- Richard Maponya discusses challenges and succession plans (22/02/2008). Cameraperson: Danie de Beer; Editing: Darlene Creamer. (8.96 MB)
I would like to be afforded an opportunity to build more malls throughout the country,” the father of township retail and entrepreneur extraordinaire Richard Maponya announces casually in an exclusive interview with Engineering News at the comfort of his patio in Hyde Park, in Johannesburg.
Arguably Soweto’s best-known business-person and head of Maponya Group, which has interests in everything from food and fuel retailing to property development, is just emerging from, perhaps, his most ambitious venture yet: the construction and opening of the R650-million Maponya Mall in South Africa’s best-known township.
Indeed, Maponya himself acknowledges it as one of his best achievements, reflecting on the history of the development thus: “twenty- five years ago, I invited Pick n Pay to show them the piece of land, where the mall was built. The company said it was enthusiastic about the site and promised that if the mall was built, they were going to be the first tenants to sign on. Indeed, they were the first tenants and I did not have a problem in persuading the other tenants.”
As is now widely known, that site was, in fact, Klipspruit, Soweto, which now houses a 60 000-m2 mall named after Maponya himself and developed in partnership with Zenprop Property Holdings, a large private property development company.
The mall was the culmination of a two-and-a-half-decade battle by Maponya to develop the 21-ha site. He attempted a venture with South African Breweries in the 1980s, but the government of the day refused permission for the deal to go ahead. Later, he partnered with Woolworths’ property division, Wooltru Props, and was all set to proceed in 1998 when the rand began to ‘crash’.
Eventually, last year, the development opened its doors, featuring anchor tenants that include major national retailers, such as Woolworths, Edgars, Truworths and the Foschini group, as well as Ster Kinekor cinemas.
Woolworths’ senior real estates manager for Johannesburg, Osafa Gyimah, says that Soweto is an important market for the company and Maponya Mall is an important development for Soweto.
“We are excited to be part of this ground-breaking retail development which is bringing international brands and the leading names in South African retail to what is, after all, an integral part of the city of Johannesburg. The success of Maponya Mall will open the gateway for investors to put their money into Soweto and help create the kind of South Africa we all want to live in,” adds Gyimah.
Internet service provider (ISP) M-Web also opened its first retail store in Maponya Mall, owing to the growing need for consumers to interact face to face with their service providers.
FOLLOWING THE MONEY
The company believes the Soweto market is vastly underserviced when it comes to technology offerings and that there is huge potential for growth in this area.
Former President Nelson Mandela officially opened the R650-million retail complex last year, and it has subsequently been described as the first ‘super mall’ in a traditional township area. With a contemporary design and world-class finishes, it is geared to cater for the growing spending power of Soweto’s burgeoning affluent market.
Soweto residents reportedly have spending power estimated at about R4,3-billion, of which R3,4-billion is spent outside the township, according to the Unilever Institute at the University of Cape Town.
Soweto residents who previously flocked to malls outside the former township, now have no reason to travel far in order to find the perfect place in which to exercise their growing spending power.
“I have been one of the sons of this town for a very long time. I have seen it grow. In Maponya Mall, I have put up a world-class facility for the people of Soweto, that is outstanding. The people of Soweto appreciate it and the kind of support that we are receiving is unbelievable. I think our tenants are happy so far and I hope we will grow from strength to strength,” explains Maponya.
MORE FOR SOWETO AND OTHER TOWNSHIPS
He notes that the Soweto mall did not only open other opportunities for Maponya Group, but also opened opportunities for the people of Soweto, who never had the experience of trading in a mall.
“We are looking at other areas and we have received an invitation from Ekurhuleni municipality to build a mall. At the moment, we are still establishing if the site is suitable to accommodate a mall as big as Maponya, or a smaller one. “I am busy with a big plan. I am involved with Barloworld Motors and we are putting together a plan to build a ‘motor city’ in Soweto because we have recognised the township as an area that has fantastic growth opportunities, since it is in a city within a city,” adds Maponya.
He points out that there are no dealerships in Soweto, where the people can walk in and buy a car. They have to travel to the central business district or the suburbs and the group wants to create an opportunity in their backyards, since the growth in car ownership in Soweto is just as good as in any other suburb.
Automotive firm Toyota South Africa announced last year that it had completed negotiations with a new joint venture company comprising Maponya Group and Barloworld Automotive for the establishment of a Toyota franchise in Soweto.
“We have long sought a franchise outlet in this important and burgeoning market,” said Toyota South Africa president and CEO Johan van Zyl.
He added that Soweto had been a long-standing “open point” in its dealer network.
“As the vehicle market has expanded in recent years, the urgency to fill this point with a viable dealership has grown.
Toyota is happy to confirm the establishment of a dealership in Soweto, which will further increase the number of our black- empowered dealerships within our dealer network,” added van Zyl.
“This is yet another dream come true. We commend Toyota South Africa for taking the bold step and showing confidence in the market by awarding this opportunity to Soweto. We are also pleased to be in partnership with Barloworld Automotive and are sure that we will establish a successful business together for the benefit of Toyota customers in Soweto,” Maponya says.
