#10 Kgothatso Meka – The Internet Saves Lives, Building Schools, and Advice for Young South Africans
PODCAST: Episode 10
Kgothatso Meka – The Internet Saves Lives, Building Schools, and Advice for Young South Africans
The Future Minds Podcast has given us the opportunity to have conversations with several brilliant minds who have made an impact in the education space, and Kgothatso Meka is definitely one of them. From building schools to providing affordable homes to hundreds and thousands of South Africans, Kgothatso is making a huge and positive impact. We were fascinated by his perspective on education and how his personal education journey guided him to be where he is today.
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About Our Guest: Kgothatso Meka
Kgothatso is a South African real-estate developer focused on providing affordable housing at scale. He started his career in investment banking which provided him with the tools necessary to master the world of finance and deal-making. Kgothatso spent time working as an asset manager at Old Mutual Alternative Investments focusing on steering their R1.4 billion Schools Investment Fund which focused on systems and infrastructure investments to build new, affordable private schools across South Africa.
He moved to Cosmopolitan Projects in 2019 and later that year founded Cosmopolitan Property Developments, which is part of the Cosmopolitan Projects and Central Developments group. Kgothatso remains passionate about education, technology, and providing South African communities with access to affordable, dignified education and home environments.
- The current challenges and opportunities in South Africa.
- The need for basic infrastructure and access to education.
- Kgothatso’s personal education journey.
- Advice for young South Africans.
Full Episode Transcription
Philip von Ziegler: In today’s episode, I’ll be speaking with Kgothatso Meka. Kgothatso is a South African real estate developer focused on providing affordable housing at scale.
He started his career in investment banking, which provided him with the tools necessary to master the world of finance and deal-making. Kgothatso spent time working as an asset manager at Old Mutual Alternative Investments, focusing on steering their R1.4 billion Schools Investment Fund. Which focused on systems and infrastructure investments to build new, affordable private schools in South Africa. He moved to Cosmopolitan Projects in 2019 and later that year founded the Cosmopolitan Property Developments, which is part of the Cosmopolitan Projects and Central Developments Group.
Kgothatso remains passionate about education, technology, and providing South African communities with access to an affordable, dignified education and home environment. In this conversation, we unpack topics such as the current challenges and opportunities in South Africa, the need for basic infrastructure, and access to education. Kgothatso’s personal education journey and advice for young South Africans, as well as a range of other topics. I thoroughly enjoyed this conversation with Kgothatso and I’m sure you will too. Without further ado, I give you Kgothatso Meka.
Kgothatso Meka, thank you so much for joining us, I appreciate you taking the time. So to start off, maybe just give us a little bit of background as to who you are and what you do.
Kgothatso Meka: Okay, well my name is Kgothatso Meka. I am a property developer, previously in investment banking and investments, but now focusing exclusively on property development, largely on affordable housing all across Gauteng.
PvZ: Okay, tell us a little bit about your education journey. How did you get to where you are today?
KM: Well, I think I come from a very, I suppose, interesting time in South Africa. I started school in the early 90s and that’s just when our country was going through what we could call an interesting transition. And I started my schooling journey at St David’s, Marist Brothers College, actually. And, yea, there were very few Black people in those schools at those times, because it is only really right about that time where we are allowed to go into some of these schools.
St David’s is a very good private school and, yea, it actually taught me and exposed me to a hell of a lot. At the time I was living in Soweto, so, yea, literally spent a good two and a half, three hours of my day just traveling to and from school. But very, very, important what it did for me, because it exposed me to just a different side of life, and it allowed me to come to believe because my surroundings changed quite significantly. And then also on top of that, at the school, the education was just absolutely world-class.
I was only there for a few years, about 4 years, and then I moved to other schools in Gauteng. But I’d like to say the foundation was laid and I still pay huge homage to the foundation that that school laid in my life.
Post that I went to university. I studied Finance and Investments at the University of Johannesburg up to Honours level, and, yea, then I began working. And just to brush up on my educational skills, I also started doing my Master’s in Property Studies at UCT, which I’m trying to complete at the moment. So, yea, that’s a nutshell of my education journey.
