The Editor’s Desk: Looks like we owe you an apology, Vivian Reddy

On 27 July, Alec Hogg and Felicity Duncan discussed the scuttlebutt about a commercial development in KwaZulu-Natal run by entrepreneur Vivian Reddy. Word on the street was that all wasn't as it seems and that the deal was smelly. But after Alec sat down with Reddy and got the details, a different picture has emerged. Reddy has been working hard to make a success of the project in the face of a run of bad luck, and if he succeeds, the people of Umhlanga will have reason to say a big thank you. In this episode, Alec and I discuss his conversation with Vivian Reddy. We also talk about the importance of entrepreneurship and the reality of immigration. – Felicity Duncan.Hello and welcome to this week's episode of The Editor's Desk here on Biznews Radio with me, Felicity Duncan, and with Biznews editor in chief Alec Hogg..___STEADY_PAYWALL___.Now, Alec, on the 27 of July, you and I had a bit of a chat. And we do we talk about a lot of different things, but among those things was a visit that you had made down to Durban. .And you had sort of driven around and seen a lot of what was going on, and one of the things that we discussed was a stalled development project that seemed to be headed nowhere and seemed a bit of a cash sinkhole and was associated with one Vivian Reddy. Now, I am told that you went back to Durban and this time you actually spoke with Vivian and that you've got some interesting things to share with us out of that interview..It really was the most fascinating morning with him. In fact, it was a terrific trip all round and I can tell you about the real purpose for going. But meeting with Vivian, who I do know, I had things to do with him in the past, as one tends to when you from the same province. KZN – KwaZulu-Natal – is a small area, where there is a small business community relative to the rest of the country and everybody kind of knows everybody and coming from that part of the world, I kept in touch..Vivian is this great example of the "tall poppy." He's a guy who is the last child in a family of nine, grew up in extreme poverty, worked his way up from being a bakkie builder – driving around doing installations and electrical installations with his bakkie and a couple of guys to help him – to owning this enormous organisation called Edison, which I think is the biggest electrical contracting business on the African continent..Anyway that's a little bit of the background. He's also gone into, more recently, into property developments, into casinos – my hometown of Newcastle, he built the biggest shopping centre there. He built the casino there as well. And that's who he is – tall poppy, extremely..And I guess what happens in our society in South Africa is when people do achieve great things, immediately the gossip starts, and they are accused of only doing that through crooked means..Vivian, the talk around Umhlanga was that he bought this patch of land for nothing, or for very little from the town council and he put together this building and then he'd run out of money. That's really the story, the long and the short of it, and it's all nonsense, it's all fake news..I sat with him on Friday morning, I had a fascinating interview, threw all the difficult questions at him, and came back very satisfied that this is a guy who has been denigrated, I guess, for as long as I can remember. People would point fingers at him – not that he's a bad guy or anything, but you know, he's a member or an unashamed member of the ANC and supporter of the ANC and so of course he has to be corrupt. And that isn't the case at all. Not that I know anyway..And I'll tell you why, Felicity. It might be a small thing in other people's minds, but in my mind it's huge. In 1975, as a 15-year-old, I went to the World Jamboree of the Boy Scouts in Norway and this changed my life completely. It exposed me to people of other races, in an apartheid South Africa, and also gave me a view of what's going on in the rest of the world, which almost fast tracked my development..Vivian Reddy had the same experience exactly four years earlier. Again, he comes from a very poor background, as I was from a pretty modest background too. His parents didn't have enough money to send him to the World Jamboree after he'd been selected. So the community did cake sales, whatever, to give him this incredible opportunity and he went to Japan in 1971..So, it's almost like there are few very limited parallels with this man, but I can relate to him in that way. And he has built his business and his life very much based on that principle. And what happened to him in 1971 at the World Jamboree was he met Neil Armstrong, and Neil Armstrong said to him, "if you can dream it, you can do it." And that's exactly what has shaped his life thereafter..Getting back to the point of the Umhlanga development, which is the biggest private development, I think, ever undertaken in South Africa – it's almost R4bn that Vivian Reddy and his partner Rob Alexander from Pietermaritzburg are putting together..They bought the land, not from the town council, but from somebody else who had it. He told me the numbers – they are confidential, but I can assure you it is many times multiple of the R30m that has been thrown around. They had to then invest a whole lot more money to get that land ready, and they started off with their first contractor who went bankrupt, and the second contract, Group Five, went bankrupt..It's a real run of bad luck over there..It's kind of not their fault. You build a big, massive project, a R3.5bn project