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A New Housing Policy and Strategy for South Africa

1994

Contents

1. Preamble

2. Housing and the Economy
2.1 Introduction
2.2 Macro-economic Performance

3. The Current Housing Context
3.1 Statistical Profile of Housing in South Africa
3.2 Existing Housing Conditions in South Africa
3.3 Existing Constraints to Resolving South Africa's Housing crisis
3.4 Opportunities Prevalent in the Housing Environment
3.5 Recent & Current Policy Development Processes in Housing

4. Proposed National Housing Strategy
4.1 Introduction
4.2 National Housing Vision
4.3 National Housing Goal
4.4 Basic Points of Departure
4.5 Underlying Policy Approaches and Considerations
4.6 Overall Approach to Ensuring Housing Delivery

5. Key Substantive Appoaches and Interventions
5.1 Stabilising the Housing Environment
5.2 Institutional Arrangements
5.3 Subsidies
5.4 Savings
5.6 Housing Support
5.7 Land and the Housing Development Process
5.8 Infrastructure, Service Standards and Tariffs

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1. Preamble

Housing the Nation...

...is one of the greatest challenges facing the Government of National Unity. The extent of the challenge derives not only from the enormous size of the housing backlog and the desperation and impatience of the homeless, but stems also from the extremely complicated bureaucratic, administrative, financial and institutional framework inherited from the previous government.

This White Paper marks the beginning of a process. For the first time in its history, South Africa now has a policy framework for all of its citizens. The approach adopted has been the search for the creation of an enabling environment, and not for the publication of a new set of rules. It aims to contribute to the certainty required by the market, as well as give the Provincial and Local Governments their capacity to fulfil their Constitu- tional obligations.

Throughout the document, a partnership between the various tiers of government, the private sector and the communities is envisaged. This is seen as a fundamental prerequisite for the sustained delivery of housing at a level unprecedented in the history of this country. It requires all parties not only to argue for their rights, but also to accept their respective responsibilities.

One of the greatest initial challenges facing all role players is the creation of a public environment conducive to attracting the necessary private investment, both of the household as well as that of the institutions. Our collective success in achieving this productive climate will be the essential foundation for removing the blight of homelessness - one of the most visible and destructive legacies of the past. Success in meeting the housing challenge will be one of the cornerstones of rebuilding our social structures and regenerating the economy.

This White Paper also marks the end of a process. From its inception in 1992, the National Housing Forum has played a seminal role in creating the conditions necessary for a national consensus in housing, most visibly evident at the National Housing Summit in Botshabelo on the 27~ October 1994. Out of this consensus, the people of South Africa now have the task of harnessing the skills, resources and energy that the nation has in abundance, and directing it to the task at hand.

We believe that of all of our resources, nothing compares with the latent energy of the people. The housing programme must be designed to unleash that energy, not only to get the houses onto the ground, but also to give meaning to the notion of a people centred development.

The time for policy debate is now past - the time for delivery has arrived.

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2. Housing and the Economy

This chapter analyses the housing sector within the context of the macro-economy.

2.1 Introduction

In order to assess the relationship between the housing sector and the macro-economy in South Africa for the purposes of formu- lating housing policy, it is necessary to define the general economic context in which that policy will operate.

The analysis of the intersection of the housing sector with the broader economy can be desegregated into four interrelated areas:

• Real side linkages: Real linkages include the effects of housing policy on such macro-economic variables as output, employment, income, consumption, savings and investment, prices, inflation, and the balance of payments;
• financial linkages: Financial linkages deal with the relationship between the financial sector - in particular formal and informal institutions providing housing finance - and the demand for, and supply of, housing;
• fiscal linkages: Fiscal linkages cover the contribution of government to the supply of housing through tax and subsidy policy; and
• socio-economic linkages: Housing policy, through the quantum and quality of housing delivered impact on socio-political stability, productivity and attitudes and behaviour.

2.2 Macro-economic Performance

2.2.1 Economic Growth

Growth in the Gross Domestic Product (GDP) has shown a cyclical decline over the past three decades, with the average annual growth rate of the GDP falling below the annual population growth rate. This has resulted in a decrease in real per capita income.

2.2.2 The Distribution of Income

In South Africa, the effect of previous racially-based policies has left the distribution of income remains substantially skewed, prompting powerful arguments in favour of economic redistribution. The trend towards equalisation needs to be accelerated.

An increased income to lower-income groups could have a major impact on the housing sector by converting latent demand for housing into effective demand.

Evidence indicates that while low-income groups have more restricted savings capacity than higher income groups, their sav- ings are more directly targeted towards specific needs, such as education and housing.

2.2.3 Employment

South Africa is characterised by large scale unemployment in the formal sector of the economy. The increasing growth rate of the economically active population in conjunction with a declining or stagnant rate of growth of GDP, implies that the level of unemployment is set to increase still further. The high level of unemployment, coupled with the declining levels of per capita GDP, has a negative effect on demand for and investment in housing and diminishes Government's resource ability to assist the poor and unemployed. A solution to this problem is fundamental to a sustainable solution for the housing problem.

At the same time, it is equally apparent that the housing sector has a potentially enormous role to play in the revitalisation of the South African economy. This point is underlined by the very high direct and indirect economic multiplier effect of housing production. In this regard, the closest possible linkage between the housing and electrification programmes should be sought as one of the primary approaches to satisfying basic needs as well as providing a sound basis for job creation and economic sustainability.

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2.2.4 Investment

Low levels of growth and income are associated with low levels of investment. In South Africa, the low level of economic growth is not attributed solely to the low general level of investment, but also to the fact that the productivity of capital has declined.

In summary, however, the low level of Gross Domestic Fixed Investment (GDFI) of which housing is a component - means that as the economy begins to grow again, many sectors will be competing for scarce investment funds.

2.2.5 Savings

The aggregate level of personal, corporate and government savings as a percentage of GDP has shown a declining trend over the last decade. The decline in personal propensity to save has occurred as falling per capita income has pushed up the consumption: savings ratio in disposable income.

At the same time, personal savings have shifted towards longer-term, contractual savings, influencing the type of investment financed by these savings. This shift, together with the low level of personal saving, has reduced the availability of savings for investment in housing, especially within the banking (mortgage lending) sector.

In summary, in order to increase the level of housing investment it is first necessary to increase the level of personal savings by increasing the level of disposable income, and secondly, to redirect savings towards mortgage lending institutions.

2.2.6 The Fiscal Deficit

In recent years the fiscal deficit has grown rapidly, despite government efforts to maintain the deficit at around 3% of GDP, in keeping with International Monetary Fund guidelines. The current size of the deficit (8 % of GDP) places serious constraints on economic development.

The greatly expanded housing delivery programme to meet the Reconstruction and Development Programme target of 1,000,000 houses in five years, will necessitate substantially increased fiscal spending on housing. The currently accepted five year targets cannot be achieved on the current housing allocation within the national budget. The size of the budget deficit, however, implies that this additional funding will have to come either from an expansion of the tax base, or from a reallocation of current funds among budget categories. The scope for such reallocations is limited, placing constraints on the level of financial assistance possible through subsidies.

2.2.7 Inflation

South Africa experienced two-digit inflation over the last 20 years excluding 1993 when the rate dropped to a single figure. The level of inflation is of key importance when assessing the viability of a mass housing programme, as it is necessary to determine whether a rapid increase in supply will lead to an increase in the price of housing. This is of particular concern, as the rate of inflation in the construction and building materials sectors has consistently exceeded the consumer price index.

Although studies show that the manufacturing sector is operating well below full capacity at present this, in itself, is too broad a category. Inflationary implications of a mass housing programme, which on preliminary analysis appear to be significant, will require specific monitoring and attention from government.

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2.2.8 The Balance of Payments

Since the mid-1980s, South Africa has run a surplus on the current account of the balance of payments (BOP). This has been necessary to offset the persistent deficit on the capital account, caused firstly by financial sanctions which blocked access to foreign loans, and secondly, by the need to repay existing debt according to a strict debt servicing timetable.

Current trends suggest that the BOP constraint will increase in the short term.

2.2.9 Policy Implications

In conclusion, a broad economic policy framework which facilitates a significant increase in the delivery of housing, must address the following issues:

• a higher rate of economic growth and, in particular, rising and more equitably distributed real per capita income;
• an increase in the level of employment; greater incentives to save;
• reduction in government dissaving; and
• effective containment of the rate of inflation (especially in construction prices).

These factors, in combination, serve to create an environment conducive to savings for, and investment in housing, and which, in turn, will increase the likelihood that specific housing policy will achieve its objectives.

In light of these facts, Government has taken a policy decision to increasingly promote a savings-based approach to housing credit. This will have the effect of mobilising higher levels of investment from the private sector, particularly from the contractual savings industry. It should, however, be recognised that this is a long-term policy approach, the effects of which will become more perceptible over time.

3. The Current Housing Context

Presently, there is no comprehensive source of information on housing. Consequently, the statistical information given in this section must be seen as indicative only. Work is already under way to develop a comprehensive Housing and Services Information System, which will allow a much more detailed overview of housing conditions in South Africa.

In the absence of generally endorsed, comprehensive housing information, this chapter sets out to, in quantified terms, as far as this is possible;

• Define the statistical profile of housing in SA;
• describe existing housing conditions in SA;
• identify existing constraints to resolving the housing crisis in the country;
• identify opportunities prevalent in the housing environment; and
• summarise recent and current policy development processes (at a national level).

