By: Janina Slawski, Head of Investment Consulting – Alexander Forbes
There has been a significantly raised level of interest in the prescribed assets issue in the last few weeks. Questions are being asked on whether this would be preferable to an IMF bailout, Cosatu has come out in support of prescription, and President Ramaphosa has called for a dialogue on the issue.
The Alexander Forbes position on this continues to be that we are opposed to any regulation, including prescription, that could lead to suboptimal investment outcomes for investors, particular members of retirement funds where fiduciary duty requires that members’ benefits be safeguarded and grown.
In respect of an International Monetary Fund (IMF) bailout, countries that have had to apply for an IMF bailout have typically been countries with balance of payment issues and banking crises. South Africa has neither of these, and the South African Reserve Bank continues to play a critical role in safeguarding South Africa in these realms, ensuring that a request to the IMF is still an unlikely resort for South Africa.
The country’s fiscal position is, however, dire. It is therefore not surprising that questions are being raised about whether retirement funds and other investment pools could be used as a source of funds to meet South Africa’s budget deficit, especially if more state-owned entity (SOE) debt (specifically Eskom) has to be taken onto the government balance sheet.
It is instructive to review the responses of President Ramaphosa when asked in front of the National Assembly for a direct answer on whether he supported the implementation of prescribed assets. Whilst he voiced support for initiatives that would be good for South Africa, and that would give good returns for pension funds, he did not indicate support for implementation of prescribed assets.
President Ramaphosa’s specific response when questioned on prescribed assets was that “we will pursue policies that advance the interest of our people here in South Africa and also advance the interest of pension fund holders”. He continued: “Our policies are clear. We are pursuing a strategy of economic reform and it is seen as quite positive by the investing world.” Since prescription would be viewed as extremely negative by the investing world, we view this as support for strategies outside prescription that support developmental objectives. President Ramaphosa referred to successful developmental initiatives invested in by the Government Employees Pension Fund, and that “pension funds make good returns out of infrastructure developments”.
These comments support a strong positive stance on impact investing, which we believe could make a significant difference to the growth and job creation initiatives that the country so critically requires. If compelling investment opportunities were to be created to invest in growth and job creation, then retirement funds and other investors would be enthusiastic potential investors in these initiatives for their own enhanced returns as well as the positive effect that it could have on South Africa and the communities impacted by the investments. It is not a lack of capital for investment into initiatives that is the issue, but rather a lack of investible opportunities that is retarding investment.
The recently released National Treasury Economic Growth Strategy document raises hope that the focus will shift away from negative thoughts of forcing prescription towards growth initiatives. The document proposes extremely positive ideas that, if implemented, could lift GDP growth by 2 to 3% a year in the medium term. The challenge will be to ignite some of the job-creating initiatives that hold hope for the vast numbers of our unemployed population, before the negatives of job losses start to take hold in government and state-owned entity sectors that need to reduce costs to have a hope of returning to profitability.
The successful case studies for impact investing speak for themselves:
- The Renewable Energy Independent Power Producer Procurement Programme (REIPPP) has made a significant impact on the economy, job creation, community upliftment, economic transformation and climate change
- The Financial Sector Code (FSC) committed participants to actively promote a transformed, vibrant and globally competitive financial sector that reflects the demographics of South Africa. Opportunities were found to invest in projects that gave an attractive return to investors whilst meeting the requirements of the charter, which included investments into housing, infrastructure, agriculture, schools and SME financing.
- The Jobs Fund was launched in June 2011 with an amount of R9 billion set aside to co-finance projects by public, private and non-governmental organisations that significantly contribute to job creation. This involves the use of public money to catalyse innovation and investment on behalf of a range of economic stakeholders in activities that contribute directly to enhanced employment creation in South Africa.
- The N4 Toll Road project is a public–private partnership that includes socio-economic outcomes to empower and uplift communities along the N4. Success has been achieved through social and entrepreneurial development, job creation, and training and skills transfer in a variety of fields.
Each of these successful initiatives has been funded by investors seeking and achieving superior investment returns, within acceptable risk parameters. The investors behind investment capital were willing, superior returns were achieved, and the positive spin-offs in community upliftment have been significant.
