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Musa Group Investment in Lehae Affordable Housing Project

 

Press Announcement

26 October 2017

Musa Group Investment in Lehae Affordable Housing Project

The Constitution of South Africa states that “everyone has the right to have access to adequate housing”. Adequate housing does not merely achieve Maslow’s most basic physiological need of shelter, which is important, but even more fundamentally important is that adequate housing fuels the inspiration of human dignity.

Opportunities exist in this space for more work to be done in order to accelerate delivery of quality affordable housing. Musa’s Housing platform, the Skyward Group has developed a niche in delivering quality product to the South African market.

With a R50 million commitment from the Musa Group, Skyward and its partners have launched one such project in a township called Lehae, situated in the South of Johannesburg.

This past month, a team from the Unemployment Insurance Fund (“UIF”) and the Compensation Fund (“CF”) visited the development site to view the project which will see up to 2,000 homes built over the coming years. Currently in its first phase, with over 400 houses scheduled to be built, the team witnessed yet another successful partnership between UIF, CF and its stakeholders, as Skyward continues to pursue the goal of delivering quality housing and provide sustainable returns to its investors, complementing Musa’s continued efforts to Do good and Do Well in key sectors of the African economy.

 

 

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Musa Capital’s Namibia Mid-Cap Fund Acquires Swanib Cables, Enabling Transformation for the Namibian Economy

Musa Capital SWANIB

Namibia Mid-Cap Fund Acquires Swanib Cables, Enabling Transformation for the Namibian Economy

Swanib Cables, a distributor of electric cables, transformers and fibre optic cables to the Namibian mining, utilities / infrastructure and telecom sectors has been a market leader over the past 20 years. It boasts a robust customer base which includes multi-national mining operations, national and regional government, as well as Namibian blue-chip companies.

The Namibian Mid-Cap Fund (“NMCF”) completed its acquisition of 100% of the shareholding in Swanib Cables from Powertech International Holdings, part of the JSE listed Altron Group.

The Swanib acquisition was made with the intention to grow the organisation into a regional diversified distribution platform through a combination of organic and bolt-on acquisitive growth. The acquisition is aligned with the Namibian Government and the Government Institutions Pensions Fund’s (“GIPF”) policy goals of infrastructure investment to drive economic growth, job creation, as well as meaningful economic transformation and participation.

The Transaction is expected to provide broader benefits to the Namibian economy, which include: 1) localising shareholding from a South African JSE-listed shareholder to Namibian beneficiaries and incentivising empowerment partners to grow the value of the business, and 2) empowering locals, including previously disadvantaged Namibians, through meaningful equity participation and Namibian job creation.

Musa Capital Namibia (“MCN”) is the Fund Manager for the Namibian Mid-Cap Fund, and a subsidiary of Johannesburg based firm, Musa Group (“MG”).  MG is a diversified operating company with financial advisory and fund management capabilities that has been operating in Africa for 22 years.  NMCF is Musa Group’s third African private equity fund.

NMCF is a Namfisa registered investment vehicle, organized as a Trust in Namibia for the purpose of making quasi-equity and equity investments in private Namibian companies.  MCN primarily targets investments into existing businesses requiring expansion capital in the following priority sectors: agribusiness, consumer related industries, financial services, logistics, and light infrastructure. The Fund’s focus on middle market companies drives small and medium enterprise(“SME”) development, which in turn positions each investment to have the maximum transformational impact for the Namibian economy.

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Musa Group Transformation Partnership In Retail 

Musa Group RetailMusa Group (“Musa”) is an investment holding company, that has FMCG, Housing and Construction, Retail Financial Services, as well as an Investment Banking and Private Equity division, all under its group umbrella. While much of Musa’s investment banking work is on larger, transformative transactions, Musa’s other activities are targeted at transforming middle market businesses within our target segments.

In recent times, the notion of social entrepreneurship has become more prevalent in business. Musa has instilled this into their core business strategies, understanding that the long term value of “giving back” whilst conducting business proves far more beneficial to the overall outcome of an organization’s success, than having a focus on the profit motive alone.

