Sunday, May 29, 2022

Deputy CEO asserts BHC’s right to make profit

Received wisdom in certain quarters is that the Botswana Housing Corporation (BHC) is not a commercial enterprise but merely a state-owned enterprise that should provide affordable housing to the nation. That was the “confusion” that BHC’s Deputy Chief Executive Officer (Operations), Nkaelang Matenge wanted to clear when he took the stage at a session of the four-day the engineering forum which was held at Boipuso Hall last week. The forum was organised by the Engineers Registration Board.

Quoting the Botswana Housing Corporation Act, which established BHC in 1970, Matenge said that the Corporation was well within its mandate to function as a commercial enterprise in order that it could stay afloat and execute building projects on behalf of the government.

In buttressing the latter point, he painted a picture of set of circumstances in which BHC has to discharge its mandate. Over the past 27 years, “BHC hasn’t received any subventions from the government.” In the period of its existence, the Corporation has built 26 000 units and sold “over 17 000” of such units to Batswana. Its tenants pay “20 percent less than the market rate.” A unit at its Tsholofelo East flats in Gaborone sells for “just over” P460 000: “Where else do you get a flat that cheap?” On the whole, “among developers, BHC products are the most affordable.” As regards profitability, Matenge said that BHC’s profit margins are “very low.”

Against that situation, BHC has to borrow money from financial institutions at normal rates. Those institutions expect the Corporation to be in good financial health in order that it would be able to return the money it was lent.

Addressing the Kweneng District Council in that year, then Deputy CEO, Milidzani Majingo, said that the rentals of BHC houses had remained stagnant whilst construction costs had been escalating. The government approved BHC’s request in 2020 and the rentals were increased in April 2021. Rentals will be going up again this coming April. Tenants have already received a letter from the Regional Director, Kesebonye Khimbele, that says that BHC has completed a review of its rentals for implementation in the 2022/23 financial year.

“The review comes on the backdrop of annual rental adjustments approved for the Corporation by the government, affecting all tenants (government, local authorities, parastatals, private companies, individuals and other corporate bodies,” Khimbele’s letter reads.

While BHC has made a credible case for why its rentals have to go up, some have questioned why the rentals had to be implemented amid a pandemic that has hit most tenants very hard in the pocket.

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