The Challenges of Education in South Africa
PvZ: And looking at the South African context, as a property developer, there are certainly some infrastructure shortcomings in the schooling environment. And a lot of our government schools are ill-equipped to adequately educate the South African youth.
What are some of the things that you have come across in your experience as either a property developer, or working in the investment banking space, that South Africa can do from an infrastructure standpoint to improve that education challenge that we face?
KM: Well, look, before before property development, when I was in investments, I worked for a school fund. So we were managing capital on behalf of investors and our mandate was to exclusively look at schools and build independent schools. Trying to bridge that gap, because the quality of education in this country has gone down quite a bit. And the government is also trying to solve a lot of problems, not just education.
And so the idea of the fund was to take some of this capital in instead of just putting it into MTN or Steinhoff or whatever, put it into alternative assets such as housing and education. And build a system building new schools, but also monitor the quality of that education. Because it’s one thing spending R100 million on the infrastructure. But if what’s happening inside of those schools is not well-monitored and taken as seriously as that building and that infrastructure, then is there really a point?
So I spent 5 years at this fund and we were managing, I think, just R1.4 billion rand, and we did many investments across the private schooling. And the nice thing about it was that our mandate was to actually do affordable independent schools. Because every time people think of independent schools or private schools, they think of your St David’s and your St John’s, etc, and then that just creates even bigger inequality in South Africa. So this mandate actually capped us and said, you cannot charge, I think at the time I was there, more than R22, R23,000 a year in school fees.
So that actually allowed us to tap into the more affordable market. So we built schools in so-called lower-income areas. And a school at the time was costing R60, R70 million. So you buy land. We partner with people that are already in the education space, that are already running schools. Maybe they run one small school, but they’ve got the ability to actually operate the school. So we come in with what the capital and the business background. We partner with these individuals. And just like any other business, we’d put in debt and equity in these schools businesses, and then roll out the schools. And once that’s been done, you’ve spent your R50, R60, R70 million building the school. We as a fund would actually also monitor not just the financial performance of the school, but also the academic performance, which was just as important as getting repaid.
So I think there’s a lot of stuff that can be done, a lot of ideas such as that that can still be rolled out. I mean, with the R1.4 billion, which sounds like a lot of money, but in the greater scheme of things is actually very, very little money. We were able to, at the time, we built about 26 schools.
Their average performance, when you looked at the metrics such as your Matric pass rates, was about 20% higher than the national average, which was positive. And I think South Africa should be looking at more solutions like that instead of just sitting and always criticising the government. And it’s about what can we do as normal persons, and what can we do as a business.
More About Kgothatso’s Current Projects
PvZ: Now, education starts at home, so tell us a little bit about Cosmopolitan Projects and what you’re doing to provide homes for people across Gauteng. And in doing so, providing children with the facilities that they need in order to further their education.
KM: So I actually met the Cosmopolitan guys and came across this business while I was still in the education space. Because being one of the largest residential property development companies focusing on affordable education, there was synergy there.
And throughout their time, I mean, historically, they would just build houses like every other developer. But over the last, call it 5 – 10 years, they changed their strategy to instead of just being a developer, building houses, buying land and building houses, they started doing mega-development where it’s quite integrated. I mean, some of the developments that they do consist of like 10 -15,000 houses.
So for them to make the lives of their customers just holistic, they started looking at integrated development. So partnering with people that will come in and bring and build shopping malls, that’ll build schools. And not just any school, but good quality schools, making sure the areas have got fibre, etc.
So there was just a natural chemistry between what we were doing and what they were doing. And they were absolutely integral in us rolling out some of the schools that we did in their developments because they weren’t looking at actually making money through this because their core is property development.
So they were able to purchase the land in their developments at pretty much cost price, just so that they can recover their costs. And they actually built our schools also at cost price. And that makes a huge difference for a school operator, because it’s costing me R50 million to build the school instead of going out to the market and getting a normal contractor who’s going to charge you 65 million. It allowed us to then charge lower school fees in our school, and thus opening up the access to all sorts of communities.
