Fred Hoyt's Travels

Back in Windhoek from Scout camp—er, Etosha National Park.

In mid-May 1983, I became Scoutmaster of Troop 19.  Accordingly, mid-May 2016, it’s not surprising that I commemorated this auspicious event by camping—albeit in a “rest camp” in a national park in Namibia.

We didn’t get much rest, though, because Etosha National Park is one of the largest preserves in the world.  Created in 1907 under the Germans, it was once almost 50,000 square miles.  It’s now closer to 15,000, but still substantial.  Etosha means “great white place,” and it is: one of the major features (about ¼ of it) is a salt pan, which does fill if there’s enough rain—but hasn’t for nearly 8 years.  The salt pan shimmers white, looking for all the world like a distant ocean.

But it’s not the salt pan we came to see; it was to work on Nature requirements, and Etosha does have a strong “merit badge” program.  There’s a variety of ways you can study nature:

1. Go to a museum. Or the National Park variant covered in the story told by Eagle Scout Chris Perillo, who, when we saw an alligator swimming in the ‘Glades,’ told us he’d just come back from the North Cascades where his family took a nature hike at night.  The ranger said she’d been there earlier in the day, and there was an owl—and she pointed her flashlight at the tree, and sure enough the owl was still there.  This continued till the end, when she asked Chris to say behind—and carry the stuffed animals back.  That’s the origin of my comment about “automated” or “robotic” or “animals on demand”on hikes.  That wasn’t a problem for us.
2. A second variant is to go to a game park. Our guests did this at various stops while we were in our business visits, and got some great pictures feeding cheetahs.  You’re sure to see animals, which is also true if you go to a zoo.
3. The private preserves like I went to last year (adjoining Krueger National Park in South Africa) offer a different blend. Lots of animals, but they’re like fish in the sea.  The sea has a lot of fish, but you can’t always find them.  At Sabi-Sabi, the driver plus tracker were radioed in to other vehicles, though, and we were able to spot lots of wildlife, and because it was a private preserve, pursue them off the road.
4. Etosha was a great challenge (and excitement, really) because you never knew what you were going to see, and you couldn’t go off road in pursuit.You might be fortunate enough to have an old bull elephant almost close enough to touch as he went across the road, which our vehicle did, or see a leopard dragging a kill, which some of our other trekkers did.

I chose plan A, which was to have “only” three game drives—but one was from 6:15 am until 5:30 pm, and took us from our rest camp across to the other end of the park.

It was easy enough to meet the requirement to identify 10 different animals, and here are some we saw:

Lots of antelope.  Some of their relatives we had for dinner, since they’re vegetarians and generally at the bottom of the predator food chain.  I know why lions love impala (I do too), oryx (on the Namibian seal, but also on the menu as schnitzel or lasagna), kudu (menu item, too, but a big one), and the South African rugby team mascot, the springbok.

The bigger mammals.  The giraffe has an lovely gait, and it was just fun to watch them.  They move both left legs at the same time, then the two right legs—so they’re always in step, but I wonder why they don’t topple.  Other animals like to hang around with them because they can spot the carnivores a long distance away, and that’s a plus.  The black rhino, who have bad eyesight, (and are an endangered species partly because they can’t see the poachers) are just one of the animals with a symbiotic relationship with giraffes.

The others:  I said our group didn’t see many cats, but we saw their followers—the jackals and hyenas that our guide called “cowardly,” but I think they’re smart—like people, they let others get the food for them; the honey badger, that looks like a skunk and inhabited our campground going from garbage can to garbage can; the banded mongoose, who scurried from a furtive feast in a termite hill when we stopped to photograph them, like boys caught doing something wrong; zebras all over the place, looking like painted horses; and the wildebeest and warthogs. I thought we ought to have an “ugliest” contest, but they’d probably all enter—and all win.  Check out wildebeest and see whether you think all babies are beautiful.

The highlight for me—as those of you who know me might guess—was the discovery at the east entrance of the park of the original German fort, built in 1907 to block the entrance of diseased cattle into German lands.  It’s now a hotel in that rest camp.

Well, summer camp is over, I’ve completed my Nature requirements, so I think I’ll go on a high adventure trip to Ethiopia.  That begins tomorrow morning, as my new best friends scatter, some going home, some staying in Africa for more adventures.

Our two site visits today capped our business experiences in Namibia, and summed up a number of themes we’d heard elsewhere.

The first was to the local Caterpillar dealer, and though I had visited a number of Cat facilities in Asia, I had never visited a dealer before. The dealer was part of a chain that a number of south African countries are managed from headquarters in Johannesburg.  There is kind of a love-hate relationship, I realized, between Namibians and South Africans.  In addition to the over 25 year civil war to create an independent Namibia from an administered province of South Africa, there is much economic dependence today, partly because Namibia is a country of only 2.5 million people, or about the size of Naperville (actually it is larger than Naperville, but you know what I mean).  Because of the mining and the road construction here, this could be a good market for Caterpillar.  And in some areas it is.  Some of the big mines (including the Chinese-owned one) are big purchasers of Caterpillar equipment.  One major drawback, however, is that there is a tariff of 14% on imported goods, and there is an African company with a joint venture with John Deere that is considered African—hence, its products are tariff free. Small wonder Cat champions free trade.