The Harvard Business Review (January-February 2011), touched on some vital points relating to the concept of “Creating Shared Value.”

“The concept of shared value recognizes that societal needs, not just conventional economic needs, define markets and social harms can create internal costs for firms…. The concept, which focuses on the connections between societal and economic progress—has the power to unleash the next wave of global growth.” 

The article further states that, “Instead of considering it as the redistributing of a company’s already achieved value, shared value refers, rather, to expanding the total pool of economic and social value,” so as to yield opportunity for prosperity to all parties.

Applying this view to the African landscape, more specifically with respect to the retail sphere, emerging retail owners are faced with severe challenges to be manoeuvred around. The evolving challenges often require innovative thought and co-dependent solution execution. These challenges vary from restricted access to capital, to lack of collateral for securing funding, to the paucity of know-how and to a lack of supplier network.

Musa bases its core ethos on “doing good and doing well” in the eco-systems in which it operates. Consistently looking to diversify its community engagement and stakeholder development, Musa has taken note of the necessity to establish joint ventures aimed at addressing the fundamental needs of entrepreneurs. This has been performed through impactful programmes and tools, all of which address ground level challenges hindering the development of broad-based black economic empowerment (“BBBEE”) beneficiaries. One such ground-breaking instrument is the formalization of an Empowerment Development Programme (“EDP”) between Musa and one of Africa’s largest retail networks. The EDP is centred around the ideology of creating a substantial presence of previously disadvantaged retail store owners and supply chain participants. The EDP espouses the objectives of the South African National Development Plan, which aims to eliminate poverty and reduce inequality by 2030.

The programme is focused on acquiring a core group of retail stores with a proven track record and experienced owner-operators who are willing to diversify their personal investments, whilst retaining operational control. This structure is focused on store sustainability and maximising return on investment.

The objective of the programme is to utilise the identified stores as a training ground for the development of entrepreneurs, as they receive formal education, as well as in-store practical training through mentorship from established owner-operators of participating stores. A further aim of the EDP is to create opportunities for successful retailer candidates to acquire equity participation in companies or close corporations that own retail stores. The core of the programme is to broaden and accelerate transformation through targeted human capital development.

Musa envisages numerous achievements from this project, primarily, the development, acceleration and retention of previously disadvantaged retailer candidates who will become independent store owners in the future. Surprisingly, ownership levels in this basic stepping stone of entrepreneurship is extremely low, with less than 5% of owners within this network of stores being from the economically previously disadvantaged segment of the population – along with home ownership, franchising is a major source of early economic activity for wealth creation in emerging segments of any population. In addition to spurring entrepreneurship, there will be improved succession planning through structured personal development programmes within the current ownership structure of stores. This project will also assist in facilitating the transfer of critical skills and competencies from existing successful retailers, through structured mentorship and coaching. True skills development has evaded many of South Africa’s industries and pairing successful entrepreneurs with future aspirants in a hands-on approach portends to deliver more efficacy and more lasting results.

The fundamental growth of our people, our country and our continent depends invariably, on our ability to recognise and pursue opportunities which harness socio-economic advancement. Musa is attempting to rise to the challenge that is being posed to business – that of tackling the social and economic realities prevalent in South Africa, through creative solutions, ultimately driving greater growth in our economy and ameliorating the effects of history that are displaying themselves in a myriad of ways, most visibly captured in South Africa’s shamefully world-leading disparity (as measured by the GINI coefficient). Musa believes that only through creative solutions can the business actively play its role in solving this problem.

“Business cannot succeed in societies that fail. Likewise, where and when business is stifled, societies fail to thrive” 

Bjorn Stigson World Business Council for Sustainable Business (WBCSB)

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Musa Group’s Strategic Transformation Partnership in Retail 

Musa Group RetailMusa Group (“Musa”) is an investment holding company, that has FMCG, Housing and Construction, Retail Financial Services, as well as an Investment Banking and Private Equity division, all under its group umbrella. While much of Musa’s investment banking work is on larger, transformative transactions, Musa’s other activities are targeted at transforming middle market businesses within our target segments.

