Implementation of the Rural Household Housing Subsidy Voucher Scheme(pilot)

Presentation to Parliamentary Select Committee on Public Services

07 August 2012

Historical Background

• The process started in 2009 spearheaded by NDHS and RHLF.• Two pronged process:

– Policy adjustments to guide implementation process.– Pilot programme to test aspects associated with implementation.

• RHLF co-ordinated key partners to develop the concept document in collaboration with NDHS, NURCHA, NHBRC, EC Human Settlements and Pilot Municipalities.

• EC Human Settlements proceeded with pilot whilst RHLF and NDHS pursue policy dialogue.

• The two processes are intertwined.

1

Vision

• The purpose of the programme is to facilitate the construction of 500 quality housing units within the identified 3 pilot areas located within rural areas in the EC.

• The pilot programme will be implemented using the beneficiary participatory approach which will test the efficiency and viability of a voucher system as an instrument towards the delivery of housing units for replication in other municipalities and possibly in other provinces. The construction of the housing unit will include the involvement of the allocated beneficiary.

• The priority of the programme is to ensure the inclusion and empowerment of previously marginalised individuals whilst contributing to local economic development.

• Empowerment – skills transfer to local village builders, promote local economic activity/ development, job creation, expose and empower beneficiaries in the technical aspects of construction. Specific focus will be paid to marginalised individuals – destitute, women, elderly, youth, persons with disabilities.

• EC MEC launched the programme as: EC Rural Development Human Settlements Project.

2

Concept• Owner-driven building process– giving rural beneficiaries the opportunity to take

the building of their own homes into their own hands.• Enhance housing choice for rural inhabitants – including assisting rural residents in

improving their existing traditional houses.• Alternative building typologies and material supplies have to be explored. These

will need to address the problems of potable water, sanitation, heating, cooking and electricity supply.

• Training opportunities targeted at ensuring informal local builders are able to improve their long-term employability in the building industry.

• Existing local and rural authority building practices and regulations have to be adhered to ensure compliance and quality.

• Good quality houses together with builder empowerment should be the end goal of the programme.

• Testing and confirming the ability of the programme to be rolled out on a national basis.

3

Approach and Benefits

• The programme seeks to empower local builders with a skill set that will be utilised for community upgrading and development.

• The initial investment will include for human resources, infrastructure setup, training and certification.

• The cost of management will be reduced over time as these beneficiaries pass this skill set through to their communities.

• The Programme will have a multiplier effect wherein every beneficiary will be able to further train others.

• It will further provide the municipality with an opportunity to develop systems and procedures towards such programmes in the future, thereby further reducing overhead costs in the future.

• Documentation management and lessons learnt will form a crucial part of the programme.

4

Institutional ArrangementsEastern Cape

DOHSBudget for Rural

Programme

Municipalities & Traditional Authorities

BENEFICIARY

House Building

SuppliersBuildersArtisans

ProfessionalsNHBRC(CETA

accreditation)

NURCHA

Quality Controllers

(BQCO)

Transfer Approved Subsidies

5

Programme Milestones

1. Stakeholder Engagement

2. Proposal and budget

3. Legal agreements and appointments

4. Systems development and appointments.

5. Technical preparation

6. Beneficiary engagement

7. Construction process

8. Payment and financial administration

9. Monitoring and Evaluation

6

Stakeholder engagement

• Extensive stakeholder consultation.• Community launch of the programme.• Stakeholder participative approach being adopted.• Ward committees, traditional leadership, ward councillors and community

representatives.• Peoples housing process (PHP).

7

Proposal and budget

• EC DHS appointment letter.• Proposed design and specification.• Detailed financial plan and cashflow.• Finalised approach plan and programme implementation plan.• Determine availability of grant (subsidy).

8

Legal agreements and appointments

• Finalise SLA and transfer of funding procedures.• Finalisation and definition of roles.• SLA’s and MOU’s.• Institutional arrangements and clarification of roles and responsibilities.• CETA, NHBRC and Border Technical Training.