3.1 Statistical Profile of Housing in South Africa

3.1.1 Demographic profile of South Africa (1995)

South Africa has a rapidly increasing and urbanising society but population growth will result in a numerically stable rural population. Coupled to this is a large existing and increasing housing backlog, due to very low rates of formal housing provision.

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(a) Population Size and Population Growth Rate (1995)

South Africa's population is projected to be almost 42.8 million in 1995. The projected average annual growth rate of 2.27% per annum between 1995 and 2000 will increase the total population to approximately 47.4 million by 2000. This implies an average increase of approximately one million people per annum over this period.

(b) Number of Households (1995)

There will be an estimated 8.3 million households in South Africa in 1995. The average household size nationwide is 4.97 people, and it is estimated that there are approximately 2.0 million single people. Given the projected rate of population growth, an average of 200,000 new households will be formed annually between 1995 and 2000. The phenomena of extended households and circulatory migration further add to the complexity of dealing with the housing issue.

(c) Urbanisation Rate (1995)

It is estimated that over 28.0 million people (66%) of South Africa's population are functionally urbanised. This implies that approximately 14.5 million people (34% of the total population) reside in rural areas, many of whom will spend part of their working lives in the urban areas.

3.1.2 Income Profiles (1995)

The low incomes earned by many South Africans are a major consideration in the formulation of future housing strategy. Table 1 outlines the proportion of households falling into certain income categories.

TABLE 1:Projected monthly household income distribution figures (1995)

No Income Category Percentage Number of Households 1 R 0 - R 800 39.7% 3.30m 2 R 800 - R1,500 29.0% 2.41m 3 R 1,500 - R2,500 11.8% 0.98m 4 R 2,500 - R3,500 5.6% 0.46m 5 R >3,5001 13.9% 1.15m TOTAL 100.0% 8.3m

3.1.3 Living Conditions, Existing Housing Stock and Rate of Supply

A relatively small formal housing stock, low and progressively decreasing rates of formal and informal housing delivery in South Africa have resulted in a massive increase in the number of households forced to seek accommodation in informal settlements, backyard shacks and in overcrowded conditions in existing formal housing.

(a) Urban Formal Housing

Approximately 61% of all urban households live in formal housing or share formal housing with other families. The total formal housing stock in South Africa is estimated to be 3.4 million units. This includes formal houses, flats, townhouses and retirement homes.

Formal housing provision for low-income households (houses costing below R45,000) is estimated to have decreased to under

+-20,000 units during the 1993/94 financial year, from levels of around 45,000 in 1989/1990.

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(b) Urban Informal Housing

Approximately 1.5 million urban informal housing units exist in South Africa at present. These include around 620,000 serviced sites delivered by the old Provincial Authorities and through the Independent Development Trust's (IDT) Capital Subsidy Programme, as well as almost 100,000 unused (sterilised) serviced sites. Delivery of serviced sites through the IDT's Capital Subsidy Scheme and by the four (old) Provincial Authorities is estimated to have reached levels in excess of 120,000 per annum over the last three years, but has declined this year.

(c) Hostels

An estimated 5.2% of all households presently reside in private sector, grey sector4 and public sector hostel accommodation. No new hostel accommodation has been constructed over the last five years. Approximately one third of all public sector hostels (58 in all) housing approximately 100,000 people have been or are in the process of being upgraded.

(d) Squatter Housing

Approximately 13.5% of all households +-(1,06 million) live in squatter housing nationwide, mostly in free-standing squatter settlements on the periphery of cities and towns and in the back yards of formal houses.

Low rates of formal housing delivery coupled with high rates of new household formation have resulted in a massive growth in the number of people housed in squatter housing.

This form of housing remains the prevalent means through which urban households are accessing shelter in South Africa at present. It is estimated that approximately 150,000 new households per annum house themselves in this way. The recent rapid increase in the number of land invasions is a further indication of this. In the short-term particularly, policy responses from all tiers of Government will have to be pro-actively responsive to this fact.

(e) Rural Housing

Two thirds of the 17.1 million people estimated to live under the poverty datum line (PDL) live in the rural areas. Of the 14.5 million people estimated to live in the rural areas, the far greater part reside outside the commercial farming areas. There is a mix of both formal and informal house structures but what they generally share in common is inadequate access to potable water and sanitation, and a general insecurity of tenure.

(f) Farm worker Housing

The estimates on Farm worker households vary considerably between one to one and a half million households. Since 1990 farm owners received subsidies towards the building of 20,140 approved Farm worker residences. Farm workers do not have security of tenure, and are therefore reluctant to put earnings into housing. Consequently, the living conditions of Farm workers are among the worst in the country especially the hostel-type accommodation for seasonal workers.

3.1.4 Access to Basic Services

Many people in South Africa do not have access to basic services, such as potable water, sanitation systems and electricity. Furthermore, many neighbourhoods are inadequately supplied with social and cultural amenities.

(a) Water Supply

Approximately one quarter of all functionally urban households in South Africa do not have access to a piped potable water supply (South African Labour Development and Research Unit, 1994).

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(b) Sanitation

An estimated 48% of all households do not have access to flush toilets or ventilated improved pit latrines, whilst 16% of all households have no access to any type of sanitation system (SALDRU, 1994). An estimated 85% of rural households have some form of sanitation system whereas an estimated 49% of Farm workers are reliant on the veld for this purpose.

(c) Electricity

It is estimated that 46.5% of all households are not linked to the electricity supply grid in South Africa (SALDRU, 1994).

(d) Socio-cultural Amenities

Although no accurate statistics exist, many households do not have access to socio-cultural amenities within their neighbourhoods, such as schools, health care facilities, sports facilities, cultural and community centres, etc. Most informally housed people have poor access to such facilities, whilst many formal housing areas are also poorly served.

3.1.5 Summary

In undertaking its new housing programme, the Government will strive to eliminate previous approaches which effectively separated the provision of housing stock from other services, be they physical or social. The massive damaging effects of this illogical and fragmented policy approach are physically reflected in our urban and rural areas, and socially reflected in the dislocation of our society.

A housing programme cannot be limited to housing, but needs to be promoted in such a manner as to give meaning to the goal of creating viable communities. This simple and self-evident Statement will necessitate the most fundamental and far-reaching conceptual changes for all those involved in the housing delivery process, and constitutes one of the primary challenges in effecting the Government's Reconstruction and Development Programme.

3.2 Existing Housing Conditions in South Africa

3.2.1 Present Housing Backlog

It is estimated that the urban housing backlog in 1995 will be approximately 1.5 million units. The consequences of this backlog are physically reflected in overcrowding, squatter settlements and increasing land invasions in urban areas, and generally by the poor access to services in rural areas. Socially and politically, this backlog gives daily impetus to individual and communal insecurity and frustration, and contributes significantly to the high levels of criminality and instability prevalent in many communities in South Africa.

Coupled to this housing shortfall are:

• An estimated 720,000 serviced sites in the urban areas that will require upgrading to meet minimum standards of accommodation;
• a large number of rural houses that lack access to basic services; and
• approximately 450,000 people living in existing public, private and grey sector hostel accommodation that requires upgrading.

Due to the high rates of population growth and low rates of housing provision, it is estimated that the housing backlog is presently increasing at a rate of around 178,000 units per annum.

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3.2.2 Conditions of Tenure

Many South Africans do not have adequate tenurial security over their homes:

• Approximately 58% of all households (4.8 million households) have secure tenure (ownership, leasehold or formal rental contracts) over their accommodation; whereas
• an estimated 9% of all households (780,000 households) live under traditional, informal / inferior and/or officially unrecognised tenure arrangements in predominantly rural areas; and
• an additional estimated 18% of all households (1.5 million households or 7.4 million people) are forced to live in squatter settlements, backyard shacks or in over-crowded conditions in existing formal housing in urban areas, with no formal tenure rights over their accommodation.

This pattern of insecure tenure is undoubtedly one of the salient features and causes of the housing crisis in South Africa.

One of the most significant and short-term interventions required of the Government will be to provide the widest range of options for the rapid attainment of secure tenure. As an invisible intervention, it is likely to have a highly significant and positive impact on the propensity of individuals and communities to commence with the process of investing in their own housing conditions, no matter how modest they may be at the beginning.

3.3 Existing Constraints to Resolving South Africa's Housing Crisis

Numerous constraints to housing delivery still remain. During the formative stages of policy development, extensive analyses of the problems facing housing in South Africa were undertaken.

This section summarises some of the key constraints and problems that need to be addressed by new housing policy and strategy in South Africa.

3.3.1 Scale of the Housing Problem

The large scale of the housing and services backlog, and the rapid growth in housing demand represent a mammoth ask for future housing policy. Coupled to the scale of the problem are other key constraints that need to be addressed:

• Geographic disparities: large disparities in housing conditions exist between rural and urban areas, different urban areas as well as between different provinces; and
• low-incomes: low-incomes of large proportions of South Africa's population imply that many people are unable to afford adequate housing using their own financial resources alone.

3.3.2 Structure of South Africa's Human Settlements

South Africa's history has produced a wasteful settlement structure that has inherent to it specific constraints that need to be overcome:

• Concentrated need: high rates of urbanisation have concentrated housing needs in urban areas;
• inefficient and inequitable cities: the geographic segmentation of living areas according to race and class, urban sprawl, and disparate levels of service provision and access to amenities in different areas make South Africa's cities very inequitable; inefficient and relatively expensive to manage and maintain; and
• dispersed rural settlement structure: the dispersed nature of many rural settlements hamper servicing and make access to socio-cultural amenities problematic.

