in the room with government at negotiations. If the Germans sign on the dotted line without us we will consider it as an act of war,&#8221; he told Reuters.
&#8220;We won&#8217;t wait another 100 years for justice.&#8221;
 
&#8220;CLEANSING&#8221;
Another Herero group is being consulted in talks but Otjitambi says they are just &#8220;puppets&#8221; of the Namibian government, which has been dominated by the largest community, the Ovamba, since independence.
This week, a United Nations expert Group on People of African Descent appeared to back him up.
Noting Germany had apologised for the genocide and given aid, it said it regretted Berlin had &#8220;thus far not seriously consulted with the lawful representatives of the minority and indigenous victims of that genocide to discuss reparations&#8221;.
German Ambassador to Namibia, Christian Matthias Schlaga, acknowledged some Herero groups were not currently engaged in the talks but expressed confidence they could be reintegrated.
&#8220;Both governments&#8217; clear intention is to reach a result that will be accepted by the communities in question,&#8221; Schlaga told Reuters from his office in Windhoek.
Eyeing a possible Namibia deal, Tanzanians have sought compensation from Germany for some 70,000 killed during the Maji-Maji rebellion during colonial rule of German East Africa in the early 20th century.
But Schlaga said any agreement between Berlin and Windhoek would not lead to negotiations in other parts of Africa. &#8220;We think the situation in Namibia is very unique,&#8221; he said. &#8220;This is why we negotiate in this country and nowhere else.&#8221;
The unique nature Schlaga refers to is the evidence of German forces&#8217; intent to exterminate along ethnic lines.
That was spelled out by German General Lothar von Trotha, who was sent by the Kaiser to crush the uprising. &#8220;I believe that the (Herero) nation as such should be annihilated,&#8221; he wrote. &#8220;Only following this cleansing can something new emerge.&#8221;
Those who were not shot or starved to death in the desert were captured and placed in concentration camps, where many more died of disease, mistreatment or torture. Up to 100,000 Herero and 10,000 Nama were killed, historians say.
Herero and Nama women were systematically raped by German soldiers and their descendents still face discrimination from members of their tribe who consider themselves &#8216;pure&#8217;.
 
DRAWING A LINE
The grave of Samuel Maharero, who led the Herero&#8217;s fight against the German colonial army before escaping across the border, lies in an almost inaccessible field in Okahandja amid wandering goats and overgrown foliage.
Just a few hundred metres down the road is an impeccably cared-for graveyard for German soldiers killed in the rebellion. There is no cemetery for the slaughtered Herero, whose bodies were left out in the open.
&#8220;We&#8217;ve lost our land, our culture, our tradition,&#8221; said Sarafina Nbaimbaind, a resident of the nearby township wearing the traditional horned headdress that symbolises the Herero&#8217;s cattle herding heritage.
&#8220;The Germans are getting richer and richer from our land.&#8221;
Schlaga said Berlin supported efforts by Namibia to redistribute land but it was the responsibility of the Namibian government to resolve disputes between its nationals.
&#8220;Germany has always agreed and supported the Namibian government’s decision &#8230; to do a redistribution of land, but based on a principle of willing seller, willing buyer,&#8221; he said, noting that land can change hands multiple times over 100 years.
&#8220;It is very difficult, if not impossible, to draw a line from the events of 1905 and 1906, to 2017.&#8221;
Namibian government sources said one idea was for Germany to provide funds for Namibia to purchase land from any owners willing to sell, but that talks on the issue had stalled.
The government&#8217;s chief negotiator, Zed Ngavirue, said the &#8216;willing seller, willing buyer&#8217; system had failed. The issue would be revisited at a conference this year, he said, but would not be part of the negotiations with Germany over the genocide.
Robert Murtfeld, a U.S.-based academic and independent observer in the Namibian talks, said he did not think an agreement could be reached unless land was included, with implications for other former colonies in Africa.
&#8220;Any settlement that would be reached between the German and Namibian governments has to address the issue of land and any decisions hereto could have a trickledown effect for others,&#8221; he said. &#8220;I believe the chances for a deal being reached are very little.&#8221;﻿

Land haunts Germany's effort to atone for Africa genocide

There is plenty of talk in the corporate sustainability space. Some companies embrace a green cause such as rhino poaching, tree planting, or wild dog conservation research.  However worthy the cause, that embrace tells you little about those companies’ real approach to sustainability.  To see which businesses  are serious about sustainability, there are only two questions that matter:
1. Is your sustainability approach integrated into your real business strategy?
The sustainability strategies that matter are the ones that are part of a company’s real business strategy.  Companies have a difficult enough time implementing one strategy.  Implementing multiple parallel strategies seldom succeeds.
