The South African Institute of Black Property Practitioners (SAIBPP) hopes today’s 2023 Budget Speech will highlight “meaningful reforms that will facilitate the increased representation of black people in the property sector”.
“The 2023 Budget Speech must indicate an intention to invest in the transformation of our economy and not merely as a cushion for the status quo,” says SAIBPP CEO, Kululwa Muthwa.
In a statement ahead of the Budget Speech at 2pm, the SAIBPP said: “The property sector is the bedrock of economic development and holds colossal opportunities for all South Africans looking to own homes, investment properties and participate in sectors that are interconnected to the property sector.
“We have outlined policy reforms, and investment measures below that we believe are critical for putting the transformation agenda in action, and we hope to see these reflected in Minister of Finance Enoch Godongwana’s speech.”
These are some of the reforms the Institute would like to see:
1. Financial Services sector reforms
The Economic Reconstruction and Recovery Plan places infrastructure-led development at the forefront of bringing South Africa out of its current economic predicament.
In the 2022 Budget Speech, the Minister of Finance announced an infrastructure-led development to be financed through Public-Private Partnerships. However, as SAIBPP has long advocated, the success of Public-Private Partnerships requires the implementation of meaningful reforms to the permitting processes and funding norms.
SAIBPP advocates for reforms to the financial sector to make commercial banks a viable option for black-owned property businesses.
“We, therefore, appeal to National Treasury to table policies that direct market activities and lending practices to enable development funding institutions to participate in property funding.
“These will protect property businesses with policy certainty, making it easier for property enterprises to access funding and available opportunities. In addition, temporary measures should be instituted that include capping or scrapping administrative costs in property financing and partial or full waiving of legal costs in property transactions.”
Furthermore, said the SAIBPP, it expects government willingness to engender transparency in credit granting practices by instituting legislative interventions that require credit grantors to publicly report on lending practices by demographics to ensure that the transformation agenda is adhered to by all relevant stakeholders.
2. The PFMA, MFMA AND PPPFA for increased State Procurement
The state is the largest procurer of goods and services from businesses.
A plethora of black-owned property businesses have scaled their operations to compete with established corporates in the property sector by doing business with the state.
SAIBPP calls on the Minister of Finance to consider amending the Public Finance Management Act (PFMA) and Municipal Finance Management Act (MFMA) to compel national, provincial and state-owned entities to procure 80% of all goods from local producers and a minimum of 50% from black producers of which at least 50% is owned and controlled by women and the youth.
This must be coupled with the integration of black-owned property businesses into the property and built environment supply chain processes, specifically with respect to the disposal and acquisition of property.
These processes must prioritise BBBEE participants and the majority of black-owned companies.
“National Treasury must ensure that the disposal of government property or land prioritises BBBEE participants and majority black-owned companies and adhere to a supply chain process specifically designed for the disposal and acquisition of property.”
3. Cushioning Business Owners from Electricity Tariff Hikes
The energy crisis has also had a dire impact on the property sector, with many black-owned businesses and professionals experiencing the increasing the cost of doing business, allowing those who can afford generators and diesel to compete in the market.
“Whilst we note the debt crises faced by Eskom, the board of Eskom must look into alternative sources of funds instead of relying on consumer funding through continuous hikes in tariffs.”
The most recent tariff hike of 18,65%, approved by NERSA, will lead to an increase in the overhead costs of players in the sector.
“We call for a Budget Speech that looks to alleviate the economic distress faced by many consumers and investors alike, as it relates to the energy crisis through a bailout of Eskom from the fiscus; stringent conditions and measures must be enforced by National Treasury should they disperse money to Eskom to ensure that the bailout facilitates maintenance of Eskom’s power plants and increased electricity to the national grid.”
4. Increased investment in education
The property sector remains exclusionary in its nature due to the skill-set one must acquire to access opportunities. Access to quality education in property studies and other related fields remains limited to those who can afford it.
While industry interventions, such as bursaries, have done a commendable job in providing young people with opportunities to obtain degrees and diplomas in property studies, National Treasury must increase its budget allocation towards the higher education sector.
Furthermore, sectors that still lack racial and gender representation, such as the property and built environment sector, must receive greater budgetary allocations to fund more students.