GENERAL MANAGEMENT ASSISTANCE CONTRACT (GMAC) 
Contract No: 674-C-00-01-10051-00 
Evaluation of the 
Social Housing Foundation’s 
USAID Grant-Finance Programme 
Final Report 
Prepared by 
Richard Martin 
3 December 2004 
This report was prepared under Mega-Tech, Inc.’s prime contract with 
USAID and addresses USAID/South Africa’s Strategic Objective 
No. 6: Increased Access to Shelter and Environmentally Sound Municipal Services 
MTI Contract No.: 0148-0804-PO-ME13 
Table of Contents 
Acknowledgements ii 
Acronyms iii 
Executive Summary iv
1. Background 1 
2. Methodology 2 
3. The case studies 
3.1 The East London Housing Management Co-operative 4 
3.2 Msunduzi Housing Association 6 
3.3 Vusani Amadolopha Housing Company 8 
3.4 Yeast City Housing 8 
3.5 Greater Middelburg Housing Association 11 
3.6 Govan Mbeki Housing Company 12 
4. The role of the SHF, and impact of its programmes 
4.1 General 14 
4.2 The grants 14 
4.3 Best practice material 15 
4.4 International exposure visits 15 
4.5 Impact of services provided to emerging housing institutions 16 
4.6 Pilot projects run by SHF in a national level 16 
5. Evaluation of the impact of the programme 
5.1 Training and capacity building of Boards and staff 18 
5.2 Payment for equipment, furniture etc 20 
5.3 Payment to meet running costs such as salaries, office rent etc 20 
6. Constraints on the sector, and the role that the SHF played 
in dealing with them 
6.1 Formation, appointment of Board, appointment of staff 22 
6.2 Financial survival after formation 24 
6.3 Designing a good scheme 26 
6.4 Allocating units 27 
6.5 Asset management and cost recovery 27 
7. Constraints for the implementing agent 
7.1 SHF as an advisory body 29 
7.2 SHF as a funder 29 
7.3 Staff 29
8. Recommendations for the future 
8.1 The new policy 30 
i
8.2 Funding arrangements 34 
8.3 The new policy: conclusions 34 
8.4 A role for USAID 34
Appendix 1: Documents consulted 37
ii
Acknowledgements 
I wish to acknowledge with gratitude all the persons who gave up their valuable
a e
ocial Housing Foundation, Nkosiphambile Ndlovu of USAID; Nomawethu 
hunzi and Mella Mahlangu from the Govan Mbeki Housing Co; Ronald Eglin, 
amantha van der Walt and Fred Kusambiza from Afesis Corplan; Mrs Manziya 
om the East London Housing Management Co-operative; Mayesh Chetty from 
e Msunduzi Housing Association; Motsamai Mofokeng from the Vusani 
madolobha Housing Company; Stuart Talbot from Yeast City Housing; Thomas 
tuli from Greater Middelburg Housing Association, and Rory Gallocher from the 
upport Programme for Social Housing.
Finally I would like to express a very special, additional, thank you to Rose Biza
who provided extensive documentation and made arrangements for the 
interviews.
Richard Martin 
time to meet me and share their experiences. 
These include Andrew Higgs, Rose Biz , Vusi Duma, and Thoko Moja from th
S
T
S
fr
th
A
N
S
ii
Acronyms 
CEO Chief Executive Officer 
DFA Development Facilitation Act
ELHMC The East London Housing Management Co-operative 
of Social Housing Institutions 
NGO Non-Governmental Organisation 
People’s Housing Process 
RDP Reconstruction and Development Programme 
SARS South African Revenue Services
Social Housing 
SHF Social Housing Foundation 
SHI Social Housing Institution 
TLC Transitional Local Council 
TOT Training of Trainers 
USAID United States Agency for International Development 
VA Vusani Amadolopha 
YMCA Young Men’s Christian Association 
EEC European Economic Community 
EU European Union 
GMHA Greater Middelburg Housing Association 
GMHC Govan Mbeki Housing Company (Previously Highveld East 
Housing Association) 
JHC Johannesburg Housing Company
LA Local Authority 
MHA Msunduzi Housing Association 
NASHO National Association
NHFC National Housing Finance Corporation 
PMU Programme Management Unit 
PHP 
SH 
iii
Executive summary
1. Background 
USAID entere into 500,000 with the Social
Ho ation
equ t of 2,750 ing Foundation agreed to 
make R500,000 available as counterpart funding, bringing the total program 
val ,2 0,000
In A ril 2002, an ext the Agreement was agreed, together 
with ndments to uded:
, to make the process of
nt
l hmen titutions.
2. Methodology
The wa cond uments
supplied by the SHF and the grantees, and personal interviews. Interviews were 
con
Six tees ere in intention of understanding the
nat thei work, es that they faced, and the role
of t me those challenges. They were:
dolo
east City Housing
Greater Middelburg Housing Association 
Govan Mbeki Housing Company (Previously Highveld East Housing 
Association) 
3. The role of the SHF, and impact of its programmes 
Opinions regarding the role of the SHF among the SHIs varied. On the one hand 
there was gratitude for the fact that it helped to advise on setting up procedures, 
on the other there was a sense that the advisees knew more than the advisers. 
There was unanimity regarding the principle of providing start-up grants. It was 
clear that they came at a crucial time for some institutions and allowed them to 
bridge a funding gap – buying time, in a sense, while other parts of the funding 
puzzle were being put into place. 
The beneficiary institutions were unanimous regarding SHF’s main contribution to 
their welfare. It was by the provision of start-up support and advice, the USAID 
grant and workshops. Two workshops were found particularly useful in the early 
d a co-operative agreement for $
using Found on 4th December 1998, which was estimated to be the
ivalen R ,000 at the time. The Social Hous
ue to R3 5 .
p ension to the validity of
ame the program agreement which incl
• Establishment of a grant-making committee
processing and approval of grants more efficie
• Estab is t of Group Training Programs for Social Housing Ins
• Best practice workshops and 
• International tours
study s ucted primarily through two means: study of doc
ducted on a structured basis, but were not administered as questionnaires. 
gran w terviewed with the primary
ure of r the developmental challeng
he USAID grant in assisting them to overco
The East London Housing Management Co-operative 
Msunduzi Housing Association 
Vusani Ama pha Housing Company
Y
iv
days: Guidance on the role of the Board, and Strategic Planning. Without this 
they admit that they would have found it very difficult. 
portant role in
sup r ed
comple . The USAID grants
we th
Co the grants is divided into three aspects: 
acity building of Board and Staff 
have a disproportionate emphasis on the legal and regulatory framework as 
This was an essential item for many SHIs and was properly spent. 
Pay alaries, office rent etc.
The interviews painted a picture which showed the severe financial stress of the 
ear s as eligible expenditure under the 
gra .
Ho
no
g
inancial survival after formation 
form of guidance
The SHF has built up an impressive body of material on best practice. The 
material was developed in a consultative manner and thus has benefited from 
inputs from a wide variety of practitioners. This has been quite an impressive
achievement. 
4. Evaluation of the impact of the program 
There can be no question that the programme played a very im
po ting and strengthening SHIs, and without it they might have either fail
tely or be working at a lower level of effectiveness
re e only ones available at the time on a consistent and programmatic basis. 
mments on the impact of
Training and cap
There is no doubt that this was the strongest part of the programme. The 
majority of the training undertaken by the SHF was considered very useful, and 
their generic courses were very well received. However, the workshops tended
to
opposed to practicalities. 
Payment for equipment, furniture, etc. 
ment to meet running costs such as s
ly years of a SHI. By including these cost
nts, the SHF and USAID were clearly helping to address this problem
wever, what is very clear is that, in general, a grant of R200,000 was far from 
e ugh.
5. Constraints on the sector, and the role that the SHF played in dealing 
with them
There are five crucial road blocks which must be overcome for a SHI to succeed.
Formation, appointment of Board, appointment of staff 
The SHF has played an important role in holding launch workshops, and advisin
on the start-up process. 
F
The financial risks inherent in social housing are very many. In some cases the 
local authorities or provinces or both have subsidised the early period of a SHI’s
development. These subsidies either take the form of cash grants, or the 
v
handover of local authority housing to provide an income from rentals. Typically
the SHF has played a minor role in this component. 
effective and well designed in themselves, and are useful tools 
which can be used when commissioning schemes. 
l
sset management and cost recovery 
nd dispute
solution, and maintenance. The training programmes funded by the SHF 
this part of SHIs 
ot
s going wrong.
nse of the word. This need is, to some 
, but that has
gulatory systems which might make it inappropriate for some of the SHF’s 
endations for the future 
A new policy has recently been announced, and details are currently under 
rants to cover operating deficits. If current plans are operationalised, 
ill be able to plan developments with confidence while also serving the target 
body which would be
role for USAID: Capital finance 
s, 
pt
that has subsequently been made policy. 
Designing a good scheme 
As noted above, SHF has prepared Guidelines for Good Design, for Making 
Social Housing Affordable, and for Designing for Special Needs. These 
documents are
Allocating units 
The SHF has been active in the field of tenant education, and the recent manua
has clear guidance on the procedures to be used. 
A
Under this heading we may include debt collection, tenant relations a
re
appear to have been relatively successful in assisting
operations. 
6. Constraints for the implementing agent 
The constraints faced by the SHF are that it is only an advisory body, and cann
intervene when it sees thing
Secondly, it is not a funder in the usual se
extent, being met by the EU Support Programme for Social Housing
re
clients. 
Thirdly there is a shortage of experienced personnel who can be recruited by the
SHF. 
7. Recomm
development. The policy effectively addresses the funding problems by 
proposing g
social housing institutions will then be placed on a sound financial footing, and 
w
market. The policy also addresses the need for a regulatory
empowered to intervene in cases of gross mismanagement. 
