Businesspeople are invariably practical people, and so the recent interest rate cut has been greeted by the real estate industry with enthusiasm. In a recent News24 feature, a number of prominent figures in the field suggested that this was a ripe opportunity, and the time was right to buy.

‘The current market is one to seriously consider if you are a buyer who has a secure monthly income and has a long-term view of where you want to live or invest. The cumulative effect of the interest rate cuts has reduced monthly payments by almost 20% from where it was in March this year,’ said Herschel Jawitz.

Others – from Leadhome, ooba, BetterBond, High Street Auctions, Leapfrog, RE/MAX, Seeff and Pam Golding – joined him in this, pointing to the favourable payment terms that the current circumstances would make possible.

This makes some sense.

This is a rare opportunity to turn turmoil to advantage. Somewhere within these sentiments is the idea that the pandemic will not last forever. Sooner or later (probably sooner in the grand scheme of things), South Africa will return to normal.

That is true, but it is also the problem. ‘Normal’ in the South African context is a stressed condition. The economy as a whole has underperformed for a decade. Per-capita-GDP growth in the years following the global financial crisis was at around half the world average. Before the pandemic hit, South Africa was in a recession, and unemployment stood at 29.1%.

Even at that point, for growing numbers of South Africans, a ‘secure monthly income’ was uncertain. With some three million jobs estimated to have been lost in the lockdown period, this can only have escalated exponentially.

Mired in these circumstances

The passing of the pandemic will not address this. South Africa is mired in these circumstances largely because of a string of policy choices. One might point to racial empowerment policy, the politicisation of the civil service and rigid labour laws. And of course, over the past two-and-a-half years, there has been the move on property rights – the commitment to a policy of expropriation without compensation (EWC), the process to amend Section 25 of the Constitution and the Expropriation Bill.

The latter has a direct bearing on those contemplating investing in fixed property; the frame of reference used to drive the issue is the need for land reform. A government empowered to seize at no compensation represents a real threat to property investments, whether these are farms, residential properties or business premises.

Curiously, the real estate industry has been quite sanguine about it, seeing it largely as a matter for the farming sector to deal with. Some voices have airily dismissed concerns on just these grounds. Yet, to the extent that EWC is justified by land reform, residential properties could very well be within its purview. It is important to recognise this.

Acknowledging the danger raises the question as to how it should respond. Business has a responsibility to understand the realities of the society in which it is operating. It also owes it to its clients to be forthright in how it intends to deal with this threat.

There have been some less than encouraging responses from within the financial sector about this. One property financier tweeted: ‘In the event of expropriation, the bond repayments would still remain owing to the mortgage lender. However, we understand that the rights of all parties will be considered in any expropriation processes and have no reason to believe that residential properties will be affected.’

Cas Coovadia, then of the Banking Association of South Africa, similarly commented: ‘Where land is being expropriated, government needs to guarantee repayment to the banks.’ 

Deeply disappointing

All of this is deeply disappointing, not only for the evident complacency of the responses, but for the evasion of responsibility evident in them. 

Business cannot exist in a society divorced from its realities, and from its attendant responsibilities. Inasmuch as it sees opportunities to sell to potential clients – an entirely honourable thing – it must be forthright in speaking on those issues that threaten them. And it needs to realise that it cannot insulate itself from these threats. It needs to find its voice.

EWC is not an issue that will evaporate. Nor can it be dismissed as someone else’s concern, or as a self-evidently destructive idea that will never be put into operation. Businesspeople need to understand that their pragmatism and practicality is not a universal attribute.

As the adage goes, they may not be interested in politics, but politics will find a way of being interested in them.

[Picture: Tierra Mallorca on Unsplash]

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13 COMMENTS

  1. Sorry my buddy. You missed the key point. The ANC government is vindictive and State business is today dominant. Most businesses NEED the income from sales to State Organizations. The Business people of SA DARE not criticize any aspect of the ANC. I dared and My business is actively discriminated against by the local government.

  2. Leviathsn needs to brought to heel, yes.

    Many different approaches are available.
    Ask yourself this question.

    How does a slave free themselves?

    Choose the one that make sense to you and follow it, else choose to remain a slave. There ain’t no one coming to save you from the shackles, they normally arrive with greater shackles hidden in their medicine bag.

    Your choice and only yours, this the beauty and the beast.

    Have a beautiful day

    Bob

  3. Pieter D Rossouw is right, but it goes even further and that is running government are pseudo scientists who do not have the technical skills to run a country in an industrial world. For example the Department of Agriculture wasted R4 Billion trying to implement crop farming in black communities where by 2012 99% had failed. Similarly Housing by 2012 had wasted R50 billion as their pseudo-scientists did not know how engineers quality control production. That wastage is ongoing. Through their power over finance and projects they have silenced not only business leadership, but the CSIR, the NRF the SA Academy of Engineering and other bodies.

    So we now are in the same situation that West German engineers who reported to their government on the state of East Germany’s economy after the fall of the Berlin Wall. Marxists pseudo-scientists had forced business and engineering to submit to pseudo-science, precisely what is happening in SA.

    • I don’t think that they are ‘pseudo-scientists’ at all. They are driven by ideology which in my opinion is far more dangerous.