9

Systems development and management

NURCHA provides systems for the following:• Track and support each beneficiary through all the building stages.• Update construction progress based on site inspection reports.• Manage material supplies through card system making available material needed at

specific time in pre-agreed time schedule form accredited local suppliers.• Produce monthly financial and reconciliation reports per beneficiary.

Cell phone / card communication • Inform Beneficiary with SMS/ Real Time information on Card of actions to be taken

on each stage / milestone.• Receive Beneficiary requests, enquiries through Real Time information on Card /

Construction Mentors. • Provide Beneficiary with updated statements of his/her Voucher account.

10

Technical Preparation

• Submit Geo-tech Reports for soil condition interpretation and suitable design proposals.

• Standard house plans to be developed.• Alternative plans will be considered. • Develop Bills of Quantities. • Approval of Suppliers.• Agreements - qualifying Suppliers.• Bills to the selected Suppliers for pricing.• Approve local Builders and Artisans.• Beneficiary – recruit local labour. • Assistance - NURCHA Construction Mentors.• Provide accredited technical training for local Builders – Dept of Labour / CETA /

Border Training Center.

11

Beneficiary engagement

• Assist Local and Traditional Authorities (LTA) to promote the Voucher Scheme through workshops and campaigns.

• Assist LTA to develop transparent user-friendly application support systems. Confirm Functional Tenure applicable to the area. Criteria to pre-determine whether an applicant will qualify. Short-listing of Pilot Beneficiaries.

• Instruct Land-Surveyor - GPS coordinates. • Subsidy Applications

Training for local officials to process applications accurately. Submit completed applications to EC DHS.

• Track Subsidy Approvals by EC DHS Inform EC DHS if additional information is required.

12

Construction Process

• Deploy experienced Programme Manager. • (Provincial) / Building Quality Control Officers.• Assist Beneficiaries with:

– Stand audit– Selection of plans– Suppliers and local Builders - sign agreements– Build and Supply Orders - Technical advice / quality control

• Arrange for inspections of foundations:– According to LTA laws and regulations.

• Obtain Proof of Delivery of Building Materials:– Per SMS / Swipe card from Beneficiary/ Mentors.– Per fax /email from Supplier (signed copy) / electronically through card system.

• Conduct progress inspections (Building Quality Officers):– As and when Beneficiary advise that s/he is ready to make the next draw.– Quality control on site – including photos of progress stages to be included in reports.

13

Payment and financial administration

• Update progress per milestone per beneficiary on Codex.• Obtain and review invoices from Suppliers per Beneficiary.• Process Payment Requests.• Make payments to Suppliers and Builders supported by:

– CODEX system to track physical progress and cost,– Card system to facilitate ordering, scheduling and payment of suppliers and service provider,

• Update System Statements – Beneficiaries.• Bank reconciliations.• Monthly financial and progress reports/reconcilliations.• Programme cash flow projection and tranche applications.

14

Programme monitoring and evaluation

• Project Steering Committees will play a key role in monitoring and evaluation.• Conduct regular stakeholder meetings:

– Progress reports and feedback.• Contact Beneficiaries and Suppliers randomly to determine levels of customer

satisfaction.• Evaluate total impact and cost effectiveness of the Pilot.• Communicate the progress and lessons learnt.

15

Summary of budget allocationFunding Source 2011/12 Quantum

Budget per subsidy

No of units Total Budget

Subsidy

Phase 1 – Direct & indirect costs R 23 403.00 500 R 11 701 500.00

Phase 2 – 40m2 house

R 57 980.00 500 R 28 990 000.00

Variation Allowances

Locality – from East London & 1% adjustment

R 5 825.00 500 R 2 912 500.00

Geotech – Clay R 7 517.00 500 R 3 758 500.00Topography R 1 948.00 500 R 974 000.00Additional professional fees R 1 529.00 500 R 764 500.00

5.5% Capacitation fee/Voucher system

R 5 401.00 500 R 2 700 500.00

TotalR 103 603.00 500 R 51 801 500.00

16

Progress to date

Stakeholder mobilisation• Consultation sessions with stakeholders in the pilot municipalities facilitated by

NDHS, ECDHS and RHLF.• MEC launched the project in March 2012.• Project steering committees setup in the pilot projects.• Housing consumer education conducted (ongoing).

