MAIN IMAGE: Dr Muriel Mushariwa – managing director of EconoBEE, and Dr Steven Ngubeni, chairman of the PPRA
Senior writer
With the introduction of the PPA came an acute focus on B-BBEE in the property sector, and two years later, we ask yet again, has the industry really transformed?
Dr Muriel Mushariwa, managing director of EconoBEE, a management consultancy specialising in B-BBEE, skills development and employment equity, thinks this is insufficient. Dr Steven Ngubeni, chairman of the PPRA agrees with her.
Using the Sanlam Transformation Gauge score for the sector as factual evidence, it shows the industry’s achievement of Level 4 recognition in 2023 from the previous two years’ of Level 5, “fewer than *10% of registered estate agents are black,” says Dr Mushariwa (*The most recent data from the PPRA’s 2022/23 Annual Report notes the figure at 27%).
“When one looks at the BEE scorecards of most property companies, elements such as ownership and management control, which is where real empowerment lies, show that transformation is yet to take place.”
One of the major hiccups to this is that BEE reporting by property agencies is not as prolific as it should be. “Not enough effort has been put towards improving the BEE reporting in the property sector,” Dr Mushariwa points out. “Punitive measures should be implemented for companies that are not compliant with the minimum 10% black women ownership and management control. The nature of the market is such that unless we link licensing to transformation goals, it’s unlikely we’ll see any real transformation, as those with money will dictate who does and doesn’t get business.
“While there has been improvement in B-BBEE structures, the access to funding for black entrepreneurs remains a considerable obstacle, and key contracts are regularly given to untransformed companies.”
Noting that women remain the most marginalised group in the sector, especially when it comes to ownership and management, Dr Mushariwa also highlights that “the amendments of the Employment Equity Act will be pivotal in addressing some of these challenges,” she says, “specifically for companies doing business with the public sector.” (While the Employment Equity Amendment Act 2022 has been signed by the President, the amendments are not yet in effect due to delays proclamation).
Dr Ngubeni points out that the public sector adds to the challenges, many of which are historic. One such pattern is buyers and sellers undermining the availability of stock on an equitable basis to previously disengaged groups. These barriers to entry are especially attributed to body corporates in security estates and are largely financial in nature.
“But to be fair, we also have weaknesses in regulatory enforcement, such as being able to identify illegal practitioners who undermine the rule of law. This discourages the registration by many more black practitioners.”
If history is indeed playing a role, it goes some way in explaining why the sector was and remains one of the slowest to transform. Dr Ngubeni attributes this to the industry being largely market-driven. “Buyers and sellers dictate the terms of engagement, including who they prefer as a property practitioner. The absence of hand-holding initiatives to resolve this issue is glaring.”
Does this mean that much of the education and total embrace of transformation lies in the hands of the real estate agencies? Dr Ngubeni acknowledges that most are working towards this. “To some extent, the agencies are showing good intentions, but the plot gets lost in the process. I think, though, that with a combined effort involving all stakeholders, particularly the well-established firms and including the PPRA, we can do much better, much faster.”
One of those ways, suggests Dr Ngubeni, is to advocate for new markets “particularly mixed income developments. This will require development finance institutions to come on board with funding and support to real estate entrepreneurs.”
The future
Dr Ngubeni wants to see a further 70% transformation in the property sector as quickly as possible. “Of that figure, 50% should be black women entering the market. Military veterans and those living with disability should not be excluded. My ideal is for the sector to have at least five black-owned firms competing at the level of the current big five.”