What is required to achieve a significant growth impetus for South Africa is not prescription. It is the launch of initiatives that will ignite investor interest in attractive, risk-adjusted returns, with the potential for significant socio and economic upliftment.
But what is critical is that we move beyond the wholesome concept of impact investing and into the realm of hard investment realities. If specific projects could be put forward that are seeking investment capital, then investors would be able to evaluate these opportunities and determine whether they represent viable investment cases. Without these real, live potential investments, the concept of impact investing and the difference that it could make to the South African economy and its people will remain nebulous.
Without hard investment opportunities, impact investing will not have the opportunity to gain momentum.
WHY 2020 IS THE RIGHT TIME FOR FS MODERNISATION
Chris McLaughlin is chief product and marketing officer at Nuxeo
Few would argue against the notion that the UK financial services (FS) industry is facing many challenges as both a new year and new decade begin. Uncertainty over Brexit, the potential threat from new competitors and Big Tech brands, and rising customer expectations are just some of the challenges facing the sector.
But for every challenge, there is also opportunity. Digital banking paves the way for greater service continuity, making it easier for banks to capture and analyse data (with consumers’ permission), reduced repetition of information collection, and delivering more of what customers want in terms of products and services.
By innovating with richer and more convenient online and mobile banking experiences, and by using technology to deliver smarter and more streamlined backend operations, traditional FS providers can roll out and execute services more cost-efficiently too.
But many FS firms have been restricted in their ability to innovate and realise such opportunities, due to the outdated and inefficient systems and applications to be found in many organisations. However, with many FS workers believing that the challenges the industry face could see their company lose customers in 2020, the time is ripe for FS firms to embrace modernisation.
The 2020 agenda according to UK FS workers
Nuxeo recently surveyed 501 UK FS workers that focused on the challenges, concerns, and opportunities facing the industry. The main 2020 FS industry challenges were Brexit uncertainty; cybersecurity threats and information or data breaches; physical branches closing down; the burden of increasing regulation; competition from Big Tech firms potentially moving into FS; and competition from new challenger banks.
Perhaps of most concern to the industry is the fact that 59% of FS workers in the study felt that these challenges left their organisation vulnerable to losing customers over the next 12 months. But there are signs that FS firms are adapting to the new market reality and embracing technologies such as artificial intelligence (AI) that can help them modernise and address such challenges.
Almost two-thirds of respondents claimed their organisations are committed to innovation, and more than half (58 per cent) believe that firms which use AI in creative ways make for more attractive employers. 68% of respondents say their organisation is already using AI for content search or is in discussion to do so, and 67% say the same for automating backend processes, suggesting that FS firms are alive to the value that can be achieved.
Transforming customer service delivery is also a key focus for AI ambitions, with more than one-third (34 per cent) of respondents saying their organisation is already trying out AI in this context. Chatbots, often used to improve the customer experience, are being used by one-quarter. Meanwhile, 41 per cent are already using AI-based capabilities for some form of data analysis, suggesting that FS providers are attuned to the need to target their activities more strategically.
Smarter management of data, content and information
One of the major threats to productivity is the inability for FS firms to connect and organise all the data they have at their disposal and there is a real need for smarter management of data, content and information. Compared to newer industry market entrants, established banks and FS providers have far richer data going back decades or longer. If institutions could tap into this considerable resource, it could be used to distil invaluable intelligence and insights into consumer trends, product performance, and relative account profitability.
Although organisations have all the underlying information stored within their legacy systems, it is typically very difficult for teams to access, combine and cross-analyse this data. This is because, too often, systems are unconnected, use incompatible data formats and feature considerable data duplication between applications.
In the Nuxeo research, FS providers confirm that, on average, they store information and content across nine different systems. And these systems tend to operate in silos: almost three-quarters of respondents say their organisation’s systems are not fully connected with each other.
System users who need to access information as a regular part of their jobs can be spending up to an hour a day (52 minutes) searching for what they need because it is not readily discoverable. Given that this equates to four hours 20 minutes each week per employee spent looking for information, the total time wasted across an organisation over a year is quite significant.
