 |
SMM811S - STRATEGIC MANAGEMENT - 1ST OPP - NOV 2024 |
|
|
1 Pages 1-10 |
▲back to top |
|
|
1.1 Page 1 |
▲back to top |
nAmlBIA UnlVERSITY
OF SCIEnCE AnDTECHnOLOGY
FacultoyfCommercHeu, man
SciencesandEducation
Schoolof Commerceand
ManagementSciences
Departmenot f Governance
andManagemenSt cfences
13JacksonKaujeuaStreet
Private Bag13386
Windhoek
NAMIBIA
T: •264 612072398
F: •264 612079396
E: dgms@nust.na
W: www.nust.na
QUALIFICATION: Bachelor of Business Management Honours
QUALIFICATION CODE: 08BBMH
LEVEL: 8
COURSE: Strategic Management
COURSE CODE: SMM811S
DATE: November 2024
SESSION: PAPER 1
DURATION: 3 Hours
MARKS: 100
FIRST OPPORTUNITY EXAMINATION PAPER
EXAMINERS: Ms Esther Olivier
MODERATOR: Dr Chris van Zyl
THIS QUESTION PAPER CONSISTS OF TWO (2) PAGES
(INCLUDING THIS FRONT PAGE) AND A CASE STUDY)
INSTRUCTIONS TO CANDIDATES
1. The required length of the Report is between six (6) and eight pages (8), including the indent
reference list.
2. Please ensure that your answers are written clearly and legibly. Avoid using cursive or illegible
handwriting. Answers that are difficult to read will result in lost marks.
3. You are allowed to refer to your notes, textbooks, and the case study during the examination.
However, all answers must be presented in your own words.
4. Ensure that you allocate sufficient time to each section of the report according to the percentage
weightings provided. It is crucial to manage your time effectively to cover all sections
comprehensively.
5. Where applicable, include references within your answers to support your analysis. Follow APA
referencing style for in-text citations and the reference list at the end of the report.
6. All answers must be written in the examination book provided. Ensure that you number your
answers correctly and follow the report structure as outlined.
|
|
1.2 Page 2 |
▲back to top |
QUESTION 1
Study the case study "Livestock Wealth: crowd farming for wealth creation".
By Amanda Bowen, Claire Beswick and Richard Thomson
Required: Present a Report and consider the following variables:
1. New Government Regulation: A cap on the number of livestock an individual investor can own
through crowd farming platforms, limiting ownership to 50 head of cattle per investor.
2. Sustainable Agriculture Mandate: All agricultural investment platforms must now allocate at least
20% of their investments towards sustainable, environmentally friendly agricultural practices.
3. Continued Drought in the SADC Region: Ongoing drought conditions affecting livestock and
agricultural productivity across the Southern African Development Community (SADC)region.
The Report should cover the following:
Criteria
1.1. Executive Summary
1.2.Organisational Goals & Objectives
1.3. Comprehensive SWOT analysis giving due consideration to the additional
variables
1.4. Current strategic position
1.5. Discussion and findings
1.6. Recommendations
1.7. Conclusion
1.8. UK academic English, in-text references and the indent reference list
Weighting
(%)
10%
5%
30%
15%
15%
10%
5%
10%
Total for assessment=100%
END OF THE ASSESSMENT
|
|
1.3 Page 3 |
▲back to top |
LivestockWealth: crowdfarmingfor
wealth creation
------....i=-==---:::==~=-------------------
Amanda Bowen, Claire Beswick and Richard Thomson
y February 2022, Ntuthuko Shezi, the founder and chief executive officer (CEO) of
Livestock Wealth, had turned his idea of "crowd farming", which enabled anyone to
invest in living farm assets and earn a profit at harvest, into a full-fledged business
that was creating wealth for both investors and farmers. Although Livestock Wealth had just
started to turn a profit, Shezi had bigger goals. He wanted to ensure that, across Africa,
there would be "no ground that is not planted with something of value", which will stimulate
the economy of the areas around the farm and create wealth for the community [1]. To make
his dreams a reality, Shezi now had to decide what direction to take in terms of both
business growth and marketing strategy to attract sufficient investment into Livestock
Wealth.
Livestock Wealth: origins and concept
Shezi was a born entrepreneur - his parents and grandparents were all formally employed
and always involved in some sort of side business. In 2006, Shezi left a promising career as
a consultant at Accenture (a global consulting firm) to start Scratch Mobile, a panel-beating
business that operated from OR Tambo International Airport in Johannesburg. Shezi used
this business for the initial funding of Livestock Wealth (see Exhibit 1 for a photo of Shezi).
The idea of "crowd farming" came to Shezi in 2011 when he wanted to buy a farm but could
not obtain the necessary finance. "One of the biggest problems that farmers face is the time
it takes - months at least, sometimes years - before they can realise the value of their
assets, and in that time, they have to spend money and time on growing and maintaining
that asset", he observed. "This creates a massive cash flow dilemma, as conventional
lenders in South Africa don't accept growing assets as collateral."
Because owning cattle held such an important place in the African culture, Shezi believed
that there were several individual investors who would like to own cattle but did not have the
time or the expertise to farm them. "I don't know a single black person who doesn't want to
own cattle", he said. Hence the concept of crowd farming - linking investors who had the
money with farmers who had the capacity to farm but needed funding to be able to grow.
