Housing in Southern Africa July 2016

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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. Q : What were the most memorable achievements? A : 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. Q : What were the most difficult mo- ments in NHFC’s history? A : 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. Q : What would you like to share about the organisation?

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. Q : If you could wave the magic wand and do it all again, are there things that you would do differently? A : 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. Q : Since the initial injection of capital fromgovernment what has the NHFC achieved? A : 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.

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. Q : What were the challenges for the State-owned DFI? A : • 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. Q : What were your priorities? A : 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. Q : Did the mandate and the business model change over the years? A : The NHFC’s mandate was up-

A : It has evolved, adapted and

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