A
The twin purposes of the grant program under review (funding emerging SHI
and strengthening the SHF’s ability to provide technical assistance and best 
practice information) have now been met by the SHF and Government itself. The
SHF and USAID should feel proud that the USAID grant pioneered a conce
vi
In these circumstances, is there any role for international donors, and USAID in
articular?
the
n area
guarantee a loan by a private
bank to a SHI, or to an umbrella body which would on-lend to SHIs (e.g. the 
the Johannesburg Housing 
ompany’s (JHC) Brickfields Project, though in the end the bank (ABSA) 
is decision was informed by the 
I
Fixed interest rates 
inance has been the destabilising
the limited elasticity in the disposable
comes of their tenants. USAID might assist in developing creative ways of 
ousing is an emerging sector which faces many difficulties. These are 
ttributable to the lack of experience of this model in South Africa, and the 
portant reforms are being proposed by the South African government, which 
ed under this program and from the work 
ery
nt to
p
A consistent problem that has been highlighted by the industry, and some of
more advanced SHIs, has been the lack of development capital. This is a
in which USAID can make a significant contribution through its Development 
Credit Authority. Under this scheme, USAID would
NHFC). 
One such deal was nearly made in connection with
C
proceeded without a guarantee. Clearly th
financial strength of JHC and the inputs of other funders. However, not every SH
might be as well placed to borrow as the JHC, and the guarantee could be a
major comfort to lenders. 
The other issue in connection with long-term f
effect of variable interest rates. It is extremely difficult for a SHI to deal with 
substantial increases in interest rates given
in
addressing this need. 
8. Conclusions 
Social h
a
complexity of the field. 
Im
benefit greatly from the experience gain
of the SHF as a whole. If these reforms are implemented they will make a v
important contribution to the viability of the sector. However, it is importa
recognise that private sector finance will be required if the sector is to expand to 
meet demand, and USAID might assist be developing models and support for 
this. 
vii
1. Background 
USAID entered into a co-operative agreement for $500,000 with the Social 
Housing Foundation on 4th December 1998, which was estimated to be the 
ity of the Agreement was agreed, together 
anges the proportions of expenditure to be spent were 
F, the effectiveness of the programme and its impact o the 
ocial housing sector in South Africa. The opportunity was also taken to find out 
eds of social housing in South Africa might be, and how 
equivalent of R2,750,000 at the time. The Social Housing Foundation agreed to 
make R500,000 available as counterpart funding, bringing the total program 
value to R3,250,000. Of the USAID component of the program, 52% was to go
to grants for emerging Social Housing Institutions, and 35% for technical 
assistance. The remainder was for salaries, administrative support and audit.
In April 2002, an extension to the valid
with amendments to the program agreement which included: 
• Establishment of a grant-making committee, to make the process of
processing and approval of grants more efficient 
• Establishment of Group Training Programs for Social Housing Institutions. 
• Best practice workshops and 
• International tours
As a result of these ch
slightly changed as follows. Grants 49%, Training Programmes 27%, Best 
practice workshops 14%, and international tours 10%. 
This is a final evaluation from which it is hoped to draw conclusions about the
performance of the SH
s
what the future ne
possible donor support could be used to meet those needs. This is set in a 
context of rapidly evolving policy development. 
1
2. Methodology
The study was conducted primarily through two means: study of documents 
supplied by the SHF and the grantees, and personal interviews. Interviews
conducted on a structured basis, but were not administered as questionnaires.
The beneficiaries selected for interview were as follows: 
East London Housing Management Cooperative 
Greater Middelburg Housing Association 
Highveld East Housing Association (Now the Govan Mbeki Housing Company)
were
Yea
hese institutions were visited and interviewed with the primary intention of 
Msunduzi Housing Association 
Vusani Amadolopha, on behalf of 
 Itself 
Nkehasani Housing Association 
Semunye Housing Association 
Vukuzakhe Housing Association 
st City Housing
T
understanding the nature of their work, the developmental challenges that they
faced, and the role of the USAID grant in assisting them to overcome those
challenges.
In addition interviews were held with members of staff at the Social Housing 
Foundation, USAID and the PMU for the EU funded “Support Programme for 
Social Housing.” 
Issues covered in the interviews are summarized in the table overleaf: 
2
Theme Donor SHF
Manage￾ment 
SHF field 
staff 
Be
ficiaries
ne￾Original Agreement 
Help establish local SH institutions 
Assist with establishment costs, 
feasibility studies and business 
planning 
 
Increase capacity of SH providers to
enable greater delivery on the ground
 
Provide training, development, TA and
capacity building to enhance 
sustainability of emerging SH 
institutions
 
Promote innovative pilot projects likely
to have a nationwide impact
 
Encourage formulation of good practice 
in SH 
Grants 
Problem of identifying beneficiary
Problem of preparing budget 
Problem of control of funds 
Reporting and supervision 
Revised Agreement 
Institutional set-up grants 
Group training programmes for SH
institutions: 
 SH Executives 
TOT for tenant education 
 Caretaker training 
 SH governance 
Exposure visits 
Best practice 
I was greatly assisted by the SHF who arranged the interviews for me. 
3
3. The case studies 
ase studies were undertaken in th e evalu y
provide useful illustrations of the environment w t nts w
made, and the impact they had on the recipient
Mana ement C -operativ (ELHMC)
under th auspice of Afesis C rplan and
hed to obtain houses but preferred to occupy 
s a co-operative rather than go the private ownership route. Initially 
the ast Lond n TLC, wh h granted em
newly elected Buffalo City Municipality 
p , they ha e not been esponsive o
cond project, and have not connected water to the 
Nevertheless the Municipality has been playing 
f the account administrator in terms of subsidy payments, while 
.
f 16 hous s, of which 96 are 
is was the only co-operative included 
study, and differs from the other xamples of social housing in that it 
rket – e. persons who are eligible for the full 
ilt are R P style, and they are being built by 
rs, while payment and materials procurement are 
ople’s Housing Process system. 
o-op established the principle that it would use the 
be an
n how to devel and man ge housing
t of them had little education and low incomes. 
lished its first step was to prepare a business 
apply for nding fr donors. plan for R 00
t is now adm tted, underestimated the difficulties of 
ome in the early years. 
However, on the basis of this business plan, and protracted correspondence, 
ight of the
institutional weakness of the co-op, it should be handled by Afesis Corplan on 
behalf of the ELHMC. No other grant funding has become available, although 
approaches were made to several other donors. 
Although the ELHMC is the developer, when the houses are completed each 
group (of between 18 and 36 units) forms a co-operative of its own for 
management purposes, thus removing the responsibility for maintenance and 
cost recovery from the parent co-operative. There are nine such co￾operatives. Each co-operative owns the units under its control, but members 
Six c e cours of this
ithin which
s.
ation. The
he gra ere
3.1 The East London Housing g o e
The co-operative was formed
consisted of persons who wis
them a
e s o
they received strong support from
land, but since December 2000, the
E o ic th
has been less supportive. For exam
requests for a site for a se
80 units already occupied.
the role o
le v r t
Afesis Corplan has been the certifier
The Co-op has an approved project o
completed or are under construction. Th
2 e 1
in the e
serves the lowest end of the ma
g bu
i.
subsidy. The houses bein
to
D
small labour-only contrac
being handled on the Pe
At an early stage, the C
project of developing housing to
In other words they aimed to lear
empowerment tool for the members. 
op a on 
the job, even though mos
When the Co-op had been estab
plan which could be used to fu om A 3
000 was prepared which, i i
obtaining inc
a grant of R200 000 was approved by SHF on the condition that, in l
4
may buy their units after 4 years, provided they pay the conveyancing costs, 
the rates, while individual 
occupants pay the municipal service charges. 
ated
of
– due to approval delays – they had an 
ffice, staff and no work; now that they have work but funds have run out, so 
, per se, a reflection
n the effectiveness of the training that they received, it points to the difficulty 
C,
e
et as the expenditure was premature. 
had implemented their 
lan to use a container, at least they would still have that. However, the SHF 
owever, they did receive an establishment grant of R110 000 under the 
mall
ves a
and provided that two thirds of the membership agree to permit it. 
The local co-operatives are responsible for paying
The ELHMC has about 1 300 members. Those who have not been alloc
a house are placed on a waiting list. Each member pays R36 as a once-off
joining fee. The Co-op also helps people to save, and requires people to 
have saved R2070 before being allocated a stand. They charge a small fee 
for administering the savings scheme. 
Meanwhile the finances of the co-op are in poor state. It cannot afford any 
staff, and Board members are acting as staff on a voluntary basis. This 
vividly illustrates the problems of programming funds at the start-up phase
a SHI. For while they had no projects
o
they have no staff. 
The problem of timing was also reflected in the training programme. The 
ELMHC sent eligible households for training in building in advance of the 
project. There was an interval of many months between the training and the
start of construction. As a result the trainees obtained jobs elsewhere, and 
outside labour was used to build the houses. While this is
o
of matching grant funds to programmatic activity. In other words the ELHM
in order to meet the conditions of the grant, had to spend the money when it 
did if it was not to loose it. As a result the expenditure was made on an offic
that was hardly used, and the broader objectives of the grant could not be
m
ELMHC has criticised the SHF because it discouraged it from buying a 
shipping container for use as an office, and instead urged that they should 
rent a “proper” office in town – which they did. If they 
p
has pointed out that the budget in the Grant Application was for office rent, 
not, e.g. for “acquisition of shipping container for use as office.” Furthermore, 
SHF felt that USAID might not have wanted to be associated with a project 
operating out of a container. 
H
People’s Housing Process which allowed them to establish a site office and 
pay for essential staff during the project. Board members also take a s
allowance for the PHP grant in the guise of supervising the house 
construction. Afesis Corplan acts as certifier for the project and recei
small income from that activity. 
5
In terms of developing their institutional capacity, a procedures manual which
overs maintenance, fee collection and transfer procedures was prepared 
pport from the NORAD co￾perative housing program which could place them into a stronger position 
eceived an annual grant of R400 000 
om the Msunduzi Municipal Council (previously Pietermaritzberg TLC). This 
nt
to
f a technical adviser from Britain who worked for one 
ear (1998/99). For a number of reasons little progress was made at that 
y
nd the owners of property adjacent to
e proposed site objected to the development. The matter was being 
e early years appear to have taught the parties 
oncerned a lesson. The Municipality continues to be supportive and has 
to
s
c
with funds from the USAID grant. This gives them the basis for good practice
in the future. It is likely that they will receive su
o
both financially and institutionally.
