Broad-based black financial empowerment (B-BBEE) and transformation in basic are burning subjects in the nation, particularly with many sectors of the economic system nonetheless lagging on this entrance.
The Property Sector Charter Council (PSCC) performs a key function driving the transformation agenda in the broader property sector.
On this newest episode of The Property Pod, PSCC CEO Portia Tau-Sekati shares her insights on B-BBEE in the industry she is so enthusiastic about. She additionally talks girl empowerment, because it’s nonetheless Women’s Month.
Highlights of her interview seem under. You may also hearken to the complete podcast above or obtain it from iono, Spotify or Apple Podcasts.
Highlights
“Basically the first Property Sector Code was gazetted in 2012, and this year marks a decade from the first property sector code that was gazetted. So we are assessing basically how we have actually done in the last 10 years.”
“I’m pleased to announce that this year, in 2022, we saw a nice pickup from Level 5 in the last two years to Level 4.”
“In 2020 the performance was at Level 5 [in terms of the B-BBEE property charter scorecard]. In 2021 again it was at Level 5 and this year there was a pickup at Level 4. So there has been relatively good progress, which is actually stemming from the last couple of years before the regress to Level 5.”
“In the final couple of years just a few components that now we have additionally been involved about which have really been exhibiting [include] a really regular decline significantly on three components – administration management, employment fairness and ability improvement.
“We see that in the last couple of years, as we assess the performance in terms of transformation, it was very clear that where we were doing well, we are getting better; where we were doing badly, it was getting worse. As the saying goes, you can’t expect different results from doing the same thing. We could see it the last couple of years that all of those three elements actually were continuing to go down.”
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“So we had actually had to put [in] quite some effort in terms of being able to change the trajectory so that those three elements then start to change. It is no surprise that the three elements really took the same direction together, mainly because, of course, when, under employment equity, if you don’t have the right people at the different layers, whether at senior, middle or junior level, you are unlikely to have anybody that then picks up at exco and manco and executives to pick up under management control.”
“If you don’t have those people in place, you are likely to have enough spend for you to then spend on skills development in that space. You’ll always have people unskilled that are there, but you won’t be able to pick up enough skills development to register good expected progress in terms of skills development. Those have been the major contributors into that space.”
“However, coming on to 2020, 2021, also over and above that aspect, aspects of procurement have been hit. Procurement was really impacted. There wasn’t as much procurement, as it happened as well, with the impact on the property sector in terms of performance because of Covid.”
“[The Covid-19 pandemic] exacerbated that underperformance from that perspective, not to mention the fact that skills development was not doing very well.”
“It got worse in 2020, before everybody geared themselves up with their technological ability to be able to drive training. So you would recall that from March 2019, when there was a hard lockdown, literally there was a standstill; nothing really happened in skills development until people towards the latter part of that year started to figure out, okay, this is still doable using technological means and facilities only at that point, besides the fact that it wasn’t doing well over and above that.”
“Then you got Covid. You then had procurement issues that exacerbated the issues, including socioeconomic development, which is almost like a CSI. You see that because there was less contact and [fewer] people at the offices, things such as normally planned, like Mandela Day – people didn’t do Mandela Day.”
“And then the civil unrest that happened in July also added to that impact – that civil unrest. We are starting to feel the effects even more this year.”
“And which elements did it specifically hit? It’s what we refer to as economic development, which is an element where we were encouraging [development] in under-resourced areas, to basically say to the developers, please go and do development where under normal circumstances you would not consider [doing] development.”
“Why is that the case? The reason is more to uplift the communities around where those new developments would be in order to transform those communities around …”
What have been the higher performing components of the scorecard previous to Covid-19?
“So there are other elements, and ownership is one of the critical ones. I can actually give you the context around elements and the performance, but I think what would actually give a better context would be if we split ownership from [a] few segments.”
“So let’s talk [commercial ownership], and I’ll talk ownership from the residential [perspective], because if I combine [them], it may not give a proper, well-articulated context.”
“So [in] commercial, we see there have been quite a few progressive moves from the commercial industry in order to get a lot of ownership [in the] commercial industry. The question that is critical and most important is: have we seen a lot of fruition, and have we seen, from that, initiatives that have been done in driving ownership? Have we seen a lot of impact? Not yet, but at least the progress has started. That is on the commercial side.”
“You will probably see there have been some deals that have happened, but maybe not necessarily on a big scale in that way. And you will see a lot more such instances. Where are you starting to see the deals?”
“Really, the deals are more at an asset level, and what has actually been [driving] it …”
“So you would see basically where you see, let’s say, an engineering company that actually resides or operates from an office space that’s owned by one of the big listed entities.”
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“So how that sort of dialog would begin could be that sort of organisation. There are fairly just a few, together with the legislation firms, these sort of firms. Then they might go to the landlords and say, Mr Landlord, you’re our greatest procurer. However, sadly you don’t have the suitable B-BBEE credentials, and that impacts our scorecard.
“So you then see the conversation going in the direction of that tenant having that ownership discussion with that landlord, and you see a partnering of their ownership at an asset level, where the benefit then aligns for both of them and, okay, let’s talk about the ownership. But in return, let’s talk about what you are looking at [as to] the tenure in terms of leasing that ownership?”
