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'Government Housing Plan Built on Rock'

By Steyn Speed, in Mayibuye, Vol. 6, no. 3
July 1995

Having established solid foundations, the housing ministry has begun implementing the plan to build a million houses. Steyn Speed reports.

After months of planning and policy development, the government's housing plan is finally being implemented. Although the housing ministry was quick to announce its plans after last year's election, it is only recently that houses have begun to be built.

"There is no use rushing to put up housing which won't last for even 40 years," says housing minister Sankie Mthembi Nkondo. "I usually tell people: 'We don't want to construct our houses on sand, we want to build them on rock'."

The ministry's approach is a deliberate one. Interviewed by Mayibuye shortly after his appointment last year, housing director general Billy Cobbett said the government had resisted announcing a 'quick-fix' solution in their first weeks of office. He said they had chosen to spend their first months in office developing measures to address the housing problem in the long term, even if it made them unpopular.

Those months were spent developing consensus as much as they were spent developing policy. The core of their strategy was to bring together the private sector, government and communities to reach agreement around the government's housing policy and secure a commitment from each of the sectors on their individual responsibilities.

The National Housing Summit held in Botshabelo in October 1994 was the culmination of this consultation process. It laid the basis for more detailed planning of the housing policy. Representatives of the nine sectors at the summit publicly pledged themselves to the accord, and undertook to fulfil certain obligations as a sector.

The result of this work has been that the ministry has been able to make significant progress in getting its white paper approved by cabinet, and establishing structures, like the national and provincial housing boards, to implement the policy.

Although the implementation phase has started, there is room for the policy to be adjusted according to its success. "The policy is not supposed to be rigid, it has to be flexible. There will be need to make sure that its realistic and accessible," says Mthembi Nkondo. She says that much of her task involves "doing the rounds" to see the effectiveness of the policy on the ground.

The government approved around 200,000 subsidies, which were made available from 1 June to households earning less than R3,500 a month. The subsidy amount ranges from R5,000 to R15,000 depending on income. In addition to individual subsidies, the government is making available project-linked and cooperative subsidies.

The ministry is seeing these subsidies as an "incentive" to kickstart the question of home ownership. The subsidies are being administered through the provincial housing boards, who have to process the applications and liaise with the applicant and the developer. The subsidies are not being given directly to the individual applicant, but to the builder, as a way of protecting the funds.

The subsidies form part of the government's plan to make housing affordable to greater numbers of people, as the majority of people who need housing can't afford it. Linked therefore to the subsidy scheme are strategies to bring the private sector increasingly into the low income market. Through a Record of Understanding signed with most banks, the government hopes to make bank loans available to lower income earners. According to the ministry's information tabloid, Home Truths, there will be 50,000 new loans in the next year for people who can afford credit.

Mthembi Nkondo says the government will be waiting "very keenly" to see whether the banks are meeting their obligations, and will be waiting for feedbacks from communities: "We've agreed with the banks that we'll have a regular review of how the whole process works, because it is the first time that we are dealing with this kind of package."

Banks will be also be watching to see whether communities previously 'redlined' by banks will be 'normalised', and more specifically whether loan repayments are forthcoming.

The ministry says that to attract investment and loans, communities need to ensure that functioning non-racial, representative local authorities need to exist and provide services. It says there needs to be an "acceptable and rising level" of payments for housing and services; community opposition to crime and violence; respect for the law and court orders; and a freely operating housing market.

To protect the consumer, and to save the government, banks and home-owner much money, the Builders' Defects Warranty Scheme has been introduced. Builders who join the scheme promise to build properly, and take responsibility for their work. This will provide consumers with a higher level of security, and will ensure that houses built are able to last. It will alleviate one of the problems which contributed in the past to non-payment of services, rent and bonds, says Mthembi Nkondo.

The government is not satisfied that existing measures will ensure that enough South Africans have access to affordable housing. It is therefore in the process of finalising details for the establishment of a national housing finance corporation, which will make financing available to the non-traditional retail lenders. In this way, people who earn very little income - who normally wouldn't get loans through a bank - will have access to credit. This money will only be available to limited segments of the market - those who most need it. It will provide an avenue for international investors to invest in South African housing directly.

