11/14/ FINANCIER | FACILITATOR | INNOVATOR PRESENTATION TO SELECT COMMITTEE ON PUBLIC SERVICES 28 JUNE 2011 PRESENTATION TO SELECT COMMITTEE ON PUBLIC SERVICES 28 JUNE 2011

11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 2 CONTENTS 1.Mandate, Vision and Mission 2.Strategic Objectives 3.NHFC Human Settlements Interventions 4.Developmental Impact Strategic Plan Overview 6.Contribution to Outcome 8 7.Key Performance Indicators 8.Objectives linked to Provinces 9.Challenges faced in Provinces 10.Service Delivery, Job Creation, Poverty Alleviation 11.Projects: Potential impact (units ) by Province 12.Commercial: Provincial footprint through intermediaries 13.Funding 14.NHFC Projects Showcase

11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 3 NHFC’s Mandate, Vision, Mission To be the leader in development finance for the low to middle income housing market. Providing innovative and affordable housing finance solutions to the low and middle income households. The National Department of Housing established the National Housing Finance Corporation Limited (NHFC) as a Development Financial Institution (DFI) in 1996 with the principle mandate of broadening and deepening access to affordable housing finance for the low to middle income households.

Expand housing finance activities, through the effective provision of housing finance solutions, thus enabling the low to middle income households to have choice of renting or owning or incrementally building, to meet their housing needs. Facilitate the increased and sustained lending by financial institutions to the affordable housing market. Mobilise funding into the human settlement space, on a sustainable basis, in partnership with the broadest range of institutions. Conduct the business activities of the NHFC in a manner that ensures the continued economic sustainability of the Corporation whilst promoting lasting social, ethical and environmental development. Stimulate the low to middle income housing sector, by providing robust, relevant and timely research and market analysis to practitioners and housing consumers. Strategic Objectives 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 4 STRATEGIC OBJECTIVES

11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 5 NHFC Human Settlements Interventions

Developmental Impact /14/2015 FINANCIER | FACILITATOR | INNOVATOR 6 Housing opportunities created: 16,884 Beneficiaries Benefitting: 64,158 Funding impact : R776 million Private funds leveraged R1,297 million Jobs Created : 1,860 Empowerment (Women and Youth Entrepreneurship) : R100 million

Strategic Plan Overview 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 7 16,884 18,962 22, Housing Opportunities R776 m 2012 R894 m 2013 Disbursements R306 m R500 m Funding Requirements R1,076 m 2014 Note: The above figures exclude the Mortgage Default Insurance (MDI) implementation

Contribution to Outcome 8 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 8

Other Government Priorities 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 9 Through funded projects, NHFC enables job creation, skills development and entrepreneurship enabling Government to achieve the goal of economic growth. The Corporation has included job creation as a KPI. Disbursements totaling R415 targeted towards women and youth managed / owned companies in the planning period. The Corporation’s experiential programme (learnership for students, internship for new graduates and sponsorship for students who are still at university –both undergraduate and post graduate) is targeted at providing youth with work experience as well as ensuring that those who are within the NHFC’s field of study are assisted financially.

Key Performance Indicators 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 10 Objective 1: Expand housing finance activities, through the effective provision of housing finance solutions, thus enabling the low to middle income households to have choice of renting or owning or incrementally building, to meet their housing needs. Provision of loans to institutions that provide various housing tenure options – Social Housing Institutions, Inner City Landlords and Integrated Housing Project Developers. Provision of loans to intermediaries that on lend into the market for incremental housing and home ownership. Syndication through dedicated Funds to scale up housing opportunities. Co-financing arrangements with Banks towards integrated settlements.

Key Performance Indicators (cont.) 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 11

Key Performance Indicators (cont.) 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 12

Key Performance Indicators (cont.) 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 13 Objective 2: Facilitate the increased and sustained lending by financial institutions to the affordable housing market. Syndication through dedicated funds to scale up housing opportunities. Co-financing arrangements with financial institutions towards integrated settlements. Through strategic partnerships attract other funders to fund intermediaries.

