Advice and Opinion

Middle-income market is the key to unlocking wealth creation opportunities in SA

While the recently announced national budget provides policy certainty, greater emphasis is required on implementing this policy to positively impact South African society and our economy. So comments Charles Robertson, CEO of Visual International Holdings, which is set to list on the JSE AltX at the end of March 2014.

“Minister of Finance Pravin Gordhan certainly delivered on providing certainty about policy,” says Robertson. “There were few, if any, meaningful changes announced in the 2014 budget speech. Some people may be disappointed and consider it a weak budget. But we, as business people, know that we cannot make big changes in our business every year, and the Government should not do so either. Such certainty will also help to give comfort to the growing middle income group, which will be beneficial for our economy and society.”

Roberson adds that certainty enables companies to make the business and investment decisions necessary to carry the economy into the future and, in fact, to provide further stimulation. However, the implementation of this policy can be improved upon.

“Minister Gordhan acknowledged this in his speech. While we realise that other Ministers and Departments must perform in this regard, the Minister has already started addressing some of these areas by allocating funding. This should have a positive impact on the economy, albeit indirect.”

Robertson cites these area as: implementing the National Development Plan, the public infrastructure investment programme, especially for roads and transport, as well as Government’s social investment programme. He also commends budget apportioned to areas that strengthen the growing middle-income group, for instance government employees, beneficiaries of subsidies and grants, and micro businesses.

The Unilever Institute at the University of Cape Town recently found that the black middle-income group has increased to more than four million South Africans.

“Stimulation of the growth of the middle-income group during the past 20 years is one of positive aspects which Government supported,” says Robertson. “A strong middle-income group adds great value to our economy and society. This is by far the fastest growing population group in our country. And this burgeoning group requires accommodation, the provision of which is the main focus of Visual International Holdings Ltd, which is to be listed on the JSE AltX later this month.”

Visual develops mixed-use suburbs and builds quality housing for the middle market on suitable land near jobs and infrastructure in strategic high-growth nodes. Its homes and apartments range in price from R400,000 to R700,000.

“We have found the middle-income market is currently not well catered for with housing. There is a big demand for good quality residences and communities which include schools, shops and recreation,” notes Robertson. “By listing, Visual will continue to pursue some of the many opportunities in this market segment.”

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