The housing finance corporation is also intended to support emerging contractors, especially those from disadvantaged communities. Because they don't have the capital to compete with the bigger, established companies, methods are being developed which will make available to emerging contractors loans at negotiable interest rates.

To ensure that unemployed and very low income earners are able to have housing, the government is planning the establishment of housing support centres across the country, which will provide people with all the expertise related to housing, including how to build their own. The ministry plans to have "one or two" centres established before the end of the year.

Mthembi Nkondo says the people staffing these centres will not be able to dictate to communities. "They will be getting into communities to give assistance where needed. And if communities feel they can get on with the job without these professionals, they are free to do so. As long as the resources they have been given by the government will not be misused, or will not be wasted because people didn't have the correct knowledge to utilise the funds," she says.

Even with all these mechanisms in place, the task facing the housing ministry - and the people as a whole - is an enormous one. There are between seven and eight million homeless people in South Africa. It is estimated that South Africa has a shortage of 1.3 million houses, and each year an additional 130,000 houses will have to be built to match population growth. Nevertheless, Sankie Mthembi Nkondo is confident about what can be achieved. "There is a lot we can do together, as a people and as a nation," she says.

Solutions Sought for Non-payment

In an attempt to normalise the re-payment of home loans, a company has been established to help people who are finding it difficult to pay their loans regularly.

The company, Servcon Housing Solutions, will deal with individual cases of people who have been unable to pay "because perhaps," says housing minister Sankie Mthembi Nkondo, "they are unemployed. Some didn't pay because they were on boycott, some are unable to pay because they are confronted by emergencies they had not budgeted for."

There are several options available to non-paying occupants. According to the ministry's Home Truths, if occupants can afford to pay for the house they are in, every effort will be made to avoid repossession. The lenders will also help people who can afford to pay in finding ways of paying for their loans on a regular monthly basis. If people can afford to, they will be able to buy the houses back which were repossessed earlier.

If someone can't afford the loan payments on a house, they will be offered help to find an affordable home. People who refuse offers of help and do not cooperate will be removed from the house with the support of the law. This follows an agreement between government and lenders that people can't stay in houses they're not paying for.

The ministry has hailed the initiative as a major step forward: "For the first time there's a link between the private sector and the communities, which we hope to maintain because we are going to need it. There is a lot of reconstruction which needs to be tackled by both government and the private sector."

Summit Planned For Rural Housing

The housing ministry is planning to hold a rural housing summit early in 1996 to develop mechanisms for delivery of rural housing. Housing minister Sankie Mthembi Nkondo says she had hoped to hold the summit this year to "tie together the research, the investigations, the experience of the people on the ground to look towards methods and mechanisms of delivery in the rural areas."

Developing a rural housing programme is more difficult than in urban areas, for a number of reasons. The dispersed location of the rural population is chief among these. It means that distances are far greater than in urban areas, and resources far more difficult to access. The construction time on a house in a rural area is therefore far greater than one in an urban area.

It is very expensive also to put up the infrastructure, which includes piping for clean water, for sewage and sanitation; electrification; roads; and other services. The unique problems of rural areas demand that the housing ministry develop an integrated approach together with the other ministries.

Part of the delay to date has been that housing for the rural population, particularly farmworkers, has been administered under the ministry of agriculture. After a decision was taken last year to transfer that responsibility to the housing ministry, mechanisms have been sought to transfer the allocated money from the agriculture to the housing ministry.

The lack of clarity on local authorities in rural areas is likely also to pose a problem for the delivery of housing there. The lack of any appropriate structures means that there is no one to relate directly to the people on the ground, particularly around the issues of subsidies.

The ministry believes a summit would be the best way of addressing these problems in consultation with the rural population. Mthembi Nkondo says the delivery of rural housing is urgent, "but at least the processes are on".