It’s easier to see this integration in the companies who have succeeded in driving significant revenue growth from it.  Internationally, one of the best compilations of these companies, <a href="http://www.greengiantsbook.com/">Freya Williams’ Green Giants</a>, lists a number of the “usual suspects” whose business model was created from the integration of business and sustainability, such as <a href="https://chipotle.com/food-with-integrity">Chipotle</a>, <a href="http://www.wholefoodsmarket.com/mission-values/core-values">Whole Foods</a> and <a href="https://www.tesla.com/about">Tesla</a>. She also identifies companies which have integrated sustainability into business segments like <a href="http://www.ge.com/about-us/ecomagination">GE’s Ecomagination</a> and <a href="http://www.toyota.com/usa/environment/index.html#!/Vehicles">Toyota’s Prius</a>.  In  South Africa, <a href="/Woolworths'">Woolworths&#8217;</a> Good Business Journey programme was launched in April 2007 as a formalisation of Woolworths sustainability commitment. <a href="/SABMiller">SABMiller</a> in South Africa pioneered water footprinting and partnered with WWF to reduce water use in its beer production while <a href="/Safaricom">Safaricom</a> in Kenya is showing true leadership in sustainability. Yet others are struggling, as in NRG’s attempt to reinvent the energy business, <a href="http://www.greentechmedia.com/articles/read/A-Conversation-with-David-Crane">leading to the CEO’s dismissal</a> – yet <a href="http://www.usatoday.com/story/money/columnist/2016/06/07/nrgs-new-boss-brings-new-approach-green-energy/85555380/">his successor’s contention that the strategy remains fundamentally unchanged</a>.
Where sustainability is real, it has been developed with the business strategy in mind, and/or has dramatically shaped the business strategy.  It has deeply informed the understanding of future risks and opportunities for the business itself. It is achieved by understanding BOTH:
<ul>
<li>What are the sustainability issues which have real potential for affecting the business of the business – markets, supply chain, competition; and</li>
<li>What is the strategy process of the business, and how to inject sustainability content into that process rather than building artificial and burdensome parallel processes.</li>
</ul>
There are a number of different ways that this integration can happen, including:
<ul>
<li>By using the strategy process itself – the real one that drives the company – to identify and address sustainability issues and aspirations along with other critical issues</li>
<li>By using sustainability issues and insights to fundamentally shape the assumptions and hypotheses going into the business strategy process</li>
<li>By building sustainability goals into the desired outputs, identifying the clear sustainability aspects of the business strategy and goals –nota separate set of sustainability goals</li>
<li>Before the business strategy is locked in, by including a critical review stage, using a matrix of business issues and sustainability issues to see where the two sets of issues come together, where sustainability issues may create unanticipated opportunities and risks</li>
</ul>
Many companies have yet to achieve this integration of business and sustainability strategy.  Some have tried and failed.  Others have attempted to improve branding or appeal to stakeholders by highlighting sustainability activities without achieving meaningful integration.  (There is still a raging debate over what aspects of the oil &amp; gas industry’s efforts were sincere and failed versus which were public relations efforts, ranging from <a href="http://www.cnbc.com/id/100647034">BP’s infamous “Beyond Petroleum” campaign</a> to other majors’ largely-abandoned investments in wind and solar.)  Many others have invested in a large number of sustainability initiatives, which however well-intentioned are still irrelevant to the strategy of the business.  Even when those grow, it’s always useful to remember that the plural of initiatives is not strategy.
If sustainability has truly been integrated into the business strategy, that in turn means it is more likely to influence the real decisions the business makes for its future – where it puts its money.  If sustainability is really integrated into the strategy of the business, then we should expect to see sustainability issues influencing the critical business investment decisions like research and development (R&amp;D), mergers and acquisitions (M&amp;A) and capital expenditures (Capex).  Which takes us to the second question.
2. Is your sustainability approach really adopted and used by the business functions that matter most?
A second interesting question to ask a practitioner is: “Which departments/functions in your company have the greatest influence on your future, which ones have the greatest uptake of sustainability issues, and how does that match?”
