Download rural housing loan fund

RURAL HOUSING LOAN FUND
MAKING HOUSING DREAMS OF THE
WORKING POOR A REALITY
RHLF’s Vision
Statement
RHLF is a world class rural social
venture capital fund that creates
new financial arrangements and
opportunities for rural families to
improve their housing, economic
and living environments.
RHLF set-up
• Established in September 1996 as a Section 21
company
• Helps address the housing needs of rural poor > 2MLL
currently R 4 670
• Assists with financial sector development in rural areas
advocated by ISRD Programme
• Independent board appointed by the Minister of
Housing
• Capitalised with DM50 million grant from German
Development Bank, KfW
Core Principles
• Social venture capital fund
• Targets working poor households
• Supports incremental housing construction,
extensions & improvements
• Targets Rural Areas—Non-metropolitan and
enhance urban-rural linkages
• Promotes non-use of asbestos products
RHLF implementation
strategy
Market served by
established
retailers.
2000
2%
R3500
RHLF Strategy
SEGMENT 1: Regular Income Formally Employed - earning
above R3500 per month.
SEGMENT 2: Regular Income Formally Employed.
R2500
R1500
20%
34%
R600
44%
SEGMENT 4: Irregular Income/ Unemployed
SEGMENT 3: Regular
Income Informally/ Self
Employed.
Achievements of RHLF Board
approved Business Strategy
• Continue to fund profitable and
adequately capitalised established
entities
– R 37 m new commitments
• RHLF will use its venture capital
investments to leverage additional
debt funding from banks
– Leveraged R 9.3 m (25%)
• Financial sustainability and access to
financial services
– No clients in distress
Key Performance
Indicators
Full Year
Budget
6 Month
YTD Actual
6 Month
YTD Budget
Total
Cumulative
Commitments
R343,0M
R325,2M
R343,5M
Cumulative
Loan
Commitments
R325,3M
R307,3M
R325,2M
Cumulative
Equity
Commitments
R17,7M
R17,8M
R17,2M
Equity and investments
Total Cumulative Commitments
Loan facilities
500,000,000
Rand
400,000,000
300,000,000
200,000,000
100,000,000
1998
1999
2000
2001
2002
2003
2004
2005
2006
Projections
Key Performance
Indicators
Full Year
Budget
6 Month
YTD Actual
6 Month
YTD Budget
Total
Cumulative
Disbursements
R335,7M
R278,5M
R296,3M
Cumulative
Loan
Disbursements
R325,4M
R268,5M
R286,0M
Cumulative
Equity
Disbursements
R10,3M
R10,0M
R10,3M
Equity investments
Loan facilities
Annual Disbursements
140,000,000
120,000,000
Rand
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
1998
1999
2000
2001
2002
2003
2004
2005
2006
Projections
Key Performance
Indicators
Full Year
Budget
6 Month
YTD Actual
6 Month
YTD Budget
Average
Loan size
R5 000
R4 725
R5 000
No New
Loans
14 860
3 619
6 980
Cumulative
No Loans
68 069
56 828
60 189
Potential No
of Loans
81 326
79 759
73 446
Sustainability Indicators
Full Year
Budget
6 Month
YTD Actual
6 Month
YTD Budget
R11,1M
R4,2M
R5,0M
Interest on
Investments
after funding
R2,9M
R2,6M
R2,0M
Loan Loss
Impairment
R3,3M
R0,0M
R1,6M
Operating
Costs
R11,1M
R5,2M
R5,7M
Surplus /
(Deficit)
(R0,4M)
R2,5M
(R0,2M)
Interest on
Advances
Commitment to BEE
• Four distinct strategic
thrusts
– Demand driven developmental
needs of end-users
– Funding black owned and
managed companies
– Warehouse RHLF shares for
future acquisition
– Employment equity
Gender distribution of end-user loans
45%
Male
55%
Female
Key Performance
Indicators
Full Year
Budget
6 Month
YTD Actual
6 Month
YTD Budget
Cumulative
Clients
35
36
35
Cumulative
Clients BEE
16
16
16
6
6
5
Nil
Nil
Nil
Active
Clients
Distressed
Clients
RHLF Empowerment Clients
(Both MDF Grants and Loans)
40
30
20
10
12
12
13
16
16
18
20
Other clients
Empowerment clients
7
8
14
15
15
15
16
16
16
0
1998 1999 2000 2001 2002 2003 2004 2005
Warehouse RHLF
shares
• RHLF owns shares in the
following number of clients:
– Protea Financial Services
Group
– Norufin Housing
– Lendcor
– Indlu Finance
– Bayport Financial Services
– Izwe Loans
RHLF Development Impact: Some key
findings
• Loan usage: 69% (vs 70% RHLF target for 2002/03
FY) of the loans are used for developmental
purposes
– 54% housing
– 14% education
– 1% working capital for in micro/survivalist
enterprises
•
Satisfaction: 61% of the end-users said they were
satisfied with the outcome of the loan use, and
•
68% said they would recommend their retail lender
to friends and relatives.
