Date: 20/04/2005
Source: Department of Trade and Industry
Title: Mpahlwa: Arello District Six conference 2005
Address delivered by Minister of Trade and Industry, Mandisi Mpahlwa, at the Arello District 6 Conference 2005
Chairperson Mr Linda Nyembe
CEO of the Estate Agency Affairs Board, Mrs Nomonde Mapetla
President of ARELLO Dr Wayne Thorburn
Vice President of ARELLO Craig Cheatham
International, Pan African and local delegates
Ladies and gentlemen
Introduction
I would like to thank you for choosing South Africa to host the inaugural meeting of the District Six conference. Some of you may be aware that for many years the name District Six was inextricably associated in South Africa, with Apartheid. This was because the Apartheid government had decreed that all black people must be forcibly evicted from their homes in District Six, a suburb close to downtown Cape Town. The subsequent evictions and consequent protests became a symbol of the resistance to the forced evictions of black people across South Africa. More recently we have as a country, recast this negative symbolism into a very positive development. The same people who were evicted are now returning to new homes in District Six signifying our approach to dealing with the past; building rather than destroying.
Ladies and Gentleman, the Deputy Minister reflected this morning on the boom in the property market in South Africa and on some of the economic reasons for the extra-ordinary surge in property value and transactions. It is generally accepted though that this boom was buttressed by the sound macro-economic policies practiced by our government. Having inherited an economy in crisis, the first democratic government embarked on a reconstruction project, not only to rescue the ailing economy but to do so in a manner which would ensure sustainable growth and equitable economic expansion.
Economic Growth
The facts show that we were correct in our approach to economic policy. Never in the history of South Africa has the economy been in better shape. The South African property market is no exception. We are currently experiencing the longest consecutive trend of real growth in the residential property market, as we are going through our longest period of real economic growth in over 50 years.
It is indeed remarkable that this progress is taking place in the context of dealing with the legacy of the past. Of course many of these legacy issues remain; for instance, we have not yet achieved our goal of eradicating poverty and we have not been able to match the skills required by the economy with enough skilled personnel. This will change, as we implement a number of key micro-economic initiatives designed to take advantage of our current positive position to further boost economic growth.
Our strategies to achieve higher levels of economic growth are in broad terms focused on three areas, that of raising the levels of investment, improving competitiveness of the economy, and increasing participation of people in the economy. To increase investment we will use state resources to further stimulate the economy and crowd-in private sector investments. This will see us increasing our spending on infrastructure, more effectively using our development finance institutions, attracting greater levels of international investment into the country, and entering into trade agreements.
To improve the levels of competitiveness of our economy we are looking at lowering the cost of doing business in South Africa, lowering the administrative or regulatory burden faced by businesses, improving our transport logistics systems, and supporting skills development. These are new challenges, which have arisen as a result of successes we have achieved in growing the economy.
The third pillar of our strategy to stimulate economic growth is to increase the participation of people in our economy. Faster growth cannot be sustained on the back of high levels of inequality, and addressing this inequality is one of the driving factors behind our broad based black economic empowerment initiatives, as well as our focus on supporting women in business and small business development. Because of the kind of inequality that existed in South Africa unequal economic participation was a structural constraint to economic growth and it remains so albeit to a lesser extent. Increasing the number of people who participate in the economy will see our economy expand and result in greater opportunities for businesspeople.
Property Sector Growth
These developments must be of great interest to property professionals. Economic growth and large scale infrastructure developments can only have a positive impact on this industry. However, we are aware of the view that the industry is overtraded leading to lowering of average earnings and instability in the industry. We expect that this will stabilise over time as we address the legacy of the past. The rapid growth experienced over the past few years is not unexpected as greater numbers of black estate agents enter the sector. Furthermore we see that there are also significant opportunities in ancillary businesses such as origination insurance, legal services and a range of homeowner services.
