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JEREMY MAGGS: Hello everyone, and welcome to FixSA, the podcast presented by Moneyweb, where we delve into innovative concepts and practical solutions to tackle South Africa’s most urgent issues. Today, I’m pleased to welcome Laurence Rapp, the Chief Executive Officer of Vukile Property Fund. Laurence is not only a highly respected thought leader with over ten years of experience in the real estate industry but also possesses knowledge that extends far beyond property.

I’ve had the privilege of meeting him, and our conversations have revealed him to be an energetic and visionary strategist. His perspectives on corporate governance, capital markets, and economic development are impressive. He has a reputation for adeptly managing complex challenges with effective results, and I’m eager to hear his innovative ideas for transforming South Africa. So without further ado, let’s see how Laurence Rapp can help in fixing our nation.

Laurence, it’s wonderful to have you here. Let’s get started: what do you see as the biggest challenges hindering South Africa from reaching its full economic potential? What are your views on this?

LAURENCE RAPP: Thank you, Jeremy, for the kind welcome. I believe the main challenge is bureaucracy; it stifles action and slows progress. We need to instill a sense of urgency, stronger commitment to productivity, and empower our citizens to take meaningful action in rehabilitating our country. Political red tape is a major impediment to our advancement.

JEREMY MAGGS: Laurence, I would suggest that while urgency is a mindset, bureaucracy is a procedural concern. Which aspect would you prioritize first?

LAURENCE RAPP: I would focus on bureaucracy and procedural efficiencies. Urgency can indeed be seen as a mindset—thank you for framing it that way—which relies on the intrinsic drive of individuals. South Africa has enormous potential. Just think about how much the country could accomplish with fewer constraints. If we can remove bureaucratic barriers…

I believe that the natural desire for improvement and the need to support one’s family will incite that urgency. It exists within all of us; we just need to eliminate the hurdles to cultivate an enabling society. Hence, I advocate for reducing bureaucracy. The drive for betterment and growth is inherent in everyone; it will arise naturally.

JEREMY MAGGS: Let’s delve deeper, Laurence. Hypothetically, if I appointed you as the acting minister of bureaucracy for a week and granted you full authority, where would you begin?

LAURENCE RAPP: That’s quite a challenging proposition! We should consider several labor-related factors. Simplifying the process for starting businesses and opening bank accounts is crucial. I’m not suggesting we compromise on legal requirements and regulations, but we must find ways to expedite processes. Look at the immigration and visa complexities; streamlining these could significantly enhance travel opportunities in our nation. Your question is pointed and valuable, but I would need more time to reflect on specific actions.

Ultimately, we want to create an environment where entrepreneurs can quickly establish their businesses and thrive. This is key to unlocking the country’s potential.

JEREMY MAGGS: Given that we currently have a coalition government focused on improving processes, do you sense positive changes on the horizon?

LAURENCE RAPP: I can confidently assert that the atmosphere today is markedly different from January. As you noted, I am actively involved in capital markets, engaging with institutional investors both domestically and internationally. I often wish politicians could attend my meetings to experience the contrasting sentiments firsthand.

The optimism among capital allocators is impressive, especially now that the load shedding issues have lessened. There’s a renewed expectation for growth, leading to increased allocations in sectors like property, which has typically been seen as a long-term investment. Before the elections, uncertainty led many to withhold their funds.

The influx of foreign interest in our sector and company is remarkable, driven by new hope and a sense of stability. My sincere wish is for politicians to rise above party politics and understand the wider implications of their achievements, which have been significant.

This transformation in the business climate has been transformative since the elections, although macroeconomic factors such as interest rate reductions play a large role. Additionally, discussions have shifted from managing load shedding effects to exploring opportunities in a post-load shedding landscape. The difference is striking, and it’s rewarding; I commend the politicians for reaching this pivotal moment. My prayer is that they sustain this momentum, as we finally seem to be moving in a hopeful direction after many years.

JEREMY MAGGS: You would agree that investors prefer stability and certainty. It’s wonderful to see an upturn in sentiment, yet there will inevitably be a lag between sentiment and actionable change. This ties back to your earlier point about urgency; more work lies ahead to ensure we capitalize fully on this evolving environment.

LAURENCE RAPP: Exactly. Sentiment is merely the starting point. Ultimately, we must see tangible outcomes. The energy generated by positive sentiment is crucial but must be converted into action. We need to ensure that policies are clear to avoid any self-inflicted delays.

