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JEREMY MAGGS: Hi everyone, and welcome to FixSA, the podcast brought to you by Moneyweb, where we delve into innovative ideas and practical strategies to tackle South Africa’s most urgent challenges.
Today, I’m pleased to have Laurence Rapp, the Chief Executive Officer of Vukile Property Fund, joining me. Laurence is also recognized as a prominent thought leader with over a decade of experience in the real estate industry. However, his expertise goes well beyond just the property market.
Having met him, I can attest to his energetic approach and visionary strategic thinking. His profound insights into corporate governance, capital markets, and economic growth stand out. He is well known for his ability to navigate complex situations and deliver effective results. I’m looking forward to hearing the innovative ideas he has for transforming South Africa’s future. So, let’s get started and see how Laurence Rapp can help us address the nation’s challenges.
Laurence, it’s great to have you here. Let’s dive right in: what do you see as the biggest hurdles preventing South Africa from achieving its full economic potential? What’s your take on this?
LAURENCE RAPP: Thank you, Jeremy, for the warm introduction.
I believe the primary challenge lies in bureaucracy; it obstructs action and hinders progress.
We need to cultivate a stronger sense of urgency, a deeper commitment to productivity, and empower our citizens to take meaningful steps towards revitalizing our nation.
Political red tape is a major obstacle to our advancement.
JEREMY MAGGS: Laurence, I would suggest that while urgency is a mindset, bureaucracy is a procedural issue. Which would you prioritize as a starting point?
LAURENCE RAPP: I would prioritize bureaucracy and procedural efficiencies.
Urgency can indeed be seen as a mindset – and I appreciate your perspective on that – which relies on individuals’ intrinsic motivation. South Africa has immense potential.
Imagine the possibilities if we could remove bureaucratic barriers…
I believe that the inherent desire for a better lifestyle and the need to support one’s family will fuel that urgency. It exists within each of us; we just need to eliminate obstacles to foster an enabling environment. Therefore, I advocate for reducing bureaucracy. The motivation for progress is innate; it will naturally emerge.
JEREMY MAGGS: Let’s delve deeper into this, Laurence. If I hypothetically appointed you as the acting minister of bureaucracy in South Africa for one week with full authority, where would you start?
LAURENCE RAPP: That’s quite a thought-provoking challenge! There are certainly various labor-related factors to consider. Simplifying the processes of starting businesses and opening bank accounts is essential.
Of course, I’m not suggesting we compromise on legal obligations and regulations, but we need to find efficient ways to expedite these processes. Think about the immigration and visa complications; streamlining these would enhance travel opportunities within the country. You’ve raised an important question, and while I need more time to ponder specific actions, my ultimate goal is to create a landscape where entrepreneurs can swiftly launch their businesses and thrive.
That is vital for unlocking the country’s potential.
JEREMY MAGGS: Given that we currently have a coalition government focused on enhancing processes, do you feel there is a constructive shift in that direction?
LAURENCE RAPP: I can confidently assert the following:
The current environment feels strikingly different from what it was in January.
As you mentioned, I am actively involved in capital markets, liaising with institutional investors both locally and internationally. I often wish politicians would join my meetings to grasp the contrasting sentiments firsthand.
The optimism among capital allocators is notable, particularly as the issue of load shedding has eased.
There’s now an expectation for growth, prompting investments in sectors like property, which has traditionally been viewed as a long-term investment. Prior to the elections, the uncertainty led many to hold back their investments.
The influx of foreign interest in our sector and company is remarkable, fuelled by renewed hope and a sense of stability.
I sincerely hope that politicians can set aside party interests and recognize the broader implications of their achievements, which have indeed been impressive.
This shift in the business landscape has been significant since the elections, though factors such as interest rate reductions play a large role.
Moreover, discussions have shifted from managing load shedding’s effects to exploring opportunities in a post-load shedding scenario.
The transformation is remarkable, and it is rewarding; I commend the politicians for reaching this critical juncture. My hope is they continue this progress, as we finally appear to be moving in a promising direction after many years.
JEREMY MAGGS: You would agree that investors prefer stability and certainty. It’s encouraging to see positive sentiments, but there will inevitably be a gap between sentiment and action. This returns us to your earlier point about urgency. Many tasks remain to ensure we fully capitalize on this evolving environment.
LAURENCE RAPP: Definitely. Sentiment is merely the beginning of the journey. Ultimately, we need to translate that momentum into tangible outcomes. The positive sentiment momentum is crucial, but actionable policies need to clear up any potential setbacks.
I recently came across proposed legislation to impose taxes on trades within collective investment schemes, which could adversely affect capital inflows and liquidity on the JSE.
