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Sweat equity

23 June 2004 Angelo Coppola

Wayne van der Vent, a director at FutureGrowth Asset Management talks about property, townships, social investment and returns.

Property and township development in the Western Cape comes to the mainstream, along the lines of a normal suburban integrated development plan as FutureGrowth Asset Management explains and details the status and future plans for Khayelitsha.

“This is a long term involvement that means getting involved in the community, and being transparent. A fair amount of sweat equity has been invested, and asset managers need to put in the time and effort,” says Van der Vent.

He was quick to point out that the financial services charter has started to help township developments to a limited degree. “In some instances there has been a marked improvement - from one ATM to a couple of hundred metres of actual retail space.

“In fact the banks have woken up to the fact that there is an entire market to be serviced. The banks have bought into the development and four banks are taking space in the area. Absa seems to be stealing the march here taking the lead here and there may be some market share increases.”

The retail sector has also bought into the project, with Shoprite Checkers and Spar anchoring the retail development in the area.

The township development plan is here to stay. People want to see the area developed and because its home to 700 000 people, these townships can be turned into suburbs – done against returns that match any other suburban development.

“At the end of the day the returns match investor requirements, in spite of the social development angle,” says Van der Vent.

He called on pension funds whose members are working class people to invest and change the lives of working class people. In the past those pension funds were used to change the lives of middle class people.

“Pension funds should be utilized to improve quality of life during the life time of people.”

Investors should also start looking at these types of investments and judge them purely on their returns. “They won’t be pissing money against the wall – returns in social development programmes match investment expectations.”

Quick Polls

QUESTION

Is the commission procurement rule introduced via clause 5.14 of the Amended Financial Services Sector Code (AFSSC) an important piece of the transformation puzzle?

ANSWER

The clause’s implementation coincides with an increase in the minimum spend targets, which further complicates matters
Many FSPs still view the AFSSC as a matter of choice and consequence rather than compliance
Transformation represents a great opportunity for growth and penetration by brokers
Brokers are unlikely to find their commission business yanked away from them by insurers looking to influence procurement scorecards
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