Thursday, May 6, 2021

BHC Chief cries foul!

The Botswana Housing Corporation CEO Reginald Motswaiso has come to the defence of his embattled corporation.
BHC has recently been subjected to incessant attacks that it has abandoned its mandate of providing decent and affordable accommodation to Batswana in the quest for profit maximization.
Speaking at the presentation of the 2006/07 stakeholders dinner and launch of the annual report in Francistown on Friday, Motswaiso painted a gloomy picture of a corporation that finds itself faced with the daunting task of battling to provide decent and affordable accommodation in the face of decreased revenue caused by stagnant rentals and skyrocketing development costs.

Motswaiso also called for the amendment of the BHC Act to make it more autonomous.

For some time now the BHC has been lobbying government through the line ministry to give them more independence.
Motswaiso said were BHC to become more autonomous from the Minister of Lands and Housing, they would be better placed to make management decisions that would benefit the corporation’s business.
At the moment, he said, they are restrained by having to report to the minister who reports to cabinet; a tedious thing which hampers speedy commercial decisions.

The amendment of the act would effectively shift power from the minister to the corporation’s board of directors.
That would enable them to make independent decisions on issues like rental increments and loan acquisitions without having to seek approval from the minister.

The BHC initiative was however greeted with hostility and suspicion by members of the public and the legislature who wasted no time in reminding the corporation that it remains answerable to the taxpayer and should, therefore, desist from acting as if it is an independent corporation bent on profit maximization at the detriment of the citizenry.

Faced with increasing public hostility led by maverick BCP MP Dumelang Saleshando, who recently tabled a motion in parliament requesting government to review the BHC mandate and to empower it to provide affordable housing for the lower and middle income groups, the BHC CEO threw down the gauntlet at the corporation’s dinner and came out with guns blazing in a no holds barred defense of his beleaguered corporation.
The CEO said that they welcome observations and comments from the public as they provide them with an opportunity to further explain exactly what their mandate is and to attest the importance of shelter to human kind. He welcomed Saleshando’s motion, hailing it as an indicator of the fruitfulness of BHC’s consultations with stakeholders.
But Motswaiso refuted allegations that they have abandoned their mandate saying that contrary to public perception they are still operating within the confines of the BHC Act which mandates them to provide for the housing, office and other needs of government and local authorities.

He said construction inputs such as labour, material and overheads have more than doubled, especially with the advent of the FIFA World Cup 2010 in South Africa.

Motswaiso also explained that BHC buys land at market rates in urban areas and has to incur additional infrastructural costs in most cases. He cited BHC’s recent expenditure of P120 million in Block 7 and P7 million in Ga Phatshwa as typical examples.

He proposed that developments costs and, by extension, the cost of BHC housing units would be greatly reduced if government was to avail land to the corporation without any financial consideration. He also called for sharing of costs with other utility corporations to reduce costs.

Another problem that the CEO said they faced is the stagnation of rentals as the corporation has not increased its rentals in the past 4 years despite spiraling costs. He said that the cost stagnation is despite the fact that rental income accounts for the bulk (56%) of the corporation’s income, and any rental increases have to be approved by government. He called for regular reviews of rentals to fend off effects of devaluations and inflation.

Motswaiso also explained that they find themselves faced with conflicting situations as despite the fact that they have to provide affordable housing they are also faced with the daunting task of responding to customers’ demand for top quality designs in their properties, which he says increase production costs and, consequently, the selling price.
Government has directed parastatals to manage their businesses in such a way that they are able to meet their expenditures and at the same time be self sustaining. ”Given all these challenges, self sustenance cannot be achieved without breaking even, and we can only break even if we recover our costs and we can only recover our costs if our revenue exceed our expenditure,” he explained.

Motswaiso also said that housing is a basic need for all human beings and should, therefore, be exempted from VAT, especially for first buyers and the low income group.

Instead of paying the requisite 25 percent of its surplus as dividends to government, Motswaiso proposes that such dividends could be converted into provision of housing for the low income group which would alleviate the home ownership challenges faced by this group.

“While the nation looks upon us to deliver their housing needs, we have to overcome these tides and hurdles, but it is our conviction that while they might be a bitter pill to swallow the suggested interventions might prove to be just what the doctor has ordered,” concluded Motswaiso.

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