These matters must be thoughtfully debated within the appropriate forums, evaluating the long-term implications of such actions for capital markets, local savings, and foreign investment.
In essence, we must transition from exciting ideas to effective implementation.
While we’ve seen some progress—such as the resolution of load shedding—we can anticipate that access to clean water will become our next significant challenge.
JEREMY MAGGS: The phrase “on-the-ground delivery” is interesting as it brings me to my next question. We’ve discussed philosophy, sentiment, and barriers, but I assume infrastructure is core to your business. If you were to envision new approaches to addressing infrastructure issues to stimulate investment and growth, where would you start? For instance, logistical challenges remain unaddressed, despite Transnet’s national recovery plan.
LAURENCE RAPP: Indeed. Infrastructure is a critical driver of growth. Energy has been a primary focus, but effective on-the-ground implementation is essential.
Our company operates in both South Africa and Spain. The time our South African teams spend troubleshooting…
…detracts from initiatives aimed at driving growth and enhancing customer service, representing a major resource drain.
For instance, in energy, we have spent the last ten years installing solar systems in our shopping centers, generating approximately one-third of our portfolio’s power through photovoltaic systems.
Nearly all our malls have reliable backup water supplies. However, the costs and effort required to implement these measures—not just capital but also management resources—highlight the shortcomings in local government services.
That energy should instead be directed towards productive, growth-oriented activities rather than remedial actions.
Water infrastructure represents a significant challenge that may rival, if not surpass, electricity issues. While we have the advantage of solar energy, urgent attention must be given to the water supply.
In some areas where we have shopping centers, we’ve relied on borehole water for weeks when municipal supply was disrupted, often caught up in billing disputes and bureaucracy.
A troubling trend is the gap between the national government’s optimistic statements and the more localized interests at the municipal level.
Enhancing collaboration between national and local governments is vital for effective on-the-ground delivery. The burden of rates and taxes is rising, yet service delivery continues to decline. As responsible taxpayers, we all deserve more.
JEREMY MAGGS: Laurence, you’re not the first CEO I’ve heard express that their teams have become skilled at troubleshooting. What specific leadership qualities should we foster in both public and private sectors to drive meaningful change? Is there a need for a shift in our leadership philosophy?
LAURENCE RAPP: Absolutely. I believe our approach to leadership in South Africa tends to be overly functionally oriented, which is prevalent in the public sector as well.
Professionals in fields like accounting and law are often confined by their specific roles. We frequently overlook individuals’ inherent talents and how we can best utilize them across different disciplines.
For example, in South Africa, most investment bankers are trained as accountants or lawyers. In contrast, investment banks in London hire individuals from diverse backgrounds—history, political science, philosophy, economics, etc.—prioritizing talent for critical thinking before providing necessary training.
This functional approach has always been surprising in the South African context.
To address your question: exceptional leaders are those who can recognize crises and think strategically from first principles to develop solutions.
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Outstanding leaders particularly shine in uncertain business and global environments. They set themselves apart by their capacity to navigate unpredictability, which relies on confidence, accumulated wisdom, and overall education as opposed to merely specific functional skills.
Thus, we need to encourage leadership development and education that nurtures well-rounded individuals with critical analytical capabilities and global awareness—even at the university level.
JEREMY MAGGS: Laurence, am I pushing it too far when I suggest that we should advocate for leadership that embraces philosophy, poetry, history, and economics alongside conventional skill sets?
LAURENCE RAPP: Absolutely! We need visionary leaders capable of comprehensive situation analysis.
Few challenges I’ve faced in my career are simple or one-dimensional. How do we evaluate these complexities thoroughly? And how do we resolve them effectively?
I’m not advocating for specific industries or skills; I’m insisting that we nurture broader perspectives in our leadership ranks.
This trend seems to appear organically among leading individuals who rise to prominence, but how can we more broadly cultivate this mindset?
This insight enables more informed approaches to significant challenges while fostering innovative solutions.
JEREMY MAGGS: I want to dig deeper into this captivating concept. Many years ago, while at a previous broadcasting organization, I met Peter Matlare, who later became the chief executive officer of Tiger Brands and sadly passed away during Covid. One day, he came to 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 value of philosophical engagement and reflection, which I believe aligns with your views.
So, Laurence, what is your perspective on leadership? How do you tackle challenges?
LAURENCE RAPP: That’s a profound insight you received from Peter. As I reflect on my journey toward becoming a CEO, I initially adopted a “doing” mentality rather than a “being” mindset.
In the early stages of my leadership, my focus was solely on tangible results and outputs.
As CEO, striking a balance between time spent on thinking versus doing is vital.
