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Referral based business or Pyramid Schemes?

David Aladegbaiye Patricks

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It started among a few friends and then it has become a miracle call for many hoping to make extra income. My friend told me about a “financial opportunity.” I was invited to invest R3,500, and in a few days I’d stand to get back R 750. I only had to get two other people to invest too. This would be easy, because they could make so much money.

A few years ago, I remember many people playing The Invest and reward scheme, and they were all waiting to get bonus payout. What happened? Why did that scheme stop? Did everyone eventually become a millionaire and cash out their millions?

The “Investing schemes,” “financial networking” “golden circle” “Friends Network,” “pyramid games”: they’re all the same. They’re also called “ponzi schemes,” named after Charles Ponzi, a man who perfected the game in 1919. No matter what they”re called, pyramids are a lie, a scam, and they really do not work.

You see these ponzi artists, show off cars and houses and you get motivated to conquer the world. The problem is that no one really tells you the truth, that you will have to get the fat boss more points before you can really harvest. It get’s really frustrating and sometimes demeaning and the saddest part is that these schemes prowls on the low income house holds.

The fact about these referral schemes is that , the meal has already been served and shared before these hopefuls even started and they would keep filling in points for the fat cats.

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The lie

All ponzi schemes work the same way, regardless of the particular details of any one game: they pay off old investors with the money from new investors. Paying off old investors with the money from new investors is a dishonest way to make money, because no money actually gets “made.”

There are two ways to make money. To sell money, or sell stuff.

Selling money:

Banks and other usurers who sell money pay depositors a fee, called interest, which is much, much, less than the fee they charge other people who buy money (take out loans). For example, saving accounts currently pay 2% while personal unsecured loans cost 10%. This difference between 2 and 10 percent is the profit the bank makes after it pays off your investment. You are at the top of this “pyramid,”but the amount you take out of the bank is four times less than the amount that stays in and makes the bank directors rich. “New money” comes into this “pyramid”from people who eventually pay much more back on their loans than they take out.

Gambling casinos make money the same way, paying out much less to winners than they keep from losers.

Selling stuff:

The other way to make money is to invest with a company that sells something: a service, information, or objects. If your investment is successful, then the company has found consumers for its things, and received more money than it must pay back to you. New money comes from consumers who are willing to pay a marked-up price. As an investor you take a risk that the company will be able to pay you interest with its profits from the added value consumers create.3

With a ponzi scheme, there is no earned interest or added value. The only profit comes from having an ever-increasing number of players. New money to pay off old investors comes from new investors. No degree of wishful thinking will make money out of no money. If anyone tells you different, they are lying. New investors must be found, or the game collapses.

The Scam

Oh, but there will always be new people, I’m told. In fact, I’m told many things:

This game is different. people are responsible to those below them, they’re re-investing their money; they buy the slots of the people below them; they’re helping their friends take advantage of this great opportunity.

This doesn’t change the fact that new money comes from new investors. This practice will prolong the game, because there are more “slots” on the pyramids than people playing, but reality still holds. Unless the “winners” are reinvesting every dollar of what they “win,” (which they don’t) someone is going to eventually lose.

Because money is always being taken out of the game by winners, the winners can’t help everybody. So who gets helped? The people who are liked, the people who have friends. Who gets left out? The very people who get screwed in most social groups: the misfits, the difficult people, the people with few friends. And this is supposed to help our diverse community?

If people work hard at getting more investors, they will get their money; if people don’t work hard, then they deserve to lose what they invested.

This sounds familiar, like those other scams that put people into a situation where they might fail, and certainly many people will fail, and when people do fail, they are told it is their fault. This is a common political tool to make people feel worthless. The tool is only more insidious when it’s wielded by women we trust.

These are people we know. They have gotten their money. They’re helping other people get theirs.

The trust part, I hate that. Pyramids are a con game and that means confidence. Ponzi schemes thrive in homogeneous communities of people who trust and care about each other. In fact, the tighter the community, the better it works, and therefore the more damage it does when it collapses. I’ve seen specialized ponzis first-hand as a partner. I’ve read articles about how they run through the African communities, and I’m sure every group has its own con artists. Ponzi schemes wouldn’t work if people didn’t trust each other. Would you give R 2500 to some stranger on the corner who said she would pay you back R 20 000 in three days?

If people don’t play the game early, then it’s their fault, they just didn’t luck out like we did.

The odds of winning get worse and worse the longer the game is played. Some people think this recent pyramid is just a form of gambling, but no. It’s a game for suckers and crooks. Encouraging your friends to gamble in a game where their odds of winning their money is worse than yours were, because you got in the game first, should make you feel uncomfortable. Oh, but that must be why winners “help” those on the pyramid below them.