and the guys are contracting for you go bang. It isn't your fault that the project stalls..But the point about all of this is that they've got the funding secured. I've seen the documentation.They've got Wilson Bayley and Trencor, who are busy doing the contracting – they're the blue-chip operators in the construction market. They're back on site, they're back building there..There's nothing about the problems that they have to demolish the whole thing, which is what the talk was – a little bit of sandblasting, according to the engineers, is fine. And the project, which will be this massive upliftment for Umhlanga, it's likely to significantly increase property values in the area, will be completed by December next year..So, Vivian Reddy is on track. The knockers, I think, once again are going to be shown that they don't really know what they're talking about. And it was just a delight to spend a bit of time hearing the reality of it. I'll put that whole interview together and put it on the site next week. But as we started, if you like, the rumour and the nonsense here, it's probably best to actually end it here too..Very interesting and it just goes to show that, while rumour and gossip and common knowledge, let's call it, can be a very valuable source of information about what's happening, you always have to do the footwork and find out what's happening on the other side of the story. .And that's a lesson South African journalism has had to learn multiple times..Scuttlebutt..Scuttlebutt, that's the word?.That's what Phil Fisher, in his great book, which is one of the two big investment books and one of the best investment books to read, talks a lot about scuttlebutt..And it's good, because you get to know about the inside story, perhaps, on investments before you go ahead. But the lesson, always, is go out there and go where the takkie hits the tar. Don't just take things for granted, as I did in this case, I was listening to what people were saying and there was the building, it was stalled. So, I said, well, this is what people are saying about it. But you need to actually find out from the source, don't you?.Absolutely. And I think that, on that trip, this was not the only source that you encountered and that you learned from, but that you also got a good insight into a part of the real economy of the KZN and specifically, I guess, Durban..And that's an important thing, because there's so much doom and gloom and we hear a lot of unhappiness from community, but it's always important to be reminded that there are people out there who are on the coalface, who are the ones who are really creating jobs, creating value, and they have their heads down and they're just doing their work..Yes, the reason I went to KZN was an invitation from one of our subscribers, who works very closely with… he's a mentor of Rajeev Kasieprasad Pattundeen, who turned 50, who is the owner of a company, a footwear company called Palm Footwear which, Felicity I'll have you know, produces about one third of all the school shoes worn in South Africa..Now, this immediately got me thinking, because we hear that the Chinese produce, mass produce, and we can't compete with them. But here you've got a company in Durban, which was started by Rajeev's father, who was a greengrocer who desperately wanted to get into manufacturing, he had a little greengrocer business, but any manufacturing operation that came along he would have bought, Rajeev was telling me..But, as it happened, it was a company that went into liquidation, that was making shoes, that he had enough to acquire. So he bought this company, with a staff of about a dozen and today, to look at the way this business operates, it was so inspiring. Not just that he competes with the Chinese, or in fact the Chinese don't even play in this market anymore, they can't. But secondly, when he walked around the factory floor – I wasn't with him, I was standing up higher, I arrived a little bit later while he was going through there. The way that the staff treated him was like he was a rockstar..It's a husband and wife team who own this business, he's got about 900 or so staff. Real old-fashioned labour, or high labour-intensive production lines, where there are ladies sitting there with their sewing machines, sewing the shoes together. That kind of thing that we hear that South Africa really needs, and Rajeev has done it..He's gone there, he's taken his father's business and expanded it, producing school shoes with synthetic material – plastic, rather than the leather that you would see in the one most people know, Bata Toughees. Palm does their product, which is called Trustees, and their brand sells at about a half, just under half of what Bata Toughees do, which for many people – if you can go buy school shoes at under R100, seriously, you can imagine that is, when you're on a very tight budget, that is a great boon to you..So, I was inspired. I was inspired at the way that his staff treated him like a rock star. They hugged him and congratulated him and took selfies with him. And that is an approach… and I spoke to him a great deal about it afterwards, about how he does that. And it's just a different way of approaching business. They pay well, or relative to everybody else in the area, their wages are a little higher, but it's more the way that they look after their staff, treat them like family, and in family businesses you often do you find this..And they're getting on and doing things and looking at new markets but slowly and conservatively, and building it over time. It really was inspiring to see a story