Recently, I learned about proposed legislation to impose taxes on trades within collective investment schemes that could impact capital inflow and liquidity on the JSE. Such topics must be rigorously debated at the proper levels, with careful evaluation of the long-term effects on capital markets, local savings, and foreign investment.

In essence, we need to transition from ideas to effective implementation. Progress is evident—like the resolution of load shedding—but I believe access to water will be the next major challenge.

JEREMY MAGGS: The term “on-the-ground delivery” is intriguing and leads me to my next question. While we’ve discussed philosophy, sentiment, and obstacles, infrastructure is also essential to your business. If you were to envision new strategies for addressing infrastructure issues to stimulate investment and growth, where would be your primary focus? For instance, we still face logistical challenges, despite Transnet’s national recovery plan.

LAURENCE RAPP: Certainly. Infrastructure is a critical driver of growth. Energy has been a major focus area, but effective ground-level implementation is vital. Our operations span South Africa and Spain. The time and energy our South African teams spend on troubleshooting…

…detracts from initiatives aimed at driving growth and enhancing customer service, which is a considerable resource drain. A prime example is energy; over the last decade, we’ve installed solar systems in our shopping centers, generating nearly a third of our portfolio’s power.

Almost all our malls have dependable backup water sources. However, the costs and effort involved in implementing these solutions—not just financial but in management resources—highlight the shortcomings in local government services.

That effort should be invested in productive, growth-oriented activities, not in remedial measures. Water infrastructure presents a significant challenge, possibly rivaling our electrical challenges. Thankfully, we can rely on solar energy, but addressing water supply urgently is critical.

In some regions where our shopping centers are located, we have depended on borehole water for weeks during interruptions in municipal supplies, often tangled in billing disputes and bureaucratic red tape.

A notable trend is the disconnect between the national government’s positive statements and the narrower interests at the local government level. Enhancing collaboration between national and local governments is essential for efficient on-the-ground delivery. Rates and taxes are increasingly burdensome, yet service delivery continues to decline. As responsible ratepayers, we all deserve better.

JEREMY MAGGS: Laurence, you are not the first CEO I’ve encountered who expresses that their teams have become skilled at troubleshooting. What specific leadership qualities should we nurture within our public and private sectors to guarantee meaningful change? Is there a necessity for a shift in our leadership philosophy?

LAURENCE RAPP: Absolutely. I strongly feel that our approach to leadership in South Africa often leans too heavily towards functional roles. This tendency exists in the public sector as well. People tend to be confined by their designated roles—accountants, lawyers, etc.—and we often overlook individuals’ innate talents and how to best utilize them across diverse environments.

Consider investment bankers in South Africa; most are trained as accountants or lawyers. However, if you look at London-based investment banks, you’ll find professionals with backgrounds in history, political science, philosophy, economics, etc. They prioritize recruiting talent for critical thinking and then provide the necessary training.

This functional mindset has always surprised me in the South African context. To connect it back to your question: great leaders are those who can identify crises and think strategically from first principles to craft solutions.

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Exceptional leaders shine, particularly in uncertain business and global landscapes. They set themselves apart through their capacity to navigate unpredictability, which relies on confidence in one’s abilities, accumulated wisdom, and education rather than merely functional expertise. Therefore, we should encourage the development of leadership thinking and education that cultivates well-rounded individuals capable of critical analysis and equipped with a global perspective—even within universities.

JEREMY MAGGS: Laurence, am I pushing the envelope too far when I infer that you believe we should promote leadership that embraces philosophy, poetry, history, and economics alongside conventional skill sets?

LAURENCE RAPP: Absolutely! We need visionaries who can conduct comprehensive analyses of situations. Very few challenges in my career have been simple or straightforward. They usually present multiple dimensions. How do we thoroughly evaluate these problems? And how do we effectively resolve them?

I’m not advocating for specific industries or skills; I’m suggesting we foster broader perspectives among our leadership ranks. This trend appears to emerge naturally among top leaders who ascend to prominence, but how can we cultivate this mindset more broadly?

Such insight leads to informed viewpoints that help manage substantial challenges while formulating innovative solutions.

JEREMY MAGGS: I want to delve deeper into this captivating concept. Years ago, while at a previous broadcasting station, I spoke to Peter Matlare, who later became the CEO of Tiger Brands and unfortunately passed away during Covid. One day, he entered my office and remarked, ‘Mr. Maggs, I pay you to stare out the window.’ It took years for me to grasp his message on the significance of philosophical engagement and reflection, which I believe you are also championing.

So, Laurence, what’s your thought process around leadership? How do you tackle challenges?

