Housing in Southern Africa July 2016

role

European Investment Bank (EIB).

The NHFC pushed the innovation

envelope further through strategic

partnerships that led to the establish-

ment of Housing Investment Partner-

ship (HiP), offering income-linked

home loan products, as well as being

a locally credit-rated institution.

: What were the challenges for the

State-owned DFI?

• Like any DFI, the balancing the de-

velopmental mandate, imperative

and sustainability of the business

over a long term

• Clarity on themandate imperative

and good corporate governance,

which for the NHFC, was excellent

• The NHFC’s small size balance

sheet yielded limited leveraging

capacity

• Although continued shareholder

funding support became neces-

sary, especially where greater risk

had been taken, in NHFC’s case,

this was after 15 years

• And, retaining good talent as the

business evolved and changed.

: What were your priorities?

: To ensure that clarity of the man-

date given by shareholder was fully

understood and to ensure that I had

a good calibre Board to provide over-

sight tomanagement strategy formu-

lation and execution. In the initial

years, it was to create and capacitate

new non-banking retail intermediar-

ies to increase the disbursement of

loans to the target market.

A further priority was to drive the

financing of the social housing sector

and inner city affordable rental. This

included making sure that NHFC’s

capacity to significantly leverage the

private sector was on the rise, result-

ing in greater housing delivery from

funds outside government.

: Did the mandate and the business

model change over the years?

: The NHFC’s mandate was up-

dated to align with the Breaking New

Ground Strategy of 2004 – ‘broader

and deeper’. The NHFC Business

Model has evolved over time, and

is currently almost end-to-end, as it

addresses both the demand-side and

the supply-side of housing finance

delivery. It has also been adopted

the prevailing business model in the

business case for the Consolidated

Human Settlements Development

Finance Institution.

: What were the most memorable

achievements?

: We have had a number. The abil-

ity to be a self-sustaining entity for

more than 15 years without seeking

any shareholder funding support.

Establishing the financing of social

housing and inner city affordable

rentals on a sustainable basis. Due

toNHFC’s delivery impact the Innova-

tion Hub in Pretoria was named the

Eric Molobi Innovation Hub, after our

former Board Chairman.

Another great achievement was

successfully piloting an employee

housing assistance scheme. Mobilis-

ing additional funding for the devel-

opment of sustainable integrated

Human Settlements.

Also in 2003, the NHFC was key

in establishing the Trust for Urban

Housing Finance, which is a success

story, as an extended and profitable

delivery vehicle.

: What were the most difficult mo-

ments in NHFC’s history?

: The unsuccessful Gateway Home

Loans Pilot project, with plans to pro-

vide 20 000 houses. At the end of the

two year pilot programme only 2 500

houses were delivered. The strategic

rationale to separate the Rural Hous-

ing Loan Fund (RHLF) from the NHFC

in 2001. The passing on of the NHFC

Chairman Eric Molobi was especially

difficult. Returning the Job Summit

Funds to National Treasury. Closure

of the Home Front – an NHFC Retail

Initiative under BreakingNewGround

strategy – unfunded mandate. The

uncertainty about shareholder fund-

ing support almost threatening the

on-going status of the NHFC. Failing

to pursue the Mortgage Loan Default

Insurance (MDI) pilot according to

plan.

: What would you like to share about

the organisation?

: It has evolved, adapted and

remained relevant to the changing

environment, both at government

policy and priorities, whilst grounded

on the financial sustainability level as

a Development Finance Institution.

NHFC has a distinctive history, great

leadership and is richwithmemories,

experiences and signature processes.

: If you could wave the magic wand

and do it all again, are there things

that you would do differently?

: There are a few. I would position

the NHFC as a Human Settlements

Development Finance Institution,

with appropriate capitalisation, lead-

ing to a robust Balance Sheet, such

as that of the Development Bank of

South Africa, the Industrial Develop-

ment Corporation, LandBank (theDFI

Consolidation imperative).

I would have split the NHFC’s fund-

ing and financing into two streams, to

scale and deepen the developmental

part through concessional funding

support and the commercial part

be supported through appropri-

ate capitalisation (some element

of cross-subsidisation in new and

unknown markets). And I would use

the Human Settlements subsidies to

greater leverage both the banking

and non-banking retail intermediar-

ies to deliver integrated sustainable

Human Settlements across the value

chain.

: Since the initial injection of capital

fromgovernment what has the NHFC

achieved?

: It has disbursed R7,1 billion and

leveraged a further R19 billion. The

current loan book is R3,4 billion and

the development impact has created

477 000 housing opportunities. The

NHFC has assisted 76 developers

and entrepreneurs, which include

women, youth and BEE entrepre-

neurs and disbursed R226 million.

The NHFC has also created 9 157 job

opportunities.

Appointed to the first board of

the NHFC by Minister of Housing, Joe

Slovo under Chairperson, EricMolobi,

Katz regards his involvement as one

of his most important contributions

to a new South Africa. He concludes:

“I saw housing as vital to South

Africa. If you have adequate human

settlements, good education, good

stable communities, then you have a

healthy household. And that is why I

stayed on the Board.” Since day one,

Katz has never been paid a director’s

fee and serves free of charge.