SELECT COMMITTEE PUBLIC SERVICES 7 SEPTEMBER 2005

A (VERY) BRIEF HISTORY Founded: 1995 JV: SA Government and SEDF (OSI) (Now Public Entity) Task: Attract banks back to low income housing Mechanism: Guarantees (SEDF $50 million) Focus: Project Bridging Finance via Risk Sharing Guarantees to Banks

SINCE 1996 NURCHA HAS SUPPORTED: >700 PROJECTS CONTAINING >175 000 HOUSES 155 000 HOUSES BUILT FACILITATED FUNDS TO THE VALUE OF R3.2BN

IMPORTANT TRANSITIONS FROM GUARANTEES FOR BANK OVERDRAFTS TO GUARANTEES FOR MANAGED LOANS TO CREATING FINANCING STRUCTURES AND MANAGING LOANS OURSELVES

BACKGROUND TO AMBITIOUS “BNG” GOALS 1. Minister’s Challenge: “Grow Your Business” Construction Finance Institution “Proposals to HOD MINMEC Meeting OSI Director and Minister – 10/04 Proposal submitted to Minister – 12/04 Minister and Mr Soros sign MOU – 02/05

RENEWED MANDATE & RE-CAPITALISATION Affirms co-operation between Government and SEDF. Commits Nurcha to finance 190 000 houses and R2.4 billion in loans over three years. 400 Complementary projects (infrastructure and community facilities). Objective to strengthen Nurcha’s capital structure. SEDF will inject $10 million cash. If matched by Government over three years. Complete full agreement in April 2005. Agreement signed in July 2005

ASSUMPTIONS & BUDGET OUTPUTS OUTPUTS PREMISED ON 1. Increased housing delivery. 2. Developments in credit-linked housing. 3. Increased activity in MIG and Public Works outputs. 4. Acceptance of Nurcha as financier of above. 5. Enhanced funding capacity.

NURCHA’S CURRENT AREAS OF FOCUS Nurcha finances the construction of: Subsidy (RDP) housing Credit-linked houses ≤ R200 000 Rental for families ≤ R7 500 per month Infrastructure and community facilities NOT FOCUSSED ON HOME LOANS/END USER FINANCE

NURCHA’S CLIENTS EMERGING CONTRACTORS ESTABLISHED CONTRACTORS Borrow without collateral Through intermediaries Highly controlled lending ESTABLISHED CONTRACTORS Have history and financials Put up at least 30% funding Additional security Moderately controlled lending

DELIVERY MECHANISMS Use of financial intermediaries for emerging and small contractors to assist them “every step of the way”. Intermediary presence in Limpopo, Free State, Gauteng, KZN, Northwest, northern part of the EC for emerging and small contractors. Direct lending for established contractors available in all provinces.

FINANCING CONSTRUCTION FINANCIERS DONORS CAPITAL MARKETS DFIS NURCHA PACKAGES FINANCES CHAMPIONS FINANCIAL REQUIREMENTS + RENTAL CONSTRUCTION: CREDIT LINKED SUBSIDY+ + INFRASTRUCTURE

NURCHA ADDRESS 3RD FLOOR ,THE GRACE OFFICES CNR TYRWHITT & BATH AVE ROSEBANK 2196 JHB TEL (011) 214 8700 FAX (011) 880 3981

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