NHBT lauds public-private partnership mechanism

NHBT lauds public-private partnership mechanism
By Joan Chirwa
Friday September 14, 2007 [04:00]

NATIONAL Housing Bonds Trust (NHBT) has said the public-private partnership mechanism adopted by the institution is the most sustainable way of handling the accommodation crisis in the country. NHBT chief executive officer Zik Zekko said in an interview that the institution’s focus in the construction of estates in the first five districts of the country was meant to derive greater benefit of both the public and private stakeholders in the development process.

The housing bonds trust, set up last year as a special purpose vehicle (SPV) of the Ministry of Local Government and Housing, seeks to assist in solving the accommodation crisis in the country in collaboration with local authorities in five pilot districts namely Chipata, Kitwe, Lusaka, Livingstone and Solwezi.

Government identified the option of borrowing money from the public through the issuance of housing bonds on behalf of the local authorities so as to deliver periodic housing infrastructure to all 72 districts in Zambia, within the targeted period, with a primary goal of providing about 800,000 quality and affordable housing units to Zambians by 2015.

According to recent statistics, the country is currently short of about 1.5 million housing units, a situation that has pushed up rentals especially in urban areas.

“The housing situation is widespread in this country and this is the reason why the government thought of a mechanism such as the NHBT in order to have affordable accommodation provided to the Zambian people,” Zekko said.

He further indicated that the NHBT has set November as the time for the issuance of housing bonds on the stock market in order to raise funds for the project.

“We will require about US$10 million approximately K40.2 billion to construct an estate in each of the five pilot districts,” Zekko said. “This means we need a total of US$50 million approximately K201 billion to build estates in the five districts. After the issuance of bonds, we hope to start construction by December and I am hopeful that we will complete the construction within the expected period which is two years.”

Zekko said the institution had already acquired land in the four districts, except Lusaka because of the growth of the construction sector in the city.

But some stakeholders have however raised concerns over NHBT’s planned way of sourcing funds, saying the municipal bonds might not be successful if the financial base of the councils was not expanded.

The Economics Association of Zambia (EAZ) indicated that members of the public would be interested to purchase the bonds if the financial capacity of the bond issuer councils was known to be strong.