Mthembi-Mahanyele: Conference of the Institute for Housing in South Africa

10 Oct 2002

Keynote address by Housing Minister Sankie Mthembi Mahanyele at the Institute for Housing in South Africa Conference, Buffalo City

Programme Director
MEC Nkwinti
Mayor of Buffalo City
President of IHSA
Distinguished guests
Ladies and gentlemen 

The past eight years of democracy have clearly illustrated what a nation can do when given an opportunity to operate in an environment created through democratic principles. The word democracy has been given different interpretations; to some it meant throwing away all caution and doing what one likes and wants to do with their lives. But to some it meant seizing the opportunities provided by an open, transparent and democratic environment and these have benefited and continue to do so today.

The first five years of implementing our housing policy adopted by government at the end of 1994 was not easy at all. We moved into an environment brought by a myriad of segregative pieces of legislation and administrative centres managed on a racial geographic basis.

The new Housing Department had no balanced skills; the provincial administrations were battling to merge old structures into single, cohesive, organised and productive structures. A lot of what we planned to do, we have to a great extent achieved. But a lot still need to be done. This should not dispute the fact that in governance, the policy fundamentals are in place and what remains is for us to enhance and strengthen our existing policies, reform where necessary and discard whatever is obstructive to delivery.

1997 was an exciting year for most of us. The delivery machinery produced 322 000 dwellings to the poor, thereby producing more shelter to the homeless and desperate. We have slowed down a bit since then, to strengthen our capability thrusts, to refine our administrative and management centres, but also to make space for quality delivery as an additional input to the numbers already produced. 

Since the beginning of this second term of government, we have moved substantially in trying to improve the quality of the houses we produce. Whereas there were fears that this change in delivery strategy could affect the pace of delivery in some provinces, it has instead seen massive increase in the number of peoples housing process projects. It has improved involvement of the poor in the construction of their own houses, and seen an improvement in quality of the structures that we produce. The eight years of our democracy therefore bears testimony that we have capability to improve our delivery both quantitatively and qualitatively.

Savings by the housing consumers are gradually taking root and the 351 000 members belonging to savings schemes registered by smaller banks are an encouragement to those who may not believe that even the smallest of savings can make a difference towards increasing the value of the governments subsidy. Our focus as a Department is to ensure that families do not depend entirely on government to access their housing but join effort to create homes they can be proud of because they participated at the level of both construction and investment. 

Partnership between stakeholders is central in achieving our goals and objectives. Co-operation, co-ordination and integrated approach to issues including problems enables the role players to emerge from whatever difficulty strong enough to move forward with what they want to achieve. 

Many small savers have deposited their savings with smaller banks such as Agishana, PEP Bank, Ithala and Teba Bank to benefit from services not availed to them in bigger banks. Nurcha has played an important role in mobilising savings, it registered 40 000 savers, half of whom are based in KwaZulu-Natal and Gauteng provinces. You will observe that the savers are from both the rural and urban areas.

Government continues to interact with bigger banks in an attempt to reduce and remove those obstacles denying individuals or households services they could enjoy if the system was structured differently. Ways of solving this problem are underway. 

However, governments move to encourage people to save must not in any way be misconstrued as substitution for bank credit to these communities. The allocation of resources between the present and future consumption remains one of the most fundamental economic choices facing any economy. The choice affects not only the rate of growth our country can have or enjoy but also the standards of living for our future generations. Saving is therefore a necessary and crucial activity for any society.

Since the last election in 1999, my Department has been exploring means of accelerating access to housing finance through the studies and experiences of other countries with conditions similar to ours. Chile and the United States of America are but two of the countries from which we can learn a lot in terms of dealing with the problems the poor currently have in accessing credit. The experience in Chile further demonstrates that the poorest of the poor save to resolve their housing needs. It is the responsibility of the individual household to initiate processes to address the family housing needs. Families approach government to support their initiatives and compliment governments efforts. 

The Savings programme in Chile has made prioritisation of beneficiaries an open and transparent process so that those who save are given preference in housing allocation. The programme has positively impacted on the quality of the housing products in general. They are seen as a support measure than an entitlement to resources. In short, lessons learned from Chile confirm the following: 

• The poor will always save in order to contribute to the solution of their housing needs.

• Appropriate categorisation of levels of poverty is critical to ensure that the poorest of the poor benefit form Government programmes.

• Linking savings with subsidy and credit could be one of the effective strategies for quality improvement

The Chilean experience provides a challenge to us. The private sector and government are jointly involved in monitoring the families behaviour of saving. Households become committed, dedicated savers who consciously contribute to their housing developments. The banks and the Department of housing and Planning in Chile compile a consumer record of the savers finally assists the government to allocate the subsidies to those who have made an effort to save. The system is simple, accessible and consumer friendly. This approach has captured our attention. 

Locally we are working out a system of linking household savings to the governments subsidy and progress in this direction has been made.

Our task has been and will always be to help people to help themselves in creating dignified, healthy, and, with time, increasingly comfortable living conditions. The involvement of housing consumers in the housing delivery process is a strategy specifically aimed at achieving this. Their contribution of their savings and/or sweat equity in the construction of their homes is contributing massively to the enhancement of quality on the houses that are produced. 

