23 July 1994
We all know that the run of the mill commercial bank and the large institutional investors are not charitable institutions, and that they are not branches of the Salvation Army. But in the new South Africa we have growing demands that they measure up to their social responsibilities - not just in words, but also in performance. There are few cases which demand that they do so more, than in the sphere of low-cost housing. At the moment their doors are firmly shut in this area. In this sense the Community Bank is a trail-blazer. It's first priority will be to open the doors for the poor who are most dependent on small loans to get themselves a start in home ownership.
So it is a great pleasure for me to be present today at the birth of a bank which will hopefully become a pioneer in serving the large community which urgently needs better access to housing loans.
The first priority of the Community Bank will be to see to it that ordinary people have access to loans they can afford, loans which will help them become first-time homeowners. Rather than being dominated by an unbridled profit motive, this is a bank which is responsible to the community, as the name suggests.
Here in Benoni, I'm told the Bank has held a series of successful workshops explaining its function, the importance of interest, and how bonds and loans work. This is important, because access to credit is also about knowing what services a bank can offer, how it can help someone who is looking for a bond - and indeed, it is about knowing how to find the cheapest loan possible. These are things many of us take for granted, but as we work to expand the availability of housing, more and more people will be needing the help and services of a bank for the first time. They must be given the opportunity to get to know the workings of a bank, because one can only trust something one understands.
Banks are all too often intimidating institutions. It's not just the splendid buildings or the marble floors, it's also about how they talk to people, it's about what they call credit-worthiness and red-lining and all of those other things which all too often are perceived to be old-fashioned racism. We are concerned about the continuing reluctance of the major banks to give housing loans to ordinary people in ordinary jobs with ordinary incomes - incomes which according to all the objective criteria of the financial world are low. Whatever the criteria in the light of our apartheid inheritance the perception of racism continues to loom.
The Community Bank has a large role to play in demonstrating how access to credit can be liberalised and democratised. But it can only be one element in mobilising the massive financial resources we have in this country. It can only be one element of many if we are to ensure that the thousands and hundreds of thousands of people who can muster a monthly repayment on a loan, however small, are actually going to be able to get a loan.
Ultimately, it will be up to the major banks and lending institutions to come in to the new South AFrica and to play their full and responsible part in helping to solve what is one of the most fundamental problems facing this country - housing. I'm hopeful that this is going to be a voluntary process within a short space of time, and we are working on the creation of institutions like the mortgage indemnity scheme to assist the banks in making the transition to greater accessibility. But should it turn out that this reluctance on their part becomes a permanent feature, then we are going to have to look for other way to encourage banks to open their doors to the lower end of the market - if necessary through legislation.
There is of course the other side of the coin. We must see to it that the inherited culture of bond and rent boycotts ultimately comes to an end. If we are saying to the banks, as I have, that they must make themselves more accessible to smaller borrowers and to ordinary people, they we have to be prepared to enter a social compact which says that people will meet their bond repayments. Rent and service boycotts were understandable in the past, not just for political, but also for economic reasons. But the time is coming for everyone to accept that they have a responsibility to pay for their housing and the services they receive.
There is of course a large sector of the population for whom the idea of meeting a regular monthly bond payment lies beyond their wildest dreams. This is not a small group in South Africa, it is the vast majority of the population, the working poor and those who have no jobs at all - people who earn R800-00 and less per month, many of them earning nothing. These are people who don't even qualify for the kind of small subsidies and bonds we have been talking about in recent weeks.
I don't know how many of you read the story at the beginning of the week of the man who was looking for a warm place to sleep the other night in Johannesburg and chose one of those large rubbish containers. The refuse removal people came to collect the container the next morning and the truck automatically started compacting the rubbish in the container when the driver heard screams. When he found the man who had gone to sleep in the container the night before, he had already been crushed to death.
It is human tragedies like these which show us the magnitude of the task in front of all of us. It is the death of a homeless man whose name was not even reported in most of the media we have to do something to help the vast majority of South Africans who are so poor that they cannot even afford to get into the bottom end of the housing market.
We have got to start developing our ideas for starter houses -basic structures with basic facilities which will give people a roof over their heads and the opportunity to expand as and when their financial circumstances allow them to buy some building materials. This is not about toilets in the veld, and its not about the simple provision of serviced sites. We are investigating ways in which the state - especially local government - can play a role in ensuring that the housing process, once begun, will indeed be completed. what it is about is understanding that a good 60% of South Africans cannot afford even to buy a house which can already be called a home.
It is a challenge to develop a simple, sound starter structure which can be delivered within the limits of the subsidy scheme. It is a challenge for people with ideas in the communities, in the construction industry, among architects and planners, and for all of us in the Ministry of Housing. It is a challenge we are taking up because it is in the interest of ordinary people that we find viable solutions. And one important route is to mobilise even the small people's savings so as to be able to help people to help themselves.
Now whether we are talking about simple starter houses or the segment of the housing market which will be served by the Community Bank, there is another issue we are going to be paying increasing attention to in the future.
What became clear in the Western Cape after the recent storms -as it has done in many townships on the Reef - is that too many contractors have for too long been delivering shoddy work. Too many builders have been cutting too many corners, for whatever reasons. They have left people who are struggling to pay off their houses to deal with the extra burden of repair costs for leaking roofs, cracked walls, and subsiding foundations.
Contractors, whether they are large or small, must know that they are not going to get away with this kind of shoddy work in the future. We are going to make quality control an issue in the interest of the consumer. Home buyers have a right to consumer protection and we are going to see to it that they get it.
Ladies and gentleman,
There are many issues and many problems facing all of us involved with housing in South Africa. The policies and practices of the past have left us with a legacy which is going to take years to overcome.
Looking at the mountains that have to be moved, it would be possible to become dispirited - were it not for people like yourselves and institutions like the Community Bank. People who are prepared to roll their sleeves up and get on with the job of making housing more accessible, a bank which is prepared to open its doors to those who need help in getting the necessary credit, and in understanding the mutual rights and obligations of lenders and borrowers.
Let me take this opportunity to congratulate you on the opening of the Community Bank's first office here in Benoni and of wishing you all the greatest of success in the interest of greater accessability to housing in South Africa.