3.2 Msunduzi Housing Association (MHA) 
There are many contrasts between the MHA and the ELHMC. Of these the 
most striking is the fact that Msunduzi r
fr
allowed it to bridge the very difficult gap between formation and receiving re
income. In addition, the municipality has seconded two members of staff
the MHA. 
The history may be summarised as follows. The Association was started 
under the guidance o
y
time. Subsequently they had the services of two other technical advisers 
from Britain, however they also had difficulty making an impact. Their 
position was not helped by the fact that they were young women working in 
an industry in which women are not highly respected. They were followed b
a technical adviser from the Netherlands. The present chief executive was 
recruited in mid 1999, and a finance officer three months later. 
The MHA negotiated a site for 300 units from the Municipality but faced two 
major problems. The first was that the Provincial Housing Board appeared to 
be unaware of their right and duty to give grants for social housing, and 
delayed approvals for over two years1
; a
th
handled under the Development Facilitation Act (DFA), but the objectors
chose not to attend the hearing which had been established under the Act, 
and instead chose to take the matter to court. Fortunately, on the grounds 
that they had raised no objections at the DFA hearing, the court case was 
dismissed with costs, but the delays had cost the MHA dearly. Construction
did not start until June 2003. 
The difficult experiences of th
c
allocated an additional two portions of land. The Province has asked them
estimate the number of subsidies they will require next year so that they can
be ring-fenced. And, in recognition of bridging finance and capacity problem
 
her factors might have been at work. Other S 1
 Ot HIs in the Province did not seem to have the same
difficulty. 
6
being faced by MHA, it has been promised a grant of R1 200 000 from the EU 
t
asis, MHA typically gets 100%, and never
ss than 90%.
ven though this is one of the strongest of the SHIs interviewed, 
ey face major challenges. The margins are so small that they cannot afford 
nd
ovincial or
ational government, or the private sector to provide social amenities for the 
ever
d
ttle
here were clashes regarding the format of their business plan which was 
and use a SHF designated consultant. SHF maintains that the first business 
plan submitted was too vague a document on which to base a grant 
project. 
Their income is received from two sources. The first is 80 units of housing 
which used to belong to the Municipality. These were transferred free of 
charge to the MHA. Even though the Municipality used to receive only abou
60% of the rent due on a monthly b
le
Income from their new project is also good. 70% of the units were occupied
at the time of the interview, and, because some tenants are paying in 
advance, payments have typically been better than 100%. The MHA is proud 
of its record in cost recovery – they have had only one bad debt of R1500. 
However, e
th
the staff they really need to operate efficiently. As a result they are 
experiencing staff burnout, and absenteeism has become a problem. They
urgently need to employ a tenant liaison/community development worker a
a caretaker, but do not have the funds to do so. 
Also, in spite of the subsidies they have received, they do not have a 
sufficiently strong capital base to be able to operate on good business 
principles, and at the rents that they can charge there is no margin for 
reserves. An important problem has been the inability of local, pr
n
project. In particular a crèche and commercial facilities are needed, as these
are important factors in terms of the marketability of the scheme. 
The USAID grant was only R35 000, but it enabled them to buy the computer 
hardware and software that they needed, and which is still in use. How
the machines are now at the end of their useful life, and more sophisticate
software is available – which in turn needs modern hardware. The MHA has
been one of the most regular participants in SHF activities such as training 
events and international exposure visits, but claim that they have learned li
from it. 
T
required for their application for an EU grant under the Support Programme 
for Social Housing. The current CEO has a master’s degree and an MBA;
their Chairman, the Mayor, is a law professor: therefore they objected strongly
to being told that their business plan was inadequate, and that they had to 
spend additional funds to have one prepared which met the SHF’s demands, 
7
agreement in that it simply requested funds for capacity building without 
specifying what capacity would be built and how and when. 
l be
dolopha (VA)
usani Amadolopha offers a management support service to a number of 
ier 2 - Owning housing stock and managing it 
.
ame No of Amount of 
grant 
Another criticism they made of the SHF was that the USAID grant should 
have been paid to them directly – as the comparatively large EU grant wil
– instead of being retained by the SHF. 
3.3 Vusani Ama
V
existing SHIs. It provides service to SHIs responsible for inner-city buildings,
all of which are in Hillbrow, Johannesburg. SHF has developed a 
categorisation for SHIs, as follows: 
Tier 1 - Providing management services 
T
Tier 3 - Owning housing stock which is managed by others 
Thus VA is a tier 1 institution, providing services for tier 3 institutions
VA’s client list is as follows: 
N
units 
Vukuzakhe 56 R85 000 
Nkehasani 42 R72 000 
Semunye 56 R81 000
Vusani Amadolopha R200 000
 Harrison Reef 108 
Park Avenue (managed for a private landlord) 42 
Everglades (managed for a private landlord) 26 
Waterford Court (managed for a private 
 landlord) 
33 
Both the VA and its constituent members applied for grants. The SHF 
reported that it was difficult to distinguish between the needs of the different
applicants, and there had been a tendency to duplicate services under the 
grant applications – e.g. they all requested computers, whereas the logic of 
g
tenants) the subsidies to buy the blocks, on the understanding that the 
the arrangement was that such services would be centralised. 
As shown in the above table, Vusani has also taken the initiative to provide 
services for a private landlord. This offers the potential for cross 
subsidisation, as well as increasing the scale of the operation without entering 
into the protracted procedures which are sometimes a feature of social 
housing projects. 
In most cases the Province had given the SHIs (effectively the existin
8
tenants would be capable of meeting their responsibilities in terms of 
collecting and paying monthly payments for rates and services, and
aintenance. In addition, it had been necessary in most cases to take bank 
nagement, two of the SHIs were in
quidation when VA was formed – Vukuzakhe owed R1000 000; while 
ent of about R600 000. Hence the need for a 
t services as described above, VA is also 
n terms of training their
A to withdraw.
A has received R1 350 000 million for management costs, and is receiving a
icies 
nd equipment. They have a staff of four persons in Hillbrow: 2 tenant liaison
1 secretary. In addition they have a part-time 
cting Manager, and an overall co-ordinator who initiated the project and 
es to spend a lot of time on it, but who is not a staff me
stimated that until they have a total of at least 1 7 nits,
000, they will not be financially viable. Even thou like
y receive good co-operation from the tenants, the m ins a
ons to be sustainable on their present footing. 
n ey f l that
e nd t t the
the F sta f often
not ave o
trodu tory a eminars were very good, and made a significant 
t
g is a church-based inner-city housing institution which 
t
m
loans to complete the purchase. However, through various types of 
mismanagement, payments – whether to banks or the City Council – were 
often not made. As symptoms of misma
li
Semunye was in debt to the ext
more businesslike Tier 1 body to take responsibility for collection of rents, 
payments to all creditors, and maintenance of the buildings. 
While providing management suppor
undertaking capacity building of the existing SHIs i
Boards and management. In due course this may allow V
V
grant of R1 700 000 from the EU project for capacity building, staff pol
a
officers, 1 accounts clerk and
A
continu mber.
They have e 00 u and
preferably 2 gh – other
SHIs – the arg re too
small for their operati
In regard to the role of the SHF and the future of social housi
d
g, th ee
too much emphasis may have been placed on overseas mo
that
ls, a ha
priority now should be to develop local ones. The fact
nd experience is also a weakness. However, the 
SH f
do h n-the-grou
in c nd other s
difference to people’s understanding of social housing. 
In relation to the grants, it is alleged that the SHF was slow to pay: hence no
all the funds approved were spent. The SHF state that this was partly 
attributable to the time taken to resolve potential duplication of requests
contained in the original grant applications referred to above. As with MHA, 
VA say that SHF’s insistence on disbursing the grant directly to suppliers, 
thus withholding the responsibility for managing the funds themselves, was
demeaning. 
3.4 Yeast City Housing
Yeast City Housin
aims to demonstrate the viability of integrated and inclusive developmen
9
within the inner city. They come from a background of charitable supp
the needy. 
They started in the housing field by taking over a YMCA building whi
R300 000 in arrears with its payments; then a second building was taken 
over, and more recently a new building was developed. 
They have experienced many problems since their formation in 1998, chiefly 
to do with cash flow. They have experienced only limited support from the
City of Tshwane, but very strong support from the Province in
ort for
ch was
the form of
ubsidies and support of the Gauteng Partnership Fund. They received R100
me
n effective and efficient organisation.
l
of
shwane.
ng
ouse, and the other the upgraded YMCA hostel referred to above. Under 
rd in this category is
nly slightly worse than for the better-off tenants. While the demand in this 
at
argins in terms of provisions for staff salaries and operating 
xpenses. In addition, since their focus is on the needs of the lowest income 
t between R400 – R500 per month there is very 
jor
operating at a loss of about R20000 per month. 
s
000 grant from the SHF for training, payment of consultants to prepare a 
business plan, to buy furniture and to meet running costs. This grant was 
very useful and was one of the tools by which they have managed to beco
a
They have 293 units in nine blocks. Three of these are transitional or specia
needs schemes, and one is unsubsidised: thus they cover the widest range of 
incomes of any of the SHIs studied. New projects recently undertaken 
include converting an office block into residential units and a green field 
project: the remainder are existing housing schemes in the inner city
T
They are the only SHI covered in the case studies which provides so-called 
transitional housing, and were, when they started, something of a pilot 
institution in this field. They have two blocks: one a converted boardi
h
the subsidy rules the units are available to individuals earning less than R1 
500 per month, or families earning less that R2 500 per month. The 
accommodation is in single rooms with shared bathrooms, and rents are 
between R400 and R550 per month. Lower income tenants can be more 
vulnerable to changes in their economic status, and this is reflected in 
fluctuations in their rent payments. On average the reco
o
category is very high, transitional housing can only be economically viable 
where suitable buildings come onto the market which can be converted
moderate cost. 
