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SOUTHERN AFRICAN HOUSING FOUNDATION INTERNATIONAL CONFERENCE 2014

CLOSING ADDRESS –MINISTER BONGINKOSI MADIKIZELA

1st October 2014

Presentation Overview

Legislative and Strategic

Environment

Previous Delivery Record

and Affordable Housing and Affordable Housing

Challenges

Skewed Lending Patterns

Culture of Saving amongst g g

the Poor in South Africa

The Change in Approach

© Western Cape Government 2012 |

The Change in Approach

Introduction

The Constitution and the Bill of Rights is a cornerstone of democracy in Southg y

Africa. It enshrines the rights of all people in our country and affirms the

democratic values of human dignity, equality and freedom

South African Constitution. Chapter 2 : Bill of Rights

“… 26. Housing.-

1) Everyone has the right to have access to adequate housing.

2) The state must take reasonable legislative and other measures, within its

available resources, to achieve the progressive realisation of this right. ..”


3 Pillars of the National Development Plan (NDP)

1 The responsibility of 1. The responsibility of

leadership across

society to work society to work

together to solve

problemsp

2. A capable and

developmental statedevelopmental state

3. Active citizenry


NDP Chapter 8 : Transforming Human Settlements

Objectives: Objectives:

Strong and efficient spatial planning system, well integrated across the spheres

of government

Upgrade all informal settlements on suitable, well located land by 2030

More people living closer to their places of work

© Western Cape Government 2012 |Source: SOHCO

Our 2040 Challenge

Creating a resilient, inclusive and

competitive Western Cape with

higher rates of employment

producing growing incomes, greater

equality and an improved quality of

life


One Cape 2040

FOCUS SUMMARYEducating Cape • Ever/ person will be appropriately educated for

opportunity • Centres of ecological, creative, science and social

i ti innovation

Enterprising Cape • Anyone who wants to be economically active is able to work

• Entrepreneurial destinations of choice • Entrepreneurial destinations of choice

Green Cape • Water, energy and waste services delivered sustainably

• Leader in Green Economy Leader in Green Economy

Connecting Cape • Welcoming, inclusive and integrated communities • Global meeting place and connector with new

markets markets

Living Cape • Welcoming, inclusive and integrated communities • Global meeting place and connector with new

markets


Leading Cape • Ambitious socially responsible leadership at all levels • World-class institutions

Housing Delivery in SA since 1994

1994 target of 1 million houses in 5 years (RDP)1994 target of 1 million houses in 5 years (RDP)

1 million target met by 2001

Urban divide remained as these units were built Urban divide remained as these units were built

on the fringe of cities

By 2010, deficit grew to 2,1mil. householdsy 0 0, de c g e o , . ouse o ds

The number of informal settlements grew to more than 2,600

This delivery model re-enforced the urban spatial divide and proved to be y p p

unsustainable

The Breaking New Ground Policy (2004) was developed which spoke of

sustainable, integrated development, emphasizing partnerships and

community participation


Major Infrastructure Challenges

Poorly located and inadequate infrastructure limits social inclusion and Poorly located and inadequate infrastructure limits social inclusion and

economic growth. Infrastructure provision and service delivery in rural areas are

particularly challengingp y g g

Historic underinvestment in maintenance and rehabilitation of infrastructure

Transport services are inefficient, inaccessible, unsafe, unaffordable and

fragmented

© Western Cape Government 2012 | Future Cape Contextual Report (2012)

Resource Inefficiencies

spatial and resource inefficiencies have serious negative consequences for …spatial and resource inefficiencies have serious negative consequences for the environment, but also for government finances (particularly municipal finances) and for household livelihoods.

Increasing Municipal Funding Gap

R 24 billion additional capital required over 10 years

Municipalities battling to service their increasing debts

Increasing Municipal Funding Gapwith major funding shortfalls

Additional rates & tariff increases of up to 4% p aincreases of up to 4% p.a.

Low income households having to pay up to 18% more f t tfor transport

33% average increase in CO2 emissions from transport


CO2 emissions from transport

increased costs to households contributing to poverty trapsSource: Western Cape Infrastructure Framework, May 2013

Population increase between 2001 and 2011 (29%)

WCWCWCWC


HS Development Grant per Province 2014/15

Human Settlement Development Grant

Estern CapeWestern Cape

Human Settlement Development Grant

13%

Free State6%

North West9%

11%

Mpumalanga7%

Northern Cape2%

Gauteng26%

Limpopo7%

7%

KwaZulu‐Natal19%


Source: DORA 2014

Skewed Lending Patterns

An analysis of National Credit Regulator (NCR) data shows that outstanding An analysis of National Credit Regulator (NCR) data shows that outstanding

unsecured credit has increased from R41bn in 2007 to R159bn in December

2012, a compound annual increase of 31% p.a.p p

Credit type Balance Rand Value

% of Total

Year on Year Growth Rand Value

Year on Year Growth %

(Q1 2012)Mortgages 796 329 489 998 60,3% 26 438 075 909 3,4% Secured 255 553 185 573 19,4% 29 205 139 923 12,9% Credit Credit Facilities