Well, I signed something when I put in my money, saying it was a gift, and I didn’t expect anything back in return.

This is a new twist, to protect the people already in the game from criminal prosecution and civil lawsuits. Early ponzis had one person at the top who raked in the cash. These “new age”pyramids turn our friends into criminals who must be protected by lies on paper. If this game is so good for communication in our community, why must we lie to our friends immediately upon entering the game?

This is a great opportunity to talk about our money stuff.

If you want to deal with “money stuff,”try buying a house with your friends. Or loan someone a large sum of money. Or borrow a large sum. Co-sign a loan. Start a business with a friend. There are companies that are selling shares and securities to companies, as well as investment brokers. These are real opportunities to learn what  taught you about money, and discover how you can do it differently. Scamming your friends is diminishing, not revolutionary.

It won’t work.

I am the Co-founder of NativityConcepts,SA , acting Brands Manager for Maphorisa initiatives, Shareholder of empowerprojects, Psychologist at Lovefoundation, Mentoring partner for Mzanidirectories. A business mind, a playful soul and a fan of life. I love to share my experiences and feelings in a practical way, hence i ended up with a hobby for writing.

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Sim Tshabalala becomes first Standard Bank black CEO

Metrosmag,SA

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Sim Tshabalala has become the first black person to lead Africa’s largest bank by assets without sharing power, after his co-CEO stood down, South Africa’s Standard Bank said on Tuesday.

Tshabalala, a 49-year old company veteran who describes himself as “a Zulu boy from Soweto”, joins only a handful of black executives at the helm of one of the country’s top-40 blue-chip companies.

He is the second black person to run one of the top five South African banks after Sizwe Nxasana took the reins for five years in 2009 at rival FirstRand in a sector often criticised by politicians for a lack of diversity more than two decades after the end of apartheid.

In an unusual statement from the government on company executive appointments, Finance Minister Malusi Gigaba called the appointment an affirmation of the capacity of black professionals.

“Along with the work that is currently ongoing in parliament to address the slow pace of transformation in the financial sector, Mr Tshabalala’s appointment comes as a step in the right direction,” Gigaba said.

Tshabalala, a lawyer, was appointed alongside Ben Kruger in 2013 to sharpen the company’s Africa focus and clean up a costly blunder by then chief executive Jacko Maree to try to turn Standard Bank into a major emerging markets lender.

“The board is satisfied that the structure, which was necessary in 2013, has met and in many respects exceeded expectations,” Standard Bank Chairman Thulani Gcabashe said in a statement.

“Good momentum has been achieved in the implementation of the group’s refreshed strategy.”

In their joint 4 1/2-year tenure, Standard Bank has added branches across Africa while selling assets in Russia, Turkey, the United Kingdom and Argentina under a revamped strategy that scaled back its ambitions outside the continent.

Kruger will stay on as an executive director, and will report to Tshabalala, Standard Bank said.

Black executives’ lobby group, Black Management Forum (BMF), welcomed Tshabalala’s appointment, saying it showed Standard Bank had respect for black talent.

“The BMF trusts that this announcement will mark an end to the joint CEO appointments phenomena that we have come to see,” the group said.

BMF generally criticises the appointment of two bosses, saying it is often done when “the most deserving candidate is a black person.” It also says it stifles accountability and adds costs to a company payroll.

Synthetics fuels giant Sasol is another high profile company with two bosses. The company is led by Bongani Nqwababa and Stephen Cornell.

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Direct selling providing more opportunities for more women