•
55% of the end-users are females
RHLF Development Impact: Some key
findings (cont…)
•
Direct correlation between end-users receiving
consumer education and those who are up-to-date
with payments;
– But only 19% report having received consumer
education
•
11% of end-users live in RDP housing, and 3% used
the loan to top up subsidy at acquisition
•
End-users live in the RDP house an average of 24
months before borrowing to improve or extend the
RDP house
RHLF Development Impact: Some key
findings (cont…)
• On average end-users who built new space on the
RDP house or existing dwelling, added 22 m2 to the
house at cost effective amount of R617 per square
metre
• 7% of the end-users are informally employed
•
RHLF currently has small exposure in 3 ISRDP nodes
in Eastern Cape and Limpopo/Mpumalanga-
This house has three bedrooms, a kitchen, lounge, inside toilet and has a tiled roof. Initially, the house was a
simple 2 room house and has now improved beyond recognition. Standing at the foreground of the house is
Mrs Mthethwa, proud mother of Philile who took small successive loans (amounting to R12, 000) to buy
building materials and to pay a local builder who built the house. Philile also used R10, 000 of her own
saving. The family resides in Thulasi Reserve, a deep rural area of Mandeni, KZN.
This house belongs to Nyalunga family in Lydenburg Extension 6. Towards the back, with greyer bricks, is an original
RDP house that the family got in 1996 and that has been extended into a big house. Nyalungas started by stockpiling
building material and built foundation. Later they took four successive loans amounting to R22, 000 to buy bricks, tiles,
door and window frames and pay for labour.
The front elevation of the Nyalungas’ house with Mrs Sophie Nyalunga in the foreground. She states that
they will go back to the RHLF retailer lender for another loan for fencing.
Martha Mthimunye of Mashishing Township (Lydenburg) borrowed R9, 000 from one of RHLF retail lenders (Indlu)
and added that to her own saving of R2, 000. She added a verandah and an extra room which she uses for business
purposes—productive housing. She runs a home based business of dressmaking and selling clothes and curtains.
The house also shows consciousness about security which is important as she runs her business from home.
Martha shows her sewing machines and garments which she sells from her house. She is very happy with the
working space which she now has after obtaining a loan from RHLF retail lender. She makes cash payments to
repay the loan and is very aware of dangers of defaulting.
Ella Nkosi is a single mother of four and works as a domestic worker for a doctor in Lydenburg, where she
earns R700 per month—working 3 days a week. She is as entrepreneurial as you can get. To augment her
income, she sells sweets, snacks and hand-made brooms from home and at a nearby school. She also has a
pay phone in her house. Her entrepreneurial drive plus her meagre regular income have enabled her to afford
5 successive loans ranging between R2, 000 and R4, 000 to build a four bedroom house for her family. She
lived in a tin shack for 10 years before building the house in the background. She says she is a strong believer
in Vukuzenzele.
Ella with materials she uses to make brooms which sell like hot cake in the community. Members of the
community us these brooms mainly to sweep the grounds of the yard. She says finding this niche market was
a blessing as she has used income from this economic activity to help improve the living condition of life of
her family.
Critical Success
Factors
• Government remains committed to
policy of sustainable development
• Inflation remains below 10%
• National Payment System does not
introduce discriminatory practices
• Implementation of new consumer
credit regulation
• Shrinking formal sector
Positive Impact of
DoH Funding
• Concretize government’s ongoing support in
eyes of external institutions wanting to
develop partnerships with RHLF
• Continue to support New Housing Agenda with
cutting edge new financial products and
arrangements
• Lower RHLF’s borrowing costs to “incentivise”
intermediaries to make “higher risk, higher
transaction cost” rural housing loans
• Enable RHLF to mitigate credit risk associated
with new shocks similar to small banking
crisis
• Make new commitments to at least 3 new
pipeline clients
Thank You