Despite the price disadvantage, Cat sells well because of reliability and maintenance.  Over half the company’s employees are assigned to work at various mines to service equipment.  We toured the warehouse and maintenance facilities, where the tractor used to move equipment was a 1963 model, which ought to say something about durability.  The business suffers from several other drawbacks as well: currency risk (i.e., when you bill in dollars and collect in Namibian dollars the exchange rate is critical on big ticket items—and Caterpillar products are big and big ticket—especially when those items cost $15-$25 million dollars); the dealer writes local contracts in Namibian dollars with the proviso that the price is subject to the exchange rate.  The products are all manufactured overseas and assembled in Namibia (or elsewhere).  20% of the equipment is leased.  Finally, sales depend on industry expectations, which in turn, depend on commodity prices, which right now are down.

What I gathered is that being a franchised dealer means (among other things) that Cat supplies promotional materials, performance metric standards, and training—as well as the products. The metrics include customer satisfaction and plant safety—the latter was one of the sources of the manager’s pride—0.25 accidents over the last 4 months. As I pointed out when we left, people come to the Namibian game preserves to see the Big 5 animals (lions, etc.)—we had seen the “Big Cat,” and if they wanted to use that as part of their advertising, I’d be glad to talk with them about signing away my rights!

She also revealed something I had not realized.  When Namibia voted on UN Resolution 435 in 1990 (the US brokered a deal in which South Africa withdrew from Namibia and Cuba withdrew from Angola/Namibia–which accounts for the Cold War battles fought here in the 70s and 80s, and the suspicion of the United States by that generation), the country consciously chose English as the national language rather than the other competitors (German, Afrikaan, the 13 tribal languages).  She said that at the primary and secondary levels, though, it’s still not taught universally.

A visit to the Ambassador’s house for a reception capped our day and our business visits in Namibia. It was fitting, because also attending were many of the speakers we’d met, and movers and shakers from government (several ministers and the president pro-tem) and business.  We spent a very pleasant evening meeting and spending some time talking with individuals from various background who were essentially curious about what we saw, thought, and expected from our visit to Namibia.

I think I’ve shared my thoughts on the topic with you.

I don’t think I want to be the ambassador, but I certainly loved his house, which, as a taxpayer, I do own.

On to Scout camp—er, Etosha National Park.

To answer the question of what’s at the corner of Luderitz Strasse and Fidel Castro Street, it’s the Goethe Institute which houses the Goethe Café (on one corner) and the headquarters of the Lutheran Church here.  Both the Castro reference and the Teutonic emphases help explain contemporary Namibia.

The German influence, as I’ve suggested earlier, is pronounced, although its history as German Southwest Africa ended in 1915 or 1916.  Part of the heritage is in the architecture.  Cultural relics abound, including the old Christ kirche, a Lutheran Church that looks gingerbread-like outside and has a Rubens copy painting inside (probably a fake imported from China, like so many other things), the Hochschule (not sure I got the spelling right) which houses part of the museum of Namibia, and my favorite, the Alte Feste, the old  fort/headquarters of the German army in SWA, with its crenelated castle towers and a huge statue erected in honor of the “Fallen Soldaten” in world war I  nearly half a century later.  The discussion we had at the Embassy pointed out that many German habits still prevail (people stop at the stop lights), and many of the restaurants feature German fare (I had schnitzel the other day).

The Fidel Castro reference is equally important in explaining recent Namibian history (which also has a spillover effect on business, especially on US businesses).  Simply, the good guys who helped Namibia liberate itself from South Africa, as the Namibians perceive it, were Cuba, Russia, China, and North Korea. For example,  I went to the new museum of history, built by North Korea (I’d never before heard of North Korean construction companies going anywhere beyond their borders!).  Inside, what I saw would have made Kim (anyone of the three) immensely proud, because the vocabulary and displays were “socialist realism.”  There were exploited workers both in historical pictures and in artwork right out of the Chinese mold (the founder of the Republic stands statuesque in front, looking for all the world like Mao/Kim with a slightly different face–he does have a beard).  The pictures (and that was most of the exhibit) didn’t give any context, but I could imagine the struggle for liberation from the displays.  The country finally became independent in 1990 (March 21 if you want to win the trivial pursuit game), with the assistance of the United Nations.

