BHC TOO EXPENSIVE FOR BATSWANA – PAC

BHC TOO EXPENSIVE FOR BATSWANA – PAC

Botswana Housing Corporation (BHC) is losing touch with reality and their core objective of ‘affordable housing’ and its basking in false reputation of being ‘low-cost’, contrary to the Public Accounts Committee's (PAC) argument that many Batswana are being priced out of the property market.

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Aerial view of the BHC Flats in Gaborone city on 24 September 2016. (Pic:MONIRUL BHUIYAN/PRESS PHOTO)

Botswana Housing Corporation (BHC) is losing touch with reality and their core objective of ‘affordable housing’ and its basking in false reputation of being ‘low-cost’, contrary to the Public Accounts Committee’s (PAC) argument that many Batswana are being priced out of the property market.

The Permanent Secretary to the Ministry of Infrastructure, Science and Technology, Dikagiso Mokotedi has acknowledged the high price of housing, but argues that the pricing structures are designed to keep the corporation afloat. Mokotedi was speaking this week before the PAC, which was scrutinising the value for Money Audit Reports. The Ministry of Infrastructure has oversight of the Reginald Motswaiso-led housing corporation. BHC was established with a core objective to provide affordable housing to Batswana. The corporation relies mostly on internally generated funds to finance further developments; or borrow money to pursue development.

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The government, due to financial constraints, has opted to cease to provide subvention to the corporation, according to Mokotedi hence “BHC has to fend for itself.” This involves hefty prices to offset losses incurred through interest rates accrued while borrowing. “There has to be a way government provides assistance. Otherwise BHC will struggle to meet mandates.”

BHC derives most of its revenue through sales. Lately, the corporation has focused on selling new properties instead of renting them. Sales which increased by 26 percent for the fiscal year 2015/16, contributes approximately 60 percent of its revenue. Thus, any inability to sell its housing products adversely impacts the corporation. BHC argued that there has been no review of rental revenues for the past 12 years despite it having to foot increasing cost of repairs and maintenance of properties.

Strikingly, in contrast to its primary mandate of affordable housing, in its annual report the corporation admits that as rental properties are being sold and the rental threshold is replaced with new houses, and rental for these properties are pegged at “market value”. This suggest that BHC is using rates at par with private companies.

The report lends credence to Specially Elected Member of Parliament Bogolo Kenewendo’s remarks that BHC should come out clearly to state that they no longer provide affordable housing solutions. Kenewendo, who forms part of the PAC argues that “BHC doesn’t provide affordable housing because it competes with private developers. There is a feeling that it provides affordable housing.”

The committee has raised concerns about BHC’s lack of a clear plan to accommodate first time buyers, particularly the youth as against its costs. In defence, Mokotedi indicated that most will be exempted from certain taxes. “We are engaged on strategies, of making housing affordable. We are open to suggestions to have various products for different markets. A lot of work needs to be done.”

BHC, has a mandate and is tasked with the development and delivery of housing for the youth and low income groups earning salaries between P3000 and P7000 on a monthly basis. The project started in earnest in the reporting financial year and 372 high density houses were started under this scheme. The first batch of these houses is expected to be delivered in December 2018 while the second batch of 300 houses will start in financial year 2016/17. The scheme has been welcomed as it is seen to cater for income groups not falling under SHAA criteria as well as those not qualifying for mortgages at commercial banks. The houses are to be sold by BHC through the instalment purchase scheme, the corporation has said.

Yet, Mokotedi grappled to inform the committee on the aspirations of the corporations. “What I would like to hear is you to state a clear plan of targets. That will elaborate where you want to move to. Otherwise we are groping in the dark,” Gaborone Bonnington South Member of Parliament Ndaba Gaolatlhe argued.

BHC’s mandate is crafted in a way that it is not limited to just housing. It has obligations such as office and other building needs for government and local authorities. The MPs raised concerns over focusing on office space while the there is still a backlog on its core mandate of providing affordable housing.

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