Planning meetings with Department• NURCHA appointed as Programme Managers• Legal agreements very close to finalization.• Beneficiary list in the process of being concluded.• Programme implementation plan completed.

17

Progress to date

Appointment of Social Facilitator• Scope of services has been finalised.• SSB Training have been appointed, briefed and on site.

Appointment of Building Contractors• Appointments confirmed.

18

Progress to dateProvincial funding application and beneficiary list

Umzimbubu• Pre planning funding application approved. • 158 beneficiaries approved.

Mhlontlo• Pre planning funding application submitted for approval.• Beneficiary list being finalised.

Intsika Yethu• Pre planning funding application submitted for approval. • Beneficiary list being finalised.

Procurement of professional service provider• Architect, GIS, civil and geotech have been appointed.

19

Progress to date

Role of NHBRC• Quality control and assurance. • Training of local builders.• Enrolment of housing units. • MOU awaiting signature.

Recruitment of Provincial Programme Resources• Site based programme manager appointed. • Building Quality Control Officers appointed to start soon.

20

Replicability

• The success of this roll out will allow DHS to replicate a similar model in other Provinces and Municipalities.

• Dedicated Programme Management Units will be setup together with appropriate institutional arrangements.

• The 16% programme management fee will be further reduced as the systems and procedures from this pilot will be deployed to other provinces.

• The role of NHBRC and CETA will be crucial in ensuring the successful training and accreditation of beneficiaries.

• Lessons learnt – learning through experience.

21

Expected outcomes from the pilot

• Pilot must search for replicable solutions.• Credible and efficient fund management to fully account for use of public funds.• Appropriate quality management approach anchored around NHBRC.• Cost of managing programme at acceptable levels.

22

No. Key Risks Mitigation Measures

1. Fund management and possible misappropriation of funds

• Designed a technology backed funding flow process that allocates accountability to the Fund Manager and eliminates possibility of leakages.

2. Possible conflict between parties

• Set a stakeholder management process with intensive consultations.• Intensive social facilitation process through out the implementation process to keep key stakeholders engaged.• Clearly defined scope and well understood by all stakeholders.• A participatory planning process was followed accompanied by intensive communication.

3. Lack of service providers and subsidy administrators

• The pilot is centred around developing local builder residing in the benefiting and surrounding wards.• Municipalities and provincial dept. need to be at the centre and play clearly defined and distinct roles. • Fund Managers play a very important role to ensure public funds are fully accounted for.

4. Lack of material suppliers • All rural towns have material suppliers. This programme inject the critically desired economic activity in the villages and rural towns that support them.

5. Losses during transporting of materials

• Suppliers will take full responsibility for material until it is delivered on site.• Daily supervision by BQCO based in the wards and technical resource to the benefiting community.

6. Possible incomplete dwellings and possible inferior workmanship

• NHBRC is a key partner in the Pilot and will be part of the think tank that develops sustainable solutions for up-scaling the programme and addressing quality issues.

7. Geotechnical problems • NHBRC is a partner to the Pilot

23

Conclusion

• Focussed and well co-ordinated approach.• Provides an optimal balance between rural building practices, the requirement to

produce quality homes and acting in a responsible manner with public funds.• Beneficiary participative approach – beneficiary remains in charge with sufficient

support systems in place.• Monitoring and support provided by experienced technical team. This will allow early

problem identification and intervention measures to be implemented.• Information technology platform will provide live updates on progress, disbursements

and reporting. • Formalised communication channels to all stakeholders.• Programme will be a direct contribution to the rural development priority of

Government.

24

END THANK YOU