A R30-million social housing project — a joint initiative of the National Union of Mineworkers (NUM) and the Building Construction and Allied Workers Union — is frozen as stakeholders hurl accusations of managerial incompetence and financiers withhold funding.
The Leamohetswe Hae Housing Association (LHHA) was put on ice last November when its construction company, Africa Construction, withdrew because the LHHA couldn’t pay the R12,5-million it owed the company.
Now the National Housing Finance Corporation (NHFC) is accused of stalling on an agreement to fund the project. The NHFC committed R17,4-million to the LHHA at the beginning of this year, but has failed to transfer the money.
The Gauteng Department of Housing is withholding subsidies, worth about R5-million, until the NHFC releases its loan.
Standard Bank told Africa Construction on Friday last week that it was no longer prepared to support the company as a principal funder of the project as the company cannot repay its loan to the bank because it has not received its LHHA funds. Africa Construction is a black economic empowerment company and the major empowerment construction company in the R1,5-billion Coega harbour project in Port Elizabeth.
The LHHA development began in May last year and should have been completed by the end of 2002.
It is two-thirds complete, but no further work has been done on the project for more than a year. In Thokoza, outside Johannesburg, the project consists of 246 apartments, to be rented out. ”Social housing” provides subsidised homes, managed by independent institutions, for low- to middle-income families. Various forms of tenure are on offer, excluding individual ownership.
NHFC chief executive Samson Moraba told the Mail & Guardian: ”The NHFC has approved the funds [R17,4-million], but there are three outstanding conditions that need to be met that I cannot disclose to the M&G because this is client information.” He did, however, indicate that one of these conditions is a ”commitment from a stakeholder”.
The M&G understands that this ”commitment” is R3,5-million in operational capital from NUM, which the union can earn back if the project is successful.
Yet well-placed stakeholders told the M&G that NUM is holding back because the union is concerned about the viability of the project. NUM general secretary Gwede Mantashe denied that he knows anything about the R3,5-million agreement.
The NHFC is a state-owned enterprise that was set up by the national Department of Housing in 1996 to mobilise finance for social housing, along with the Social Housing Foundation, established in 1997 to provide technical support for social housing.
But now Building Construction and Allied Workers Union general secretary Narius Moloto has told the M&G that ”the commitment of the NHFC towards social housing is very much in doubt — the LHHA has been brought to its knees.”
The LHHA was impeded from the start because it ”didn’t have management [and] certain fundamentals — such as subsidies and loan finance — were not secured before the project began,” Social Housing Foundation chief executive Brian Moholo said.
The M&G understands that the LHHA did not have a shareholders agreement, either. ”So if anybody defaults, there is no procedure,” said a stakeholder. ”Why didn’t the Social Housing Foundation, whose mandate it is to capacitate, not step in and help?” Moholo said the foundation’s mandate was to manage such developments. ”The issues around capital grants and loans are beyond us. We don’t deal with that,” he added.
The M&G has seen a letter written in May this year from the NHFC to the LHHA, officially committing to the R17,4-million loan. The NHFC ”keeps moving the goal posts”, a senior housing expert said. ”It committed itself in principle to the project but is now reluctant to complete the deal. Either this is a political issue or it is pure inefficiency.”
Asked why the NHFC has delayed for so long, Moraba said: ”We were approached at the beginning of the year by the LHHA as a last resort — it takes two months to process the funding.”
Moloto accused the NHFC of ”managerial incompetence” and ”a complete lack of urgency. Those people can engage in talks for ever,” he said.
Wayne van Niekerk, the LHHA’s legal adviser, refused to comment. ”Things are at an extremely sensitive stage,” he said.
Africa Construction chief executive officer Rob Newbury also declined to comment.