That allegiance of SWAPO, the party of the revolution, and the party which has run the country since, is tilted toward the communist bloc.  Many of the businesses are state-owned, and we learned that the sentiment is that “profit is bad,” which has had a salutary effect on the corporate social responsibility of businesses that want to operate in this country.  One of our speakers, from 3M, sells respiratory devices to mining companies, and its entry strategy has been to give free training to mine owners who were convinced that towels and cloth masks were sufficient to prevent silicosis (!)  And, until recently, the parliament members were on the committee to scrutinize applications from companies desiring to do business here, or invest here (most of the mines are foreign owned, the capital requirements being too great for locals to manage, though about 95% of the workers are local—at least 80% have to be—and, the Chamber of Mines economist assured us, at least 70% of the revenue remains in Namibia. I thought it was fitting that her title was “economist,” but her training was in journalism.)  The mines are a major contributor to the GDP.  As I understand it, there is a new $6 b Chinese-owned uranium mine soon to open that will add 5% to the GDP of the country.  And the economist also assured us, miners’ pay is relatively high, both within Namibia and in the African mining industry.

The bias has some interesting effects.  A government tender for a railroad led to 8 bids, which went to a Chinese company.  The seven losers contested, and the proposal was rebid with 7 bidders.  The result was the Chinese won again.  The port of Walvis Bay is being expanded with Chinese construction (some of the subcontracting is going to Caterpillar). I’m beginning to get the picture now; the battle is partly for the interior-the Botswana and Zambia and Zimbabwe.  The port will require additional infrastructure, especially railroads, and we saw some plans (there are a lot of plans in and for Africa) for linking Walvis Bay with other countries.  The embassy told us even now it’s more efficient to ship to Walvis Bay than to the South African ports.

All this may be changing.  There is an American-educated President (the first) who is less skeptical about the motives of the United States (and Obama’s presidency has helped here, too), though the commercial attache related a story about telling the Minister of Foreign Trade how important the “ease of doing business in” and other ratings are in attracting foreign investment only to be told, “But countries lower than us get the most money.”  We’re having a reception at the embassy tomorrow, so maybe we’ll get more of a sense of what is happening in this large (think Alaska), thinly populated (2 million) and environmentally varied and naturally attractive country.

Gotta go essen!

One of the purposes of the FDIB trips is to facilitate cooperation between faculty, not just those on the trips, but with members of universities in host countries.  Today, in compliance with that goal, we had visits at two of the top universities in Namibia (I think there are three).

The first was the Windhoek campus of the University of Namibia, and I confess I’ve never really had a comparable site visit.  Usually, we have something of an overview, then usually a question and answer, then some sort of a reception where we can talk one on one.  At U Namibia, however, the dean of the school of business launched into a “here’s how you can help us.” Piecing things together, it sounds like the University has too many students (200 MBAs, 26 PhDs) and too few faculty (one full time because hiring full-time faculty is too expensive!).  As a consequence he was looking for research supervisors and thesis examiners, since all advanced degrees require a research thesis.  He pointed to the opportunities for co-publication and collaboration.  His college does hire many adjuncts from both business and the academy, but they cannot both supervise and examine.  This was the biggest of the 12 regional campuses of the university.

The second visit was to the Namibia University of Science and Technology, a more established Management Institute for graduate business education.The school coaxed a 10 million Namibian donation from a local businessman (divide by 15 to see how much you’d have to pay in US dollars to get the school named after you).  The school is housed in the university, but it specializes in graduate (and executive) education.  It, too, has a small faculty (6) and a large adjunct supplement.  What I found interesting was that the six do not include either an accountant or a marketer, though in talking with the faculty afterwards, they do bring in faculty from the undergraduate departments, including marketing and accounting.  The dean of the total area told me over half of the students at the university came under his care, and the head of the graduate school suggested—only half-jokingly, I think–that we ought to leave a resume with him!

Some other things that came out of the meetings:

Many of the students in graduate business are government employees (expected, this is the capital). All at NUST are part time.

The dean at NUST said that one of the emphases of the school was on improving business in Namibia.  One is tourism, the largest business after mining and fishing.  He mentioned that Namibia is virtually unknown in the US and Australia, two countries which send a lot of tourists overseas, and they are complementary in having summer six months apart!

He did mention that his school hosted a “customer service” seminar that was pan-African, hoping to identify where Africans can use the fundamentals that have been established in services marketing in the US and the Nordic countries over the past thirty years.  That led to some discussions about our experiences in sub Saharan Africa, both good and bad.  I had an episode where I asked a policeman in Swakopmund to point me in the direction of our hotel which also housed a casino, and he replied that he’d been on the force for only two days (which said he wasn’t from the town and wasn’t trained).  In response to our wondering why the mall below our hotel closes at 6, he noted downtown (where we are) closes down and people go back to the suburbs, which stay open till 11.  Thinking about Chicago, it’s about the same in most central business districts.

I had a little time to wander, but I think I’ll save that for another post—and that’s when I’ll tell you what’s at the corner of Fidel Castro street and Luderitz Strasse (no kidding!)

We’ve arrived in the capital of Namibia,  Windhoek, a 250 mile, 6 hour ride almost directly east from Swakopmund.  Before leaving, I took the opportunity this morning to explore the seacoast city.