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3.3.3 Institutional Framework

The past institutional framework governing housing has resulted in numerous constraints to housing delivery in South Africa:

• Duplication of housing institutions and funding mechanisms: fragmentation of the housing function racially (between the three previous own affairs administrations and the Department of Housing) and geographically (with the TBVC States and homeland areas having jurisdiction for housing in their areas) has resulted in a large amount of overlap, duplication and confusion within and between housing institutions which results in significant inefficiencies and wastage;
• inability to carry out responsibilities: many authorities have been inadequately resourced and politically unable to undertake certain responsibilities, which has resulted in delays to the housing development process and a virtual collapse in the public environment and public administration, in many areas; and
• local government transition: the slow process of local government transition is already resulting in significant delays to the housing process. However, new legislation and procedures are being developed and the problems associated with the collapse of local government in many areas under the previous dispensation are being addressed. Because of the mutually reinforcing or potentially destructive relationship between the housing process and the local government process, a high level of policy-coordination will be essential between the relevant national and provincial Departments.

3.3.4 Policy Framework

Apart from duplicated and inequitable policy approaches for different race groups, the housing policy framework in South Africa suffers from the following other key constraints:

• Lack of overall housing strategy: inadequate definition of roles and responsibilities of all role players in the housing sector, as well as the lack of a coherent overall housing strategy have contributed to the present confusion and breakdown in delivery. Specific areas of concern include the exclusion of rural housing needs from the mainstream of housing policy approaches, as well as the continued marginalisation of workers and families effectively trapped within the hostels, especially those within the public sector;
• multiplicity of legislation: there is multiplicity and duplication of legislation governing housing, land and services.

3.3.5 End-User Finance and Subsidies

Constraints in the structure and availability of end-user finance for housing and housing subsidies have exacerbated the housing problem:

• Poorly focused use of housing funds: statutory housing funds have been used for diverse purposes (such as funding for bulk infrastructure, community facilities, interest rate and rental subsidies), which has resulted in diluted, dispersed and inadequate impact of State expenditure;
• duplicated and poorly targeted subsidies: subsidy systems have been duplicated, racially segmented, poorly targeted at poor households and often inadequately funded and largely unsuccessful in mobilising significant levels of non-State investment; and
• lack of end-user finance: the unavailability of end-user finance, especially for low-income households (due to a complicated set of constraints including the lack of appropriate retail lending capacity as well as the reluctance of formal financial institutions to lend in certain areas and to certain income groups) impedes the ability of many households to access adequate housing, even though they may be able to afford it.

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3.3.6 Land and Planning Issues

The historical and existing patterns of land use and allocation, as well as the legislative and policy framework associated with land, provides an immense challenge and constraint. A fundamentally different approach will be required to make the housing programme a sustainable reality. However, the impact will have to reach far beyond purely legal and institutional matters, which Government can rectify over time.

A wholly new approach to land use and planning is required, impacting both on the professions and the communities. Even today, South Africans tend to view land as an infinite and cheap resource, whereas the opposite is generally true. The country's extremely wasteful approach to land will have to change, allowing for higher densities and innovation in its use. A different approach to land use not only promises the possibility of social cohesion, but can also have a dramatic and beneficial impact on costs and the efficiency of other resource utilisation such as energy and water.

The inability and unwillingness to release sufficient suitable land for housing continues to be a constraint to timeous housing delivery:

• Lack of coherent policy on land: no clear outline of responsibilities for the identification, assembly, planning and release of land for low-income housing exists, and inconsistent positions exist between different government departments and tiers of government;
• land identification: previous racial zoning practises, reluctance of certain authorities to accept responsibility for low-income housing, resistance of many existing communities and various legislative constraints have impeded the identification of sufficient, suitable land for low-income housing;
• constraints to land assembly: due to legislative controls and the fact that land was previously assembled according to ability to pay rather than need, insufficient land has been assembled for low-income housing;
• land planning: present planning legislation and approaches are burdensome, inappropriate in the South African context and resource-intensive;
• land invasions: increases in informal land invasions hamper efforts to timeously release adequate, suitable land for human settlement in a planned manner, and may result in certain people attempting to jump the housing / subsidy queue; and
• land title: many different tenure arrangements (many of which are not officially recognised) complicates the registration of secure tenure. Furthermore, notwithstanding the sophistication of South Africa's land registration system, most citizens are forced to acquire accommodation outside this formal system.

3.3.7 The Housing Construction Sector

The building materials supply, building and civil sector also face significant constraints:

• Inadequate development framework: the lack of identified land, poor access to bulk infrastructure networks and confused and lengthy planning procedures hamper developers' ability to undertake housing development expeditiously;
• limited capacity: at present, South Africa's construction sector and building materials supply industry are emerging from an economic recession and production slump: significant capacity will have to be built to enable it to deliver the number of houses required: competition from other development programmes will further dilute this capacity. Certainty around the future housing policy and strategy to be adopted by Government has become essential to initiate the necessary sustained capacity growth and mobilisation, and to release the job creation and employment potential latent within this sector. This will most markedly be felt within the marginalised sector of small and largely black builders, through whom a great deal of the challenge should be met;
• potential bottlenecks: significant potential bottlenecks exist in certain sub-sectors of the construction and building materials supply industries: the lack of basic and managerial skills and building material production and supply constraints are but two examples;
• incompatibility of demand and supply: geographic distribution of demand does not match present location of construction capacity and building materials suppliers;

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3.3.8 Sociological Issues

Many social features of South African society pose important constraints and challenges to future housing policy:

• High expectations: the high expectations of many people from a new democratic order have to be tempered by fiscal and practical realism, if this is not to become a major constraint to housing development in South Africa;
• crime and violence: continuing high levels of crime and violence often hamper or derail development processes;
• lack of consumer protection: inadequate protection for consumers against fraudulent and exploitative practices and behaviour by suppliers of housing products and services, currently characterises the housing environment
• poor consumer education: low levels of consumer education increase misunderstanding of developmental and housing issues and the number of unscrupulous operators in the housing environment
• perceptions of housing: many households still have a limited view of housing, and have not realised its full potential as a means of increasing equity and security. While this is undoubtedly partly a function of the backlog itself, increased housing production will provide an opportunity for the creation of a viable secondary housing market;
• non-payment: non-payment for services constrains the long-term viability of the public environment and sustained housing production, as well as limiting the amount of resources available for new housing provision. Linked to the breakdown in law and order and the due process of civil and criminal law in many areas, private housing finance has effectively been withdrawn from large sectors of South African Society;
• special needs housing: prevalent social problems in South Africa have increased the need for special needs housing, such as old age homes, homeless shelters and frail care facilities; and
• other important sociological considerations: specific sociological factors complicate the ability of housing policy to reach all targets, such as:
  • Circular migration and dual households;
  • hostel accommodation;
  • the prevalence of single (often female-headed) households;
  • cultural and legal impediments to access for women to housing; and
  • traditional tenure systems.

3.3.9 Economic Issues

A number of factors militate against a massive increase in effective demand for, and supply of housing:

• A low rate of growth;
• declining per capita income;
• a highly unequal distribution of income which penalises low-income groups;
• mass unemployment;
• low levels of gross domestic investment and fixed capital formation;
• declining personal domestic savings;
• a high consumption: savings ratio among low-income groups;
• a high level of government dissaving;
• persistent inflation; and
• a persistent balance of payments constraint.

3.3.10 Summary

All of the constraints above are able to only provide a brief sketch of the scope and extent of the challenge. However, all of them are dwarfed by the single most significant constraint to the housing delivery process, that of affordability.

In policy terms, affordability is conceptualised here as having two essential components. The first relates to State affordability, and is understood in terms of the very real and accepted limitations imposed by the State fiscus and macro-economic realities. This constraint is further tempered by the realisation that housing has to compete with other national priorities such as health, water and education.

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Of more significance and concern is the grinding poverty of such a large proportion of the South African population. This provides the single most important limitation on the housing programme. The resolution of this problem is something that a sustainable housing programme can significantly contribute to, but cannot remotely seek to solve on its own.

These two affordability constraints have important policy consequences. In broad terms, it confirms the need to focus limited State resources on the poorest sections of our population. In more specific terms, it requires the State to constantly seek new ways of supporting the poor to mobilise complementary support through which our housing goals can be achieved over time.

In political terms, these facts must serve as an important corrective to the temptation to promise that which is not achievable in the short to medium term. While the nation's expectations may be deemed in certain quarters to be high, they are also eminently reasonable. The manner in which such expectations are to be achieved becomes the critical policy question.

3.4 Opportunities Prevalent in the Housing Environment

3.4.1 Participative Policy Development Processes

An important opportunity for the future of housing in South Africa has been the open and honest process of policy formulation that has been embarked upon. Joint deliberations between the State and civil society interests through the National Housing Forum / Government process over the last two and a half years, with full participation from all affected parties and the utilisation of all relevant expertise, has forged a new approach to housing policy formulation. The many constructive relationships that have emerged from this process augur well for the future of housing in South Africa.

3.4.2 Acknowledgement of Importance of Housing in the RDP

The recognition of housing as a key and priority component of the Reconstruction and Development Programme under a new democratic order should secure the necessary political will and fiscal support to enable the successful launch of sustainable housing programmes meeting the needs arising from inherited backlogs and new family formation. This will require two main approaches: first, securing for housing an adequate contribution from the national budget and, second, establishing multi-sectoral and multi-departmental coordination as an urgent matter of policy and reality.

