Advancing in South Africa: Empowered Minds and Prepared Feet

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JEREMY MAGGS: Hello everyone and welcome to FixSA, the podcast hosted on Moneyweb, where we explore innovative ideas and practical strategies to address South Africa’s most pressing challenges.
Today, I am joined by Laurence Rapp, the Chief Executive Officer of Vukile Property Fund. More importantly, Laurence is a well-regarded thought leader with over ten years of experience in the real estate sector. However, his expertise extends far beyond just property.
I’ve had the pleasure of meeting him; our discussions have shown me that he’s energetic and a visionary strategist. His insights into corporate governance, capital markets, and economic advancement are profound. He’s recognized for his talent in handling complex situations and producing effective outcomes, and I’m excited to see what innovative ideas he can share for transforming South Africa’s landscape. So let’s dive in and see how Laurence Rapp can contribute to fixing the nation.
Laurence, it’s a pleasure to welcome you. Let’s jump right in: what do you perceive as the largest obstacles preventing South Africa from reaching its full economic potential? What are your thoughts on this matter?
LAURENCE RAPP: Thank you, Jeremy, for the warm welcome.
In my view, the primary obstacle is bureaucracy; it hampers action and slows down progress.

We need to instill a greater sense of urgency, a stronger commitment to production, and empower the populace to take effective action towards rehabilitating our country.

Political red tape is a significant barrier to our progress.
JEREMY MAGGS: Laurence, I would propose that while urgency is a mindset, bureaucracy is a procedural matter. Which element would you prioritize first?
LAURENCE RAPP: I would emphasize bureaucracy and procedural efficiencies.
Urgency can be seen as a mindset – and I appreciate your framing of it – which relies on the intrinsic motivation of individuals. South Africa possesses immense potential.

Just imagine what the country could achieve with its hands untied. If we dismantle bureaucratic hurdles…

I believe the natural desire for a better life and the need to provide for one’s family will spur that urgency. It exists within all of us; we simply need to remove the obstacles to create an enabling society. Thus, I advocate for reducing bureaucracy. The desire for improvement and progress is inherent in all individuals; it will naturally emerge.
JEREMY MAGGS: Let’s explore this a bit deeper, Laurence. If hypothetically, for one week, I made you the acting minister of bureaucracy in South Africa and granted you complete authority, where would you begin?
LAURENCE RAPP: That’s quite a challenging proposition! There are certainly some labor-related elements to consider. Making the process of starting businesses and opening bank accounts more straightforward is essential.
Of course, I’m not suggesting we lower standards in terms of legal obligations and regulations, but we must discover ways to expedite processes. Consider all the immigration and visa complications; if we could streamline these, it would lead to greater travel opportunities in the nation. You have posed a focused question, and I think it’s a valuable one, but I would need more time to contemplate specific measures.

Ultimately, we desire to create an environment where entrepreneurs can swiftly establish their ventures and flourish.

That is key to unlocking the country’s potential.
JEREMY MAGGS: Given that we currently have a coalition government aimed at enhancing processes, do you sense a positive shift in that direction?
LAURENCE RAPP: I can confidently say the following:
It feels as though today’s atmosphere is markedly different from what it was in January.
As you noted, I am quite active in capital markets, engaging with institutional investors both locally and internationally. I often wish politicians could attend my meetings to witness the contrasting sentiments firsthand.

The positivity among capital allocators is remarkable, especially as the issue of load shedding has dissipated.

Now there’s an expectation for growth, prompting increased allocations to industries like property, traditionally seen as long-term investments. Before the elections, there was so much uncertainty that many held back their funds.
The surge in foreign interest in our sector and company is remarkable, driven by renewed hope and a sense of stability.
My sincere hope is that politicians move beyond their party agendas and grasp the broader implications of what they’ve achieved, which has been remarkable.
This transformation in the business environment has been significant since the elections, though macroeconomic factors, like interest rate reductions, contribute greatly.
Additionally, the conversations are now less about managing the effects of load shedding and more about the opportunities in a post-load shedding reality.

