SAIBPP says COVID-19 and downgrades have exposed policymakers’ failure to implement structural reforms

By Thabang Mokopanele

The South African Institute of Black Property Practitioners (SAIBPP) says the recent downgrades and COVID-19 lockdown have laid bare the impact of the failure of policymakers to transform the South African economy and the lackadaisical approach to implementing key structural reforms that could reduce income inequality, provide adequate housing and social infrastructure, and undo apartheid spatial planning.  Moody’s cut its assessment of South Africa’s debt to sub-investment grade on Friday (27 March), saying unreliable electricity supply, persistent weak business confidence and investment, and long-standing structural labor market rigidities continue to constrain economic growth.

According to Moody’s the downgrade comes as South Africa is beaten down by unreliable electricity supply, with persistently weak business environment and low levels of investment.

The country also has a long-standing labour issue, and low levels of flexibility on policy. Effectively, South Africa has a lot of problems, and government isn’t (and can’t) move quickly enough to solve them. While the coronavirus pandemic is mentioned in the report, the crux of the rating downgrade lies in the country’s other fundamentals.

“The recent events will compound when the country is affected later in the year by economic recession with current growth projected to shrink by a further 4-6% inevitably widening the chasm between the haves and the have-nots. South Africans in general, however, more specifically, the majority of black Africans, will be worst affected and the already-vulnerable black and township businesses will inadvertently bear the brunt of these events and the history of policy failures. This will compound the struggles already faced by black businesses, such as poor access to funding, lack of market access and discriminatory lending practices, etc.,” SAIBPP President,  Tholo Makhaola says.

“The recent announcement of the Moody’s downgrade comes at a time when the economy is already under extreme pressure due to the COVID-19 lockdown. Many key industries have been ground to a halt with devastating consequences for mostly poor, marginalised communities and informal traders. Many emerging landlords, small business owners, contractors and commission-based earners who operate in the property sector are facing an uncertain and bleak future.”

“We cannot underestimate the challenge facing the world and our country right now and as such, the South African Institute of Black Property Practitioners (SAIBPP) commends the South African government for the urgent and pro-active steps taken towards arresting this invisible enemy that has already claimed the lives of thousands worldwide,” Makhaola says.

Makhaola says: “It will not be business-as-usual, this is definitely a wake-up call for certain segments of the industry like the office market, which are bound to be negatively impacted with the increased shift to remote work and various technology platforms.”

He argues that black practitioners which include developers, agents and brokers, managing agents, property managers and facilities managers, property valuers, bond originators and those related to the industry such as contractors and professionals from the built environment who still suffer from minority participation in the industry will be hardest-hit.

Black property owners within the commercial sector will be watched with keen interest. However, Makhaola’s message to black practitioners is that “this is not the time to wallow in self-pity, there is still lots of room for those who are willing to explore new opportunities.”

“To avoid a repeat of economic policy missteps of the past, which have only served to widen inequality and stifle meaningful transformation, we must accept that long-term sustainable growth cannot be achieved without a deliberate drive to transform the economic structure of the country. Structural transformation targeted at designing an economic future that includes all South Africans and in equal measure benefits black people and black business at all levels of the value chain.”

To that end, SAIBPP calls for the following urgent interventions to be implemented to catalyse economic development and assist with the post-lockdown recovery of the property sector. These includes SAIBPP 11-Point Plan which calls for Treasury to authorise a post-lockdown stimulus package that begins to aggressively redirect at least 10% of government spending towards housing and infrastructure development, a further 5% towards information systems, knowledge sectors and the growing pool of professionals.

SAIBPP is also calling for partnerships in the industry, resources should be pooled to support the struggling retail sector and commercial landlords must provide rent relief to those tenants who were prohibited from trading during the lockdown period as well as to small, medium and micro-enterprises (SMME) tenants.

Source: SA Property Insider

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