147 340 976 725 11,1% 14 309 377 159 10,8%

U d 120 811 141 417 9 1% 39 946 611 269 49 4% Unsecured Credit

120 811 141 417 9,1% 39 946 611 269 49,4%

Short-Term C dit

882 031 713 0,1% 184 549 294 26,5%


Credit Total 1 320 916 825 426 100,0% 110 083 753 554 9,1%

Source: Compliance and Risk Resources (NCR), Research into Unsecured Loans, 6 August 2012

Reasons for Home Loan Declines by Banks

Typical reasons given by consumers applying for unsecured loans included housing

(approx. 40%), education (around 26%) and furniture (13%)

Mortgage lending has notably dropped ever since the implementation of the

National Credit Act. According to the Office of Disclosure, reasons provided

include:

Lack of affordabilityLack of affordability

Unacceptable credit track record

Insufficient information / documents having been provided

Unacceptable security

Ineligible applicant

Unacceptable exposure (town)

Adverse credit record

© Western Cape Government 2012 | Source: Rajeen Devpruth (NCR), Collectivity by MBD

Culture of Saving amongst the Poor in South Africa

Research released in May 2014 by African Response indicate that the robusty y p

Stokvel market in the area of traditional collective saving is estimated at

R25 billion. There are

8.6 million stokvel

members in South

Africa which

represents 23% of the

adult population and

an estimated 421 000

stokvels in total.


Value of Stokvel Contributions


CHANGE IN APPROACH

Policy Principles

A capable state working in partnership with

active, responsible citizens to achieve shared

goals.

Partnerships with other stakeholders outside

the state are central to meeting strategic

objectives.

Policy must be underpinned by:

Open opportunity society for all

Whole-of-society approach

A rights-and-responsibilities-based approach

Evidence-base


Sustainability

Strategic Game Changers

Adopting a Whole-of-Society approach with a changed role of Government as condition-

maker, enabler, facilitator & partner. This requires improved partnerships: within maker, enabler, facilitator & partner. This requires improved partnerships: within

Government, with the Private Sector, Civil Society and Communities

Ensuring that the ecological resource-base is maintained and that the economy and

settlements become more resource efficient

Embracing and planning for informality, adopting an incremental approach and improving

security of tenuresecurity of tenure

Inclusive, dignified & sustainable access to basic services (water, sanitation, waste

management, electricity, public transport) and social amenities provided through spatially-

targeted, decentralised & resource-efficient infrastructure provision


Partnerships

All 3 spheres are interrelated and interdependent: the private sector and All 3 spheres are interrelated and interdependent: the private sector and

communities must take up the opportunities that an enabling

environment createsenvironment creates

Strong partnerships between the organs of state within each sphere as

well as between the different spheres of government (including the p g ( g

SOEs)

Partnerships with the private sector, civil society, communities,

academia, international partners, etc., is a critical success factor


Key Starting Points

Focus on the accelerated delivery of informal settlement upgrading

• limited state resources to be allocated to as large a group of beneficiaries limited state resources to be allocated to as large a group of beneficiaries

as possible

More integrated settlements (providing public and social services and

livelihood opportunities, together with housing) and densification along

transport networks, which make urban settlements more ‘liveable’ and

ffi i tefficient

Importance of refining implementation component (the HOW) – direction is

substantially clearsubstantially clear

• alignment between NDP, One Cape 2040 vision, political agenda

Importance of communication and partnership building going forward

Importance of clearly defining roles and responsibilities in relation to human

settlements


Significant HS strategic shifts required by NDP and other strategic frameworksand other strategic frameworks

From ToFrom ToFull subsidised “RDP” house (for few) Incremental product options (for

many)

Single stand-alone units Medium density units

Narrow ownership emphasis Range of rental, rent to buy, hi d t i ht tiownership and tenure right options

Focus on households earning under Broader income range focusFocus on households earning under R 3 500

Broader income range focus

State provision (state as driver) Partnership and co-provision (citizen and private sector as drivers)

Fragmented housing delivery Integrated settlement planning and


Fragmented housing delivery Integrated settlement planning and management

Strategic Agenda

Accelerating informal settlement upgrade as core delivery programme with a view Accelerating informal settlement upgrade as core delivery programme with a view

to addressing the service backlog by 2026

Promoting incremental housing through empowering citizens and providing

targeted support with a view to facilitate real improvements in formal settlements

over time

Enabling and facilitating major increase in affordable housing opportunities through Enabling and facilitating major increase in affordable housing opportunities through

partnerships to address the challenge that poor households earning between R 3 500

and R 15 000 experience in being able to access housing opportunities

Improving inter-governmental settlement planning and management in order to

achieve better located higher density settlement patterns and improved service

deliverydelivery

Consolidating an efficient and effective provincial human settlements department

able to lead and manage delivery process


Thank youThank you

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