About Us - Breif History

Introduction

uTshani Fund is a not-for-profit organisaton (registration number 97/10227/08), and is registered with the National Housing Board as a Lender, operating offices in Cape Town, Durban and Johannesburg. uTshani Fund was established in January 1995 to partner and support development initiatives of organized slum communities. uTshani?s community partners are grassroot organizations practicing the principles of Shack Dwellers? International (SDI). Since its inception uTshani has invested over R100 million into housing development making it the biggest investor in pro-poor housing in the country.

Utshani Fund?s mission is to support community-based process, to improve relationships within poor communities, and between poor communities and the state, around issues of human settlement and livelihoods. Modeled on a sturdy cross section of international housing finance institutions for the poor, uTshani Fund has successfully supported the Federation in terms of ?the People?s Housing Process? and has been recognized at the highest level of Government. Utshani is committed to a pragmatic, positive approach to relations with government, has assisted in formulating the Peoples? Housing Process and broadly supports the government?s housing policy.

uTshani Fund has been mandated by the Federation of the Urban and Rural Poor (FEDUP) and its affiliates to function as its Support Organisation - to provide technical, financial, logistical and administrative support - in terms of the guidelines set out for projects implemented according to the People's Housing Process in Chapter 8 of Part 2 of the National Housing Code thereby fulfilling the requirements of a Support Organization as set out in subsection 8.2.1.

The Federation of the Urban and Rural Poor (FEDUP) formally known as the South African Homeless Peoples Federation (SAHPF) is South Africa?s largest people?s housing process CBO. As a social movement it has, with its NGO allies, uTshani Fund and the Community Organization Resource Centre (CORC) and Shack Dwellers International (SDI) established itself as an international pioneer in the field of tenure security and people?s housing since 1991.

As a people-based housing movement, most of its membership is drawn from informal settlements, backyard shacks, hostels, or rented accommodation in township areas. The basic building blocks of FEDUP are women's savings collectives. By means of savings, exchanges, enumerations, negotiations and dialogue, the Federation develops its members' capacity to conceive, control and implement their own poverty alleviation strategies via the development of their own communities.

uTshani Fund, as the financial arm of FEDUP, is the primary partner to the Federation in identifying land and acquiring development rights; accessing subsidies to retire debt or to fund new projects; managing, co-managing or supporting project implementation (depending on the capacity of Federation groups) and providing support around job creation.

uTshani?s main day-to-day functions are: acting as an institutional ?go-between? for organized communities and government; sourcing and administering technical support for community-driven human settlement development; supporting community-based financial systems that build social capital; and strategic investment and asset holding.

Although uTshani works in the housing field, it is not a ?housing delivery? agency. We are actively involved in building better cities, socially as well as physically. We support sustainable examples of broader asset mobilization, blending loans, savings, and social capital and linking all this to the state housing subsidy system.

Brief History

uTshani?s initial capitalization came from the German donor Misereor. In 1995 the late Minister of Housing Joe Slovo committed another R10 million. Since then, capital has been sourced from international donors with some small contributions by other government departments. uTshani also received certain fees from administering housing subsidies.

Utshani Fund?s priority when it was established in 1995 was to use donated capital to pre-finance innovative community-based housing delivery and design (as opposed to developer-driven models) in order to provide examples of alternative, improved housing delivery along People?s Housing Process lines. The intention was to recover bridging loans through successful subsidy applications, and to revolve these funds back into new innovations. In addition to providing low-cost housing finance directly to saving schemes uTshani Fund, as a revolving Fund, has pre-financed land purchase and infrastructure development. During the period 1995 ? 1997 Utshani was a key contributor to the ideas and practices resulting in the People?s Housing Process Programme. Utshani remains the largest single PHP-oriented institution in South Africa and has facilitated more PHP houses than any other process.

In 1997, uTshani Fund concluded a legal Agreement with the National Department of Housing which recognized uTshani as an accredited financial intermediary of the subsidy system and allowed them to access subsidies ?up front? for community savers. In terms of this agreement uTshani issued 5 660 up front subsidy loans in the period 1996?2001.