Walking around, I found the information center and got a list of “historic buildings” still standing. One intrigued me—the Hohenzollern House, circa 1905, in the same art deco style of so many of the buildings in Qingdao China, which the Germans treated as a colony, although it was leased for “only” 99 years.  The 1907 hotel I saw looked liked the “Strand” in Qingdao also. It’s an attractive style that has been reflected in many of the buildings since the German colonization. Not coincidentally, there’s still a Bismarck Street (I should probably say strasse), a Kaiser hotel, and a wonderful antique store named Pete’s that had everything from old helmets and books in German to various African artifacts.

My main goal was to visit the Swakopmund museum, which I was told was among the best museums in sub-Saharan Africa, and I needed at least an hour there.  It’s a private museum, started in 1951 by a dentist, and augmented ever since.  It is pretty comprehensive—and here were some of the highlights for me:

From the German period:  a wonderful collection of stamps, covers, and an explanation of the postal service—which included a San (“Bushman”) postal carrier with a sack as a poster to use the mail, and various donkey and other means to get the mail from point A to point B.  Since I collect the Qingdao German stamps, I’ve seen some of this material in auctions, but it’s got to be an award-winning collection.  I also enjoyed some of the military uniforms, including the camel corps that patrolled some of the desert areas.

From life in Southwest Africa, there were several restored rooms, including a reconstructed dining room complete with portrait of Wilhelm II and his wife. The dentist’s shop was reconstructed, including extracted teeth, which I had to admit, I’d never seen before in a museum.  There were artifacts from the Cape/SWA boundary, and a little information on the First World War here—a British warship shelled Swakopmund and hit a pig pen…

There were interesting exhibits on the tribes—the Himba (whom I mentioned yesterday using mud as sunscreen and mosquito repellant), the Herero (rather sketchy on the uprising)—with explanations in 3 languages—Afrikaan (the Boer descendants, many of whom settled in SWA when it was mandated to South Africa), English, and German.

There was also a geological exhibit, including a lot of information on uranium, which came from the National Uranium institute that was the site of our business visit today.  The report they gave us explained why the lobby group had broken away from the general mining group—uranium is above ground mining, and in that sense is less risky than sending miners underground.  Namibia is one of the top four producers of uranium (Kazakhstan is the leading uranium producer), and the institute claims nuclear power mining has changed and nuclear energy is safer and more efficient than is generally given credit for–you be the judge.  I do know that along the road was a major pipeline delivering precious water to the mines.  And we have potentially another mine visit.

The bus ride fit in nicely with a flora/fauna explanation at the museum.  For about half the distance we were in the Namib Desert, which is sandy and pretty sparsely vegetated. Then it became savannah, with old pretty gnarled trees, which use a minimum amount of water, and some animal life, including the warthog.  By the time we got here, we’d imperceptibly gone up about 4,500 feet.  That made our Brigham Young faculty happy because Provo is about that high. They may be at home, but for a flatlander who lives where overpasses are sometimes mistaken for hills, this seems pretty high. Still, it’s good to be off the bus.

We’re in Swakopmund, Namibia, 883 miles from Johannesburg and 4 degrees closer to the equator (22 degrees) according to my gps.  It’s on the west coast of South Africa, where the Namib desert fronts the cool Atlantic Ocean.

Don’t be deterred by the name, which comes from the Swakop river, which means, in the local language (politely put) rear end.   It’s a city that a century ago was part of German Southwest Africa until the British and South African armies captured it, and the colony became part of South Africa, initially as war booty and as a mandate under the League of Nations.  Parts of the city architecturally date back to the German days, including the hotel we’re staying at, which back in the day was a railroad station that has been converted to a five-star hotel.  It could be somewhere in Bavaria.  A lot of the tourists here are German (the boat trip I took this morning had German/English explanations, with a French woman translating for her countrymen), and I understand there’s direct flights from Frankfurt to Namibia.  The restaurant some of us ate at tonight is the Hansa House, and it did serve schnitzel, but it also served game, and I could not resist the springbok steak!

The fact that it was a German colony should tell you something if you know anything about the colonial period: the Germans came late and essentially got what no one really wanted.  Portugal, the first to seize colonies, took Angola to the North, and the Dutch/British South Africa to the South.  Of Namibia, apparently the most desirable part was Walvis Bay, a good harbor, which the British claimed until eventually ceding it to the Germans.

The Namib desert is quite extensive, as we saw flying over it; I can compare it only to Mongolia in my experience, or the Taklamakan, but you might think of it as parts of Nevada/Wyoming.  That it is on the ocean provides some livelihood.  Tourism is one attraction. As I drove up to the boat, I was thinking “Florida” because of the new houses fronting the ocean; the image sharpened when we stopped at a mudflat to photograph the flamingos!  Another was salt.  As you may know, salt was part payment to the Roman legions; hence, “salary” derived from it.  Namibia is a major exporter of salt.  I can see the salt company out my window.  A third is a port expansion going on here, apparently not entirely successful, with Chinese help; the thought was to bring to the ocean exports from landlocked countries nearby (Zambia, Zimbabwe, etc.).  That was kind of the German thought, too, in building the railroad station where I’m staying; they found it not viable, too.