Metrosmag,SA

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Johannesburg, 16 August 2017 – Figures just released indicate that unlike many other sectors in the economy direct selling is growing, providing more micro-entrepreneurial and income generating opportunities for women.
Currently some 1 333 223 South Africans benefit from direct selling and have the opportunity to build their own small business, of which 72% are women.
Despite the flagging economy, direct sales in 2016 were 18 percent up on 2015, totalling nearly R12.9 billion
According to Cornelle van Graan, chairperson of South Africa’s Direct Selling Association (DSASA), direct selling attracts female entrepreneurs because it offers opportunity, flexible working hours, training and the ability to work from home.
The number of women who make a full-time living from direct selling has grown by almost 30% with the majority operating in the health and wellness, personal care or household good sectors.
Van Graan says that the sector also provides opportunities for women who have an existing full-time job, but want to supplement their income.
“Direct selling is also a good way for stay-at-home mothers to make a living, while being actively involved in the lives of their children. Getting started is generally easy, low cost and low risk.”
“Mothers usually have an existing network of other moms, giving them excellent access to a market with similar needs and interests. Their personal relationships and endorsement gives buyers confidence, so these women can be very effective sales people.”
About three-quarters of all direct sales people in South Africa are involved part-time.
Besides flexibility and access, part of the appeal of direct selling may be that money can be earned immediately the sale is made. There’s no waiting until the end of the month or the next payment cycle.
Van Graan says while motivation can vary from paying for a child’s education to saving for a dream holiday, most women get involved in direct sales to provide for their families.
There are 34 direct selling companies who are members of the DSASA. There are more than a million independent business owners associated with DSASA member companies. They make sales totalling nearly R13 billion a year. Everything from financial services to beauty products and skin care, from fragrances and fashion accessories to nutrition and health supplements, from dinner services and a host of other tableware and kitchenware to household cleaning supplies are sold.
What you need to know about direct selling:
If you are thinking of becoming a direct seller here’s what you need to consider to help decide what direction you want to pursue.
1. Product selection
The direct selling industry offers a range of products within sectors such as health, beauty, homeware, financial and investment products, nutritional supplements and weight-loss management. Although it is preferable to choose products which you are familiar with or interested in, you will receive training on all products being offered by the DSA member company that you choose to join. Believing in your product is vital to effectively market and sell your product, as well as personal fulfilment.
2. Choosing which company
Visit www.dsasa.co.za for a full list of member companies and scroll down and identify the companies offering the type of product or service of interest to you or the business opportunity that appeals to you. Attend a demonstration or visit the website of the company to help decide which company you feel best suits your needs and ideals.
3. Research appealing companies
Read through all their marketing collateral and agreements to get a good understanding of the stability and history of business and of your responsibilities.
4. Investigate the start-up costs
All DSASA member companies are obliged to keep start-up costs low. Your initial investment will typically cover a sales kit with all company information, product samples and training materials. Avoid companies expecting a large investment or who push overzealous inventories, you should be allowed to grow at your own pace and affordability.
5. Study the return policy
All DSASA member companies are obligated to buy back any unsold, re-saleable product inventory, promotional materials, sales aids and kits purchased within the previous 12 months at the selling price less an administration fee of up to 10% of the selling price.
6. Fully understand the compensation
Check the member companies’ compensation plans as they all differ. Make sure you understand details of earnings and the overall business model.
Ends.

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Veolia signs landmark B-BBEE deal with Ceracue

Metrosmag,SA

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“Veolia was looking for a local development partner with strong project experience in the water treatment markets,” explains Gunter Rencken, Managing Director, Veolia Water Technologies South Africa. “In Ceracure, with whom we’ve had a less formalised working partnership for about four years, Veolia has a hands-on, active B-BBEE partner with a thorough understanding of our core business and the water treatment market.”

This close alignment in corporate vision lays the basis for a synergistic approach to increased business development in both South Africa and Africa. “With this partnership in place, Veolia can confidently amplify business development avenues and enhance our project reach in the municipal and industrial markets,” Rencken continues.

“In addition to demonstrating Veolia’s seriousness to transformation and social development, it also means we’ll be able to supply water treatment solutions encompassing a broader scope of works,” explains Langa Nxumalo, Managing Director, Ceracure. “Together, we can advance our technical and business capabilities, offering a superior and integrated solution for water treatment projects. This ‘one plus one is equal to three’ strategy will allow better project execution in line with clients requirements, all thanks to a good balance sheet and technical experience by Veolia.”

The partnership will also see Veolia South Africa taking an active approach to expanding Ceracure’s business capabilities. “We are assisting Ceracure with achieving a higher CIDB grading, and have planned for a structured transfer of technology and skills of Veolia’s water treatment expertise to Ceracure,” Rencken explains.

Veolia’s shareholding arrangement with Ceracure represents an important pillar of the company’s new vision that is enhancing the water solutions specialist’s delivery of highly efficient, low-footprint water treatment technologies in South Africa and Africa. Alongside the B-BBEE deal are a range of recent organisational and technological innovations that have streamlined the company’s manufacturing, distribution and service networks across the region. Veolia South Africa is now positioned as a key technology and manufacturing hub for Veolia’s new range of standard engineered products and systems as well the company’s range of Hydrex™ speciality chemicals.

“We are excited to welcome Ceracure on board, and look forward to a fruitful synergy with them as we continue to tackle Africa’s water treatment challenges,” Rencken concludes.

Veolia group is the global leader in optimized resource management. With over 163 000 employees worldwide, the Group designs and provides water, waste and energy management solutions that contribute to the sustainable development of communities and industries. Through its three complementary business activities, Veolia helps to develop access to resources, preserve available resources, and to replenish them.In 2016, the Veolia group supplied 100 million people with drinking water and 61 million people with wastewater service, produced 54 million megawatt hours of energy and converted 31 million metric tons of waste into new materials and energy. Veolia Environnement (listed on Paris Euronext: VIE) recorded consolidated revenue of €24.39 billion in 2016.

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