Press Release - 01/02/99 [ back to previous page ]

Kickstart for Cato Manor Guarantee Fund
A ceremony was held today to witness the signing of two important contracts between the Cato Manor Development Association and two guarantee fund administrators, the National Urban Reconstruction Association (NURCHA) and the Home Loan Guarantee Company (HLGC).  The two contracts  will kickstart schemes to provide guarantees to financial institutions to secure loans of R12 million for low-income home owners and working capital for emerging contractors.  This intervention will act as a further catalyst for the housing process in Cato Manor.

 

The R12 million guarantee fund has been provided by the European Union as part of the grant of R150 million made available to Cato Manor by the European Union for the re-development of Cato Manor.

The first scheme is aimed at improving access to working capital for small and emerging developers and builders whilst the other provides guarantees to financial institutions for housing loans to the low-income housing market which makes up about 50% of the projected housing stock to be constructed in Cato Manor over the next 5 years.

It is anticipated that these schemes will make available 2 100 home loans of R3 000 each to beneficiaries of the Provincial Housing Board’s subsidy scheme in Cato Manor and 150 loans of R30 000 each to provide working capital to emerging contractors who are employed in the Cato Manor project.

Summary of the two schemes:

  1. Cato Manor Short-Term Working Capital Guarantee Scheme

The objective of this scheme is to ensure that small and emerging developers and builders who usually have difficulty gaining access to working capital loans or overdraft facilities because of a lack of a track record or sufficient collateral to pledge to banks, gain access to working capital loan finance or overdraft facilities to enable them to participate in the development of Cato Manor.

This Guarantee Fund will be capitalised with European Union funds of R 5 million and administered by the National Urban Reconstruction Housing Association (NURCHA).

  1. Cato Manor Long-Term Guarantee Scheme

The objective of this scheme is to ensure that beneficiaries of housing projects in Cato Manor,  the great majority of whom have an income of R 1500 per month and below and who cannot gain access to loans for housing purposes as they are not formally employed, (or are employed with employers who will not arrange for payroll deductions and are not able to guarantee repayment of loans from the individuals pension fund to lenders) can gain access to small loans for housing purposes repayable over a maximum period of five years.

This Guarantee Fund will be capitalised with European Union funds of R 7 million and administered by the Home Loan Guarantee Company (HLGC).

Applications from six potential guarantee fund administrators were considered and after adjudication the two above-mentioned institutions were identified as the preferred candidates to become the administrators for the funds.   Both institutions are Section 21 Companies that have a proven track records in this field.

The Loan Guarantee Fund Administrators will issue guarantees to financial institutions including approved non-conventional lenders who want to lend to the above defined target market within the physical boundaries of Cato Manor.  The Fund Administrators will endeavour to contact potential financial institutions and lending agencies that want to provide finance in Cato Manor to meet the needs of the defined target markets. The current target is to be in a position to guarantee loans by the end of February 1999.

Interested community organisations, developers or builders will be advised which Institutions have entered into guarantee agreements with the Fund Administrators to finance working capital loans or housing loans in the area.

Members of the media are invited to attend the briefing and signing ceremony which will be held at 12 noon on Wednesday 3 February 1999 at the offices of the Cato Manor Development Association, Suite 119 Highway House, Mayville. (See attached programme).

For more details please contact Shelley Gielink on (031)  261-6640

 
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