I allocate significant time daily to reading—about an hour and a half to two hours. I read a range of local and international publications as well as industry-specific materials.
I also keep a television running in my office—background noise helps my productivity, especially when I’m tuned into the news.
One of my strengths is the ability to connect disparate pieces of information. The more data points I gather, the better I can identify trends.
This ultimately shapes my vision for the future of our business.
Furthermore, leaders in all sectors must maintain a forward-looking perspective.
You may find it interesting that Vukile is celebrating its 20th anniversary, prompting me to ponder our direction for the next twenty years.
While I must manage immediate priorities, such as the upcoming results announcement next week, I also consider longer-term goals.
Being proactive about the future is a key aspect of my role, and I strive to gather as much information as possible.
Allowing time for reflection throughout my day is essential. I frequently travel to our overseas operations, finding that time incredibly beneficial.
My family and team often worry upon my return from vacation each January because I instantly grab a new planner to jot down new ideas inspired by my reflective time during the holidays—discussions often exploring concepts like AI and its anticipated effects on our business.
Staying informed about global affairs, technological advancements, and industry trends is crucial.
From there, I focus on connecting the dots; this ability varies among individuals.
This skill to synthesize information often distinguishes one leader from another. While it’s tough to teach, it’s vital to carve out time for thoughtful consideration.
It took me time to realize I don’t need to be physically present in the office by 7:30 AM. Instead, I use my mornings for productive work while enjoying breakfast and reviewing various publications—this time is invaluable.
I usually begin my day this way and conclude with an evening news review, ideally capturing emerging ideas and trends that could inform key decisions.
JEREMY MAGGS: That’s an important point; to paraphrase the late Pravin Gordhan, it’s also about connecting the dots. Laurence, addressing challenges takes courage since mistakes will undoubtedly happen. How do you navigate errors made along the way?
LAURENCE RAPP: I will draw on two contrasting influences in my thinking: the esteemed strategist Michael Porter from Harvard Business School and the beloved Dr. Seuss.
One of my favorite works is Oh, the Places You’ll Go.
While that may sound whimsical, I assure you I’ll connect these two ideas.
JEREMY MAGGS: Please do!
LAURENCE RAPP: During my tenure at Monitor Company, which was Michael Porter’s strategy consulting firm, we defined strategy simply as making choices. It is crucial to recognize early on that the decisions made today may change in the future, as factors in the environment can evolve.
A common mistake for many when developing strategy is to cling to a decision without adjusting it to the changing circumstances.
Thus, the first important aspect is to maintain a flexible mindset; we must respond to changes in our environment and avoid becoming entrenched in rigid paradigms.
Additionally, having the courage to question whether we’re making the right choices is tied to an invaluable lesson shared with me by an executive coach years ago.
If we pause to evaluate the key decisions we’ve made over the past decade based on their outcomes, we often find that most have yielded positive results.
This realization nurtures confidence in one’s capability to make sound judgments grounded in fundamental principles.
Dr. Seuss articulates this message beautifully in Oh, the Places You’ll Go, stating, ‘You have brains in your head, you have feet in your shoes; you can steer yourself any direction you choose.’
In essence, it’s about trusting your instincts and acknowledging that once you build self-confidence in assessing situations and making decisions, you can determine whether or not you’re achieving your desired outcomes. If not, consider why that may be. Then, adjust your approach.
Dr. Chris Argyris of Harvard introduced a fascinating concept called “triple loop learning.” Essentially, it implies that every action we take exists within a context. Each context shapes the issue, resulting in actions that lead to various outcomes.
If the outcomes don’t align with expectations, we need to decide whether the context was incorrect, the framing was flawed, or if actions were misaligned. This allows us to identify failure points and adjust when necessary.
So, we should cultivate a reflective mindset, acknowledging when we’ve made mistakes or that previous assumptions need to adapt to current realities. We cannot rigidly adhere to preconceived notions.
Consistently challenge yourself and foster an environment where team members feel empowered to do the same.
Often, people hesitate to question their superiors’ views. Within our organization, team members are encouraged to challenge decisions and provide alternative opinions freely.
When discussing potential deals, I will designate a colleague as the “skeptic” to engage in constructive debate, ensuring we assess the proposal comprehensively. The selected individual can voice concerns openly; this approach encourages empowerment rather than opposition.
JEREMY MAGGS: This conversation has truly underscored the importance of connecting ideas meaningfully. I wish to conclude by expressing my gratitude. Laurence Rapp, thank you for joining us on FixSA at Moneyweb. Your insights and time are greatly valued.
LAURENCE RAPP: Thank you, Jeremy. This discussion has been enlightening and engaging.
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