So they continue to play a huge role in actually stimulating and being part of that ecosystem of rolling out affordable, quality education. When I look at all of our plans going forward in all the different townships that we’re building, it’s not just home stands that we put in our plans, but we actually have a lot of demarcated areas just for schools.
So even going forward, we are still open to working with various school operators to come into our communities and build schools in our communities. So that people not only have a dignified home, which we provide and we pride ourselves in, but also that the children in those schools can have access to quality education.
PvZ: Yea, that’s incredibly important. Real estate development in South Africa obviously has its regulatory challenges. You’ve got financial challenges to overcome, and at the end of the day, brick-and-mortar is a difficult task in and of itself. That said, what motivates you to do what you do?
KM: I mean, I come from these townships we speak of. You can’t just look at the end result and see me in my office and being a property developer. It was a journey. Like I say, being born in Soweto and just having that exposure of poor communities around you. And two hours later you’re in Sandton and you’re seeing all this beauty and wealth around you, it did something to my mind.
And my mom always emphasised the importance of education, and it’s through education and through working very hard and getting myself educated, that I’ve been able to get to where I am. And what motivates me is that I’m not special at all. I think I’m a pretty average guy, actually, who just works hard and has been well-educated.
But I come across many, many, many people that are 10 times smarter than me that just didn’t get that opportunity. So I’m motivated by just trying to help where I can, to give as many people in our country this opportunity to be able to uplift themselves. And thus uplifting their families, and then thus uplifting the rest of the country. And I think that’s just the one thing that we actually really, really, really need in South Africa.
You often hear politicians or people in business or whatever, saying it’s important to get education. But, being a product of that and actually having been part of rolling out the strategy of building new schools and actually seeing the impact that it’s had on many, many people’s lives and continues to have. I just want to continue on that trajectory and making sure 200,000 more people have these opportunities.
Advice to Young South African’s
PvZ: Great, and some of the challenges that we look to as a society when it comes to education, is access to education. But a lot of challenges are really sort of champagne problems. South Africa has the highest income inequality back in the world. And this is obviously an issue that we need to remedy through education and a whole bunch of other means.
That said, what advice would you give a young South African who does come from an underprivileged community? Who doesn’t have the opportunities that a lot of people in developed countries as well as from privileged backgrounds do have. Now, what sort of advice can you give a young South African looking to build a career for themselves the way that you have?
KM: Look, before advising him, I just want to make it clear that I, as much as I’ve worked very hard to be where I am, I also didn’t come from squalor. My mom was a nurse, she was able to buy a little house so I had a roof over my head; I had three meals a day. As much as she struggled to pay the school fees, she was able to do that for me. So that in itself is privilege.
So I can’t fully identify with a kid from Alex who maybe is an orphan, or both parents are unemployed, and there are like 8 people in the house, and those things do play a huge role. Telling someone like that, just go to school and all will be all right, makes me a little bit uncomfortable, because I just don’t know that sort of challenge.
But what I would say is that in life in general, we all have problems. And I always tell my younger brothers that you always have to just play the cards that you’re dealt. There’s a lot of people that are much poorer than us. There’s a lot of people that are much richer than us. But you can’t focus on that because that’s not going to change, that’s just the cards that you’re dealt. Rather focus on playing those cards.
And what I would say to those younger South Africans is that the first step is education. That’s just the reality, especially if you if you come from a situation like that. People just won’t take you seriously if you don’t have something that’s backing you. So just start it, and it’s not just about the paperwork, and I think that’s one of the problems in South Africa. That people will be like, yeah, I went to school and got a degree or whatever, and I’ve got a qualification, but I’ve never had a job. But there’s a reason they call it a qualification – you qualify to be in the real world. It doesn’t really mean nothing.
