Both Sides of the Mercantile Relationship
A couple years ago, DigsConnect published a student housing report. I wrote the opening chapter, and in a recent application I’ve been working on I used that chapter as a writing sample, but with a couple touch ups. It’s quite a snappy little piece of writing, which articulates my worldview with a lot more formality and professionalism, so thought I’d share it on the good old Aviation Club. Enjoy.
As an undergraduate at the University of Cape Town (UCT), I served as a student leader on the Student Representative Council (SRC), a position which permitted me a first-hand perspective into the challenges faced by the modern South African student body, in a context that was broader than just my own. It was during this tenure that the magnitude of the national student housing crisis became apparent to me.
While there is little doubt that this problem places students from less privileged backgrounds at greater risks, and addressing this is of paramount importance if we’re to build a stable and prosperous nation, students arrived on our campus from myriad of socio-economic contexts reflecting the diversity of our South Africa - and thus the need for multidimensional solutions. Some grew up beneath the shadows of Sandton’s skyscrapers erupting like glassy candles toward the clouds. Others hailed from beneath the baking sun of rural KwaZulu Natal where they shared rugged roads with grunting tractors and cattle being herded to pastures.
They came in hundreds and thousands to Cape Town, some joining siblings at the university, while others, entirely alone, had taken 18-hour buses and were the first in their families, sometimes even their towns and villages, to attend university. They came carrying their belongings, blankets, books and clothes, and the weight of expectations and hopes for a better future for their communities back home. They came to break the cycles of poverty that have robbed so many South Africans of their dignity. And far too often, they were left homeless.
I was born on the eve of our democracy; the Mandela generation, the born-frees, the beleaguered millennials who have to reconcile every wrong perpetuated on every previous generation, which weighs heavily on our shoulders. We understand implicitly that if we don’t make it work, it would have all been for nothing.
These students who arrive on our campuses may have come from all over the country but they all came seeking security and shelter. They came seeking a home for their new start. And from my little office in the Steve Biko Student’s Union Building it was my task to find the solution.
Within the broader narrative and context of our country, this situation wasn’t surprising. Our universities were built pre-1994, and while enrollment had been growing impressively, supporting infrastructure at public institutions had not been built at a commensurate rate.
Many felt that the duty to rectify the situation lay with the public bodies and to a certain extent this was perhaps true. However, where they fell short, the private sector had begun to respond to this critically underdeveloped market. Landlords would call me regarding vacancies and beds-to-fill; wanting to know how to advertise these rooms to students.
The plucky entrepreneurial spirit of ordinary South Africans kicked in and people realised there was an opportunity to facilitate a burgeoning demand using assets they already owned but could not efficiently monetize due their inability to access prospective tenants. Thus, DigsConnect as a concept became obvious as an online marketplace to connect sellers (landlords) with buyers (students). As with all things obvious, I was completely blind to it.
There’s a fantastic commencement speech by David Foster Wallace where he tells the story of two young fish swimming along, and they happen to meet an older fish swimming the other way. The older fish nods at them and says "Morning, boys how’s the water?" The two young fish swim on for a bit and then eventually one of them looks over at the other and goes "What the hell is water?"
It’s a great anecdote about how we can be so comfortably oblivious. How I like to further interpret this, is in the unconscious resistance to new ways of doing things; so much so that the very thought that we can reconfigure the world to suit changing needs and contexts perhaps even feels incomprehensible.
It could be that I’m asking too much of humanity. We are neither infallible nor omnipotent, and the rearview mirror is almost always clearer than the windscreen. Hindsight can be a real bitch sometimes.
Back in my SRC days, in the Steve Biko building, I certainly was not thinking about the efficient monetisation of assets. All I knew is that I had to somehow cobble together a list of Plan B housing options for students that did not get a place in the university residences (of which there were only 5000 beds available out of a student population of 30 000). I hacked together the most basic two page website I could in a weekend. Even the name didn’t get more than a handful of seconds of thought; DigsConnect, because I was connecting students to a trusted network of digs’ (a South African term for a commune).
Once you make an idea real and set it free, it has a way of taking on a life of its own. A student housing marketplace, which would become the largest on the African continent by number of beds per our portfolio of stock, took shape.
The beauty of marketplace technologies is that they democratise access to the supply and demand of services, meaning that the value gained from consumers is distributed amongst more sellers. A more fertile market, one that not only generates access to more sources of revenue but also permits more merchants access to said sources, better serves the economy by negating the stranglehold a property sector under a monopolistic scheme might have.
In the case of student housing, it means that instead of one developer (and far too often a government crony “property developer”) getting a multi-billion rand tender and building all the residences, now everyday South Africans can invest in smaller, more accessible, commune-style properties, and rent these out to students. This means tens of thousands of people benefit, instead of just the one. More people with more money, and more places to spend it, precipitates a more heterogeneous flow of commerce; and that is the essence of a thriving economy.
For the students, having a vast and meticulously curated database, which can be easily filtered to accommodate their specific requirements, represents a massive shift in their autonomy as consumers. No longer will they be subject to monolithic, and often subpar, housing standards. Instead, in this competitive marketplace, landlords have the incentive to offer the highest standards of living so as to attract tenants.
Practically speaking, every year the standard of private student accommodation is improving, and those that do not improve, or charge too much, quickly find themselves with vacancies. Hence, we see that when a free market enterprise is structured to specifically address a social imperative it has the capacity to affect constructive, tangible, change on both sides of the mercantile relationship.
Furthermore, having recently been a student myself, communal living for students also encourages more cohesion and closer bonds, combating the sense of social isolation so many contemporary students experience. Considering the strain already placed on the national budget, we needn’t allocate huge sums for overly ambitious public projects in student housing when the solution can be provided by the private sector.