The Atlantic here does provide some respite. It’s too cold for swimming, but, as I discovered on a dolphin watch this morning, has spawned an oyster industry.  Because of the current along the coast, oysters grow to full size in 9 months; elsewhere, it takes two years.  One local entrepreneur found a way to breed babies ashore (I think he said 400 tons a month), then the oysters get put in cages in the ocean to grow.  The captain assured us they were the best oysters in the world, and at an onboard lunch almost persuaded me!  The tour also featured a pelican that came on cue on the boat, a sea lion that did the same, and a voyage out to an island where there was a colony. There are reputedly more seals in Namibia (2.5 million) than people (2 million).  That was my morning activity, since we were free to do what we wanted, and I thought, “sea and sand; do both.”

The second part was an FDIB sponsored trip to Dune 7, a huge sand dune that makes Mount Tom at the Indiana Dunes look like a junior high player.  The dunes were featured in Lawrence of Arabia, and one of our faculty used his free time to fly in a small plane to an area where the dunes are otherwise inaccessible.  Our guide told us of one tribe that lives in the interior gets so little rain that they wash with dirt….I wonder how many Scouts will start using that as an excuse, but I warn them in advance that they’re not in Namibia.

Namibia’s history reflects in part the turbulence of the 20^th century.  The first German governor of SW Africa was Hermann Goering’s (of Nazi infamy) father. A local uprising of the dominant Herero tribe led to what has been called the first genocide of the 20^th century—a massacre of something like a half million Herero and the poisoning of the wells, etc.  Later in the century, Namibia, part of South Africa, became embroiled in the Cold War.  I think most of us of the right age think of the Cold War as probably Asia, Russia and Eastern Europe, and Cuba.  Namibia independence fighters attracted support from Angola, which in turn invited Cuba freedom fighters, which in turn encouraged the United States to provide support for South African troops.  The consequences of that civil/cold war today are that Namibia tends to side with China and even North Korea. Monuments in Windhoek (the capital—we’re leaving for there tomorrow morning) I’ve been told, look more like Kim Il Sung than local leaders of the revolution (who are still in power here).

Another major product (even though over half of the population lives in poverty, the average income is $11,000, which means a few people have a lot of money!) is uranium, and we’re visiting a uranium mining company tomorrow.  I’ve been told it’s Chinese owned, but I’ll give you a report on that tomorrow—hopefully, not a “glowing” one.

Today is our last day in Johannesburg, and we’re leaving with a much better picture of “doing business in South Africa” especially after our two visits today, both to multinational corporations.

The first was to Anglo Ashanti Gold, the first South African company to be listed on the New York Stock Exchange, and the third largest gold mining company in the world.  That seemed appropriate because more than half of the gold mined in history has come from South Africa.  It seemed appropriate for another reason as well—the importance of mining in opening up Africa.  The discovery of diamonds at Kimberley and the Witwatersrand gold in 1886 were drivers in the colonial expansion into the continent of South Africa.  Johannesburg really owes its birth to the Gold Rush.  And mining has become a major employer in South Africa, affecting housing, race relations, and South Africa’s place in the world.

The current company is fairly recent, having been born in a merger between Ashanti Goldfields and Anglo American.  The professor leading the tour told me that the roots go back to a joint venture early in the 20^th century between a South African named Oppenheimer and JP Morgan. That branch went off to become Anglo American, a company that deals with a variety of mining operations (copper and platinum, for example), while AngloAshanti is only as good as gold.

In fact, that was very much the tack our speaker took in explaining the company to us; it’s only as good as gold, and operates in a volatile environment that has had the price of gold plummet to under $900 from about $1600 in the last few years, and resulted in a major contraction in the industry; Anglo has cut over 10,000 jobs, and sold off a number of mines to reduce its financial exposure and reduce its debt. Like most gold mining companies, he said, Anglo had predicted the price of gold would never decline, and had purchased, explored, and expanded—hence the need to contract.  He used the word “sustainability” in a rather unusual way—arguing that the company needed a “sustainable cash flow”!

He articulately laid out the risks in this industry—in addition to the usual ones all industries face, such as weather and currency fluctuations, but also the growing political risks of being in a dangerous and sometimes environmentally conscious world in an activist and connected world; he admitted he could only explain away as fate the deaths of two miners caught underground in an earthquake, but pointed out the company had made safety one of its goals, but closed with a quotation from Mark Twain: “Mines are dirty holes in the ground with a liar on top.”   Small wonder that one of the messages over the urinals was, “You always have a choice—let our ethics be your guide.”

The business is inherently risky, and becoming riskier.  Mines are increasingly deep he noted—some are over 2 miles underground, and it takes nearly four hours of an eight-hour shift to get to and from work (even worse than a commute in rush hour Chicago!).  Small wonder that the company is spending $50 million on developing a robotic gold extractor….especially with the tight connections between unions and the government of South Africa.