Social impact
Shezi believed that crowd farming could have positive spin-offs for the rural communities
around the farmers who benefitted from the investment. This was an idea that held
substantial appeal for him. Shezi had been selected to be part of the Clinton Democracy
Fellowship [2] in 2005. During this fellowship, he learned the concept of "doing well by
doing good" and spent some time with the CEO of Timberland, a US-based outdoor
footwear and clothing company that aimed to give effect to this concept.
Amanda Bowen,
Claire Beswick and
Richard Thomson all are
based at The Case Centre,
Wits Business School,
University of the
Witwatersrand,
Johannesburg, South
Africa.
Disclaimer. This case is written
solely for educational purposes
and is not intended to represent
successful or unsuccessful
managerial decision-making.
The authors may have
disguised names: financial and
other recognisable information
to protect confidentiality.
DOI10.1108/EEMCS-09·2023-0352
I I VOL.13 NO.4 2023,pp.1-44©, EmeraldPublishinLgimitedI,SSN2045-0621 EMERALDEMERGINMGARKETSCASESTUDIES PAGE1
|
|
1.4 Page 4 |
▲back to top |
When Shezi was thinking of starting Livestock Wealth, Scratch Mobile was doing well. But
one question kept cropping up in his head: "Am I really doing everything I can to change
the world? Is fixing cars really changing the world?"
From his experiences, while growing up, he knew that owning cattle could provide
economic opportunities for people in rural areas. His parents and grandparents had been
small-scale farmers and, at the same time, were working formal, low-income jobs. Because
of their effort and the income generated from farming, he received a good education, and
his family was now in a position where Shezi's daughter could now, for example, decide to
become "a ballerina without anybody worrying where the money is going to come from."
At the same time, he believed that the value of cattle was underestimated by those who
farmed on a small scale and that cattle could become a form of currency. South Africa is
"the most unequal country in the world. We lead in inequality. This means that on one side of
the road there is healthcare for a few people who can afford medical aid, and on the other
side of the road, there is a questionable facility where people are condemned to die", he
explained, telling the story of a friend who had died in a public hospital because his friend's
father did not have sufficient money to pay for care in a private hospital. Yet when Shezi
went to his friend's funeral, he saw 30 or 40 cattle in the father's kraal [3]. The cattle were
worth at least a half a million rand.
Shezi believed that Livestock Wealth offered a solution. "For me, the world I am creating is
one where farmers across Africa can realise the value of their cows today. The cows are on
our database. They are tracked with our tracking system. We can guarantee the owner's
creditworthiness based on how many cows they have. I want to create an Africa where there
is no piece of ground that is not planted. In that world, everyone will be able to have a
choice to stay alive."
Developments in technology would make this possible, with a mobile app that allowed
investors to select where they wanted to invest their money and make the necessary
payment on the app using a debit card, credit card, bank transfer or electronic funds
transfer (Livestock Wealth, 2023e).
A small but influential industry
According to research conducted by Statistics South Africa (Stats SA) in 2018 (latest
figures), around 14.8% of South African households were involved in agricultural activities of
some sort, and of these, almost 76% did not rely solely on agriculture for their food
production but had to find other sources of food. The figures indicated that households
involved in agricultural activities often focused on more than one activity, with 50% being
involved in grain production such as maize and sorghum, 53% in growing fruit and
vegetables, close to 50% farming livestock and 37% farming poultry (South African
government, 2023).
Commercially, the sale of livestock products (the animals themselves as well as meat, milk,
eggs and related products) generated the greatest income for farmers, accounting for 48%
of agricultural sales in 2019. Horticulture followed, accounting for 27% of sales, and then
field crops such as maize, sugarcane and wheat (19%}. Poultry was an important source of
income, with the total value of sales from chicken products (R58.1bn) being very close
to that generated by the field crop sector in its entirety (R61.9bn) (Stats SA, 2021) (see
Exhibit 2 for agricultural production in South Africa).
Large enterprises dominated the sector, earning just over 60% of the income. However, with
22.4% and 9.1% of income, respectively, small and micro-enterprises contributed more
than medium enterprises, which generated 8.3% of income (Stats SA, 2019}.
In terms of challenges faced by the agricultural sector, International Labour Organisation
(ILO) researchers noted that employment creation in the formal sector was not keeping
i I PAGE2 EMERALDEMERGINMGARKETSCASESTUDIES VOL.13 NO.4 2023
|
|
1.5 Page 5 |
▲back to top |
pace with growth in the labour force, and they concluded that agriculture and the formal
economy would have to "absorb a large share of these new workers into remunerative work
otherwise the region will experience escalating economic, social and political challenges
associated with youth unemployment" (Jayne, Yeboah and Henry, 2017).
Furthermore, because of competition for arable land, coupled with intergenerational
subdivision of land, median farm sizes were shrinking to such an extent that it was
impossible to generate surplus production. Many smallholders were left with small plots that
were degrading owing to continuous cultivation without sufficient integrated soil fertility
management, while population pressure was increasing the price of land in the area,
making it difficult for young people to buy land (Jayne et al., 2017).
