Figure 2.1 Housing affordability curves for households in a private-sector-financed scheme in Harare
In some ways, the scheme was smoke and mirrors. It was officially meant to be addressing the city’s critical housing shortage for those on lower incomes. However, the ideological turn towards cost recovery and the involvement of private-sector profit-oriented housing finance meant that the costs – which, it must be remembered, were on a site-and-service basis with no actual house at the start and no allowance for labour costs – were far too high for the vast majority of the groups for which it was intended (which, in this case, was most of Harare’s population, excluding the remaining white residents).
The construction of affordability curves for housing is sobering. The concepts were used in South Africa to provide insights into the constraints on future housing policy in the run-up to the final attainment of democracy in 1994. As is often the case for a new political force that has long struggled against the problems it is now faced with solving, and where class and financial interests in maintaining the status quo are not so entrenched, there was a moment of clarity and relative openness in policy circles. A government White Paper on housing published in 1994 was clear: although there were various constraints, ‘all of them are dwarfed by the single most significant constraint to the housing delivery process, that of affordability’. There were two sides to this issue: one was the need to recognise ‘limitations imposed by the State fiscus and macro-economic realities’. However, ‘of more significance and concern is the grinding poverty of such a large proportion of the South African population. This provides the single most important limitation on the housing programme. The resolution of this problem is something that a sustainable housing programme can significantly contribute to, but cannot remotely seek to solve on its own.’6
The White Paper contained various summary data illustrating the affordability problem. The total monthly income of 40% of all households was estimated to be under R800 and 70% had less than R1,500. But it was found that there was ‘almost insignificant’ provision of formal-sector loans for housing to any household with less than R3,500 per month. A housing dilemma indeed if it were hoped that the formal private sector would play a role in solving the housing crisis – since a mere 14% of households earned more than that. Even if some families with less could borrow something, albeit not enough for a completed house, as in the Zimbabwean example of Glen Norah C, it was estimated that 45% to 55% of South African households were simply not going to be able to borrow any housing finance at all, or afford to pay it back if they did. This group was going to be entirely dependent on its ‘own (limited) resources and State subsidisation’.7
The new South African government tried very hard to encourage and cajole local building societies and banks to become seriously involved in low-income housing and appointed one of the African National Congress’s (ANC’s) most senior members, Joe Slovo, to the Housing Ministry. But they refused to lend to households with less than R1,500 per month,8 thereby excluding 70% of families. The South African situation was a microcosm of the urban housing dilemma across the world – of the circle that cannot be squared by talking up either the need for more urban land or the efficiencies to be derived from profit-oriented private-sector housing delivery. In different countries and cities the figures will play out differently, and they also change over time (currently usually in directions that make the situation worse), but there is always a segment of the housing ‘market’ which is too poor to be reliably profitable for private-sector finance. The South African White Paper had put this problem up front, for once. Caught between a radicalised urban population with high expectations for housing, and the gimlet eyes of the International Monetary Fund (IMF), World Bank and international credit-rating agencies assessing their public finances, the ANC opted for a compromise. In a radical departure from other African countries, it introduced a one-off means-tested cash housing grant payable to any household earning under R3,500 per month. This could be used in various ways but its primary purpose, according to the White Paper, was to provide ‘security of tenure and access to basic services as well as possibly a rudimentary starter formal structure to the poorest of the poor’. The top grant was R15,000 for the poorest households on less than R800 per month, decreasing to R5,000 for those with R2,501–3,500, and it was to be increased in line with inflation.
The South African approach has been evaluated and analysed endlessly since then. There have been well-founded criticisms relating to, for example, the location of most housing schemes in areas too distant from areas with jobs – although unless land costs are subsidised in some way this is a depressing inevitability for ‘low-cost’ housing projects for low-income people in a free-market urban environment anywhere in the world. Housing quality and size are seen as problems. Many schemes received higher levels of subsidy than the limits theoretically set or they would never have been completed. There is still a significant housing shortage and many still live in unplanned settlements and/or are squatters. The idea of ‘incrementalism’ embedded in site-and-service approaches, whereby the poor provide ‘sweat equity’ on a bare plot, as in the Zimbabwean examples, often proved too contentious. At first, it had been highly unpopular in Zimbabwe too. By 2014, 20 years after the attainment of democratic rule, any couple living together or household head with dependants with a total household income under R3,500 per month could apply to go on the waiting list for what had become known as RDP houses. These were named after the short-lived Reconstruction and Development Programme; this guided South African policy from 1994 but was replaced in 1996 by a much more market-oriented approach, to the dismay of pro-poor activists. When they reached the top of the list, a small, basic but serviced and legal house was assigned to them for free (i.e. their housing grant had been put towards it and they were now ineligible for a further grant). They could not sell this house for at least eight years. The concept of receiving a grant to put towards housing had been rolled up into straightforward but basic provision. There were 17 other subsidy programmes operating for different income groups by 2014, but the RDP projects were much the largest.9 However, accepting at the start that typical incomes meant that market-based solutions were not going to work for the majority was crucial. Despite many problems, between 1994 and 2014 the government built 2.84 million RDP houses and provided 903,000 serviced sites10 and had much improved the lives of the beneficiaries (see Box 2.1).
Box 2.1 The benefits of RDP houses in South Africa
Research in Durban and Johannesburg has found that ‘[r]esidents living in RDP housing, particularly those who had moved from informal housing, were near-unanimous in their joy over the improvement in their everyday quality of life. These benefits related in particular to protection from the elements (specifically rain), security of tenure, and access to water, sanitation and energy.’ Florence in Johannesburg told researchers how her RDP house ‘means everything … Yes. Because now … when it’s raining, I’m sleeping comfortably. It’s not like when I was in the shack, you know when it’s raining … I have to move the things that side or what, what. It means everything.’ According to her son, ‘The day we opened this house, she even cried to see how happy she is.’ Early RDP houses were often very small and did not give much extra space over previous informal shelters but newer ones were better. Siyanda in Durban explained, ‘I’m so happy to own the house as I’m living with my children only … the children have their own room to make noise. We have space for cooking and the children are able to study in their room. If I’m thinking back in the informal settlement … we were sleeping in one bed with girls and boys because we did not have the space.’
Source: Charlton, S. & P. Meth. 2017. Lived experiences of state housing in Johannesburg and Durban. Transformation: Critical Perspectives on Southern Africa, 93, 91–115.