RURAL HOUSING LOAN FUND

10th Annual Workshop

7 & 8 September 2006

This house has three bedrooms, a kitchen, lounge, inside toilet and has a tiled roof. Initially, the house was a

simple 2 room house and has now improved beyond recognition. Standing at the foreground of the house is

Mrs Mthethwa, proud mother of Philile who took small successive loans (amounting to R12, 000) to buy

building materials and to pay a local builder who built the house. Philile also used R10, 000 of her own

saving. The family resides in Thulasi Reserve, a deep rural area of Mandeni, KZN.

Ella Nkosi is a single mother of four and works as a domestic worker for a doctor in Lydenburg, where she

earns R700 per month—working 3 days a week. She is as entrepreneurial as you can get. To augment her

income, she sells sweets, snacks and hand-made brooms from home and at a nearby school. She also has a

pay phone in her house. Her entrepreneurial drive plus her meagre regular income have enabled her to afford

5 successive loans ranging between R2, 000 and R4, 000 to build a four bedroom house for her family. She

lived in a tin shack for 10 years before building the house in the background. She says she is a strong believer

in Vukuzenzele.

Number of End User Loans

22,000

26,648

15,202

8,006

10,536

5,553

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2007 2006 2005 2004 2003 2002

117,059

95,059

68,411

53,209

45,203

34,667

117,059Cumulative number of end user loans

22,000Annual number of end user loans financed

RHLF Gender Distribution of End-user Loans

12 Months ending 31 March 2006

51

49

Male

Female

RHLF Empowerment Clients

MDF Grants & Loans

20 19 18 16 16

21

1716

16 15

0

5

10

15

20

25

30

35

40

45

2006 2005 2004 2003 2002

Nu

mb

er

of

clie

nts

Empowerment clients

Other clients

RHLF Current Client Profile

3

6

Other clients Empowerment clients

DEVELOPMENTAL IMPACT - April 2005 to March 2006

Development impact statistics compiled from

monthly Housing Impact Monitoring Reports

Number of new loans 26,648 68,411

Loan usage

New House 2% 8%

Extension 6% 14%

Improvement 49% 49%

Services 16% 12%

Others (education) 26% 17%

Repeat loan borrowers 25% 17%

Borrowers using loan together with gov. subsidy 12% 2%

Gender of borrower

Male 51% 56%

Female 49% 44%

Borrower's employment

Private sector 41% 62%

Public sector 57% 32%

Self-employed, informal 1% 5%

Borrower's income

less than R1 500 21% 25%

R1 500-R2 500 22% 33%

R2 500-R3 500 19% 41%

R3 500-R6 000 26%

more than R6 000 12%

Since

inception to

March 2005

West Coast DC

Northern Free State DC

Sisonke DCFrancis Baard DC

Kgalagadi

Sisonke DC

DPLG listed Rural Nodes

Other Rural District Councils

RHLF development impact in ISRDS

April 2005 to March 2006 (Annualised)

Loans in 13 Rural Nodes and 4 District Municipalities

Number of loans 2 881

Value of loans disbursed R 7.9 m

RHLF’s Institutional Positioning

National

Departments>

DEPT. OF

AGRIC.

DEPT. OF

HOUSING

DEPT. OF

LOCAL

GOVT.

DEPT. OF

FINANCE

DEPT. OF

PUBLIC

SERVICE &

ADMIN.

DEPT. OF

TRADE &

INDUSTRY

Wholesale

finance &

purpose> IDC

LAND

BANK

Other

Housing

Institutions

NHFC RHLF DBSA IDC Khula Apex Fund

Industrial

developmentAgriculture

Mafisa

Micro

Finance

(Agric)

Nurcha HLGC

NHBRC Servcon

SHF

Social Housing,

IH, Home

Ownership

Rural & peri-

urban

progressive

housing

Infrastructure

development

Industrial

developmentSmall business Small business

Other strategic

partners> HFRP

Finmark

TrustCash Build

Other

Building

Merchants

ITC Post Bank

Private

Venture

Capital

CABINET

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.

RHLF’s Mission Statement

To empower people in rural areas to

maximize their housing choices and

improve their living conditions with

access to credit from sustainable retail

lenders.

RHLF implementation

strategy

Expected Results

• Broaden and deepen the reach of existing lending

products

• Address informal earners with new loan products and

approaches

• Reach organised rural target groups

• Support rural financial sector development

• Raise additional wholesale funds by proving that rural

people are a good credit risk

More Housing, more impact at lower

cost of credit

Strategic Directions:

• Back to the housing basics (more impact, better payment

behavior)

• Efficient delivery: scale, back-office concentration, smart

use of technology

• Expand into the “gap” market: larger non-mortgage

housing loans (R10 -30k), longer tenors (~ 36 months)

Lower TCOC

More Housing, more impact at lower

cost of credit

Selected Strategic Initiatives:

• Savings Linked Housing Credit– Stokvels, Village Bank, Blue Dot Rural Housing/Wizzit Cell phone

banking

• Community-Based Loan Origination– Emerging farmers and farmworkers

• Alternative Building Technologies– Possible changes in Rural Subsidy, alternative building technology

supports environmentally friendly housing

• Rural Worker Housing– Cooperate with employers on agri-village development

• Link with Building Material Manufacturers– Link “second economy to first economy”

• Leveraging Housing Subsidies with RHLF top-up credit

• New Conventional Wholesale Clients– Alternative distribution channels, incremental housing.

Cumulative Disbursements

504,074

411,669

260,975

222,455

160,396

330,120

39%

31%

17%

26%

25%22%

-

100,000

200,000

300,000

400,000

500,000

600,000

2007 2006 2005 2004 2003 2002

R'0

00

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Cumulative disbursements

Annual percentage movement

Consolidation strategy

Rebalancing strategy

Growth strategy

Annual Disbursements

92,405

69,145

62,059

38,269

38,520

81,549

-36%

80%

62%

-38%

18%13%

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2007 2006 2005 2004 2003 2002

R'0

00

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

Annual disbursements

Annual percentage movement

Consolidation strategy

Rebalancing strategy

Growth strategy

1,0062,103

(272)

(10,225)

(17,041)

3,823

-20,000

-15,000

-10,000

-5,000

-

5,000

R'0

00

2007 2006 2005 2004 2003 2002

Annual Surplus / (Deficit) Before Tax

Consolidation strategy

Rebalancing strategy

Growth strategy

RHLF’s response to Key Environmental

factors

• Financial Sector Charter – Competition or Co-operation?; funding

of clients reaching RHLF’s maximum exposure limits

• Land and Agricultural Policy – Share experiences in micro-finance

for housing with Mafisa and SAMAF

• National Payment System and Competition in Banking Sector –

RHLF made representations to SARB and PASA

• New National Credit Act – bigger loans and longer terms at lower

cost to borrower

• Pressure on cost of living reducing affordability and increasing

probability of default

Thank You