Intersite is showing the way in profitable, socially responsible use of state land, reports Reg Rumney
A LITTLE-KNOWN property company managing R2,3-billion worth of assets mainly in the major metropolitan areas — and getting a good return — claims also to be achieving this in a socially responsible way.
It’s the done thing now to claim that one’s business activities are in line with the reconstruction and development programme. However, Intersite (Pty), the property arm of the South African Rail Commuter Corporation, which is wholly owned by the government, can more honestly claim this than most.
Intersite manages around 370 stations in urban areas. Its aim, according to MD Dirk Ackerman, is to make a profit to decrease the amount of subsidy that has to be paid to the loss-making corporation, and to do this in a socially responsible fashion, by creating jobs and opportunities for communities and involving them in decisions.
Intersite has also employed local entrepreneurs, who in turn have employed local youths, in a R2,5-million project to build pedestrian bridges over the tracks at five Soweto stations. The building of such bridges was suggested by communities themselves during a public involvement programme.
Intersite has employed specialists to implement on-the-job training schemes for contractors and the youths they have hired.
Cleaning, maintenance and gardening contracts are also awarded to local entrepreneurs. Soweto landscape gardener Billy Leballo has recently completed a landscape gardening contract, and he has now been awarded a maintenance contract.
Hawkers, often the first traders at stations and the only ones to give passengers convenient service in the past, are also accommodated with formal structures and leases for security of tenure. In return they have to perform their share of keeping premises clean.
Intersite was set up as a private company with staff mostly from the private sector to overcome the bureaucratic “railways” mentality that infused the operations of the old South African Transport Service. The SATS was commercialised and split into the SARC and Transnet in March 1990. A similar property company would have a staff or around 220, says Ackerman, but it can get by with 70 because it outsources much of its work to the private sector.
It sees itself as a facilitator of development. For every one rand of state money, four rands are leveraged from the private sector for development in around the stations. So if a building company wants to develop shops, it is asked to build the station itself.
The company has certainly not sat on its hands over the two years of its existence.
Ackerman points to Intersite having cornered the market in luxury coach termini, a competitor for both long-distance rail and air.
Among many projects, a commercial centre at Nyanga station in the Cape was one of the first “socially desirable investments” in which Southern Life’s Futuregrowth fund was involved. It also employed the services of a black developer, Combi & Company.
Of the 59 projects on the go at the moment, one Tshwane Village, in Pretoria, will be a mixed-use location for embassies and other international bodies such as the Uninted Nations, with retail and sports facilities thrown in.
Privatisation has moved off the list of taboo subjects for the new government, and the selling off of state land has been mentioned.
The government owns a disproportionately large amount of real estate in South Africa, notes Ackerman. “It should be channelled back into the private sector.” In the process the gap between white and black ownership of land can be closed.
However, Intersite is not in the business of privatisation but rather in the business of managing state portfolios carefully in a way which is integrated with the aims of the RDP and which makes money for the state.
As well as adopting a participative process in its projects, it also has an affirmative action inside the company, says Ackerman, but its affirmative action approach to contracting seems to be far ahead of most of the private sector. This week Intersite announced it had contracted an 11-member team of black architects, quantity surveyors and mechanical, civil and structural engineers to rehabilitate Johannesburg’s South station in the CBD in a R5,4-million project. This is part of Intersite’s overall Park City project, which aims to renovate and upgrade Park station completely.
Black professionals have also been included in the development of a long-haul taxi rank.
While its social aims are commendable, it is managing taxpayer’s money. To the sceptical Ackerman can point to the money made by Intersite: third-party portfolio income has risen from R18-million in 1991 to R43-million this year. That is R43-million less to come out of taxpayers’ pockets to subsidise commuter rail fares.