A Facilitator Of Incremental Housing Finance RURAL HOUSING LOAN FUND BROCHURE

A Facilitator Of Incremental Housing Finance RURAL HOUSING LOAN FUND BROCHURE

WHAT IS RURAL HOUSING LOAN FUND Rural Housing Loan Fund (RHLF) is one of the Human Settlements Development Finance Institutions established by government to address housing development issues. RHLF is in the process of being consolidated to the National Housing Finance Corporation as a first step towards establishing a new Human Settlements Development Bank(HSDB). Vision RHLF is a world class rural housing social venture capital fund that creates new financial arrangements and opportunities for rural families to improve their housing, economy and living environments. Mission RHLF s mission is to empower people in rural areas to maximise their housing choices and improve their living conditions with access to housing credit from sustainable retail lenders both commercial lenders and community based organisations. MANDATE RHLF s mandate is to facilitate access to incremental housing loans to low income earners in order to enable them to improve their housing conditions in rural areas and small towns as well as tribal land in South Africa. Key components of the RHLF mandate are as follows: Loan usage: new house, extension, fixed improvement to a house, connecting to utilities; water harvesting, fencing, productive housing; purchasing of land by individuals or groups for residential purposes. Rural areas: tribal/communal land, farm areas, small towns. Low income currently set at maximum of R15 000 p.m. To support the implementation of the government s rural development programme ensure that RHLF funding reaches priority rural nodes RHLF s CORE PRODUCT: INCREMENTAL HOUSING FINANCE Low-income people, when building their houses, prefer to do so in an incremental way because of limited access to finance and limited affordability to repay large amounts of loans. This way of building is generally referred to as incremental housing (or progressive build). In addition, many people in rural areas have no title to land and thus cannot access mortgage finance. Typically, a borrower applies for a loan from a RHLF approved lender, pay it back and return for another loan in line with the incremental building process. Increasingly, repeat borrowers are becoming a large part of our business s customer base. The approach to incremental housing and repeat loans indicate that low income people take loans that they can afford to repay until a complete house or home improvement has been completed. 1 Not only do people residing in rural areas (non-metropolitan areas) benefit by accessing micro-loans to achieve their housing dreams, but they also access loans to improve their living conditions in general. Many people apply for loans for water and electricity connections as well as sanitation a phenomenon that is largely enabled by government schemes to provide access to services to rural communities. Security is a concern for people residing in rural areas as well; as a result people are also applying for loans for fencing their homes. In general, financing home improvement forms a large part of our business. RHLF BUSINESS MODEL RHLF operates as wholesale Development Finance Institution and provides incremental housing loan facilities to its approved intermediaries for on-lending to the individual borrowers who want to improve their housing conditions.

RHLF works with the following type of intermediaries: Commercial or Non-profit microfinance institutions: Who are registered with the National Credit Regulator; and Lend to members of the public who are in the RHLF s target market. Community based organisations: These include organisations such as stokvels, co-operatives or associations; Lend to their members only and not to the general public. Why RHLF works with intermediaries: RHLF works with intermediaries because it is more cost effective and enables a greater geographic reach. Our approved intermediaries offer rapid and efficient service to end-users. They respond quicker to events and better understand local needs and circumstances. The intermediaries are also able to ensure high repayment rates. In the case of community based organisations who on-lend to their members only, RHLF is able to assist self and informally employed to access housing loans so that they can improve their housing conditions. Annual Disbursements R000 300,000 270,000 240,000 210,000 180,000 150,000 120,000 90,000 60,000 30,000-246,257 239,962 286,867 261,499 168,277 227,305 146,280 107,106 100,369 58,915 2013 2014 2015 Disbursements 2016 2017 Disbursements including moratoria Value of Loans Disbursed 4.2% 1.2% 16.6% 10.4% 4.0% Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo 7.3% 21.0% Mpumalanga Northern Cape Northwest 24.4% Western Cape 2

3 MANDATE COMPLIANCE INFORMATION 2015 2014 2013 Statistics Compiled from Monthly Housing Impact Monitoring Reports 40,185 44,610 44,812 Number of new loans 1.0% 8.0% 74.0% 14.0% 97.0% 3 8.0% 8 96.0% 4.0% 31.0% 4.0% 76.0% 9 8.0% 30.0% 9.0% Loan usage New House Extension Improvement Services Total housing usage Other Repeat loan borrowers Borrowers using loan together with government subsidy 39.0% 61.0% 38.0% 6 48.0% 5 26.0% 7 2 76.0% 2 7 Gender of borrower Male Female Source of income Private sector employment Public sector (including social grants) Self / informal employment State pension Farm workers 2016 39,790 3.5% 5.7% 77.2% 1 98.4% 1.6% 36.1% 2.9% 39.9% 60.1% 26.7% 7.0% 2.1% 63.9% 0.2% 63.2% 5.7% 7.6% 76.5% 7.3% 5.5% 5.1% 5.6% 2017 45,512 0.7% 5.8% 85.1% 7.7% 99.3% 0.7% 33.5% 0.7% 41.3% 58.7% 29.0% 9.1% 1.0% 60.4% 0.5% 60.7% 8.1% 71.8% 9.4% 7.7% 6.5% 4.7% 64.0% 6.0% 7 6.0% 6.0% 6 4.0% 7 7.0% 9.0% 1 56.0% 66.0% 1 Borrower s income less than R1 500 per month R1 500 per month-r2 499 per month R2 500 per month-r3 499 per month Sub-total below R3, 500 per month R3 500 per month-r5 999 per month R6 000 per month-r9 799 per month R9,800 per month - R15,000 per month more than R15 000 per month (w.e.f. 1/4/2014)