One of my partners here in the business, who runs one of the big groups within the business, always says you can’t take that degree to Standard Bank, to Nedbank, because if you do and say I want to cash it in, they’re going to laugh at you. So, it’s important, but it doesn’t really mean much. All it says is you’re worth giving a chance to. So start there, get yourself educated, and go out there and hustle.
Again, in South Africa, we complain a lot, but you look at people from Zimbabwe, those people are educated. A majority of the population is very educated and very smart, but they come here and they’ll take a job as a plumber, or a street worker, or working in a restaurant, because they don’t want to just sit there and complain. And then next thing you know, the guy is a manager. The next thing, he’s running his own store. So instead of complaining, they work with the fact [inaudible].
And you have a look at poverty – Africa and South Africa are not the only poor countries. If you go to Asia, if you travel. I mean, I was in Bali the other year, and gee whizz! I mean, it’s not the most formal economy. People are out on the streets hustling, selling something. And that’s the sort of attitude that we need.
And I think in a country that’s full of opportunity like ours, if you get yourself educated first, and you have a positive attitude. Whether it’s in a year, or 3, or 5, something will give. Because business people and just corporations are looking for problem-solvers with good attitude, so it doesn’t matter where you start.
How COVID Has Impacted the Property Industry
PvZ: Yea, that’s a great message. So shifting gears a little bit, 2020 has obviously been a very interesting year from all angles. How have the coronavirus pandemic, and lockdown in particular, impacted your business?
KM: I mean, it’s been tough for everyone, and we were locked down; our business is a people’s business. We employ over 1,000 people and half of them are out there on the streets. They’re doing construction; we’re selling houses. So when you say sit at home, that was very, very tough for us as a business.
But again, the culture of this organisation is a bit similar to what I was talking about, about playing the cards that you’re dealt. And it’s about being innovative. It might be a big company, but all of our leaders are very accessible and can make decisions within a matter of hours or days. And we had to adapt and adapt very quickly, from doing things online, that’s on the sales side. Restructuring the organisation and being able to be all hands on deck to be able to survive.
We all had to play our part, take salary cuts for a month or two, so that we could all survive. But on the other side, we were able to come through it quite well because interest rates have dropped quite significantly, which stimulates the housing market, especially the affordable housing market. When I say affordable housing, I’m talking about houses between call it 500,000 up to one 1.5 million. That’s our bread and butter.
So as much as those are the people that lost their jobs during the lockdown. Because there’s such a huge backlog in providing affordable housing, if we use our numbers, say there’s a million people that need affordable houses, and 200,000 of them lose their jobs. There’s still 800,000 people working, needing these houses. And in the country as a whole, maybe we’re doing 10 – 15,000 a year.
So now suddenly that 800,000 are working with interest rates that are 200 basis points lower, and they’re like, this is definitely the time to purchase. So it’s been quite positive. The results have been stronger than expected, and we foresee that happening for the next year or two. And just continuing to look at different products to be able to roll out to the communities that so desperately need access to housing.
PvZ: Great, so access to housing is one thing, but then access to the Internet, particularly as it relates to education. How important is this in your business and how do you factor that in when developing these homes for people?
KM: Well, again, I’ll use myself as an example. We’re in 2020 now and access to Internet is, if you’re like middle-class, everyone’s got Internet. But I’m 36 now, and 15 years ago, Internet wasn’t as readily accessible as it is now.
But I was lucky, I had a smartphone and I got into it quite early and listening to different podcasts, etc. And I often say the Internet pretty much saved my life, because as much as I was going to university and studying, I just still wasn’t sure, because there was no kind of advice. And my mom has done everything for me, but she’s a nurse and she only knows so much. My grandfather was a factory worker and my grandmother was a domestic worker, my aunts are nurses.
And social capital is an important thing, coming home and being able to discuss your career plans and get advice from your mom, your dad, your uncles, and extended family is important. And what the Internet did for me, I was able to listen to podcasts.