The contrast is astonishing, and it’s rewarding; I commend the politicians for reaching this pivotal juncture. My prayer is they maintain this progress, as we finally appear to be heading in a promising direction after many years.

JEREMY MAGGS: You would acknowledge that investors favor stability and certainty. It’s great to see positive sentiments, yet there will inevitably be a delay between sentiment and action. This circles back to your earlier point about urgency. More tasks lie ahead to ensure we fully leverage the advantages of this evolving environment.
LAURENCE RAPP: Absolutely. Sentiment is only the beginning of the journey. Eventually, we must witness tangible delivery. The momentum created by positive sentiment is crucial, yet it needs to be transformed into action. We must ensure there is policy clarity to avoid self-inflicted setbacks.
Recently, I learned about proposed legislation to impose taxes on trades within collective investment schemes, which could negatively impact capital inflow and liquidity on the JSE.
Such matters must be carefully debated at the appropriate levels, assessing the long-term consequences of such actions on capital markets, local savings, and foreign investment.

In essence, the transition from enthusiastic ideas to effective implementation must be made.

Some progress is evident – as seen with load shedding being resolved, but I believe access to water will be our next significant challenge.
JEREMY MAGGS: The phrase “on-the-ground delivery” is interesting as it leads me to my next inquiry. We’ve addressed philosophy, sentiment, and barriers, but I would assume infrastructure is integral to your business. If you were to envision new methods for resolving infrastructure issues to encourage investment and growth, where would you focus first? For example, we have yet to address logistical challenges, despite Transnet’s national recovery plan.
LAURENCE RAPP: Certainly. Infrastructure is a vital growth catalyst. Energy has been a critical focus, but effective ground-level implementation is key.

Our business operates both in South Africa and Spain. The effort and time our South African teams expend on troubleshooting issues…

…detract from initiatives designed to boost growth and enhance customer service, which is a significant resource drain.
A primary example is in energy. Over the past decade, we’ve been installing solar systems in our shopping centers, generating nearly one-third of our portfolio’s power through our photovoltaic systems.
Nearly all our malls have reliable backup water supplies. However, the costs and effort required to implement these measures – not only in terms of capital but also in management resources – illustrate the deficiencies in local government services.

That energy should instead be directed towards productive, growth-driven activities rather than remedial measures.

Water infrastructure poses a considerable challenge. It may rival, if not exceed, electrical issues. At least we can depend on solar energy, but urgent attention must be directed at water supply.
In certain areas housing our shopping centers, we’ve relied on borehole water for weeks when municipal supplies were interrupted, often entangled in billing disputes and bureaucratic red tape.

A notable trend is the disconnect between the national government’s optimistic statements and the more narrowly focused interests at the local governmental level.

Improving the collaboration between national and local governments is essential for effective on-the-ground delivery. Rates and taxes are increasingly burdensome, yet service delivery continuously declines. As responsible ratepayers, we all deserve more.
JEREMY MAGGS: Laurence, you are not the first chief executive I’ve heard express that their teams have become adept at troubleshooting. What specific leadership qualities should we cultivate within our public and private sectors to ensure meaningful change? Is there a need for a shift in our leadership philosophy?
LAURENCE RAPP: Absolutely. I firmly believe that our approach to leadership in South Africa is often too functionally oriented. This tendency permeates the public sector as well.
Individuals in each profession – accountants, lawyers, and so on – are confined by their designated roles. We often fail to appreciate people’s innate talents and how best to apply them across diverse environments.
For instance, if you consider investment bankers in South Africa, most are trained as accountants or lawyers. However, if you speak to London-based investment banks, you’ll find individuals with histories, political science, philosophy, economics backgrounds, etc. They prioritize hiring talent for critical thinking and then provide the necessary training.

This functional mindset has always surprised me in the South African context.

So to bring it back to your question: exceptional leaders are those who can identify crises and can think strategically from first principles to devise solutions.

