Low-cost Housing and Community Facilities
Kuyasa is a microfinance institution that extends to low-income clients to build or improve their houses, based on their savings records. “Hope – that’s what we sell,” explains Olivia, the executive director. “The journey of hope started when people came to the city looking for work. Kuyasa’s challenge is to convert that hope into something concrete, such as a house.”
Seventy-four percent of Kuyasa’s clients are women; 75% are between 40 and 60 years old; 60% are informally employed or pensioners; 86% have no individual bank accounts; 70% earn less than ZAR 1,500 and 93% earn less than ZAR3,500. This means that virtually all of their borrowers are eligible for government housing subsidies, which they can stretch further (to build larger and better houses) with the help of Kuyasa loans. Typically, the loans enable clients to expand their houses from 36 to 60 square meters. Some clients’ houses are valued between ZAR 100 and ZAR 250,000, which would seem to qualify their owners for formal bank mortgages. However, the borrowers’ incomes would be insufficient to enable them to make mortgage payments.
Kuyasa’s loans, amplified by savings (which clients manage in groups and deposit at either Standard Bank or the Post Bank), stretch far further than those of the government subsidies. With the amounts of government subsidies for 583 people, Kuyasa can build the same facilities for 5,500 clients. Thus the combination of subsidies, savings and loans enable clients to construct much more house for their money. Clients use their funds as they choose in ways that range from sweat-equity (self-build) to employing small contractors.
Kuyasa understands savings as a primary development tool, and engages people and encourages them to organize into community-based savings groups. Sixty-five percent of their clients take no loans, but simply save for their own housing by participating in savings groups.
Eunice and Govan Mbane, Kuyasa clients from Khayelitsha, Western Cape
Eunice and Govan are the proud parents of three children ages 16, 17 and 20. Their 17 year-old son, Andile, is still in high school, and now hopes to become a doctor.
The couple left their shack in the township of Crossroads, outside of Cape Town in 1986, as violence, fueled by the government and “third force” agents, erupted between the ANC comrades and apartheid collaborators when President P.W. Botha attempted to establish a tri-cameral parliament that excluded black South Africans. The Mbanes moved to a shack in nearby Khayelitsha, which was quieter and safer at the time.
After South Africa became a democracy, and Kuyasa was established, the family discovered they could obtain secure and permanent housing with Kuyasa’s help. When the family received their government subsidy of $1,400 (to build a house on a serviced site), Eunice applied to Kuyasa for a loan to expand the home to accommodate the family. She joined a savings group and saved a total of $140 over a six-month period, against which she borrowed $350 from Kuyasa. She used the first loan to purchase building materials, which her husband, working with the builders, used to increase the size of the home to a four-room house. Eunice continued to supplement the family income by sewing and selling clothes.
She then increased her savings, and returned to Kuyasa for a $700 loan. Just before she had finished paying off her second loan, when her husband was injured on his construction job and laid off, and she came to Kuyasa in tears. The Kuyasa staff worked with her until the loan was repaid, and then lent her an additional $700. She used the loan to finish the work on the walls, and is in the process of repaying it. She plans to apply for a final loan to install a ceiling below the roof to improve insulation.