So as a 19 – 20-year-old, I could download a podcast of someone in the United States, and that’s exactly what I did. And I’d listen to different lectures and conversations of people at Stanford University, or from Harvard, and just how people build up their careers. And that kind of thing helped me to plan and I kind of followed some of the plans that I’d come across. And again, that’s how I got to where I am.
So I’m a huge believer in access, not just to education, but to the Internet, because it allows people to take what they’ve learnt at school and apply it into a completely different world that opens up literally the entire world to you.
I mean, I can Google anything. I want to say Google will never come back to you and say, hey, are you stupid? You can literally ask it anything. You know, how to do, make X,Y and Z, and it’ll give you an answer, no judgment.
So in our communities, access to the Internet is vital, and we’ve got a partner who does the fibre and an ISP. But again, it wasn’t an easy journey. It wasn’t just about come, let’s get Vodacom or whoever. We needed the right partner who understands that you will make your money; it might not be in 2 or 3 years, but it’s going to be over the long-term because we need those prices as low as possible.
I mean, our clients are already spending, it sounds like nothing, but R600,000 to some families is a lot of money, and they’re working very hard for it. So now they’re also paying school fees at the schools that we put up there. We need those schools fees as affordable as possible. Access to Internet because these schools try to integrate them online into their programs.
So I need that ISP to come in at a price that’s as affordable as possible. And we’ve got a few models that we’ve rolled out, and in every single one of our new developments, that is part and parcel of [inaudible]
PvZ: Great, so are you predominantly focused on Gauteng at the moment?
KM: Yeah, just because of the nature of our business. We just believe that you need to be able to drive to your problem. You don’t want to have to (inaudible) to your problem. Property development is a tough space. You need to manage meticulously, timelines, everything, and then also there’s the construction. When you watch television and you’re [inaudible] so when it’s all in Gauteng, which is where we’re based, we’re able to manage that process quite intensively.
Another thing, this is where the market is. This is where the jobs are, and this is where the floods of people are coming from all over South Africa. They continue to come to Gauteng. So it doesn’t really make any sense for us to go to where they’ll be leaving.
PvZ: Of course.
KM: Let’s focus on the backlog is already massive here, and, yea, so Gauteng is our focus.
PvZ: Great, and going forward, what are some of the projects that you’re most excited about?
KM: A lot of them. If you’re looking at our development at Sky City, which started in 2016. I mean, we’re doing 18,000 houses there in different phases, of course. And about 3-odd thousand have been built and occupied. So we still have 15,000 that we’re rolling out. We want to build more schools there. We built a school in partnership with Royal Schools, which is operating and doing well. We’ve got a massive shopping centre there which needs to grow. So that’s a very, very exciting project there, and continuing to just improve our product.
And there’s another one in Pretoria called Sammy Marks. Again, another mega-development, which is going to be similar to Sky City in terms of doing integrated development. We’re going to bring shopping centres, schools, roll out different types of houses. And then it’s a proper integrated community. So you have a R600,000 house, or up until, you know, call it 2 million.
So South Africans mixing, and, yea, it’s just very exciting. There’s a lot of work opportunities in property development, residential property development. And it’s just, when you see the start, where you’re literally just buying raw farmland. There’s nothing on there, it’s just the veld.
And 5 years later, you build your first house. And 5 years later there’s like 3, 4, 5,000 houses there. There’s schools, there’s shopping centres, and people have dignity, and you can see the joy in their faces. Yeah, I just can’t wait to continue doing that.
I think it would be nice to also do a project with the government, because I’m a big believer in the private sector and the government working together to try solve some of these enormous problems that our country is facing. We can’t do it alone, the government can’t do it alone. I don’t see why we can’t do it together.
PvZ: Yea, I mean, on that point, what is the current state of GAP housing, affordable housing, and RDP housing in South Africa at the moment?
KM: We don’t really do RDP, but we do tap into the FLISP subsidy. So, certain houses, if you’re buying a R500,000, R550,000 house, the client is able to get a subsidy from the government up to, I’m not sure, but about, call it R50,000, which helps. Because if you’re buying a R500,000 house, who knows? The payment on that is probably R4,000. But if you can get R50,000 off that, it takes your payment to under 4,000, so it really does help our clients.