He painted, in other words, an interesting picture of a company in a dangerous industry, with plummeting prices, focusing on efficiency and cost cutting, compensation for the days when good as gold was an optimistic phenomenon.

Our other visit was to South African Brewery, one of South Africa’s important industries, but soon to be purchased by the InBev Anheuser Busch company to create the world’s largest brewery; that may in itself cause some major reshuffling as the combination will create almost monopolistic power in some countries.  SAB owns Miller in the US for example, and I read something about the probability one of the brands will have to be spun off.  The company dates back to the 19th century, and became a fixture in Johannesburg after the gold rush. A few points during the presentation that interested me: 1) Miller owns the whole channel of distribution.  In the US, post prohibition required independent wholesalers, such as City Beverage in Bloomington.  Our speaker said, “That’s why AB isn’t as profitable as it could be.”  2) she emphasized (as did the video describing the company) “cold affordability,” due in large measure to the demographics—a growing middle class, but with a great deal of uncertainty in the home market.  Growth is relatively flat, though South Africans don’t drink as much beer as most of the rest of the world.  Growth is coming from premium and flavored beer (note to the wise, Chocolate Milk Stout beer isn’t as good as it sounds). 3) SAB has grown through acquisitions (such as Miller Coors), and also moved into non-beer products, such as Coca-Cola.4) in response to my one word question, “AB InBev,” she was pretty optimistic about the synergies of new markets.  I don’t think she’s read the St. Louis papers, which are still whining about the purchase of the All American lager by the “efficient” (read cost cutting) Brazilians who run the Belgian company.

We also learned a little more about apartheid and its consequences.  Blacks could not legally drink until the 1960s, for example, but today, government policies rectifying the past include “transformation” of businesses to ownership by Africans.  SAB distributorships, for one example, are part of that transformation. We made a brief stop at the Museum of Africa—a large building no one seemed to know what to do or could afford to tear down; hence, it has what can at best be described as an “eclectic” combination of displays that you really stumble on.  One was a small Scouting exhibit, smaller than the Ottawa museum’s similar collection of Baden Powell artifacts. Another dealt with a question I had regarding Gandhi, who lived for almost 20 years in South Africa, about half the time in Johannesburg. It was here, the exhibit noted, that he began the practice of nonviolent resistance that eventually toppled the Raj in India—here he led protests against the compulsory Asian Immigrant Act which required Asians to register and get passes.

And finally, we had a tour of downtown Johannesburg, which, except for government buildings, our guide described as a “ghost city.”  He noted that whites owned the buildings before the end of apartheid, but abandoned it afterwards.  It’s not totally abandoned, but once five-star hotels are vacant, and most buildings have no more than shops on the first floor.  Everything else is empty, with boarded up or broken windows.  As our guide stated, people with money shop at the malls, like the posh Nelson Mandela mall across from our hotel.  I saw a McDonald’s, a Burger King, and a Game (one of the Massmart stores) downtown, but mostly locally-owned shops.  There’s a lovely old post office building with broken windows surrounded by scaffolding, which our guide said had been in place for three years, with no progress.

On a more humorous closing note, I picked up a China Daily at the front desk (yes there is a China Daily African edition).  I was drawn to an article on a Chinese agricultural mission in rural Ethiopia that complained about the toilets on the farm.  They wound up getting a Chinese government grant for new toilets and additional TVs so they would have a better stay at the agricultural station.  I hope my experience with the toilets will be better than the Chinese!

Today is the kind of day I’m really delighted to be on this FDIB trip; the combination of business visits and cultural experiences is exactly what I need to help me bring International Business vividly to students at Illinois Wesleyan (and hopefully to readers of this blog—believe it or not, I am “on the job”).

The site visits were fascinating.  One was to an insurance company started by two Australians in the 1990s to tackle health care insurance. It has since expanded into other financial services (property and casualty insurance, life insurance, banking) and into other countries, including UK, and through a joint venture with John Hancock to the US and with Ping An, to China.  To me, the most interesting discussion involved what the speaker, a senior executive and former government minister (not an uncommon example in developing or even, as I think about it, developed countries), described as a shared value model.  The model uses the incredible data available to determine and manage risk to the company by determining and helping shape a customer’s behavior.  The Vitality wellness subsidiary of Discovery (the main company) partners (a word we’ve heard a lot) to get rewards to encourage people to eat healthy, and exercise to save money and save money on their health premiums.  Data reveals (and we knew it!) that exercising 5x a week  put you in a healthier category, as will eating right.  Consequently, you get points from the partners, whether it’s a discount on healthier foods or to an exercise club.  I think he said that of the 8.5 million life insurance holders in the country, 3.2 million belong to Discovery/Vitality. The current promotion is the company will give you an Apple watch which 1) you can pay for with your reward points; 2) keeps track of your exercise activities and purchase points; and 3) sends reminders each week of what you need to meet that week’s goals.  The reward program can result in low frequency high ticket rewards (airline travel; he mentioned really cheap airline tickets for his daughter) or low ticket-high frequency rewards (weekly goals=free cup of coffee at Starbucks—though I think drinking caffeine probably ought to cost points).

