funding addressed will include dealing with tenants with respect to invoicing, dealing with rental and municipal charges, and collecting payment from tenants. Trainees start their business when they move into the second year of training. Depending on what suits their individual needs, they will go either to a Black Umbrellas incubator or to a Transnet Enterprise Development hub (if they don’t need the incubation side). Once placed, they will receive the support they need from EDPF in the form of a place from which to work, internet access, telephone facilities and so on – similar to a shared office space. EDPF has access to eight Black Umbrellas incubators around the country, and Black Umbrellas has agreed to give EDPF five seats per site. There are no seats available in the Transnet Enterprise Development hubs, but the entrepreneurs can go there for advice, guidance, mentorship and support with regard to CIPC, SARS, etc. In Johannesburg, there are several bodies of support, such as the Gauteng Enterprise Propeller and the Small Enterprise Development Agency. From the end of 2017, EDPF will have a base within the Transnet Enterprise Development hubs, where the staff on duty will be trained to provide support to the trainees. Two mentors will be allocated, one each to cover financial services and property management, to guide trainees through the process of getting their business registered, and to provide them with training and mentorship for all SARS issues in relation to VAT, personal tax, company tax, and how to monitor and engage with the taxman. In their second year, trainees will have opportunities for property ownership. As an example, the Minister of Public Works recently announced that, through the Property Incubator Programme (PIP), he wants to set aside 25% of the current spend on rentals towards small black entrepreneurs. That constitutes a billion rand a year in rentals that national government alone will spend on small black entrepreneurs who come into the PIP. EDPF will leverage off the PIP in terms of opportunities. Additionally, Transnet, as one of the biggest land and property owners in the country, could offer enormous opportunities to do some deals through PPPs – or property could potentially just be bought from Transnet or other
parastatals on tender, to enable the trainees to develop it. There are also many private acquisition opportunities with big corporates with whom EDPF could structure deals, such as those corporates wanting to get rid of a particular property because it no longer suits their portfolio, preferring to go into retail, or wanting to get rid of residential or commercial property or even a piece of land they own that is no longer wanted. This gives the trainee entrepreneurs an opportunity to engage with corporates.
Our presentations brought in about 150 applicants countrywide, and by midDecember we will have chosen 45 finalists,” says Adriaanse. “Our goal is to pinpoint applicants with an entrepreneurial spirit, and our assessment method consists of three stages. The preliminary stage is the basic application form completed by all applicants, and sums up what they hope to do, where they come from, any history they have as an entrepreneur, and whether they have any entrepreneurial skill whatsoever Much has taken place recently in the world of vendor financing with big corporates, such as the example in which a big company offloaded its shares to a Black Woman Fund, which they vendor-financed. EDPF will leverage on this type of deal to ensure its entrepreneurs get funding. It is helpful that some of the banks have come forward, saying they can put up 70% of the funding required, while a couple of private equity houses have said they will come up with the remaining 30%. This scenario is similar to the TUHF model, except EDPF will not be lending the money. TUHF is the financier, whereas in the immediate term EDPF will only provide a capitalsupport function. Creating its own fund is a future aim of EDPF – it hopes on the one
hand to be in a position to support black entrepreneurs at a hugely reduced interest rate, and on the other that, by taking a small stake, it can eventually become selfsustainable. Over a 10-year period, EDPF aims to create 1 200 operational property businesses, with a fund of about R100billion supporting those entrepreneurs. With the property sector value being more than R5,8-trillion, R100-billion is just a drop in the ocean – but it is a start. Furthermore, EDPF does not wish to be the only organisation doing this, which is why it will partner with TUHF and others for support. The initial engagement has been handled by UCT, where Professor François Viruly’s programme is run jointly with TUHF. All the organisations aim to support one another’s entrepreneurs through their different programmes, having already begun to engage and collaborate towards this goal and work supportively with one another on behalf of black entrepreneurs rather than being in competition. “Our presentations brought in about 150 applicants countrywide, and by midDecember we will have chosen 45 finalists,” says Adriaanse. “Our goal is to pinpoint applicants with an entrepreneurial spirit, and our assessment method consists of three stages. The preliminary stage is the basic application form completed by all applicants, and sums up what they hope to do, where they come from, any history they have as an entrepreneur, and whether they have any entrepreneurial skill whatsoever. At this first phase, all sorts of people from all walks of life are applying, so we are identifying who in that pool of applicants actually has an innate entrepreneurial skill, and the ability to benefit from our teaching. The applicant at this point has not necessarily identified property, but could be someone interested in becoming a property entrepreneur. “Thanks to our partnership with LEAPco, the second phase takes place online using LEAPco’s biometric identity scan software programme. This entrepreneurship scan gives a 360-degree view of the applicant that sums up who the entrepreneur is, what the entrepreneur’s skills consist of, and whether the applicant actually has what it takes to become a property entrepreneur. This second, very intense phase generates a report that provides greater detail about the entrepreneur, where he or she comes from, his or her strengths and weaknesses, whether he or SOUTH AFRICAN PROPERTY REVIEW
37