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Opinion: Going once, going twice... Auction industry to change

May 28 2017 06:00
Tirhani Mabunda

Auctions, according to information held by the National Auctioneers Association, date as far back as 500 BC.

Back then, women were being auctioned off as wives to the highest bidder. The practice was so rife that it was considered illegal to allow daughters to be “sold” outside of an auction.

The world has come a long way from the time of bidding for wives, but in a way auctions have kept more or less the same format of operation.

Goods and assets that include property, cars, portions of land, jewellery and livestock are still being sold off to the highest bidder – albeit in ascending order.

There are different types of auctions across the world that keep this multibillion-dollar industry running daily.

* Absolute auctions or auctions without reserve, refers to auctions where goods are sold to the highest bidder without requiring a minimum bid.

The seller or any of his/her agents, cannot bid for those goods and cannot withdraw them from the auction once public bids have been opened.

* Auctions with reserve or with upset price, are those where the seller has the right to set a minimum price for the goods they are auctioning – and has the power to withdraw those goods at any moment before the completion of the auction. They may also bid for the goods as long as competing bidders are made aware.

Auctions may take place at live locations where potential buyers converge in one place and the auctioneer takes bids from the floor.

Advances in technology now allow for online auctions however, where prospective buyers can bid for goods from the comfort of their homes or offices.

In South Africa, the R2 billion auction industry is a tightly contested space that is dominated by large white-owned auction houses.

The few black auction companies in existence are almost operating on a part-time basis, because of a scarcity of work.

About three black-owned companies have, however, managed to gain some traction and scale in this tough industry.

They are Tirhani Auctioneers, Rihlazana Auctions and Tumai Auctions and Valuers – the leading handlers of government auctions.

Black-owned auction companies are estimated to receive under 2% of the industry’s annual fees of well over R2 billion.

That is what the newly launched SA Professional Auctioneers’ Association (Sapaa) is trying to change.

We are an organisation that is asking hard questions of the auctions industry, with a view to transforming it.

Sapaa will gather and analyse all accurate data in this regard, with the intention of making it publicly available.

Our aims and objectives include:

. Establishing minimum entry levels for auction industry employment, including educational qualifications and experiential requirements.

. Transforming the auction industry by creating conditions that are conducive for the entry of historically disadvantaged persons and promoting equitable distribution of work.

. Achieving substantial change in the racial and gender composition of ownership, management and control of auction companies.

. Influencing the enactment of legislation, regulations and policies to regulate the industry and introduce preferential procurement.

I was previously chairperson of the SA Institute of Auctioneers (SAIA) when we drew up the Draft Auction Industry Code, which outlined the above objectives in detail.

As an independent organisation, Sapaa has adopted this code as its mission. We are not discriminatory, but we are very serious about transformation - not only for our members, but also educating the black population as much as possible about auctions.

We believe that transformation is actually an advantage and not a disadvantage to the auction industry, as it has the potential to increase the size of the industry by introducing more participants (buyers), particularly from the black population which is largely sidelined.

One of our members is the African Training Academy and School of Auctioneering (Atasa), which is accredited by the Services Seta to offer the NQF4 Auctioneering Services qualification: a 12-month qualification consisting of both theory and practical components.

Atasa has trained more than 100 auctioneers in South Africa so far.

But who makes up SAPAA?

We have 13 members. Of the member companies, two have a national presence; nine are from Gauteng Province; one is in Kwazulu-Natal and another one is in Limpopo.

Twelve of the members are majority male owned companies and one is woman owned.

Contrary to popular belief, we are of the strong opinion that auctioneering can appeal to the previously disadvantaged.

The majority black population must be educated to embrace auctions as a preferred method of selling and buying both movable and immovable assets. Although there are no statistics that are publicly available, one could guestimate that auctions appeal to less than 5 million of South Africa’s estimated 55 million population.

This means that the scope for growth is there and should be explored. It is time for the industry in this country to also embrace change and open itself up, especially to the historically disadvantaged.

Mabunda is the chairperson of Sapaa and owner of Tirhani Auctioneers

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