like that and engaging with other entrepreneurs who came along to the lunch. He held it as, I suppose, as a business lunch and birthday celebration in one..And I was able then to engage with about 70 people there, with entrepreneurs who he knows or who he has contact with. And just to see how these people are getting on with it, getting on with things. Not ignoring the doom and gloom, but very much tailoring their businesses towards the opportunities that do exist. And it was inspiring..You know, it's an interesting attitude. I remember, I had a friend who – he had an engineering background – and he was a very entrepreneurial guy. And about, probably call it 10 years ago, he and I were talking doom and gloom the way that South Africans do. Or rather, I should say, I was talking doom and gloom the way that South Africans do. .And he said to me, you know, actually this is a good story. He said, the more inefficiencies that get introduced into the economy, the more opportunity there is for small businesses to go out there and fix those inefficiencies. .And he now is a very successful entrepreneur. He's done extremely well for himself in the technology space. Just going out and identifying where there are problems, where there are issues, and instead of looking at them as problems or issues, he's looked at them as an opportunity for him to provide a solution and do well out of it..And that kind of attitude, I think, is very exciting to see. It's not necessarily the most common attitude to problems, but it is the entrepreneurial attitude to problems. And there are still some South Africans out there who have that attitude and who are doing just that – when they see a market like school shoes, where a lot of people maybe can't afford them, you know, somebody like this is going to say, well, let me come up with a solution and make money doing it..You've really put your finger onto something big there, because so often, when I talk to even young people in South Africa, they believe that there's a better future for them elsewhere. And then I ask the second question, and that is: What do you do?.And without exception, those who are looking to emigrate from the country are working for corporations. And you can understand that, because they come from a demographic group that previously was advantaged, and now it's no longer advantaged. And, in fact, they're on the back foot, because people who've been disadvantaged must be given the greater opportunities in corporates. It's part of the system and it's not something that is ever going to reverse. In fact, if anything, it's going to accelerate..But instead of stopping and thinking and saying, hang on, if this is the scenario that I'm faced with, let me look at alternative ways of addressing it. Like your friend, going into the marketplace..This is a market economy. Instead of the socialist kind of approach, where I work for a big corporate and I get my salary every month and, when I retire, I'm going to go on pension, to say, how can I take advantage of the inefficiencies that I see all around me – in fact, mostly in this corporation that I'm working for. And go and do things which will enhance the economy..Instead of doing that, people of this type say, oh well, let me go and find another corporate somewhere else in the world where I won't be disadvantaged because of the colour of my skin..But the reality is you'll be disadvantaged over there because you're South African. You can't go into a British society and think without the Old School Tie that you're suddenly going to be treated equal to everybody else who's been in that society and has paid their taxes for many years etc..You're going to hit exactly the same obstacles within a corporation in any other country in the world, because that is the way the world works. They look after their own before they look after foreigners. So, where foreigners do succeed when they go into other countries as immigrants is when they start their own businesses, when they do entrepreneurial things..So, rather than going through all the trauma, all the hassle of relocating your family, why not become an entrepreneur in South Africa?.If I could get that message through to somebody, or just not get the message, just get somebody just to think about that as an alternative to many of the other life choices that people are making, then I think I would have done my life's work..So, it's terribly frustrating when you see this happening..And I'll tell you, a very object example of this is the Afrikaner in South Africa. Afrikaners, up until 1994, had a choice, really, of serving the volk – i.e. working in the public sector – or going off to the other side, and very few of them would go to the other side and work with the Englishman, in other words, the old historic enemy of the Afrikaner..So, what happened: generally, there was a very strong civil service, because many of the Afrikaner people saw this as a natural home for themselves. Post-1994, that's not a home anymore. So, a lot of them have been forced to become entrepreneurs and look at the incredible success they have made of it..So, it's almost like, just look at this as an alternative – with many Afrikaner people, they've been forced to do it and many of them have done incredibly well, rather than going into that hamster wheel and "these are the only options available to us." We as human beings have incredible ingenuity. Sometimes, we need to get out of our own way to unleash that energy.

The Editor’s Desk: Looks like we owe you an apology, Vivian Reddy

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