Rescue plan for Mass Housing

Brand new, affordable houses stand empty across the country, creating the impression that the government is not serious about housing delivery.

14 February 2020 | Government

The ministry of urban and rural development says it will “expedite” the completion of hundreds of houses built under the Mass Housing Development Programme (MHDP) that were abandoned some years back.

The ministry admitted on Friday that 1 122 of the 3 958 houses built before the programme grounded to a halt were still incomplete. The executive director of the ministry, Nghidinua Daniel, said the ministry would oversee the full completion of the 1 122 houses built under the initiative. He said the National Housing Enterprise (NHE) would allocate completed houses that were ready for occupation to “avoid further unnecessary damage”.

Daniel said NHE would make arrangements to “encourage” buyers to take occupancy without delay.

The ministry said 2 836 houses were already occupied.





A new spotlight was thrown on the mass housing project when members of the public demanded to know what would happen to the houses.



The origins of the programme

The mass housing project was launched in November 2013 by outgoing president Hifikepunye Pohamba as his 'legacy project'.

So much weight was placed on the project that a ministerial committee, chaired by Pohamba himself, was created to steer the process.

Others on this committee were the then minister of regional and local government, housing and rural development, Charles Namoloh, minister of presidential affairs Albert Kawana, minister of finance Saara Kuugongelwa-Amadhila, and the director-general of the National Planning Commission, Tom Alweendo.

The NHE was directed to develop a concept paper and a blueprint for the initiative was adopted by the cabinet in July 2013, about five weeks after the project was hatched.

Outlined in the blueprint was the intention to build 185 000 affordable houses by 2030 at a cost of N$45 billion; 10 278 houses were to be built yearly over the next 18 years at an annual investment of N$2.5 billion.

It was later decided to kickstart the project as a two-year pilot phase between 2014 and 2016 in which 5 000 houses per year – or 10 000 over the two-year period – were to be built.

With the emphasis on affordable housing, and because of high input costs, the government undertook to subsidise these houses by 40% to 60%. With these subsidies, the houses were priced at N$220 000 on average, with smaller houses priced at less than N$90 000.

After Pohamba launched the programme in November 2013 the housing ministry invited construction tenders and indicated that the houses were to be built at an “accelerated and rapid approach”.

In conformity with a cabinet resolution, the advertisement also indicated that the NHE was to do the contracting in accordance with NHE tender regulations.

With that, 216 companies applied and by January 2014 the NHE had signed contracts with 25 companies to build the houses and 11 companies to service the land. By February 2014 all contractors were on site and construction started.



Trouble brewing

At a meeting that February, however, Kuugongelwa-Amadhila insisted that the NHE did not have the mandate to award tenders. She insisted that the MHDP was a government project and that tenders should be approved by the then national tender board, which fell under her ministry.

Her interpretation carried the day and Namoloh instructed the NHE to cancel the contracts, stating that certain agreements were unlawful and unenforceable because they “did not meet the requirements of NHE's own tender procedures and policies and that certain terms of such agreements [were] against public policy and interest”.

More importantly, no money was forthcoming from the treasury despite the fact that contracts had already been entered into between NHE and the contractors.

An attempt by NHE to borrow N$2 billion from the Swiss bank Credit Suisse was shot down by finance permanent secretary Ericah Shafudah.

Shafudah held that Credit Suisse was “unknown” and questioned the bank's “capacity and capability to mobilise the funding when needed”.

She also raised concern over the foreign-exchange risk and proposed that NHE approach “reputable international financiers” like the African Development Bank (AfDB), or alternatives such as Shelter Afrique, Afreximbank, and other “similar institutions”.

Unbeknownst to everyone the NHE decided to move ahead with the mass housing initiative and the contracts it had already signed with contractors, and obtained a N$220 million loan from Bank Windhoek to save the project.

In May 2014 it surprised even Pohamba, who was allegedly under the impression that nothing was happening on the project.

In May 2014 Pohamba was at the coast to inaugurate the Husab uranium mine and the Walvis Bay harbour expansion. The NHE used this opportunity to show some of the houses built under the mass housing scheme to Pohamba, who at that stage was allegedly unaware of any developments in the initiative.

Furious at conflicting reports on the project, Pohamba gave instructions that money from the treasury be released. Only by July 2014 – six months after the project had commenced – was money beginning to be released to the ministry of urban and rural development.

Kuugongelwa-Amadhila this week said the allegation that she had “starved” the mass housing project was false and malicious.

“Payments under approved government programmes are made in terms of state laws and regulations, and never on the basis of the discretion of the minister of finance,” Kuugongelwa-Amadhila said.

She said the funds that were provided for the mass housing programme were disbursed by the finance ministry to the line ministry responsible for housing under the said governing framework.

An NHE official who preferred anonymity concurred, and stressed that not a single cent was given directly to the NHE.

“Treasury advanced the money to the line ministry, which took the responsibility to pay the contractors after payment certificates were approved by the ministry,” this source said.

Although the housing ministry denies that the mass housing scheme was suspended, President Hage Geingob, when reporting on his first 100 days in office on 29 June 2015, officially informed the nation that the initiative had been stopped “due to numerous irregularities reported”.

A total of 4 880 jobs were lost as a result.



Alleged irregularities

During the implementation of the mass housing scheme, the NHE was accused of having inflated or negligently accepted inflated construction prices.

Vinson Hailulu, the former NHE CEO, was accused of having received bribes from contractors with which he allegedly bought a Mercedes-Benz CL500 SUV in cash. He was also accused of having corruptly allocated tenders to his relatives.

The government appointed two firms of quantity surveyors to investigate the inflated pricing allegations. They found that the construction prices the NHE had agreed with the contractors were in line with market rates, if not below market rates in some cases.

The Anti-Corruption Commission (ACC) launched two investigations into Hailulu but according to documents seen the ACC did not find any evidence to support the allegations against him.

Subsequent to these investigations, Hailulu wrote to Geingob to express his “humble expectation” for the government to vindicate him and help repair the damage inflicted upon him and the former management of the NHE. No response has come from Geingob to date.

What cannot be removed easily are the hundreds of houses standing empty and derelict across the country.



CATHERINE SASMAN

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