If sustainability strategy is real in a company, then the people who understand and care about sustainability issues are the people who have their hands on the levers that really move the business.  They do not need to recognize that the issuesare“sustainability” issues, but:
<ul>
<li>The people who control M&amp;A activity need to understand evolving water and carbon constraints and how those might affect the viability and value of an acquisition target. For example, the proposed carbon tax in South Africa, anticipated to be introduced in 2018, will undoubtedly have a financial impact on an energy intensive business. Similarly, an operation that is water intensive and located in a water-stressed catchment, will be subject to additional risk. For example, Anglo American Platinum’s Mogalakwena mine is located in the water-stressed Limpopo river basin. In addition, there are challenging socio-economic circumstances with high poverty levels and poor infrastructure. These conditions are exacerbated by the drought conditions experienced in Southern Africa as a result of the El Nino effect. This means that access to secure water is a risk that the company has to proactively manage. </li>
<li>The people who control R&amp;D need to understand a wide range of constraints and concerns, and how those might create both opportunities and risks.  For example, key materials used in products, that may either be carbon intensive or contain materials harmful to the environment, may be destined for rejection by customers in the future, creating urgent needs for replacement materials – or drivers for innovation.</li>
<li>The people who control Capital Expenditure need to understand the increasing concerns over social, environmental and economic impacts and how those may affect the ability – and time required &#8212; to win approval, begin and complete projects, and actually obtain the return for which the investment is going to be made. Traditionally project teams have focused their attention on “maximising Net Present Value (NPV)”. If the highest NPV option is technically feasible, this is typically the one selected. These project teams have sometimes ignored potential sustainability impacts, to the detriment of the project. For example, construction of a million-dollar wind power plant in Kenya was halted following a series of protests by surrounding communities. According to the proprietors, construction of the power plant has been prevented by protests from the community since May 2014, costing the shareholders $66 million to meet project costs and pursue other avenues to move forward with the project.</li>
</ul>
In successful companies, you do not necessarily see the leaders of these functions engaged in formal sustainability activities.  What you do see is a deep understanding and uptake of the issues.  The people leading M&amp;A demand that, at a minimum, social due diligence and future-facing carbon and water assessments are part of the decision process before deals go too far.  These are questions asked by the deal sponsors, not asked of them.  They want to know.  Similarly, the real Capex process includes rigorous analysis of the social and environmental issues that could arise from a project, and take those into account both in the project costing (“what will it take to do this right?”) and in looking at project timing which drives NPV (“when will we really get to the revenue stream if we deal with communities this way?”).  When you are looking at investment, costing and timing this way, you are now bringing the real sustainability issues into the operation of the key business functions.
In some companies, though, the answer is clear – and inverse.  Engagement has been shaped about who already cares about sustainability and wants to be involved – rather than who controls the fate of the company andneedsto be involved. In those companies, the more a function shapes the future of the company, the less likely it is to have understood, accepted and applied sustainability issues.
It’s not about how nice your sustainability strategy is, or how many initiatives you can show and boxes you can tick.  It’s about how well sustainability is integrated into the strategy of the company, and how well sustainability issues have been understood and taken up by the critical business functions and leaders who are responsible for implementing any strategy.  That’s what real sustainability is about.﻿

Op-Ed: Making sustainability real for business

In 2017, an economic climate more conducive to entrepreneurship will prevail, though tinged by uncertainty on the local and international front. Here are some of the trends to look out for:﻿
ECONOMY
Structural reforms to get the economy back on track
1. In our previous annual trend report, we predicted that 2016 would be the year where South Africa’s macro-economic stability would come into sharp focus. Indeed, this was the case on the fiscal and monetary policy front. The National Treasury navigated a tough balancing act of increased spending pressures amidst a slow-growth economy. The Reserve Bank raised the repo rate twice before holding it steady at seven percent for the rest of the year, as inflation risks abated and the central bank was careful not to burden a weak economy with interest rate hikes. The country’s performance was convincing enough that it managed to escape a sovereign credit rating downgrade.
2. Nonetheless, the engines of growth remain stalled. In 2017, investors, entrepreneurs and ordinary citizens will expect to see tangible improvements to the economy. There is broad agreement that the structure of the South African economy prohibits fast and inclusive growth. Analysis by government departments, international bodies such as the World Bank and the IMF and private sector bodies all converge on one key theme, namely the need for structural reforms to boost confidence and reboot economic activity. That means government policies, supported by private sector action that will unlock productivity and lower barriers to entry into the formal economy. There is some debate as to what the ideal policy package will be, but the set includes:
<ul>
<li>restructuring state-owned enterprises to improve their governance and performance</li>
<li>encouraging private sector employment to bring in the unemployed, especially the youth, into the labour market</li>
<li>improving relations between employers and employees, especially organised labour</li>
<li>rooting out anti-competitive behaviour by dominant companies</li>
<li>trimming the regulatory burden on business</li>
<li>improving the efficiency of government services and infrastructure that supports business development</li>
<li>resolving policy and legislative impasses in sectors such as mining and telecommunication</li>
</ul>
3. The government has committed to implementing measures such as these, and 2017 will be the year when this is tested. Much of government action will be geared towards maintaining an investment grade sovereign rating. Tougher competition in politics (as demonstrated by the outcomes of last year’s local government elections) might inspire some constructive moves by government. But this will be counter-balanced by pre-occupation with the leadership contest in the ANC, which may distract key leaders and policymakers, and also spill into policy debates.