Financially Yeast City Housing are facing many difficulties. The business 
plans, on the basis of which they have secured funding, were prepared with
inadequate m
e
groups, rentals are low. A
little room for the magnitude of increases which are needed to make a ma
impact on the financial viability of the institution. As a result they are 
10
Looking to the future, they see that there will need to be an increase in salary 
vels if they are to retain existing staff or attract people of the necessary 
y
ing Company 
ceived a start up grant from the EEC which gave them the assets with 
e
, it must also include overheads such
s hire of a venue, cost of meals, transport etc, all of which have to be 
was established by the Middelburg TLC in interesting
ircumstances. The CEO was working at the time for the Mpumalanga 
sing 
pert,
offered
-subsidised – intended for those earning between R3 500 
nd R7 000 per month. Construction of the scheme was completed in 2003. 
or
re
ng
pied units. Ideas being 
le
calibre. More importantly, there is a continuing need for equity funding, as 
without this SHIs cannot plan effectively, nor grow to the level at which the
will be sustainable. For example, the Johannesburg Hous
re
which to negotiate for long term finance. 
They felt that SHF’s tenant training workshops, which were paid for from th
grant, were not very satisfactory. They considered the cost of between R15 
000 and R19 000 was very high for a one-day workshop, and that the 
workshops were more information-transfer than real empowerment. 
Regarding the cost, SHF feels that such criticisms overlook the fact that 
payment is not just for the trainer’s fees
a
recovered. It should also be noted that generic training courses were not 
charged for: they only charged for those which were designed for the needs 
of a particular SHI. 
3.5 Greater Middelburg Housing Association (GMHA) 
The GMHA
c
Housing Finance Corporation, a parastatal which provides funds for lower 
income housing developments. The MHFC sent him to study social hou
in Germany for three months. On his return, together with a German ex
he did a road show to the Local Authorities (LAs) in Mpumalanga on social 
housing. The first local authority to take up the challenge was Middelburg, 
and the CEO, Thomas Ntuli, was invited to start the organisation, and
a start-up grant of R10 000. This was in 2000. 
The LA allocated 6.5ha to the Housing Association, and it applied for a
subsidy of R7.2 million together with R1.3 geotech allowance, which was 
granted in 2001, together with a loan of R36.5 million from the National 
Housing Finance Corporation (NHFC). With these funds they designed a 
scheme of 501 houses, called Hope City, which comprises 450 subsidized
units and 51 non
a
It is a very well designed scheme, and the rents are competitive at R1225 f
a two bedroom and R1375 for a three bedroom unit. The two bedroom 
unsubsidised unit is R1500 per month. However, as with Msunduzi there a
complaints about the lack of shops and social facilities nearby. 
Unfortunately, demand for the housing fell far short of the supply, and 
currently only 380 units are occupied. Currently a business plan is bei
prepared to identify how to dispose of the unoccu
11
looked at may include selling the units, rent-to-buy or similar alternatives. 
ted a hostel block, Chromeville, to 
e GMHA. The association had them converted into family units, using R2,7 
tre, and
four
, and
n rate of about 92%, which is far better than anything the 
unicipality was getting for its units. Annual rent increases are negotiated 
for all units.
tions, one of which had 
een started by Sasol.
ere,
t
ave
d for
xpenditure elapsed.
ed
sk,
The business plan is expected to be completed in February 2005. 
This year the GMHA received an annual grant from the Province of R4 200
000, up from R 3 000 000 the previous years. Without this grant they could 
not survive. 
Meanwhile, Middelburg Municipality dona
th
million subsidy, plus R1,4 million of their own funds. The units are now fully 
let and the rents form a useful source of income. 
They have bought their own offices which also serve as a training cen
sub-let a portion of them. Thus their overheads are limited. They employ
permanent members of staff: the CEO, two accounts staff and one credit 
controller. They have two housing supervisors at the Hope City project
one at Chromeville. 
They have a collectio
M
with tenants. The agreed increase for last year was R125
Like MHA, GMHA has participated very actively in SHF activities, and 
acknowledge that they have received very valuable support. 
3.6 Govan Mbeki Housing Company (Previously Highveld East Housing
Association) (GMHC) 
The initiative for the GMHC came from the Municipality, with support from 
Sasol who provided a full-time administrator, offices and telephones. It was, 
in effect an amalgamation of two housing associa
b
The first Board was dominated by Councillors which resulted in several 
problems in terms of interference and political conflict. These conflicts w
in part, due to unresolved issues arising from the amalgamation, and 
competition between different towns: within the Municipality of Highveld Eas
there were competing locations (especially Evander and Secunda). There 
was also a lack of understanding of the role of the Board. 
The SHF undertook training of the Board Members, but this appears to h
been insufficient to prevent the conflicts that dominated it. An indicator of this
problem was that the grant was not fully utilised before the perio
e
About seven months ago a new CEO was brought in. He identified the ne
to restructure the Board at an early stage, and has since completed that ta
12
with a great deal of support from the SHF. During the period of transition 
relationships were very difficult. A new business plan has now been prepared
be used as a basis for the restructuring. This was recently workshopped, 
s received considerable support. They receive a monthly grant 
f R50,000 from the Province, and a full time staff member from the Govan 
hey have received a donation of three housing schemes from the 
ken at the time of the interview, but they expected to 
tart collecting rents within the next month. The third scheme is 66 council￾ce
eeds.
a new project. 
feasibility study has been completed for the project, at a cost of R200 000, 
g
ed, they plan to build 100 units initially to test the 
arket. They will start to float the idea with neighbours and stakeholders very 
ry thin
he SHF has been involved throughout. A Strategic Planning workshop was 
at that
the national workshops they have attended is that 
ere is an overemphasis on governance, and under-emphasis on how to 
to
and adopted. 
The GMHC ha
o
Mbeki Municipality (previously Highveld East) has been seconded to them. 
The Director of Social Housing for the Province is on their Board, and has 
reserved a subsidy of R20 million next year for them. 
T
Municipality. One is a scheme of eleven houses which are more of a liability 
than an asset as they are in very bad repair, and only five out of eleven 
tenants are paying rents (which are only R250 per month). The second 
scheme is a hostel for which the unit rent is R260 per month. Transfer of this
had not been underta
s
owned houses which they are due to take over on 1st December 2004, and 
expect to get a monthly income of about R19 000 from that. However, they
will have to employ a caretaker to live on the site to address maintenan
n
They have also been given a site in Evander on which to build
A
but neighbouring landowners are objecting to the development. 
Being aware of the delays that such objections can cause, the GMHC have
decided to start with a project in Secunda, where the demand is much higher
anyway. Also, learning from the mistakes of Middelburg in terms of buildin
more units than was need
m
shortly. 
In spite of the subsidies they are receiving the GMHC operates with ve
margins. If, as has already happened, project design and implementation is 
delayed, their financial future is not rosy. 
 
T
financed from the grant. From the record of the workshop it appears that the 
plan was well done, with clearly defined objectives. However, institutional 
paralysis appears to have prevented the plan from being implemented
time. Their reaction to
th
perform the tasks required. More recently, as noted above, the SHF played a
major role in the reconstitution of the Board. 
13
4. The role of the SHF, and impact of its programmes 
4.1 General 
The SHF has a mandate to offer support to the social housing sector, a 
major challenge in light of the newness of the concept and therefore lack 
clearing house for 
ideas and experience gained within South Africa, and thereby build up a 
nical
gle
g
id
ave a pool of experienced persons from which to recruit staff, any 
more than SHIs had done. Thus on-the-ground experience has been a 
There was unanimity regarding the value of providing start-up grants, 
t
rants were capped at R200 000 and thus could be no more than a 
contribution to limited components of the SHIs development. Typically the 
wn
hat was clear is that this
of a cadre of people and institutions with the skills required. It has been 
supported by donors who have provided technical assistance and study 
tours of relevant institutions overseas. 
As time has progressed it has been able to act as a
repertoire of best practice which is locally based. 
It also offers management guidance to SHIs either through direct tech
assistance or through workshops. Some workshops are held for a sin
SHI, while others are attended by many. 
Opinions regarding the role of the SHF among the SHIs varied. On the 
one hand there was gratitude for the fact that it helped to advise on settin
up procedures, on the other there was a sense that the advisees knew 
more than the advisers. This reflects the fact that the SHF sometimes d
not h
rare commodity. 
4.2 The grants 
which were available at a crucial stage to SHIs with no other resources. I
was clear that they came at a crucial time for some institutions and 
allowed them to bridge a funding gap – buying time, in a sense, while 
other parts of the funding puzzle were being put into place. 
The g
funds were used for training and purchase of equipment. Sometimes they
were used for salaries for Board members and staff, or paying rent for 
office space. 
At an early stage the SHF decided to make payments against invoices – 
i.e. not pay the funds into the bank account of the beneficiary SHI, but to 
pay suppliers direct. In some cases this included payments for SHF’s o
courses. 
Beneficiaries complained about this method of controlling the funds, 
maintaining that by so doing the SHF weakened rather than empowered 
them in the handling of funds. However, w
14
procedure made control by the SHF simple and direct, and ensured that 
le to provide
ccurate accounts to USAID when claiming reimbursement, 
or
cedures, handbook for
oard Members, Conversions, Co-operative Housing, Sustainability, 
e
t that whereas beneficiary institutions often referred to 
orkshops they had attended as being very useful, no one referred to best
l per se. This reflects common experience – guidelines 
n element introduced in the contract amendment of April 2001 was that 
truggling to find guidance on how to operate the sector, 
ternational visits are a very useful tool to learn from the successes and 
ors have made similar offers, including the Norwegians, the 
utch, the Canadians and the Germans. The chance to see the US 
no financial abuses took place. As a result the SHF was ab
prompt and a
and the project was implemented flawlessly from an accounting point of 
view. 
