Wednesday, August 11, 2010

Zuma housing fund not functioning

Aug 11 2010 09:33


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Housing recovery short-lived
Housing slump hits Government
Boost for affordable housing

Cape Town - Incompetent municipalities were behind much of the housing backlog in the country, Cas Coovadia, chief executive of the Banking Association of South Africa (Basa), told members of the parliamentary standing committee on finance.

He added that President Jacob Zuma’s billion-rand guarantee fund for housing “exists only in theory”.

A meeting on this fund had not yet been held with Human Settlements Minister Tokyo Sexwale to finalise details.

The R1bn guarantee fund for affordable housing was announced by Zuma in his State of the Nation address this year. This fund is intended to help prospective homebuyers who earn too much for a state-subsidised house and too little for a bank home loan.

Coovadia said the fund existed only in theory and that South Africa had a shortfall of some 600 000 affordable houses for households earning between R3 500 and R15 000 a month.

He berated municipalities for no longer being able to build affordable houses.

He said that the banking sector had been criticised for not providing sufficient finance for housing but, even should the government give a 100% guarantee, this would not help if in the first place the houses could not be built.

About 120 000 affordable houses need to be built a year, he pointed out, but for the past three years only about 80 000 houses have been built each year.

The primary problem was the incapacity of municipalities, he said.

Five years ago finalising municipal regulations around house construction, such as issuing certificates of approval for developments, took 30 months. It currently takes a municipality 48 months to issue such certificates.

Affordable housing developers are simply withdrawing from such projects.

Coovadia also rejected criticism from committee members that commercial banks were not advancing enough to small and medium-sized enterprises (SMEs).

He lambasted development financiers like Khula, which now want to compete directly with commercial banks using its Khula Direct model – rather than developing a plan to provide security for those without collateral but with a good business plan.

The ANC’s Zephroma Dubazana said she had been under the impression that commercial banks used taxpayers’ money from the government fiscus, and were therefore obliged to help small enterprises.

Coovadia had to explain the difference between money from the fiscus, as in the case of Khula, and private deposits kept by commercial banks on the public’s behalf.

On Wednesday the committee will meet with the Financial Sector Transformation Council.



Comments by Sonny

So much for ANC service delivery!

Zuma's presidency only exists in theory!

The rest is dysfunctional!

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