Promoting Economic Empowerment through Low-Income Housing
Writer: Emily Jarvis
Project Manager: Stuart Parker
Motheo Construction began as one woman’s ambition to empower South African people through the provision of better living conditions; providing ordinary people with a means to escape poverty. Now with an order book of more than 1.3 billion rand and around 80,000 houses in its portfolio, the Group hopes to maintain growth levels with blue-sky thinking and a keen focus on black economic empowerment targets; placing gender equality at the forefront of its activities.
What began as a hobby on the side while running a private medical practice in Johannesburg in 1996, Motheo Construction Group CEO, Dr Thandi Ndlovu identified that with better living conditions came a better standard of healthcare for South Africans. When the South African government instated the Housing Act of 1996, shortly followed by the establishment of South Africa’s Housing Development Board, Dr Ndlovu was able to facilitate sustainable housing development to fulfil the basic human need for housing. “The Act gave the funding required for low income housing in the Mpumalanga province, and what started as six projects began to grow new wings and we were able to construct residences of higher quality and consistent standard over a wider geography,” says Tim Potter, part-Owner and Director of Motheo Construction Group.
In 1998, Chris Cudmore and Tim Potter entered into a joint venture with Dr Ndlovu and, given the joint interest in social housing, she sold her medical practice to her partner and Motheo Construction Group was subsequently formed in 2007. “Chris Cudmore and I were able to offer our construction expertise via our own company, Cudmore & Potter, and we worked together to figure out the best way of achieving our goals before the eventual merger happened,” Potter highlights.
Motheo Group has experienced 18 years of organic growth, expanding from the construction of hundreds of houses, to tens of thousands, and a significant order book in the public sector as well. “The business has now expanded beyond Mpumalanga into eight provinces and what started as just a residential low income housing company has now grown to include schools, hospitals, office buildings, railway stations and much more,” he states.
“At present, we have between 35-45 active projects across South Africa, with many of our contracts categorised as ‘deep rural’ construction,” Potter adds.
As its main interest lies in low income housing, the majority of Motheo Construction Group’s business has come from government-funded projects. However, in light of the consistent success over the past two decades, the Group is now looking to diversify into the private sector. “In the past we have dabbled in this area, working with big names such as MTN and First National Bank. It is important that as we grow, we diversify our offering into new sectors in order to remain competitive, and given that available working capital in the private sector has been steadily increasing, we are now finding the right balance of projects to remain sustainable in the long-term,” explains Potter.
Remaining ahead and offering something different is at the forefront of Motheo’s promise to recipients of social housing, and there are several differentiating factors behind the scenes that contribute to this as Potter details: “Since being in business, we haven’t done a single build with a mortgage bond from the bank; opting instead for either full capital subsidy or taking on rental housing projects. There can be a significant amount of cost associated with adding mortgage options with banks and we have identified that this structure is not suitable for Motheo.”
This year, the Group was accredited as a social housing institution, which will allow Motheo to access government institutional subsidies for projects; one of which is to answer the demand for higher density housing to minimise cost effectiveness over a smaller geography of land as Potter says: “We are now able to manage a project from start to finish; from finding the land, seeing a project through its design and construction, to managing the unit once complete.
“The above opportunity allows us to consider the development of 250-500 rental accommodation units with good transport links to house local workers, and we predict a steady stream of business from this new venture area in the coming 12 months,” he adds.
Moreover, a new scheme called Black Industrialists Development Programme is beginning to gain traction in South Africa, with a mission to improve the number of black-owned enterprises in the country. Motheo has chosen to align itself with this new scheme through strategic acquisitions of civil construction companies to fast-track the spread of wealth of black-owned businesses in the next three years.
Level 2 B-BBEEE
Right from the beginning, one of Motheo’s key focus areas has been the promotion and development of young talent and gender equality, choosing to reinvest its earnings back into the company to fund its growth. “As a business that is 52 percent black female-owned, considerable efforts have been made to ensure that we give everyone equal opportunity to give them the best chance in life; an ethos that has been spread right down the value chain since day one,” Potter further explains.
“From day one, our empowerment-orientated focus has made Motheo an attractive business to work for. Our strong company culture gives us plenty of room to grow.
Motheo’s position as a level 2 B-BBEEE Company complements its empowerment attitudes, making the Group attractive to any investor looking to boost its scorecard. “If a Company chooses to procure through us we can help improve their own scorecard through our high compliance level. We are extremely close to level 1 status and will be working hard to achieve this top level in the short-term future,” states Potter.
Furthermore, companies have recognised Motheo’s local commitments with the majority of supplier relationships standing the test of time. “We make a conscious effort to work with regional partners and have good longstanding relationships with local partners. Not only is this cost effective for all involved, but our scorecard allows us to contribute to the economy.
“Additionally, we often take part in joint ventures with other smaller local businesses in order to increase local content.
“This, combined with our ongoing commitment to local skills development and our strong desire to give back to the community via corporate social responsibility activities, reflects our emphasis on truly empowering both individuals and companies,” he further explains.
Exhibiting an 18-year long track record for quality construction, high standard of delivery and time management across the public sector, Motheo Construction Group hopes to grow sustainably into new sectors in the long-term.
Potter concludes: “Residential accommodation will remain our main focus and our biggest order book, and we remain optimistic that Motheo’s future in South Africa will be a bright one.
“Fronted by blue-sky thinking, we will continue to grow into a truly indigenous company led by empowered local partnerships that combine youthful exuberance of young black professionals with the vastly experienced seniors of the previous generation.”