Speeches

Housing vote speech by Minister Brigitte Mabandla, MP to the NCOP

27 May 2003

Madam Chair
Honourable Members 

Introduction

This budget speech follows in the heals of a hot debate sparked by my budget speech to the National Assembly a week ago. Topping the debate is the critical issue of the availability of housing finance to the historically-marginalised groups of our country. However, it would be very disappointing if the debate could overshadow the important issue of accelerating the delivery of quality housing to the poor communities of our country.

Indeed the vulnerable of our society, in particular women, older persons, people with disabilities and people infected with and affected by HIV/AIDS, should remain the main beneficiaries of our housing subsidy grant. These vulnerable sections of our populace should, more than ever before, see that the government is indeed taking bold steps to make them masters of their own destinies.

Our aim is to build solid homes and help in the building of thriving communites while at the same time trying to reverse the apartheid spatial development patterns that we have inherited. In doing this, we ought to reach out and mobilize non-governmental and community-based organizations, private sector partners and the beneficiaries themselves so that we face these challenges as a collective. Critical to this is the need for all stakeholders to begin to play their respective roles in the delivery of housing to our people.

I take this opportunity to thank all the stakeholders who have traveled the nine years journey with us to help us realize our goal of delivering more than 1.5 million houses to the poor. I also thank Honourable Members for your continued support of the housing policy and programme.

Challenges

As Honourable Members might be aware, our provinces have been confronted by a number of challenges in the past nine years of housing delivery.

The tendering process, particularly at municipal level, is still a problem. We have found that the capacity of local authorities and provincial governments to implement the new procurement regime introduced in April 2002 is expected to take a while to develop. This means that the current approval rate of housing projects is most likely to decline from previous levels.

The scarcity of land, mainly as a result of costs that differ from province to province and land claims that have been lodged in various municipalities, still needs our full attention. Provincial departments of housing are continuously grappling with the problem of being unable to finalise housing subsidy applications on the grounds of outstanding or unresolved land claims. 

However, we have not been able to establish as to exactly how many of these outstanding land claims are really stalling the approval of housing subsidy applications received by provinces, nor do we exactly know, the number of the existing unapproved housing subsidy applications as a result of this problem.

Owing to the legacy of apartheid and massive insecurity of tenure, it has also been difficult to reach the expected annual provincial housing delivery targets. The issue of tenure securitisation has also become a complex process, which makes it impossible for provincial departments of housing to fast track the approval of housing subsidy applications. What complicates this process is the multiplicity of tenure legislation with often cumbersome, costly and complicated procedural requirements. 

The availability of land for housing purposes in tribal areas has also emerged as one of the critical issues behind the 2002/2003 provincial under spending of housing financial allocation. The most common explanation is that some tribal authorities are not willing to forgo the powers they have in respect of land allocation, administration and management. However, from informal discussions that our officials had with the institutions of traditional authorities, it has emerged that at the core of the problem is the issue of governance as a whole, which includes both political and economic considerations. In other words, the inherent differences between the pre-and post-modern South Africa’s systems of governance have been cited as contributing to the current non-availability of tribal land for housing purposes. 

We hope the draft discussion document on the role of traditional authorities in governance that was produced by the Department of Provincial and Local Government will help sort out this problem as soon as it is finalised.

The implementation of the National Environmental Management Act of 1998 have also been found to contribute to the delays in the implementation of our projects. This Act requires the compilation of environmental impact assessments, to show the impact that any planned development intervention would have on the environment and its people. Most provincial departments of housing have cited this requirement as a hindrance to housing delivery. Part of the explanation relates to the time taken and costs involved in compiling each environmental impact assessment report. 

In Gauteng, for example, where this matter affected a major portion of the expenditure, intra-provincial interventions had to be made at the highest level to deal with interpretation problems by the provincial department responsible for management of the environmental legislation.

Bridging finance to small and emerging contractors is still a constraint to the delivery of housing. The guarantees provided by NURCHA and the finance provided by smaller specialized banks does assist in this regard but needs to be strengthened and linked to the Department of Housing Emerging Contractor Programme.

