KEY NOTE ADRESS BY LN SISULU MINISTER OF HOUSING AT THE CEREMONY TO LAUNCH THE OLIEVENHOUTBOSCH HOUSING PROJECT

20 February 2006

Master of Ceremonies
Invited guests
Father Smangaliso Mkhatswa, Coucillors, Steve Boosen,
Comrades, friends
Ladies and Gentlemen:

In April 2005 together with ABSA we signed a memorandum of understanding for a project that will deliver 5480 units in accordance with the Comprehensive Plan on Sustainable Human Settlements. This Olievenhoutbosch housing project is the result of our attempts to consummate the relationship we had committed ourselves to. It is a response to my request for pilot projects from the banks.

I must add at this that ABSA was the first of the banks to respond. The first to respond, the first to show commitment. It took lead to sell the idea of this site to us. We visited the site, and on the very same day we struck a deal. That, to me, is indicative of ABSA’s enthusiasm for this partnership.

I have noted with a great deal of appreciation how both the province and Tshwane were swept up by the mood of the project.

In terms of the agreement for this public-private-partnership ABSA was to make land available for the development of the project and develop the bonded houses whilst Tshwane was to develop the low-cost houses. As national government we committed to do all that was necessary to expedite the project and to facilitate coordination between the respective government departments. 

           The project therefore, in accordance with the Plan, is to address integrated development. It is to be a mixed housing project. Its implementation is to achieve 70 percent of black ownership and have 30 percent of female participation. Also, it is to provide opportunities for SMME participation in the areas of supply, manufacturing, contractors, sub-contractors, as well as services of skilled and unskilled labour  

I am, as you can expect, thrilled, by this partnership. As I have indicated there was no hesitancy on the part of ABSA to be involved in it.  

Our towns and cities are, as a result of rapid urbanization, growing at an alarming pace. We know what prevented the development of opportunities such as we have now. We thus know what precipitated the critical challenge that we face today of having to deal with a housing backlog of almost three million.

Since 1,9 million of our people currently live in shacks we have made the vow to eradicate informal settlements by 2014. We made the undertaking informed by the conviction that there is no issue that is as more urgent and critical to the masses of our people than adequate shelter and housing.  

          Their conditions of squalor do not enable them to live a decent life and take advantage of the myriad of opportunities that are being opened up by the sterling performance of the economy. Thus, even though democracy has extricate the whole of society out of the depths of the economic crisis that apartheid precipitated before 1994, the masses of our people are as yet to fully benefit from the cusp of our present economic success. Hence, the commitment we have made to provide adequate housing to all by 2014.

We, however, understand that towards 2014, is a rocky climb. For, already, some, albeit sitting and watching on the sidelines, make much of the fact of unemployment that they say is the obstacle towards providing adequate housing. Yet, all that we as government have intentions about is to through the banks to house those that are already employed and of whom most are found in the ranks of the civil service. A 2005 research that has been conducted Finmark Trust shows that in the category that is our target for housing by the banks are 3.87 million households with a gross monthly income of between R1 600 and R8 000. This is the challenge towards which we need to mobilise housing and mortgage finance, specifically.  

We need to reverse the situation where backyards and informal settlements continue to increase at much a faster rate (of 26 percent) than the rate of increase of 11 percent (between 1996 and 2001) in population growth. In addition, we collectively need to ensure that housing development does not continue to be on the periphery of economically active towns and cities. The Finmark Trust research demonstrates that this manner of development has come to place at a huge disadvantage over 11 million adults who do not live near centres of retail economic activity.  

We have also made the point that both the demand for housing and the housing market has changed but, the benefits of a buoyant higher end property market have not been felt by the poor. The sale of second hand houses is currently highly profitable for the well-off but, often constitutes a loss for the poor, particularly those with subsidised housing. Refocusing the housing programme upmarket from the current target group, while it may make narrow investment sense (more self-funded housing stock and the inclusion of ‘bankable’ people), will probably exacerbate this situation rather than more equitably distributing benefits.  If wealth creation is to be stimulated amongst the current beneficiaries of the programme, then the housing asset needs to have functional value (a usable physical asset to create social and human capital) and an exchange value (an ability to create financial capital), and this depends on investment in inner city, township and informal settlements so that the property market works for everyone. Hence, significant public investment and substantial private sector collaboration are called for. 

Since, moreover, there is evidence of households presently managing their finances much better resulting in much lessened bad debts there is thus opportunities for increases in bank loans for housing.  

Government has emphasised the importance of public-private partnership. This is in recognition of the fact the private sector has to contribute to the development we seek to achieve, through especially availing financing.

In today’s world we know that banks in particular have become far more efficient in what they do than ever before. But from that very fact is it is important to realize that financial services are not necessarily an end in themselves. They cannot exist by themselves without regard to issues of common growth and development. Hence, the appreciation I have about the role being played by ABSA in this project.

As concerned I am about this I definitely sure that you are all concerned. For together we share a history and a destiny. So, if I had been too simplistic in my view I expect you to show me. This is because I expect no subservience from yourselves but a robust and constructive discussion that builds all of us.  

There is need for investments in our urban areas that foster integration. I appeal to yourselves to help unleash the potential that each one of us has to make that possible. I believe that you can. And I believe that you have the will to do so.  

Once again, let me thank and congratulate ABSA for having come to the party to enable us to launch Olievenhoutbosch. I am therefore very grateful to Dr. Steve Booysen, ABSA’s Chief Executive Officer, Sipho Mashinini, the Managing Director for ABSA Development Company. I am also grateful to the Mayor of Tshwane Father Smangaliso Mkhatshwa for making sure that Tshwane delivers its part.  

I thank you very much.