PORTFOLIO COMMITTEE PRESENTATION ON THE

Transcript:PORTFOLIO COMMITTEE PRESENTATION ON THE:
PORTFOLIO COMMITTEE PRESENTATION ON THE DEVELOPMENT FINANCE INSTITUTIONS DIRECTOR-GENERAL: MR T ZULU 03 MARCH 2015 1 CONFIDENTIAL OUTLINE Introduction Background Progress to date Needs Analysis Sector Challenges Rationale Case for Consolidation Options Analysis Practical Establishment of the DFI Delivery Model Human Resources Implications Financial Implications Implementation Plan Project Schedule 2 CONFIDENTIAL INTRODUCTION This business case sets out the rationale for the proposed establishment and also provides the details of the institutional framework and arrangements for the Consolidated DFI In preparing this business case cognisance has been taken of the following: specific requirements in respect of public entity establishment as determined by National Treasury and the Department of Public Service and Administration relevant legislative and policy guidelines - the Public Finance Management Act, Public Entities Guidelines and other legislation governing public entities 3 CONFIDENTIAL BACKGROUND The housing sector is supported by three DFIs – the National Housing Finance Corporation (NHFC), the Rural Housing Loan Fund (RHLF) and the National Urban Reconstruction and Housing Agency (NURCHA) The DFIs were created to promote social and economic development and individual DFIs have specialised areas of operation. National Treasury undertook a review of the mandates of South Africa’s Development Finance Institutions (DFIs) at the request of Cabinet (March 2008). Treasury Review recommended amalgamating the housing sector DFIs into a single institution. The proposed new Consolidated DFI would have three main divisions focusing on: Intermediary Finance Contractors Financing (Source: The National Treasury – Review of Development Finance Institutions – Draft Report March 2008) 4 CONFIDENTIAL BACKGROUND Following the Treasury Review, the NDoHS undertook an investigation into finance delivery mechanisms for the Human Settlements Sector. Each of the Housing Development Finance Institutions operates in a specific niche market: RHLF addresses the lack of end user finance in non-metropolitan areas NURCHA focus on contractor’s/developer’s finance and support in respect of new housing development (affordable and subsidy) and infrastructure backlogs NHFC addresses the lack of project finance for social housing, as well as affordable private sector rental and housing for sale. The existing expertise and capacity is an important resource for the sector and needs to be preserved. 5 CONFIDENTIAL BACKGROUND The DFIs, however, operate at too small a scale to impact significantly on the need. Accordingly it is proposed that a consolidated Human Settlements Development Finance Institution (HSDFI) should be established comprising a consolidation of the existing DFIs. (Source: Rationale: Human Settlements Development Finance Institution – Final Draft