Pooling our assets to build a better future
BY: BAFANA MALAZA
30 Oct. 13
I am not an economist, nor am i qualified in matters economic. But this should be no barrier when contributing to the economic discourse in my country. I want to throw down the gauntlet and engage with my fellow countrymen who are tasked with finding a way to uplift the socio economic situation of communities and the previously disadvantaged.
Various models and schools of thought abound about how to empower black people. They range from preferential procurement from the state, BEE, affirmative action etc. These discussions are often fraught with emotions as we seek to build a non racial society premised on human rights and equality, while recognizing and acknowledging the injustices of the past. It’s a delicate balancing act.
My point of departure is to acknowledge the good work done so far in building a long term asset base for poor people. I refer to the provision of free housing.
A house is an asset that appreciates in value, some appreciating far higher than others depending on the location . This asset can be used as collateral (surety) to access funding from a financial institution. This form of lending attracts low interest rates than unsecured lending ,which is currently tearing families apart because of exorbitant interest rates.
How can communities, especially poor ones, use this asset to develop themselves, and invest profitably in their future without exposing themselves to adverse risks , thus compromising the roof over their heads.
Recently we have seen the mushrooming of shopping malls around townships. I use shopping malls as a point reference . Township residents and communities do not hold any stake or shares in these businesses. They are relegated to being merely consumers of goods or employees in these enterprises. I do not seek to politicize or downplay the critical role played by these businesses in creating employment and reducing poverty.
What I advocate is that communities can actually build shopping malls for themselves and get returns. Entire communities can actually stimulate their own economic participation by pooling their ASSETS , using them as collateral to source funding. There is strength in numbers.
Imagine a shopping mall that is wholly owned by the community. They can source experts in property management to find and manage tenants, collect rental and realise a return on investment.
This way they become active participants in the economy and not merely spectators in the periphery, scavenging on crumbs and leftovers from a rich man’s table.
Let’s be a bit practical. Say a community of two thousand households pooled their assets to raise funding, assuming their properties are fully paid. They approach the municipality with a view to acquiring land suitable for the development of a shopping complex. Instead of purchasing the land outright , they enter into a 99 year lease. This could free some capital and save on costs.
This could be an investment of a lifetime
The logistics of the actual development ,zonings, conveyancing ,etc will be best left to the experts.
Experience has shown that where communities have a sense of ownership, they eventually protect and guard that asset jealously since their livelihood depended on it. As owners of the asset, communities are now empowered to bargain with potential tenants for the employment of the locals within the shopping complex .
There are quite a number of benefits accruing from this approach:
1)employees will walk to work instead of spending a fortune in transport
2) reduced traffic flow and toxic gas emissions from exhaust fumes.
3)QUALITY time with family as people will be a walking distance to and fro work.
4) reduced crime levels as communities will be vigilant in safeguarding their investment
The same approach can be extrapolated and employed in various business models. Communities would then benefit when dividends are declared, thereby assisting in the repayment of the initial capital.
But ,like I said in my opening, I am no economist. I’m only a patriot who thinks out of the box.
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