4. Once again, the budget will be a balancing act, with new taxes to boost revenues. Increases in VAT or a tax on asset holdings are still possible; as will tracking down illicit flows of money out of the country. It’s clear that mega-projects such as NHI and the nuclear build have been paused or trimmed, but we cannot rule out surprises on this front. Monetary policy will be neutral, with a bias towards holding interest rates steady, but any acceleration in the pace of interest rate hikes in the United States will force the Reserve Bank’s hand.
5. Relations between government and business will improve through the joint actions announced last year, but we expect implementation to be relatively slow in 2017. The economic climate remains challenging for entrepreneurs. ﻿
BUSINESS
Measures to improve the entrepreneurial ecosystem &amp; entrepreneurs in the classroom﻿
1. As part of the measures announced last year by government, business and labour to ward off a sovereign credit rating downgrade, a new funding vehicle is to be launched to strengthen the funding ecosystem for high potential entrepreneurs. The vehicle, whose details are yet to be spelt out, will see business, mostly blue-chip companies, commit R1.5 billion to financing entrepreneurs and high-growth small and medium enterprises. This will be done indirectly, through accredited fund and investment managers.
2. The fund has identified market failures that hamper entrepreneurship as the following: limited funding for early stage ventures, lack of access to high quality mentorship by entrepreneurs and working capital constraints due to late payments. These are well-known challenges that plague new business formation in South Africa. This new entrepreneurship development vehicle is business-led, with well-known business founders Adrian Gore of Discovery and Brian Joffe of Bidvest taking the lead. It will tap into the skills and capabilities of established businesses to provide not just finance but also guidance and mentorship to new start-ups. Government has also pledged to match the contributions by the business sector. This promises to inject new life into the start-up and small business scene in 2017 and beyond.
3. Other elements of the entrepreneurial ecosystem will also be enriched in 2017 as business owners, innovators and creatives turn to co-working spaces, private clubs and incubators to nurture their ventures. South African entrepreneurs have also been looking globally for mentorship and funding, taking ‘field trips’ to Silicon Valley and raising finance from international venture capitalists. This bodes well for high-potential entrepreneurship, though the rates of new business formation and success remain modest. ﻿
4. Amongst the social challenges facing South Africa, the quality of education ranks quite high. In recent years, the private sector has slowly inched into this terrain, and in 2017, some initiatives will take off or accelerate. Some of these start-ups will occupy the space left by the largely high-end and establish player Advtech. Some are further along down the road – Curro is the well-known but still exciting growth story. Newcomer Spark Schools, playing in the primary school end, received an injection of funding from the Omidyar Network last year and is set to go on an expansion drive. Pioneer Academies continues to open new primary and secondary schools in South Africa and is active in East Africa. Former First Rand CEO Sizwe Nxasana, with co-founder Dr Judy Dlamini, is rolling out the Future Nations schools, which aim to ‘spearhead the African education revolution’ by providing high quality, technology-enabled education.
5. Leading South African company Naspers is also pursuing the opportunity in education, and through Naspers Ventures, is making investments in education technology globally. It has backed Brainly, a collaborative platform for high school students to tutor one another. Other investments include Udemy, an open, online course platform and Code Academy, an online site to learn some basic coding languages. Naspers Ventures believes that in the next few years, technology will transform education radically.
6. Entrepreneurs will also tackle other social services, such as healthcare. These forays demonstrate the opportunity in entering areas that once were mostly left to governments. Entrepreneurs have to tread carefully here, as they are also taking on the ethical obligations that are expected of ‘public goods’. ﻿
GLOBAL
Geo-political risk in unlikely places
1. What were once thought of as safe, stable democracies underpinned by strong, advanced economies will see the return of political risk in 2017. The post-war free-market order has come under severe challenge from ordinary citizens in the West, who have confounded polling agencies and experts by voting against what they consider to be the elite consensus of open borders, free trade and multiculturalism. This was most evident in the key votes of 2016 – the Brexit referendum and Donald Trump’s clinching of the United States presidency.
