Financial Mail: Housing – Each One Settle One campaign

Housing – Each One Settle One campaign
Open Invitation

Claire Bisseker

In a desperate attempt to tackle the housing backlog, housing minister Tokyo Sexwale is appealing to the Good Samaritan in each South African to invest in SA’s future by buying another South African a house.

Housing minister Tokyo Sexwale is appealing to the Good Samaritan in each South African to invest in SA’s future by buying another South African a house.

He calls it his Each One Settle One campaign and says it has received a “heart warming response” from a number of companies since it was launched at the JSE a few weeks ago.

Anglo Platinum, Impala Platinum and Old Mutual have been the first to pledge their involvement, but it’s not just aimed at big corporates. “Someone called yesterday saying they would give us [enough for] 200 houses from their family foundation,” says Sexwale. “I’ve had calls from school principals, families, and individuals. Someone has offered us 2m bricks.”

So how does it work? Will donations be pooled into one big fund? Will it be used to give away RDP-type houses to the poor or is the idea to build and sell larger, quality houses to those in what is known as the gap market, who earn too much to qualify for government subsidies but too little to service a mortgage bond? If so, how will this campaign make gap housing more affordable?

Despite a lengthy interview, the FM is still none the wiser. Sexwale says there is no preferred funding or delivery model behind the campaign. “It’s very open, there’ll be a multiplicity of approaches so that it’s open to whoever wants to come. There’ll be a model for every specific situation.

“If you can help one South African to the tune of R55000 [the current government housing subsidy] do it on your own — if you know what to do . But if you don’t ,” says Sexwale, “give us your money and we’ll put it to good use”.

Given the well-meaning intentions of such a scheme it seems churlish to remind ourselves that 87% of the houses built by government between 1994 and 2010 are considered “high-risk” structures. This is due to various defects. Also, the minister had to take back R463m in unspent housing grants from provinces last year.

That aside, how can Sexwale expect companies that already pay high taxes and are involved in many social responsibility projects and BEE initiatives to donate more to government?

“You’re doing your duty to yourself and your country,” he says . “SA is being confronted by service delivery protests every day and they’re becoming increasingly violent. There’s a lot of impatience out there, so people can’t just sit back and say: ‘Sexwale must deal with this thing’.”

The background document outlining the campaign states that “unless we take individual responsibility for housing our fellow citizens, SA may find itself in a catastrophic recession similar to that of the US”. It also claims that the campaign could create “tens of thousands of jobs”.

These claims are overblown — the US is not in a recession, nor is this campaign likely to provide the kind of growth catalyst that could prevent SA entering a recession.

“The minister has, since his first days in office, demonstrated a flair for political theatre and gestures calibrated to win media attention,” says Rhodes University lecturer and housing expert Richard Pithouse. He feels “there is simply no way that a campaign like this has any chance of making a substantial contribution to overcoming the housing crisis”.

Pithouse also warns against the danger of making social rights the responsibility of business, arguing that only the state has that duty. Unfortunately, he says, Sexwale “hasn’t demonstrated any willingness to move beyond superficial gestures and to get to grips with the structural issues at the heart of our chronic urban crisis”.

Sexwale does not take kindly to armchair critics who dismiss his campaign as being populist or short on substance. Nay sayers, according to Sexwale, do not understand the magnitude of the problem.

Certainly, the scale of SA’s housing backlog is huge. The department has built over 3m subsidised houses since 1994, roughly 200000/ year.

However, in 2008, SA’s housing backlog still stood at 2,1m. Since then it has grown to 2,3m because of rising urbanisation, population growth and decreasing household size.

The housing backlog means SA now has roughly 2500 slums and about 12m people without access to decent houses, according to the department. Its goal is to clear the backlog by 2030 but it recognises that it can’t do this alone.

At the same time, Sexwale is impatient with the suggestion that a tax benefit be provided to encourage campaign contributions, saying: “When someone sticks his arm in your car window at a traffic light you don’t attach conditions.”

He is in the process of appointing “a very senior business person” to head the Each One Settle One desk in the national housing department. Campaign contributions will be made into a separate bank account and overseen by an independent board of trustees.

The department also undertakes to conduct regular media briefings and televised appearances to report on the campaign’s progress.

Leon van Schalkwyk, Impala Platinum group executive (strategic finance) thinks there is a business case for non mining firms to facilitate employee home ownership, saying it results in a “solid, satisfied workforce, staff retention and less pressure on employers to keep raising salaries, because workers at last have affordable housing”.

Impala is investing R2bn developing the new Sunrise View estate in Rustenberg. So far 1500 houses have been built and a R17m school is next on the cards. But instead of renting or giving away RDP-type units, the mine has developed a more sustainable model.

It involves building quality two- and three-bedroom homes, costing up to R265000 each, and selling them to employees. This ensures that workers have an appreciating capital asset.

To ensure affordability, the mine has partnered the government’s National Housing Finance Corp (NHFC), which provides qualifying workers with mortgage bonds of up to R190000. In addition, Impala provides these employees with a R75000 interest-free loan. The lowest-paid workers also qualify for a government subsidy, which is offset against the bond to reduce the monthly instalments.

As a result, workers pay R1820/month for a three-bedroom unit whereas they would be paying R4043 at market rates.

Impala deducts beneficiaries’ mortgage instalments from the payroll. If a home- owner leaves the firm, he also has to begin paying interest on the R75000 company loan. This helps to retain staff. Only 29 of the first 1300 home owners have resigned over the past three years.

“We did it initially because we were driven by the mining charter, but now we see it works. It’s real upliftment,” says Van Schalkwyk. “It’s the right thing to do, to anticipate and invest in the future. It means our workers’ children will grow up in a decent environment and go to a decent school. In 10 years’ time they may work for us.”

Anglo Platinum is participating in a similar programme, facilitating the building of 20000 houses for its employees over the next 10 years, through an employer-assisted housing scheme that will cost that company R1,4bn. But normal companies don’t have the capacity to install bulk infrastructure, as the mines have done. If government could undertake to provide serviced sites, leaving it to firms to just pay for the top structure, then Sexwale’s appeal would look more attractive. It would stand even more chance if the SA Revenue Service could give incentives to companies to provide a housing benefit as a condition of employment.

“Then this thing could really work,” says Van Schalkwyk. “If we all do it, it’ll make for a better SA.”