1. RURAL HOUSING LOAN FUND MAKING HOUSING DREAMS OF THE WORKING POOR A REALITY

2. RHLF’s Vision Statement RHLF is a world class rural social venture capital fund that creates new financial arrangements and opportunities for rural families to improve their housing, economic and living environments.

3. RHLF set-up Established in September 1996 as a Section 21 company Helps address the housing needs of rural poor > 2MLL currently R 4 670 Assists with financial sector development in rural areas advocated by ISRD Programme Independent board appointed by the Minister of Housing Capitalised with DM50 million grant from German Development Bank, KfW

4. Core Principles Social venture capital fund Targets working poor households Supports incremental housing construction, extensions & improvements Targets Rural Areas—Non-metropolitan and enhance urban-rural linkages Promotes non-use of asbestos products

5. RHLF implementation strategy

6. Achievements of RHLF Board approved Business Strategy Continue to fund profitable and adequately capitalised established entities –R 37 m new commitments RHLF will use its venture capital investments to leverage additional debt funding from banks –Leveraged R 9.3 m (25%) Financial sustainability and access to financial services –No clients in distress

7. Key Performance Indicators Full Year Budget 6 Month YTD Actual 6 Month YTD Budget Total Cumulative Commitments R343,0MR325,2MR343,5M Cumulative Loan Commitments R325,3MR307,3MR325,2M Cumulative Equity Commitments R17,7MR17,8MR17,2M

8. Projections

9. Key Performance Indicators Full Year Budget 6 Month YTD Actual 6 Month YTD Budget Total Cumulative Disbursements R335,7MR278,5MR296,3M Cumulative Loan Disbursements R325,4MR268,5MR286,0M Cumulative Equity Disbursements R10,3MR10,0MR10,3M

10. Projections

11. Key Performance Indicators Full Year Budget 6 Month YTD Actual 6 Month YTD Budget Average Loan size R5 000R4 725R5 000 No New Loans 14 8603 6196 980 Cumulative No Loans 68 06956 82860 189 Potential No of Loans 81 32679 75973 446

12. Sustainability Indicators Full Year Budget 6 Month YTD Actual 6 Month YTD Budget Interest on Advances R11,1MR4,2MR5,0M Interest on Investments after funding R2,9MR2,6MR2,0M Loan Loss Impairment R3,3MR0,0MR1,6M Operating Costs R11,1MR5,2MR5,7M Surplus / (Deficit) (R0,4M)R2,5M(R0,2M)

13. Commitment to BEE Four distinct strategic thrusts –Demand driven developmental needs of end-users –Funding black owned and managed companies –Warehouse RHLF shares for future acquisition –Employment equity

15. Key Performance Indicators Full Year Budget 6 Month YTD Actual 6 Month YTD Budget Cumulative Clients 353635 Cumulative Clients BEE 16 Active Clients 665 Distressed Clients Nil

17. Warehouse RHLF shares RHLF owns shares in the following number of clients: –Protea Financial Services Group –Norufin Housing –Lendcor –Indlu Finance –Bayport Financial Services –Izwe Loans

18. RHLF Development Impact: Some key findings Loan usage: 69% (vs 70% RHLF target for 2002/03 FY) of the loans are used for developmental purposes –54% housing –14% education –1% working capital for in micro/survivalist enterprises Satisfaction: 61% of the end-users said they were satisfied with the outcome of the loan use, and 68% said they would recommend their retail lender to friends and relatives. 55% of the end-users are females

19. RHLF Development Impact: Some key findings (cont…) Direct correlation between end-users receiving consumer education and those who are up-to-date with payments; –But only 19% report having received consumer education 11% of end-users live in RDP housing, and 3% used the loan to top up subsidy at acquisition End-users live in the RDP house an average of 24 months before borrowing to improve or extend the RDP house

20. RHLF Development Impact : Some key findings (cont…) On average end-users who built new space on the RDP house or existing dwelling, added 22 m 2 to the house at cost effective amount of R617 per square metre 7% of the end-users are informally employed RHLF currently has small exposure in 3 ISRDP nodes in Eastern Cape and Limpopo/Mpumalanga-

21. This house has three bedrooms, a kitchen, lounge, inside toilet and has a tiled roof. Initially, the house was a simple 2 room house and has now improved beyond recognition. Standing at the foreground of the house is Mrs Mthethwa, proud mother of Philile who took small successive loans (amounting to R12, 000) to buy building materials and to pay a local builder who built the house. Philile also used R10, 000 of her own saving. The family resides in Thulasi Reserve, a deep rural area of Mandeni, KZN.

22. This house belongs to Nyalunga family in Lydenburg Extension 6. Towards the back, with greyer bricks, is an original RDP house that the family got in 1996 and that has been extended into a big house. Nyalungas started by stockpiling building material and built foundation. Later they took four successive loans amounting to R22, 000 to buy bricks, tiles, door and window frames and pay for labour.

23. The front elevation of the Nyalungas’ house with Mrs Sophie Nyalunga in the foreground. She states that they will go back to the RHLF retailer lender for another loan for fencing.

24. Martha Mthimunye of Mashishing Township (Lydenburg) borrowed R9, 000 from one of RHLF retail lenders (Indlu) and added that to her own saving of R2, 000. She added a verandah and an extra room which she uses for business purposes—productive housing. She runs a home based business of dressmaking and selling clothes and curtains. The house also shows consciousness about security which is important as she runs her business from home.

25. Martha shows her sewing machines and garments which she sells from her house. She is very happy with the working space which she now has after obtaining a loan from RHLF retail lender. She makes cash payments to repay the loan and is very aware of dangers of defaulting.

26. Ella Nkosi is a single mother of four and works as a domestic worker for a doctor in Lydenburg, where she earns R700 per month—working 3 days a week. She is as entrepreneurial as you can get. To augment her income, she sells sweets, snacks and hand-made brooms from home and at a nearby school. She also has a pay phone in her house. Her entrepreneurial drive plus her meagre regular income have enabled her to afford 5 successive loans ranging between R2, 000 and R4, 000 to build a four bedroom house for her family. She lived in a tin shack for 10 years before building the house in the background. She says she is a strong believer in Vukuzenzele.

27. Ella with materials she uses to make brooms which sell like hot cake in the community. Members of the community us these brooms mainly to sweep the grounds of the yard. She says finding this niche market was a blessing as she has used income from this economic activity to help improve the living condition of life of her family.

28. Critical Success Factors Government remains committed to policy of sustainable development Inflation remains below 10% National Payment System does not introduce discriminatory practices Implementation of new consumer credit regulation Shrinking formal sector

29. Positive Impact of DoH Funding Concretize government’s ongoing support in eyes of external institutions wanting to develop partnerships with RHLF Continue to support New Housing Agenda with cutting edge new financial products and arrangements Lower RHLF’s borrowing costs to “incentivise” intermediaries to make “higher risk, higher transaction cost” rural housing loans Enable RHLF to mitigate credit risk associated with new shocks similar to small banking crisis Make new commitments to at least 3 new pipeline clients

30. Thank You