The ILO researchers highlighted the power of agriculture to improve the economy of a
country. In countries such as Ethiopia and Rwanda, for example, they had effectively
increased farm productivity; there was also faster poverty reduction, increased productivity
in non-farming sectors and quicker migration of the labour force from farming into the
broader economy (Jayne et al., 2017).
Setting up Livestock Wealth
Shezi came up with the idea for Livestock Wealth in 2011, then "let the power of time help
[him] to solve the problem of how to implement it." So it was only in July 2014 that he saw a
patent attorney at the law firm Adams & Adams (chosen because he drove past their offices
every day on his way to work at Accenture). "I was so fortunate that I met Tumelo
Mashabela, this brilliant attorney at Adams & Adams", he said. "I downloaded all the
information I had in my head to her. She then crystalised it and started creating what
became our first IP [intellectual property] - our method of investing in livestock and our way
of operating the system. Because of this patent, no-one else can use the same livestock
investment model that Livestock Wealth uses."
Although his business model subsequently changed to one where Livestock Wealth was the
intermediary between farmers and investors, in the beginning, Shezi had thought that
Livestock Wealth should run the farms and own the cattle in which people invested. Thus, in
October 2014, with the patent he had obtained in July of that year, Shezi set about trying to
buy a farm. He received information from a contact at the Land Bank (a government-owned
development finance institution) that a farm was available in the Blood River area of
KwaZulu-Natal, and so he went to meet the farm owner, Bill Van Lelyveld, in December
2014. Shezi took a gamble and told Van Lelyveld about his vision. Van Lelyveld was so
impressed with his idea that he agreed to lease Shezi a portion of the farm where he could
keep 40 cows.
Although Shezi had grown up with cattle, he lacked any commercial farming experience.
Van Lelyveld subsequently became an advisor at Livestock Wealth and was particularly
helpful about commercial farming.
On 26 March 2015, using money borrowed from Scratch Mobile, Livestock Wealth bought
its first 40 heifers [4]. Van Lelyveld went with Shezi to inspect the heifers and then allowed
those who were not already pregnant to breed with his bulls. "With him in the picture at the
time, I didn't have to worry about the cows", said Shezi. "Every month he would send me an
invoice for rental. In fact, you could say that from the get-go we had pretty much outsourced
the cows, which really helped. I could focus on getting interest in people buying cows
online."
Establishing the infrastructure
With all of this in place, Shezi started working full-time for Livestock Wealth in 2015 and
began the process of establishing the company and attracting investors. "It was quite a bit
I I VOL.13NO.4 2023 EMERALDEMERGINMGARKETCSASESTUDIES PAGE3
|
|
1.6 Page 6 |
▲back to top |
of work to set up before going live", he recalled. "We were doing something that no-one had
done before, so had to set everything up from scratch." He worked without external funding,
relying only on Scratch Mobile to fund Livestock Wealth.
Shezi secured a space at the Innovation Hub in Pretoria, a business incubator dedicated to
fostering entrepreneurship and incubating new innovative companies. He then employed
Donald Ngundu, who had a degree in agriculture, with the idea of combining both of their
skills to establish the business. Shezi put him in charge of discussions with the industry
regulators - the Financial Services Board, which became the Financial Services Conduct
Authority (FSCA) in 2018, and the National Credit Regulator. Because Livestock Wealth was
to offer financial services, the organisation needed to be registered with the relevant
authorities. Livestock Wealth was also registered as an agricultural producer agent with the
Agriculture Producer Agents' Council (Livestock Wealth, 2023d).
An important concern was that of building the app. Getting this right was crucial for the
success of the business because Shezi planned to use the app as the primary means by
which investors interacted with Livestock Wealth. "We relied very heavily from day one on
the fact that technology can bridge the gap between the investor and the farmers. It's
always been our mantra", explained Shezi. "The farmers have the cows, but they don't have
a storefront. That is what we provide."
In April 2015, he employed a technology company to start building the app, using software
that was originally developed for online clothing retail and adapting it to suit Livestock
Wealth's needs. The app had to be developed by July 2015, in time for the Global
Entrepreneurship Summit in Kenya. This summit was being held in Africa for the first time
that year, and Barack Obama, then president of the USA, was scheduled to speak at the
summit. Shezi had managed to secure this opportunity because, in 2013, he had been part
of the Mandela Washington Fellowship, a programme organised by Obama. The
development of the app took much longer than anticipated, and, in the end, it was ready
just in time for the conference. "You can imagine that Obama is coming to this continent for
the first time ever, and it's a shiny stage for us to present our app, and it was not working!"
exclaimed Shezi. "So when I left for Kenya, the developer told me, 'When you get to Kenya
in the morning, it will be working."'
The app was working, although it still needed some refining and was fully functional only by
the end of September 2015. This app served Livestock Wealth well in the early days. Then,
as the company grew, it developed its own app that could cater to all its business
requirements across the life cycle of the company.
With the fully functional app, Livestock Wealth was formally launched on 13 October 2015,
and Shezi enlisted the help of a friend, Tumi Sebambo, to stabilise the company and
oversee its operations. Shezi described her as being "between gigs", and she consulted for
Livestock Wealth for six months. "The thing with start-ups is that getting people is difficult.
Highly skilled people want to command a good salary, but start-ups don't have a lot of
money", said Shezi.