The nature and size of the grants is assessed below in relation to plans f
the future. 
4.3 Best Practice material 
The SHF has built up an impressive body of material on best practice. 
This includes design, business processes and pro
B
Effect of HIV/AIDS, and Human Resource Management etc. Much of this 
work has now been consolidated into an Operations Manual which was 
published in September 2004. 
The material was developed in a consultative manner and thus has 
benefited from inputs from a wide variety of practitioners. This has been 
quite an impressive achievement. 
Preparing the material is only half of the battle: the other half is to ensur
that it is used. In this respect training workshops have been very useful,
and it is significan
w
practice materia
and manuals only start being used when people have collectively and 
individually taken ownership of the contents and the guidance contained 
therein. 
4.4 International exposure visits 
A
international tours should be arranged for members of the industry to 
expand understanding of social housing concepts and practices in the US.
The SHF itself undertook an exploratory visit first. 
In a country s
in
difficulties of other countries. Clearly it would be a mistake to adopt the 
practices of one single country without adaptation to the specific needs of
South Africa. In this respect, a comparative approach is very useful. 
Other don
D
models, which tend to come from very different traditions from the 
European ones, was therefore very useful. 
15
The visit, undertaken a year after the initial fact-finding trip, was made by
team of ten people, four from SHIs, one from the Co-operative Housing 
Foundation, two from the SHF, two from the NHFC and one from NASHO
The trip lasted for two weeks. The lessons learned included the need for
good q
a
.
uality construction so that it would not deteriorate over time, and 
e need to integrate social housing so as to prevent the occupants from 
5 Impact of services provided to emerging housing institutions 
ere unanimous regarding what they 
a
ger for the foundation of institutions that 
ere recipients of USAID and other support.
gic Planning. Without this form of 
uidance they admit that they would have found it very difficult. 
t important national activities were:
social housing
hich social housing 
stitutions are formed and how projects are delivered. 
to
and
th
being stigmatised. 
4.
The beneficiary institutions w
considered to be SHF’s main contribution to their welfare: it was the 
provision of start-up support and advice, the USAID grant and workshops.
The SHF conducted a large number of introductory workshops with 
interested groups, which acted as a first stage in initiating action to start
SHI. These often acted as a trig
w
Two workshops were found particularly useful in the early days: Guidance
on the role of the Board, and Strate
g
Due to the limited scope of the study it was not possible to evaluate the 
SHF’s impact as a whole, but the evidence suggests that its existence as
a source of technical assistance and advice was considered crucial by 
many emerging institutions. 
4.6 Pilot projects run by SHF on a national level 
The mos
Disseminating information about
There is widespread ignorance about social housing in South Africa. The
SHF has played an important role in informing interested parties about
how social housing works and the part that it plays in the provision of 
housing. It has also explained the procedures by w
in
These introductory workshops are crucial because, outside the major 
metropolitan areas, there is widespread ignorance about any delivery 
system except the RDP. 
Establishing norms and standards 
As experience grows in the practice of social housing so it is possible
learn from the experience and prepare guidance about procedures,
codify practice. 
16
This responsibility has been grasped by the SHF, and the recent 
Operations Manual is an example of such a service. 
17
5. Evaluation of the impact of the program 
There can be no question that the programme played a very important role
in supporting and strengthening SHIs. Without it they might have either 
failed completely or be working at a lower level of effectiveness. It was 
universally acknowledged that the concept of a grant to assist emerging 
institutions was an excellent one, and that it had a very positive impact. 
The USAID grants were the only ones available at the time on a consistent 
and programmatic basis. 
To be more specific, the grants served three needs: 
• To pay for training and capacity building of the Board and staff 
• To pay for equipment, furniture, etc. 
• To meet running costs such as salaries, office rent etc.
We shall comment on these three items: 
5.1 Training and capacity building of Boards and Staff 
There is no doubt that this was the strongest part of the programme. The 
majority of the training undertaken by the SHF was considered very 
useful, and their generic courses were very well received. 
Against this generally very positive evaluation, however, we have some 
comments to make: 
5.1.1 Content of workshops 
The writer was given copies of workshop reports for many of the 
workshops that have been conducted in the last three years. He was also 
given the syllabus of Group Training Programs for SHIs which was 
submitted to USAID in July 2000. 
Our comment on these workshop outlines is that they seem to allow 
considerable time for matters which have no practical value, and very little 
time for matters that might pose pressing problems to the participants. 
For example, the following is the content of the Caretaker Course which 
was delivered in September 2001. 
Day 1: Introducing Social Housing, Rental Housing Policy, Institutional 
Subsidy 
Day 2: Communications skills, Time management, Stress management 
Day 3: Visit to three Gauteng based Housing Associations 
Day 4: Use of water and electricity, prevention of fire, community policing 
Day 5: Roles and responsibilities of key role-players within your housing 
association, role of the caretaker. 
The syllabus proposed to USAID had, among the expected outcomes: 
18
• Can assess maintenance needs of individual units, entire building
e first of the above objectives. It seems to the 
riter that on-the-job exercises would have been a perfect way to help 
en should
som th stic
to e e needs of flat roofs, plumbing 
ins a
king basic repairs, specific skills 
re involved. Either through demonstrations by participants, or other 
ave been
.
ithout a full report on the workshop one cannot determine how the last 
lised way. Another approach might have been to
ke a successful example of how this is done and help the participants
rks, e.g. apply a method to the recording of 
e done
.1.2 Capacity Building 
of
.
this connection, the SHF also faced a challenge in finding staff with the 
ed in providing grants. At the time that the programme was at its 
ct that 
and the environment and report on them 
• Can carry out minor repairs, maintenance, and improvements 
within the units and within the complex 
• Can effectively manage themselves and their jobs 
There was nothing in the actual programme which seemed to assist the 
participants to deal with th
w
them learn. Training in exercising judgement (e.g. wh
e ing be repaired or replaced) is important here, and it is not reali
xp ct people to appreciate maintenance
tall tions etc without expert guidance. 
Regarding the caretaker’s work of underta
a
experts, methods of dealing with common problems could h
discussed and the skills passed on. The question of tools, preventing 
collateral damage, and similar matters should also have been raised
W
item was handled, but on the basis of the program it seems to have been
done in a very genera
ta
understand how the system wo
complaints, opening a job card, determining whether the job can b
in-house, or needs to be contracted out, obtaining quotes, supervising the 
job, obtaining tenant co-operation in the process etc etc. 
5
It is paradoxical that some of the grants were not used due to the lack
capacity to spend them. This points to the relationship between SHF and 
the grantees which, some claim, was domineering rather than supportive
In
experience to give effective advice to SHIs 
There was criticism by the interviewed SHIs regarding the delays 
experienc
peak the SHF had many commitments, and was not in a position to give
all the support it would have liked. This may be explained by the fa
the SHF set itself the objective of working with all applicants, no matter 
how weak their original application might be, and never to refuse an 
application outright2
. 
 2
 In the end, only one application was refused on the grounds that the applicant was a welfare co-operative
and not a social housing institution. 
19
The r
that it n therefore to require that 
app a ined
or spe One view in this connection
is t t tforward
rocedures should be eliminated at an early stage, rather than waste the 
apacity
me.
in
of a
ertain type. Such procedural rigidity, while ensuring that values such as 
s funding was
onsidered to be a very useful contribution to all who had benefited in this 
as salaries, office rent etc.
here is a conventional view that if an organisation cannot meet its daily 
er
pleted, there is typically a gap between the first 
ceipt of income and making a surplus. This gap may vary from a few 
months to several years. 
g ants were supposed to build capacity, but of course it is a truism 
eeds capacity to spend money. If one is
lic nts should meet certain requirements before funds can be obta
nt, those with the least capacity will fail.
ha those who cannot comply with comparatively straigh
p
time of all concerned. The alternative view is that they are the very ones
which need assistance. 
The SHF took the second view, and in some cases undertook a c
building programme with the applicant in order to help it apply for a grant. 
Thus capacity building in many cases involved technical support, even 
hand-holding in some cases, which took ti
Thanks to this supportive approach to applications, only one grantee 
effectively failed, which is remarkable in the circumstances. Even so,
that case, the SHF was able to recover the grant-funded assets. 
There were also complaints about SHF’s insistence on business plans
c
objectiveness and fairness are adhered to in allocating grants, may not –
in the long run – achieve the growth and development that the SHF would
probably want from the SHIs that it supports. 
5.2 Payment for equipment, furniture, etc. 
This item featured in the majority of the grants, typically including at least 
one computer, printer and software. These are the tools of the trade of all 
modern offices, and must be recognized as essential. Thi
c
way. 
Some grantees used the funds to purchase furniture, also a prerequisite 
for operations. 
5.3 Payment to meet running costs such
T
running costs it is fundamentally unsustainable, and therefore it is
inappropriate for grant funds to be used for such purposes. 
The interviews painted a very different picture. In fact even the strongest 
and best managed SHIs must expect to run at a substantial deficit for a 
number of years, due to the protracted start-up procedures. Even aft
their first units are com
re
20
In other words, if social housing is to flourish it must have the support it 
needs to cover its early years, and this support must include running 
expenses. 
By including these costs as eligible expenditure under the grants, the
and USAID were clearly helping to address this problem. However, what 
is very clear is that a grant of R200 000 was not enough. The large 
subsidies received, for e
SHF
xample, by GMHA and GMHC demonstrate the 
agnitude of the funding gap which must be bridged. For those not lucky 
thing, and the grants did 
ake an important contribution. 
ct of it
being able to sustain this level of activity. In other words while the grant 
m
enough to receive these subsidies there is a major problem, as 
exemplified by Yeast City Housing which has a monthly deficit of R20,000. 
However, something was clearly better than no
m
The only criticism in this respect came from East London, where an office
was established, and full-time staff employed, with no real prospe
should have been used to sustain operations during the difficult start-up 
phase, those operations should have been at a level which was 
appropriate for the type of organisation that it was. 
