NHFC Portfolio Committee Of Housing 13 June 2001 - PowerPoint PPT Presentation

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NHFC Portfolio Committee Of Housing 13 June 2001

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Banks - Unibank, Cash Bank. Non-Banks Agishana, Grand Finance, Mid First, Protea, Sumex ... Consolidation / Alliances extending reach by the big banks ... – PowerPoint PPT presentation

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Title: NHFC Portfolio Committee Of Housing 13 June 2001


1
NHFCPortfolio CommitteeOf Housing13 June 2001
NATIONAL HOUSING FINANCE CORPORATION LIMITED
2
South African Government
The National Housing Finance Corporation is one
of five state-owned development finance
institutions in South Africa. With initial,
permanent capital provided by government, each
one supplements its capital with private sector
funding. In this way, partnerships between the
public and private sectors are created.
KHULA ENTERPRISE FINANCE
NATIONAL HOUSING FINANCE CORPORATION
DEVELOPMENT BANK OF SOUTHERN AFRICA
LAND AND AGRICULTURAL BANK
INDUSTRIAL DEVELOPMENT CORPORATION
Industrial development finance for,
and investments into, industrial concerns
Infrastructure development finance
for provincial/local authorities, parastatals
and utilities
Small, medium and micro enterprise development
finance for lending intermediaries financing
small, medium and micro enterprises
Housing development finance for intermediaries fin
ancing housing and housing institutions
Agricultural development finance
3
THE MANDATE . . .
In partnerships with the broadest range of
organisations, to search for new and better ways
to mobilise finance for housing, from sources
outside the state... "The corporations
endeavours should in time ensure that every South
African with a regular source of income can gain
access to finance to acquire, rent and/or improve
a home of his/her own
4
THE MISSION . . .
  • The NHFC seek to
  • create housing opportunities for the low and
  • moderate income families by
  • Funding intermediaries to promote broader access
    to housing
  • Building adequate and sustainable capacity
    within the organisations to which it funds
  • Partnering organisations to pioneer new finance
    and housing delivery approaches

5
Wholesale Debt Funding R 1 083m
  • Provide credit facilities to retail lenders in
    low income housing market existing
    institutions(Rural/Urban)
  • Banks - Unibank, Cash Bank
  • Non-Banks Agishana, Grand Finance, Mid First,
    Protea, Sumex
  • Building Material Suppliers Bonus Building
    Supplies
  • Development Corporations Ithala, Mpumalanga
  • Challenges / Experiences
  • Consolidation / Alliances extending reach by
    the big banks
  • Environment highly competitive no room for
    small lenders, clients
  • Liquidity pressures in this market
  • Blending of credit with SAVINGS and SUBSIDIES
  • Risk Management become increasingly important

6
Build Capacitate new Inst R 170m
  • SHF provides capacitation of new housing
    institutions
  • Fund housing projects of the housing
    institutions for alternative tenure promote
    Social Housing
  • Rental stock - SEMAG, Greater Germiston, Durban
    Metro, HAEL
  • Rent-to-Buy CTCHC, Reatlehile
  • Installment Sales CTCHC, ABAHLALI
  • Co-operatives COPE, NEWTOWN HOUSING CO.
  • Challenges / Experiences
  • Setting time of viable housing institutions 18
    approx. months
  • Project have to be scale magnitude approx.
    3000 units
  • Grant funding is crucial at early stages of the
    project
  • Vat and Income Tax Exemption make them
    sustainable
  • Enabling regulatory environment Rental Housing
    Act

7
Partnering other Organisations
  • Intent to deliver housing and housing finance at
    scale
  • In 1999, setup Gateway Home Loans(PTY) - PPP
  • Loan Origination and Servicing by major banks
    end up in Securitisation Accredited Lenders
  • Designed a Non-Mortgage financial instrument
    Makhulong Home Loan Pension provident fund
    backed / other forms of collateral
  • Banks SBSA, NEDCOR, AFRICAN BANK, CASH BANK,
    ETC
  • Lessons Learnt
  • Need for Primary Market stimulation no big
    banks in this market
  • Need for policies/regulation to facilitate the
    banks involvement
  • Scale delivery is crucial for successful
    securitisation
  • Risk Enhancement mechanisms NHFC to assume
    greater risk