3.4.3 Well Developed Infrastructure

South Africa has a relatively well developed infrastructure as a basis upon which future housing policy can develop:

• A diversifying and growing economy;
• a relatively well developed settlement hierarchy that can form the skeleton for future development and growth;
• a sophisticated financial sector with well developed infrastructure although this infrastructure in inappropriately distributed due to past policies and constraints;
• an internationally renowned land surveying and tenure registration system;
• a well defined legal system; and
• technical capacity and innovation.

3.4.4 Potential Resources for Housing

Although South Africa does not have an abundant supply of resources, significant amounts of resources could be mobilised for housing development:

• There is general acknowledgement that State resources for housing can and should be increased substantially over time through budgetary reallocations;
• significant resources in the private sector can and should be mobilised for development, given the correct policy framework;
• there is a high likelihood that international aid could be mobilised towards housing and related development; and
• individuals themselves have the capacity to mobilise important resources for housing.

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3.4.5 Economic Factors

A number of positive economic trends for housing are identified:

• The economic growth rate is projected to increase faster than the rate of growth of population during the latter half of the 1990s;
• as a result, real per capita income is set to increase;
• the need to reduce the level of unemployment, and the scope for job creation in a mass housing programme, should encourage investment in housing;
• to the extent that the rate of savings among low-income groups does increase and these savings, in turn, are invested in housing, this does not represent an opportunity cost in terms of investment in more productive sectors. Rather, this investment represents consumption expenditure foregone by these groups;
• there is significant spare capacity in segments of the manufacturing sector, which may diminish the inflationary impact of a rapid increase in demand for housing; and
• the BOP constraint may ease in the short term thanks to increased foreign borrowing, foreign investment, and inflows of foreign aid funds. Furthermore, the perception that housing places little direct strain on the balance of payments makes investment in housing an attractive option, especially given its high employment: investment ratio.

3.5 Recent and Current Policy Development Processes in Housing

3.5.1 Housing in the Interim Phase

(a)Relationship Between Department of Housing (DOH) and the National Housing Forum (NHF)

The NHF was established in 1992 as a forum for all major stakeholders in the housing sector to develop a new housing strategy and policy for South Africa. Policy positions were developed through a process of bilateral negotiations between the Department of Housing and the NHF, representing the most inclusive process of policy development ever undertaken in South Africa in respect of housing.

(b)Housing Arrangements Act [No 155 of 1993]

In November 1993, the Housing Arrangements Act (Act No 155 of 1993) was passed by Parliament, after extensive negotiations

This Act aimed to ensure that housing provision could proceed in the interim phase, while detailed future policy was being developed and implemented. This Act set out the following:

• The establishment of a National Housing Board (with representation from housing suppliers, consumers and regulators) to advise government on issues of national policy;
• the establishment of four Regional Housing Boards in the four (previous) provinces, to adjudicate the allocation of fiscal resources to projects at the provincial level; and
• the amalgamation and joint operation of housing funds and certain housing institutions of the old own affairs administrations, by April 1994.

(c)Housing Amendment Act [No 8 of 1994]

In March 1994, the Housing Amendment Act provided for:

• The replacement of the four existing Regional Housing Boards with nine Provincial Housing Boards, again as an interim measure pending a comprehensive new housing strategy and institutional arrangements; and
• extension of subsidy availability to previous Self Governing Territory and TBVC areas.

3.5.2 Present National Housing Forum/Department of Housing Relationship: Joint Technical Committees

In May 1994, the DOH and the NHF agreed to establish eight Joint Technical Committees (JTC's). The JTC's have representation from both parties, and each was tasked with developing policy on a specific priority area of future housing strategy. These priority areas are:

(a) Overall Housing Strategy;
(b) Housing Subsidies;
(c) Retail Lending Initiatives and the
(d) Institutional Arrangements, Fund Mobilisation and the National Housing Budget;
(e) Land and Planning;
(f) Hostels;
(g) Sector Efficiency and Effectiveness; and
(h) Rural Housing Policy and Programmes.

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All key housing policy recommendations are then referred to the National Housing Forum and National Housing Board for comment. Substantive proposals developed by these JTC's and the Department of Housing / National Housing Forum process to date underlie many of the proposals in this document.

3.5.3 Relationship with the Provinces

An extensive process of consultation with the nine new provincial governments was undertaken in order to reach consensus on the new housing policies and overall housing strategy, outlined in this White Paper.

Given the nature of housing and its constitutional positioning (as a schedule 6 matter), consensus on the broad national approach between national and the provincial governments, is essential. The evolution of housing policy and delivery over time will only become a success if it is underpinned by the continued and programmatic empowerment of the provincial governments and their respective administrations.

4. Proposed National Housing Strategy

This chapter provides, in summarised terms, the overall strategy Government intends to pursue, in order to attack the housing challenge in the country. It deals with:

• The basic trade-offs facing South Africa in housing;
• the National Housing vision and goal;
• some basic points of departure underlying the strategy;
• underlying policy approaches and considerations;
• the overall approach to be adopted in relation to:
  • stabilising the housing environment,
  • supporting the housing process,
  • mobilising housing credit,
  • mobilising savings,
  • subsidisation, to alleviate affordability constraints,
  • institutional arrangements,
  • land, and
  • the coordination of development efforts and fund allocation within the State.

4.1 Introduction

In devising a national housing strategy, the State inter alia has to reconcile the following key factors:

• Existing backlogs in housing requiring +- 200,000 households to be housed annually in order for the backlog to be eradicated over a period of 10 years.
• New household formation requiring a further +-350,000 households to be housed annually if backlogs are not to increase.
• A current State housing budget (new allocation) of +-R1.4 billion per annum (+1% of the total State budget).
• +-45 - 55% of households in need of housing, unlikely to be able to afford or access credit and therefore entirely dependant on own (limited) resources and State subsidization to satisfy their basic housing needs.

The required annual delivery rate (of +-338,000), relatively high proportion of poor households and budgetary constraints do not allow sufficient subsidy money per household to enable the construction, at State expense, of a minimum standard complete house for each household not able to afford such a house. Only a limited State subsidy contribution towards the cost of a house is possible.

The fundamental requirement to address the challenge is the economic growth and employment to be created through the com- prehensive programme of economic reconstruction and development embarked upon by Government. It has, however, to be recognised that this will require time and that relatively high levels of unemployment and poverty will prevail for a considerable period in the future.

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Appropriate housing policies and delivery systems can contribute to employment creation and economic growth, but cannot be the only primary drivers of such growth. Housing policy will therefore favour the involvement of small and medium sized businesses and labour intensive approaches, in order to maximize the economic growth and employment impact of such policy.

There is no single formula for solving South Africa's housing dilemma. It is only by mobilising and harnessing the full diversity of resources, innovation, energy and initiative of individuals. communities. the State and the broader private (non-State) sector, that the challenge can be met effectively. It is this belief that most significantly underpins the approach to housing that has been adopted by the Government of National Unity.

A national housing policy and strategy therefore has to be a multi-faceted approach towards serving all segments of the market with particular emphasis on the poor and should essentially be driven at a local and provincial level.

Households access housing at a level commensurate with the means at their disposal at the time and thereafter continuously strive to improve their circumstances with whatever further means come at their disposal. The more limited the ability of a household to be self sufficient, the more the responsibility on the State to support the endeavours of such a household to house themselves.

The South African context requires an approach of assistance to households in need in a way that will maximise the options available to enhance and strengthen their own efforts and initiative to improve their housing situation as quickly as possible.

Past inappropriate site and service approaches through which the poor were accommodated have to be left behind for good.

4.2 National Housing Vision

Housing is defined as a variety of processes through which habitable, stable and sustainable public and private residential environments are created for viable households and communities. This recognises that the environment within which a house is situated is as important as the house itself in satisfying the needs and requirements of the occupants.

Government strives for the establishment of viable, socially and economically integrated communities, situated in areas allowing convenient access to economic opportunities as well as health, educational and social amenities, within which all South Africa' s people will have access on a progressive basis, to:

• A permanent residential structure with secure tenure, ensuring privacy and providing adequate protection against the elements; and
• potable water, adequate sanitary facilities including waste disposal and domestic electricity supply.

Despite the constraints in the environment and the limitations on the fiscus, every effort will be made in order to realise this vision for all South Africans whilst recognising the need for general economic growth and employment as well as the efforts and contributions of individuals themselves and the providers of housing credit, as prerequisites for the realisation thereof.

In order to meet the housing challenge in the country, Government aims to establish a sustainable housing process which will even- tually enable all South Africa's people to secure housing with secure tenure, within a safe and healthy environment and viable communities in a manner that will make a positive contribution to a non-racial, nonsexist, democratic and integrated society, within the shortest possible time frame.

4.3 National Housing Goal

Government's goal is to increase housing's share in the total State budget to five percent and to increase housing delivery on a sustainable basis to a peak level of 338 000 units per annum, within a five year period, to reach the target of the Government of National Unity of 1,000,000 houses in five years.

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4.4 Basic Points of Departure

In developing a new housing policy and strategy for South Africa, the following points of departure are believed to be fundamental.

4.4.1 Sovereignty of the Constitution

In terms of Section 126 of the Constitution of South Africa Amendment Act No 2 of 1994, a provincial legislature has concur- rent competence with parliament, for making laws for the province with regard to all matters which fall within the functional areas defined in Schedule 6 of the Act. These include housing, as well as areas relevant to housing, such as consumer protection, public transport, regional planning and development, and urban and rural development.

