Entrepreneur leads way in transformation of property sector

Posted On Thursday, 02 June 2016 13:34 Published by
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An entrepreneur Malose Kekana , clings a multibillion-rand deal which will see his consortium owning 24% of property company, Pareto.

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A little more than a week ago Malose Kekana, an entrepreneur in the financial and property sector, clinched a multibillion-rand deal. It will see his consortium owning 24% of a huge property company, Pareto, which owns rental properties such as Westgate and Sandton City in Johannesburg, the Pavilion in Durban and Tyger Valley in Cape Town.

Kekana is one of only a handful of black economic empowerment (BEE) barons who have focused on property, one of the least transformed industries in our economy.

The lack of change in the property industry is staggering, with about 95% of it still in the hands of white business. Until it is changed, not much economic freedom can be realised for the majority.

Kekana is among a new breed of black industrialists who have vowed not just to dirty their hands in ensuring that their own businesses truly transform, but to use them as a springboard for meaningful change in the property industry.

What struck me in his articulation of his vision to enter such an exclusive industry was his understanding that we can no longer merely rely on ownership to engender real change. The other pillars of BEE, such as employment equity and preferential procurement, will take place only when owners such as he become involved in the sector.

Passive BEE is a thing of the past, and certainly in an industry that has shown no traction for change, it is clear that industrialists such as Kekana will have to be in the business to ensure that change can indeed take place. Making BEE broad-based is crucial, but it means nothing if it merely means the broadening of ownership.

It has to mean finding black people to run the business, investing in developing the skills of employees, broadening the procurement supply chain beyond the usual suspects who have been service providers of these businesses under the old ownership, and striking partnerships with new enterprises as a way of broadening participation in the broader industry by new entrants.

It is clear that the envisaged creation of black industrialists can happen only if such industrialists are willing to learn the ropes of the industry in which they wish to ply their trade. And people such as Kekana need to enter the sector with businesses such as his new venture, assume executive positions and drive their growth. Token BEE involvement will be no better than the fronting that the BEE codes aim to combat.

Kekana has broken away from the usual dependency on development-funding institutions by getting two commercial banks to back his venture instead of the Industrial Development Corporation.

This is important, since not only is it clear that his venture can stand on its two feet without being placed in the "affirmative action" box, but it underlines an important need for private business to become involved in the transformation of the economy without always deferring to the public sector.

BEE funding in the property space must become normalised in high-end transactions if it is to make any dent in the 95% untransformed part of the industry.

The same can be said of the financial sector, which is about to see a major shake-up with the exit of Barclays from the African market. Public-sector funding will not be enough to back such a mammoth deal.

Kekana’s deal was followed by yet another major development. The agreement on a construction charter that will focus on driving change in the industry, is a crucial step.

It will be interesting to see whether deals such as the Pareto acquisition and the newly adopted charter will spur the big players into exciting partnerships that make the BEE revolution happen.

source" Business Day

Last modified on Thursday, 02 June 2016 14:14

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