1. INTRODUCING THE HUMAN SETTLEMENTS DEVELOPMENT BANK (HSDB) 28 FEBRUARY 2017

2. Rationale …
Rationale for the new entity derives from BNG Policy Framework and the Treasury Review of DFI’s and an Assessment of the Needs of the Sector…
IMPROVE EFFECIENCIES
Mandates lack clarity in goals, are overly broad and lack focus resulting in overlap and duplication, and unserved areas
INCREASE SCALE OF IMPACT
DFIs are not realizing their developmental potential, as they operated at too small a scale
ACHIEVE LONG TERM SUSTAINABILITY
Financial stability concerns are often used to justify reduced risk taking (DFIs are very risk averse

3. Land Assembly and Packaging Top-Structure Development
SOUTH AFRICA CONTINUES TO FACE SIGNIFICANT HUMAN SETTLEMENTS DEVELOPMENT CHALLENGES ……
There are currently problems, blockages or challenges in every part of the human settlements value chain – these are often exacerbated by funding issues …
Planning
Land Assembly and Packaging
Servicing (Bulk and Internal)
Top-Structure Development
AFFORDABILITY
Spatial planning has improved through SDFs and IDP
Lack of coordination in respect of infrastructure, social and economic amenities
Long time frames to package land
Project packaging is poor
Limited access to affordable well located land
Insufficient funding for land assembly
Bulk infrastructure often not available
Development contributions are high
Limited or fragmented funding for bulk and link infrastructure
Quality of construction poor
Poor management of contractors by Provinces and Municipalities
Limited contractor and developer finance
Limited equity funding for new developers
Constraint Household Incomes
High Levels of indebtedness
Limited innovative end user finance
Weak Govt assistance for the GAP market
Human Settlements Development Bank (HSDB): Concept and Roadmap
21 November 2016

4. HSDB aims to deliver…
The sustained, equitable and accessible value creation by effectively and efficiently providing quality funding and financial support for the development of integrated human settlements in South Africa.

5. Human Settlement Development Bank’s Business Model
What the HSDB will Do…
Strategy
Vision
Strategic objectives
Outcomes
An efficient and effective Human Settlements Development Bank delivering quality financial support for the development of sustainable and integrated human settlements in South Africa.
Increase the provision of finance across the human settlements value chain
Support effective transformation of the human settlements sector
Expanded access to financing, while maximising social outcomes, ensuring a more effective housing market and reducing the cost of human settlements financing
Enhance Integration and coherence of Human Settlements grants with other sources of funding to create scale (housing opportunities).
Increase the Private Sector Leveraging Capacity
Remain sustainable while pursuing development objectives.
Human Settlement Development Bank’s Business Model
Treasury: Investment & Fund Raising
Lending: Retail Intermediaries / Housing Institutions
Credit Enhancement: Guarantees & Insurance
Land, Developer Infrastructure and Contractor Finance
Equity Funding & Strategic Investments
Advisory / Technical Assistance
Functions
Human Capital
Financial Sustainability
Robust Balance Sheet
Good Credit Rating
Critical enablers
Research & Market Intelligence
ICT Infrastructure
Treasury Management
Risk Management
Human Settlements Development Bank (HSDB): Concept and Roadmap
21 November 2016

6. Delivery Model of the HSDB…

7. HSDB Footprint
The new HSDB will operate across South Africa and target all sectors of the economy
The new HSDB will operate nationally covering all provinces and key municipalities on a gradual basis with key areas to include:
Gauteng, also covering North West
Nelson Mandela Metro and Buffalo City in the Eastern Cape)
Ethekwini, South and North Coast in KZN
Cape Town and Western Cape hinterland
Polokwane and environs in Limpopo
Mpumalanga
Free State and the Northern Cape
Location infrastructure will be underpinned by the need for efficiencies and a mixed model comprising larger stand-alone offices as well as shared service centres (with other entities of Human Settlements) are a consideration.

8. HSDB Funding Sources …
SHAREHOLDER CAPITALISATION, COMMUNITY REINVESTMENT AND INVESTOR
EQUITY
OPERATING SURPLUSES (FROM INTEREST AND FEE INCOME)
BORROWINGS
INCOME TAX EXEMPT

9. CONSOLIDATED PRO –FORMA FINANCIALS (BASE CASE = YEAR 0)

10. Contents Summary of Capital Allocations over the MTEF
Draft Group Summary Statement of Financial Position
Overview and analysis of Draft Consolidated DFI

11. Summary of Capital Allocation
NHFC
R’m
NURCHA
RHLF
TOTAL
2015/16
100
61*
161
2016/17
2017/18 50
150
2018/19 80
2019/20
Total
430 61
541
* Repayment of loan commitments

12. Draft Group Summary Statement of Financial Position

13. Overview and Analysis – Draft Consolidated DFI
Liquidity ratio (Liquid Assets : Short-Term Liabilities and opex) – level of capitalisation.
Losses in prior years as a result of high impairments and bad debts. Quality of income – Interest on loans vs interest on investments and other income.
Positive trend in efficiency and cost to income measure.
Marginal growth in advances portfolio
Achievability of growth assumptions; operating environment
Level of capitalisation

14. The Transaction & Progress
To Complete the Transaction
NHFC Tax Amendment Bill now an Act (effective 1 April 2016)
NHFC Application to the Company Tribunal
Approval from All Funders
NURCHA and RHLF Assets and Liabilities transferred to NHFC, meeting all CP's and confirmation of Take On Balances
October 2017
Governance and Organisational Structure
Restructured NHFC Board
Expanded NHFC Organizational Structure
1.3 Consolidate APP's of the three entities

15. Establish HSDB & Progress
2.1 Draft Business Case, Policy & Legislation
Secure Approvals & Funding
30 June 2017
Promulgate Legislation
Announcement HSDB (Minister’s Human Settlements Budget Speech)
April 2017

16. Super NHFC Organogram
Board of National Housing Finance Corporation SOC Limited (“NHFC”)
National Department of Human Settlements (“NDoHS”)
Chief Executive Officer (CEO)
NHFC
Managing Director
(RHLF)
(NURCHA)
NURCHA
RHLF
Executive
Management
Minister

17. Summary Evaluation - Institutional Options…No
Option
Key features
Facilitates Good Governance
Ensures Effective Accountability/
policy alignment
Supports Effective Lending & Collection
Ability to raise funding
Ability to facilitate market innovation
Ability to attract / retain scarce skills 1
Public Entity
Separate legal entity
Powers / functions determined by legislation
Political and administrative autonomy
Outside of the Public Service
Reliant on transfers from the National fund 2
Government Business Enterprise
Required to raise own revenues and can raise loans etc. 3
Public-Private Partnership
Formally structured vehicle that substantially transfers management & risk to private sector party to deliver a particular service, e.g. concession
Typically used to raise capital or secure management & other expertise 4
Private Company
Private Companies with appropriate governance and management structure
Operates in line with memorandum and articles of association
Could be a Not-For-Profit

18. The Consolidation & Progress
3.1 Administration Activities
Payroll & Admin integration of all entities
3.2 IT Systems
Arrange for NURCHA & RHLF to transfer their current IT & systems
IT Integration
3.3 Physical Movement of RHLF & NURCHA staff
3.4 Change Management
3.5 Stakeholder Engagement Management

19. Infrastructure of the HSDB…

20. THANK YOU
Conclusion