Property Sector BEE
The need for the South African economy to promote small businesses and broad based black economic empowerment is also linked into the developments amongst property professionals. Fortuitously, the positive developments in our economy and property sectors coincide with the steps being taken by the industry to draft the Property Sector Transformation Charter, because, as the sector expands, it provides new opportunities for black people to enter the sector without pushing out existing players. Indeed I am encouraged to learn that a number of initiatives have already been taken by the sector to accelerate the entry of black people where the current numbers of black estate agents are approximately 12% of the total. This suggests that a deeper understanding of what government hopes to achieve through broad based Black Economic Empowerment is evident.
Programme Director; broad based BEE is about ensuring that black people are given access to opportunities to develop their skills, enter management positions in companies, start and grow their enterprises, become suppliers to large companies and government, as well as buy equity in companies. Our approach to BEE, as I alluded to earlier, has been to increase the effective participation of black people in the economy and thereby stimulate economic growth. This growth will take place as economic relationships are normalised, the skills base is increased, more people enter the formal economy, new enterprises are started, there is greater wealth accumulation, and an increase in the income of ordinary citizens.
The draft codes of good practice for Broad Based Black Economic Empowerment, that were released last year, have started to provide guidelines for BEE. We are currently reviewing the comments on these draft codes and should be finalising them shortly. The codes amongst other things define BEE, inform BEE transactions, and will contribute to the sector charters.
Ladies and Gentleman, I said earlier that a key driver for growth is broadening participation in the economy. Property professionals have a very significant role in partnering with government to achieve this goal. The process of wealth accumulation by black people through collateralisation of properties and promoting property development in underdeveloped areas will have very positive multiplier effects.
Furthermore, we have identified as a key constraint to the expansion of businesses in underdeveloped areas, the lack of adequate and available commercial property. This is changing but not enough innovative activity is taking place to meet the demand for access to businesses premises. It is my particular passion to promote underdeveloped areas and transform our rural areas and townships into zones of economic activity. We must resist any temptation to view these areas as simply residential dormitories and do more to increase economic activities and to support the emergence of local entrepreneurs.
International Investment
Programme director, the internationalisation of the South African industry and foreign property ownership has become a topical subject. As an open economy that is increasingly integrated globally we welcome new investment, and the mutual flow of skills and cutting edge expertise. We would be concerned to ensure that these developments promote sustainable growth in our economy, and I am confident that all will adopt a mature approach and long-term view.
South Africa stands at the threshold of a major boost in foreign direct investment into the region as the country prepares for the 2010 Soccer World Cup. The honour to host the biggest event in the world sports calendar will undoubtedly translate into significant growth opportunities for the property industry, both from a residential and commercial point of view. South Africa’s estate agents can look forward to new challenges as the industry elevates its go-to-market offering, both from an industry and skills transfer point of view.
Ladies and gentlemen, the trend of global business has also taken on a new and exciting dimension and coincides with our efforts to promote continent wide economic growth. With the increased stability and growth that is taking place in Africa and through the support of initiatives such as the New Partnership for Africa's Development (NEPAD) and institutions such as the African Union, there are significant opportunities on our continent for the development of commercial, residential and industrial properties. With an average growth in Africa of 4.5% last year, the demands for property must be significant and will translate into even greater growth for the property sector.
We are aware that particular perceptions of the African Continent continue to persist. In reality Africa is a very different place today than even a few years ago. The formation of a number of Pan African institutions dealing with Africa’s own issues is evidence of this sea change. Many South African companies have invested heavily in other African countries and doing excellent business.
Conclusion
To conclude, ladies and gentlemen, South Africa and Africa represent enormous opportunities for the property sector. Doing business in these economies is not always straight forward as we address some of the legacies and inefficiencies of our past. However, as we have seen in South Africa over the past few years, the growth potential can be significant and addressing our Apartheid legacy has in fact contributed towards this growth. And as we put our economy on a higher growth path so we will see positive outcomes for the property sector, not only as a beneficiary of our faster economic growth but also as a contributor to employment and greater levels of equality.
I thank you.