These are little things that people don’t know about, what our government is actually doing. It’s not just about them building houses and giving them away, but they’ve also assisted many, many, many people to access houses like ours.
But the reality is that there is a backlog everywhere, whether it’s affordable housing, GAP housing, RDP housing. There is massive, massive backlog. But again, I say, you’re only going to just dent if we all work together. I mean, even in the private sector, we as a business, we like competition, because we can’t service this market alone. And we often help some of our competitors because, the more the industry grows, the more we can actually solve this problem.
PvZ: Yea, that’s a very mature approach, especially given the fact that there is competition in the market.
One of the things that stands out to me is the technical challenges faced in coordinating such massive projects. What sorts of technology have you adopted internally in order to streamline those processes?
KM: I mean, it’s very difficult to say because property development starts all the way from land development up to sales. But of course, technology is a big part of what we do. I think, speaking of technology, I think it would be much better on the government side, because they’re the guys that are actually processing a lot of these applications. If they could improve on the technological side, because a lot of stuff is still done manually. And you often have to drive there and do a submission, it gets stamped, taken to this department through the corridors. So I think that’s where it can improve a lot.
For us, there’s a lot of products for private developers that we use just for our own statistics and making our life a lot easier. And we continually assess different types of technologies, but it has to be useful. And I find, I suppose this conversation is shifting, but a lot of developers of technology often try solve problems that don’t exist.
So it’s important for you to know what the actual problem is. It doesn’t help for you to develop an app that can brush my teeth. You’re clearly very smart that you can develop something like that, I mean, jeepers! But it’s not really solving any problems.
So I think that’s where the challenge is with a lot of the technology that we see out there – it’s fantastic, it’s great, it’s innovative, but it’s not really solving my core problems of business.
PvZ: Yes, it’s something that I’ve often felt is that Silicon Valley startups often focus on Silicon Valley problems, and not developing problems that we have in Africa.
The State of Education in South Africa
PvZ: So to round off this conversation, I’m going to ask one last question that we ask all the guests. And that is, what do you believe about education, or the current state of education, that most people may disagree with?
KM: Phew, that most people may disagree with? I mean, I think it has its place. I know the biggest criticism is how education has changed and we’re still doing the old boring approach. But I think in a country like ours, where we are so, so, so far behind, I think even just doing that step, the good old-fashioned step, I think even just doing that and making sure we’re doing that right, I think it’s still very, very beneficial.
You’ve got to crawl before you start walking and running. And I think some of those problems about innovation and how education is delivered globally, I mean, you’re comparing yourself to Eton College and world-class schools. Or even locally to St David’s, St John’s, St Mary’s. I think those are the guys that should be looking at kind of disrupting the existing model, because they’ve got the facilities and the capital to be able to execute that and be a working model. And that’s not to say I’m not for innovation and technology in how we roll out education. In fact, I’m a big [inaudible] and it can make life a lot easier.
But all I’m saying is that in a country like ours and where we are in that education spectrum, I’ll even the take the good old-fashioned sitting down in class, writing exams, just because I think we’re so far behind.
PvZ: That’s a really, really good point. Kgothatso, I really appreciate you taking the time and I really enjoyed this conversation, thank you so much. And for those that are listening, if they want to find out a little bit more about yourself, or a little bit more about your companies and what they do. Maybe just give us a little bit of information where people can reach you.
KM: Yea, I mean, they can check out our websites. Just Google Cosmopolitan Projects and a lot of information will come up there. You can see the different developments that we’re rolling out, and we literally cater for everyone. If you’re looking for a 3-bedroom house and your budget is 6, 700,000, we’ve got something for you. If you have R2 million and you’re looking for something, we’ve got something for you.
So check out Cosmopolitan Projects and Central Developments, which is our other company. And to reach me, you can just hit me up on email, [email protected] That’s [email protected], c-o-s-m-o-p-r-o.co.za.
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