Frequently Asked Questions

Q:

What are the main differentiators that set RHLF apart?

A:
We focus on low income rural market.

We have expertise and experience in financing incremental housing or progressive building.

RHLF is an endorser brand, not a micro-financier. We also provide free consumer education.

We are a social venture capital institution – putting our service and our clients before profit, yet prudentially looking after our funding.

A flat organizational structure promotes teamwork.

Q:

Why work with intermediaries?

A:
It is more cost effective and enables greater geographic reach. Our clients enable rapid and efficient service to applicants and end-users. The retail lenders respond more quickly to events and to local needs and circumstances. The intermediaries are relatively better able to ensure high repayment rates.

Q:

How is the consumer protected from over-exposure and excessive interest rates?

A:
Rigorous credit assessment by RHLF intermediaries helps protect the end-users from over-indebtedness. No more than 25 to 30% of household’s disposable income can be used for servicing and repayment of credit. Interest rate margins of the intermediaries are capped and monitored in terms of RHLF Pricing Policy. Our clients promote family budgeting.
Furthermore, our intermediaries are registered with the National Credit Regulator and operate in accordance with National Credit Act.

We grant loan facilities to our intermediaries at low interest so that lenders can pass the benefit of low interest rate to borrowers. We encourage our lenders to charge below the maximum interest rate prescribed by the National Credit Act Regulations. Our Pricing Policy is designed for this purpose.

Q:

How do we define a rural area?

A:
In line with RHLF mandate, we define it as: agricultural areas, settlements near small family-owned farms, villages on communal and proclaimed land, dense settlements on communal land or small proclaimed towns, new settlements arising from restitution and redistribution. Metropolitan areas are excluded but some “grey areas” have been serviced. Some of RHLF’s clients are well positioned to take advantage of nodes identified in government’s Integrated Sustainable Rural Development Strategy.

Q:

What can RHLF loan be used for?

A:
Our loans are used to buy, build, or improve fixed property on which the borrower lives. They generally cover construction costs, purchase of building materials, fixed improvements, connections to services such as water, sewerage, electricity, fencing, water harvesting and the purchase of land. No asbestos based materials may be used. Because of low income levels for people in our target market, People take small loans that they can afford and build incrementally until they have completed a desired house.

Q:

What support is provided to end-users?

A:

We provide via our approved lenders a free Building Advice Handbook which help borrowers to get more value for money by avoiding common building problems.
We also publish a directory of available subsidies, sample plan catalogues and building advice handbooks. RHLF tries to promote acceptable construction quality.

Our approved lenders also support borrowers with consumer education materials.

Q:

What are RHLF’s investment instruments?

A:
RHLF’s core business is to provide structured loans to intermediaries, from which approved lenders draw and on-lend to the market. We also provide pilot loan facilities to entrepreneurs who are testing the market for the product. We also take equity stake in startup companies with a view to enhance and support their growth.

Q:

What is RHLF’s risk philosophy?

A:
We have always understood that because rural households are generally poor, operating in the rural market is high risk. The biggest risk is that of the failure of borrowers to pay. The other risks are the contagion effect of irresponsible lending and the operational liquidity and solvency of the intermediaries.

Q:

Who can become a RHLF client?

A:

  • A potential RHLF client must be a Proprietary Limited Company (Pty) Ltd or a Close Corporation already operating in the micro finance sector.
  • The potential client must also be registered as a micro lender with the National Credit Regulator.
  • The client must also have business focus on housing lending in rural areas for low income earners.
  • Key personnel in the organization must have relevant experience in the microfinance/lending industry.
  • RHLF also grants loans to community based organisations who operate along stokvel principles. In this case a community based organisation will only lend to its members not to the general public in order to comply with the National Credit Act.

Q:

How to apply to become a RHLF intermediary?

A:
A detailed business plan must be submitted to RHLF.

Q:

Does RHLF only work with commercial retail intermediaries?

A:
As stated above, RHLF also works with Community Based Organizations who are income generating and have a need to improve their current housing conditions. And we also target member based organizations to facilitate housing credit facilities for the benefit of their members.

Q: How can I as member of the public access RHLF loan?

A:

Since RHLF operates as a wholesale Development Finance Institution, borrowers must approach RHLF approved lenders to apply for a loan. We encourage borrowers to get quotes for a loan form more than one lender to ensure that they can get a better loan outcome.