  4. Don’t hold your breath. It is not in big business’ DNA to resist government. It is too risky for CEO’s to rock the boat. Each CEO just need to look like they are getting the best possible returns for their shareholders until their contract expires in 5 years time. No long term strategy. David Constable’s reign at SASOL is a case in point. Made the books look good temporarily but ruined SASOL in the long run.

  5. I am under the impression that most of the companies in South Africa are headed up by BBBEE appointees. And a bunch of them are also openly ANC comrades or deployees (Ramaphosa, Motsepe included) and totally dependant on the ANC’s favours.

  6. Call it whatever you like Business, Big Business, Corporate Business, International Corporate Business. The issue is that they have willingly allowed the Government to ride roughshod over them and are essentially complicit in the Socialist Communist scourge. The have become lackeys by agreeing to enforce what are clearly racist laws against their white customers. Of course done in the desire to profit.

    There is no problem in making a profit, However when you abandon your moral and ethical principals don’t whinge when the very Communists you have supported nationalise your businesses and take your property without compensation.

    In your quest for profit and abandoning principals of ethics and morality you have destroyed private small and medium business enterprises. You customers the citizens will not forget, no matter how much you virtue signal.

    Oh, I hear you say it will never happen. Well it has, look North, Angola, Mozambique, Zimbabwe, Zambia, DRC…Of course they will allow you to do business again under their terms an provided they have some partnership and equity in your operation.
    Bravo.

  7. For 27 years we have been under an authoritarian dictatorship hiding behind the term “Democracy.” Not an ounce of democracy exists under this regime. Yes, we vote but the people’s voices are hardly ever heard. That is not democracy. It’s not surprising since the ANC regime studied its ideology and doctrine in the USSR and Maoist China from the 1950’s and even before that. It does not understand the concept of democracy at all. The present relationship between the regime, its alliances and China is further proof of this. Mandela was a left wing created icon who had, with Ramaphosa and their comrades, developed a 25 year plan to where we are now. Nearly all his statues shows the black power hand clench which was not a sign for the struggle of all black people, but rather for ANC black people. That hand clench represented power and nothing to do with equality and fairness. The people of South Africa were lied to and duped.
    The United Nations is also a dictatorship allowing only 5 nations to veto while the rest of the world watches in anticipation. Some of those members are also Communist which is an indication that democracy means nothing.
    What we are experiencing now is part of the UN Agenda 2030 which the ANC is happy to follow as it allows itself to plunder our resources even more than it previously did. It is either filling its criminal members pockets or selling our country and businesses to the Chinese and other malicious, dubious states and entities.
    The idea is to make the majority poor and uneducated. That makes us easier to control, manipulate and brainwash. This is how this regime has stayed in power for 27 years.

  8. Bottom line is that government is completely unable (ie not qualified) to understand how a profit-driven business works. Decision making based on business or market needs is an alien concept. Competition is an alien concept as are so many other tenets of operating any business. ad infinitum.
    Needed is government’s acceptance they should not be operating or influencing SOEs. Municipalities should be run for profit and loss account with qualified business people.
    If such people need to be politically appointed, at least ensure they are a) business qualified and b) an oversight committee is not political.
    That is where our focus should be. Once they release existing SOEs to private or part private ownership (hopefully eskom and saa dare I say it) and realise that they operate and pay taxes, the groundswell will grow.
    Don’t hold your breath and it may be only your children, those that bravely stay in SA or come back if things “get better”, that will see this.

  9. Through BEE and cadre deployment most boards have a cadre on the who will “engage” the minister. He/she will assuage the board that this is all politicking and discuss factions etc., keeping the board spell-bound with his/her intimate knowledge of the ANC.

    And the company will then do nothing and wait to see what comes of the “engagement”.

    And then it will be too late…

  10. Business be like – Lets make profit while we can
    ANC be like – Lets make businesses ripe for plucking. We’ll replace white management with black and turn them into co-ops under our control

    • Very sad but true. Reading all these comments you can virtually come to the conclusion that whites are disregarded in the future, unless we all succumb to (BBB/EEE) BEING OWNERS & BUSINESS partners. i.e Total enslavement. Just a pity we can’t all leave in the next 7 days ,at least. That will enable them so sort out their corrupt & most violent country with Covid-19 as an encore!

  11. As a business-person directly impacted by Covid19, this article provoked some reflection.
    I recently endured the clamour of a raucous, all-night party, spewing from the house of the newest “community-members” who had a month previously taken up residence in the once quiet, middle-class cul-de-sac. Their arrogant disregard for the Covid19 lockdown restrictions, social distancing and alcohol restrictions, and the civil rights of their fellow community members to sleep, was enlightening.
    Social-Intelligence= ZERO
    I got to thinking that the iconic Covid-mask, in itself is merely a Band-Aid, an outward manifestation, a thin covering-over of a deeper, darker, deadly virus…comprising ideology, culture, and behaviour.
    This mask can be easily shed, replaced or refashioned to suit the political climate and social circumstances, whereas the underlying virus, with its accompanying values, rituals and symptoms has become embedded, a permanent scar-to-be, an inescapable feature (of our future) of being South African.
    Infection is inescapable. It appears that it will only be a question of time and of quantum; the extent to which we will succumb, and of survival… Will an effective vaccine be found in time? Or will it mutate…into something more or less dangerous? Will herd immunity prevail?
    That party and this article have made an impression…

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