1 April 2005

The government and the banking sector have signed a pioneering deal that will transform the way in which banks engage with low-income borrowers and see billions of rands in finance being translated into houses for poor South Africans.

Housing Minister Lindiwe Sisulu, the Banking Association of SA and the heads of the country's four leading banks on Thursday signed a memorandum of understanding to co-operate in extending housing finance on a sustainable basis to low-income borrowers.

Central to the partnership will be the delivery by the banks of at least R42-billion in housing finance for households in the R1 500 to R7 500 per month income bracket by the end of 2008.

This is one of the targets contained in the financial sector's black economic empowerment charter. The sector is thus the first to sign a partnership agreement with the government aimed at ensuring that its charter commitments are met.

According to Business Day, the government and the banks will put together a working team to come up with detailed plans for the government to provide some form of insurance for banks' low-income mortgage books.

Banking Association MD Cas Coovadia told Business Day that the banks hoped to be ready to start providing affordable housing finance to households earning between R1 500 and R7 500 a month by early 2006.

Also present at the signing in Pretoria were Absa's Steve Booysen, FNB's Paul Harris, Nedcor's Tom Boardman and Jaco Maree from Standard Bank.

Boardman said various government departments, apart from housing and treasury, were also involved in the process.

He said they had six weeks to assemble a team to work out the modalities of the agreement to enable them to begin implementation.

"We have some pretty tight timelines, and that serves as an acknowledgement from the financial sector that we are now entering the second decade of democracy and it is incumbent upon all of us to accelerate this process for the benefit of our people", Boardman said.

"We pledge our firm commitment to these timelines and to commit resources at our disposal to ensure that we can deliver on time."

SouthAfrica.info reporter

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