Vote out failures, vote in the profits
| Sisa Ngebulana hails the shake-up of SA’s political landscape but says more changes are needed
ONE of South Africa’s most successful black industrialists says the recent election results were the best thing that could have happened to the country.
“South Africans are signalling to the world that you’re not going to see another failed African state where leaders are corrupt and things are going wrong and people vote the same lot in again and again,” says property tycoon Sisa Ngebulana.
“We’re a different society. We’re a society that is far more informed about their choices and when people see something wrong they will vote you out.”
Ngebulana, 50, will own assets including shopping malls and office blocks worth around R17-billion when he concludes a deal between two companies which he started and leads, Rebosis Property Fund and property development company Billion Group.
Five years ago, Rebosis became the first black-owned and black-managed property fund to list in South Africa. After the deal with Billion Group it will have a market capitalisation of close to R8billion. In addition, it has a controlling stake in New Frontier Properties, which owns regionally dominant shopping malls in the UK.
He announced last week that he was positioning Rebosis for a rerating so that it can be included in global indices and attract larger, international investors.
If anybody has an interest in South Africa’s success it is Ngebulana, who, ironically perhaps given his delight at the strong showing of the DA, has been a generous ANC donor.
He says that as a successful black entrepreneur he was under pressure to give.
He believes DA control of the Nelson Mandela Bay metro and Tshwane will be good for business. He owns shopping malls in both regions.
“It’s about having local government that attracts investors,” he says.
“It’s not about DA or ANC. I’m encouraged by active politics because from a business perspective, when the politics are active business thrives and there are employment opportunities for people.”
Apart from the recent elections, he says he is not at all encouraged by the situation in South Africa and the direction it seems to be headed in.
“The current economic climate in the country is not conducive to business,” he says.
The core of the problem, “the elephant in the room”, is South Africa’s “intractable labour laws, more than anything”.
There are other structural macroeconomic issues that need to be sorted out, but labour is the biggest issue, he says. “We all know that.”
The biggest thing South Africa has going for it is the depth of its capital markets thanks to things like pension funds, he believes.
This gives it an inbuilt advantage over other emerging economies. But incompetent leadership and self-destructive policies are “squandering” this advantage.
“We’ve got a lot of other structural things that we are messing up. Government issues, corruption, policy issues around labour.”
One of his biggest gripes is the high interest rate.
“In a world that is looking bleak, to be signalling that interest rates should be going up — from a business perspective, things like that just defeat me. This is the last thing we need.
“When you signal things like that, it defeats the economy, the little that’s left of it. It leads to companies not investing in the economy because there is no growth.
“You can’t be in a country where inflation policy is between 4% and 6% and interest rates are running at 10.5%.”
But by far the biggest issue that needs “urgent attention” is labour.
“There is all this talk in the market [about the need for labour market reform] but I don’t see the government paying any attention to it. We’ve got to get rid of corruption, got to have a more flexible labour market, got to be competitive in world markets.
“We’ve got to have leaders who come out and say: ‘Listen, guys, we’ve got to work hard.’ We’re competing in a world where you can’t have guarantees in life. The fact that employers can’t hire and fire when they want — the reality is that you can’t compete.”
Ngebulana says decisive leadership is crucial.
“Unfortunately, I don’t think you’re going to get that before the next election.”
He wants to see black business playing a stronger leadership role in influencing government policy and repairing the distrust between business and the government, a legacy of the past.
“Because of the lack of trust there has never been a forum where business views are part of decision-making.”
Ngebulana says there has never been a forum in which there was “complete recognition” of the fact that business plays a vital role in decisions affecting South Africa. The country needs to hear what business has to say before any policy decisions are made, he says.
“Invariably, white papers come out, things come out that are totally uninformed because there is just no consultation.”
But it is hard for business leaders to speak out because they depend on the government “for all sorts of things to operate their businesses. So no businessperson wants to be seen to be saying things publicly against the government.”
This makes it important for black business to act in unison and speak with one voice.
This is not happening, he feels, because black business leaders are divided between genuine entrepreneurs who started and run their own businesses, and those who owe their success to lucrative BEE deals that depend on political connections.
Unfortunately, when they come together it is “the BEE dealmakers” who drive the agenda, which is generally pro-government.
The real business people “who really have grown their own businesses from the start” generally recuse themselves from political debate, he says.
“It’s meant to be a business forum, but a lot of them are ex-politicians who have succeeded in business through BEE deals. They actually don’t run businesses, they’ve never run a business in their life. They sit in board meetings where they’ve got this BEE stake. So they come from a very different perspective.”
He himself is said to have made generous donations (including at least one of R1-million) to the ANC and used political connections to secure profitable lease deals with several government departments.
“I’ve never been a political person,” he says. “I’ve never joined a political party. I grew up in a business family where I learnt how to create opportunities and get on with my life.”
After matriculating at St John’s College in Mthatha he studied law at the University of KwaZulu-Natal and did articles with a firm that specialised in commercial transactions and litigation.
He started several businesses (transport, coal) that went bust, then launched his career in real estate, developing residential homes in upmarket areas. “That’s how I built up my business.”
Sixteen years ago, he began picking up properties in the Pretoria central business district for a song as insurance companies and other corporates moved out.
“I spent cash, my own cash, on them,” he says.
And then leased them to the government. Now he is cutting his exposure to government tenants because they have such a bad reputation in the market for late or nonpayment, among other issues.
It annoys Ngebulana to be associated with “BEE dealmakers” as opposed to “real entrepreneurs”.
If real entrepreneurs don’t want to be associated with BEE, should it be scrapped?
“The way it has been done to benefit politically connected people is incorrect,” he says. “If that is the only way it must continue then it should be abandoned.”
We’ve got a lot of structural things that we are messing up. Government issues, corruption The BEE dealmakers . . . actually don’t run businesses, they’ve never run a business in their life
He believes it will always benefit the politically connected.
“I see it with the so-called industrialists,” he says, referring to the Department of Trade and Industry’s plan to create 100 black industrialists.
“You realise these are not people who will make a success of it. They’re people who succeeded through BEE but they’ve never run businesses. How are they going to be industrialists?
“The theory is right, but the implementation, like any other thing that has ever been implemented by government, seems to be going the wrong way.
“You need true entrepreneurs who will grow this country and take it to a different level. People who care about politics to the extent that it is important and good for the country, not about political connections,” says Ngebulana.