The data he noted, has not only become more reliable, but verifiable. For example, you get tested for smoking, and the card the company gives you uses food purchases.

The application has been so successful, he noted, that the company is testing using it for automobile insurance, with data from cars that can even alert you if someone not driving like your profile is driving the car.  I think I had heard State Farm developing similar software.  What it does emphasize is what I’ve been urging students to do—learn how to use data; companies are!

The second visit was to a company you might have heard of Walmart, which bought an interest in Massmart, a local retailer with five divisions that Walmart has kept (including a Home Depot look alike), wholesale operations, and a variety of retail operations.

The American who spoke to us (along with the Dutch CFO and a South African) had been in South Africa since the merger, and to his disappointment, was being rotated out.  He did describe the complicated steps in the merger.  Proposed in 2010, it was approved by a competition commission, and a tribunal, only to be nixed by a combination of government and labor (as I’ve mentioned, the governing African National Congress has strong labor participation), a decision which he said still has repercussions.

For Walmart, negotiations and compromises on Walmart’s part led to eventual approval. Walmart has agreed to recognize unions, not lay off workers, supply funds to help develop local suppliers (I think he said $25 million), and recognize the unions.  There are over 40, he said, some being store specific.

Our speaker said that Walmart was a marketing, supply chain, and logistics company, masquerading as a retailer, while Massmart (with stores in 13 African countries) was a finance company masquerading as a retailer, so Walmart thought there would be synergies.  Five years into the merger, he said they are still   integrating the two companies.  The most difficult operational question for Walmart has been the introduction of food and working with the government regulations meant to favor black-owned enterprises.  Interestingly, he said Massmart was more entrepreneurial and decentralized that Walmart has become; being big, Walmart has become more bureaucratic, and that’s part of the culture clash in integrating the two chains (not to mention, as he pointed out that South Africa is still Eurocentric, with more British business thinking than American).  Our hour scheduled trip easily slid into over two hours, as you might imagine, because every one of the business faculty has used Walmart as an example of something or another in class (but, as the Walmart executive said, watch out for Amazon and the battle for the web space)

In the evening, we were treated to an introduction to the African tribal culture.  South Africa is roughly 50 million people, about 10% Caucasian (and ¾ of them descendants of the Boers).  The republic has 14 official languages, reflecting the 14 official tribes. The dinner/theater/hotel about an hour from the city had villages representing 5 of those tribes.  You can lodge in one of the villages, or just have dinner, dances, and a discussion in each of them.  Our guide was a Zulu with a booming voice and a great theatrical presence, who took us to each village, taught us a few words, and described some aspects that differentiated them.  The most memorable? The different number of cows required for a dowry (usually 11, sometimes demanding horses as well), and for one, pretty, hard working, and educated got you six more cows.  The Zulu, under Chief Shaka, dealt the British the worst defeat they experienced until World War I in a futile effort to delay British conquest; during that battle, the Pedi so admired the bravery of the slaughtered Highlander regiments that they wear kilts (they kilt the Brits?) to this day, and the Xhosa, from whose royalty Mandela descended, and whose language includes tongue clicks we could not imitate.

I think you can see why I thought the lessons of the day would find their way into class!!

Day 2 of our FDIB trip was about education—from both the top and the bottom. The “top” was the visit to the University of Witwatersrand School of Business; the dean said of the two top schools in South Africa, the University of Cape Town where we visited last year had better scenery. His

school, he claimed, had the better scholars. Whatever the claims, he certainly had the nicer building (UCapetown school of business is housed in a former prison); it’s located on the business and governance campus in one of the swankier areas of town. The area was populated after 1900 by the so-called Randlords, the beneficiaries of the gold strike at Witwatersrand. The administrative building is a baronial style mansion built by one of the founders of South African Brewing.

The two hour session introduced us to higher education on the continent of Africa, in an up-to-date building whose library contained 4 terminals dedicated to Bloomberg services that IWU was told would cost us $12000 a month! The Dean welcomed us with a brief background of what makes the school distinctive, including its part (UW’s, anyway) in the protests against apartheid, which led in the early 1990s to one of the first visits to a campus from Nelson Mandela, who thanked the students for their protests against the segregation.

Student protests seem to be part and parcel of current campus life now, too. I’ve read about protests to change the names of the buildings, and the

removal of the Cecil Rhodes statue from the Cape (he gave the land on which it is built), and the protests against higher fees. On one bulletin board was posted an unusual court order, enjoining about a dozen students from engaging in any disruptions of the “Senate House” or the campus in general. Increasing fees seem to be part of the stimuli.

