EntrepreneurMonth: Property Fox challenges status quo

According to Property Fox, the recently launched industry disruptor is listing around 10 new residential properties a week, with a total of 313 homes currently listed on its site. With just seven months in the game, its co-founders are excited about the service’s positive uptake.
We chatted to Ashley James and Crispin Inglis to find out what it takes to be an entrepreneur in South Africa, what motivates them, and what the reception has been like to Property Fox since launch.

Crispin Inglis (left) and Ashley James (right)
Crispin Inglis (left) and Ashley James (right)

As an entrepreneur, how can government create a more enabling environment for startups in SA?

Crispin Inglis: South Africa is a great place to be an entrepreneur – there is so much opportunity for success and I think South Africans are naturally entrepreneurial. I believe that the government should focus more on investing in a more bottom-up style approach by creating and investing in pockets of entrepreneurial energy across the country. The trouble we see at the moment is that it’s easier to do top-down investment which doesn’t breed growth. These types of investments, while requiring more work, really ignite local economies and breed startups.

Ashley James: Focus on the various entrepreneurial ecosystems that enable a highly motivated root to the start of new businesses in South Afrcia. Focus on imprinting the opportunities and benefits to South Africans from an early age, i.e secondary and tertiary education.

Do you think anyone can be an entrepreneur or is it something you’re born to do?

AJ: It’s not for everyone, as you can often face challenges that aren’t for the faint-hearted. Withstanding these moments is a prerequisite to becoming a successful entrepreneur.

CI: Everyone has the opportunity to be an entrepreneur, but it definitely takes a certain mindset to get over the line. Some days are tougher than others and it’s about getting through those moments that will get you over the finish line.

Being an entrepreneur is really hard – what motivates you to tackle this head-on each day?

CI: The easiest way I found to do this was to find something I genuinely believed in. In our case, I genuinely believe there is a more affordable and easier way to buy and sell property in South Africa and because of that it makes it easier to get out of bed. It’s often said you must ‘love what you do’, and while there is truth in that, I would say it’s more important to believe in what you do!

What are some of the challenges you’ve faced as an entrepreneur and how have you overcome them?

CI: Finding great service delivery. It’s sometimes tough in South Africa. But I guess that just means more opportunity for anyone hungry enough to do a better job!

AJ: Emotional challenges and pressures. Finding the time to see those that matter most. Still working on it, but time management skills need to improve.

Briefly describe the key differences between your offering and the traditional estate agency model.

CI: Our model is fundamentally different in that we don’t have any physical agents on the ground. The reason for this is because we decided to invest in a more centralised service arm so that we could offer a much cheaper solution, as well as to improve on every element of the buying and selling process. For example, when you sell through us we include a professional photography option.

What inspired the idea to launch a service such as Property Fox?

AJ: The possible vision of the project and the entrepreneurial excitement behind starting a new business with endless opportunity.

What has the reception to Property Fox been like since it launched earlier this year?

AJ: There was a very exciting uptake! We have sold properties in all nine provinces since launch, proving the capabilities of the model. With over 300 properties on board, we look forward to exciting times ahead.

In many cases, when a disruptive model shakes up an industry, many of the older players kick up a fuss rather than adapting to the change. What advice would you give to those clinging to the traditional estate agency model?

CI: As I mentioned, while we are essentially in competition with other agencies, we are fundamentally different without actual agents. Some still like the ‘having an actual agent’ part of the process, but we have found that 99% of buyers and sellers that have contacted us are more than happy to adapt to our new-style offering if it means they can save a few hundred thousand rand.

Many disruptive models distinctly empower the consumers they serve – why do you think this is, and do you think this trend will continue into 2017?

CI: We have challenged a lot of assumptions in the real estate game. Our business looked at each element of the buying and selling process, and improved on each. These improvements ranged from photography to customer service to name a few. But moreover we have allowed the sellers and buyers to be involved in the process every step of the way which they have jumped at with open arms. It’s your most valuable asset after all, so why wouldn’t you want to be involved. So I guess to answer your question, I absolutely think this trend will continue!

Hundreds of millions of rands in forex losses set to hit Nampak earnings hard

Packaging group Nampak says it expects its full-year headline earnings a share fall by up to half, hit by abnormal items like foreign-exchange losses.
Corrugated packaging production.
Corrugated packaging production.
Picture: Supplied
Excluding abnormal items, profit for the year to September was expected to be 2%-7% higher than that of the previous year, the company said on Wednesday.

Nampak, which makes cans, bottles and cardboard boxes is reeling from weakening effect on Nigerian and Angolan currencies of lower oil prices.

The group said its foreign-exchange losses amounted to between R670m and R700m. Nigeria accounted for the bulk of losses.

There were also asset impairments of R355m-R370m related mainly to planned conversion of the Angolan tinplate line to aluminium.

Standard Bank’s forex wallet app wins at Efma

Standard Banks’ new foreign exchange mobile wallet, ‘Shyft’-ing money was awarded a Bronze international award in the Most Disruptive Innovation category, at the 2016 Efma-Accenture Distribution & Marketing Innovation Awards held in Barcelona this week.

Through the app, customers can buy a number of different currencies at a live rate, store the funds in eWallets and then make purchases using either the physical or virtual cards capability, or make international transfers using the cross border payments capability.

Shyft is not just the digitisation of forex; it also provides an element of control over when and where an individual buys foreign exchange.

