Minister Mmamoloko Kubayi: Local Government Residential Property Development Summit

This is a timely gathering because it gives an opportunity to pause and reflect on what has been achieved in the past 30 years of democracy. As has been published in the 2022 Census from Statistics South Africa, significant achievements have been recorded in the human settlements sector. For example, informality has been on a decrease and government has built 4.8 million houses. The demand for housing has also been on the increase, which means there is still a lot of work to be done to realise the constitutional imperative of the right to shelter.

Human settlement and property development in general is a fundamental part of the infrastructure development programme. As you are aware, we have identified infrastructure development as a central pillar, not only in driving economic growth, but also as a key driver of industrialisation. in the final analysis, infrastructure development of any kind happens within localities that under the jurisdiction of local governments. This makes local governments an important and a fundamental part of the infrastructure delivery process.

So, as we reflect on how we can make the delivery of human settlement infrastructure more efficient, we necessarily have to reflect on the role of local government and how it can be improved to expedite the delivery of services. More importantly, we need to find ways to ensure that the three spheres of government are well-coordinated in terms of planning and ordering of priorities in terms of projects. It is only through this type of coordination, that we will ensure that we maximise the impact of the limited resources that we have on our fiscus.

Our policy has evolved over time to move away from housing to human settlements, and this has been better exemplified by the development of integrated human settlements. Through this programme, we have seen the development of large integrated human settlements projects which include Breaking New Ground units, social housing and upmarket housing units for those who can afford. Our experience has shown that these projects were started without an accompanying funding framework that would ensure that their delivery is accelerated. As a result, these projects have been affected by lack of funding, lack of bulk infrastructure and other challenges.

They take years to deliver the number of units/housing opportunities for citizens. This means that we need to find an alternative mechanism that will ensure that once such mega-projects are started, they continue uninterrupted until completion and that sufficient funding for that project is available for speedy conclusion. Hence, we must improve on our planning, and most importantly the funding model.

We have published the Draft Human Settlements White Paper for public comments. The new White Paper, once adopted, will replace the Housing White Paper of 1997 and it will inform the drafting of the new Housing Code and regulations.

The Draft Human Settlements White Paper makes proposals on the creation of integrated human settlements that are responsive to modern trends, such as climate change, new innovations in building technologies, rapid rise in urbanisation and deepening women empowerment, among others.

Urbanisation is only going to increase as more and more people migrate to cities to look for economic opportunities. This migration to both mega cities and intermediate or secondary cities, will attract both the employed and the unemployed. This means that the housing demand market in urban areas will range from Breaking New Ground, through the missing middle and to the high-end property market.

This means that urban municipalities will need better planning systems in terms of making land available for human settlement, ensuring that these pieces of land are serviced with bulk infrastructure and other social amenities such as transport facilities.

Urbanisation has also led to a significant number of informal settlements that lack basic services such as electricity, clean water and sanitation. Most of the residents of these settlements are left vulnerable to fires, natural disasters, diseases and crime. Another housing option for poor and low-income city dwellers is what is referred to as backyard dwellers.

Many of the backyard dwellers fall within the social housing market but they have yet to get access to a social housing unit. It is worth noting that more than half of the population in South Africa lives in just three provinces – Gauteng, KwaZulu-Natal and the Western Cape and this is because these three provinces are the most urban.

There is growing recognition of the importance of the social housing sector to South Africa’s ability to deal with fast-paced urbanization, rising inequality, urban poverty, and spatial fragmentation. Social housing is the only state-subsidized form of housing that can achieve the desired densities to support spatial transformation, public transport efficiency and urban inclusivity.

The rising urban population and housing challenges have also led to the phenomenon of hijacked buildings, which have mostly been turned into drug dens and other kinds of lawlessness. We need a collaborative approach to inner city renewal that brings together property developers, financial institutions and government in which we crowd-in resources to drive the repurposing of old buildings in the inner city for human settlement. We can explore various models including rental, rent to own and bonded housing units.

Treasury has gazetted the amendments to the Private-Public-Partnership (PPP) regulatory framework for public comments. The amendments, as stated by the Minister of Finance, “seek to reduce the procedural complexity of undertaking PPPs, create capacity to support and manage PPPs, formulate clear rules for managing unsolicited bids, and strengthen the governance of fiscal risk”. We recognise the fact that government, with the constrained fiscus, does not have enough resources to develop and build the housing stock especially for missing middle at a sufficient pace to meet the demand in a short period of time.

The gazetting of the amendments is a demonstration of the seriousness with which we have embraced private/public partnership and blended financing approach to infrastructure development. We therefore require a strong collaborative relationship from the financial sector and the property development sector. We are willing to de-risk housing development projects, within available resources in the residential sector, so that the private sector can play a greater role in the development of the housing stock.

With regards to climate change and the increasing frequency of natural disasters such as heavy rains, strong winds and floods, it is necessary for us to adopt Innovative Building Technologies that are climate change resilient. Secondly, as we engage in the transition to a low carbon emission economy, we have to ensure that the construction and built environment contributes by lowering its emissions.

It is estimated that 40% of global greenhouse gas (GHG) emissions come from buildings and, if left unchecked, they're set to double by 2050. Cement alone contributes around 8 to 10 percent of global Carbon Dioxide emissions.

This means that without changing the way we build new structures and preserve and retrofit existing structures, we will not achieve the crucial carbon dioxide goals. Building material and system innovations to reduce carbon and other embedded environmental impacts on the life cycle of building materials have also seen a huge leap over the past decade.