RURAL HOUSING LOAN FUND Strategic plan 200506 1

RURAL HOUSING LOAN FUND Strategic plan 2005/06 1

RHLF’s Vision Statement RHLF is a world class rural social venture capital fund that creates new financial arrangements and opportunities for rural families to improve their housing, economic and living environments. 2

RHLF implementation strategy 3

RHLF’s contribution to “Peoples Contract to Create Work and Fight Poverty” • Establish credit histories & repeated access to credit • PPP with intermediaries creating jobs within housing finance value chain • Stimulate local economic development using local builders in construction • Enable access to public utilities • Supporting the BMS industry create jobs in the industry and related industries 4

STRATEGIC INSTITUTIONAL POSITIONING OF RHLF 5

RHLF’s contribution to “New Comprehensive Housing Strategy” • Contribution to job creation • Informal settlement upgrading • Increase household income limit in line with new subsidy rules to R 7 500 • Contribute to Specific Programme Thrusts: – Financial Services Market – Incremental Housing – Rural Housing 6

RHLF’s contribution to “New Comprehensive Housing Strategy” Financial Services Market: • Access to micro-loans for incremental housing and fixed home improvements for the rural working poor • RHLF will use its venture capital investments to leverage additional debt funding from banks: – Clients reaching maximum RHLF exposure of R 25 m – Constructive discussions with two banks; application to co-fund Norufin submitted to Std Bank – Bayport’s relationship with Brait • Borrower education – revised Building Advice Handbook now available in 3 languages & include chapter on household budgeting 7

RHLF’s contribution to “New Comprehensive Housing Strategy” (cont…) Incremental Housing: • Existing core financing opportunity for RHLF business • Informal settlement upgrading – post occupancy • Disburse 200 loans to subsidy beneficiaries in Northern Cape with monthly income below R 1 500 8

RHLF’s contribution to “New Comprehensive Housing Strategy” (cont…) Rural Housing: • Farm worker housing – 200 loans to emerging farmers and farmworkers in Mpumalanga • Provision of loans for improving traditional houses in communal land support indigenous housing (maximizing housing choices) 9

Status of RHLF approved business strategy • Continue to fund profitable and adequately capitalised established entities – – Two new clients, Izwe & Bayport New facilities to current clients Blue Dot & Indlu Increase in facility to Norufin Received application from Lendcor (including pilot loan for emerging contractors) – Received application from new client; African Dawn Capital (emerging farmer and farm worker housing) • RHLF will continue to use its venture capital investments to leverage additional debt funding from banks • Financial sustainability and development impact – Bayport phase 2, SAPO savers & rural lending – Izwe’s expansion to secondary towns 10

11

12

13

14

Commitment to BEE • Four distinct strategic thrusts – Demand driven developmental needs of end-users – Funding black owned and managed companies – Warehouse RHLF shares for future acquisition – Employment equity 15

16

17

18

Warehouse RHLF shares • RHLF owns shares in the following number of clients: – Protea Financial Services Group – Norufin Housing – Lendcor – Indlu Finance – Izwe – Bayport 19

Organogram 20

Employment Equity 21

RHLF Development Impact: Some key findings • Loan usage: 69% (vs 70% RHLF target for 2003/04 FY) of the loans are used for developmental purposes – 54% housing – 14% education – 1% working capital for in micro/survivalist enterprises • Satisfaction: 61% of the end-users said they were satisfied with the outcome of the loan use, and • 68% said they would recommend their retail lender to friends and relatives. • 55% of the end-users are females 22

RHLF Development Impact: Some key findings (cont…) • Direct correlation between end-users receiving consumer education and those who are up-to-date with payments; – But only 19% report having received consumer education • 11% of end-users live in RDP housing, and 3% used the loan to top up subsidy at acquisition • End-users live in the RDP house an average of 24 months before borrowing to improve or extend the RDP house 23

RHLF Development Impact: Some key findings (cont…) • On average end-users who built new space on the RDP house or existing dwelling, added 22 m 2 to the house at cost effective amount of R 617 per square metre • 7% of the end-users are informally employed • RHLF currently has small exposure of 3. 6% of loans surveyed in 3 ISRDP nodes in Eastern Cape and Limpopo/Mpumalanga 24

Key Environmental Factors Land & Agric. Policy Financial Sector Charter DFI Traffic Jam Debit Order Monopoly Changing Laws & Regulations 25 R Pearson 2003: Updated Retreat March 2005

RHLF’s response to Key Environmental factors • Financial Sector Charter – Constructive engagement with banks, funding of 2 clients reaching RHLF’s maximum exposure limits • Land Agricultural Policy – Share experiences in micro-finance for housing with Mafisa • Debit order monopoly – RHLF made representations to SARB and PASA • DFI mandates reviewed and confirmed with implementation gaps to be addressed • New National Credit Bill – bigger loans and longer terms at lower cost to borrower 26

27

28

29

30

31

32

Thank You 33