Binary option trading – 2016 style

In terms of revenue generation, binary options are a relative newcomer to the world of investment. They are popular because they are easy to understand, and by investing in binary options with a licensed broker, you are unlikely to lose vast amounts of money. The flip side is that you are also unlikely to make vast amounts of money, but that’s the ‘penalty’ you pay for keeping risk to an acceptable minimum.
Binary options are so-called as for each trade there are only two outcomes – you get nothing back if your trade fails, and you receive back a certain fixed amount if your trade is successful. If you buy stocks and your stocks crash, then you could lose everything you’ve invested. With binary options you are not actually buying stocks – you’re simply wagering on their performance.

The concept of binary options trading has only been around since 2008. Unfortunately, binary options trading has developed something of a poor reputation. This is mainly due to the actions of a minority of brokers who are swindling ill-prepared traders out of significant amounts of money.

Regulation paves the way for the protection of traders

The usual way of preventing unscrupulous parties from deceiving clients is via regulation. If you want to trade in binary options without falling foul of a broker scam, then choose a regulated broker. However, regulation comes with issues itself.

Many observers and lobbyists view binary options trading as gambling. A trader is betting on the value of a commodity, currency or stock rising or falling. There is no guarantee of the result, just as there is no guarantee that the next spin of a roulette wheel will result in red, or black.

Online casinos have been regulated for many years, however, until 2014 in the UK licensing could be acquired via any number of offshore regulatory boards. Curaçao, Gibraltar and Malta all became popular suppliers of gambling licences. This changed on 1 November 2014 when the Gambling (Licensing and Advertising) Act came into force. This act stipulated that online casinos could not offer their services to UK-based customers unless they had a licence issued by the UK Gambling Commission (UKGC).

It’s likely that binary options trading will take the same path. Currently, the regulation of binary options brokers has fallen to the Cyprus Securities and Exchanges Commission (CySEC). Any binary options broker with a CySEC licence is able to trade anywhere in the EU. Some CySEC-regulated brokers offer their services to traders in the US and Canada.

The cloudy issue of the status of UK binary options trading – investing or gambling?

This is perhaps not a satisfactory state of affairs for UK-based binary options traders. Historically, the UK government has left control of binary options trading in the UK to the UKGC. When the government originally decided whether binary options trading qualified as gambling or investing, they said that binary options are “a form of fixed-odds betting on movements in financial markets” and hence should fall under UKGC control. Most observers believe that regulation should be handled by the Financial Conduct Authority (FCA) – the UK’s independent financial regulatory body.

The UK government seems to agree. In May 2015 the then coalition government began a consultation aimed at deciding whether the regulation of UK-based binary options brokers should pass to the FCA from the UKGC. In detail, the decision was to be made as to whether binary options trades qualify as MiFID (Markets in Financial Instruments Directive) financial instruments and should therefore come under FCA regulation. The consultation closed on 18 June 2015. The results of the consultation were supposed to be published in early 2016, but have been delayed.

Different jurisdictions have different attitudes towards the legality and regulation of binary options trading:

In the United States it is only legal for binary options brokers to offer their services to US-based citizens if they are properly registered with the Commodity Future Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Very few brokers, however, have managed to secure licensing. In 2013 the large Cypriot/Israeli broker Banc De Binary was fined $11 million for accepting US-based customers without the necessary licensing.

In Canada binary options trading can only be performed by Canadian citizens at brokers that have been regulated by the Canadian Securities Administrators (CSA). This is something of a misnomer, as no brokers in Canada have been licensed by the CSA. This practically makes binary options trading illegal in Canada.

Australians are able to trade binary options at any broker with a licence issued by the Australian Securities and Investments Commission (ASIC).

The French financial regulatory body, the Autorité des Marchés Financiers (AMF) banned the advertisement of all binary options services to its citizens in August 2016. Forex products and CFDs with leverage greater than 1:20 were banned as well. As a result of the ban, many leading brokers simply stopped accepting registrations from French-based citizens.

The Belgium financial authorities took matters one step further. Around the same time as the French advertising ban, the Financial Services and Markets Authority (FSMA) decided to ban binary option brokers, Forex trading and CFDs altogether.

The biggest issue facing binary options traders – scams

This seeming hostility towards binary options brokers is not borne out of a dislike of the ‘gambling’ nature of such trading – after all, in France alone the annual spend on online gambling is over €725 million. The issue some jurisdictions have with binary options trading is the massive amount of client scamming that occurs via disreputable sources.

Most scams operate by first luring a client in and then offering them ‘get rich quick’ schemes. Initially, everything will appear to be legitimate – the site will ask for a standard deposit amount of $250. Once the trader has made a few trades (whether successful or not) they will be contacted with the offer of a ‘no risk’ deal for a sizeable investment. Once the sizeable deposit has been made, the traders account is closed.

Regulators are cracking down on scam sites, though. In August 2016 two Israeli sites – Vault Options Ltd and Global Trader 365 were fined $4.5 million and closed down. The lawsuit was brought about by the CFTC. One man had deposited $17,500 with Vault Options and was then send a fraudulent cheque when he tried to have his deposit returned. Global Trader 365 had conned a Michigan woman out of $44,200, telling her she had to pay $14,200 in ‘taxes and fees’ after she had made a $30,000 deposit.

Despite the issue with scamming, legitimate binary option brokers are still experiencing substantial growth. In Q1 2016 the binary options broker EXTrader reported transactions worth $52.8m. This was more than double the amount of transactions recorded in Q1 2015.

By definition trading in binary options is very definitely black and white. Mix those two pigments and you perhaps get a little understanding of how the binary options market currently stands, with its issues over scams, regulations and licensing.