Key Performance Indicators (cont.) 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 14 Objective 2: Facilitate the increased and sustained lending by financial institutions to the affordable housing market. Leverage ownership through Commercial banks through effective risk enhancements such as Mortgage Insurance(MI). o The development of the MI implementation plan is advancing satisfactorily with the following milestones achieved to date: o Business plan and financial modeling done. o Positive engagement/consultations with Financial Institutions and Financial Service Board, BASA, Mortgage Originators and Developers, Shareholder, NCOP, National Treasury and the Presidency. o A separate detailed Business plan on MI will be provided.

Key Performance Indicators (cont.) 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 15 Objective 3: Mobilise funding into the human settlement space, on a sustainable basis, in partnership with the broadest range of institutions Source and mobilise funding in partnership with broad range of institutions to support strategic objectives. Facilities concluded with AFD and EIB. Concurrent approval from National Treasury and Accounting Executive for both facilities. Sale of Retails books. Approval and implementation of optimum funding strategy and plan. Explore opportunities with DHS to mobilise funding into the Human Settlements space.

Key Performance Indicators (cont.) 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 16 Objective 4: Conduct the business activities of the NHFC in a manner that ensures the continued economic sustainability of the Corporation whilst promoting lasting social, ethical and environmental development

Key Performance Indicators (cont.) 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 17 Objective 5: Stimulate the low to middle income housing sector, by providing robust, relevant and timely research and market analysis to practitioners and housing consumers. Facilitate the provision of housing consumer education, skills development with Partners and RFI’s. Provide an analysis of the affordable housing market performance, trends in house prices, consumer behavior and patterns. Participate in the promotion and development of housing related policies, instruments and strategies through providing input into DHS policy issues, legislations and regulatory frameworks.

How Objectives are linked to Provinces 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 18 Objectives are informed by both Provincial and National housing plans. NHFC provides top-up loan funding for most Social Housing initiatives by Province. An amount of R300 million has been set aside for the current financial year for this programme. The NHFC provides an implementation service to fast-track delivery of housing projects. Examples are EC – Siyanda Project, KZN – All Social Housing projects. Currently working with all Provinces to develop in interim strategy for the roll out of the Finance Linked Subsidies Programme (FLISP). We have dedicated funds to support inner city housing initiatives. The major focus is currently in Gauteng, KZN and EC. We have a Development Fund to fund housing research initiatives in provinces that must result in viable housing projects (Limpopo – Bendor, EC – Siyanda, KZN – First Metro, WC – CTCHC).

Challenges faced in the Provinces 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 19 Changes in political leadership tend to affect relationships and delivery of projects on the ground. Long lead times for approval of projects under National Environmental Management Act (NEMA). There is no effective and coordinated support by provinces to ensure the recovery of monies owed by rental defaulters e.g. Polokwane, WC, Gauteng and KZN. Provinces are not honouring their payment undertaking to financial institutions for work done by provincially appointed contractors, e.g. Illima (Gauteng). No demonstrable support for GAP housing initiatives. Provinces are not willing to set aside funds for the FLISP Programme.

Service Delivery, Job creation and Poverty alleviation 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 20 NHFC has set aside R1 billion for the current financial year for Human Settlements initiatives (land, services and top structures) From our funding initiatives we expect to create jobs. Most of our funding goes into construction wherein significant empowerment and skills transfer takes place as most of the construction work is done by PDI sub-contractors. R100 million has been set aside for Youth and Women Empowerment initiatives.

11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 21 Projects: Potential impact (units ) by Province

11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 22 Commercial: Provincial footprint through intermediaries

Funding 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 23 No additional capital from shareholder, funding raised externally External funding secured from AFD and EIB Sale of Retail books Approval and implementation of optimum funding strategy and plan.

NHFC Client Showcase 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 24 Southernwood Square: East London Emerald Sky: East LondonHomeFront: Rustenburg Strathdon: Durban CBD

NHFC Client Showcase 11/14/2015 FINANCIER | FACILITATOR | INNOVATOR 25 Cavendish: Johannesburg CBD Cavendish Entrance