Azola Mayekiso, CEO of the National Housing Finance Corporation (NHFC), shared insights on the NHFC’s achievements and strategies in an exclusive interview. Under her leadership, the NHFC increased housing finance approvals by 20% in 2023. Mayekiso explained that their focus is on the “gap market,” which includes income brackets from 3,501 to 22,000 Rand.
The NHFC operates a B2B model, supporting developers and non-banking intermediaries. They also facilitate fully subsidized housing, offering bridging loans to developers. Mayekiso highlighted the urgent need for funding to address South Africa’s housing backlog. She discussed enhancing risk management within the NHFC, emphasizing robust policies and monitoring to ensure financial stability.
Personal experiences reinforced her commitment to affordable housing. She advised young professionals to prioritize learning, obtain relevant qualifications, find sponsors and mentors, and allow their work to speak for itself. Mayekiso emphasized the NHFC’s goal of partnering with the private sector and attracting donor funding to sustainably address South Africa’s housing challenges as they move towards becoming the Human Settlements Development Bank. Excerpt
Congratulations on increasing the number of housing finance approvals by 20% in 2023 under your leadership. Could you share the key initiatives or strategies you implemented to achieve this substantial growth?
The thing about increasing the approval, and I suppose for us, that becomes crucially important because, at the moment, we don’t initiate it on our clients, who are developers, because we are wholesale financiers. So, we fund the people that actually do the work on the ground, even with respect to the retail, non-banking intermediaries that we provide funding to; we provide the funding to them as institutions, so it’s a B2B model for all intensive purposes, even though, at the end of the day, they then, you know, provide micro logos to individuals on the ground; we pretty much deal with other businesses.
So, it’s a B2B model that we follow, but with respect to us increasing our targets year on year, so that the demand out there is right for the market that we serve, and the market that we serve is what we call, really, that gap market. And the market that we serve is what we call that gap market, and the gap market is that market with income brackets that fall within the 3501 rent band, up to 22,000 Rand.
Finally, receive the house; the house is for ownership. So, they own it; it doesn’t belong to the government; it gets transferred to them. So, we also do play a role as the HFC with respect to the delivery of that fully subsidised housing, and how we go about doing that is that we have a bridging loan facility that we provide to developers on a revolving basis. So, it’s a revolving facility. And it really gets informed by how big a project that particular developer or contractor has been awarded. So really, what informs the approvals that we get in any given year is the demand that we receive from the developers. So, developers are fully satisfied.
We also play a role with respect to social housing, and what social housing really is is an affordable rental stock, but those rentals are very much regulated in search, and they are also heavily subsidized. by the government. And then we’ll also provide, you know, finance for the vision of private rentals. So private rental stock: we have both other social rental stock as well as private rentals and long, long-dated paper. The issue with that is that it enjoys full security. We’d like to take security on our senior loan facilities.
We are the national implementing agent for the Department of Human Settlement, who is our shareholder, you know, for access to our first home-financed subsidy. subsidy, it’s a subsidy for individuals who want to either finance their first home or who want to build it from scratch. So, there is an internal subsidy that works on a sliding scale. Weigh in the people who earn closer to the 22,000 Rand mark; they get the least amount of subsidy, and those who earn closer to the 3500 trademarks They get the largest portion of that substance. So, in the sliding fee scale at the bottom end, the lower-earning people get roughly 169,000 Rand. As a one-off subsidy, which then goes to either a down payment on the bond or that goes towards perhaps purchasing it fully.
And then for those that earn at the 22,000 Rand mark, that subsidy drops down to the region of 10,000 Rand. So that’s how that works.
Yeah, I think I’ve covered much of what we found at the NHD, so the reason we actually have a preference for our approvals to increase year on year as opposed to going in the opposite direction, obviously, is because of the housing backlog. It is going to be sitting at 2.6 million homes, and that is for the fully subsidised housing market.
And if we talk about affordable housing, there is, or rather, housing for the market that is sitting in the region just below a million households that still needs to be delivered. And this problem, unfortunately, as the years passed, got bigger and bigger because of urbanization. You know, people are leaving and are always in search of economic opportunities. And those economic opportunities can be accessed in urban areas. So, there’s a lot of migration that happens in rural areas.
People will come to the urban areas in search of working opportunities, and then at the end of the day, you find that the squatter camps emerge all over the show because, obviously, people are still looking for employment. They are unable to provide formal housing for themselves. And so they put up these squatter camps, and the problem from our side gets bigger and bigger with each passing year. So, we are desperate for more funding to go into the area, particularly if funding can be granted, because, as you can imagine, the South African government cannot carry this out in its own right. Because ultimately, if you are not going to derive a return for the fully subsidised housing that money is going to come from,
So, donor funding is something we are desperately looking for and something that I’m going to enter the world looking for, hopefully with all assistance as well.