21
6. C g
wit
The constraints on the sector are so overwhelming that it is amazing that any 
SHIs exist. There are perhaps five crucial road blocks which must be 
ove
we
the
SH
is in
inte
These five road blocks are: 
ld
. Once formed, how do acquire land and they survive financially? 
 
It w cess: In
wh In light of the technical
and expensive nature of development, how does it get the necessary advice 
and support? 
The Social Housing Foundation acts as a resource to guide emerging 
institutions address these challenges, but until the USAID grant became 
available, it had no funds with which to help emerging institutions meet those 
costs. The grant gave it the means to make a difference, and help the 
institutions establish themselves. However, the grant was not enough in any 
case to ensure financial sustainability. 
6.1 Formation, appointment of Board, appointment of staff 
Four models emerged from the interviews. In no particular order, these were: 
Model 1: Company started under the auspices of the Municipality
This model, of which Middelburg, Highveld East and Msunduzi are 
examples, has been the most successful relative to the others interviewed. 
This was because the Municipality felt a responsibility to help the bodies 
by the donation of land, by political support, e.g. in accessing subsidies, 
and in financial support. Municipal financial support took the form of cash 
grants, seconded staff, and donations of housing stock from which rental 
income could be obtained. Typically councillors served on the Board thus 
reinforcing the link between the two bodies. This is now prohibited under 
the Municipal Finance Management Act, as representing a conflict of 
interest. In the three cases the SHF was not crucial in the establishment. 
onstraints on the sector, and the role that the SHF played in dealin
h them
rcome for a SHI to succeed. In examining the nature of these blockages 
shall try and evaluate what role the SHF can and did play in relationship to
problem identified. (Before going into detail, it must be noted that the
F has only an advisory role. For example, if it becomes aware that a SHI
financial distress, in can only offer support and has no power to 
rvene.)
1. How are they formed, who should constitute the Board and who shou
be recruited onto the staff? 
2
3. How do they design projects? 
4. How do they allocate units? 
5. How do they manage cost recovery and their assets? 
ill be noted that there are three basic points of difficulty in the pro
ose interest is the SHI working? How is it financed?
22
Model 2: Company started by SHF 
In this model interested persons have typically decided to form a social 
d
company is supported by the Province (Gauteng in this case) 
and the SHF. In turn the company acts as a managing agent for existing 
that lack the expertise to sustain themselves. 
several virtually bankrupt housing associations in Hillbrow are being 
y less
successful than Models 2 or 3, but the case included in this study was of a 
board
here are many problems associated with the formation of a SHI. These 
will
ture
d.
refore have an important bearing on 
e operation of the SHI. Some of the difficulties experienced by the Highveld 
t of an
Fun
At a und to
reg
doe f
fait l
Aut
pro
Ap
The
app
must be timed to coincide with the work load. Thus starting with a lone CEO 
housing institution, but do not know where to start. The SHF provided 
funds for a Task Team to define the need, form an interim board an
provide technical assistance to register a company and define its 
objectives. 
Model 3: Umbrella company: Tier 1 
One example of this was included in the survey. Formation of the
umbrella
social housing institutions
This model applies to the management of existing stock – in this case 
assisted in this way. 
Model 4: Support from NGO 
In principle there is no reason why this model should be an
co-operative which was weak in terms of skills and resources, and relied 
virtually entirely on external grants. 
Appointing a
T
include the crucial decision about the composition of the Board, as this
determine the future of the institution and will have a major influence on fu
results. Typically a new institution is launched by convening a workshop, and
it is the workshop which designates people to constitute an interim Boar
This in turn must constitute a formal board. The decision as to who is invited 
to the workshop in the first place will the
th
East Housing Association can be traced back to the appointmen
inappropriate Board. 
ds to register the company 
n early stage, before a legal entity exists, about R10,000 must be fo
ister the company. Who will make this payment and why? If the company 
s not exist it cannot receive the funds. Any payment is therefore an act o
h by some third party. In Middelburg, this payment was made by the Loca
hority, and unless there is such a champion the matter can derail the 
cess.
pointment of Staff
re are major decisions to be taken regarding when full time staff are
ointed. In terms of the responsibilities of the SHI, clearly the process 
23
ma months, to be supported, as time
goe
Un re
not
bei debt on
the SHI which can have a very negative effect on the operations over the long 
term. 
Ro
The
adv
Som
gov ture
an effective relationship between the Board and the staff. These governance 
workshops were helpful in establishing ground rules and protecting the day￾to-day operations from interference. 
It is
qua
.2 Financial survival after formation
ocial housing are very many. If we map out scenarios, 
old
tion is perceived to be poor; and because the 
stitutional subsidy represents only a portion of the costs, the rents are not 
or bad location.
land provided by the municipality is in the wrong place, the SHI 
ight be wasting its time and money by developing there. Middelburg faced 
ct – it accepted the land offered by the municipality 
r the
y be quite appropriate for the first few
s on, by an accountant and receptionist/office clerk, for example. 
fortunately, many SHIs rush into such decisions and appoint staff who a
well qualified, and before they are strictly necessary for the operations
ng undertaken at the time. This imposes a compound-interest-like
le of SHF in the above 
SHF has played an important role in holding launch workshops, and
ising on the start-up process. 
e recipients of the USAID grant were given training in the field of 
ernance and management, principally so that they were able to struc
not clear that detailed guidance regarding the recruitment of staff, 
lifications and salary levels was ever offered by the SHF. 
6
The risks inherent in s
based on the experiences of the SHIs which were interviewed, we can 
characterise them as follows: 
6.2.1 Obtaining good land 
As any developer will confirm, location is the most important criterion in 
determining the success of a residential development. While the RDP model 
can survive, to some extent, in bad locations, Social Housing developments 
are competing to some degree on the open market. The reasons for this are 
twofold – the units are rented, and therefore there is little incentive to “h
on” to a unit if the loca
in
so much lower as to compensate f
However, without land, a SHI has no chance of success, and it typically has 
no funds to buy land. It must therefore rely on local government to make land 
available. Typically a Land Availability Agreement is signed at this stage. 
But, if the
m
a dilemma in that respe
and developed it in good faith, with a high quality scheme, but demand fo
24
units has never been high enough to fill the scheme3
. As a result, with abou
70% occupancy, the SHI has no prospect of financial security for many
6.2.2 Waiting for subsidy approvals 
Experience varies between provinces, but in some cases – Msunduzi is one – 
the SHI had to wait two years for approval of its application for an institutional 
subsid
t
years.
y. During this time staff and rents must be paid, while there is no 
come.
r of
the units applied for. Typically some are 
jected as being ineligible, and a second application must therefore be done 
is essential for an SHI to undertake a market survey before committing itself 
take
and for
ousing within the target income groups on a specific piece of land is low, 
ibly another survey conducted. 
of
inces, Metros and the SHF all have data bases 
n population, incomes and similar socio-economic data which is not 
tart from scratch.
many
ole of the SHF in the above
hese subsidies either take the form of cash grants, or the handover of local 
in
Another problem is that, under the present subsidy rules, the exact numbe
applications must be submitted for
re
to fill those vacancies. Some of the second applications may also be 
rejected, and the same thing can happen a third or even a fourth time. This 
can continue for months, if not years4
. 
6.2.3 Feasibility/Market survey
It
to a piece of land. Such surveys are typically quite expensive, and can
several months to complete. If such surveys indicate that dem
h
alternative sites must be found, and poss
In this connection it is worth noting that that there is insufficient sharing
information. For example Prov
o
accessed: instead many SHIs s
6.2.4 Obtaining approval for the long-term finance 
All institutions except the East London Housing Management Co-operative 
relied on the National Housing Finance Corporation for their long-term 
finance. As a prudent lender the NHFC took time to approve loans, thus 
imposing further delays and extending the period without income for
SHIs. 
R
Typically the SHF has played a minor role in this component. In some cases
the local authorities or provinces or both have subsidised this period of SHI’s 
development which has made an important contribution to their finances. 
T
authority housing to provide an income from rentals. 
 
nt levels could also be an important factor: a full analysis of the problem has not yet been undertaken. 3
 Re 4
 Gauteng is trying to reform this system to allow for alternates to be submitted; but it would clearly be
better for the applicant to be able to access the data-base from which the Provinces operate. Some blame 
also lies with the SHIs who do not effectively screen applications before submitting them. 
25
6.3 Designing a good scheme 
6.3.1 Town Planning 
At an early stage it is necessary to apply for approvals in relationship to town 
olve township establishment, which 
ifferent problems are experienced in relation to inner-city rehabilitation 
However, not every scheme is
uccessful, and there are many variables to be considered. Of these the 
intment of a good architect, the unit design 
present value for money by the consumers. It must therefore be 
e
his is a highly specialised area in which large amounts of money are at risk. 
ich SHIs can easily
onths
nterest that in Middelburg the design is of a very high quality, but that 
is was insufficient to attract enough tenants to the project. 
udgetary ceilings are
posed, due to the subsidy system, such developments can be quite risky. 
planning requirements. Often this will inv
can be a slow and expensive process. Typically, neighbouring owners will 
object to the development, which might require convening of a Tribunal or 
other forum for the resolution of disputes. 
D
schemes. They may involve changes in zoning, as well as determination 
regarding the suitability of the environment for the target group. 
6.3.2 Architectural design 
There are many criteria for success in design – the SHF has prepared 
Guidelines to illustrate what these are.
s
three most important are the appo
that meets the expectations of the target group, and the relationship between 
cost and amenities. 
There is no magic formula for getting these components right, and even a 
skilled architect may not be able to produce a product that is seen to 
re
appreciated that design is crucial and the SHI as client must be aware of th
criteria which will determine whether the product will meet the demands of the 
target market. 
T
Therefore the area of commissioning design is one in wh
go wrong. Moreover, substantial costs are incurred in this process which 
cannot be recovered until the units have been let – typically about 18 m
later. 