Attractingattention
Now that all the systems were in place, Shezi had to get the word out about his new
company. Ngundu was instrumental in helping Livestock Wealth attract attention at Web
Summit, an event described as "the world's premier tech conference" (Web Summit, 2023).
"We had applied to be at the Web Summit [which took place in Dublin, Ireland, in November
2015] and we had to find a way to stand out. When we were doing preparations for the
summit, Donald [Ngundu] said to me, 'Shezi, present the big thing. Present the moonshot.
Tell them that you want to make cattle the new currency.' And I started pitching that, and
people were blown away. We even got a mention in Tech Crunch [5]. That was a great
41 I 4 PAGE EMERALDEMERGINMGARKETSCASESTUDIES VOL.13 NO. 2023
|
|
1.7 Page 7 |
▲back to top |
achievement, considering that most companies sent a team, but we could only afford to
send me."
Livestock Wealth's next task was to attract people who would invest in its cattle. Shezi did
not do this by making use of his networks. Instead, he wanted the business to speak for
itself. "I've always been a believer that a business is not a business until I've found a paying
customer. And if that customer knows me, it's not really the same. It would be a cross
between business and charity. If it's someone who has a problem - and the problem is that
they want to own cattle - then I can say, 'Here, I've got cattle. You can go out and see them
if you want, but you don't have to do that. There is an app. You can log in and buy now"', he
explained.
He was fortunate that his wife, Sibongile Shezi, was a public relations practitioner, and
together with her, Shezi designed a launch campaign that involved various media events.
"When we launched, there was e.tv, the Sowetan and City Press there, and we shared what
we had created and how it worked." This campaign generated a lot of publicity through
newspaper articles and television interviews [6]. In turn, these were helpful in attracting the
first investors.
Growing the business
In the past six years since Livestock Wealth launched, its business model evolved. "When
we started, the investor was the owner of the cow for life and paid us a monthly fee for
managing the cow. When it got old, we would sell it and replace it for them. We had
imagined that we would be able to replace ageing cattle with calves born to the females,
and sell the rest for a profit", explained Shezi.
However, in 2019, when Shezi wanted to start growing the business, he realised that one of
the main constraints to growth was the time required for running the farms. "There was a lot
of time spent leasing farms and travelling to the farms to try and be a good farmer. But the
scarcity of land meant that we had three farms eight hours from each other." This situation
was difficult to sustain.
"And speaking to investors as well, we discovered that the aspect of the business that is
scalable is the technology platform part. So we started to convert ourselves from being
farmers to being a matchmaker between farmers and investors. It was a big metamorphosis
for us. We had to uncouple the business into a farming arm and a technology arm, where
we track the cows and earn a commission from connecting the farmer and the investor",
said Shezi.
However, he was not entirely happy about having to make the change. "I was angry and
upset with this 'uberisation' of everything", he explained. "People were saying that they liked
the tech part, but they didn't like the cows. But for me, even to this day, I'm opposed to this.
It's okay in the USA, where everything works. In the USA, you can wake up today and start a
company that ships coffee mugs to anywhere in the USA, and they can deliver the stuff
within 24 hours, because there's a road network, there's a delivery network, there's a
payment network. And they all work. In South Africa, I can't do that. If it's in a rural area, I
can't get there because the road is made of gravel, there is no address because there is no
address system. So, I can't do in South Africa what I could do easily in America."
"That short-sightedness prevents long-term benefits", he continued. "For example, in our
case, we know how impactful our work can be for agriculture on the continent. But we also
know that there is a lot of other supporting work that needs to be done. For Livestock Wealth
to support a farmer in Ndwedwe [a rural area northwest of Durban], we will have to spend a
month training the farmer, getting them to visit commercial farmers and become really
excited about farming at that level. So, the fact is that Livestock Wealth has to invest in the
farmers, otherwise there is nothing for the investors to invest in."
I I VOL.13NO.4 2023 EMERALDEMERGINMGARKETSCASESTUDIES PAGE5
|
|
1.8 Page 8 |
▲back to top |
Still, becoming the matchmaker between the farmer and the investor had freed Shezi to
grow the business and expand its product range. And this helped Livestock Wealth to grow
as a company.
Expanding the product range
By 2022, Livestock Wealth offered investors the opportunity to make a range of different
agricultural investments. Figure 1 indicates the range of investments available.
Shezi explained how investment in a pregnant cow worked: "The point at which a pregnant cow
creates money is 12months from the time when you pick up that she is pregnant - she gives
birth after nine months gestation. But you can only test for pregnancy at three months. So, six
months thereafter, she drops a calf. Then the calf grows - when it's born it weighs about 29 kg
and it's supposed to pick up 1 kg a day from its mother's milk. When it's six months old, it
weighs around 200 kg. It is sellable and it can generate income for the farm. At this point
[12 months after the investment was made], the farmer buys back the mother from the investor
for the amount that the investor paid for it, plus a portion from the sale of the baby (about 25%)."
Shezi prompted the decision to offer the opportunity to invest in macadamia trees as he
wanted to prove to investors that the Livestock Wealth system could work with more than
just cattle. "I have to be honest that most people did not take cows seriously. We wanted to
show that this is something that can work to fund a whole lot of other projects: coffee beans,
avocados, etc.", he explained. He chose macadamia trees because they produced a high-
value crop, but it took six years before the trees produced a crop that could be harvested.