The Dean (and his faculty) stressed the challenges of doing business in Africa, and, in particular, the challenges of teaching business. The school has gone to a program with a lot of application—there was advertised a short course (management development seems to be a specialty—and a profit center for the University) with a week at the London School of Economics, followed by stops in Dubai and Singapore, and a focus on being involved in African business beyond South Africa. WSB has introduced a number of imaginative Master’s courses, in design creation, for example, arguing that a school in Africa has to teach more than the traditional business programs—with 36% unemployment (official figures released this week), and a government known for corruption, and multinationals probably incapable of making a dent in unemployment (mining, which once employed about 65% of the workforce has suffered catastrophic declines), the school’s faculty and administrators have chosen to advance education (about other countries—the MBA students must go on visits to other countries in Africa), and give people the tools they need. The dean noted that of the 17000 schools of business, Wits ranks 3rd in the number of CEOs it has produced.

As I said, the theme was education, and the latter half of the day, we visited a social entrepreneur—in education. We went to a library that he had gotten money from the Mayor to equip with computers—and to create a MOOV (massive online varsity, he called it), that is housed in about a dozen libraries around Johannesburg. The organization provides “facilitators” (we met many of them), whose job it is to introduce people to computers and to become literate in either business or computer skills so as to become employable. The “students” (I think it’s all free) can sign up for a training class on how to (for many the first time they’ve used a computer—computer literacy on the continent is 13%). They take probably 3 courses, using the library based-computers, earning an employable certificate of competence in computers or marketing or finance. The young man who started it told us he was an academic economist who “wanted to make a bigger difference.”

His challenge was highlighted by the news that the library had been robbed earlier this morning—the robbers took the technology, not books—the township is one of the roughest in Johannesburg. I thought I was seeing what Clayton Christensen described as “Disruptive Innovation” in higher education; he thinks the internet will force the change in the model, but one thing our speaker said gave me hope—as an academic—that the current model is broken but not yet ready for the scrap heap; his main goal is to find a university to give credit for these certificates. What he was saying, in effect, was that universities provide validation for learning—and sometimes make it possible. New tools offer new opportunities as well as threats, even in libraries in townships in South Africa.

I am back in Jozi (one of the abbreviations for Johannesburg) nearly a year later, and it’s probably a good thing I’ve been here before; after 10,000 miles in the air, total of 30 hours, I’m lucky I know where I’m at right now.

I got here around 9 am Jozi time, which is about 8 hours earlier than your time, and rushed to hear the end of our first speaker. Fortunately, we did mostly what we did last year before I left—and fortunately, the visit to the Apartheid museum and the township (read ghetto) of Soweto (short for South West Township) is at least as moving the second time as the first.

Jozi itself is a sprawling city, erected on the largest gold mine in the world (the Witwatersrand), that is the business capital of the Republic of South Africa. In the interior, Jozi acquired population when gold was found here in 1886, a discovery that transformed the Transvaal (a state set up by the Boers, descendants of the original Dutch settlers who clashed with the British, who had seized the Cape Colony to keep it from the French during the Napoleonic Wars) back eventually into a British colony that in 1906 became the Union of South Africa. Population is somewhere around 10-12 million, with townships scattered around gated communities, including Sandton, the financial capital, which is where we are staying.

The Apartheid Museum was built by a developer who was given part of the former gold mine region in exchange for building the museum. (He turned the gold mine into another gold mine—an amusement park), but the museum, located in Soweto (the home of Nelson Mandela, who 22 years ago this week, became the first democratically elected president of South Africa, as well as other members of the African National Congress, the party that fought the racial separation laws that intensified after the 1960s) is one of the most moving exhibits of 20th century brutality I’ve seen—and the 20th century is full of them.

The efforts of the white minority to hold onto power (and to keep a cheap source of labor) goes way back into the Dutch colonial past (and to some extent, the British as well; it was in South Africa that Mahatmas Gandhi initially experienced the racism that led to his campaign of peaceful non-violence that eventually sent the British packing from India). Ironically, segregation intensified after World War II—an Afrikaner party supported the Nazis—and there were pitched battles (look up Casspir) that rocked South Africa, Angola, Mozambique, and involved the United States and Russia (this was the cold war period). The Mandela house (he spent 27 years in prison, and less than a month in the house) still bears the bullets from police drive by shootings. I remember some of the efforts that students made at Chicago and elsewhere to bring economic pressure to bear on South Africa—and eventually the resistance led to Mandela being freed, elected president, and providing the platform that the African National Congress has stood on to stay in power for the last 24 years.

We’ll get a better picture of the economic doldrums here—the currency is worth 20% less than a year ago, the power shortage is still real (there are stunning cooling towers that have become murals because the energy company has not invested in infrastructure).  And South Africa is facing the worst drought in a century, which has led to some interesting marketing (“do you water your plants with grey water?” and a jeans company that I saw in the–could be Michigan Avenue mall across from our hotel that boasts almost never needs washing—just like clothes Scouts take –I almost said wear–for a week at summer camp).