Habitat for Humanity: briefing

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HOUSING PORTFOLIO COMMITTEE
10 May 2000
HABITAT FOR HUMANITY: BRIEFING

Website:
http://www.habitat.org

SUMMARY
Mr Kurt Firnhaber of Habitat for Humanity briefed the Committee on the organisation's background, objectives and activities and requested the Committee's support for their proposed partnership with the Housing Ministry which they have submitted to the Minister.

MINUTES
Habitat for Humanity South Africa
Habitat for Humanity is a network of grassroots projects dedicated to eliminating sub-standard housing in this country. Habitat is not a charity but a partnership - they do not give away homes. Each project is a co operative effort incorporating the home recipient, volunteers from inside and outside the immediate community, and Habitat. Homeowners help to build their own houses and those of four other families. The labour contributed by homeowners and volunteers, called "sweat equity", keeps house costs affordable. When complete, homeowners repay the construction cost of their house through a 10-year, non-profit, inflation indexed bond (bond). In a continuing cycle, the monthly bond payments of all homeowners are deposited into a community-managed revolving fund and are used to build more homes.

In South Africa the tools needed for economic prosperity are available. South Africa is distinct on the continent of Africa in that it has a first world economy with many living in third world conditions. The history of apartheid has created a crisis in housing that will take many years to unravel.

What is Habitat for Humanity International?
Habitat for Humanity International is a non profit, ecumenical Christian housing ministry. It seeks to eliminate poverty housing and homelessness from the world, and to make decent shelter a matter of conscience and action.
Habitat invites people of all backgrounds, races and religions to build houses together in partnership with families in need. It has built more than 85,000 houses around the world, providing more than 425,000 people in more than 2,000 communities with safe, decent, affordable shelter. It was founded in 1976 by Millard Fuller along with his wife Linda in USA. There are more than 1,900 active affiliates in 64 countries.

An ecumenical, international board of directors determines policy. Board members are dedicated volunteers who are deeply concerned about the problems of poverty housing around the world. Each Habitat for Humanity affiliate is managed by its own local volunteer board.

How does it work?
Through volunteer labour and donations of money and materials, Habitat builds and rehabilitates simple, decent houses with the help of the homeowner (partner) families. Habitat houses are sold to partner families at no profit, financed with affordable, no-interest loans. The homeowners' monthly bond payments are used to build still more Habitat houses. Habitat is not a give away program. In addition to a down payment and the monthly bond payments, homeowners invest hundreds of hours of their own labour -- sweat equity -- into building their house and the houses of others

How does a Habitat for Humanity affiliate get started?
Habitat affiliates -- independent, locally run non-profit organisations -- start when concerned citizens come together to address the problem of poverty housing in their community. These volunteers research the community's affordable housing needs and resources, and evaluate the potential success of Habitat's self-help model in their community. The group then applies to become an official Habitat affiliate. Each affiliate co-ordinates all aspects of Habitat home building in its local area -- fund raising, building site selection, partner family selection and support, house construction and bond servicing.

What does a Habitat house cost?

Habitat houses are affordable for low-income families because there is no profit included in the sale price and no interest charged on the bond. Bond length varies from seven to 30 years. So far, the total number of houses completed in South Africa is 237 at a cost of R23 000 each.

How are the partner families selected?
Families in need of decent shelter apply to local Habitat affiliates. The affiliate's family selection committee chooses homeowners based on their level of need, their willingness to become partners in the program and their ability to repay the no-interest loan. Every affiliate follows a non-discriminatory policy of family selection. Neither race nor religion is a factor in choosing the families who receive Habitat houses.

How does Habitat work with the government?
Habitat for Humanity International is not a government agency, nor does it accept government funds for the construction of houses. However, Habitat considers all levels of government and governmental agencies important partners. Habitat for Humanity welcomes partnerships with governments to help "set the stage" for the construction of houses. Stage-setting funding and gifts might include land, houses for rehabilitation, infrastructure for streets, utilities and administrative expenses.

