The Mdyesha family in the Eastern Cape has joined the emerging class of black commercial property owners via the establishment of a 3000 square metres shopping centre in Willowvale.
Organised as Mdyesha General Trading, the family business has undertaken a difficult mission of pooling considerable amounts of capital into a remote area, largely neglected by conventional financiers. The Willowvale Shopping Centre which is due for official launch today is located 30km’s from Idutywa and 80km’s from Butterworth in the Eastern Cape.
The project has attracted national retailers which is one way of proving its viability. The shopping centre is anchored by Pick ’n Pay’s Boxer Superstores and also features Jumbo, Chippies, Boxer Super Liquors and a clothing shop.
The project kills two birds with single stone. It delivers a critical socioeconomic service to the community while advancing the emergence of black landlords in the commercial property space.
The project feeds into a few stories of black entrepreneurs who are venturing into the commercial property market.
One of the phenomenal stories in this theme comes from the Billion Group, a property development company led by Eastern Cape born entrepreneur Sisa Ngebulana. Billion Group recently launched construction of a mega centre in Mthatha, in the Eastern Cape. The BT Ngebs Mall will see R1.3bn flow into a largely poor and neglected area of Mthatha. The other story is that of Mike Nkuna who through a vehicle called Masingita Properties has left a trail of developments in historically neglected areas. One of Nkuna’s projects was the development of the Masingita Plaza, a retail development in Giyani in Limpopo Province.
These are some of the key factors which attracted the National Empowerment Fund (NEF) to participate in the development Willowvale Shopping Centre.
The NEF funded the Mdyesha project to the tune of R23.3m. The NEF will be taking 15% equity in the shopping centre.
NEF Divisional Executive for Venture Capital and Corporate Finance, Hlengiwe Makhathini, said “the shopping centre has created 115 new and permanent jobs, while at least 80 temporary jobs were created during the construction phase of the centre”.
“This may seem like a small achievement, but the benefits are many. In addition to job creation, the shopping centre signifies real upliftment and regeneration of an impoverished rural community with very high unemployment levels”.
A high number of people are on social grants, and it serves them well for economic activity to be as close as possible to home in order to bridge the distance and associated costs for the benefit of the Willowvale community,” said Makhathini.
The NEF’s investment plays a critical financial role in the project. The state owned development finance institution noted that it 15% equity will serve to reduce the project’s leverage and will enables it to begin operation with a lower debt burden. “When the business reaches maturity the existing shareholders will have the first right of refusal for the NEF’s stake. The Willowvale Community Trust is in the advanced stages of being finalised”.
Makhathini added that transaction will further the objectives of the Property Sector Charter by enabling meaningful participation of black people in the property sector.
“We don’t want black people to just aspire to own residential properties but we also enable them to create or participate in more commercial property opportunities. We don’t have enough black commercial property owners in South Africa and funding Willowvale is a step in the right direction in order to change the status quo in the commercial property sector,” said Makhathini.
The Willowvale Shopping Centre is dream come through for the Mdyesha family. In a venture driven by five siblings, the Mdyesha General Trading, seems to have struck gold while making a significantly positive impact on the community of Willowvale.
The Executive Director of Mdyesha General Trading, Sibongile Mdyesha, said the announcement of a shopping centre may seem mundane, but to a rural and impoverished community such as Willowvale, the centre represents a fundamental turnaround.
He noted that the remoteness of the Willowvale location in terms of its distance from the bigger towns has always posed a challenge for the impoverished community.
“This community has never had a centre nearby. Until now the elderly and people with disabilities had to travel long distances to access a bank,” said Mdyesha.
The NEF noted that the Willowvale transaction was approved by its Board Investment Committee in August last year and the site was handed over to the contractor on 10 December 2012.
Construction was completed in September 2013, and trading was set to begin on the 24th of October 2013.
The NEF added that loan horizon of the project is for 10 years, and was granted on normal commercial terms. The business is 100% black-owned and 51% black-women-owned. 55% of the business is owned by Mdyesha General Trading, 30% by the Willowvale Community Trust and 15% by the NEF.