Strengthening the NHFC’s risk management framework is crucial for financial stability. Can you provide insights into the specific measures you’ve taken to enhance risk management within the organisation?
So, when I arrived at the NHSC, there was an existing, you know, enterprise-wide risk management framework.
And this is great and this is an all-encompassing framework, right, that looks at operational risks, that looks at, you know, legislative, legislative, or compliance risks, just to ensure that the NHC operates within the legislative framework that is supposed to operate within that and all that other aspects that have to do with things like, you know, cyber security to ensure that all of those things that are in place are by and large, you know, the enterprise-wide risk management framework of the organisation was robust, right? So, there was nothing for me to do in that particular regard. But where there was something for me to do was certainly on the part of our core business, which is the lending business, and what we were doing in terms of safeguarding the institution from that perspective.
And one of the key elements that is currently underway is a review, because we are doing a review of everything that we do in terms of our core business. So, we are reviewing our pricing policy because, at the moment, we are just not sufficiently satisfied. That is the way that we price these loans that we disburse to our clients, right? We are doing it in the most optimal manner. So, we’re doing a complete review of that.
We are doing a review of our risk appetite statement, and we have a large consulting firm that is helping us with this particular exercise. We are reviewing our credit policy; we are reviewing our investment policy; we are reviewing our lending policy; and we are reviewing all the results you know, the processes and procedures that accompany these policies. So that is the work that is currently underway that we started implementing.
I would say in about June, yeah, in June, and we anticipate that this work is going to go on and we’re going to receive a final report for it in May next year, which means that in the first quarter of the next financial year, we are going to start doing things differently when it comes to our core business and how we price for risk and what kind of risk we take on in the first instance, but where, you know, our lending business is concerned, the type of security that we accept from our clients.
Just as the post-investment I think I came to realise that the organisation’s post-investment monitoring and evaluation were not robust enough. And when we needed to therefore make enhancements, when it comes to that, just to ensure that once we have disbursed money into a client, they start drawing down on a facility that, as they are rolling out the projects, right as they do the construction, that we also have our boots on the ground who monitor what is happening, right? So those are the kinds of enhancements that I have put in place that haven’t come in from the outside, and we believe that these things are going to help us, you know, future-proof the longevity of the NHC.
But it’s also going to just ensure that we begin to be judicious in the management of our book and the growth of our book because we do want to be aggressive with respect to, you know, supporting, particularly your emerging entrepreneurs, so that the black entrepreneurs, as you might be aware, our whole project in South Africa, which is called Triple B EE, so black, broad-based black economic empowerment, transformation, it’s a transformation project.
And the NHC really wants to lead the way in terms of playing a very catalytic role in the built environment. drive transformation. And so, we want to do that. We just want to make sure that, from a risk management point of view, we are not unnecessarily exposed to risks that we don’t have proper risk mitigation for, and, you know, we don’t have policies to ensure that we operate more with a risk-aware kind of approach than otherwise.
What personal experiences or moments have reinforced your commitment to making a difference through affordable housing, and how do these experiences shape your leadership philosophy?
After finishing off my Bachelor of Business Science degree at university, and before my final year during my honours year in finance, I started engaging with people that were already working.
So, I started engaging people that were already working, just, you know, trying to solicit some advice around what career paths I should be following. It was very clear that I didn’t want to be an accountant.
I did finance, but I also majored in economics as well as statistics, and I had also been introduced to things like marketing within the junior degree itself, as well as accounting, obviously, but it was very clear that I didn’t want to go the accounting route.
And I wasn’t sure exactly within finance what I wanted to do; I didn’t know economics was economics. But then, you know, the kind of economists that I was reading at the time, their work really was centred around research, and I wasn’t sure that I wanted to do that either. So in fact, you know, one of them pointed me in the direction of investment consulting.
He said, You know, it’s an emerging practice in South Africa, the world of acid consulting, and it really gives a very broad view of what happens in the investment world you are concerned about, and obviously, as an asset comes out, you get to advise them on things like how to formulate it, invest as much as election decision portfolio construction, as well as asset allocation, and in order to help them execute. You then also get to interface with the people that you know who get to manage that money by executing their investment strategy on behalf of those institutional investors.
You know, and that’s how I got basically that I found it very interesting to me that I also get to interface with people like fund managers, you know, people that manage global portfolios, they do investment analysis, and all those interesting things. And it really appealed to me, and then that’s what I should have a shot at, so I then interviewed with Alexander Forbes, as a consultant. I got interviewed, you know, out of their Cape Town office by the head, actually. At that time of the unit’s, cut a long story short, I ended up at Alexander Forbes.