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Great leaders stand out particularly in uncertain business and global environments. They distinguish themselves through their ability to navigate unpredictability, which is inherently dependent on confidence in one’s capabilities, accumulated wisdom, and overall education rather than just specific functional expertise.
Hence, we should encourage the development of leadership thinking and education that generates well-rounded individuals capable of critical analysis and equipped with global awareness—even in universities.
JEREMY MAGGS: Laurence, am I reaching too far when I gather that you believe we should encourage leadership that embraces philosophy, poetry, history, and economics alongside conventional skill sets?
LAURENCE RAPP: Absolutely! We need envisioners who can analyze situations comprehensively.
Very few challenges I’ve encountered in my career are straightforward. They often involve multiple dimensions. How do we evaluate these problems thoroughly? And how do we resolve them effectively?
I’m not promoting specific industries or skills; I’m suggesting that we foster broader perspectives in our leadership ranks.

This trend seems to manifest naturally among top leaders who rise to prominence, but how can we cultivate this mindset more broadly?

Such insight leads to more informed perspectives that help manage substantial challenges while devising innovative approaches for resolution.
JEREMY MAGGS: I want to probe deeper into this fascinating concept. Many years back at a previous broadcasting organization, I encountered Peter Matlare, who later became the chief executive officer of Tiger Brands and sadly passed away during Covid. One day, he entered my office and said, ‘Mr. Maggs, I pay you to stare out the window.’ It took years for me to grasp his message about the importance of philosophical engagement and reflection, which I believe you’re also advocating.
So, Laurence, what is your thought process around leadership? How do you confront challenges?
LAURENCE RAPP: That’s a valuable insight you received from Peter. Reflecting on my journey towards becoming a CEO, I initially operated with a “doing” mindset rather than a “being” mindset.
Early in my leadership, my focus was solely on tangible results and outputs.
In the CEO role, balancing time spent on thinking versus doing is essential.
I dedicate ample time to reading each day—about an hour and a half to two hours. I read a variety of local and global publications, as well as industry-related materials.
I keep a television running in my office—background noise aids my productivity, especially when I’m tuned into the news.

I believe one of my strengths is connecting disparate pieces of information. The more data points and inputs I gather, the better I can identify trends.

This ultimately shapes my vision for the future of our business.
Additionally, leaders across sectors must maintain a forward-thinking outlook.
You may find it interesting that Vukile is celebrating its 20th anniversary, prompting me to consider our direction for the next two decades.
While I need to manage immediate goals, like the results announcement next week, I also plan for the longer horizons.
Being proactive about the future is a critical part of my role, and I strive to gather as much information as I can.

Allowing space for reflection in my day is crucial. I extensively travel to our overseas operations, and I find that time incredibly useful.

My family and team often worry when I return from vacation each January because I immediately purchase a new planner to jot down fresh ideas inspired by my reflective downtime during the holidays—concepts we discuss include AI and its implications for our business.
Keeping informed about international affairs, tech developments, and industry trends is paramount.
Then, I focus on connecting the dots; this talent varies among individuals.

This ability to synthesize information often distinguishes one leader from another. Although it’s challenging to teach, it’s vital to afford oneself time for thoughtful consideration.

It took a while for me to realize that I don’t need to be physically present at the office by 07:30. Instead, I utilize my mornings for productive work while still enjoying breakfast, reviewing various publications—this time is invaluable.
I tend to start my day this way and will usually conclude with a review of the evening news, ideally capturing emerging ideas and trends to inform pertinent decisions.
JEREMY MAGGS: That’s a significant point; to paraphrase the late Pravin Gordhan, it’s also about connecting the dots. Laurence, addressing any issue requires courage because mistakes will inevitably occur. How do you recover from errors made along the way?
LAURENCE RAPP: I will refer to two contrasting influences on my thinking: the renowned strategist Michael Porter from Harvard Business School and the beloved Dr. Seuss.

My favorite work is Oh, the Places You’ll Go.

While that may sound whimsical, I assure you I’ll connect these two thoughts.
JEREMY MAGGS: Please do!
LAURENCE RAPP: In my time at Monitor Company, which was Michael Porter’s strategy consulting firm, we defined strategy simply as making choices. It is essential to recognize early on that the decisions you make now may differ from those you contend with in the future since factors in the environment can shift.
For many, the common misstep in crafting strategy is seizing hold of a decision without adapting it to changing circumstances.