"Only farmers with deep pockets can grow macadamias. If you go to White River or
Tzaneen [areas in the provinces of Mpumalanga and Limpopo], most of those farms are
owned by investors in London, who come in once a year in a helicopter", he asserted. "But
the normal farmer can't afford to have something in the ground for six years and look after it
for six years before it gives the first cent in income. So here is a problem that we can solve
by finding investors with patient capital to put into this."
He had a similar motivation for starting to offer investment opportunities in horticulture.
"There are farmers who can supply the big retailers, but they don't have the capacity to
Wi'itii
.- '
STLOCKIVEIO
WEALTH
» '"' < • • • • • C ., I •, '•
MACADAMIA
NUT TREE
Term
Price
Profit
6 years
R2.000
Rl,948 - R2,164
% Profit
Total Return
95½-105?.-
R3.948 - R4,164
Source: Livestock Wealth (2023g)
FREE RANGE
ox
Gmonths
Rll.529
A576- R807
PREGNANT
cow
12 months
R18,730
Rl,873 - R2,622
Rl2.105- R12,336
R20,603 - R21.352
CONNECTED
GARDEN
Syears
R8,200
RS.000
Rl3.200
61 I PAGE EMERALDEMERGINMGARKETSCASESTUDIES VOL.13 NO.4 2023
|
|
1.9 Page 9 |
▲back to top |
produce more food", he said. "We say, 'You do the farming, you know what you are doing.
We will fund you to get the tunnels [7] for farming and you just pay rental for the tunnel."'
By 2022, Livestock Wealth managed around R100m in assets on farms located mostly in the
North West, KwaZulu-Natal, Mpumalanga and Free State provinces (Livestock Wealth,
2023b). Looking to the future, Shezi noted, "What I'm learning now is that in the future there
will probably be fewer cows. Because cows move. And you find that farmers have sold the
cows, but they haven't paid us, and now we must recover the money. But with a tree, it's
there. It can't move. There is more control and less risk."
Livestock Wealth charged a commission (which varied from product to product but
averaged 5% per annum) for brokering the investments that the company offered.
Securing partner farmers
When Livestock Wealth made the transition from being the farmer to being the matchmaker,
Shezi initially sought to secure partner farmers from the network he already knew and
trusted. However, by July 2021, Livestock Wealth had completed work on a farmers' app, a
free tool that farmers could use to indicate that they were looking for investors. Registering
on the app kickstarted Livestock Wealth's verification process, in terms of which it sought to
verify that the investors could have confidence that the farmers would be able to deliver on
their investment.
Partner farmers accessed affordable health care and nutrition products for their animals
through Livestock Wealth's mobile app and local animal health partners. In addition,
Livestock Wealth provided animal tracking protection - initially developed in partnership
with mobile network provider MTN and mobile phone company Huawei. This solution
provided farmers with real-time information on the location of their cows and reduced the
risk of theft (Livestock Wealth, 2023c).
By January 2022, Shezi's company had more than 30 vetted partner farmers, most of whom
operated large- or medium-sized farms. The biggest farm was a cattle farm with a capacity
for 5,000 cattle. On the other end of the spectrum were farmers with between 20 and 50
head of cattle, where Livestock Wealth provided funding for only up to 50% of the herd.
Most of the farmers receiving funding from Livestock Wealth investors were beneficiaries of
the government's land reform programme, in terms of which the government owned the
land and leased it to the farmers for a fee. "But they don't have the funding to fill up the farm
to capacity. They can rear 500 cows, but only have 100", noted Shezi, adding, "We are
trying to strike a balance between the two [established commercial farmers and land reform
farmers]."
Shezi saw his primary role in Livestock Wealth as that of managing relationships with the
partner farmers. "If you focus on the farmers, then the investors will find ready stock", he
said. "If the shelves are full, the investors will buy."
Growing the investor base
Since 2015, Livestock Wealth gained over 3,500 local and international investors who had
invested over R120m in its products. Livestock Wealth's largest individual investor had
invested R2.7m. The lowest possible investment was R2,000, the amount paid for one
macadamia tree. The median investment size was about R30,000.
Livestock Wealth's method of attracting investors changed slightly over the years. However,
the company continued to use marketing tactics similar to those it had used in the
beginning - public relations activities coupled with campaigns on Facebook, lnstagram,
Linkedln and Google Ads. For six months in 2021, the company used a billboard on the M1
freeway (which linked the northern and southern suburbs of Johannesburg). Shezi found
I I VOL.13 NO.4 2023 EMERALDEMERGINMGARKETSCASESTUDIES PAGE7
|
|
1.10 Page 10 |
▲back to top |
this to be useful in gaining recognition for the brand, but unlike the social media campaigns,
it was difficult to know whether the billboard had led directly to any actual investment.
The company's website was an important component of Livestock Wealth's business, as it
constituted the primary interface between investors and the company. It provided
comprehensive information about Livestock Wealth, featuring videos and recorded
seminars where Shezi explained how the products worked and the benefits to the farmers
and investors. "Your investment helps create jobs and enables the farmers to produce
healthy food while creating shared wealth. You are investing in living, breathing livestock
and growing crops, not invisible shares. These types of assets are always in demand",
declared the site {Livestock Wealth, 20231).
