Millenium Group briefing, Committee Programme 2006

Meeting report

HOUSING PORTFOLIO COMMITTEE
16 November 2005
MILLENNIUM GROUP BRIEFING, COMMITTEE PROGRAMME 2006

Chairperson: Ms Z Kota (ANC)

Documents handed out:
Overseas Private Investment Corporation's (OPIC) Financial Tools for Africa
Draft Committee Programme

SUMMARY
Representatives for the Millennium Group Worldwide Inc. presented the aims, achievements and capabilities of their company. They proposed to bring finance and financial management skills from the United States of America, where they had been involved in similar projects, to Africa.
The Committee members suggested that women, black emerging contractors, people with low credit ratings and low income be targeted for providing assistance. The involvement of church groups to develop human and social capital was applauded.

MINUTES
The Chair tabled the minutes of the previous meeting and the draft 2006 Committee Programme.

Millennium Group briefing
Mr B Konki introduced himself as a businessman from Gauteng with a wide array of interests, amongst which, with the Millennium Group Worldwide Inc., the R 1,2 billion South African Hall of Fame golf estate and housing project in Knysna.

Mr J Jackson Sr (Chairman: Millennium Group Worldwide Inc.) set out the aims, achievements and capabilities of the Overseas Private Investment Corporation (OPIC) in mobilising funds at lower than market bond rates for housing developments, also for people with low credit ratings and lower than median incomes. After a short period of bond repayments bonds would be lumped together and offered to the market for recapitalisation by investors.

Dr W Lee (President, Faith Base Division of Millennium Group Worldwide Inc.) mentioned that in the United States the Black and Latino churches were active in building social and human capacities through their ministries.

Discussion
Mr A Steyn (DA) wondered whether it would be possible to sell off bonds to the market if the bonds carried a lower rate than market rates, especially if the market was subsidised, and Mr S Masango (DA) asked what would be done in the case of bond defaulters.

Mr G Schneemann (ANC) suggested that discussions with the Ministers of Housing and of Finance were imperative to promote their plans. Subsidised housing attached to the Knysna project might be a government requirement. Would the proposed funding for housing be channelled through existing government agencies? An initiative by South African banks to generate R 42 billion of high risk capital to service aspirant home-owners who were unable otherwise to obtain finance was in process. Emerging contractors often had skills but lacked finance, and mentoring was crucial.

Ms S Sigcau (UDP) asked which group of people were targeted to be provided with housing.

Mr Konki explained that for the R 1,2 billion Knysna project an American project manager would be employed and that emerging contractors would be used. Their company would discuss their proposals with the Minister after having briefed the Committee. The South African Sport Hall of Fame project would be financially self-sustainable and was structured so that everybody would be able to stay there. 3500 jobs would be created.

Mr Jackson stated that their bond rate would be of the order of 10%, which was 1,5% to 3,5% lower than the going market rate. In Mozambique the government provided the land and infrastructure such as water and sewage treatment while they brought money. They aimed at creating communities which included minor shopping facilities and clinics. They intended bringing in five people from the USA and working capital for acquiring equipment by emerging contractors. In the Knysna project the profits would be invested into affordable housing. They were aiming at involving the business sector, not so much government. The target group was those with an income of 80% or less of the mean. His company aimed at broad based economic empowerment, sharing information, filling the gap where no formalised plans existed, taking the excuses away, and that when they would sell the bond book the loan rates would stay the same. They would build in a 15% default rate so as cover against defaulters. In Mozambique they were covered by a sovereign guarantee when they had kept up the bond payments for six months. They managed their own money and had ample reserves. Profits would be retained with which to do more housing. Most, eight out of ten of their housing projects, were to be in rural areas. At least one was for a woman contractor, and Black Economic Empowerment groups consisted 60% of women.

The Chair supported consumer education in churches, the priests then becoming custodians. It had to be noted that housing was a government area.

The meeting was adjourned.