Mthembi-Mahanyele: Signing of low-cost housing deal with US

13 Jan 2003 

Speaking notes for Housing Minister Sankie Mthembi-Mahanyele, at the Official Signing of the OPIC Deal, Sheraton Hotel, Pretoria

Minister Alec Erwin
Honourable Mr Robert Zollick
OPIC delegation
Members of the media
Ladies and gentlemen

Today is a great occasion in the history of housing delivery in South Africa, marking the conclusion of an agreement on a significant support project that started with my visit to the United States eleven months ago. Since then officials from my Department have been in negotiations with officials from OPIC (Overseas Private Investment Corporation) that culminated in the conclusion of negotiations late last year. 

OPIC has agreed to fund our housing programme to the tune of R200 million in a deal that will bring much needed relief to thousands of homeless people in South Africa. This is a landmark transaction between South Africa and the United States of America, which is one of the countries that have been partnering us in our quest to develop our society and help push back the frontiers of poverty. 

Not only will this deal result in as many as 90 000 to 100 000 new homes for needy South Africans; it also sets in train a process whereby foreign funding for low-income housing will become a welcome reality in the years ahead. 

One of the major constraints for small contractors and women contractors entering the construction industry remains access to finance. Our arrangement with OPIC pilots a programme with intermediaries that will offer credit as well as project and cash flow management to contractors at affordable rates. So this is about more than just money - it assists us with much needed financial management skills.

Through Nurcha, the government is able to package finance for low-income housing. To date, Nurcha has helped create investment opportunities worth more than R1,6 billion in the most disadvantaged areas of South Africa.

The terms of the initiative we are undertaking today are structured in such a way that Nurcha will share the risk with specialised lenders, based on agreed criteria, for lending and risk management processes. 

This is the kind of smart assistance we as government welcome, because it can be geared into our economy in a sustainable way. It ensures not only an ability to break down the credit blockade some sectors of the housing market have been facing, but also the enhancement of our own skills in the country in terms of managing housing processes.

Allow me to take this opportunity to thank those from both the US and the South African side who have been involved in securing this important agreement. You have enhanced our capacity in the struggle to overcome poverty and for sustainable development. And you have contributed to the strengthening and sustainability of the development-based relationship between our two countries.