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had to run a business in such a way
that we earned amarginwithout hav-
ing to goback to government for fiscal
allocation. That is why there would
always be in depth engagements at
Board level seeking to balance devel-
opmental and sustainability impera-
tives of the NHFC,” says Moraba.
Chairperson Eric Molobi
was appointed by Joe
Slovo
NHFC’s First Steps
In 1996, theNational Housing Finance
Corporation was established with
four key divisions:
• Niche Market Lenders – debt fund-
ing to intermediaries
• Housing Equity Fund – providing
technical assistance and start-up
capital for new and pilot ventures
• Housing Institutions Development
Fund – providing development
capital to viable start-up social
housing institutions
• Rural Housing Loan Fund – to
enable low and medium income
households in rural areas to maxi-
mise housing by providing loans
for building and renovations
The Challenges
The lowest end of the market was
being served by government’s pro-
vision of delivering a fully subsi-
dised Reconstruction and Develop-
ment Programme (RDP). But, low to
moderate income earners, whether
formally or informally employed,
could not access housing credit.
Recognising this gap in the market
theNHFCwas taskedwith findingnew
ways tomobilise and broaden access
to housing finance.
It was widely accepted that not
everyone was able or keen to buy a
house and, increasingly, low income
families were opting to rent. A num-
ber of initiatives were implemented
to establish alternative lending
institutions, and this contributed
to the growth of non-banking retail
financial intermediaries. Another
challenge facing the corporation was
its inability to influence pricing by its
retail intermediaries on loans to the
end user, at a time when interest rate
levels were at their highest. With the
rapid growth of themicro finance sec-
tor, there was a need for appropriate
regulation.
As use of micro finance instru-
ments for housing credit grew, so
did the number of institutions it
funded. The risk exposure also grew
significantly and needed to be man-
aged more vigorously.
NHFC Initiatives
The NHFC facilitated the creation of
the Social Housing Foundation in
December 1997. The Housing Institu-
tions Development Fund (HIDF) was
designed to provide capital at below
market rates to establish viable start-
up social housing institutions.
Gateway Home Loans was estab-
lished in 1998, as a wholly-owned
subsidiary of NHFC, todeliver housing
at scale in the Gap market for homes
between R25 000 and R60 000, and
to promote the secondary home loan
market process in the low income
housing sector.
The Presidential Job Summit
Pilot Project held in October 1998
identified the need for a National
Presidential Lead Project (NPLP) on
rental housing at sufficient scale to
pilot mass housing delivery and al-
ternative forms of tenure. The pilot
project would provide a minimum
of 50 000 units and a maximum of
150 000 houses. This included 75%
permanent rental units and 25% for
ownership.
A partnership between govern-
ment, the private sector, the Depart-
ment of Housing, National Treasury,
the Banking Council of South Africa,
Labour and the NHFC would roll
out 15 000 units to be developed in
Durban, Witbank and Johannesburg.
Continued
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