2. In 2017, we will see what Trump, Brexit and the rise of far-right parties in Europe all add up to. Elections in Germany and France may provide more upsets. The long and uneven recovery from the Great Recession fuelled the economic insecurity that has found expression in these political developments. The threat of automation also looms large, and for the first time, middle class jobs are on the line. The working conditions of the ‘uber’ economy have added to the sense of precariousness in people’s livelihoods.
3. The solutions that Trump and the European far-right have brought to the table do not address the core issues of technology, productivity and competitiveness. Trump may achieve some temporary stimulus to the old industries of the US economy, but he will be ineffective against the larger economic forces. Those at the centre of the political spectrum, and the left, will also not provide a compelling antidote to Trump or a solution to the economic forces driving citizens’ anger.
4. The global political economy will be volatile in 2017. The bromance between Putin and Trump can only end in tears, as Russia and the US have fundamentally different values and national interests. China will have to manage the threat of trade war with the US, whilst also dealing with its internal economic challenges and a leadership transition. All this will dampen global economic growth.
New approaches to welfare as technology threatens jobs
5. The march of technology is relegating some to what is known as ‘wageless life’. Many workers, both blue collar and middle class, will find themselves displaced by technology. Technology is also reshaping the nature of work, in a process which might be called ‘uberization’, where the traditional job with security and benefits is replaced with task or project-based, independent work. These types of working arrangements place risk on individuals, who can no longer rely on the security of the corporation but in most cases, would also not qualify for traditional welfare schemes. These challenges have inspired a new wave of experimentation, mainly in advanced economies, on guaranteed income schemes, otherwise known as universal income or basic income grants. Technology entrepreneur Elon Musk has argued that automation will drive policy towards a universal basic income.
6. The idea is to provide a modest sum (that meets basic living expenses) to all citizens, irrespective of means or ability. One success story that is often cited is a program that was run in the Manitoba region in Canada in 1979, before being abandoned. A review by academic Evelyn Forget finds that it had a positive impact on the community – health and education outcomes improved. The fear that a universal income would encourage idleness also did not come to pass as the incentive to work was not diminished – the rate at which people worked remained largely the same, save for people staying longer in school and some mothers choosing to stay at home.
7. Proponents of a universal income, who can be found both on the left and on the right, argue that it avoids the bureaucracy of testing for means or complex eligibility criteria. Traditional welfare, as practiced in advanced economies, also tends to punish those who find very low-paying jobs and are thrown out of the system, thus creating a preference for welfare over entry level jobs. With a universal income, work is always a top-up to welfare, not a substitute. As everyone receives a universal income, it also argued to take the stigma out of welfare.
8. A referendum in Switzerland to introduce a universal income was rejected last year. However, in 2017 experiments will be underway in Finland (proposed €560 per month) and the Netherlands (€1000 per adult, €200 per child per month). The idea, whose resurgence has been inspired by likely impact of technology, has also caught the eyes of the entrepreneurial community. The American start-up incubator Y-Combinator is running an experiment in Oakland (US$1000 to US$2000 per month), with one of the underlying hypotheses being that people would be more creative and innovative if their basic needs are taken care of. Lessons from abroad might rekindle a similar debate in South Africa, where a basic income grant has been mooted since the late 1990s. This would bring the unemployed, including the youth, into the social safety net. It has also been argued that universal incomes improve the quality of what people are already doing, be it job search or further education. It could also stimulate entrepreneurship as it provides a cushion for people to take risks. The budgetary implications would be staggering, and these experiments will need to show a net positive benefit.
Creative Africa Rising
9. For most of its contemporary history, commodities have defined the African growth story. Indeed, China’s once-insatiable demand for African commodities underpinned many African economies, including South Africa. But as commodity markets have cooled down, it has become apparent that there is more to African production than natural resources. Financial services, telecommunications and consumer goods companies now regularly feature on lists of the continent’s most valuable companies. But the most untapped resource on the continent is the creativity of its people. For many years, the African content, be it television or music or literature, lived under the shadow of Hollywood, London or Paris. The African creative economy was hampered by low demand, poor distribution and poor branding. The rise of Nollywood was the first major disruption to these state of affairs.
10. The Internet has become a major force in liberating the African creative economy. From literature (see for example the user-powered poetry archive Badilisha) to storytelling to music and video, Africans on the continent and in the diaspora are experimenting with new ways to create, share and consume content.