South Africa has world-class business leaders. It starts with a natural entrepreneurial spirit in our people, the initiative to problem solve, a self-reliance necessary for our survival, and is later reinforced by having to build a business in extremely tough economic conditions. There’s a reason why we say ‘n boer maak ‘n plan. Those that manage to build thriving businesses here have proven that they are resourceful, competent, hard-working, accountable, and resilient. Exactly the kind of qualities you’d want in the people attempting to navigate this dilemma.
While I am, clearly, an advocate for capitalism, I would not go so far as to say I’m a libertarian, and regulation is required to ensure that bad-faith actors intent on taking advantage of vulnerable students are excluded from the marketplace and business is conducted lawfully and ethically. The primary concern here is that thousands of communes are harder to regulate than a handful of giant buildings, especially for the already overstretched Department of Higher Education and Training (DHET) and the National Student Financial Aid Scheme (NSFAS). With their number of responsibilities compounding, both administrations are being held accountable for a deepening crisis yet are not adequately provisioned with appropriate human, financial, or structural requirements.
I do not doubt their willingness, but their task is impossible unless significant resources become available to them in a short period of time. There can be little doubt of their systemic shortcomings and, pardon my animadversion, but if we continue to use antiquated, paper-based systems for such regulation, which is the current technological status of the organisations, we will continue to flounder when it comes to delivery in these departments.
Unless our public administrations take advantage of the vast assets available in the private sector, it is unfeasible to expect them to accrue the necessary quantity of beds to combat the student housing crisis. A collaborative approach going forward would allow said offices to delegate resources elsewhere and let independent businesses and individuals bear the weight, expenses, and incentive-aligned upside of this service.
With the right technology and resources, both of which already exist, we can unite policy, practicality, student wellbeing, and economic stimulation, in a harmony of organisational efficacy where the benefits are widespread.
This technology is the DigsConnect Virtual Res, which, at its heart, is an extraordinarily simple idea. It is a decentralised student accommodation verification system; democratic, instantly scalable, self-sustaining and refreshingly modern. The Virtual Res is financially transparent, meaning that the flow of money from taxpayer to government to bursaries to student to landlord is clean, accountable and auditable.
It also removes the bottleneck of a centralised authority granting property verifications, and instead allows for those that should have the biggest say in the matter, the students, to be not only included but indeed necessary for the system to operate. This is because it is the students that will respond, via the app, to property verification requests directly from the landlords. The verification standards are openly published and easily accessible on the platform, and the technology picks up automatically if the landlords qualifies; further expediting the process.
Since students are being paid on a gig-economy basis for doing accreditations across South Africa, this means that the Virtual Res is creating employment, accountability and enhanced security across the entire sector. Once the student has verified the property, it is immediately updated on the platform, increasing the stock of available university / NSFAS verified properties, which is instantly available to NSFAS students with a simple tap on their cellphones to filter the listings. For the policy-makers themselves, this is exciting because now we have up-to-date (up to the second, really) data that they can use to hone their decision making model and more accurately determine accreditations and funding amounts.
At DigsConnect, we have come to realise this platform has exceeded even our most ambitious dreams concocted during our humble beginnings in the Steve Biko Building on UCT’s Upper Campus. We have begun to enable access to higher education that has been so elusive for so many students, not only in South Africa, but across the rest of Africa also. There are many stories of students from abroad having to grapple with an inefficient system, thus putting their education at risk.
Every year, Grace, a Zimbabwean student at UCT, would struggle to get her student visa, because she could not get the documentation without a signed lease proving that she had accommodation. Before DigsConnect, there was no decentralised platform with a trusted third party accreditation system, and so Grace was exposed to conniving “landlords” demanding deposits in exchange for dubious promises of properties that were often fake.
The overall unpleasantness of the experience and mental tax aside; this lack of reliable accommodation meant that her student visas were always being delayed. This year, she found accommodation on DigsConnect that our team had vetted and with peace of mind paid her deposit. Thus, she secured her visa in time to make it back for the start of the academic year. For Grace, and the myriad of foreign students coming to study in South Africa every year, their path through the system has become measurably less fraught, both emotionally and bureaucratically.
Such streamlining also enhances the experience of struggling South Africans too. Regard Fiona, a single mother of two girls in the Southern Suburbs of Cape Town, who had been diagnosed with cancer. Fiona was unable to keep going to work, but needed an income to support her daughters. She started renting out her spare rooms on DigsConnect, and did so well with those that she ended up opening a second student accommodation house down the road and proceeded to rent out all of those as well. Fiona is building her property portfolio on the back of the DigsConnect platform while taking care of her health and family.
Ordinary South Africans should be rewarded for investing in our economy, for starting small businesses and hiring staff to combat the high unemployment in our country. With more people having the opportunity to participate in a lucrative sector of the economy, we made a remarkable observation within communities enriched by students. Secondary services —local salons, cafes, bookstores—began to flourish in the wake of their student influx. It was putting the money back in the hands of local entrepreneurs, where they in turn were spending it in their communities.
There is nothing greater than communitas, and at DigsConnect we often say “we are committed to community”. We use technology to bring people together; to form communities so that no student feels isolated. We speak often of the ‘Fourth Industrial Revolution’ in South Africa, and we are of the firm conviction that the power to bring this about lies not solely in the hands of the government, but in the hands of young, ordinary South Africans that can build the solutions they and their fellow citizens need.
We have the solution. I am honoured to be sharing this report with you on our analysis of the current government norms and standards, and vetting procedures, for student accommodation in South Africa, as well as our plan of action to revolutionise this sector and unlock the massive potential we see here.