More importantly is that NURCHA has managed to assist more than 30 women projects nationally to access finance. The total value of these projects is R77m, and the women were guaranteed by NURCHA to the tune of more than R16m.

However, in total, when one considers all the initiatives made towards unlocking access to finance by women, NURCHA has been able to facilitate more than R500 million to women in the past nine years.

From April 2002, the National Housing Finance Corporation has approved facilities totaling R2 million and disbursed R43 million to the beneficiaries. Through the NHFC’s lending activities, more than 1 500 new housing units have been delivered, and over 400 loans granted. This effort by the NHFC, together with those of the previous years, have changed the lives of more than 2,5 million people for the better.

However, inadequate private sector finance therefore continues to constrain housing delivery and access to quality housing. As I mentioned in the National Assembly, I hope the introduction of the Community Reinvestment Bill will contribute to the flow of credit to developers and housing consumers.

Allow me, though, to reiterate that particular attention is being given to the provinces under-spending, especially those who are not in this situation for a first time.

Housing Delivery

Madame Chair, it is encouraging to note that at least 9,3 million people have benefited from the 1,5 million houses that we have built and the 400 000 former municipal homes that we have transferred to them during the past nine years. The number excludes those who have benefited from the hostels redevelopment and rapid land release programmes. 

Of these houses, Eastern Cape has delivered 218 718; Free State 108 155; Gauteng 387 409; Kwazulu/Natal 245 295; Mpumalanga 105 065; Northen Cape 33 799; Limpopo 100 314; North-West and Western Cape 125 353 and 167 368 respectively. 

Thus our efforts, which included subsidy increase in line with inflation rates, have served to intensify our responses to reducing homelessness among our people. 

Honourable Members, one of the most critical areas of our work this year will be to consolidate our strategy of empowering the historically marginalized entrepreneurs, especially women and help to facilitate the establishment of SMMEs in the industry. We will do this, among others, by intensifying the enforcement of the 10 percent quota set aside for women contractors in the provincial allocations. We will do this with full appreciation of the work already done in other provinces, which have managed to meet and even to exceed this quota. Our records, though, indicate that about R850,8 million from the past eight years’ budget was allocated to women contractors in the nine provinces. This constitutes only about 3, 9 percent of the provincial allocations since 1994. This figure needs to be urgently improved if we are to meet our objective in this regard.

Emphasis on Quality

Quality in housing goes hand in glove with the ability to diversify housing options and the right for beneficiaries to select the type o housing that will adequately address their needs. We have already announced our intensions to intensify the strategy for the densification of certain residential areas to optimally utilise scarcely available land and infrastructure and to provide the growing demand for rental housing in heavily populated urban provinces. 

My Department is in the process of developing a comprehensive strategy for the undertaking of medium density housing development in inner city areas. The programme will cater for new developments as well as the refurbishment or conversion of existing buildings. The programme will also cater for a variety of design models with various levels of finishing to suit the widest range of affordability levels. The current Institutional Housing Subsidy programme will, in the process, be evaluated to determine its suitability for the future housing development approach. The finalisation of the proposals regarding this is expected by August this year.

The aforementioned Medium Density Housing Development Programme is linked to the Government’s initiative to establish and operationalise adequate sustainable social housing institutions to undertake the said medium density housing development projects. In short, the policy proposes the establishment of a sector regulating structure and a dedicated funding regime required to finance the establishment and initial operationalisation cost of suitably equipped social housing institutions.

The Social Housing Bill is also being drafted to support medium density housing and will be tabled before parliament this year. The Bill provides for a regulatory body which will be responsible for accrediting social housing institutions and for ensuring the good governance and sustainability of such institutions. This because there are indeed many of the low and medium income people who do not wish to become tied down to home ownership and the obligations thereof. They would rather prefer to take up an affordable rental option which would give them more mobility in the job market. The government is therefore providing this option to them. 

At the Presidential Job Summit held in October 1998, the government, privte sector and labour organisations resolved that there is a need for a National Presidential Lead Project on Rental Housing at sufficient scale to pilot affordable mass housing delivery and alternative form of tenure – especially rental housing. The Presidential Pilot Project on Rental Housing was then conceived to provide 50 000 rental units in three phases over multiple financial years. 