Whereas some commentators had predicted a decrease in savings and self-building due to the increase of the housing subsidy to R22300- 00, there are early indications that the beneficiary contribution of R2439-00 is propelling people to save. The number of PHP projects has increased by almost 400% in many provinces, which shows that those who cannot readily raise the required amount are prepared to invest their sweat equity. The established contractors have also positively received the restructuring of the housing subsidy. It is predicted that those who had initially left the low-income market are beginning to come back in numbers. The return rate is estimated at 8 - 10% during this financial year. 

It is my conviction that we have given ourselves enough time to devise the means to allow financial institutions to lend to the historically disadvantaged and to establish a savings mechanism for low-income earners without putting housing delivery to the poor on hold. Because the subsidy and savings can be linked, the programme now offers us a first opportunity to fully involve subsidy beneficiaries in housing delivery through their own efforts to maximise what the subsidy can do for them in the housing market. They do this by saving. 

Our strategy in respect to the enhancement of quality to low-income housing couldnt have succeeded had it not been complemented by the effective monitoring and regulatory mechanism. Quality control in housing delivery also means that there should be proper protection of housing consumers and capacitation of homebuilders. 

Our homeowner protection strategy provides for the National Home Builders Registration Council to enrol the homebuilder and to direct the homebuilder to building quality standards as prescribed in the Red Book. The homebuilder, on the other hand, enrols each house built with the NHBRC, supplying the soil classification and any relevant engineering certificates relating to foundation or other structural design; the NHBRC then carries out spot check inspections to assist the homebuilder to comply with the norms and standards. 

If there is a dispute between the developer and the housing consumer, that dispute is referred to the NHBRC who in turn intervenes and assists in making the developer accept responsibilities. The final step in the circle is a fund for the rectifying of major structural defects which is a safety net coming into effect where a home builder is unable to meet his structural warranty obligations to the housing consumer. 

The Council currently boosts 5670 registered homebuilders and a very low percentage of defaults or lack of adherence to quality standards by the contractors. The percentage of de-registered homebuilders has decreased from 5,9% in 1998 to 0,2% in 2002, indicating a sharp decrease in non-adherence of quality standards in home construction since we shifted our focus from quantitative to qualitative production.

The National Home Builders Registration Councils mandate can be summarised as follows:

• To represent the interests of Housing Consumers by providing Warranty Protection against defects in new homes;

• To provide protection to Housing Consumers in respect of the failure of home builders to comply with their obligations in terms of this Act;

• To establish and to promote ethical and technical standards in the Home Building Industry;

• To improve structural quality in the interests of Housing Consumers and the Home Building Industry;

• To assist Home Builders, through training and inspection, to achieve and to maintain satisfactory technical standards of home building;

   

The publication of the Housing Code in 2000 was a milestone in the housing policy process. The Code sets out clearly in one comprehensive document, the overall vision for housing all the countrys poor. In addition, it shows the significant achievements notched in addressing the problems outlined, and thereby making inroads towards resolving problems around the delivery of low cost housing in the country. The Code is therefore the home for all National Policy, current and future. Both the Housing Code and the Red Book are crucial documents for the construction and housing practitioners. 

Different sectors of our industry have a pivotal role to play in creating an internationally respected construction and housing industry. We have seen evidence of the might and strength of the people who since 1994 have formed lasting and vital links and partnerships with government. It is through the bedrock of the above-mentioned policies that made it possible to harness and invest in initiatives that have made the construction of 1,4 million housing units. In spite of the significant gains made, we do acknowledge that more participation from other sectors is needed in order to meet the housing challenge. However, the building blocks have been laid. We have a structure, a vision, policies and programmes and a legislative framework in place creating a platform from which all efforts towards accelerating social and economic change within the low cost housing industry have been launched.

IHSA has a role to play in the construction; it has to put into place an agenda that will indicate where it is going. I have continuously raised the issue of transformation in IHSA. The Institutes understanding of transformation sometimes differs from that of the Department. Transformation of IHSAs agenda is crucial. 

The professional bodies working in the construction sector, I think are expected to be affiliates of IHSA. IHSA HAS TO DRAW UP A PROFESSIONAL PROGRAMME of action of how they will service these bodies.

Training curriculum and what happens in tertiary institutions across the country in the housing related faculties is something IHSA should interest itself in. 

The theoretical developments and debates in the world around housing and human settlements are part of what should be IHSAs business. A gathering of this nature occurring every year does not take us very far unless it also includes debates beyond our borders. The world is debating the future of human settlements, the growth of cities and legislation that impacts on citizens accommodated in settlements we are custodians of.

Transformation should not just mean a black president but should entail a programme that directly contributes towards transforming the entire industry.

We are now part of the international community and our participation and understanding of changes around us is essential. We are now part of the world through its institutions. Does IHSA think of programmes around international events like World Habitat Day? Does it participate in such events? Does IHSA think of programmes that could mentor the young in the industry?

These are the questions I think all of us have to find answers to.

It is our mutual responsibility to address the housing challenge in a focussed manner implementing creative and innovative solutions. This because South Africas Housing Policy carved on the national historical annals in 1994 and driven by the people of this country belongs to us all.

I thank you.

Issued by Ministry of Housing