Housing Loans Delivered in Prioritised Rural District Municipalities 25,000 20,000 R 160,000 22,572 21,256 R 140,000 19,129 17,250 15,716 R 120,000 R 100,000 15,000 R 80,000 10,000 R 60,000 R 40,000 5,000 R 20,000-2013 2014 2015 Number of loans 2016 2017 R- Value of loans disbursed R000 Provincial loan numbers 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000-2013 2014 2015 2016 Western Cape 2,807 1,147 869 713 533 Northwest 1,952 2,793 2,548 2,315 3,093 Northern Cape Mpumalanga 2017 161 95 156 73 151 3,543 3,496 4,179 4,245 5,210 Limpopo 1,602 1,273 1,264 1,373 2,364 Kwazulu Natal 15,734 17,301 14,828 14,147 15,880 Gauteng 5,270 5,426 3,858 4,345 3,848 Free State 1,329 1,367 1,292 1,358 1,668 Eastern Cape 12,414 11,713 11,190 11,221 12,765 Eastern Cape Free State Gauteng Kwazulu Natal Limpopo Mpumalanga Northern Cape Northwest Western Cape RHLF S GROWTH STRATEGY RHLF is embarking on the growth strategy in order to scale up access to incremental housing finance for the benefit of the target market especially after consolidation of human settlements Development Finance Institutions and establishment of the Human Settlements Bank. Key to this growth strategy are, among others, the following elements: Signing up more commercial intermediaries: The focus of this element is to identify existing and start up enterprises that are willing and able to offer incremental housing product as part of their product offerings. Signing up more community based organisation/ stokvel groups and co-operatives: The focus of this aspect is to identify community based organisations that are involved in income generation activities and whose members aspire to access housing loans for the purpose of improving their housing conditions. Partnering employers who have Employer Housing Assistance Programmes designed to assist their employees to improve their housing conditions 4

HOW RHLF ADDS VALUE TO BORROWERS IN OUR TARGET MARKET Mrs Maya Masekeng Sannah, Phuthaditjaba, Maluti - a- Phofung Municipality Free State Province Mrs Maya Sannah Masekeng is married and lives with her husband as well as two grandchildren, one of whom is still attending school. The Masekeng family lives in an old house built before1994 by the government. The family obtained it during the 1970s and the house has electricity, running tap water and a flush toilet. Mrs Masekeng is a pensioner, she receives a social grant for elderly. She took a loan of R4 995 from a RHLF approved intermediary, Lehae Housing Finance and used the loan to put floor tiles and paint the house (as in picture below). She mentioned that she is happy with the service received from Lehae and says she is planning to build rental rooms in the yard later in 2017. Mr Mluleki Mraqo, Mpheko location, King Sabata Dalindyebo Local Municipality, Eastern Cape Province Mr Mraqo Mluleki is 65 years old. He is married with 5 children, all of whom have moved out from his home, but he still lives with his four grandchildren. The family lives in a small house with access to electricity and harvests rain water using a Jojo tank and uses a bucket system. Mr Mraqo took a loan of R2 500 in January 2017 from a RHLF approved intermediary, Lendcor Group through a material store to build a new three roomed house (as it is depicted on the picture). The borrower is pensioner receiving social grant for the elderly. He is using the loan and his savings to complete building the house. Mr Mraqo stated that the existing house was too small for the family, mostly when his children came to visit during the holidays. 5

Mrs Memme Ramesela, Lekubu Village, Zeerust, Ramotshere Moiloa Local Municipality North West Province Mrs Memme Ramesela is a widow and she lives with her five children, the youngest one is at crèche. They live in a shack with access to electricity, public tap water outside the yard and uses a pit latrine toilet. Mrs Ramesela took a loan of R3 200 in November 2016 from a RHLF approved intermediary, Kabo Financial Enterprise to purchase additional roofing material for her new house that she is currently building. She stated that she is building the house alone as her children are unemployed and she only receives a pension grant and child grants. Mrs Ramesela mentioned that the shack is small and cold during the cold weather and looks forward to occupying her brick and mortar house when is completed. Mr Daniel Mokua Phokeng Rustenburg Local Municipality North West province Mr Daniel Mokua is married with three children who are all still school going, they live in a shack. The household has access to electricity, tap water outside their yard and uses a pit latrine toilet. Mr Mokua took a loan of R25 000 in October 2016 from RHLF approved intermediary, Thuthukani housing Finance to complete the roofing for a new 10 roomed house (as per picture above). Mr Mokua is employed in the private sector and earns more than R15 000 per month. The borrower stated that he is very happy with the service received from Thuthukani. A MESSAGE TO OUR STAKEHOLDER AND PROSPECTIVE INTERMEDIARY PARTNERS If you want to apply to become a RHLF approved lender, whether you are an established commercial lender, start-up lender or a Community Based Organisation such as a Co-operative, Building Club/ association or Stokvel, please contact us on our contact details provided. We also encourage employers from all sectors who are looking at assisting their employees to access housing finance to talk to us. 6

Postal Address PO Box 645 Bruma 2026 Physical Address 1st Floor, NHFC Building The Isle Houghton Old Trafford 3 11 Boundry Road Houghton Telephone: + 27 (0) 11 621 2500 + 27 (0) 11 644 9898 Facsimile: + 27 (0) 11 621 2520 mmothobi@rhlf.co.za Like us on Facebook www.rhlf.co.za