In January 1996, uTshani Fund started slowly dispersing bridging finance loans to qualified household members of well organized and mobilized collective saving schemes. In September 1996 following the National Agreement with the Department of Housing coupled with the resultant excitement of members catalyzed widespread disbursement of ?bridging? loans, all to be recovered by subsidy applications. Members of the saving schemes took out these loans on the understanding that the loans would be largely offset through their subsidies. Although the loans were designed on a theoretical long-term model in order to keep the monthly repayment at a minimum, it was anticipated that the loans would be retired early by government subsidies.

Unfortunately however because of the failure of most provincial governments to accept the uTshani National Agreement and approve subsidies to retire pre-financed loans issued in terms of this Agreement, Utshani suffered significant cash flow problems and by 2001 was forced to curtail its operations significantly and suspend new developments. For the next four years, uTshani sought to secure subsidies for the thousands of households that had built with uTshani loans, but lack of provincial government support has translated into little progress. Reducing debt via successful subsidy applications remains Utshani?s strategic priority.

From 2001-2005, Utshani developed a new set of products based on pre-approval of housing subsidies. Some loans continued to be made, particularly for greenfields developments, and subsidy administration procedures continue. During this period Utshani built approximately 5 000 further houses. (I have not come across any of these records? What I do know and have included are: 20 houses in Ekuphumleni, 45 Leandra, 10 Garankuwa, 48 in Gauteng.

In 2005, recently installed Housing Minister Lindiwe Sisulu recognized the role uTshani could play in her ?Breaking New Ground? housing policy. She intervened decisively to assist uTshani to recover old subsidies. With her assistance it is invisaged that uTshani will be in a position to restart its large-scale housing development.

Physical outputs

By 1998 Utshani Fund had become the only major housing finance source for South Africa?s poor other than the housing subsidy, building thousands of houses a year. During its period of peak activity between 1996 and 2001, Utshani Fund was directly involved in the construction of 10 587 houses, almost all of demonstrably higher quality than those delivered by other housing agencies. This total was comprised as follows:

  1. 5 660 loans to the value of approximately R60 million for construction of individual houses by members of the South African Homeless Peoples? Federation. These were bridging loans advanced in anticipation of receipt of a state housing subsidy. Of these, 87% were for consolidation of existing sites; 6% per for in situ upgrading; and 7% in green field developments;
  2. Land and infrastructure loans of with a total loan value of R5 million to five projects involving 3 000 households, resulting in a further 1 500 houses by 2001. Again, these were bridging loans in anticipation of the subsidy;
  3. 4 927 government subsidies facilitated without loans under the Utshani Agreement.

    4. National uTshani figures

    Province

     

    No. of loans issued by uTshani

    No. of subsidies admini-stered

    No. of subsidies waiting on

    Total No. of houses

    Eastern Cape

    479

    1018

    242

    1497

    Free State

    235

    33

    146

    265

    Gauteng

    1067

    6

    841

    1073

    Kwa-Zulu Natal

    1985

    732

    1889

    2717

    Mpumalanga

    108

    0

    82

    108

    North West

    184

    152

    81

    336

    W Cape

    1719

    2995

    447

    4714

    Totals

    5777

    4936

    3728

    10710


    The market value of the assets created by Utshani financing during that period is approximately four times the value of the initial loans granted and subsidies disbursed, or just over R410 million, or 1% of the total capital assets created by the state under its land and housing subsidy schemes in the first 10 years of South Africa?s democracy. This was probably the largest contribution of any single agency in the South African housing drive during that period.

    Of the 5 777 - 5 660 loans were released in the period 1996 - 2001 Of the funds administered in Free State 3 are in trust, the 6 in Gauteng were released recently hence 4 927 subsidies were administered in the period 1997-2001

    Between 2001-2005, Utshani facilitated another 5 000 houses.

    The Challenges

    Of the houses pre-financed by Utshani from 1996-2003, when they were forced to suspend this practise, only 25% have been repaid with government subsidies. The rest of these loans ? at current subsidy values worth R90 833 275 ? remain unretired. As such Utshani has contributed R91 million Rands to housing delivery that has not yet been matched by government subsidies.