The government has approved the institutional and financial models to be used in the implementation of the programme to pave the way for implementation of the projects. This agreement facilitated the appointment of the National Housing Finance Corporation as the management agent for the programme. In line with the said agreement, the NHFC Board has already approved the creation of a specialist unit within the institution to take responsibility for the implementation of the project. As a result, an amount of R225 million in Poverty Relief Funding was transferred to the NHFC for the purpose of the partial funding of Phases 1 to 3 of the project.

The three projects selected for the first phase of the Presidential Pilot Project on Rental Housing are in various stages of implementation. Of the three, Johannesburg (notably the Kliptown sub-project) and Witbank (eMalahleni) have already completed their show units. These show units will serve the dual purpose of physically launching the Presidential Pilot Project on Rental Housing and to further enhance end-user processes such as unit selection based on individual affordability levels. 

The first pilot project for Gauteng was launched by the President at Fordsburg last year and it is a true reflection of the private-public partnership that we need in this programme. In Durban the Roosfontein subproject is being prioritised and it is anticipated that the remaining units to be constructed in Kwazulu/Natal, as part of the first phase, will target inner city infill and refurbishment projects.

The business plans for the second phase of the project is in the process of being assessed and it is anticipated that this phase will commence shortly. It is important to take note of the fact that the Presidential Pilot Project on Rental Housing supports the shift in focus from numbers to quality of housing units and I am happy to mention that these pilot projects are based on the concept of integrated housing development which includes the provision of community facilities. 

These projects will therefore contribute towards the densification of existing urban areas and pave the way for the provision of lower income housing at medium densities. They will also inform rental housing policy development aimed at facilitating social housing projects that will provide rental housing at scale managed by viable non-governmental institutions.

Housing Finance

In order to ensure a better quality of life for all South Africans, we will continue to monitor the activities of the home building industry to ensure the transformation of the industry through our Constitution and all other relevant pieces of legislation. Despite the efforts we are making to try and provide affordable housing to the poor, we still have to ensure that all the stakeholders effectively play their respective roles in this regard. Our records reveal that only 35 759 of the 1,5 million houses built by the government since 1994 were partially financed by the financial institutions through credit. This constitute only 2,8 percent.

The reality is that we still have millions of people who are so poor that they cannot acquire their housing without any external assistance. It is in this context that we feel access to finance remains the greatest challenge to low-cost housing development. The government is therefore obliged to create the necessary environment to address this situation and the restructuring of the financial sector is a necessary priority. 

As part of this restructuring, we have promulgated the Home Loan and Mortgage Disclosure Act in 2000 and the Community Reinvestment Bill is sure to be passed into law during the course of this year. Whereas the first Act is merely for financial institutions to disclose certain information, the Community Reinvestment (Housing) Bill provides for actual targets which financial institutions will have to meet in complying with their community reinvestment obligations. The Bill, like the Home Loan and Mortgage Disclosure Act, makes provision for financial institutions to be rated on their performance. The targets, however, will be set after consultation with relevant stakeholders, including the financial institutions. The process for the establishment of the Office of the Disclosure has been initiated and is expected to be completed in the next few weeks.

As part of broadening access to housing finance, we are currently trying to inculcate the culture of savings to the housing beneficiaries. This campaign has already yielded positive result since the programme was launched by Deputy President Jacob Zuma in 2001. The National Urban Reconstruction and Housing Agency (NURCHA) has since managed to mobilize 39 315 savers from the seven provinces that the Agency has managed to penetrate. Kwazulu/Natal and Gauteng have the highest number of savers with over 16000 and 11000 respectively. Free State and Northern Cape are still to introduce the programme. 

As part of further enhancing the programme, my Department is at an advanced stage with the development of a Savings Linked Housing Subsidy Scheme that will further assist beneficiaries to save their contributions in a structured and dedicated, and well managed way. It is envisaged that the scheme will be introduced during the coming month or so.

Provincial Allocations