The role of the group housing savings schemes in housing delivery : a Piesang River experience.

Abstract

This dissertation is based on research undertaken on the role of the housing group savings schemes that provide end-user finance to the poor households to address their housing needs with special reference to South African Homeless People's Federation (SAHPF) at Piesang River outside Durban. The housing conditions inherited by the new Government in South Africa were characterized by backlog. In order for the Government to address housing shortage, housing subsidy assistance was introduced, which only provided the 'starter house', which was not sufficient enough for the poor in terms of size and quality of the house. It was hoped that the traditional financial institutions would come to the party and provide small-scale loans to the poor to incrementally improve the condition of their housing. The poor households have been seen as "unbankable". Basically the study bids to explore and establish the effectiveness of the savings schemes as an intervention in making end-user finance available to the poor households in S.A. to meet their shelter needs. The study revolves wholly around the group housing savings clubs as an intervention for proving housing for the poor. Practice has proved that incremental upgrading of a core unit using incremental finance is more suitable than long-term loans and does not bind the poor into long-term financial agreements. Given the fact that the poor are not willing to subject themselves into long-term financial commitments, consequently, the poor households have initiated financial self-help groups of the likes of ROSCAs, Stokvels, RCAs and ASCRAs as a mechanism to deal with the predicament that they are facing. The study explores the circumstances under which these saving schemes have evolved and the cause of their proliferation, looking at the international and local experiences. The study draws successful lessons from SAHPF of Piesang River about group lending and the possible expansion of its activities to other parts of S.A. Lending groups have the potential to provide affordable credit to the poor and the group members will use peer pressure to encourage repayment. Group lending is capable of making an individual repay that would have easily defaulted under individual lending. The researcher uses the combination of sample survey and case study to argue that the success of SAHPF particularly in making end-user finance available to its members is due to its strong, central focus on savings and loans. Finally the recommendations are that savings for housing purposes should be seen as an appropriate mechanism, to augment the housing subsidy given the fact that formal end-user finance is not forth coming especially to the poor as anticipated.