RURAL%20HOUSING%20LOAN%20FUND

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RURAL HOUSING LOAN FUND

• MAKING HOUSING DREAMS OF THE WORKING POOR A
  REALITY

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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.

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RHLF set-up

• Established in September 1996 as a Section 21
  company
• Helps address the housing needs of rural poor gt
  2MLL currently R 4 670
• Assists with financial sector development in
  rural areas advocated by ISRD Programme
• Independent board appointed by the Minister of
  Housing
• Capitalised with DM50 million grant from German
  Development Bank, KfW

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Core Principles

• Social venture capital fund
• Targets working poor households
• Supports incremental housing construction,
  extensions improvements
• Targets Rural AreasNon-metropolitan and enhance
  urban-rural linkages
• Promotes non-use of asbestos products

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RHLF implementation strategy

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Achievements of RHLF Board approved Business
Strategy

• Continue to fund profitable and adequately
  capitalised established entities
• R 37 m new commitments
• RHLF will use its venture capital investments to
  leverage additional debt funding from banks
• Leveraged R 9.3 m (25)
• Financial sustainability and access to financial
  services
• No clients in distress

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Key Performance Indicators
Full Year Budget 6 Month YTD Actual 6 Month YTD Budget
Total Cumulative Commitments R343,0M R325,2M R343,5M
Cumulative Loan Commitments R325,3M R307,3M R325,2M
Cumulative Equity Commitments R17,7M R17,8M R17,2M
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Projections
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Key Performance Indicators
Full Year Budget 6 Month YTD Actual 6 Month YTD Budget
Total Cumulative Disbursements R335,7M R278,5M R296,3M
Cumulative Loan Disbursements R325,4M R268,5M R286,0M
Cumulative Equity Disbursements R10,3M R10,0M R10,3M
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Projections
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Key Performance Indicators
Full Year Budget 6 Month YTD Actual 6 Month YTD Budget
Average Loan size R5 000 R4 725 R5 000
No New Loans 14 860 3 619 6 980
Cumulative No Loans 68 069 56 828 60 189
Potential No of Loans 81 326 79 759 73 446
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Sustainability Indicators
Full Year Budget 6 Month YTD Actual 6 Month YTD Budget
Interest on Advances R11,1M R4,2M R5,0M
Interest on Investments after funding R2,9M R2,6M R2,0M
Loan Loss Impairment R3,3M R0,0M R1,6M
Operating Costs R11,1M R5,2M R5,7M
Surplus / (Deficit) (R0,4M) R2,5M (R0,2M)
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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

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Key Performance Indicators
Full Year Budget 6 Month YTD Actual 6 Month YTD Budget
Cumulative Clients 35 36 35
Cumulative Clients BEE 16 16 16
Active Clients 6 6 5
Distressed Clients Nil Nil Nil
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Warehouse RHLF shares

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

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RHLF Development Impact Some key findings

• Loan usage 69 (vs 70 RHLF target for 2002/03
  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

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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

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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 in 3 ISRDP
  nodes in Eastern Cape and Limpopo/Mpumalanga-

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This house has three bedrooms, a kitchen, lounge,
inside toilet and has a tiled roof. Initially,
the house was a simple 2 room house and has now
improved beyond recognition. Standing at the
foreground of the house is Mrs Mthethwa, proud
mother of Philile who took small successive loans
(amounting to R12, 000) to buy building materials
and to pay a local builder who built the house.
Philile also used R10, 000 of her own saving. The
family resides in Thulasi Reserve, a deep rural
area of Mandeni, KZN.
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This house belongs to Nyalunga family in
Lydenburg Extension 6. Towards the back, with
greyer bricks, is an original RDP house that the
family got in 1996 and that has been extended
into a big house. Nyalungas started by
stockpiling building material and built
foundation. Later they took four successive loans
amounting to R22, 000 to buy bricks, tiles, door
and window frames and pay for labour.
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The front elevation of the Nyalungas house with
Mrs Sophie Nyalunga in the foreground. She states
that they will go back to the RHLF retailer
lender for another loan for fencing.
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Martha Mthimunye of Mashishing Township
(Lydenburg) borrowed R9, 000 from one of RHLF
retail lenders (Indlu) and added that to her own
saving of R2, 000. She added a verandah and an
extra room which she uses for business
purposesproductive housing. She runs a home
based business of dressmaking and selling clothes
and curtains. The house also shows consciousness
about security which is important as she runs her
business from home.
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Martha shows her sewing machines and garments
which she sells from her house. She is very happy
with the working space which she now has after
obtaining a loan from RHLF retail lender. She
makes cash payments to repay the loan and is very
aware of dangers of defaulting.
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Ella Nkosi is a single mother of four and works
as a domestic worker for a doctor in Lydenburg,
where she earns R700 per monthworking 3 days a
week. She is as entrepreneurial as you can get.
To augment her income, she sells sweets, snacks
and hand-made brooms from home and at a nearby
school. She also has a pay phone in her house.
Her entrepreneurial drive plus her meagre regular
income have enabled her to afford 5 successive
loans ranging between R2, 000 and R4, 000 to
build a four bedroom house for her family. She
lived in a tin shack for 10 years before building
the house in the background. She says she is a
strong believer in Vukuzenzele.
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Ella with materials she uses to make brooms which
sell like hot cake in the community. Members of
the community us these brooms mainly to sweep the
grounds of the yard. She says finding this niche
market was a blessing as she has used income from
this economic activity to help improve the living
condition of life of her family.
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Critical Success Factors

• Government remains committed to policy of
  sustainable development
• Inflation remains below 10
• National Payment System does not introduce
  discriminatory practices
• Implementation of new consumer credit regulation
• Shrinking formal sector

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Positive Impact of DoH Funding

• Concretize governments ongoing support in eyes
  of external institutions wanting to develop
  partnerships with RHLF
• Continue to support New Housing Agenda with
  cutting edge new financial products and
  arrangements
• Lower RHLFs borrowing costs to incentivise
  intermediaries to make higher risk, higher
  transaction cost rural housing loans
• Enable RHLF to mitigate credit risk associated
  with new shocks similar to small banking crisis
• Make new commitments to at least 3 new pipeline
  clients

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• Thank You