Much of the company's marketing still revolved around Shezi, putting him in the public eye
and telling the Livestock Wealth story. "I call it the curse of not having a marketing budget",
he said, "because to be honest if we had the budget, I'd just put ads out there."
The aspect of Livestock Wealth's marketing campaigns that changed was that the company
no longer cast its net so wide when looking for investors. "In the past, we said that anyone
with money to buy a cow should buy a cow. We didn't have much focus", noted Shezi. As a
result, the company responded to queries from people who did not have enough money to
invest in its products. "And then we learned over time that it's not about who we want our
customers to be, but what the information that we have in our possession tells us about our
customers", he said:
"So, we started studying our customers. Who are they? Are they rich people or poor people? Do
they have a matric, tertiary or postgraduate education? We've got their addresses, so we googled
their addresses and looked at their house from the outside, asking, 'Does it look like the house of a
rich person or a poor person? Does it look like a 702 Talk Radio [8] person or a YFM [9] person?'
We had to really try and create this persona."
This exercise showed Shezi that approximately 60% of Livestock Wealth's investors were
black males between the ages of 38 and 55 and were mostly based in Gauteng province in
South Africa. The profile of larger ticket investors- those who invested more than R200,000-
was different, consisting largely of white and South African Indian investors and a good
representation of international investors, most of whom lived in Germany. "But one needs to
keep a handle on it almost every quarter because it can change", he warned. "We have to
keep track constantly so that we are not marketing to last year's customer." The benefit of
conducting this exercise was that Livestock Wealth was able to be more selective about its
marketing opportunities, using only those that would speak to its target investors.
His wife, Sibongile, continued to be responsible for Livestock Wealth's marketing, but by
2021, she was on the company's payroll and no longer acting as an unpaid consultant.
Putting in place the right structures
By 2022, Livestock Wealth was no longer located at the Innovation Hub in Pretoria and now
had its own premises in Houghton Estate in Johannesburg. The company still relied on
consultants for marketing and some of its technology development but it had 20 permanent
employees. Shezi also hired a full-time chief operating officer and strengthened the
accounting team. He continues to keep a close eye on the company's finances, including
signing off all payments, so that he could be sure that the company did not overspend (see
Exhibit 3 for the profit and loss statement).
Shezi employed people at the managerial level to help him to run the company, which gave
Shezi more time to focus on selling the concept to farmers and building relationships with
farmers and funders.
i I PAGEs EMERALEDMERGINGMARKETSCASESTUDIES VOL.13NO.4 2023
|
|
2 Pages 11-20 |
▲back to top |
|
|
2.1 Page 11 |
▲back to top |
Looking to achieve the big vision
Livestock Wealth achieved success, and Shezi was recognised for his efforts. In 2020, he
won the title of IT Personality of the Year at the Institute of Information Technology
Professionals of South Africa annual President's Awards.
Growing Livestock Wealth even further was now at the top of his list of priorities. He believed
the company was ready to go to the next level, and he wanted to get closer to achieving the
grand vision of empowering agriculture across Africa that had motivated him to start the
company in the first place. Shezi felt an added burden to succeed: "In South Africa you can
literally count successful black entrepreneurs - people who created billion-rand companies
from scratch - on two hands. There is always that responsibility - we make up so much of
the population, but so few have started successful businesses. With everything I do, there is
that burden on my shoulders that I can't mess this up. Lots of people are looking at you to
succeed. It's like a guiding light" (The Anzisha Prize, 2020).
He had received requests from people in countries across Africa to come and replicate the
model in their country, but he had not acted on any of these requests, because he was unsure
of how to go about it. "Do we open up there ourselves, or do we find a local partner who knows
the environment and can galvanise the farmers and navigate the politics?" he asked. "How do
you move money in, and how do you move it out if an investor is investing from the US in
dollars? What currency do you invest in? Do we use a franchise model, or do we run it
ourselves? How do we grow and retain profitability and control of the technology?" There was
also the issue of valuing and confirming the quality of farming assets in other countries.
Shezi knew that regardless of how he chose to expand the business, he would need outside
funding to achieve his goal for Livestock Wealth. Additional funding would enable him to
address his biggest challenge: attracting staff who had the ability to create the technology
that would enable the growth he envisaged. "Having those people in our corner would
multiply the work that we have done and help us to move with greater speed. Where we can
move in a year with a small team, with an expert team, we could get there in a quarter and
achieve that kind of speed", he said. "But most of them earn upwards of R2 million a year.
Now R2 million a year is our payroll last year - for all of us!"
Opportunities and competition
While Livestock Wealth continued to operate in a niche market, in 2018, Fedgroup, South
Africa's largest independent financial services group, introduced an impact investment
product that operated similarly to that of Livestock Wealth. The product allowed investors to
use an app to invest directly in blueberry bushes, lettuce stacks, moringa trees, macadamia
trees, honey and solar panels .. The amount invested could be as little as R500, and
Fedgroup promised returns of between 10% and 12%. Investors were paid for the yields
when the products was harvested and sold to Fedgroup's contracted customers
(Fedgroup, 2018) (10).
