RURAL HOUSING LOAN FUND

1
RURAL HOUSING LOAN FUND

• Strategic plan 2005/06

2
RHLFs Vision Statement

• RHLF is a world class rural social venture
  capital fund that creates new financial
  arrangements and opportunities for rural families
  to improve their housing, economic and living
  environments.

3
RHLF implementation strategy

4
RHLFs contribution to Peoples Contract to
Create Work and Fight Poverty

• Establish credit histories repeated access to
  credit
• PPP with intermediaries creating jobs within
  housing finance value chain
• Stimulate local economic development using local
  builders in construction
• Enable access to public utilities
• Supporting the BMS industry create jobs in the
  industry and related industries

5
STRATEGIC INSTITUTIONAL POSITIONING OF RHLF
6
RHLFs contribution to New Comprehensive Housing
Strategy

• Contribution to job creation
• Informal settlement upgrading
• Increase household income limit in line with new
  subsidy rules to R 7 500
• Contribute to Specific Programme Thrusts
• Financial Services Market
• Incremental Housing
• Rural Housing

7
RHLFs contribution to New Comprehensive Housing
Strategy

• Financial Services Market
• Access to micro-loans for incremental housing and
  fixed home improvements for the rural working
  poor
• RHLF will use its venture capital investments to
  leverage additional debt funding from banks
• Clients reaching maximum RHLF exposure of R 25 m
• Constructive discussions with two banks
  application to co-fund Norufin submitted to Std
  Bank
• Bayports relationship with Brait
• Borrower education revised Building Advice
  Handbook now available in 3 languages include
  chapter on household budgeting

8
RHLFs contribution to New Comprehensive Housing
Strategy (cont)

• Incremental Housing
• Existing core financing opportunity for RHLF
  business
• Informal settlement upgrading post occupancy
• Disburse 200 loans to subsidy beneficiaries in
  Northern Cape with monthly income below R 1 500

9
RHLFs contribution to New Comprehensive Housing
Strategy (cont)

• Rural Housing
• Farm worker housing 200 loans to emerging
  farmers and farm-workers in Mpumalanga
• Provision of loans for improving traditional
  houses in communal land and support indigenous
  housing (maximizing housing choices)

10
Status of RHLF approved business strategy

• Continue to fund profitable and adequately
  capitalised established entities
• Two new clients, Izwe Bayport
• New facilities to current clients Blue Dot
  Indlu
• Increase in facility to Norufin
• Received application from Lendcor (including
  pilot loan for emerging contractors)
• Received application from new client African
  Dawn Capital (emerging farmer and farm worker
  housing)
• RHLF will continue to use its venture capital
  investments to leverage additional debt funding
  from banks
• Financial sustainability and development impact
• Bayport phase 2, SAPO savers rural lending
• Izwes expansion to secondary towns

11
(No Transcript)
12
(No Transcript)
13
(No Transcript)
14
(No Transcript)
15
Commitment to BEE

• Four distinct strategic thrusts
• Demand driven developmental needs of end-users
• Funding black owned and managed companies
• Warehouse RHLF shares for future acquisition
• Employment equity

16
(No Transcript)
17
(No Transcript)
18
(No Transcript)
19
Warehouse RHLF shares

• RHLF owns shares in the following number of
  clients
• Protea Financial Services Group
• Norufin Housing
• Lendcor
• Indlu Finance
• Izwe
• Bayport

20
Organogram
21
Employment Equity
22
RHLF Development Impact Some key findings

• Loan usage 69 (vs 70 RHLF target for 2003/04
  FY) of the loans are used for developmental
  purposes
• 54 housing
• 14 education
• 1 working capital for in micro/survivalist
  enterprises
• Satisfaction 61 of the end-users said they were
  satisfied with the outcome of the loan use, and
• 68 said they would recommend their retail lender
  to friends and relatives.
• 55 of the end-users are females

23
RHLF Development Impact Some key findings
(cont)

• Direct correlation between end-users receiving
  consumer education and those who are up-to-date
  with payments
• But only 19 report having received consumer
  education
• 11 of end-users live in RDP housing, and 3 used
  the loan to top up subsidy at acquisition
• End-users live in the RDP house an average of 24
  months before borrowing to improve or extend the
  RDP house

24
RHLF Development Impact Some key findings
(cont)

• On average end-users who built new space on the
  RDP house or existing dwelling, added 22 m2 to
  the house at cost effective amount of R617 per
  square metre
• 7 of the end-users are informally employed
• RHLF currently has small exposure of 3.6 of
  loans surveyed in 3 ISRDP nodes in Eastern Cape
  and Limpopo/Mpumalanga

25
Key Environmental Factors
Debit Order Monopoly
Land Agric. Policy
Financial Sector Charter
Changing Laws Regulations
DFI Traffic Jam
R Pearson 2003 Updated Retreat March 2005
26
RHLFs response to Key Environmental factors

• Financial Sector Charter Constructive
  engagement with banks, funding of 2 clients
  reaching RHLFs maximum exposure limits
• Land and Agricultural Policy Share experiences
  in micro-finance for housing with Mafisa
• Debit order monopoly RHLF made representations
  to SARB and PASA
• DFI mandates reviewed and confirmed with
  implementation gaps to be addressed
• New National Credit Bill bigger loans and
  longer terms at lower cost to borrower

27
(No Transcript)
28
(No Transcript)
29
(No Transcript)
30
(No Transcript)
31
(No Transcript)
32
(No Transcript)
33

• Thank You