Meaningful transformation requires a shift in attitude

Meaningful transformation requires a shift in attitude

MAIN IMAGE: Vuyiswa Mutshekwane, CEO South African Institute of Black Property Practitioners.

Vuyiswa Mutshekwane

B-BBEE codes were introduced 23 years ago yet have largely been ineffective to deliver transformation results in South Africa’s property sector. For the industry to truly start to make a meaningful change, our attitudes have to shift from a focus on mere compliance to recognising that transformation is inexplicably linked to the future growth and sustainability of the industry.

The recently published 2017-2018 State of Transformation report paints a dismal picture of an industry that stubbornly remains untransformed and, in many cases, is regressing in all key sub-elements measured within the B-BBEE framework and the property sector charter codes (e.g. ownership, management control, enterprise development etc.)

Read: Mixed results with transformation in property sector says Council

While the B-BBEE codes play an important role in aligning industry priorities and enabling the industry to set quantifiable measurable targets, the inability to enforce compliance with these targets results in poor implementation and widespread non-complianceThe complexity of interpreting the codes and (often) high cost of compliance also presents a challenge for small and medium size entities who are forced to ‘outsource’ this function to consultants and external programs or opt-out all together.

“What is becoming evident is that transformation cannot simply be reduced to a compliance matter and a ‘tick-box’ exercise.”

What is becoming evident is that transformation cannot simply be reduced to a compliance matter and a ‘tick-box’ exercise. The mere existence of the B-BBEE Codes since their introduction 23 years ago has largely been ineffective in delivering meaningful and substantive transformation that results in inclusive growth. Practical interventions are required that focus on; transferring scarce skills, supporting and developing entrepreneurs and new entrants within the sector and facilitating access to market for existing practitioners.

“The journey towards transforming the South African property sector starts with enabling and fast-tracking black and female property ownership.” 

The journey towards transforming the South African property sector starts with enabling and fast-tracking black and female property ownership.  A 2015 market size calculation estimates the value of privately-owned commercial property to be R1,3TN. Lack of access to equity and enterprise development funding continues to be the single biggest barrier to entry for new black entrants in the commercial property sector who, while perhaps possessing the market knowledge and expertise, often lack the personal financial credentials to participate in direct ownership. A coordinated approach must therefore be driven by banks, development finance institutions, enterprise development funds and the relevant government departments to ensure that new entrants are prioritised, funded and supported.

“Once again, high compliance costs and onerous regulatory requirements act as a further barrier to entry for new black entrants and stifle transformation and the growth of the entire industry.”

The staggeringly low number of black full status real estate agents and black-owned estate agencies, estimated at +/-3%, also points to a residential sector that is battling to attract and retain new entrants and support emerging enterprises. Once again, high compliance costs and onerous regulatory requirements act as a further barrier to entry for new black entrants and stifle transformation and the growth of the entire industry. The industry needs to prioritise programmes that support and develop emerging real estate enterprises and provide capacity support and market access to aspirant practitioners.

But is that enough?

South Africa is still, unfortunately, a deeply polarised society suffering from the effects of widespread spatial, economic and social segregation of which the property sector is but a microcosm.  For the industry to truly start to make meaningful change, a fundamental shift in attitudes needs to start to shift. We need to evolve from merely focussing on compliance and/or corporate social responsibility to recognising that transformation is inextricably linked to the future growth and sustainability of the industry.

End.

About the author: Vuyiswa Mutshekwane is CEO at the South African Institute of Black Property Practitioners (SAIBPP), position she has held for 2 years, and 2019 Standard Bank Top Women in Property finalist. She serves as an non-executive director on the board of Fortress Reit, is a member of the council and technical committee of the Property Sector Charter Council, is a member of the Land Reform & Food Security Committee at the Black Business Council and also Chairs the board of The Joburg Ballet.

Showing 3 comments
  • Charles Haigh
    Reply

    Fully agreed, after all this time there is no apparent improvement in the drive for transformation. This week i received a copy of a letter from the Cape Town City council refusing to issue board permits to agents if they are in arrears with their property rates and taxes in addition to forcing non selling principals to register for board permits in order for Interns to obtain their permits. The question begs
    1. Does the City view the industry as a soft target to fill their coffers?
    2. How are agents that do not own property dealt with as they do not have rates to pay?
    3. All of their policies create yet another barrier to entry and goes against national government policy of unemployment alleviation and job creation.

    Unless the departments throughout the various parastatals co-operate with each other and ensure that policies do not clash or at least compromise, can move forward in one direction instead of pulling in different directions and face stagnation as we currently do, and as a result we now have this transformation idea that hasn’t gained traction because of the various agendas at play.

  • Emmanuel
    Reply

    It is quite a very sad story more specially to us as the “novice” to break-through in this industry and as the writer alluded the biggest barrier is that of lack of access to equity & enterprise development funding.

    The most disheartening matter is that at a grass root level you find that the beginner has done pretty-well in terms of owning that piece of land and developed it to be what it is today, but in order to climb up to another level the funding is needed.

    Indeed, the industry needs to prioritise programmes that support & develop emerging real estate enterprises.

  • Willem Erasmus
    Reply

    BEEE is racist. Simple. Judging a person by the color of their skin tone is racist.
    Why not call it CEEE, Catholic Economic Empowerment. That way everyone else can be excluded.
    Black Africans didn’t practise Christianity in the 1540’s. Why no judgement on the person’s relgigion or lack thereof ? My daughter has a black friend at school, when they grow up and apply for job the black person with the same skills and edication will get the job squarely on racial profiling. That is racist.
    How can eqaulity be taught when it’s not government policy ?
    How can eqaulity be applied when their are laws preventing equality ?
    Since when is color of skin more important than skills development ? Since living in South Africa!
    Nothing in this country will ever change as long as color of skin is the measurement. That is one of the reasos why people are emigrating to stable first world countries.

    Agricultural real estate agents often have to drive 100’s of kilometers to list one farm, spend all day in 42 Celsius heat. It can easily cost R3000 for diesel and wear and tear to drive to the land, in the 42 Celsius heat and dust all day.
    The principle/agency doesn;t cover the expenses. Which member of the CEE (Catholic Economic Empowerment) would be willing to spend 100% of his own funds to drive his personal bakkie sometimes up to 200 km on dust/dirt/gravel roads, list the property, advertise, then drive possible buyers out tot the land for sale ?

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