You know, doing that as a consultant work, which I found incredibly interesting, but very quickly, I got bored because two and a half years into it, I was like, I know all there is to know about as a consultant now what’s next. That is where the Trinity to go study overseas found me. In September 2006, I went to start doing my MBA studies at Ashcroft International, which was at Anglia Ruskin University. So, I did a double degree, both an MBA as well as a master of arts in international business, at the UK and Young University within that International Business School, and coursework at Humboldt University of Applied Sciences at their international business school as well.
And then after that, I joined the Goonies Group, which is a diversified listed financial services business, and I spent eight and a half years of my life there. I started out in the corporate finance unit and then went and worked in the private equity funds business. At the end of that assignment, I got the contract to go work in their asset management business. What is today known as Veneti fund managers, and I was quite instrumental in turning that business around.
Basically, you know, they started out as a quant house, but then crunch was not accessible.
Changing the business model to become an active asset management house, I successfully entered a business that had 6 billion rand in assets under management. The CEO, who, at the time, had initially told staff that the business had another six months to go, would have to shut down. By the time I left, which was five years later, that business was sitting at 15 billion rand, so it had more than doubled in size since executing that strategy.
So, you know, that particular achievement is what got the attention of some investment management because, shortly after my nanny stint, I was then headhunted by some investors to go and run their traditional assets as the CEO. It was the fourth-largest asset management business in the country at the time. Yes, so I did that for three and a half years. So that’s what happened—some numbers show that my team was based in Cape Town.
My primary residence was here, and I had to commute every single week. Monday morning, got back on Thursday afternoons, and then worked out of the Cape Town office and out of the Johannesburg office on Fridays, and it was pretty much my routine until my daughter came along.
We tried commuting with the daughter for six months off, and I was like, No, it’s not working. And then that’s how I left some, and I basically went on sabbatical, so I left them in December 2019. And I had decided to take all of 2020 off. I lost my mom to COVID in July 2020. And then that basically shaped what I wanted to do; it had a big influence, at least on what I wanted to do.
Going forward in my career. For me, it was not going to be, you know, getting back into the job market and securing a job for the sake of a job. I wanted to get into something that was going to have a meaningful impact. And the bigger that impact, the better, you know, for my country. And so it took me quite some time to get back into the market because I had to turn down opportunities because they were just meaningless.
To me. The titles were great, but I mean, it was not something that was going to be fulfilling for me. So since then, since December 2019, pretty much—I mean, it took a while—in fact, when the head handicap or the NHSC paid my own, I’d already made a decision to start my own Social Impact Fund. And I have enrolled myself in a course at the UCT Graduate School of Business, for it has had a social impact. Investing course. And then they literally came when I was on day three of that course. And yeah, I suppose the rest of what they say is history. So, I ended up at the NHSC den starting in March of this year.
As a female leader, how do you balance your work and family life?
To tackle the first question, I always find it difficult to answer this question because I suppose I started late. I started my family late at night. I focused on my career. First, that’s kind of what I prioritised all along. So, by the time my daughter came along, I was 39 years old, and in fact, you know, as my friends kind of say, you saw organised, you organised right down to your own social life, you know, and because I was always very clear that I was never going to have children outside of wedlock, right? Because I know how devastating that can be, not only for the single woman, right? Who has to carry all of that burden all by herself? But it’s also devastating for children to grow up without their fathers. And obviously, I’m presenting this from a woman’s perspective, right?
So, for me, it was always very clear because I had witnessed it in my community. The kind of hardship I’ve witnessed in terms of my writing content was on the back of my mother’s divorce from my father, right when she then had to basically serve both the roles of a mom and dad, you know, and how much of a burden that was for her, the kind of sacrifice to make. So it was very clear that I had that kind of thing happen to my children.
I want to focus on ensuring that, you know, I secure myself financially first of all. Second, you know that the issue of getting married is something that’s not a priority for me. So, I prioritised my career well-being over financial freedom, right? And then, for me getting married, it was very clear that I would one day get married but that I would meet a specific kind of guy. It wouldn’t just be anybody, and I’m now incorrectly also trying to give advice to these young women. Yeah. It would be a very specific kind of guy—a guy who himself is driven.
A guy who is coming to support me and who’s not going to be intimidated by me I had faced all of those because I had kissed those frogs before. And it was very clear that I wouldn’t have to end up with someone where I have to fight my space or dim my light so that they can be comfortable, you know? I needed to end up with someone who’s self-assured, who is, you know, who is a go-getter and is ambitious in their own right, who has their own life, right? Because I have a full life.
