A State Construction Company for the Delivery of Housing in South Africa?

It has been reported in the Business Day today, that the South African Minister of Human Settlements, Tokyo Sexwale, in his Budget Vote delivery in Parliament on the 9^th of May 2012, proposed a state owned construction firm. The Minister is quoted to have stated that when houses in the government housing programme are built, the state relies on ‘by and large’ inexperienced shovel, wheelbarrow and bakkie brigades. It is important, however, to note and be critical about how and why these ‘inexperienced shovel, wheelbarrow and bakkie brigades’ are working in the housing construction sector in the first place.

The national housing policy, Breaking New Ground (approved by Cabinet in 2004) explicitly lists “utilising provision of housing as a major job creation strategy” as one of the objectives of the Department.  It has been a strategy of the Department of Human Settlements to promote the participation of small scale builders and contractors in the housing process – and for this Nurcha was created as the government institution responsible for providing finance to “contractors who cannot easily access finance from conventional financial institutions”.  One of Nurcha’s development principles is to “use Nurcha loans to contribute to the emergence of a new generation of successful, black-owned construction companies”.  To protect against quality problems, the National Home Builders’ Registration Council was created as a regulator of the home building industry. Every home builder in South Africa is required by law to be registered with the NHBRC.  The NHBRC also provides free technical training to emerging builders.  These measures should address the Minister’s concern about the relative lack of experience, should they not?

The Minister further reported that the department would focus on low cost housing construction projects in an attempt to root out corruption and maladministration as these have been identified as the main obstacles in the government’s drive to deliver housing to the poor. Ironically, the minister also highlighted the department’s initiatives in the fight against corrupt public servants. He reported that 290 were arrested, more than 240 found guilty and more than 220 were facing internal disciplinary action. These are individuals operating within state institutions some of which are directors and CEO’s- leaders within these institutions.

Although the dynamics of this state owned construction company have not been made clear as yet, I beg to question its effectiveness, should it come to pass. This idea is highly controversial and somewhat contradictory to other country’s developmental goals such as job creation and skills development and maybe even housing delivery. It was recently reported from a study by Professor Viruly that the South African housing construction sector boasts one of the highest employment multipliers in the country. Discourse and deliberations in this area therefore, have many facets to consider: What will this state construction company imply for the numerous existing players in the housing construction market, for job creation and most importantly, the delivery of housing in the country?