The development of this product was in response to the growing popularity of the concept of
impact investment, in terms of which investors sought to fund activities that brought both a
measurable social benefit and solid financial returns. In 2010, JP Morgan (a global investment
bank), the Rockefeller Foundation (a private philanthropic foundation) and the Global Impact
Investing Network (GIIN) estimated that by 2020, impact investment globally could amount to
between US$400bn anq US$1tn (Lamy, Leijonhufvud and O'Donohoe, 2021). Research
conducted by the GIIN in late 2019 showed these predictions to be accurate, valuing the global
impact investment market at US$715bn. "The growing impact investment market provides
capital to address the world's most pressing challenges in sectors such as sustainable
agriculture, renewable energy, conservation, microfinance,and affordable and accessible basic
services including housing, healthcare and education", noted the organisation (Global Impact
Investing Network, 2023). A survey conducted in South Africa in 2017 by Schroders, a global
I I VOL.13NO.4 2023 EMERALDEMERGINMGARKETCSASESTUDIES PAGE9
|
|
2.2 Page 12 |
▲back to top |
Keywords:
Africa, Agriculture,
Constructivism,
Crowd farming,
Entrepreneurship, Farming,
Investment, Livestock,
Marketing, Strategy,
Marketing strategy
investment manager, showed that 81% of South African investors placed greater importance on
sustainable investment (Prescient Investment Management, 2021).
Decision point
Shezi knew there was great potential for Livestock Wealth to make a positive impact in the
South African and African investment space while also making a positive social and
environmental impact.
The questions faced by Shezi were what direction to take in terms of business growth and
how to improve his marketing strategy to attract sufficient investment into Livestock Wealth
to make his dreams a reality.
Notes
1. Unless otherwise specified, all of the information in this case comes from: personal online interviews
with Nthutuko Shezi, 26 May 2021; 16 September 2021; 20 October 2021; and 11 November 2021.
2. An initiative of former US President Bill Clinton. The Clinton Democracy Fellowship aims to inspire
the development of citizen service programmes throughout the world by bringing together young
leaders from across the globe for a year-long programme in the USA and providing a stipend to
enable them to do this [Source: Global Giving (2023)].
3. An enclosure for cattle or sheep.
4. A heifer is a young cow over one-year old that has not yet produced a calf [Source: Dictionary.com
(2023)].
5. See https://techcrunch.com/2015/11 /05/our-pick-of-21-interesting-startups-from-web-summit/ for
the article.
6. See https://livestockwealth.com/press/
7. A greenhouse tunnel of about three metres with ribs made of PVC pipe and covered in a layer of
white, UV-resistant greenhouse plastic. [Source: Grant (2022)]
8. A talk radio station broadcasting in Gauteng with a mostly male listenership, 60% of whom are
black African, half of whom are between the ages of 35 and 54, and 55% of whom are in the highest
socio-economic measure categories of nine and ten [Source: Primedia Broadcasting (2023)].
9. Johannesburg-based YFM targets a young black African audience, with a mix of 75% music and
25% talk. It characterises its audience as young, imaginative, curious, ambitious and "continuously
seeking new ways to improve their lives and their communities so that they are able to lead
successful and rewarding lives" [Source: Bizcommunity (2023)].
10. See www.fedgroup.co.za/ventures/impact-farming
11. Instructor's note: The case writers were provided with limited financial information, that is, the profit
and loss statement (refer Exhibit 3 of the case study). At the time of writing the case study,
Livestock Wealth did not wish to provide detailed financial information.
12. The main objectives of the Southern Africa Development Community include regional economic
development, peace and security, collective self-reliance and the alleviation of poverty. The 16
member states include Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles,
South Africa, Swaziland, Tanzania, Zambia and Zimbabwe [Source: SADC (2023)].
13. For MS Teams, see: https://support.microsoft.com/en-us/office/use-breakouHooms-in-teams-
meetings-7de1f48a-da07-466c-a5ab-4ebace28e461 and for Zoom, see: https://support.zoom.us/
hc/en-us/articles/206476093-Enabling-breakout-rooms
References
Fedgroup (2018). Innovative app drives impact investing at grassroots level. 15 October. Retrieved from
www.fedgroup.co.za/news/press-releases (accessed 13 February 2022).
Fedgroup (2023). Impact farming: overview. Retrieved from www.fedgroup.co.za/ventures/impact-
farming (accessed 13 February 2022).
I I PAGE10 EMERALDEMERGINMGARKETSCASESTUDIES VOL.13 NO.4 2023
|
|
2.3 Page 13 |
▲back to top |
Global Impact Investing Network (2023). What is impact investing?. Retrieved from https://thegiin.org/
impact-investing/need-to-know/ (accessed 13 February 2021 ).
Jayne, T., Yeboah, F. K., & Henry, C. (2017). The future of work in African agriculture: Trends and drivers
of change. Working Paper No. 25, International Labour Office. Retrieved from www.ilo.org/wcmsp5/
groups/public/--dgreports/--inst/documents/publication/wcms_624872.pdf
(accessed 14 September
2021).
Lamy,Y. S., Leijonhufvud, C., & O'Donohoe, N. (2021). The next 10 years of impact investment. Stanford Social
Innovation Review, 16 March. Retrieved from https://ssir.org/articles/entry/the_nexL10_years_of_impacL
investment#(accessed 13 February 2022).
Livestock Wealth (2023a). About us. Retrieved from https://livestockwealth.com/about-us/ (accessed 14
June2023).
