Title: NHFC Portfolio Committee Of Housing 13 June 2001
1NHFCPortfolio CommitteeOf Housing13 June 2001
NATIONAL HOUSING FINANCE CORPORATION LIMITED
2South 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
3THE 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
4THE 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
5Wholesale 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
6Build 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
7Partnering 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
9NHFC Approvals and Disbursements
Rm (Annual)
10Number of End User Loans
11Number of Housing Units
12Social 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
14CTCHC WESTERN CAPE
15ABAHLALI - EASTERN CAPE
- Port Elizabeth / Nelson Mandela Metro
- ABAHLALI
16TSUTSUMANI - GAUTENG
- Alexander
- SEMAG ( All Africa Games )
17DURBAN METRO - KZN
18Housing 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
20Challenges 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 )
21Challenges 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
22Challenges 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
23Challenges 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
24Conclusion
- 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