It is of i
th
In the case of inner-city housing the problems are very different. Extracting 
an efficient and desirable environment from what is typically a run-down 
inner-city building can become much more expensive and difficult than it 
initially appears. For example lifts may be found to be unserviceable, 
plumbing might require a total refit etc. Where tight b
im
Role of the SHF in the above 
As noted above, SHF has prepared Guidelines for Good Design, for Making
Social Housing Affordable, and for Designing for Special Needs. These 
26
documents are effective and well designed in themselves, and are useful 
d when commissioning schemes.
s
nd subsidies applied for, and 
aining programmes must be developed and mounted. This requires trained 
re
documents.
Middelburg has shown that this is not a quick or 
and
idance on the procedures to be used. 
d
g-term
iously council owned housing, and rent defaults under their 
anagement have fallen from 40% to less than 10%. In some, months they
owever, all institutions talked about the constraints in terms of their incomes 
sses, but even so the road to full recovery of all costs, so that the NHFC 
slow one. It has been estimated by the SHF 
tools which can be use
6.4 Allocating units 
Selecting and training tenants before allocation is, in itself, a relatively 
complex process. Policies must be established, incomes and similar detail
must be verified, deeds must be checked a
tr
staff and time. The major risk in this process is that too few clients who a
eligible for the subsidy will come forward. Another risk is that potential 
tenants will respond slowly, miss appointments or fail to produce
Experience in Msunduzi and
easy process, both because of the administrative complexity of the task
because of potential mismatch between supply and demand. 
Role of the SHF in the above 
The SHF has been active in the field of tenant education, and the recent 
manual has clear gu
6.5 Asset management and cost recovery 
Under this heading we may include debt collection, tenant relations an
dispute resolution, and maintenance. All have an impact on the lon
viability of a scheme and the SHI, and all are affected by the relationship 
between the SHI and the tenants. It is this that distinguishes social housing 
from all other. 
One of the most interesting parts of the study has been the information that 
people are relatively willing to pay rents. Thus cost recovery, per se, is not an
issue. Even where the units have been taken over from municipal 
management cost recovery has been good. Msunduzi are managing 80 units
of prev
m
have 100% payment. 
H
being insufficient to cover their costs. The tactic of using low rents in initial 
years to attract tenants may be viable in high income projects where the 
developer has constructed deals which permit such market seeking 
strategies, but for SHIs it spells financial disaster. 
The NHFC project loan typically helps to cover the initial period of operating 
lo
loan can be repaid, is a long and
that it can take up to twenty years to cover the initial losses, assuming that 
27
rents are increased in line with inflation and capital repayment remains 
constant. 
w the issues of maintenance will be addressed in new 
ing.
ole of the SHF in the above
t
It is too early to tell ho
projects. We therefore have to turn to the experience of inner city hous
Vusani Amadolobha is manager of several such blocks. When they were 
taken over it appeared that management of the blocks by the SHI had 
collapsed, and they were on the point of bankruptcy. Now, however, it 
appears they are making progress with maintenance and payments and are 
on the way to recovery. 
R
The training programmes funded by the SHF appear to have been successful.
One may the detailed design of some examples that were made available, bu
in general they seem to have been effective. 
28
7. Constraints for the implementing agent 
The SHF is fundamentally an advisory and supporting body which can act 
hen asked to do so, but even then can only act within very limited finances. 
e when it sees things going wrong, and while it might 
end persons to counsel an SHI that is facing difficulties it cannot insist on 
hile this is fundamentally a healthy 
7.2 SHF as a funder 
Now that the USAID program has ended, the SHF has no funds to help form 
or capitalise new SHIs, nor to rescue ones which are in financial difficulty. 
This need is, to some extent, being met by the EU Support Programme for 
Social Housing, but that has regulatory systems which might make it 
inappropriate for some of the SHF’s clients. 
7.3 Staff 
As noted above, social housing is a relatively new concept in South Africa, 
and there is a shortage of experienced personnel who can be recruited by the 
SHF. The gap has typically been met by training them, by, for example, visits 
to social housing institutions elsewhere in the world, and technical assistance 
provided by foreign donors. 
Now that the SHF has come to maturity the problem is less acute, but for 
some time it is likely to be a matter of concern, especially as well-qualified 
members of staff are liable to be poached by the private sector. 
w
Looked at from the perspective of what it can do for SHIs (as opposed to its 
role in relation to national policy and the macro picture) this means that it has
neither the power to intervene, nor some of the tools to do so. We shall 
discuss this in more detail below. 
7.1 SHF as an advisory body 
The SHF cannot interven
s
any specific course of action. W
relationship, it can mean that in cases of gross mismanagement it is 
powerless. This acts to the detriment of the clients or future clients of the 
SHI, as well as the sector as a whole. 
29
olicy 
riting, and is said to be near completion. 
ifts in housing policy, especially that of social 
used on
ed
ntial property redevelopment. During 
e implementation of these projects, the current inhabitants of these areas 
result of the construction of dwelling units that they 
ty) Housing – Social Housing is 
generally medium-density and this housing intervention may make a 
ng contribution to urban renewal and integration. Social housing 
pal redevelopment projects and the urban 
development zone tax incentive offered by SARS. 
to
p above the
R3 500 income limit and the re-introduction of demand-driven 
individual subsidies will have the effect of increasing effective demand 
for existing, well-located property. This is expected to provide an 
incentive for the redevelopment of properties within inner city areas. 
The document also talks about the need to develop more appropriate 
settlement designs and housing products and to ensure appropriate 
housing quality in both the urban and rural environments. The new 
human settlements plan accordingly proposes the following: 
 
8. Recommendations for the future 
8.1 The new policy
This review comes shortly after the publication of a new housing policy by the
Department of Housing, entitled “Breaking new ground – a comprehensive 
plan for the development of sustainable human settlements”.5 Detailed p
is being developed at the time of w
This document outlines major sh
housing. It links social housing strongly to urban renewal - a targeted 
intervention by government to resuscitate declining urban areas. Housing 
plays an important role in a range of urban renewal interventions foc
urban centres and exclusion areas such as inner cities and historical
townships6
. Increasingly, the renewal of inner city areas has become focus
on commercial and high-income reside
th
are often excluded as a
cannot afford. Many municipalities are striving to avoid this by promoting, 
amongst others, affordable inner-city housing. The new human settlements
plan will support this by: 
• Encouraging Social (Medium-Densi
stro
interventions may also be used to facilitate the acquisition, 
rehabilitation and conversion of vacant office blocks and other 
vacant/dilapidated buildings as part of a broader urban renewal 
strategy. Social housing developments should be dovetailed with other 
initiatives such munici
• Increasing effective demand – The introduction of a new incentive
facilitate access to loan finance in the middle income grou
5
 As approved by Cabinet and presented to MinMEC on 2nd September 2004 6
 Inner city areas are traditionally integrated into the benefits of the urban economy, which are close to
transport hubs and commercial enterprise and work localities. They also have higher order social amenities 
including hospitals, libraries and galleries. They accordingly provide a key focus for urban restructuring. 
30
• Enhancing settlement design –Measures and incentives to include 
and project design stages will be 
guidelines for designers and regulators to achieve 
• Enhancing housing design - Within the rural context, there is a need 
ing
is a
he development of additional housing instruments to 
provide flexible solutions to demand-side needs. The new instruments will 
gre .
The
(em sing
pro form)
and to a
foc
On The emphasis on
the need to deliver housing products that provide adequate shelter to 
typ
hou e of the
soc
effe for
ins
The
inte
• Redefining the concept of Social (Medium-density) Housing:
Social housing may take various forms and it is essential that social 
ensure the inclusion
design professionals at planning
examined, and
sustainable and environmentally efficient settlements will be 
developed. This is aimed at promoting the development of a dignified
size of house that supports morality of family and society. 
to make housing interventions more effective, to enhance the 
traditional technologies and indigenous knowledge which are be
used to construct housing in rural areas and to improve shelter, 
services and tenure where these are priorities for the people living 
there7
. Within the urban context, the document states that there
need to focus on “changing the face” of the stereotypical “RDP” houses
and settlements through promotion of alternative technology and 
design. The Department will investigate measures and incentives to 
enhance housing design and promote and alternative technologies, 
including support and protection of indigenous knowledge systems.
The policy proposes t
be focussed on sectors which have been previously neglected and place 
ater emphasis on flexibility and responsiveness to local circumstances
re is to be a greater emphasis on the process of housing delivery 
phasizing planning and engagement), the quality of the hou
duct (both in terms of location but also in terms of final housing
the long-term sustainability of the housing environment (leading
us on institutional capacity). 
e such instrument is the Social Housing Instrument.
households whilst simultaneously enhancing flexibility and mobility, which 
ically entails the establishment of institutional mechanisms to hold 
sing as a public asset over a period of time. The direct objectiv
ial housing instrument is accordingly to facilitate the production of 
ctively managed institutional housing in the areas where demand
titutional or managed housing, of all types, exists. 
new human settlements plan makes provision for the following
rventions:
housing typologies be conceptualized broadly to
 7
 This includes methods to enhance the quality and durability of all housing designs and traditional housing with a view to preserving 
the ambience of rural areas. 
31
of all income groups. Social housing must be understood to 
accommodate a range of housing product designs to meet spatial a
affordability requirements. Social housing products may accordingl
include multi-level flat or apartments options for higher incom
(incorporating beneficiary mixes to support the principle of integration 
and cross-subsidization); co-operative group housing; trans
nd
y
e groups
itional
housing for destitute households; communal housing with a 
• ent
nits
nits
and each project will be costed separately. Funding support will thus 
o Communal Housing: The cost of communal housing options will be 
n
l
pm and less).
nd on
n the hostels redevelopment programme the cost of a room 
amounts to approximately R5 775,00. Government will contribute 
rget
combination of family and single room accommodation with shared 
facilities and hostels.
