Publication Date: August 2012
The Gauteng Partnership Fund (GPF) has partnered equally with the National Housing Finance Corporation (NHFC) on a R200 million Entrepreneur Empowerment Property Fund (EEPF) programme aimed at HDI owned companies pursuing rental housing opportunities in Gauteng.
GPF and NHFC formally entered into this co-funding agreement on 18 June 2012.
The EEPF is an incubator programme designed to promote participation of black entrepreneurs in the affordable rental property market.
The EEPF Programme was initiated as an intervention for the affordable housing market. Black property entrepreneurs have to date experienced a number of constraints in entering this market. This partnership provides a funding solution to address the capital gap experienced by these property entrepreneurs.
“While global financial woes have continued to pound the confidence of the banks when it comes to increasing their quantum of funding in the low end of the housing market, and continued to frustrate our programmes, we have shown great resilience and innovative design capabilities in our funding models,” said GPF CEO, Kutoane Kutoane.
In its efforts to promote the sustainable entry of BEE participants into ownership of medium density property in the inner cities, the NHFC has partnered with GPF, to enable the radical transformation of the affordable rental property market, said Samson Moraba, CEO of the NHFC. These participants are selected through a public call and vigorous selection process on an annual basis, says GPF’s chief investment officer, Boni Muvevi. He further states that this partnership will ensure that EEPF projects would have up to 95% project funding available.
A wider funding reach
The GPF mandate has evolved over the years in line with the evolving provincial government housing objectives. Thus GPF has extended its funding reach to cover the wider affordable rental housing market. It is estimated that 25% of the households in South Africa have no access to housing due to affordability challenges. These are households that earn above the government housing subsidy threshold but do not qualify for bank mortgages due to their perceived high risk and low credit rating. The assumption is that the percentage could be much higher in Gauteng.GPF launched EEPF in 2010. After a public proposal call was made, prospective entrepreneurs are short-listed and put through a rigorous induction programme that covers aspects such as property, facilities and resources management.
Once a project is approved, a dedicated GPF programme manager will be available to assist with any challenges. The first proposal call yielded 11 successful participants, of whom eight have secured projects after their proposals were approved. In total, the Board of Trustees of the GPF has approved R100 million for the EEPF facility and another R100 million from the NHFC as part of the co-funding agreement. Additional funding will be considered depending on the programme’s success.
In line with the provincial government objective of delivering 20 000 rental accommodation units by the year 2014, GPF has committed in their current strategy to the objective of facilitating funding for 6 000 of those units. This calls for over R1,4 billion in funding resources of which the government will need to contribute about R470 million.
With the new partnership between GPF and NHFC, as well as the benefit of experience, the provision of affordable accommodation makes economic sense and is therefore a good investment for entrepreneurs.