There was a comment that it seems that in Cape Town the local government is formalising back yard shacks. This commentator was once a back yard “shacker”. The biggest issue to him was that there was only one toilet, for which the landlord had the key, and he would go to bed early. He knows situations where landlords apply for indigence, yet they receive rent. In the light of this kind of exploitation, is it appropriate to use public resources to create assets for someone who already has an asset? The reply was that perhaps there are ways of not subsidising, but still supporting. Clearly this would need a level of control.
Historically people were forced to move into this kind of accommodation. Now this should be a matter of choice, for the landlord and for the tenant. In the past, it was not really the case of a landlord offering a service. Another comment was that it seems that there is a new trend emerging of plot owners investing in rows of well-constructed back yard rooms (e.g Ivory Park). A further comment was that someone knew of a case of 70 people living on a 200m2 plot. Clearly this called for a level of regulation. What were the rentals in the study presented? The reply was that in 1997 the back yard rentals in Soweto ranged from R50 to R100.
A last comment related to the increasing non-availability of land for new housing, meaning that back yard shacks must be given more and more attention in the future. However, bringing back yard shacks under a certain level of control might push the poor out of this form of accommodation into something worse. Here the brief reply was that in Latin America back yard renting is considered a very convenient form of accommodation.
Suitability for the book
This paper has been published in the International Journal of Urban and Regional Research (2000). As it stands, the paper is in publishable format, and it would probably be possible for the author to obtain the rights from the journal to republish. However, the material is from field research conducted in 1997. One could ask the author whether it would be possible to up-date the paper, depending on whether more surveys of back yard shacks have been made, and whether the phenomenon of private rental can be contextualised within Southern Africa. He could also incorporate responses to the comments made.
Low-income housing rental in Buluwayo – Isiaiha Magagula (Director of Housing and Community Services Department, Buluwayo)
In the presentation, the speaker made some important comparisons between Zimbabwe and South Africa, which are not in the written paper. The most important similarity is the emphasis on home-ownership since the 1980s (post-independence). Existing rental housing was sold to the tenants. Local governments lost rental income through this policy. Staff had to be laid off, and the local government was therefore not able to maintain the remaining rental stock. Pre-independence housing had many similarities with apartheid South Africa – beer taxing for local revenues, hostel and walk-up flats. In the post-independence home-ownership schemes, people were expected to use their own resources to build. Houses were designed with outside access into toilets, in anticipation of back yard rental. Note that Bulawayo has 100% sewer reticulation.
The written paper begins with a history of low income housing in Bulawayo with quite detailed reference to different townships/neighbourhoods, and to building materials used.
Many Zimbabwean housing officials (including the presenter) were trained in Eastern Europe. Therefore the concept of housing cooperatives (for banking and for building) was pursued actively, producing a lot of housing stock. Mention was made of a revolving fund in Bulawayo (no detail on this in the paper). Also a Millennium Low Income Rental Housing Scheme was mentioned, to which people from hostels are being relocated.
A National Housing Fund was set up, from which local governments could borrow at low interest rates. Subsidies were scrapped when the government started getting conditional loans from the World Bank. With the withdrawal of lending agencies such as the World Bank from Zimababwe (due to non-payment by the government), local authorities have resorted to lending in the open market.
Currently, it is difficult to raise capital costs in the open market for the construction of new rental housing. There are some advantages to the homeownership policy – the tenure is very secure, the owners take over responsibility for maintenance, some use the property as collateral and some create back yard rental units (i.e. the burden for providing rental housing is now with the homeowners).
However, one lesson learnt is that there is certainly a need for rental housing to complement homeownership, particularly for those without initial capital. Inflation makes the self-build process in homeownership schemes difficult. Subsidies remain necessary, as an integral part of enablement. The current lesson is that macro-economic policy can break it all.
This was before a break and the session was running late – therefore short discussion. MEC Paul Mashatile expressed particular interest in the housing programme that was targeting hostel residents (the Millennium Low Income Rental Scheme. He also commented that there were many similarities between the Bulawayo experience and Gauteng. He expressed interest in visiting the Bulawayo local government.
Suitability for the book
This paper will be an important contribution to the “Cities in Africa” perspective. However, the written paper would require some editing/re-writing, and a change from point-form to actual text in paragraphs. It was clear that the presenter has a huge amount of experience to draw on, and would probably not have a problem in bringing a little more comparison with South Africa and dialogue with the other papers (particularly that of Richard Martin, which also refers to housing in Zimbabwe).
Who needs housing finance? – Erastus Hoveka (General Manager: Finance and Administration at the National Housing Enterprise of Namibia)
This presentation contrasts what formal banks have to offer in terms of housing finance, the language, concepts, principles they apply (in channelling funds from savers to borrowers), and the reality of a poor but bankable person who needs a small loan of R15 000 to incrementally improve her house. It makes the obvious observation that formal housing finance is not suitable for the poor. It then turns to options, emphasising that the poor are credit worthy (even if the only collateral they can bring to the bank is their goats), and the need to support incrementalism – financing the house wall-by-wall. In other parts of the world, financial institutions are servicing this segment of the market/demand profitably. Lessons need to be applied from the housing finance revolution.
The presentation refers to “CA Shelter Finance.” While its not clear to me what CA is the abbreviation for, it refers to banks that operate through “networks of practitioners and supporting partners.” Various schemes from Latin America, India and Kenya are mentioned. Their pricing system, scale and profitability is spelt out, giving a positive picture. In order for these schemes to reach scale, government needs to play a role in creating a conducive macro-economic, financial and regulatory environment, government needs to show confidence in the bankability of the poor and provide the land and infrastructure, including secure tenure. Funders have the role of selecting partner institutions, designing the instruments, funding in a flexible way and promoting research and dissemination.
The presentation concludes with observations that the poor, through scarcity of resources, have had to become good financial managers. Finance policy needs to be closely matched with housing policy, and financial managers should be people with a big heart.