A provincial law will prevail over the national law except where an Act of Parliament:

1. Deals with a matter that cannot be regulated by provincial legislation; or
2. deals with a matter that, to be performed effectively, requires to be regulated or coordinated by uniform norms or standards that apply generally throughout the Republic; or
3. is necessary to set minimum standards across the nation for rendering of public services; or
4. is necessary for the determination of national economic policies, the maintenance of economic unity, the promotion of inter provincial commerce, the protection of the common market in respect of the mobility of goods, services, capital or labour or the maintenance of national security; or
5. a provincial law materially prejudices the economic, health or security interests of another province or the country as a whole.

The critical policy challenge for housing is to facilitate maximum devolution of functions and powers to provincial and local government tiers through concurrence between national and provincial governments, while at the same time, ensuring that na- tional processes and policies essential to an effective and equitable housing sector are in place. Recognition of the principle of subsidiarity will ensure effective empowerment at second and third tiers of government.

4.4.2 Housing as a Basic Human Right

Government is under a duty to take steps and create conditions which will lead to an effective right to housing for all. It is also under a duty to refrain from taking steps which promote or cause homelessness. It is held that a person has a right to live in dignity, in habitable circumstances. Government therefore will vigorously promote an effective right to housing for all, within the resource and other limitations applicable to it.

The challenge facing South Africa in housing, is to develop a strategy in the short term to direct scarce and insufficient State housing and other resources together with private, non-State resources, to ensure that all those in need (and particularly the poorest sector of society) are able to progress towards the realisation of an effective right in housing.

4.4.3 The Role of the State

The harsh socio-economic realities and sometimes despair faced by the relatively large proportion of poor people in South African society have to be recognised. The State has a fundamental role and responsibility to implement policies and strategies that will redress this imbalance in the distribution of wealth in the country.

Where people, due to socio-economic adversity, are not in a position to afford access to secure tenure, basic services and basic shelter, society in general and the State specifically has the responsibility to address this situation within the resource and other constraints applicable to it. In doing so Government's aim will have to be to, in the medium to long term, reduce levels of dependency and increase levels of independency from State financial assistance and support. This approach is consistent with the RDP of which housing is an integral part.

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It is the responsibility of the State to ensure conditions conducive to the delivery of housing. Delivery should take place through the widest possible variety of mechanisms. It is incumbent on the State to assist particularly the poor to enable them to be adequately housed whilst the State at second or third tier government can, through appropriate structures, act as deliverer.

4.4.4 People-centred Development

Government is committed to a development process driven from within communities. Through its policies and strategies it will encourage and support initiatives emerging from communities or broader local social compacts aimed at equipping and empowering people to drive their own economic empowerment, the development of their physical environment and the satisfaction of their basic needs. Policies must recognise and give effect to this approach.

In order to convert these laudable sentiments into reality, government will be required to actively provide support for this process. This will include not only financial resources, but the creation of appropriate institutional frameworks and support structures. In addition, communities as well as government must be constantly alert to people and organisations who abuse this developmental approach for their own ends, and turn development into a contest for influence.

4.4.5 Freedom of Choice

The right of the individual to freedom of choice in the process of satisfying his or her own housing needs is recognised. At the same time it is recognised that people should be able to access and leverage resources on a collective basis. The State should promote both the right of the individual to choose and encourage collective efforts (where appropriate) by people to improve their housing circumstances.

4.4.6 Non discrimination

Given past and present regulatory and statutory discrimination in South Africa, it is essential that new policies, strategies and legislative actions by the State should be particularly sensitive to the removal of entrenched discriminatory mechanisms and conventions in respect of gender, race, religion and creed. Government has particularly identified the need to support the role of women in the housing delivery process. In addition to its positive individual and social consequences, such an approach is internationally recognised as being essential to the success of any housing programme.

4.5 Underlying Policy Approaches and Considerations

The following approaches and considerations inter alia underlie government's housing strategy:

4.5.1 Housing and Economic Empowerment

Housing as a process represents more than a simple economic activity but constitutes the foundation for the establishment of continuously improving public and private environments within which stable and productive communities can grow and prosper.

Government housing policies and strategies will therefore be directed at enabling and supporting communities to mobilise towards participating in the satisfaction of their own housing needs in a way that maximises the involvement of the community and the private sector and leads to transfer of skills to and economic empowerment of members of the community.

Policy emphasis will be placed on supporting local initiatives including small or medium sized companies in partnership with larger, established companies committed to providing appropriate support and training.

In order to do this, future housing strategy will place specific emphasis on:

• Promoting the participation of affected communities in the planning and implementation of new developments;
• maximising job creation in the construction and allied sectors (in particular, the role of labour based construction and the use of local labour in housing development);
• improving economic linkages, particularly with the national electrification programme;
• programmes for skills transfer, capacity building and upward mobility for both skilled and unskilled labour in the housing field;
• the role of small and intermediate enterprises in housing construction, as well as in backwardly linked (materials supply), forwardly linked (household businesses) and sideways linked (school construction) economic sectors;
• mechanisms to stimulate entrepreneurial development in creating new housing environments and maximize the participation of historically disadvantaged, emerging entrepreneurs; and
• constantly evaluating and supporting the role of women in the housing delivery process.

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4.5.2 Sustainability and Fiscal Affordability

It is critical that housing delivery as a process be initiated at scale on a sustainable basis. This requires the essential short term action should be structured in order not to frustrate medium to longer term interventions.

The State has insufficient resources to meet the needs of the homeless on its own and recognises that sustained, substantial investment in housing from sources outside the national fiscus will be required. Housing policy will therefore need to recognise the fundamental pre-condition for attracting such investment, which is that housing must be provided within a normalised market and thus attract maximum private investment. The challenge is achieving a balance between State intervention and the effective functioning of the housing market with vigorous and open competition between suppliers of goods and services to end users.

The housing process must be economically, fiscally, socially, financially and politically sustainable in the long term. This implies balancing end-user affordability, the standard of housing, the number of housing units required and the fiscal allocations for housing. It is important that:

• The contribution of housing to the overall success of the Reconstruction and Development Programme and the Government of National Unity be recognised;
• a long-term housing programme be outlined that meets the housing needs of all South Africans within the shortest possible time frame;
• the maximum possible sustained investment is mobilised from the State, private sector and individuals if the housing programme is to be sustainable, requiring the State to continuously ensure level playing fields between the broader public sector and the private sector. This does not preclude the State from vigorously intervening to correct distortions and imbalances in the market-place;
• projected fiscal allocations to housing should form a part of such a long-term housing strategy;
• the housing programme must take cognisance of constraints to its implementation, if such a programme is not going to lead to distortions in the housing market (such as high inflation, poor quality workmanship and a higher proportion of housing starts to finishes);
• programmes should make provision for skills transfer; and
• a primary aim of the housing strategy must be to build viable and sustainable communities: to this end, responsibility for and affordability of the costs of long term maintenance and development of housing environments and services must be recognised in planning and implementation.

4.5.3 Hostels

All functional policies and strategies should take due cognisance of the complexities of and potential implications for the upgra- ding and redevelopment of hostels in order to create sustainable humane living conditions in State and privately owned hostels country wide and to ensure the re-integration of these hostel communities into the surrounding communities.

It must be honestly acknowledged that the Stated desire to end the marginalisation of hostels and their residents has not yet been given effect. Government undertakes to constantly review its approach to hostels, both public and private, and to do so with the assistance of the residents and workers living in conditions that are often inhumane.

4.5.4 Special Needs Housing

State housing policies and subsidy programmes must reflect a constant awareness of and provision for the special needs of the youth, disabled people and the elderly. To this end, special attention will be paid to the possible modification of the subsidy programme to give effect to this approach.

4.5.5 Urban and Rural Balance

Historically, the relationship between urban and rural housing and their respective needs has been paid scant attention. The Government has already initiated a process of institutional review that seeks to bring the question of rural housing into the mainstream of national housing policy. State housing policy and strategy should achieve balance in emphasis between urban and rural and take cognisance of the particular characteristics and requirements of rural communities. Special cognisance needs to be taken of:

• The dilemma facing farm workers reaching the end of their working life or contemplating a change in employment, in terms of the linkage between their employment and home;
• the different composition of rural households;
• the effects of circulatory migration;
• the pre-dominance of female headed households;
• the non-saleable nature of the rural home; and the diversity of tenure arrangements and the impact thereof on especially the accessing of credit and subsidies.

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4.5.6 Housing and the Reconstruction and Development Programme (RDP)

The Reconstruction and Development Programme sets out a clear vision for housing in the future. It is therefore imperative that future housing policy and strategy be developed in accordance with this vision and guidelines.

The provision of housing and services is a key component of the Reconstruction and Development Programme. Apart from being seen as a national priority in its own right, future housing strategy has a direct bearing on the success of all five key programmes of the RDP. These programmes are:

• Meeting basic needs;
• developing human resources;
• building the economy;
• democratising the State and society; and
• implementing the RDP.

The implications of a successful housing programme, or of its relative lack of success, are the subject of constant interaction between the Department and the RDP unit. Because of its consequential impact on the question of hard and soft services, as well as on local government, the role of housing needs to be correctly located within the overall framework of the RDP.

4.5.7 Consumer Protection and Education

Adequate measures to protect the rights of and inform housing consumers on the technical, legal and financial aspects of housing is a critical priority and should support the regulatory and delivery framework for housing. Many of the problems characterised with the current housing impasse stem from the fact that the State had previously failed to intervene on behalf of the consumer. This Government undertakes to improve its capacity in this regard, to ensure that ordinary people, driven by the desperation of homelessness, will not be at the mercy of unscrupulous operators in the market.

