Land reform and private investment can go hand in hand

Combining a successful land claim, community development, hard-nosed economic opportunity, responsible conservation ethics, and a fabulous tourist destination, Mdluli Safari Lodge is a win-win-win-winner.

While land claims can be controversial – and even emotive – issue, it can, if well managed, create jobs and equitable economic opportunity. This is exactly what transpired with Mdluli, a one-of-its-kind Section 12J project situated in one of the most iconic wildlife areas in the world – the Kruger National Park.

Some background

Back in the bad old days in 1960s apartheid South Africa, the Mdluli community were forcibly removed from their land inside the borders of the Kruger National Park. But then, after the dawn of democracy in 1994, the Mdluli community instituted a land claim process to secure freehold title to the 850 hectares from which they had been alienated. It took a while – as these things do – but today the land is theirs, registered under the Mdluli Community Trust.

The lodge

Having regained title to their land, the community had to decide how best to maximise economic opportunities from their land, and also how best to achieve long-term sustainability. So, acknowledging that the best use of the land was wildlife tourism, they entered into a partnership with the private sector via Mdluli Safari Lodge – a 12J-backed hospitality venture that officially opens its doors in October this year.

Mdluli Safari Lodge will feature 50 luxury double air-conditioned en-suite tents with private patios and indoor and outdoor showers. An elevated 360-degree viewing deck atop a large rock formation will be the perfect spot for sundowners, and for gazing into the distance over the unspoiled bush of the Kruger.

By working closely with South African National Parks (SANParks), Mdluli has been built to an eco-friendly, sustainable design with a light footprint on the environment.

After carefully assessing the supply and demand of accommodation within Kruger, the Mdluli community and their private partners identified the affordable luxury sector as potentially the most promising and profitable.

The community

Members of the Mdluli Safari Lodge board include Nelly Mdluli and Buyile Mdluli as non-executive directors as well as experienced corporate veterans Malcolm Segal (non-executive director) and Nick Dennis (non-executive chairman).

In recent comments about the project, the Mdluli Community Chief, Inkhosi MI Mdluli, said he views the project as bringing ‘stability and social cohesion to the community’ while ensuring that ‘schools, roads and clinics shall be upgraded, and poverty eradicated through the creation of skills and employment opportunities’.

Returns and rewards

Mdluli is expected to create new job opportunities, and to generate sustainable income for the Mdluli community. Also, as one of the very few affordable luxury accommodation offerings in the park, it’s a particularly good venture for investors.

The Lodge will be managed by Nkambeni Safari Camp, a division of Tourvest Accommodation and Activities – South Africa’s largest inbound tour operator. In May this year, at African Travel Indaba 2019 in Durban, Tourvest announced that it’s investing a meaningful amount in the Mdluli Safari Lodge project.

The total investment in the project now stands at R60 million of which R40 million has been raised to date with the balance under-written, so there are still opportunities for investors to take advantage of Mdluli’s Section 12J offering.

The realisation of this multi-year project has all been made possible with Section 12J, and the backing of The Grovest Group, which is South Africa’s most experienced promoter in the 12J space.

The economic potential of Section 12J

Woven into South Africa’s Income Tax Act, Section 12J enables investors to provide much-needed capital to small-to-medium enterprises (SMEs) while receiving an immediate tax deduction that is effectively equal to 100% of the amount they’ve invested. The end result is that investors in the top tax bracket can see relief of up to 45% on their investments. In turn, their risk capital is also substantially reduced.

On the flip side, SMEs – which are the engine room for economic growth – receive a better chance at success and, ultimately, becoming large taxpayers in future.

As of February 2019, in excess of R6 billion has been ploughed into Section 12J funds in South Africa, helping countless SMEs get off the ground.
What Mdluli Safari Lodge shows is that the right private investment vehicle coupled with land reform can unlock fresh economic opportunities for the country. The opportunities are particularly abundant in our country’s tourism sector, which has been highlighted as a big area for growth by the likes of the World Bank.