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Presentation to the Parliamentary Portfolio Committee on Human Settlements regarding NURCHA's strategic plan and performance plan for the next five years. The plan focuses on increasing access to bridging finance for affordable housing and community development projects. The presentation also discusses the organization's mission, vision, and key strategies for achieving its goals.
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PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON HUMAN SETTLEMENTS Five Year Strategic Plan and Annual Performance Plan 2014-15 to 2017-18 25 March 2015
MANDATE, VISION AND MISSION NURCHA MANDATE “NURCHA ensures the availability of bridging finance to small, medium and established contractors building low and moderate income housing and related community facilities and infrastructure.” NURCHA VISION “To be regarded as a partner of choice for those seeking innovative bridging finance solutions” NURCHA MISSION “NURCHA initiates programmes and takes considered risks to ensure a sustainable flow of finance for the construction of low-income and affordable housing, community facilities and infrastructure. We work in partnership with all role-players in these markets to maximize the development of sustainable human settlements”
PURPOSE • To present the Strategic Plan and the Annual Performance Plan to the Portfolio Committee,
INTRODUCTION • NURCHA’s business: • short term project finance (24 months), to developers in the affordable housing segment, • Bridging finance to contractors, • Targeted programmes to finance and develop small contractors focusing on youth and women, • Deploy programme and fund management capabilities to support sector development efforts. • NURCHA works on a ‘balanced budget principle’: • Administrative costs must be covered by budgeted income from operations • Sources of income are: • Interest and fees from lending activities, • Fees from programme and management support activities, • Money market investments.
STRATEGY PILLARS • Increase development impact in line MTSF Targets and Mandate. • Increased lending towards delivery affordable housing, • Grow loan book in the gap category of the market, • Participate in sector initiatives on mining towns’ and respond to lending opportunities, • Provide short term finance to rental projects (including student accommodation), • Develop lending products that facilitate settlement consolidation and densification. • Improved access to finance for subsidy housing contractors: • Consolidate the lending model and build provincial capabilities • Secure buy-in of NDHS, Provincial Departments and Municipalities on an acceptable lending framework and sign protocols with provinces and Metros • Implementation of Contractor Finance and Development Programme to focus women and youth owned small and medium contractors, • Develop a lending product to enable women owned contractors to gainfully respond to business opportunities in the sector. • Review current lending facilities with financing partners, • Employ programme and fund management capabilities to provide strategic support in human settlement development programmes.
STRATEGY PILLARS Cont. • Restore organisational sustainability: - Sustain positive financial results, - Improve sustainability of business streams, - Strengthen operations to support provincial lending and development support activities - Establish provincial capabilities to interface with stakeholders and clients, and manage provincial development activities, - Continue with critical processes, controls and systems’ development to support business,
SOCIO-ECONOMIC BACKDROP NDP AND MTSF • Policy and the programmatic measures to provide adequate shelter and of living environments, • State interventions to address and counter market dysfunctions that perpetuates inequality and inefficient urban environments and weaken survival economic activities of majority of citizens. ECONOMIC FACTORS • Performance of the economy generally and muted international and national growth projections, • Banks’ willingness to lend and affordability amidst high demand in the affordable housing market, • Interventions to improved affordability – (FLISP, MDI, Employer Supported Housing Schemes),
SOCIO-ECONOMIC BACKDROP Cont. GOVERNMENT INTERVENTION IN MINING AND FAST GROWING TOWNS • Forward planning and availability of land, • Bulk infrastructure, • Speed of critical property development related approvals, FINANCING CAPACITY • Access to funding at concessionary rate, • Leveraging and funding mix between grant funding and private sector. • Availability of takeout finance for rental projects,(long term finance). STATUTORY AND FINANCIAL INSTRUMENTS ANABLING NEW DFI TO REALISE THE DESIRED CAPACITY AND IMPACT
CORE BUSINESS • 1. LENDING BUSINESS • *Affordable Housing, • Full and Sectional title, • Rental – conventional and student accommodation • * Bridging finance to Contractors • PROGRAMME MANAGEMENT • * Programme management support • * Fund management • * CFDP
PROGRAMME AND FUND MANAGEMENT OBJECTIVES AND TARGETS
RISKS AND ENABLERS • Economic conditions • Affordability and creditworthiness, • Traction of state interventions to counter impact of economic constraints and stimulate the market, • Financing capacity to meet anticipated lending demand from Developers and Contractors, • Management of DFI amalgamation process, • Continuation of funding partnerships through the transition, • Staff turnover and challenges of attracting talent,
STATEMENT OF FINANCIAL PERFORMANCE FOR THE PERIOD 2014/15 TO 2017/18
STATEMENT OF FINANCIAL POSITION AS AT 2014/15 TO 2017/18 continued
CONCLUDING REMARKS • The Five Year Plan and APP are hereby presented for discussion and to note the socio-economic conditions that define frame conditions and impacting on performance.