Experience over the past few years has indicated that there are landlords willing to exploit the desperation of the homeless, and to charge exorbitant rents without taking responsibility for the conditions of the buildings under their control. As a consequence of this, Government will be reviewing the composition and effectiveness of the Rent Boards currently under its control and will investigate mechanisms to combat such exploitation, especially on government subsidised housing stock.

4.5.8 Accountability and Monitoring

It is of vital importance that appropriate monitoring mechanisms should be implemented for all key interventions and at all levels of government and that responsible authorities should account fully for performance against agreed performance standards.

4.6 Overall Approach to Ensuring Housing Delivery

The level of poverty in South Africa is significant. In excess of 40,370 of all households in the country have a joint household income of less than R800 per month.

To impact on poverty a coordinated, multifaceted approach towards initiating and maintaining sustainable socio-economic development is necessary. Housing interventions by Government can at the most be seen as part of integrated approach by Government to resolve the problem of poverty.

Government's overall approach to the housing challenge is aimed at mobilising and harnessing the combined resources, efforts and initiative of communities, the private, commercial sector and the State. It seeks to do this through pursuing seven key strategies:

• Stabilizing the housing environment in order to ensure maximal benefit of State housing expenditure and mobilising pri- vate sector investment;
• facilitating the establishment or directly establishing a range of institutional, technical and logistical housing support mechanisms to enable communities to, on a continuous basis, improve their housing circumstances;
• mobilising private savings (whether by individuals or collectively) and housing credit at scale, on a sustainable basis and simultaneously ensuring adequate protection for consumers;
• providing subsidy assistance to disadvantaged individuals to assist them to gain access to housing;
• rationalising institutional capacities in the housing sector within a sustainable long term institutional framework;
• facilitating the speedy release and servicing of land;
• coordinating and integrating public sector investment and intervention on a multi-functional basis.

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4.6.1 Stabilizing the Housing Environment

A stable public environment is required for viable private investment. At the same time the creation of a stable public environment is dependent on and requires the incentives and benefits associated with the improvement of the private living environment of people, created by private investment and access to credit. It is essential that the vicious and degenerative cycle of despair in many areas of the country be turned into a cycle of reconstruction and development, through joint and simultaneous action by both the public and private sectors in consultation with affected communities. This will require action by the State as a whole and cannot be dealt with by the housing departments in isolation.

In this regard government intends to pursue an incentive based approach to stabilize the living environments for many communities living in unstable and degenerating residential areas.

The approach is envisaged to be two pronged namely:

• A general governmental strategy, consisting of an unprecedented national and provincial campaign aimed at the re- sumption of payment for goods and services, combined with coordinated multi functional public investment and management focus in areas where the public environment has collapsed; and ,
• simultaneous, equally vigorous engagement by the private sector (by agreement with the State), in areas where the public environment has substantially stabilised, in terms of identified criteria. Housing credit will be the main focus, although private investment across the full spectrum of business activities will be sought.

4.6.2 Supporting the Housing Process

Delivery of housing to lower-income earning people and especially the poor has come to a virtual stand still. Environmental con- ditions, political transition, economic adversity and a range of other complicating factors have lead to virtual market failure in many areas in the country.

It is incumbent on government to take the necessary steps in order to not only restore a level of delivery but also enable increases in sustainable delivery to a level where backlogs as well as requirements flowing from new family formation, are being dealt with.

It is government's first and foremost priority to deal with the problem of housing for the poor.

The biggest challenge facing government is dealing with households in need of proper housing who currently cannot access credit or accumulate significant savings in order to acquire access to housing. Until such time as the Reconstruction and Development Programme has started to make inroads on the problems of poverty and unemployment, the State has to accept the responsibility to meet at least the basic needs of these households

International experience indicates a large degree of resilience, ingenuity and ability in households to look after their own housing needs with appropriate institutional support and financial assistance from government.

Government' s approach to housing support therefore centres around promoting a wide variety of delivery approaches, ensuring access to well located land, basic services, secure tenure and the ongoing construction and upgrading of the public environment, services and homes.

Assisted through State subsidies and appropriate technical and institutional support, a process of consolidation and upgrading must form an integral part of subsidised housing projects in order to ensure that the housing situation of all but especially the poor, continuously improves.

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4.6.3 Mobilising Housing Credit

A significant number of households in need of housing in South Africa can afford to access housing credit, provided that this is available. Such credit is currently not readily accessible by most of such home seekers. Unlocking housing credit is therefore seen as a fundamental requirement in order to facilitate the ongoing improvement of the housing circumstances of such households. Credit supplemented with savings can enable a large proportion of people in need of housing and eligible for State housing subsidies, to acquire access to formal starter housing under a range of tenure options. This will ensure progressive consolidation on and integration of initially less formal areas into the formal urban environment

Extensive investigations have indicated the need for both short as well as medium to long term intervention by the State in order to facilitate the sustained mobilisation of housing credit.

4.6.3.1 Short-Term Mobilisation

In order to mobilise credit at scale in the short term, a code of conduct, targets, reporting and monitoring mechanisms and a range of risk interventions and incentives aimed at mobilising the considerable capacity and resources of the major banks have been identified. At the same time the establishment of a defect warranty scheme and a national housing education fund are seen as vital interventions to assist in unlocking housing credit.

Short-term interventions to mobilise credit under consideration include:

Redlining and discrimination

An agreed code of conduct for mortgage lending will require banks to ensure that credit criteria for granting loans to individuals and area criteria on which security value is determined will be non-discriminatory and will not differ based solely on the geographic area in which the property is situated.

Mortgage indemnity scheme (MIS)

In terms of this proposed scheme, Government will indemnify financial institutions for losses (within certain limits), where normal contractual rights to beneficially access and attach securities provided for mortgage loans, cannot be exercised due to a breakdown in the due process of law. This scheme will require concentrated effort from government to deal firmly with illegal occupation of residential properties in such areas.

Existing Properties in Possession (PIPs)

Financing institutions currently hold thousands of properties foreclosed against in many areas in the country. These securities, against which mortgage loans have been provided, cannot be attached and nor can vacant, beneficial occupation be achieved, due to a breakdown in the due process of law. No payments are being made by the occupants of these houses and financiers are unable to obtain relief in accordance with court orders and contractual stipulations.

It is essential that this situation be normalised, if new housing developments are to take place in these areas, and that actions taken are consistent with the approach adopted under MIS.

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Rightsizing

The need for appropriate institutional capacity at a local level, to assist borrowers who have fallen on hard times, has been identified. A proposal for the establishment of a service organisation(s) jointly by the mortgage lenders and government, which will assist such borrowers to downsize / rightsize their accommodation to suit their affordability, is under consideration. The linkages between this proposal and proposals for a housing support programme will also be investigated.

This service organisation is envisaged to also be utilised by MIS to assist occupants of properties bought in by the MIS to vacate the properties voluntarily and by banks on an ongoing basis, to assist in dealing with cases of hardship related default. This will allow for the release and refinancing of such residential properties so released.

Home Builder Warranty Fund

Negotiations for the introduction of a comprehensive home builders warranty fund by the construction sector, are at a very advanced stage. Although financial involvement by Government is not anticipated, Government may have to be involved in the regulatory aspects of the scheme. In order to ensure the participation of emerging, largely black contractors, a mechanism whereby Government may assist financially to enable the scheme to accredit such contractors despite a lack of resources and adequate track record, is under consideration. Such assistance will only be contemplated on a limited basis linked to a proba- tionary programme.

4.6.3.2 Long Term Mobilisation (National Housing Finance Corporation)

A range of longer term interventions are under consideration in order to facilitate ongoing mobilisation of appropriate credit to the lower end of the housing market. This will include specific programmes to facilitate the development (and if necessary rationalisation) of the capacity of non-traditional retail lenders to make an increasing contribution at the lower end of the market.

Because of the range and complexity of short- and longer-term interventions required, the establishment of a National Housing Finance Corporation (NFC) which will have a focused mandate to promote and facilitate the mobilisation of all types of housing credit, is contemplated. This is envisaged to be a wholesale institution and in essence is the "National Housing Bank" originally envisaged in the RDP, and will establish a relationship with existing or future State corporate structures created in the provinces. Given the nature and scope of its envisaged functions the term "Bank " is clearly no longer appropriate.

4.6.4 Mobilising Savings

Personal savings represents a potentially large source of fund mobilisation for housing purposes and can act as a powerful tool to leverage credit through increasing the individual's ability to contribute to equity in the property and demonstrating a willingness and ability to regularly set aside money for housing purposes.

It is therefore intended to implement a savings linked credit scheme (SCS) in collaboration with accredited mortgage lenders, through which individuals will be able to secure credit through participation in the scheme. This is a policy approach taken with a long-term view, and is likely to become one of the most significant features of delivery over time. In addition, interna- tional experience has comprehensively demonstrated that such an approach will have the effect of empowering the role of women in the housing delivery process.

At the same time mechanisms through which communal/collective savings efforts can be harnessed to mobilise and unlock credit, will be pursued.

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4.6.5 Subsidies

Given the skewed income profile of the South African population and the severe affordability problems at the lower end of the market, the targeted provision of end user subsidies constitutes one of the cornerstones of the Government' s approach to the housing challenge.

A capital subsidy approach, based on the current subsidy scheme will be maintained, not least for the benefit of providing fiscal certainty in the national housing programme. The aggregate need for subsidies measured against fiscal constraints determines the level of subsidy benefits payable to qualifying beneficiaries, and government remains committed to a subsidy approach favouring width over depth in the provision of financial assistance. Given the dire need at the lower-income levels a fourth (increased) subsidy level at the lowest end of the market, will be implemented with immediate effect.