11. As with financial services, it is mobile platforms that will decisively transform the content landscape. The reach of mobile, especially with increased Smartphone penetration, will answer the difficult question of how to monetise content. By connecting creative output with advertising revenue, subscriptions and corporate sponsorships, mobile will energise the creative economy. Already, there is lots of entrepreneurship in this space with mobile video platforms such as Tuluntulu and iROKO, in competition with global platforms like Netflix. This race to dominate African media has seen some players support musicians, artists, journalists, writers with studio space, and business advice, thus stimulating the creation of local content and investments across ﻿the value chain. The winner from all this activity will be the African content creator.﻿

Trends for entrepreneurs to look out for in 2017

An open letter to the regulator ﻿by Dawid de Villiers and Seshree Govender of Webber Wentzel﻿
<img loading="lazy" decoding="async" src="/media/19303554/dawid_de_villiers_partner_at_webber_wentzel__lr_.jpg" width="350" height="527" alt="Dawid De Villiers Partner At Webber Wentzel (LR)"/>﻿ 
Dear Prospective Blockchain Regulator
A belated warm welcome to the age of Blockchain. In the last five years or so we have witnessed this technology&#8217;s ability to redefine the very nature of processes and role players, we hold dear in the financial services industry. Given a few years, the right regulatory landscape and a shift in the mindset of the industry&#8217;s collective consciousness, Blockchain technology has the potential to change fundamental ideas and concepts currently entrenched within the financial services industry.
How? Well, Blockchain technology, as with most products of the Fintech movement, is underpinned by a &#8220;millennial&#8221;philosophy that seeks to better harness the benefits of free flow information, the shift toward more consumer orientated product development processes and integrate systems with greater adaptability. Accordingly, should Blockchain successfully integrate into the financial services industry, crystalised concepts and institutions such as the need for financial intermediation, single point information storage and centralised clearing and settlement may no longer exist.
The Mission of the Regulator
The benefits of Blockchain technology have been well documented in various platforms for the last couple of years.  So too has the fear of security breaches and the platform being utilised as a means to defeat the current consumer protections instilled in the financial services regulatory framework.
As such, we get it &#8211; there is definitely a need to regulate this innovation in technology. The devastation alone that a breach or failure in the Blockchain system may cause, certainly calls for regulation. However, as is the case with all innovation, amidst the calls for regulation there is also a need for deference and patience, given the infancy of Blockchain technology.
The Keys to the Blockchain
Blockchain is essentially a record keeping system, albeit a sophisticated and virtually bulletproof record keeping system, against which information is verified, cleared and settled. In other words, a key aspect of the Blockchain system is its inherent ability to adapt and continuously develop its core purpose which is to provide a secure manner of transacting between people without a third party verifying the information provided by the transacting parties.
This inherent commitment to security and transparency is premised on three basic characteristics of the Blockchain system:<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn1" title="">[1]</a>
<ol>
<li>A decentralised clearing  or responsible authority</li>
<li>the multi-member consensus approach to enhance transparency<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn2" title="">[2]</a>; and</li>
<li>the irrevocable chain and its reluctance against judicial or regulatory intervention </li>
</ol>
The decentralised authority
Blockchain is premised on the idea that no one institution or person ought to bear the overall responsibility of verifying the authenticity of the information (block) to be added to the chain or regulating the Blockchain itself. Blockchain operates on the foundation of a decentralised verification system that serves the functions of clearing and settlement based on information held by each member of the Blockchain network.<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn3" title="">[3]</a>
The efficacy of this decentralised verification system rests on the fact that the record held by each member of the network is a replica of the chain and as further blocks are added to the chain, the records of each member updates to reflect the record of the Blockchain.<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn4" title="">[4]</a>
Therefore, if the replica record held by one member is fraudulently altered so as to manipulate the verification process a block undergoes, the relevant block would still not accord with the other members&#8217; versions and as such creating an inherent checks and balances system in respect of information verification before a block is added to the chain.
This decentralised verification system negates the need for a single entity to be responsible or liable for the information that is entered into the Blockchain system.<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn5" title="">[5]</a> This is because all participants on the Blockchain network serves the function of and is responsible for the accurate verification of information.
It is arguable that regulation that undermines the function and purpose of a decentralised system by requiring a central entity to maintain authority in respect of the Blockchain is counterintuitive to the very purpose of Blockchain. The concept of a decentralised system is to ensure that no one entity, which is susceptible to various faults and weaknesses, as is any other entity, is tasked with ensuring the validity of transactions that operates through the Blockchain.
