1. Presentation to the National Council of Provinces 12 JUNE 2002

2. Agenda 1.Mandate and Mission 2.NHFC Context (as Gazetted) : NHFC Primary Responsibilities 3.The External Environment 4.The Housing Finance System - SA 5.The Housing Institutional Environment 6.Strategies and Action Plans 7.Conclusion

3. Mandate In partnerships with the broadest range of organisations, to search for new and better ways to mobilise finance for housing, from sources outside the state... “The corporation’s endeavours should in time ensure that every South African with a regular source of income can gain access to finance for buying or renting or incrementally building or improving his/her own home”

4. Mission The NHFC seeks to create housing opportunities for the low and moderate income families by: FundingUnderwriting  Funding or Underwriting the funding of intermediaries and institutions to promote broader access to housing and housing finance Facilitate  Facilitate the building of Adequate and Sustainable capacity within the organisations and institutions that it funds Partnering  Partnering organisations and institutions to deliver innovative housing finance solution options

5. NHFC Primary Responsibilities…  Stimulate the Primary and the Secondary market in the low and moderate income housing sector: Provide alternative need- based housing finance products and financial packages:-  Provide alternative need- based housing finance products and financial packages:- mortgage and non- mortgage products (loan discounting and purchasing from lenders, direct intermediary funding) rental product options (project financing for rental or rent to buy and installment sale) provide credit to lower income earners building or developing properties incrementally – PHP, individual initiatives and through rapid land release (generally micro- finance)

6. NHFC Primary Responsibilities…  Undertake the funding as a wholesale intermediary and act as a fund manager  Specialise in identifying, assessing, pricing, monitoring and managing the risks associated with the placement of funds  Research and Product development

7. NHFC Primary Responsibilities…  Stimulate the Primary and the Secondary market in the low and moderate income housing sector (contd.) : On-going product development Support management capacity of niche lenders Promote and develop partnerships with financial institutions and other stakeholders to improve financing capacity to income groups

8. Overview of the Operating Environment… External Environment…  Shrinkage of the housing finance delivery channels into the NHFC’s target market : Demise of small banks Saambou, Unifer, FBC, etc. Demise of small banks Saambou, Unifer, FBC, etc. Market Consolidation – e.g. Cashbank Market Consolidation – e.g. Cashbank  Inadequate capacity of niche lenders to take-over the increased gap to finance  Negative impact of Unemployment and HIV/AIDS  High-risk perceptions of the Low and Moderate income financing sector – Cost of funds high

9. Overview of the Operating Environment… External Environment…(contd)  Housing Policy – HLMDA, CRA and evolving policy on Social Housing  Zero Transfer duty on less R 100 000 house value and  Stamp duty abolished for certain mortgage transactions between institutions  Stability of some of the niche lenders in long term funding emerging  Alternative tenure options for the end beneficiaries

10. The SA Housing Finance System Capital Markets (Banks, Investors, Life/Pension Funds REGULATION Parastatals (other DFIs) Govt Loan secured by property, lower LTV ratios Lending Institutions LOAN ORIGINATION LOAN SERVICING BANKS Non Mortgage Security NON- BANKS NGOs Depositors Borrowers Subsidy Beneficiaries

11. The Housing Institutional Environment Rent Own Mobilisation of Construction Funding Stabilising the Housing Environment Servcon Property in Possession NURCHA NHBRC THUBELISHA Right sizing DEVELOPER (Bridging Finance) RURAL HOUSING LOAN FUND End-user Guarantees Financial intermediary Capacity Building Ensure Quality Housing Funding or Guarantee the Funding SOCIAL HOUSINIG FOUNDATION Rural Micro-Finance

12. Strategies and Action Plans…  Prudently, grow the lending business of the Corporation and thus improve on its housing delivery impact Increase the number of housing institutions and lenders across all Provinces Facilitate the development of capacity of Housing Institutions, Primary and Niche Lenders (Standards and Guidelines)  Continuously enhance the Risk Management capacity and competency of both the NHFC anud or clients’ Accelerate the medium density housing development – thru the Job Summit Social Rental Housing Project  Accelerate the medium density housing development – thru the Job Summit Social Rental Housing Project Continue to pilot pragmatic PPP models that will deliver :  Continue to pilot pragmatic PPP models that will deliver : Affordability Value for Money, and Risk Sharing Proactively undertake Housing Finance Research and Product Development  Proactively undertake Housing Finance Research and Product Development

13. THANK YOU

14. QUESTIONS…

15. Undertaking Wholesale Funding… NHFC’s Performance…

16. NHFC Housing Impact – TO-DATE HOUSING IMPACT TOTAL TO DATE Complete housing units financed 80, 397 Incremental housing loans granted 489 480 Number of people benefited 2,47 million NHFC’s Performance…

17. Budget Highlights… Priorities of the Corporation …  Prudently, grow the lending business of the Corporation and thus improve on its housing delivery impact  Continuously enhance the Corporation’s Risk Management capacity and competency  Attain accelerated delivery on the Job Summit Pilot Project  Effectively implement the Corporations processes and systems – Drive Speed, Flexibility and Impact  Focus on the need to challenge, develop and retain the best people in the Corporation  Improve the Corporations Marketing and Communication with all its Stakeholders

18. Budget Overview 2002/5 Deliver housing finance to a cumulative total of 334,000 households (of which 30,500 new and 7,500 existing houses) in most provinces; Facilitate the building of capacity in the housing and housing finance sector by supporting 11 new and emerging housing finance intermediaries and housing institutions; Change the housing finance environment through promoting new loan products, relevant delivery channels, supporting appropriate regulatory & policy frameworks and new housing options.