He adds that this opportunity will again create jobs and bring investment into Soweto. More importantly, the people of Soweto will now be able to buy vehicles and get quality after-sales service right at their doorsteps.
Future projects include a 100 000-m2 Motor City investment and the envisaged development will be a world-class fully fledged Toyota dealership with the latest corporate identity.
HOW IT ALL BEGAN
Maponya trained as a teacher, but before he could take up his first teaching position, a friend told him about a retail company that was looking for an educated black person to head up a section that was called Kaffir Truck at the time, and that is where he developed his flair for textiles. By merely touching a garment, he was able to tell the make of the cloth and where it was manufactured.
“But my ambition was always to open the first retail clothing store in Soweto.”
Unfortunately, at the time, black people were prohibited from trading on the grounds that clothing was a luxury item, and, as such, it was the domain of white businesspeople.
“They said: native boy, you must be mad. You have no business opportunity in the urban areas. You must understand that you were brought to serve the interests of industry,” Maponya recalls.
He enlisted the services of Mandela/Tambo Attorneys to take the matter further. After persistent pressure, he was given a general dealer’s licence.
“With the licence, I was also given a control certificate and I was prohibited from selling what was regarded as luxuries.
Those were tough times, as we were raided like people who were selling drugs. During those dark days of our history, it was difficult to challenge the powers that be. Trade was difficult as black people were controlled by the pass laws, which was not conducive to fair trade opportunities.”
Maponya also adds that the fact that there was no electricity in the township affected business and people were using coal.
“The other burning issue was that we were not allowed to sell meat and powder soap in our stores on Sundays. We were catering for working class people and these people could only clean their clothes over weekends and if we sold them soap, it was an offence.
“We had to make a presentation to say to the powers that be that we are catering for people working in industry. When these people come to work surely they want them clean and disallowing us to sell them powder soap is denying them the opportunity to clean their clothes. I led a delegation to put our point across to government. They listened to us and we were given permission to sell powder soap.”
This led to the formation of the National African Federated Chambers of Commerce, an informal trader organisation formed in 1940 after black businesspeople in and around Johannesburg began to recognise the need to sharpen their acumen and raise the level of business awareness among their members. Maponya was the first president.
“It is refreshing that the organisation that I helped to form has grown to become what it is today and I am proud of its achievements.”
Maponya Group will remain in property development even though it is diversifying in other sectors.
“Since this is a family-owned business, I am working with my children, who have been trained in all facets of the business. There is a good succession plan and the ultimate goal is to list on the JSE in the near future.”
OTHER BUSINESS INTERESTs
But Maponya’s entrepreneurial appetite was as diverse as he is energetic. This led him in many directions. For instance, in 1952, Maponya with his late wife, Marina, opened Maponya’s Dairy Products, in Soweto. It was the first dairy and home milk delivery service in the area. They bought milk from large dairy suppliers and white farmers for subsequent bottling and hand delivery.
In a short period, they employed 100 people. White dairy owners started to encroach on the growing Soweto market and it led to the sale of the business. He then diverted and opened Maponya Supply Stores, a general dealer, which included a greengrocery, a butchery and a restaurant.
He later started the first motor franchise in Soweto, Mountain Motors, which had a General Motors dealership, which closed down when the company disinvested from the country.
He also had a number of other business interests, such as a petrol filling station, a BMW franchise, bottle stores, a car hire operation, a bus service and a funeral parlour, besides others.
When Coca-Cola disinvested from South Africa, Maponya put together a group of black businesspeople and formed a company, Kilimanjaro Holdings, and successfully bid for a bottling plant in East London, which was later sold.
ENTREPRENeuR-IN-CHIEF ON BUILDING NEW ENTREPRENEURS
The democratic process has come with a lot of opportunities, particularly for the young and up- and-coming entrepreneurs.
Before, there were no opportunities at all, but now entrepreneurs can get trained and find assistance to start their own businesses.
“I believe that the sky is the limit for them. However, the only area that is lagging behind is the financial aspect. Banks are still not doing enough to assist aspirant entrepreneurs with starting capital.
“They still expect them to come up with collateral, which they do not have. I believe that we need to have a designated bank with risk funds for the use of entrepreneurs – not in a sense of throwing away money, but the money will be made available to youngsters, who will come up with business plans.
“When banks evaluate a business plan and decide that it is viable, money should be injected into the business, without asking the entrepreneur to pay a 10% or a 15% deposit on the loan. It should be understood that a youngster has not had the opportunity to amass that collateral. Banks need to understand that we come from a different background and a past that deliberately excluded us from the economical arena.”
He asserts that, if he were in the seat of power, he would long have disbanded the Industrial Development Corporation and transformed it into a developmental bank, using it to create a fund for up-and-coming young entrepreneurs – across the colour line.
“I have seen this happening in other countries with great success. This is a sensible plan for young entrepreneurs with good business plans,” he concludes.