Issued by: Department of Trade and Industry
20 April 2005
Source: Department of Trade and Industry
Title: Mpahlwa: Arello District Six conference 2005
Address delivered by Minister of Trade and Industry, Mandisi Mpahlwa, at the Arello District 6 Conference 2005
Chairperson Mr Linda Nyembe
CEO of the Estate Agency Affairs Board, Mrs Nomonde Mapetla
President of ARELLO Dr Wayne Thorburn
Vice President of ARELLO Craig Cheatham
International, Pan African and local delegates
Ladies and gentlemen
Introduction
I would like to thank you for choosing South Africa to host the inaugural meeting of the District Six conference. Some of you may be aware that for many years the name District Six was inextricably associated in South Africa, with Apartheid. This was because the Apartheid government had decreed that all black people must be forcibly evicted from their homes in District Six, a suburb close to downtown Cape Town. The subsequent evictions and consequent protests became a symbol of the resistance to the forced evictions of black people across South Africa. More recently we have as a country, recast this negative symbolism into a very positive development. The same people who were evicted are now returning to new homes in District Six signifying our approach to dealing with the past; building rather than destroying.
Ladies and Gentleman, the Deputy Minister reflected this morning on the boom in the property market in South Africa and on some of the economic reasons for the extra-ordinary surge in property value and transactions. It is generally accepted though that this boom was buttressed by the sound macro-economic policies practiced by our government. Having inherited an economy in crisis, the first democratic government embarked on a reconstruction project, not only to rescue the ailing economy but to do so in a manner which would ensure sustainable growth and equitable economic expansion.
Economic Growth
The facts show that we were correct in our approach to economic policy. Never in the history of South Africa has the economy been in better shape. The South African property market is no exception. We are currently experiencing the longest consecutive trend of real growth in the residential property market, as we are going through our longest period of real economic growth in over 50 years.
It is indeed remarkable that this progress is taking place in the context of dealing with the legacy of the past. Of course many of these legacy issues remain; for instance, we have not yet achieved our goal of eradicating poverty and we have not been able to match the skills required by the economy with enough skilled personnel. This will change, as we implement a number of key micro-economic initiatives designed to take advantage of our current positive position to further boost economic growth.
Our strategies to achieve higher levels of economic growth are in broad terms focused on three areas, that of raising the levels of investment, improving competitiveness of the economy, and increasing participation of people in the economy. To increase investment we will use state resources to further stimulate the economy and crowd-in private sector investments. This will see us increasing our spending on infrastructure, more effectively using our development finance institutions, attracting greater levels of international investment into the country, and entering into trade agreements.
To improve the levels of competitiveness of our economy we are looking at lowering the cost of doing business in South Africa, lowering the administrative or regulatory burden faced by businesses, improving our transport logistics systems, and supporting skills development. These are new challenges, which have arisen as a result of successes we have achieved in growing the economy.
The third pillar of our strategy to stimulate economic growth is to increase the participation of people in our economy. Faster growth cannot be sustained on the back of high levels of inequality, and addressing this inequality is one of the driving factors behind our broad based black economic empowerment initiatives, as well as our focus on supporting women in business and small business development. Because of the kind of inequality that existed in South Africa unequal economic participation was a structural constraint to economic growth and it remains so albeit to a lesser extent. Increasing the number of people who participate in the economy will see our economy expand and result in greater opportunities for businesspeople.
Property Sector Growth
These developments must be of great interest to property professionals. Economic growth and large scale infrastructure developments can only have a positive impact on this industry. However, we are aware of the view that the industry is overtraded leading to lowering of average earnings and instability in the industry. We expect that this will stabilise over time as we address the legacy of the past. The rapid growth experienced over the past few years is not unexpected as greater numbers of black estate agents enter the sector. Furthermore we see that there are also significant opportunities in ancillary businesses such as origination insurance, legal services and a range of homeowner services.