In an ideal Blockchain system, every member connected to the Blockchain network bears equal responsibility and liability for ensuring that transactions and information are in accordance with the information record instilled in the Blockchain.
Accordingly, we submit that the Blockchain system requires the financial services industry to start thinking of the concept of liability, responsibility and consumer protection as a function performed by every member of the Blockchain network as opposed to a single central entity.
Multi-Member Consensus Approach
Blockchain, in line with the calls for increased transparency in the financial services industry, seeks to secure and generate an irrevocable and transparent record of transactions. This transparency is achieved through an irrevocable record that (i) is continuously verified by each member of the Blockchain network and (ii) such verification is not reliant upon the internal processes of one particular entity. <a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn6" title="">[6]</a>
In order to illustrate this, let us consider the hypothetical scenario of a securities exchange where the central securities depository, the issuer, the stockbroker and the central securities depository participant are all members of a Blockchain network. Should the broker (in processing a sell order) claim that their client is the owner of securities forming the subject of the sell order, this information (block) will be distributed to the various members within the Blockchain network and if it is determined that such information does not accord with the Blockchain record (held by each member) the information will be rejected and will not form part of the Blockchain, resulting in a failed trade.  
This system of multi-member consensus clearing ensures that each member, on an automated basis, applies the same diagnostic approach to the verification of information against the same record, irrespective of the internal processes of each member.  Accordingly, each member of the chain is always cognisant of the acquiesced process adopted in determining whether a block should be added to a chain. <a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn7" title="">[7]</a>
This system affords transparency to transactions processed through a Blockchain, bearing in mind that due to the flexibility of Blockchain, the system can be restricted depending on the particular needs and purpose of the Blockchain network.<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn8" title="">[8]</a>
The built-in transparency feature of the Blockchain network arguably negates the need for the regulator to administer and enforce further transparency requirements. The regulator should rather focus on the members of the Blockchain network and not the technology itself. Regulation within this context should aim to create criteria for persons who are permitted to form part of particular Blockchains. In this way, the regulator could ensure the integrity of the Blockchain and its members without inadvertently hampering innovation or undermining the core function of Blockchain.
The Irrevocable Chain
Conservative critics of Blockchain have argued that a critical flaw of Blockchain is its resistance against judicial and regulatory intervention.<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftn9" title="">[9]</a>
Let us take for example an instance where an investor is of the belief that a block in the Blockchain incorrectly reflects the factual position and contests the accuracy of the Blockchain in a court or an equivalent regulatory forum. The question that arises in this context is whether the judiciary or the regulator should have the overarching power to alter the Blockchain record in light of such a claim.
It is crucial to note that the strength and validity of Blockchain are solely dependent upon the irrevocability of the chain. In other words, the moment an institution, judiciary or regulator is empowered to alter the Blockchain; it compromises the chain in its entirety.
Accordingly, we submit that the regulator should exercise restraint in permitting regulatory or judicial intervention in the Blockchain, bearing in mind that one cannot simply oust the jurisdiction of a court.
Rather, a regulatory presumption should be adopted. The central premise of the presumption should be that the Blockchain is presumed to be correct unless evidence is adduced to illustrate otherwise. The judiciary, as well as regulators, should bear in mind the essential characteristics of Blockchain which is to enable various intuitions within the network to verify the information contained within the network. Therefore, unless there is clear evidence of manipulation or contamination of the information, the members of the network, or the verification process itself, the judiciary or a regulator should refrain from intervening in a Blockchain. 
Taking all of the above into account, the position of a prospective Blockchain regulator is an unenviable one. Such a regulator may in the immediate future be tasked with attempting to balance the benefits and industry need for Blockchain against the potential exploitative weaknesses that may be inherent in the system. How does a regulator balance the need for investor protection against the restraint from overburdening a budding and innovative field within the industry?
It is submitted that the solution is two-fold:
<ol>
<li>Understanding the purposes and core functions of Blockchain and the manner in which it differs from current industry practices and at the same time realising that while Blockchain is termed an innovation, its purpose and process are not novel. Blockchain is merely a more effective and secure means of performing the already existing function of record keeping, clearing and settlement. Regulation should thus not aim to prescribe the process of Blockchain by seeking to codify or label the Blockchain system. </li>
<li>An understanding that the inherent features of Blockchain are based on principles of transparency, investor protection and security. As such, regulation should seek to enhance the framework in which Blockchain operates rather than further regulating its core principles.</li>
</ol>
Caution must be exercised by the prospective regulator to ensure that a &#8220;throw the baby out with the bathwater&#8221; approach is not inadvertently implemented in the regulation of Blockchain.