Subsidy policy is envisaged to be as flexible as possible in order to accommodate a wide range of tenure and delivery options and enable the flexible application of subsidies at the delivery (provincial and local) level in order to obtain maximum gearing with private investment, savings and sweat equity.

Subsidy programmes already introduced or under consideration for introduction include:

• Ownership subsidies aimed at assisting individuals to acquire ownership of residential property by either accessing such subsidies on approved projects or individually;
• collective ownership subsidies aimed at facilitating the application of collective housing models through which individu- als acting in cooperation with others on a collective basis, can access appropriate housing;
• social Housing subsidies aimed at providing subsidies to institutions created to supply affordable social housing to the lower end of the market; and
• rental subsidies, anticipated to be aimed at institutions created to provide affordable, subsidised rental accommodation to the lower end of the market;
• subsidies directed at redressing anomalies created by previous policies implemented by Government, including Consolidation subsidies aimed at site and service schemes implemented under previous subsidy regimes.

4.6.6 Institutional Arrangements

A rationalised governmental, statutory and parastatal institutional framework within which the national housing strategy will be implemented is a priority to government.

Fragmentation, overlap, wastage and inefficiencies in the institutional set up for housing must be removed wherever present, in order to establish an institutional basis from which a sound long term strategy can be launched.

The process of institutional rationalisation already initiated will therefore be dealt with as a matter of priority in order to establish an institutional and funding framework within which the envisaged Government programmes can be implemented with success.

Government's strategy on institutional reform for housing will focus on:

• Finalising the restructuring of statutory and advisory structures in terms of legislation already introduced, in line with government's commitment to introduce appropriate national and provincial representation into the processes of policy development and fund allocation.
• Re-focusing, rationalising, consolidating and re-positioning (where appropriate) parastatal housing bodies at national and provincial level.
• Establishing appropriate linkages and relationships between national and provincial / local governmental, statutory and parastatal corporate institutions in order to achieve maximum efficiency and effectiveness of governmental housing programmes.
• Rationalising the assets and liabilities of the various statutory housing funds in line with the new constitutional situation and institutional dispensation for housing envisaged.

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4.6.7 Land

4.6.7.1 Facilitating Speedy Delivery

Efficient assembly and release of appropriately located land for housing is critical to achieving the desired rate of delivery of housing.

The present regulatory framework within which land is delivered is fragmented, complex, inadequate and in contradiction with the aims and objectives of the proposed housing strategy and the RDP.

Short-term intervention in order to facilitate the speedy delivery of land for development purposes is believed to be essential for the launch of the envisaged housing programme.

Under these circumstances the proposed Development Facilitation Act was drafted as a bridging measure in the short term. This proposed Act sets out to establish:

• Nationally uniform norms and standards in relation to land development;
• national legislation in parallel to provincial (inherited) laws as an alternative, more appropriate mechanism for rapid land delivery; and
• an option for Provincial Administrations to adopt and continue to utilize the Act, once all considerations have been taken into account.

A feature of the proposed Act is the legal requirement for structured interaction and consultation between various departments of Government.

Future efforts in respect of land delivery will focus on influencing land policy processes as outlined in Chapter 5.

4.6.7.2 Publicly Owned Land for housing

Land held by public authorities represent a significant national asset and therefore its disposal and/or application should be un- dertaken within a coherent policy approach. It is believed to be essential that the potential use of appropriately located and suitable land for affordable housing should be considered for such use on an equal basis with other competing uses.

It is therefore envisaged that suitable mechanisms through which such consideration can be achieved will be pursued in conjunction with the relevant national and provincial/local authorities.

4.6.8 Coordinated Development

As an integrated process, housing delivery requires coordinated and integrated action by a range of players in the public sector and the non-State (private) sector. Inadequate coordination and integration of efforts between the housing function and functions such as education, health services, transport and local government in the past, lie at the root of the breakdown in the housing process in many areas of the country.

Mechanisms at provincial and local government level which will ensure coordinated planning and budgeting on a multi year basis between all relevant government functions and the non-State (private) sector are to be instituted. These mechanisms must, eventually, result in the necessary coordination and integration of planning and budgeting at the national level.

Housing, as the sector most adversely affected by the absence of such coordination and integration is envisaged to take the lead in this process. This approach will require the most dedicated and structured approach to such inter-sectoral coordination, and is likely to provide one of the most significant contributions to the attempts of Government to redevelop our society.

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5. Key Substantive Approaches and Interventions

Chapter 4 summarised Government's overall approach to the housing challenge. This chapter sets out in greater detail the envisaged substantive approaches, policies and interventions.

In terms of the national housing strategy set out in chapter 4, the following policy approaches and interventions are envisaged in order to enable the attainment of the country's housing vision and goal in respect of:

• Stabilising the housing environment;
• institutional arrangements;
• subsidies;
• savings;
• housing support;
• housing credit;
• land and the housing development process; and
• infrastructure, service standards and tariffs.

5.1 Stabilising the Housing Environment

5.1.1 General Strategy

Government will launch a vigorous and unprecedented national and provincial campaign aimed at the resumption of payment for goods and services received and the reinstatement of the due process of law. This campaign will, however, only have the desired effect if matched by a simultaneous and equally vigourous campaign of engagement and investment by the private sector, ending their effective withdrawal from many affected areas over the last few years.

This national campaign will require intra-governmental agreement on the need for focused and priority attention on a multi-functional basis to areas where the public environment has substantially collapsed, and a concomitant commitment from the private sector to, once the level of stability of the public environment in these areas has substantially improved, invest and provide credit in such areas.

5.1.2 Prioritization of Reconstruction Areas

In areas where the public and private environment has deteriorated and to a large extent collapsed, conditions are not conducive to private investment by either individual members of the communities or the private commercial sector. It is recognised that the reinstatement of a habitable public environment has to be a precursor to a resumption of private investment and sustained development, and that the process of turning such situations around should as far as possible be initiated and driven from and by the communities and local governments involved.

Government will therefore recognise, against identified criteria on the basis of a series of incremental steps or classification, those areas where conditions are progressively becoming conducive to viable development and will at an identified stage signal to the private sector that investment and the provision of credit for housing purposes is viable and required, through making housing subsidies and mortgage indemnity cover available in such areas.

Criteria to be considered inter alia include whether or not and to what degree:

1. A Local Authority duly constituted under the Transitional Local Government Act, 1993, exists;
2. effectve exercise of primary Local Government functions is taking place;
3. reciprocal performance by communities measured against agreed objectives is evident;
4. an acceptable level of civil responsibility and behaviour as well as civil and criminal law enforcement is being achieved;
5. there is an acceptable level of performance in meeting commitments in respect of:
   1. service charges,
   2. rates,
   3. rental and
   4. instalments to mortgage lenders.

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It will be incumbent on the communities and / or local governments involved to establish appropriate mechanisms / structures, inclusive of all stakeholders involved or affected, through which:

• Initial and subsequent evaluations will be sought in order to establish a classification or re-classification;
• the coordination and formulation of plans and budgets improve the local situation through rectification of identified deficiencies, with appropriate State support and incentives can be achieved;
• the required resources and interventions from various State departments can be sourced on a competitive basis, in terms of the classification obtained;
• the implementation of such plans can be monitored and coordinated; and
• recommendations can eventually be made when adequate stability has been achieved in the affected area to the subsidy and mortgage indemnity authorities. It is envisaged that subsidies and finance for low-income housing will become available at identified stages in the stabilisation process, with mortgage finance backed by the envisaged Mortgage Indemnity Scheme. This is believed to be a critical component of a successful stabilisation process, but cannot take place before a substantial degree of stability is achieved.

5.2 Institutional Arrangements

Current institutional arrangements for housing within government and in the parastatal sector are still fragmented, inconsistently funded and is characterised by a lack of clear role definition and defined lines of accountability.

A significant degree of overlap, duplication and confusion is still evident, despite the implementation of interim adjustments which has resulted in some rationalisation during late 1993 and early 1994.

It is believed that rationalisation of existing institutional capacity within a coherent long term strategic framework can significantly improve efficiencies and ensure enhanced and sustainable housing delivery at the levels required to deal with backlogs and new family formation.

Taking due cognisance of the basic points of departure outlined in part 4, the following framework within which the restructuring of the housing sector will be undertaken, is envisaged:

5.2.1 Government

The National Ministry and Department of Housing

Schedule 6 of the Interim Constitution of South Africa determines that provincial legislatures and national government concurrent competency to legislate, inter alia in respect of housing, regional planning and development as well as urban and rural development. The intent, however, is clearly that appropriate housing functions and powers should be devolved to the maximum possible extent, to the provincial level. Against this background the National Housing Ministry and Department are envisaged to fulfil the following functions:

• Setting broad national housing delivery goals and negotiate provincial delivery goals in support thereof;
• determining broad national housing policy, in consultation with relevant other national departments and provincial governments where relevant, in so far as it relates to:
  • Land development and use (especially in respect of State land holdings),
  • land title and registration systems,
  • minimum national norms and standards,
  • national subsidy programmes,
  • fund allocation to provinces,
  • fund allocation to national facilitative programmes,
  • mobilisation of funds for land acquisition, infrastructural development, housing provision and end user finance,
  • guidelines for the spatial restructuring of cities and towns and rural settlement patterns;
• adopting or promoting legislation to give effect to national housing policies;
• establish a national institutional and funding framework for housing;
• monitoring national and, in liaison with provincial governments, provincial performance against housing delivery and budgetary goals and accounting to the national parliament in this regard;
• overseeing and directing the activities of national statutory advisory and facilitative institutions and accounting to national parliament in this regard;
• negotiate for the systematic increasing of the national apportionment of State budget to housing; and
• account to national parliament for the performance of the sector against set targets and efficiency / effectiveness parameters.