In recent times, the notion of social entrepreneurship has become more prevalent in business. Musa has instilled this into their core business strategies, understanding that the long term value of “giving back” whilst conducting business proves far more beneficial to the overall outcome of an organization’s success, than having a focus on the profit motive alone.

The Harvard Business Review (January-February 2011), touched on some vital points relating to the concept of “Creating Shared Value.”

“The concept of shared value recognizes that societal needs, not just conventional economic needs, define markets and social harms can create internal costs for firms…. The concept, which focuses on the connections between societal and economic progress—has the power to unleash the next wave of global growth.” 

The article further states that, “Instead of considering it as the redistributing of a company’s already achieved value, shared value refers, rather, to expanding the total pool of economic and social value,” so as to yield opportunity for prosperity to all parties.

Applying this view to the African landscape, more specifically with respect to the retail sphere, emerging retail owners are faced with severe challenges to be manoeuvred around. The evolving challenges often require innovative thought and co-dependent solution execution. These challenges vary from restricted access to capital, to lack of collateral for securing funding, to the paucity of know-how and to a lack of supplier network.

Musa bases its core ethos on “doing good and doing well” in the eco-systems in which it operates. Consistently looking to diversify its community engagement and stakeholder development, Musa has taken note of the necessity to establish joint ventures aimed at addressing the fundamental needs of entrepreneurs. This has been performed through impactful programmes and tools, all of which address ground level challenges hindering the development of broad-based black economic empowerment (“BBBEE”) beneficiaries. One such ground-breaking instrument is the formalization of an Empowerment Development Programme (“EDP”) between Musa and one of Africa’s largest retail networks. The EDP is centred around the ideology of creating a substantial presence of previously disadvantaged retail store owners and supply chain participants. The EDP espouses the objectives of the South African National Development Plan, which aims to eliminate poverty and reduce inequality by 2030.

The programme is focused on acquiring a core group of retail stores with a proven track record and experienced owner-operators who are willing to diversify their personal investments, whilst retaining operational control. This structure is focused on store sustainability and maximising return on investment.

The objective of the programme is to utilise the identified stores as a training ground for the development of entrepreneurs, as they receive formal education, as well as in-store practical training through mentorship from established owner-operators of participating stores. A further aim of the EDP is to create opportunities for successful retailer candidates to acquire equity participation in companies or close corporations that own retail stores. The core of the programme is to broaden and accelerate transformation through targeted human capital development.

Musa envisages numerous achievements from this project, primarily, the development, acceleration and retention of previously disadvantaged retailer candidates who will become independent store owners in the future. Surprisingly, ownership levels in this basic stepping stone of entrepreneurship is extremely low, with less than 5% of owners within this network of stores being from the economically previously disadvantaged segment of the population – along with home ownership, franchising is a major source of early economic activity for wealth creation in emerging segments of any population. In addition to spurring entrepreneurship, there will be improved succession planning through structured personal development programmes within the current ownership structure of stores. This project will also assist in facilitating the transfer of critical skills and competencies from existing successful retailers, through structured mentorship and coaching. True skills development has evaded many of South Africa’s industries and pairing successful entrepreneurs with future aspirants in a hands-on approach portends to deliver more efficacy and more lasting results.

The fundamental growth of our people, our country and our continent depends invariably, on our ability to recognise and pursue opportunities which harness socio-economic advancement. Musa is attempting to rise to the challenge that is being posed to business – that of tackling the social and economic realities prevalent in South Africa, through creative solutions, ultimately driving greater growth in our economy and ameliorating the effects of history that are displaying themselves in a myriad of ways, most visibly captured in South Africa’s shamefully world-leading disparity (as measured by the GINI coefficient). Musa believes that only through creative solutions can the business actively play its role in solving this problem.

“Business cannot succeed in societies that fail. Likewise, where and when business is stifled, societies fail to thrive” 

Bjorn Stigson World Business Council for Sustainable Business (WBCSB)

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Value Chain and Financing in the African Market

Agricultural Insight With Musa Group

Value Chain and Financing in the African Market

 

In the below sit-down interview, Andrew Makenete, Musa Group’s Agri-Business Executive discusses financing options for emerging farmers in South Africa.