The challenge will be to strike this balance by ensuring investor protection while at the same time encouraging the innovation and development of technology within this budding industry.
Kind Regards
The millennial financial services industry﻿
 
For more information visit <a href="http://www.webberwentzel.com/">www.webberwentzel.com</a> 
<div>
Follow Webber Wentzel on Twitter: @WebberWentzel
</div>
 FOOTNOTES:
<div>
<hr />
<div>
<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref1" title="">[1]</a>IMF Staff Discussion Note: Virtual Currencies and Beyond: Initial Considerations (January 2016)
</div>
<div>
<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref2" title="">[2]</a> Brave New Coin: Digital Currency Insights &#8220;A Gentle Introduction to Blockchain Technology&#8221; (2016)
</div>
<div>
<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref3" title="">[3]</a> &#8220;Distributed Ledger Technology: Beyond block chain&#8221; A report by the UK Government Chief Scientific Adviser (2016)
</div>
<div>
<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref4" title="">[4]</a> Brave New Coin: Digital Currency Insights &#8220;A Gentle Introduction to Blockchain Technology&#8221; (2016)
</div>
<div>
<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref5" title="">[5]</a> &#8220;Distributed Ledger Technology: Beyond block chain&#8221; A report by the UK Government Chief Scientific Adviser (2016)
</div>
<div>
<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref6" title="">[6]</a> Brave New Coin: Digital Currency Insights &#8220;A Gentle Introduction to Blockchain Technology&#8221; (2016)
</div>
<div>
<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref7" title="">[7]</a> Brave New Coin: Digital Currency Insights &#8220;A Gentle Introduction to Blockchain Technology&#8221; (2016)
</div>
<div>
<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref8" title="">[8]</a> Barclays &#8220;Blockchain: Understanding the potential&#8221; (2015)
</div>
<div>
<a href="file:///C:/Users/JillD/AppData/Local/Microsoft/Windows/Temporary%20Internet%20Files/Content.Outlook/VH4ORJG3/Jan17%20-%20Blockchain.docx#_ftnref9" title="">[9]</a> Oliver Wynman and Euroclear &#8220;Blockchain in Capital Markets: The Prize and the Journey&#8221; (2016)﻿
</div>
</div>

Op-Ed: Blockchain – Innocent Until Proven Guilty

Recently, I have been intrigued to see how parts of this great continent are beginning to take up the mettle and make a mark when it comes to technology prowess, particularly, the platform economy.
We might still not have created the likes of Google, Facebook, Whatsapp, but our foray into M-Pesa, the platform that has come to define the era of mobile money in Africa and many other innovations, demonstrates that it won’t be long before the continent enters the ranks of producing a global platform of note.
I have been clamoring for a company to originate from Africa that creates games for the people of Africa and of course the world.  Gaming is the way one can express how their culture is reshaped and changes over a period of time &#8211; <a href="http://www.chopup.me/">Chopup</a> is one such tech platform.
Chopup is the brainchild of two youngsters in Nigeria, who have chased their dream to make sure African games like their peers around the world have a voice and more importantly, the people of this continent can also enjoy games that are made in their own circumstances.
These games that are created use the environment and caricature of the bustling energies of Lagos particularly the Yellow Combies, which pry commuters from one part of the city to the rest.
To get their creation going, these youngsters arranged gaming challenges at different universities across Nigeria, taking a cue from the playbook of the forerunner of the social media, Facebook.
These youngsters have won accolades about their growing creation in gaming and continue to learn and aspire to take their games across the continent and world.
Recently, their games have been uploaded into the gaming portals of MTN, Etisalat and Huawei and are slowly making their way across the continent.
The journey of these two youngsters is still in its infancy, but the steps taken shout of a growing tech future as attested by the recent visit by Mark Zuckerberg to Nigeria and Kenya
*YPO is a global community of chief executives dedicated to becoming Better Leaders through Lifelong Learning and Idea Exchange.TM  We create trusted spaces where leaders gather, connect, share and grow. The YPO platform provides more than 24,000 members in more than 130 countries – representing diversified industries and types of businesses – with access to extraordinary educational opportunities, alliances with leading institutions, and interest-based communities to support their businesses, communities and families. For more information, visit <a href="http://www.ypo.org/">ypo.org</a> .﻿

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