“Those discussions have occurred from that perspective, moderately than from the group perspective. And the problem, the place it has occurred from a gaggle perspective as a complete, [is that] financing has turn out to be a really large factor; that has turn out to be simpler at asset ranges as a result of it’s not these enormous numbers which are troublesome and sophisticated cash to boost, however at an asset stage turn out to be cheap.
“And now being a participant and being a tenant at those assets actually makes it an easier conversation to have, even with the funders from that perspective.”
How is B-BBEE trying from the residential or actual property companies facet?
“[The] Balwin deal was one of the big highlights …”
“From the residential side … We haven’t seen a lot of those kind of transactions happening. However, what has subsequently happened is that on 1 January [2022], there has been the promulgation of legislation, particularly from the regulator, which is the Estate Agency Affairs Board [as] previously known. Currently [it is] known as the Property Practitioners Regulatory Authority, the current PPRA. With the PPRA in place, the legislation, the Property Practitioners Act, one of the key fundamentals of why that act was put into being was really to be able to drive transformation into that space.”
“Now the PPRA will be regulating about 12 sectors over and above even the estate agents. But talking about estate agencies in particular, one of the requirements of the PPRA is that all estate agencies will have to then be able to submit their B-BBEE in order to get their Fidelity Fund Certificate.”
“Their Fidelity Fund Certificate is a trade certificate for them to continue to trade. So that will then be happening in that space. That was done in order to start seeing traction towards transformation within the property sector.”
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“In total, the register, the estate agencies, there are about 15 000 that are registered with the regulator and very few brands, if any at all. I mean, 27 brands out of that 15 000 actually account for close to 70% of what they make in that industry. There haven’t been very big strong ones, if any at all, that are normally from previously disadvantaged.”
“The majority of those that you have, have been old established white entities that have always been there, most of them being family-owned businesses where things such as governance is very self-contained, and, should I say, very loosely managed. So you don’t have conversations you would have in the commercial industry that are done under social and ethics [norms], where they are properly controlled, and you would want to see what your social and ethics norms look like, whether you are abiding to all the laws in the country that you’re operating in.”
“So there was limited force for the real estate agencies to even consider B-BBEE. Because they were mainly servicing consumers and customers who were not even requesting B-BBEE certificates, they saw no need for them to then be able to even venture into that space.”
“We’ve seen it now, given the promulgation of that act in February. Now we are starting to get a lot of enquiries. What is B-BBEE? What does it look like? Where do we find it? Who has it, how do we account, how does one get it, and what does it mean? And so on. The consciousness is coming more from the fact that now to get the trade certificate you need a B-B-BBEE [certificate], so you see the consciousness that was not necessarily there.”
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“However, having said so, the Property Practitioners Act does not require you to have any specific level. For now we are driving the consciousness, and this is where we are balancing the performance of the economy and also the consciousness in terms of B-BBEE.”
“We don’t want to say to anybody, we don’t want to [say], ‘Oh, if you don’t have the right level, we are going to close you down’. Our economy can’t afford it at this point. We can’t afford to be closing down anything. If anything, we need to find things that help us accelerate the growth of our economy in order to drive employment, particularly, as a major challenge.”
“We are not necessarily requesting any level of B-BBEE, so we are starting progressively, saying submit your B-BBEE and your B-BBEE certificate [as a real estate agency].”
“How that would help us is that, one, we will have a very clear picture in terms of where the performance is and where the performance is lacking. Now we will be able to clearly articulate where the lack is and be able to come up with specific interventions of what we can do in order to improve that space with that discussion.”
“And then later on, as and after we begin to choose up the place we’re and the place we’re missing, and creating and getting an understanding of why we’re missing in that house, we’ll put these interventions in place.
“But we could also then find some means of creating and putting more pressure in certain areas later on, now that the consciousness is there and the understanding is there to be able to then drive transformation in that particular industry in the property sector.”
What about girls empowerment? How does that match into the entire black financial empowerment facet of property?
“Certainly, without a doubt, there has been a better performance in terms of women in the industry, to the [converse] of what I’ve just actually said in estate agencies.”
“I mean, I did say that [of] agencies in terms of companies, there are about 15 000; but in terms of performance, in terms of agents – if you were to count individual agents – there are about 49 000-odd, of which in the residential industry close to about 55% of those 49 000 are actually females. So there are a lot more females in there as estate agents in the residential industry than there are males.”
“In total [women] are 55% versus 49% male [as real estate agents]. However, in principals there are still more males. So, meaning principals, owners of agencies, there are more males than females …”
“And in commercial, on the other hand, you are starting to get a broad filter. It has been actually a very male-dominated industry, but you are starting to get a lot of females coming in and they are coming very strongly into very prominent positions. Actually you would see this in a few of the listed sectors as well.”
“But what we did, as well, one of the reports that we released together with the WPN, Women Property Network – the report is [on] the state of gender diversity, particularly in the listed industry – is we looked at this report and we looked at it from 2013, going all the way, and we will continue to review this on an annual basis.”
“[You can see] that particularly in the Reits [real estate investment trusts] – R235 billion market cap of the Reits – there has been a total increase in terms of executive directors, although the numbers are still not exactly there. But you’re starting to see an increase. Females who are non-executives are 28 versus 27 that are non-executives. And obviously there’s been an average of about 15 female executives.”
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“You then have a lot of organisations that are very women-dominated organisations. There are a few where you get a lot more women – Liberty Two Degrees, for example. There are quite a number of women in comparison to the others.”