Property Sector BEE
The need for the South African economy to promote small businesses and broad based black economic empowerment is also linked into the developments amongst property professionals. Fortuitously, the positive developments in our economy and property sectors coincide with the steps being taken by the industry to draft the Property Sector Transformation Charter, because, as the sector expands, it provides new opportunities for black people to enter the sector without pushing out existing players. Indeed I am encouraged to learn that a number of initiatives have already been taken by the sector to accelerate the entry of black people where the current numbers of black estate agents are approximately 12% of the total. This suggests that a deeper understanding of what government hopes to achieve through broad based Black Economic Empowerment is evident.
Programme Director; broad based BEE is about ensuring that black people are given access to opportunities to develop their skills, enter management positions in companies, start and grow their enterprises, become suppliers to large companies and government, as well as buy equity in companies. Our approach to BEE, as I alluded to earlier, has been to increase the effective participation of black people in the economy and thereby stimulate economic growth. This growth will take place as economic relationships are normalised, the skills base is increased, more people enter the formal economy, new enterprises are started, there is greater wealth accumulation, and an increase in the income of ordinary citizens.
The draft codes of good practice for Broad Based Black Economic Empowerment, that were released last year, have started to provide guidelines for BEE. We are currently reviewing the comments on these draft codes and should be finalising them shortly. The codes amongst other things define BEE, inform BEE transactions, and will contribute to the sector charters.
Ladies and Gentleman, I said earlier that a key driver for growth is broadening participation in the economy. Property professionals have a very significant role in partnering with government to achieve this goal. The process of wealth accumulation by black people through collateralisation of properties and promoting property development in underdeveloped areas will have very positive multiplier effects.
Furthermore, we have identified as a key constraint to the expansion of businesses in underdeveloped areas, the lack of adequate and available commercial property. This is changing but not enough innovative activity is taking place to meet the demand for access to businesses premises. It is my particular passion to promote underdeveloped areas and transform our rural areas and townships into zones of economic activity. We must resist any temptation to view these areas as simply residential dormitories and do more to increase economic activities and to support the emergence of local entrepreneurs.
International Investment
Programme director, the internationalisation of the South African industry and foreign property ownership has become a topical subject. As an open economy that is increasingly integrated globally we welcome new investment, and the mutual flow of skills and cutting edge expertise. We would be concerned to ensure that these developments promote sustainable growth in our economy, and I am confident that all will adopt a mature approach and long-term view.
South Africa stands at the threshold of a major boost in foreign direct investment into the region as the country prepares for the 2010 Soccer World Cup. The honour to host the biggest event in the world sports calendar will undoubtedly translate into significant growth opportunities for the property industry, both from a residential and commercial point of view. South Africa’s estate agents can look forward to new challenges as the industry elevates its go-to-market offering, both from an industry and skills transfer point of view.
Ladies and gentlemen, the trend of global business has also taken on a new and exciting dimension and coincides with our efforts to promote continent wide economic growth. With the increased stability and growth that is taking place in Africa and through the support of initiatives such as the New Partnership for Africa's Development (NEPAD) and institutions such as the African Union, there are significant opportunities on our continent for the development of commercial, residential and industrial properties. With an average growth in Africa of 4.5% last year, the demands for property must be significant and will translate into even greater growth for the property sector.
We are aware that particular perceptions of the African Continent continue to persist. In reality Africa is a very different place today than even a few years ago. The formation of a number of Pan African institutions dealing with Africa’s own issues is evidence of this sea change. Many South African companies have invested heavily in other African countries and doing excellent business.
Conclusion
To conclude, ladies and gentlemen, South Africa and Africa represent enormous opportunities for the property sector. Doing business in these economies is not always straight forward as we address some of the legacies and inefficiencies of our past. However, as we have seen in South Africa over the past few years, the growth potential can be significant and addressing our Apartheid legacy has in fact contributed towards this growth. And as we put our economy on a higher growth path so we will see positive outcomes for the property sector, not only as a beneficiary of our faster economic growth but also as a contributor to employment and greater levels of equality.
I thank you.
Issued by: Department of Trade and Industry
20 April 2005
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