A case study – N2 Gateway Housing Project

7 06 2009

5th June 2009
Source: SAIRR

The N2 Gateway Housing Project is an initiative which was started in March 2005 by the three tiers of government – the national Department of Housing, the Western Cape Provincial Government, and the City of Cape Town. All three tiers were, at the time, led by the African National Congress government.The project was aimed at replacing informal settlements along the N2 highway with formal houses and flats. This may in part have been a public relations exercise. The first things many visitors saw as they landed at the Cape Town Airport were the shacks along the N2 highway. This project was also designed to be the lead pilot project of the Comprehensive Housing Plan for South Africa which was adopted by the Cabinet on 1 September 2004. However, the project did not succeed as planned. Controversy arose around the N2 Gateway Housing Project.

An auditor-general’s report which was completed in 2008, and tabled in Parliament in April 2009, revealed that the project had “not been managed economically, efficiently or effectively”. The report stated that the cause of the problems arose from the fact that the business plan had not been finalised and approved before construction began.

A memorandum of understanding was signed by the three tiers of government in 2005 to define roles and responsibilities. However, the auditor-general found that the necessary legislation and policies were not in place when construction began. The memorandum was also found not to clearly define different roles, and this led to uncertainties about accountability when things went wrong.

The following other shortcomings were listed by the report:

–           The identification and securing of sufficient land was not finalised prior to construction;

–           Detailed geotechnical surveys were not completed prior to starting the project;

–           The selection of beneficiaries was not finalised before construction began;

–           The time frame for the completion of the project was not realistic;

–           Affordable housing was not provided for the identified target market; and

–           Funding arrangements were not finalised and secured before the project began.

These shortcomings led to several unintended consequences. Firstly, the six-month time frame given to deliver 22 000 units was not realistic. Two years after construction began, only 871 (5%) of the revised 16 735 planned units had been completed (21% of the total budget had already been used by that time).

Secondly, design changes to the planned houses had a direct impact on the cost and time frame, resulting in legal claims by construction companies against the City of Cape Town for “abortive work and standing time” totalling R43 million . The total additional cost for the initial phase of Joe Slovo, an area along the N2 highway where the first houses were built, was R28.2 million for 705 units. This amounted to an additional cost of R40 000 per unit       from R80 900to R129 900.

Thirdly, in the initial phase of Joe Slovo, the report showed that the certificate of completion for the building contract was incorrectly issued. Furthermore, the auditor-general could not verify compliance with registration and inspection procedures including the National Building Regulations and the National Home Builders’ Registration Council.

A state-owned company, Thubelisha Homes, took over as project manager when the Democratic Alliance administration took over in Cape Town in 2006. On 27th April 2007, the Cape Argus reported that the Sobambisana Consortium, which built houses in the initial phase of the project, said that Thubelisha Homes knew about defects in the houses, and still allowed tenants to move in. The consortium is made up of six companies – Asla Devco, Asla Magwebu, Citrine, Khayalethu Projects, the Khayelitsha Community-Based Development Company, and Power Developments. The auditor-general’s report also found that proper procurement procedures were not followed in the appointment of Thubelisha Homes.

Thubelisha Homes was declared insolvent after the government’s Housing Development Agency took over from the company following the auditor-general’s report.

The Department of Housing said in a statement issued on 8th April 2009 that more than 4 000 families had moved into the new homes, and that construction for another 6 000 houses had begun. This is far behind the 22 000 housing units planned in 2005, and later reduced to 16 735.

It is clear that the project was either poorly conceived, poorly implemented, or both. The failures highlighted by the auditor-general have to be avoided if this type of project is to be implemented in other areas. The failures of the N2 Gateway Project should serve as a warning to local government. It should ensure that before entering into a joint project with other tiers of government that there has to be a proper plan (including proper financial plans) and roles have to be clearly defined.

Formal housing forms the basis for adequate sanitation, electricity, and clean water. Characteristics of informal settlements which were discussed at the Major Urban Poverty Challenges Identification (MUPCI) workshops held in the City of Tshwane and City of Cape Town, included health issues, overcrowding, and crime.

The remaining six MUPCI workshops will take place during July and August 2009, and the remaining municipalities will have the opportunity to highlight the key poverty concerns in their areas.

The municipal outreach project aims to provide extensive research to municipalities covered by the Municipal Outreach Project. This will be done by means of publications, the project website, and workshops. A monthly publication called Fast Facts for Local Government (F3LG) is sent to local councillors, officials, and development organisations in the eight municipalities covered by the project. A weekly newsletter is posted on the project website on Fridays, and e-mailed to project beneficiaries. The annual South Africa Survey, published by the Institute, will be posted to municipalities and extracts posted on the project website.

-Nthamaga Kgafela




One response

4 02 2011
Sibulele Dyodo

The concept of densification as defined by a number of legislations in South Africa needs to be evaluated whether it is applicable in our country or not. Densification is an ideal solution to deal with overcrowded and high residential demand, however, most communities in which this concept is presented do not accept it. The reason for the rejection is cultural, but the question is, is culture living (single stand residential plots) applicable in urban areas where there is limited land? Are our people subconsciously wanting apartheid planning legacy to continue?

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