    Everyone involved in South African housing has made mistakes. uTshani has learnt from these mistakes and with its vast experience gained over the past 11 years uTshani and is a well oiled organization ready to take on the new challenges of delivery. Indeed, it would be interesting to compare the overall proportion of stalled projects and/or incomplete (or abandoned, or on-sold) houses against Utshani?s: it is by no means certain that we would come off second best. We have already proven that Utshani-financed houses are generally of a much higher standard, with higher market values and far lower on-selling, than those delivered by other means (see here). But even in quantitative terms, Utshani has a pretty good track record. In 1997-2001, we were responsible for approximately 1% of annual housing delivery. We did this with a tiny budget and less than 20 full-time employees ? because, of course, most of the work was done by the ?beneficiaries? themselves.

    uTshani is tackling the challenge of old debt recovery head on and making significant strides forward in this regard with the various Provincial Housing Departments. uTshani is also intent on addressing and completing the unfinished houses.

    Utshani Fund?s Broader Contribution Utshani Fund has been instrumental in providing financial resources to enable poor people, especially women, to demonstrate what is possible in a People?s Housing Process, and through their example, to influence South Africa?s national housing policy (though not necessarily its implementation at provincial and local government level). Initially, Utshani correctly identified the policy?s tendency to discount people?s own skills and expertise as the key constraint to realising South Africa?s dream to house its poor. By providing the equivalent to the subsidy upfront to the poor, Utshani Fund enabled poor people to demonstrate the potential of a people?s housing process. The impact of this cannot be underestimated. Along with the SAHPF, Utshani Fund has been a driving force in popularising the idea of savings as an instrument for mobilising South Africa?s homeless poor. Many other organisations have developed similar strategies based on its success in this regard. Utshani Fund has served as a model for Urban Poor Funds in other African (e.g. Namibia, Zimbabwe, Malawi, Kenya) and Asian countries (e.g. India). It has been studied extensively by international researchers, and has had a major impact on multilateral urban development policy, for example via the Cities Alliance.

    The Way Forward

    In May 2006 Shack Dwellers International, with its affiliate organizations from Africa and Asia and its South African partners most notably FEDUP and uTshani, hosted a joint conference with National Department of Housing at the International Convention Centre in Cape Town. At this ground breaking conference the National Minister of Housing Minister Sisulu demonstrated her support for the way in which SDI and its development partners work by pledging 6 000 subsidies worth up to 220 Million to FEDUP. Prior to the conference Minister Sisulu had consulted with MEC?s of all the Provinces. Six of the nine MEC?s pledged to set aside 1 000 subsidies each for FEDUP in their respective provinces. The six Provinces are: Free State, Gauteng, KwaZulu-Natal, Limpopo, North West and Western Cape. The other three provinces came on board later with 1000 houses each making the pledge now 9000 houses.

    Minister Sisulu has clearly demonstrated through her actions that she is committed to make community-driven housing work. The Housing Minitser has gone out of her way to understand the work of Utshani and the Federation of the Urban Poor and to support their efforts to recover old debt and to secure new resources for housing delivery.

    In September 2006 the Secretariate of SDI, a number of key FEDUP leaders and the Director of uTshani met with the National Housing Ministry. At this meeting a Joint Working Group was set up to set the wheels in motion to implement the Memorandum of Understanding at Provincial and Local Government level.

    By going through the following chapters you ought to get a glimpse into the depth and breadth of uTshani Funds work with the Federation over the past 11 years and see its contribution to not merely delivering housing but assisting in building cohesive communities and sustainable human settlements. Over the years uTshani has developed a highly professional and secure system for administering subsidies in a community-driven housing context. uTshani has the expertise and the systems necessary to support community-driven housing at scale, using the state housing subsidy.

    uTshani?s partnerships with FEDUP and SDI cannot be underestimated, they share a history and developmental path that is inextricable. With uTshani?s experience gained over the years and these partnerships firmly entrenched uTshani is well poised to act as the financial institution responsible for expediting the 9 000 subsidies and for the Breaking of New Ground ahead.