Winner — Enterprise Development Award: Futuregrowth Asset Management and Nurcha
About two million South Africans still need houses. And many more might have a roof over their heads but do not live in sustainable settlements. These huge needs cannot be addressed just by throwing money at them.
A partnership between Futuregrowth and Nurcha, a construction finance company, supports enterprising development in the quest to create sustainable settlements around the country.
“In the past 15 years we have provided loans to developers and contractors for the construction of close to 320 000 homes and a large number of infrastructure projects, but in such a way that the contractors are helped with the implementation of the projects,” says Jill Strelitz, Nurcha’s executive director of funding and business development.
Nurcha provides bridging finance and construction support to contractors and developers involved in the construction of subsidy housing, affordable housing, community facilities and infrastructure. A section 21 company, it is funded by the government in partnership with the Soros Economic Development Foundation, other overseas donors and commercial lenders.
It is a public entity, accountable to the minister of human settlements. Nurcha’s projects are sustained by funding from Futuregrowth. “We could not have done this without Futuregrowth,” says Strelitz. “We need cash to lend. They need a steady return. We lend at market-related rates, depending on the level of risk for each project.”
Paul Sempel, the credit analyst for Futuregrowth, structures the deals. “The partnership enables our pension-fund clients to invest their money in service delivery — and get returns,” he says.
“Rural development is very important and we must boost empowerment. “This programme supports the emergent contractor.” The partnership unlocks infrastructure investment and development capacity in rural areas by supporting small and emerging contractors, labour and skills. Nurcha lends resources to people that most banks would not touch.
Stephan Roux, the programme manager, says: “We differ from banks in that Nurcha asks, can the lender repay? But, as importantly, is the social contract fulfilled? That is, is the school built and is the contractor adequately compensated?
“We provide support services. We assess whether the contractor has the right skills to complete the project. If not and the dearth of skills is not too great, we can make up the shortfall with our support, which we charge for.”
Infrastructure projects include a hostel conversion in Meadowlands, water reticulation, a school in Rustenburg, clinics and a magistrate’s court. These are all part of creating sustainable human settlements. A number of Nurcha partners have prospered.
Grace Kgomongwe, the managing director of Little Rock Trading, for instance, has completed two successful projects commissioned by Lonmin, using Nurcha finance and the construction support services. Her first project comprised converting old mine hostels into family units.
The project value was R19-million and took just over a year to complete. The second project saw the refurbishment of Marikana primary school. As a result of the successful completion of those projects, Kgomongwe has become a preferred supplier to Lonmin Mines. She employs only local community members and sees this as a way of uplifting her people.
“Our support must be empowering,” says Strelitz. “It’s a delicate balance between allowing contractors to learn through making mistakes, but also intervening and transferring skills.”
The Investing in the Future judges praised the practical nature of the partnership and the tangible results it is producing in rural areas. They also complimented the way it empowers and supports small contractors who often struggle to raise finances elsewhere.