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5.2.2 Role of Provincial Government

Provincial government has a critical role to play in ensuring effective and sustained housing delivery at scale.

Within the overall institutional and constitutional framework it is envisaged that the following housing functions will be executed at a provincial level:

• Setting of provincial housing delivery goals and performance parameters within the context and in support of national delivery goals;
• determining provincial housing policy (within broad national guidelines), so far as it relates to :
  • Minimum housing norms and standards in the province,
  • development priorities and programmes,
  • urban and rural development,
  • land identification and planning within the province, including performance criteria,
  • urban spatial restructuring,
  • rural settlement restructuring;
• monitoring provincial housing delivery and accounting to the provincial legislature in this regard;
• overseeing and directing the housing activities of provincial statutory advisory and executive bodies, local authorities as well as the activities of provincial facilitative institutions, and accounting to the provincial legislature in this regard;
• liaising and negotiating with the National Ministry and Department as well as national statutory and facilitative bodies in respect of:
  • Fiscal transfers for housing to the province,
  • provincial priority status in respect of national facilitative programmes for housing, and
  • national housing policy and programmes.

It is recognised that provincial governments are accountable to the people who have democratically elected them in the provinces, for the delivery of housing. A leading role for these governments in enabling sustained delivery of housing in the provinces, within broad national housing policy guidelines, is envisaged. At the same time, it has to be recognised that the Minister of Housing is accountable to Parliament for overall sectoral performance. A balance between the functions and powers at national and provincial level to reflect these accountabilities, will be vital to success.

5.2.3 Role of Local, Rural and Metropolitan Government

The physical processes of planning and housing is very much a local community matter. The role of metropolitan and especially local government in enabling, promoting and facilitating the provision of housing to all segments of the population in areas under their jurisdiction, can therefore not be over emphasised. The absence of legitimate, functional and viable local authority structures will jeopardize both the pace and quality of implementation of housing programmes.

The following housing functions are envisaged to be performed at metropolitan and/or local level:

• Setting metropolitan / local housing delivery goals;
• identification and designation of land for housing purposes;
• the regulation of safety and health standards in housing provision;
• the creation and maintenance of a public environment conducive to viable development and healthy communities;
• the mediation of conflict in the development process;
• the initiation, planning coordination, promotion and enablement of appropriate housing development;
• facilitative support to housing delivery agencies;
• planning, funding and provision of bulk engineering services;
• provision and maintenance of revenue generating services (if not provided by specialised utilities / suppliers);
• provision of community and recreational facilities in residential areas;
• welfare housing;
• land planning in areas under their jurisdiction (in terms of laid down performance criteria, possibly at provincial and even national level); and
• regulation of land use and development.

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5.2.4 Statutory Advisory and Policy Execution Bodies

Government is committed towards the creation of statutory advisory and policy execution / overseeing bodies for housing, which introduce key stakeholder representation into the processes of policy development and fund allocation. To be effective it is believed that membership of these bodies should be determined on a representative (nominated) basis, through an inclusive transparent and democratic process.

The participation of stakeholder groupings and structures of civil society in the process of policy development and public fund allocation is believed to be of critical importance to secure the necessary commitment of all relevant parties for strategies and policies adopted. By informing the deliberations of these structures with inputs from nominees of the various stakeholders and civil society groupings in the housing sector, balanced and practical advice and decision making can be achieved.

(a) National Housing Board (NHB)

A new national statutory advisory body to the Ministry for Housing is envisaged (similar in function to the current National Housing Board). This body will fulfil the following functions:

• Advise the Minister on housing policy, strategy and related matters;
• recommend to the Minister housing budget allocations to national facilitatory institutions and parastatal housing bodies and the provinces;
• monitor and evaluate the performance of the housing sector, review policies and strategies accordingly and advise the Minister on an ongoing basis; and
• oversee the execution of national housing policy.

Members of this Board should comprise competent persons with expertise and knowledge in the field of housing, but it is believed imperative that they should at the same time be representative of and nominated by the following stakeholder groupings representing national interests in the housing and related sectors in the urban and rural areas of the country:

• one third of the members by consumer organisations and community based groups with an interest and involvement in housing on a national basis and representing the interests of consumers of housing goods and services.
• one third of the members by suppliers and financiers of housing goods and services, at a national level.
• one third of the members by Government interests in housing (both national and provincial), having due regard for the need for separation of the legislative and executive arms of government and inter alia, including organised local government and the State corporate housing sector.

In addition, Provincial Housing Boards will be represented by their Chairpersons, in an ex officio capacity, on the NHB. The NHB will be expected to assume a proactive role in fulfilling its advisory function and to have a distinct impact and influence in government policy on housing and will replace the current National Housing Board which was created as an interim measure in the process of rationalisation.

(b) Provincial Housing Boards

Given the importance and constitutional placement of housing at a provincial level, Provincial Housing Boards, constituted along the same lines as the proposed new national advisory body, are already being established in each of the provinces. These Boards are to be established by and accountable to the Provincial Legislatures.

In addition to advising provincial governments on provincial housing policy, these Boards will also deal with the approval of projects in terms of both national (as agents of the NHB) as well as provincial housing programmes.

Similarly constituted bodies may also be justified in the larger metropolitan and local authority areas or in rural districts in order to devolve the decision making and fund allocation processes to the closest local level.

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(c) Rationalisation of statutory assets and liabilities

The process of rationalisation of statutory assets and liabilities was initiated under the Housing Arrangements Act (No 155 of 1993), in terms whereof the five statutory (previously own affairs) funds were brought under central control.

Government will proceed with this process and will apply the following guidelines:

• Assets and liabilities will follow the devolution of functions and authority to provincial and local / metro level or the transfer to other national departments.
• Assets which are revenue-generating but do not belong in the housing function (such as infrastructure loans to local governments) will be transferred to appropriate governmental or parastatal institutions with the aim to realise realistic capital values for application in the housing effort.
• Retail loans (to individuals) will, after application of the extended R7,500 benefit (subsidy) and upon conversion to commercial interest rates, be sold to appropriate private sector or State corporate entities active at the retail level.
• Liabilities within the statutory housing funds but inconsistent with the institutional and funding framework will be transferred to appropriate institutions / departments to the extent that agreement can be reached.

5.2.5 The State Corporate and Parastatal Sector

For a wide range of historic reasons the housing market in South Africa currently is distorted and abnormal. It is incumbent on government, on a short term temporary and longer term permanent basis, to intervene to ensure that the imbalances, distortions and anomalies in the housing market are overcome. Such facilitative intervention by Government is envisaged to be primarily aimed at creating an enabling environment for delivery by the non-State sector but may, where necessary and desirable, include direct State involvement in delivery. It is believed that, to be effective, such facilitative interventions should be performed by institutions structured, funded and targeted through unambiguous mandates, to fulfil specific facilitative functions. These functions are not the normal functions of a civil service department but should be structured on business principles within parastatal corporate entities, fully and transparently accountable in terms of managerial performance and financial responsibility to government and the public at large.

Parastatal organisations in the housing sector are currently characterised by overlap, inconsistencies in policy and approach, mandates conflicting with those of other organisations or with the policies and strategies of government and a distinct lack of transparency and accountability.

It is envisaged that all housing funding functions fulfilled by all parastatal organisations will be rationalised and restructured into clearly mandated, accountable and streamlined new or restructured parastatal bodies, focused on specific mandates in the housing process. Where such housing functions are being fulfilled by organisations under the control of other government departments, the cooperation and agreement of such departments in such rationalisation and restructuring processes will be sought.

Government's objective with the process will be to rationalise and restructure within a coherent long term institutional framework which will serve the best interests of housing in the country and will enhance overall cost effectiveness, efficiency and sustained delivery in the sector.

Restructuring and rationalisation will be panned and undertaken with the full involvement and participation of all affected institutions.

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5.2.6 The Private Sector

State resources and capacity to deal with the massive housing backlogs and the process of reconstruction and development in the housing sector are severely limited. It is recognised that

South Africa cannot address this massive challenge without the mobilisation of the collective resources, capacity, knowledge and skills in the broader non-State (private) sector.

Government housing policy and strategy is essentially directed at utilising limited State resources in order to achieve maximum gearing of such efforts and resources with non-State investment and delivery.

The concept of a broad partnership between the State and the non-State sectors in addressing the housing challenge in the country is central to Government's approach. As far as the specific stakeholders in the non-State sector is concerned the following approaches are envisaged:

5.2.6.1 The Suppliers of Materials and Services to the Housing Sector

The housing sector is emerging from a prolonged depressed period of low activity. It is of critical importance that the material and services supply sector to the housing industry impose effective measures of self regulation and control in order to contain inflationary pressures on the prices of goods and services. It is recognised that direct government intervention in this regard is undesirable and likely to be less effective but this will be undertaken if this sector is unable to impose the necessary self regulation, timeously and effectively.

Vigorous and open competition on level playing fields by a wide range of suppliers is believed the be the most effective mechanism to secure the maximum possible stability and restraint in pricing.

5.2.6.2 The Construction Sector

This sector obviously is a key link in the chain of delivery. The stark dichotomy between the resource and skills base of the largely white controlled and owned formal constructi