Discussion
Q) Do you have any provision to build houses for rural communities?
Kurt Firnhaber: Of the 17 countries in which Habitat is involved in Africa, only two of them are in urban areas. There is a desire to move out of urban areas. Funding is very critical in this regard. Once we can secure partnership with government, we can surely go to rural areas.
Q) Is it possible for Habitat for Humanity to assist people who want to renovate their houses but cannot secure bank finance due to the areas where they stay?
Kurt Firnhaber: Our mission is to build decent houses for the homeless. However we realize that there is a need for renovation of houses. Habitat International is doing it in other countries however Habitat South Africa is not doing it at the moment. The communities must whether the pressing is that of building houses or their renovation.
Q) What do you do when people cannot make payments?
Kurt Firnhaber: We emphasize community ownership of the project. It happens that people do not honour their house payments in which case the local Habitat committee visits such a person to see if they can be of help. People on the waiting lists put pressure indirectly because they are directly affected. If efforts by the local Habitat committee fail to produce good results, we take such people to court but such cases are rare. Those who happen to lose their jobs enter into a new payment arrangement and once they have found a job they go back to the original payment.
Q) How do communities invite Habitat to become involved?
Kurt Firnhaber: We are invited through churches and local structures and we have regional offices in Cape Town, Durban and Gauteng.
Q) Who trains the local communities when it comes to building of houses? How do you transfer skills?
Kurt Firnhaber: Training is done by Habitat staff.
Q) How do you deal with the issue of management and accountability as regards building resources and finance at local level?
Kurt Firnhaber: Each affiliate has its own bank account. No community receives money from us until its records have been thoroughly audited by the Habitat staff members. We also have an outside auditor coming once a year to audit our finances. This is over and above an auditor who regularly checks our books.
Q) Is it possible that you can give loans to individuals who wish to build their own houses on their own?
Kurt Firnhaber: Habitat is not in business to give building loans.

Habitat for Humanity: 011-2711-836-0710

Appendix 1:

HABITAT FOR HUMANITY SOUTH AFRICA

Partnership Proposal
April 13 2000

The following is a funding proposal to assist families who build through the Habitat for Humanity model of self help and community responsibility. This is a partnership between the National Government , Housing Department, Habitat for Humanity South Africa and needy families. Through a partnership between the National Housing government structure and Habitat for Humanity South Africa NFHSA, a funding mechanism of housing subsidies would be in place to meet the needs of this type of housing delivery and community up-liftment, which is not conducive to the current subsidy scheme. As housing is more than houses and communities is more than people, it is important to support this initiative which builds communities, empowers people, overcomes entitlement and creates personal responsibility. Through this partnership, the National Housing structure would directly provide a funding pool for housing subsidies. HFHSA would provide top up funding through no-interest (inflation adjusted) loans, training, management and capacity building. The families would provide sweat equity; community participation in decision making and payment of loans.

Problem Statement
The current provincial housing subsidy schemes do not enable the development of self help or community empowerment. As many existing communities have been waiting to become proclaimed townships, HFHSA has been replacing family's shacks with decent houses. These families with "Permits To Occupy" will be receiving title deeds over the next six months or next three years, depending on the community. During this time, the provincial governments have been successfully dispersing subsidies, creating a funding short fail and a three-year waiting period. HFHSA went ahead with housing some years ago realizing these families had no other options.

As housing is capital intensive, it is almost impossible for new communities to get started as well. They need to initiate proposals two or three years in advance. This creates a barrier that is often too much for communities to overcome.

Most of the current subsidies go towards houses that are too small to meet the needs of the families and the communities. Because these homes are given to the homeowners, it enforces an entitlement mentality and lack of proper responsibility for housing and community.

Funding Structure
A fund provided by the National Government would disperse housing subsidies as the communities meet specific criteria, i.e. secure land ownership, local authority housing inspection, verification of homeowner. First time subsidy. This funding would be directed towards the loan established with HFHSA. The local government would receive their portion of infrastructure cost. The funding relationship would be directly between the National Government and HFHSA. Both parties would annually adjust the funding pool based on housing delivery performance would review the annual amount provided to the fund.

Funding Disbursement

 

National People's Housing Fund

Leveraged funding from HFHSA

Initial Homeowner Deposits

Houses per Year

Total Annual Funding Nat. People's Funda

Ttoal HFHSA Funding

Initial Homeonw Deposit

2000

R8 000

R16 000

R2 500

350

R2.8 Mil

R5.6 Mil

R875 Mil

2001

R8 000

R17 000

R2 750

450

R3.6 Mil

R7.6 Mil

R1.3 Mil

2002

R8 000

R18 000

R3 000

700

R5.6 Mil

R12.6 Mil

R2.1 Mil


Total three year funding: R12 Million Rands;

Benefits of Partnership
These Funds set up by the national government would leverage the funding which Habitat for Humanity can provide. It enables homeowners to work towards their house and their community. It rewards homeowners to take responsibility for establishing housing and building community, With the increase of housing subsidies being established within all communities we work in, significantly more houses can be built.

Habitat for Humanity is the only programme that builds more than one house with a subsidy. As the subsidy is going towards paying of the homeowner loan, another house is built with those funds. The "Revolving Fund for Humanity" which is established in each community creates a sustainable
housing solution which will continue to work for years to come. From a strategic financial viewpoint, HFHSA can better use the housing funds effectively by creating long term financial stability.

HFHSA believes that a gift such as a subsidy house does not empower people but an opportunity build a better house with access to capital funding creates life long skills, opportunities and personal growth. This is partnership which includes the homeowners. Partnership requires responsibility; which they demonstrate through their sweat equity and financial commitments. Together all three partners can create an exciting and sustainable programme for communities and government structures to be proud of.

 

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