Out of the frying pan into the fire: the limits of loan finance in a capital subsidy context

This paper describes the difficulties that the South African Homeless People's Federation has had to face, as the government housing subsidies to which its members are entitled have not been forthcoming. The Federation's members are entitled to a housing subsidy of around US$ 1,500 - and there are housing developments all over South Africa built by Federation savings and loan groups that have demonstrated their capacity to build good quality homes with this. Because of the time taken to obtain housing subsidies, a special fund (the uTshani Fund) was set up to provide bridging loans so that members could start building their own homes. The Fund was to be sustained, as members obtained housing subsidies and repaid the loan thus making more funds available for other bridging loans. But most members who took out loans never received the subsidy and many now face difficulties in repaying these loans. This paper describes how the problem arose and how the Federation and its support NGO, People's Dialogue on Land and Shelter, are seeking to address it. In doing so, it discusses the difficulties that movements of the urban poor face in reconciling the immediate needs of members (including access to housing) with strategies to obtain the long-term political changes that would allow such needs to be met sustainably.