Annual Report 2009

Chairman’s Report

JHC welcomes the shift from Housing to Human Settlements that has come about with the new administration taking office from May this year. We see this as indicative of a refocusing of emphasis within existing policies and it is in line with the kind of work that JHC has been doing over the past 14 years.

We congratulate the new Minister of Human Settlements, Tokyo Sexwale, on his appointment and we commend his readiness to experience and to understand what so many people in our country face on a daily basis – living without decent housing, without services and at great distances from their work or work opportunities. This can only reinforce government’s drive to build housing and develop integrated human settlements that provide the kind of socio-economically viable environments in which people and communities can grow.

While we recognise that the economic recession in South Africa and globally raises significant challenges to delivery, the drive must continue.

For JHC, the present state of the economy exacerbates the difficulties of delivering affordable social housing while the costs of land and construction remain at an all time high. It re-emphasises the need for government to step up housing subsidies to match the cost escalations that we have witnessed over the past five years.

It also swings the spotlight squarely onto the concerns that I raised in last year’s report – around government setting up its own property and housing organisations, whether at national, provincial or local levels, and competing with housing providers in the non-government and private sectors. While the country needs to boost housing delivery by all means, government’s direct involvement or ownership of social housing organisations raises the risk of unbalancing the playing field and limiting the roles and inputs of other players.

The new Social Housing Act, brought into effect under the previous administration, during 2008, presents some promise that government recognises the value of social housing and the contribution that established social housing institutions can make to meeting the country’s housing needs.

The Act seeks to strengthen the social housing sector and ensure its effective governance and long-term sustainability as a key element of South Africa’s housing delivery programme. It introduces a new regulatory framework for the sector and provides for the Social Housing Regulatory Authority to be established. The SHRA will take responsibility for the accreditation of social housing institutions, the administration and dispersal of capital and institutional grants, as well as monitoring and compliance in the sector.

Government’s new Housing Development Agency (HDA) also holds the promise of facilitating access to well-located land and properties within and close to urban centres for housing development.

None the less, we need to remain wary of the associated risks – of locking state resources – land, finance and subsidies – into government owned entities, to the exclusion of other players in the housing sector.

In addition, as social housing gains traction in official policy and new legislation, we need to guard against uninformed statements by officials and politicians around rental rates and rent-to-own options. Such misleading statements only raise false expectations in a market already weary of the long wait for promised housing and restless as a result of widespread delivery failures. This was a particular concern as we interacted with the Cosmo City communities around our Hlanganani development.

It is indeed a credit to JHC that government sought out our own CEO, Taffy Adler, to head up the new HDA. During his tenure at JHC, since the company’s inception in 1995, Taffy played an inimitable role in pioneering social housing in the Johannesburg inner city, while growing the company from start up to its present status as a financially sustainable and internationally recognised social housing institution. With his team at JHC, Taffy found a way to develop rental housing for integrated, mixed income communities and to create new residential opportunities in the city. These have been key to the ongoing transformation and regeneration of downtown Johannesburg. At the same time, Taffy has made a distinguished and indelible contribution to the development of social housing nationally. We congratulate him on his appointment to the HDA and we wish him every success.

JHC’s search for a new CEO began early this year and it was not until June that we identified the right candidate in Elize Stroebel. Elize will take up her position at JHC in October.

Since 2007 she has served as the country director for International Housing Solutions (IHS). IHS is the fund manager for the South African Workforce Housing Fund (SAWHF) and invests capital in low to middle income housing projects across the country. Elize assisted in setting up offices for IHS in South Africa – establishing various companies for the fund structure, hiring staff with the required skills to manage the fund, and developing appropriate corporate governance procedures for the management of the fund. She also played a key role in successfully raising R1.2 billion in funding for the SAWHF and in developing a line-up of property deals, linking these to key partners in the industry for investment by the SAWHF.

Prior to this Elize was one of the founding trustees and CEO of the Gauteng Partnership Fund (GPF). At the GPF, from 2002 to 2006, she managed and maintained all GPF capital and operational resources. Over this period the organisation managed to fund the development of more than 5 000 rental units in Gauteng.

With her training in the legal profession and her experience in property, finance, housing development and business management, Elize will bring new strengths to JHC to take the company forward on a continuing path of growth. We welcome her to JHC.

I would like to pay special tribute here to Ayesha Rehman, JHC’s financial manager, who stepped into the hiatus and, as acting CEO over this transition period, has kept a steady hand on the reins at JHC. Ayesha has been with JHC since the early days and has grown with company. She has played a critical role, not only in managing JHC’s finances prudently but also in setting up the policies and procedures and instilling the discipline within the Finance Department that have seen JHC control its overhead costs so efficiently and its arrears and bad debts at levels that set best practice benchmarks in the social housing sector in SA as well as internationally. It is especially noteworthy that even in the current tough economic conditions JHC has managed to keep within its target limits on these measures.

Over the past year there have also been a number of changes in JHC’s Board of Directors. Johan Latsky and Linda Mvusi, both of whom have served as non-executive directors of the company since JHC was formed, resigned from Board. Willie Els, a Board member since 1998, and Murphy Morobe, who served as JHC’s chairman from 2002 to 2005 and thereafter as a non-executive director, also resigned. I would like to thank all of them for the time and commitment they have given to the company over many years of service.

These developments opened the way for new Board members to be appointed, bringing their own unique perspectives and experience to JHC. At the end of 2008, we welcomed three new directors to the Board: Jill Strelitz from Nurcha; Yondela Silimela from the Public Investment Corporation; and Ayesha Rehman, who was appointed to the Board as an executive director.

In a year where we have seen JHC continue to grow, with new projects opening to tenants and new developments taking form, extending JHC’s footprint beyond the inner city into Greater Johannesburg, I would like to make special mention of the achievements of Makhulong A Matala and the eKhaya Neighbourhood in Hillbrow. Both were recognised in the Johannesburg Development Agency’s 2009 Halala Joburg! Awards for their work in building communities and improving neighbourhoods in the Johannesburg inner city, in short, for their unwavering focus on developing and strengthening the social aspects of social housing. Our congratulations go to both organisations.

In conclusion, I would like to thank all my colleagues on the Board for their dedication to JHC and for the valuable guidance they bring to the company. My thanks also go to all management and staff for their commitment and the contribution that each and every one of them makes in improving the lives of others within the framework of JHC’s mission. Together we will ensure that JHC continues to serve as a beacon in the development of social housing and integrated human settlements across the country.

Pat Lephunya

Chairman

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JHC 2009 Annual Report