Housing And The Budget

Last month the Minister of Human Settlements, Tokyo Sexwale MP, presented the 2010/2011 budget for the Human Settlements Department.  While housing has always been a matter of interest and concern for all South Africans in some form or another, this budget speech is probably more pertinent to the mainstream building industry than it has been for decades. 

There are two fundamental reasons for this. Firstly, the economy and the construction industry are in a huge slump at the moment and it is anticipated that there will only be two key areas which are going to see significant work undertaken in the short term. One of these is the huge anticipated infrastructural spend, and the other is housing.  Secondly, we have seen massive problems with defective housing having been built and it is clear that well-qualified capacity needs to be brought into this arena to ensure that delivery of quality housing is brought back on track.

What Has Been Achieved

2.3 million housing units have been made available since 1994, in turn housing nearly 11 million people. There are currently more than 8000 human settlements projects under way and 219 000 housing units were built in the past financial year.

The housing backlog has, however, grown tremendously from 1.5 million in 1994 and now stands at 2.1 million.  This translates to approximately 12 million South Africans still in need of better shelter.  This moving target is an indication of population growth which has also resulted in more than 2700 informal settlements now being in existence.  Apparently 70 of these are slums occupied solely by white people, proving that poverty is cutting across historical divides.

From Now Until 2014

The Minister advised that the department’s target is 220 000 units per year for the next five years. Over and above this, over 6000 hectares of land for human settlement development is being acquired.  500 000 informal settlement dwellings are being upgraded, although the Minister assured that these upgrades would not detract from the government’s long term objective of eradicating slums completely.

The Challenge

Due to the population growth and the increasing effects of poverty, the housing backlog is only able to be cleared at a rate of 10% per annum with current resources and pace of delivery. It is recognised by the high level Presidential Co-Ordinating Council that current fiscal allocations are inadequate and that it is challenging to ensure that the co-ordination between various stakeholders remains effective.

Towards Human Settlements 2030 – Keep the world cup enthusiasm going

Minister Sexwale alluded to the tremendous efforts that have gone into ensuring that the 2010 FIFA World Cup will be a success, referring to huge construction projects including highways, stadiums, world class airports and state of the art technology platforms.  He goes on to say: “The target for human settlements ought to be nothing less than an enhanced vision driven by a similar energy and passion to World Cup 2010 – this time round, human settlements 2030.

“To that end, we as South Africans must explore the possibility of marshalling resources in a similar fashion to the way we impressed the world -correctly so - with preparations for the world cup.  Many South Africans, who live in depressed conditions, should also be impressed.  The current large scale mobilisation of human, capital, financial, logistical, construction, project management and other resources should not dissipate after the final world cup whistle. The potential exists for the whole country to be turned into one large construction site as we build sustainable human settlements in various localities.”

With this kind of political will in place, from the highest level downwards, there can be no doubt that the housing sector will see a boom that is unprecedented.

The Gap Market

Minister Sexwale also spoke about that sector of the market which doesn’t qualify for bank credit or government subsidy. 600 000 new loans in the affordable housing sector are being pursued with the financial services industry. A guarantee fund of R1 billion established by President Zuma and Finance Minister Pravin Gordhan allows for financing for housing purposes to be accessed by this significant portion of the market. The department is forging strong relationships with the financial sector which provides the credit and housing finance.  He warned that this policy drive should not in any way provide recklessness in lending practices which will ultimately threaten the guarantee fund.

The Current Budget

The total budget for subsidised housing for the 2010/2011 financial year is R16.2 billion with an additional R1.2 billion for the sanitation programme which is designed to contribute towards rural infrastructure backlog.

Areas of Concern

The Minister reiterated his declaration of war on waste and corruption. He reported on the special investigations unit (working in partnership with the Auditor General’s office) as having worked hard to track down those responsible for corruption, abuse and malpractice. 1570 officials have been arrested to date, of whom 1189 have been convicted and R38 million has been recovered.  5 lawyers have also been struck off the role and more are to follow he warns.

Conclusion

The bottom line is that millions and millions of South Africans need housing and billions of rands have been set aside for this purpose.  It follows, therefore,  that if this is to be implemented successfully and at the pace required, a huge effort will need to be made and a significant portion of the construction industry will need to be mobilised.  Not only do these houses need to be delivered, but they need to be built well, and in a safe and sustainable manner.  There is an enormous opportunity for work to be undertaken and for training, mentorship and quality assurance activities to take place which will benefit the industry as well as the ultimate housing consumer.

Brandon Abdinor | Executive Director

President Zuma - State of the Nation address:

“…that human settlement is not just about building houses. It is about transforming our cities and towns and building cohesive, sustainable and caring communities with closer access to work and social amenities, including sports and recreation facilities.”