And, you know, the one thing that I was never going to permit was a guy who’s going to control me and my movements, what I wear, what I do not wear, you know, and all that stuff that other ladies have to contend with. So I was very clear. And the third thing I was clear about was that I would get married. I wanted to enjoy my husband. And the notion of starting a family would be something secondary, something that we do later on. Yes, once we’ve enjoyed ourselves as a married couple first.
And that’s precisely, you know, I kind of followed that plan to the tee. And so, by the time I hit a baby, I was 39 years old when I delivered my baby. So, the work-life balance thing—all that I do to balance things right So, when I can be there for my daughter, I’m fully engaged through and through, but when I cannot be there, I have support. She goes to play school, and my daughter, at the moment, communicates with me. I automatically pass on those messages to the nanny to make sure that whatever is required at school the following day, she thinks that out and my job, but if I can’t, the nanny or the dad will pick her up.
And so yeah, I think by answering that question in that detailed manner, I’ve already given that advice to the women, but in terms of the strategies to navigate the workplace itself, I want to say to the young women, just focus on, you know, being an architect. You must focus on being irreplaceable because we will all be replaced in the workplace. That’s just a fact.
If they can focus on learning as much as they can, in whatever opportunity they are provided, because, at the end of the day, no one can take your experience away from you, So I would really encourage the young people, right, to immerse themselves in whatever opportunities they get provided, and by the way, everything happens for a reason. You might start a company, but everything about your journey is preordained. If you like, you obviously don’t have the benefit of seeing into the future. But wherever you might find yourself, there’s a reason you are there.
And my advice is to fully engage yourself in it. Don’t do it for the money. Learn all that you can and take on whatever opportunity is thrown your way. Right, with both your hands, and really, just like fully immersing yourself in it.
The second thing you know is that it’s important to prepare for your future.
If you want to end up in a particular place, you just need to do the necessary research, you know, to enable you to understand what steps you need to take to get you closer to the destination that you want to get to. So, you do need to obtain the education through the short courses you know and the relevant work experience.
Also, you know, if you want to rise within your own workplace, you have to find a sponsor within that workplace. But in finding that sponsor, you’ve got to give the sponsor something to talk about with you about who their colleagues are in the decision-making process. You know the places within that workplace. So, what am I saying by that? I’m saying you have to allow your work to speak for itself. So you’ve got to shine, but shine through the work that you deliver for the organization. So, find a sponsor, because that sponsor will talk about you to people who matter, and that might have a bearing on you getting promoted within the workplace.
But then it’s also important to find a mentor because mentors help you navigate; they talk to you, they give you advice, and they are your sounding board. You know, if you need to navigate a particular thing, it’s something that, chances are, they would have gone through themselves and might have some nuggets for you on how to navigate it successfully.
With your impressive background in finance and business, how do you balance the financial sustainability of the NHFC with your mission to provide affordable housing for all? What strategies do you employ to strike this balance effectively?
So I’m going to start with the last question first. When I just literally arrived at NHFC, it’s going to be six months at the end of this month, at the end of September. So I’ve just arrived, and so much for you know. The big thing that we are currently engaged with right now is that there needs to be a culture change in the organisation, and we are busy trying to pop the culture of high performance because, given the importance of our mandate, we really can’t afford to slack off. We can’t afford to pull people up, Patrick; we can’t afford to take too long to approve transactions. We can’t afford to take too long to say no to people; you know, if their transactions aren’t going to be approved,
I believe it is really going to set us up very nicely, leading up to our migration to become the Human Settlements Development Bank. And by the way, that’s where we are headed. Chances are that by this time next year, we will already be the HSTD, which is the Human Settlements Development Bank. The only DFI in human settlements
Yeah, and then and then on the first question around sustainability, so I did try to stay in answering that first question; it’s going to be important for us to crowd in the private sector.
Because then we can invest in opportunities, as opposed to the NHSC relying on its own resources, because that way if we get others to invest alongside us, whether it’s the banks themselves or whether or not it’s private equity funds that want to invest in this in this housing space, it is social impact vehicles that want to invest alongside us. We are definitely going to do everything that we can to crowd in those kinds of third parties to come along with us on this journey of funding and affordable housing, because not only are we going to be stretching our own resources,
But we are also going to, together with these strategic partners, deliver on the Ask that is out there. So, it is two-pronged in that manner. And that’s how we’re going to approach it. And also, you know, I cannot emphasise enough the importance of the other donor funding that could come along with us in this quest to house the South African nation.