Embarking on a managed journey of modernisation
13 per cent of respondents in Nuxeo’s study believe their organisation’s inability to adopt AI quickly enough is one of the main challenges facing UK FS in 2020, so it’s something that will need to be addressed sooner rather than later.
But a managed modernisation journey, incorporating wider use of AI, which can help address many of the issues that are so concerning to those that work in FS, is already underway for many. Such modernisation can deliver quick wins, without incurring new risk or detracting from other critical work that needs to be done in 2020 and should be embraced wholeheartedly as the FS industry embarks on the new decade.
WHY MAKING MONEY ON YOUR MOBILE IS EASIER THAN YOU MIGHT THINK
Aaron Brooks, Co-Founder of Vamp
For Millennials and Generation Z, becoming a social media influencer is an increasingly desired career. According to a recent study, 86% of millennials want to use their social platforms to post sponsored content. It comes as no surprise. Getting paid to produce content about the products you love, why wouldn’t you?
It’s more than just a pipe dream too. While marketing used to revolve around big brands, employing big agencies to create ads, technological advancements have created a user generated content boom. Thanks to smartphones, most of us now have a 12 megapixel camera in our pockets. Brands have capitalised on this, launching campaigns that harvest user generated content, asking their customers to share their brand experiences through pictures, videos and reviews.
Social networks have normalised the sharing of content, which has helped propel this movement further. ASOS’ UGC hashtag #AsSeenOnMe has over a million entries on Instagram. Then of course there’s Apple’s incredible ‘Shot on an iPhone’ billboards, which use their user’s images to promote their phones.
Influencer marketing takes this a step further. These social creators produce high-end content and have engaged followings – both a valuable commodities for brands. 93% of marketers now using influencer marketing. So if you’re looking to make your mark as a content creator, there are plenty of opportunities. Don’t be put off if your Instagram following isn’t in the high thousands either. Micro influencers, with their small but highly engaged audiences, have become popular among marketers and this trend will continue to grow in 2020.
Of course, brands want high-quality content to represent their brand, but if you’re keen to kick start your creator career and start making money, a smart phone and a creative eye is a good place to start. If you want to take it further, then follow these three tips for success.
Hone your personal brand
Rather than trying to be fashion, art, foodie and travel all in one neat package, find a niche and create a consistent message. The same goes for photography styles. If you want to be the flatlay expert, I’d recommend sticking to that at least 80% of the time.
Finding your niche and making it your hallmark will let people know what they can expect from you. It’ll make you more likely to maintain follower loyalty and help you to stand out from the crowd. Make sure it’s of genuine interest to you. You’ll need enough enthusiasm to post consistently in order to build your authority in that area.
Cultivate an engaged following
While a high follower count was once the most prized possession of the influencer community, times have changed. These days if you want the attention of big name brands, not only do you need a beautiful feed, but a highly engaged following. That means people who follow you, spend time with your content and engage with it.
Actively engaging with your existing audience and contributing to the larger Instagram community will help you build relationships on Instagram. This means replying with genuine
comments and pro-actively engaging by offering your own comments on other accounts.
While it might be tempting to take shortcuts by buying fake engagement or followers, it will only sabotage your efforts. Software has become increasingly effective at spotting fakes so chances are, you’ll be found out and blacklisted.
Maximise influencer marketing platforms
Once you’ve honed your personal brand and cultivated an engaged following, you can begin making money on your mobile. Rather than waiting for these opportunities to find you, you can take a proactive approach and join an influencer marketing platform.
These technology services connect brands with content creators. Depending on the platform, it may have a database of thousands of pre-vetted influencers who have opted-in to receive content collaboration briefs from brands. You’ll get opportunities delivered direct to your mobile and will be able to choose whether you opt in or not. This gives you the freedom and flexibility to work with brands that truly resonate with you and balance the work around other commitments.
With brands constantly searching for people who boast content creation skills, there are plenty of career opportunities in the influencer space. For those looking to make money in this space, all you will need is a smart phone, passion and creativity to begin carving a career as an influencer.
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