Livestock Wealth (2023b). Common questions: Where are our farms?. Retrieved from https://
livestockwealth.com/investments/pregnant-cow/ (accessed 8 September 2021 ).
Livestock Wealth (2023c). Farmers. Retrieved from https://livestockwealth.com/farmers/ (accessed 9
September 2021 ).
LivestockWealth (2023d). Home. Retrieved from https://iivestockwealth.conn/(accessed 9 September 2021).
Livestock Wealth (2023e). Invest in less than five minutes. Retrieved from https://livestockwealth.com/
investments/pregnant-cow/ (accessed 8 September 2021 ).
Livestock Wealth (20231). Real wealth, real impact. Retrieved from https://livestockwealth.com/
investments/pregnant-cow/ (accessed 8 September 2021 ).
Prescient Investment Management. (2021). Impact investing: businesses with an impact investment
mindset are more likely to be successful in the long term. Daily Maverick, 9 August. Retrieved from www.
dailymaverick.co.za/article/2021-08-09-impact-investing-businesses-with-an-impact-mindset-are-more-
likely-to-be-successful-in-the-long-term/ (accessed 13 February 2022).
South African Government (2023). Agriculture, land reform and rural development. Retrieved from www.
gov.za/about-sa/agriculture (accessed 13 September 2021 ).
Stats SA (2019). Agricultural Survey (Preliminary): 2019. Retrieved from www.statssa.gov.za/
publications/P1101/P11012019.pdf (accessed 14 September 2021 ).
Stats SA (2021). These goods drive South African agriculture. 27 May. Retrieved from www.statssa.gov.
za/?p= 14370 (accessed 13 September 2021 ).
The Anzisha Prize (2020). Hall of fame: Thando Hlongwane and Ntuthuko Shezi. African Leadership Academy,
13July. Retrievedfrom www.youtube.com/watch?v=0JPj1sH0Ws (accessed 21 February2022).
Web Summit (2023). What is Web ,Summit? Retrieved from https://websummit.com/ (accessed 9
September 2021 ),
Livestock Wealth (2023g), Investments. Retrieved from https://livestockwealth.conn/investments/
(accessed 8 September 2021 ),
Global Giving (2023), Clinton democracy fellowship, Retrieved from www.globalgiving.org/projects/
clinton-democracy-fellowship/ (accessed 21 February 2021 ),
Dictionary.com (2023), Heifer. Retrieved from www.dictionary.com/browse/heifer (accessed 14 June 2023),
Grant, A (2022). What is a solar tunnel - learn about gardening with solar tunnels. Gardening Know How.
Retrieved from www.gardeningknowhow.com/special/greenhouses/gardening-with-solar-tunnels.htm
(accessed 21 February 2022).
Primedia Broadcasting (2023), 702 Station profile. Retrieved from https://cdn.primedia.co.za/primedia-
broadcasting/image/upload/v1638813772/702_Station_Profile_Nov_2021_yjaajm.pdf (accessed 21 February
2022),
Bizcommunity (2023). YFM about us. Retrieved from www.bizcommunity.com/PressOffice/AboutUs.
aspx?i=446164 (accessed 21 February 2022).
Correspondingauthor
Amanda Bowen can be contacted at: Amanda.Bowen@wits.ac.za
I I VOL 13 NO,4 2023 EMERALDEMERGINGMARKETSCASESTUDIES PAGE11
|
|
2.4 Page 14 |
▲back to top |
Exhibit 1. Image of Ntuthuko Shezi
Gh!iii=II
Source: Livestock Wealth (2023a)
I PAGE,21 EMERALDEMERGINMGARKETSCASESTUDIES VOL.13 NO.4 2023
|
|
2.5 Page 15 |
▲back to top |
Exhibit 2. Agricultural production in South Africa
GMiiiJ
The goods that drive South African agriculture
Sales of goods in the agriculture and related services industry, 2019
ctiickens
sheep
Other
sales of goo
7 HI'
frt.its e-x.clud1119
grape~
SQUQ
Source: Stats SA (2021)
I I VOL.13 NO.4 2023 EMERALDEMERGINMGARKETSCASESTUDIES PAGE13
|
|
2.6 Page 16 |
▲back to top |
Exhibit 3. Livestock Wealth profit and loss statement
lffl§@dl
Turnover
Trading income
Commission - connected garden
Commission - free range
Commission - macadamia nut tree
Commission - pregnant cow
Total trading income
Gross profit
Operating expenses
Advertising
Bank fees
Consulting and accounting
Entertainment
IT costs - expenses
Legal expenses
Motor vehicle expenses
Office expenses
Printing and stationery
Rent
Salaries and wages
Staff welfare
Telephone and internet
Travel- National
Total operating expenses
Ne/profit
Source: Personal email correspondence with Zihle Khotseng, 22 March 2022
840,000.00
420,000,00
82,000.00
102,000.00
192,400.00
796,400.00
796,400.00
82,500.00
13,200.00
72,000.00
1,330.00
108,300.00
23,200.00
16,617.77
1,430.00
5,473.26
28,500.00
182,000.00
2,659.41
8,200.00
4,533.82
549,944.26
246,455.74
I PAGE141 EMERALEDMERGINGMARKETSCASESTUDIES VOL.13 NO.4 2023