 

 Q: How does farmer financing in South Africa compare with the process in other African countries? 

A: In the rest of the continent farmers do not own or have individual property rights. The state owns the land and leases it back to farmers, in most cases, with well-established traditional norms and status. Long term leases are available for investors and people seeking more secure rights. Typically, the land where actual farming takes place is of a much better quality (productive capacity) than land in South Africa. It is a commonly known fact that SA is actually not well endowed agriculturally, compared to the rest of the continent; particularly the countries in Sub Saharan Africa. This means that farmers can produce on much smaller pieces of land and with higher yielding crops. Contract farming is common in the rest of the continent whereby small holder farmers are provided inputs and production finance and then they deliver the crops (produce) to the person who financed them. This is often a sugar, cotton mill, processor, or packing facility, hence being the only market for the produce. The finance risks are fairly limited in such an arrangement.

Q: What kind of financing is available for emerging and smallholder farmers in South Africa? 

A: Grant funding in various forms is available in very limited forms to emerging and smallholder farmers. This is normally from the state (national and provincial governments) in various guises or schemes. It is so limited that it reaches only a few and has had little impact. It is either for production finance, or used to fund acquisitions, primarily of land, using the three key land reform strategies.

Limited recourse funding – typically provided by SOEs such as the Landbank, IDC and a variety of provincial funding institutions, whereby the funding is somewhat subsidized and the risk lies to some extent with the funder. Recourse is often some level of personal sureties, the crop, cessions on income etc. Some private sector companies also provide such type of funding and use various instruments such as input financing, crop sharing schemes, and subsidized 3rd party insurances (sometimes even from donor countries or agencies) to cover the risks.

Q: What is the biggest mistake made by primary producers when obtaining production financing? 

A: There are a number of key risks and it is difficult to isolate just one since they are somewhat interrelated. The modern commercial farmer produces best when they are sure of a market for their produce, which can provide a commercial return. Emerging farmers, often, cannot produce at a commercial scale with is typically dependent on

economies of scale, therefore not being able to cover their production costs. At the minimum, a producer must be able to recover their production (input) costs.

Q: How do you envision financing of primary producers changing within the next ten years? 

A: The so called “value chain financing” methodology is the way to go. Primary producers become part of product value chain where the financier intermediates the whole production chain – de-risking each and every step in the chain and determining the real costs and risks and ensuring sequencing in such a manner to have adequate financial cover across the chain.

PDF Version Here: Musa Group Agricultural Insight-A Makenete

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Musa Group Perspective on SAfm

MUSA GROUP ENGAGES ON THE IMPORTANCE OF SUPPORTING AND EMPOWERING EMERGING FARMERS IN SOUTH AFRICA ON SAFM

Musa Group Farming

Last month, the Competition Commission raided nine fresh produce dealers based at the Johannesburg Market and Tshwane Market after the Department of Agriculture, Forestry and Fisheries reported cartel conduct, which could limit the development of black farmers and raise prices in the food sector – affecting vulnerable households the most.

About a week ago, President Jacob Zuma urged stakeholders in the agriculture sector to develop black smallholder farmers and to make a contribution to economic growth and job creation. For more information, please see article.

Musa Group and Spar have partnered to empower black emerging farmers in the agriculture sector. The private equity firm aims to transform the agriculture sector by providing financial support and empower disadvantaged black entrepreneurs with the skills to fully participate in the mainstream economy.

Listen to Musa Group’s Agricultural Executive, Andrew Makenete, in this interview on SAfm, as he discusses the many challenges faced by Emerging farmers in South Africa and how Musa Group provides support to emerging farmers.

Please follow link to listen to the interview: https://gallery.mailchimp.com/3168f330bd9aee300221d01f1/files/e5212302-a473-4c08-8709-bfb95c54e3c6/morning_talk_18_apr_empowering_black_emerging_farmers_medium.mp3