8

Performance TO-DATE HIGHLIGHTS
9
NHFC Approvals and Disbursements
Rm (Annual)
10
Number of End User Loans
11
Number of Housing Units
12
Social Impact of the NHFC
  • Potentially more 2,5 million low and moderate
    income families quality of life would be
    improved due to NHFCs funding activities

13

EXAMPLES OF PROJECTS FUNDED BY THE NHFC
14
CTCHC WESTERN CAPE
  • Mitchells Plein

15
ABAHLALI - EASTERN CAPE
  • Port Elizabeth / Nelson Mandela Metro
  • ABAHLALI

16
TSUTSUMANI - GAUTENG
  • Alexander
  • SEMAG ( All Africa Games )

17
DURBAN METRO - KZN
  • Durban

18
Housing Budget Relevance
  • Initially capitalised by SA Government Seed
    Capital
  • CURRENT YEAR 2001/2002 No Allocation from
    Budget
  • Current Capital Structure
  • Seed Capital R 880m
  • Debentures from Private Sector R 100m
  • Distributable Reserves/Profit R 350m
  • R 1 330m
  • Financial Vision - Longer term goal is to be
    self-sustainable

19
  • Extend the housing finance market down-stream
    accommodate the low income households
  • Unlock private sector capital into the NHFC
    target market
  • Ensure that there is increased competition in
    this sector of the market
  • Improve on the internal efficiencies

20
Challenges for the NHFC
  • Financial
  • Where the next funding for the Corporation would
    come from Self Sustainability
  • Link Savings and Subsidies to Credit (package
    better affordability levels with a quality
    product delivered)
  • Increase private sector investment in the low
    income housing market risk enhancement
    mechanisms
  • Run a Cost Effective Operation Lean and Mean
  • Conform to all the Public Finance Management Act
    regulations ( already do )

21
Challenges for the NHFC
  • Housing Impact
  • Putting the roof over peoples head
    MANDATE!!!
  • Deliver finance for ALL forms of Low Income
    Housing
  • Ownership ( including, the Urban Renewal Projects
    )
  • Alternative Tenure Rental / Rent-To-But /
    Installment Sale
  • Incremental Thrust of the RURAL housing market
    (in line with the Presidential Integrated
    Sustainable Rural Development Strategy - ISRDS)
  • How to deal with the AIDS factor that is most
  • prevalent in this target market
  • Work with other NGOs to quantify the magnitude
    and the likely impact of AIDS among the LIH
  • Explore housing solution options for the AIDS
    sufferers

22
Challenges for the NHFC
  • Policy
  • Effectively use the policy instruments such as
    the HLMDA and the CRA to ensure maximum
    participation by the private sector e.g. banks
    and non-banking financial and insurance
    institutions in the low income market
  • Stipulation of ENABLING MEASURES / EXEMPTIONS
    that will ensure the NHFC can fulfill its public
    mandate

23
Challenges for the NHFC
  • Private Sector Participation
  • Innovative financial structuring Aggressive
    risk Enhancement Mechanisms ( Strategic Thrust
    )
  • Through Enabling Measures, the NHFC becoming a
    strategic partner to private sector the spirit
    of PPP extended
  • Implicit Guarantee by the Government To
    enable the NHFC to deliver lower costs of funding

24
Conclusion
  • NHFCs Mandate Putting the Roof Over
    Peoples Head
  • Strategic Focus
  • Self Sustainability Question of future funding
  • Focused on Housing Delivery Agenda
  • Establishment of Enabling Arrangements We
    need Your Help
  • Normalisation of the housing finance sector
    among the low and moderate income families
  • Thank You Portfolio Committee of Housing
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