/ 15 July 1994

Cracks Appear In The Rival Housing Plans

The PWV will be hard-pressed to construct 150 000 houses a year, reports Drew Forrest

THE low-cost housing field has become a house divided since Tokyo Sexwale’s PWV master plan was abruptly thrust into the public arena.

“Crazy”, “Victorian Utopianism”, “not a real plan at all” have been among the reactions of sceptics to the scheme, which envisages the construction of 150 000 low-cost units in the PWV during the provincial government’s first year in power. There have been suggestions that the “ambitious” regional premier, Sexwale, sees it as a stepping-stone to high national office.

Its potential implications, commented one doubter, were large- scale defaulting on bond repayments, bond boycotts and the stigmatising of private business. This would nullify two years of negotiations in the National Housing Forum and torpedo the co- operative approach so central to the government’s Reconstruction and Development Programme.

But the scheme has its backers, who see Sexwale as a visionary keenly alive to his fretful constituency. Against the background of surging township expectations, swift movement on the RDP is vital, they argue. “A time bomb is ticking away out there,” said Investment Development Unit managing director Peter Barbe, whose organisation is marshalling private sector finance for the Sexwale plan. “South Africa is in a completely new environment; we don’t know what we can do till we test it.”

Many objections are not specific to the Sexwale plan and apply to any mass housing programme for impoverished black South Africans, defenders stress. “If you have a better plan, let’s see it,” said Bart Dorrestein, deputy chairman of Stocks and Stocks Holdings.

Hastily unveiled after a press leak, the Sexwale plan envisages a R4,5-billion outlay at R30 000 a house, financed through a package of state subsidies, state guarantees and private investment. Loans would be administered by a community bank, reportedly under former FNB chief Chris Ball, and housing development would be organically tied to job creation bankrolled by participating contractors.

It has opened a rift between Sexwale and Housing Minister Joe Slovo, who specifically questioned the spearhead role of Stocks and Stocks. Slovo’s own subsidy programme envisages 50 000 new houses countrywide over a year, rising to 300 000 by the year 2001. At talks in Pretoria this week, the two men agreed a committee would assess whether the PWV master plan and national strategy could be married.

“Slovo has two problems,” said one insider. “On the face of it, Sexwale’s scheme means less financial exposure for the state, but if the state guarantees are called up, it will be much higher. And housing in the PWV must be matched by an equitable scale of delivery in other regions _ Natal, for example, may deserve a bigger slice of the pie. That’s just unworkable.”

Driving home the point, Slovo this week announced the first tranche of housing funds for the provinces, based on such criteria as provincial populations and the proportion of households earning under R3 500 a month. KwaZulu/Natal receives R291-million, against the PWV’s R271-million.

One Sexwale partisan suggested resistance was coming principally “from the far right and the far left ” survivors from the old apartheid housing order and left-leaning service groups now becoming marginal”.

But the NHF is known to have drafted an unfriendly assessment. And this week Building Industries Federation chief Ian Robinson remarked that “the PWV housing initiative could well be in conflict with national housing strategy.

“We should be spending the next three months getting our ducks in a row,” he added. “It’s vital that we don’t unrealistically raise black hopes.”

As housing is a provincial function, it would appear Sexwale could go it alone. But Slovo’s trump card is section 157 of the interim constitution, which bars provinces from giving guarantees without the say-so of the central state’s financial and fiscal commission.

In the absence of guarantees and a market rate of return, the life insurance industry and other targeted investors will not play ball. Life Offices’ Association executive director Jurie Wessels was reported this week as rejecting the scheme.

Other doubts about the PWV initiative centre on the capacity of the emaciated construction trade, the lead time for the creation of a regional community bank, proposed communal mechanisms for ensuring bond repayments, estimated by Mofokeng at R200 a month, and the work creation component on which the scheme stands or falls.

The Urban Foundation’s David Gardiner said UF research showed 30 000 to 50 000 new houses were a reachable target in the first year across the entire country _ a third of Sexwale’s target for the PWV alone _ rising to 300 000 over six years. The construction trade had shed 40 percent of its labour force since 1986 and was constrained by “finite managerial resources”. Other constraints were materials, land release and a local government system in the throes of change.

A University of Natal study released this week insisted the building trade could only gear up turnover by 20 to 30 percent. “It will take at least three to five years before the industry can deliver housing on the scale proposed by the National Housing Forum and Department of National Housing.”

The Sexwale scheme also envisages a system of collective suretyship, in terms of which small communal groups will provide mutual bond support. But the approach has been tried in Cape Town’s African townships and found wanting. “Our experience is that it’s an unsuitable and unfair system for long-term loans in low-income communities,” said Group Credit Company boss Christine Glover. “People run into cash problems; after about a year group cohesion starts to break down. Eventually it becomes more economic to stop paying.”

Sources also stress that the scheme is pitched at the unemployed but employable, as well as those with jobs _ making work creation, to be funded by contractors to the tune of five percent of turnover, critical to its success. Large-scale repossessions or the resurgence of township bond boycotts would be calamitous for the new regional government and the RDP.

“Nothing has been said about how these permanent jobs are to be created, which means the question of affordability remains unaddressed,” said one expert. “Until we have the details there’s no plan at all, just inspiring daydreams.”