New funding mechanism for social housing: The policy docum
proposes that social housing delivery will be scaled up to 110 000 u
over the next 4 years. The existing uniform funding mechanism for 
social housing is inadequate to support this enhanced delivery due to, 
amongst others, the capital costs of developing medium-density u
and the variability of costs between locations and across product 
types. A new funding mechanism will therefore be developed. Each
project will in future be designed and costed around the actual needs 
shift away from the current emphasis on uniform individual subsidies, 
towards equity support for social institutions, determined as a 
percentage of the total capital cost of the project. For example: 
o Medium Density Housing: Initial studies indicated that one 
bedroom flat in a four level walk-up apartment will cost in 
approximately R 80 000. If Government are to contribute 50% of 
the cost, the investment will amount to R40 000 per unit. 
less as facilities are shared but it is envisaged that Government will
have to contribute 70 % of the total cost of such units. Based o
the current consolidation subsidy that provides a 30 square metre 
house at R 16 581 per unit, it could be assumed that communa
housing units of 30 square metres could cost in the region of 
R15000 plus engineering shared services of R1800 totaling at 
R16800 per unit on average. These diverse rental options cater for
the lower end of the income categories (R2 500
o Transitional Housing: Transitional housing comprise rooms a
based o
100% of the development cost of these units and the income ta
group would be persons earning R0 to R800 and less per month.
32
o Hostels: The current hostels redevelopment programm
provides for R25 800.00 for a family unit and this amount has 
been applied for hostels. 
Building Institutional Capacity within the Social Housing Sector:
In order to support the anticipated scaled up delivery of social hous
the number of social housing institutions which are able to via
manage this stock will have to increase. A key challenge is accordin
to support the establis
e
•
ing, 
bly
gly
hment and maintenance of sustainable and 
viable social housing institutions which are able to develop and 
nding
apacity
Co
The e
housin s
studies
social/ it
to ensu
envisa
incorpo
playgro e
olice stations, municipal clinics and informal trading facilities. 
A n
the pri
settlem
social
funding assistance amounting to 50% of the primary, social/community 
facility development costs of projects implemented by district councils, 
manage social housing stock of various forms. The policy proposes 
that this should be addressed as follows: 
o A National Social Housing Accreditation Institution will be 
established through the provisions of the Social Housing Bill which
is to be promulgated in early 2005. This institution will be 
established and operational by April 2005 and will administer the
accreditation and monitoring of social housing institutions that wish
to apply for capital grant for project execution. Social housing 
institutions will be invited to apply for accreditation and only 
accredited social housing institutions will qualify for grant fu
and capital funds to undertake projects. 
o A new establishment grant will be introduced to enhance c
building and to operational support for new social housing
institutions. The Social Housing Foundation will be responsible for
the capacity building requirements of institutions. 
mmunity Facilities 
n w policy also addresses the need for community facilities in
g developments, a problem that was highlighted in two of the case
above. In future municipalities are to determine the need for 
community facilities through a community profile and facilities aud
re that facilities are appropriately targeted. It is thereafter 
ged that a multi-purpose cluster concept will be applied to 
rate the provision of primary municipal facilities such as parks, 
unds, sport fields, crèches, community halls, taxi ranks, satellit
p
ew funding mechanism will be introduced to fund the development of 
mary social/community facilities, which will focus on informal 
ent upgrading projects, completed housing projects still lacking 
facilities and new housing projects. The programme will provide 
33
wh 1 al
mun ci
8.2 Funding arrangements 
nee
It is
ava of a
dev
which in present conditions is not viable due to high land prices, and the 
gap his grant would thus make a
contribution to the cost of finance and the running costs of the social 
hou be
calc la
flow ov ns in
respec
inflatio
mainte
rates, ent
costs,
8.3 The new policy: conclusions 
The
soc l hem to
plan de
For the in one form or
another, the proposed grants will be introduced, even if at a reduced 
s the need for a regulatory body which would be 
s, which
at
ance
such as was pioneered under the programme under review. The SHF and 
ile 00% of the development costs of projects implemented by loc
i palities will funded.
Proposals are under consideration to address the long-term financial 
ds of SHIs.
understood that it is proposed that capital grants should be made 
ilable in urban restructuring areas in order to meet the lifetime cost
elopment to a SHI. This will have the effect of supporting development 
between realistic rent levels and costs. T
sing institution, thus allowing it to accumulate a reserve. It would
u ted at the net present value of shortfalls and surpluses of the cash 
er a predefined period. This would be based on assumptio
t of the income mix, rental mix, rental increases, running costs, 
n and interest rates. The running costs would include short-term 
nance costs, provisions for longer term maintenance, property
taxes, charges and duties, direct administrative and managem
cleaning and security, services and vacancy and default provision.
se are clearly very ambitious proposals which, if accepted, would put 
ia housing institutions on a sound financial footing, and allow t
velopments with confidence while also serving the target market. 
purposes of this report we can only assume that,
scale. They also addres
empowered to intervene in cases of gross mismanagement. 
8.4 A role for USAID 
8.4.1 Capital finance 
The USAID grants complemented the NHFC’s establishment loan
were loans that had to be matched by assets such as land or swe
equity. This loan was replaced by a pre-establishment grant, which, in
turn, was ended in 2001. Now the EU Support Programme for Social 
Housing has filled the gap in certain respects. 
The twin purposes of the grant program under review (funding emerging 
SHIs, and strengthening the SHF’s ability to provide technical assist
and best practice information) have now been met by the SHF and 
Government itself. 
The new policy described above reinforces the need for an initial grant,
34
USAID may therefore feel proud in running a pilot for what has become
national policy. 
In these circumstances, is there any role for international donors, and 
consistent problem that has been highlighted by the industry, and some 
e
e
r lending to the lower income groups. When the proposed government 
proposition becomes even more 
k
the JHC,
nd the guarantee could be a major comfort to lenders.
tes
r a
resent models for fixed interest loans, however, typically load the rates in
ting
were made when interest rates were very high. 
USAID in particular? 
A
of the more advanced SHIs has been the lack of development capital.
This is an area in which USAID can make a significant contribution 
through its Development Credit Authority. Under this scheme, USAID 
would guarantee a loan by a private bank to a SHI, or to an umbrella body
which would on-lend to SHIs (e.g. the NHFC). 
The policy mentions a target of 110 000 units over four years. These 
would cost in the region of R8,800,000,000, or about $1,500 million. 
Funding at such a scale would clearly be beyond the scope of any privat
sector bank, and USAID typically issues guarantees for borrowing of 
between $5 million and $30 million. However, as an instrument to get th
ball rolling with private sector funding of inner-city housing, this is quite
timely. It has also become increasingly attractive as a comparatively 
secure way of meeting obligations under the Financial Services Charter 
fo
subsidies are taken into account the
viable. 
One such deal was nearly made in connection with the Johannesburg 
Housing Company’s (JHC) Brickfields Project, though in the end the ban
(ABSA) proceeded without a guarantee. Clearly this decision was 
informed by the financial strength of JHC and the inputs of other funders. 
However, not every SHI might be as well placed to borrow as
a
8.4.2 Fixed interest ra
The other issue in connection with long-term finance has been the 
destabilising effect of variable interest rates. It is extremely difficult fo
SHI to deal with substantial increases in interest rates given the limited 
elasticity in the disposable incomes of their tenants. 
P
such a way as to make them less desirable, and only apply for two or 
three years. This is therefore not a real alternative either. Moreover the 
NHFC has been giving fixed interest loans, and borrowers are objec
strongly to those that
In developing models for private sector funding of social housing 
developments this is a factor that should be considered carefully, and 
35
USAID assistance might be given to establish financial models which 
would allow fixed interest loans at moderate rates.
36
Appen
Documents 
The following documents were consulted: 
Policy
Breaking new ground: a comprehensive plan for the development of Sustainable 
human settlements, Department of Housing, September 2004 
Agreements 
USAID Cooperative Agreement, 4 December 1998 
Revised Agreement 23 May 2001 
Grant agreements 
Cape Town Community Housing Company 
East London Housing Management Cooperative 
Everite Hostel 
Greater Middelburg Housing Association 
Highveld East Housing Association 
Leamohetswe Housing Association 
Mbombela Housing Association 
Msunduzi Housing Association 
Polokwane Housing Association 
Randfontein Community Housing Association 
Reatlehile Housing Association 
17 Shaft Housing Cooperative 
Sethokga Housing Association 
Vusani Amadolopha, on behalf of 
 Itself 
 Nkehasani Housing Association 
Semunye Housing Association 
Vukuzakhe Housing Association 
Workshop reports 
Best practice (partial) 
Board development programme (partial) 
Board orientation workshop for 
Polokwane Housing Association 
Caretaker training course 
Train the trainer course 
Introducing Social Housing 
Living in Social Housing 
Klerksdorp and Potchefstroom Combined Housing Workshop 
Semag Residents Workshop 
Strategic Planning Workshops for 
dix 1
37
Highveld East Housing Association 
orp
Leeugamka Community 
uzi Housing Association 
Potschefstroom
ebangwe Housing Association 
Housing Association East London 
ment Workshop
Social Housing
tenance Policy 
esign
using Affordable
Needs Conference
tements of Accounts
ocial ule
ions Operations Manual
ighve rview of operations
agement Co-operative: sample invoices to SHF 
2-2003
on: Five year capacity building plan 
iation: Report-back on Value Management Workshop 
ssociation: Hope City advertising brochure, and 
nts for units
Klerksd
Msund
Polokwane Housing Association 
R
Train the tenants workshop 
 Greater Germiston Inner City Housing Company 
Value Manage
Greater Middelburg Housing Association 
USAID grant workshop 
Course report 
Certificate Course on Training of Trainers in
Manuals 
Polokwane Housing Association 
Human Resources policy 
Property Management & Main
Marketing policy 
Procurement policy 
Lease Agreement 
Best practice booklets 
Guidelines for Social Housing D
Guidelines for making social Ho
Report on the Housing for Special
Financial information 
Social Housing Foundation Annual Sta
S Housing Foundation Grant Sched
CD ROM 
Social Housing Institut
Documents from grantees 
H ld East Housing Association: Ove
East London Housing Man
Yeast: Annual report 200
Msunduzi Housing Associati
Msunduzi Housing Assoc
No 1. 
Greater Middelburg Housing A
table of make-up of deposits and re
38