LAURENCE RAPP: That’s a profound insight you received from Peter. Reflecting on my journey to becoming a CEO, I initially operated with a “doing” mindset rather than a “being” mindset. Early in my leadership, my emphasis was purely on results and outputs.

In the CEO role, finding balance between thinking and doing is crucial. I dedicate considerable time to reading each day—approximately an hour and a half to two hours. I read a range of local and international publications, as well as industry-specific content. I keep a television running in my office—background noise enhances my productivity, especially when tuned into the news.

One of my strengths lies in connecting disparate information threads. The more data points I gather, the better I can identify trends, which ultimately informs my vision for the future of our business. Additionally, leaders across sectors must uphold a forward-looking perspective.

You might find it intriguing that Vukile is celebrating its 20th anniversary, prompting me to contemplate our direction for the next two decades. While I must manage immediate goals, like the results announcement coming up, I also strategize for the long term. Being proactive about the future is a crucial part of my role, and I strive to assimilate as much information as possible.

Allowing time for reflection in my day is essential. My extensive travels to our overseas operations provide invaluable downtime for thought. My family and team often express concern when I return from vacation each January because I promptly purchase a new planner to note fresh ideas inspired by my reflective time off during the holidays—ideas we chat about include AI and its implications for our business.

Remaining informed about global affairs, tech advances, and industry trends is vital. Then, I focus on synthesizing the information; this ability varies widely among leaders. This capacity to connect the dots often sets one leader apart from another. Although it’s a difficult skill to teach, it’s crucial to devote time for thoughtful reflection.

I eventually realized that I don’t need to be physically at my desk at 07:30. Instead, I use my mornings for productive work while enjoying breakfast and reviewing various publications—this time is invaluable. I typically start my day this way and wrap up with an evening news review, ideally capturing new ideas and trends that inform key decisions.

JEREMY MAGGS: That’s a compelling point; to paraphrase the late Pravin Gordhan, it’s also about making connections. Laurence, addressing any issue demands courage because missteps will inevitably happen. How do you address errors made along the way?

LAURENCE RAPP: I 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 seem whimsical, I promise to tie these two thoughts together.

JEREMY MAGGS: Please do!

LAURENCE RAPP: In my experience at Monitor Company, which was founded by Michael Porter, we defined strategy as making choices. It’s crucial to realize early that the decisions made now may differ from those faced in the future as situations evolve. For many, the misstep when formulating strategy is to latch onto a decision without adjusting it to shifting circumstances.

Thus, the first key aspect is to maintain a dynamic mindset; we must be adaptable to our changing environment and avoid becoming rigid in our paradigms. Additionally, having the boldness to evaluate whether you’re making the best choices ties into an invaluable lesson from an executive coach I worked with years ago.

When we reflect on the major decisions made over the past decade and assess them by their results, we often find that most choices led to favorable outcomes. This realization builds confidence in one’s ability to make prudent judgments based on fundamental principles.

Dr. Seuss encapsulates 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.’

Essentially, it’s about trusting your instincts and recognizing that as you gain self-confidence in evaluating situations and making decisions, you can assess whether you’re achieving the intended results. If not, consider the reasons behind that. Then, adapt your approach.

Dr. Chris Argyris of Harvard introduced an insightful practice called “triple loop learning.” In summary, it means that each action we take takes place in a certain context. Each context shapes the issue at hand, leading to actions that yield differing outcomes. If outcomes aren’t aligning with expectations, we must determine whether the context was flawed, the framing was incorrect, or if actions were misaligned. This can help us identify points of failure and revert when needed.

Hence, we must adopt a reflective approach, readily acknowledging when we’ve made mistakes or realizing that earlier assumptions must evolve with current realities. We cannot rigidly cling to preconceived ideas.

Always challenge yourself and foster a team culture where employees feel empowered to question the norm. Often, individuals hesitate to challenge a superior’s views. Within our organization, employees are encouraged to contest decisions and offer alternative opinions openly.

When assessing potential deals, I’ll assign a colleague the role of designated skeptic to engage in constructive debate, ensuring we rigorously vet proposals. This approach nurtures empowerment rather than opposition.

JEREMY MAGGS: This discussion has indeed unearthed the necessity of meaningfully connecting various concepts. I want to conclude this conversation by expressing my gratitude. Laurence Rapp, thank you for joining us on FixSA on Moneyweb. Your time and insights have been immensely appreciated.

LAURENCE RAPP: Thank you, Jeremy. This conversation has been both enlightening and stimulating.

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