Housing in Southern Africa

SUBSIDY

HOUSING

NURCHAensures the availability

of bridging finance to small,

med i um and es tab l i shed

contractors building low-cost

housing and related community

facilities and infrastructure.

n Subsidy Housing, NURCHA’s

portfolio improved and achieved a

staggering 121% growth, with the

increase in deals enabling the roll out

of 9 773 sites and houses, compared

to 4 428 in the previous financial year.

Gaining momentum in tight fis-

cal conditions, NURCHA’s new loans

increased substantially by 47%, from

R55,481 million to R81,791 million.

Notably, the value of the projects

escalated to a whopping R864, 035

million compared with R349,911 mil-

lion last year.

This all bodes well for NURCHA as

a recognised champion in providing

subsidy housing and infrastructure.

According to Dini Piki, Programme

Manager: Subsidy Housing and Infra-

structure, NURCHA received 46 loan

applications totalling R231,2million.

With years of experience in home

loans under his belt, Piki says: “The

high fallout rate of 46% on applica-

tions received versus the actual

number of loans signed remains a

challenge. One of the main reasons

for this is the inability of contractors

to supply all the required documen-

tation to process a loan application

requirements.

NURCHA’s amended lending crite-

ria and additional support services to

emerging contractorswill address this

challenge and NURCHA is confident

that the volume of loans receiving

approval will show a sharp increase

in the next financial year.”

Managing the debtors’ book with

his banking expertise, Piki recognises

the need to assist contractors (spe-

cifically emerging contractors) with

working capital to start work on site.

NURCHA’s ability to meet small con-

tractor funding needs is only feasible

if risks are closely monitored and ad-

ditional construction support services

are provided. NURCHAhas introduced

more lenient credit criteria under the

Contractor Finance andDevelopment

Programme to achieve this.

DIVERSIFIED PRODUCT

RANGE

NURCHA embarked on a series of

national roadshows and workshops

for contractors and developers across

the country and the new product of-

ferings have contributed to increasing

its market share.

More than 600 new potential

contractors in Port Elizabeth, East

London, Mthatha, Durban, CapeTown

and Johannesburg and as far afield

as Mpumalanga and the North West

attended the roadshows.

This resulted in four more addi-

tional loan types, which will ensure

that NURCHA is able to assist a

greater number of contractors with

working capital. In order to be self-

sustainable, NURCHA is extremely

cautious in providing developer fi-

nance as this money has to be repaid

in order to continuously fund more

projects to meet its human settle-

ments delivery mandate.

Overdue loans equated to 20%

of the regular loan book. NURCHA’s

financial year end coincides with the

year end of the employer’s (provincial

department of human settlements).

During the last quarter of the finan-

cial year, provincial departments of

human settlements had already ex-

hausted their budget. This has caused

a delay in payments which will be

rectified once newbudget allocations

have been finalised.

GROWTH IN LOAN BOOK

Loan values have grown significantly

in the last year and utilisation of loan

is on average 40% of the loan value

approved.

INFRASTRUCTURE AND

COMMUNITY FACILITIES

This programme has issued loans to

the value of R56 million. In line with

the organisational strategy of scaling

down the infrastructure lending pro-

gramme, as a result of losses suffered

in previous years.

The programme has been amend-

ed to certificate-only lending and the

advance rate has been reduced from

90% to 80%.

There is no funding provided for

materials on or off-site. Two loans

signed in the current financial year

are for schools, which are key in the

development of sustainable human

settlements.

Other infrastructure projects will

be considered subject to the contrac-

tor meeting certain funding require-

ments.

FIVE YEAR STRATEGY

Piki says: “NURCHA’s five-year plan

focuses on strategic growth areas

This includes women contractors,

housing for military veterans, back-

yard rentals, subsidy housing and

infrastructure inmining towns includ-

ing Free State (Matjhabeng), North

West (Rustenburg), Mpumalanga

(Emlahleni) and the Eastern Cape.”

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