Are Hernando de Soto's views appropriate to South Africa?

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Snakes and ladders the hands of the poor, and also that municipalities often view low-income housing projects as liabilities because of the non-payment of municipal services and taxes. BNG expands the housing mandate to accommodate lower-middle income groups (defined as those households earning between R1 500 and R7 000 a month) via access to a credit and savings-linked subsidy, to be finalised under the Financial Services Charter. BNG has two sets of objectives: primary ones, directly related to housing, and secondary ones aimed at achieving a series of ‘spin-off ’ benefits, most of them economic. Some of the latter – particularly ‘realising the value of assets’, and ‘reducing duality in the housing sector’ – clearly resonate with de Soto’s thinking. Figure 2 reflects the BNG’s objectives in these terms, and highlights the envisaged spin-offs relevant to this analysis, namely ‘property as an asset for wealth creation and empowerment’, ‘leveraging growth in the economy’, and ‘reducing duality in sector by supporting the functioning of the entire residential property market’. BNG’s objectives of realising the value of ‘dead assets’ and reducing duality in the housing sector demonstrate that de Soto’s ideas have definite currency in the current housing policy discourse. Figure 2: Tracing the duality thesis in BNG Core objectives Spin-off objectives BNG argues that the residential property market has been skewed, to the detriment of those living in marginalised areas Vision Promoting the achievement of a nonracial, integrated society through the development of sustainable human settlements and quality housing Housing Utilising housing as an instrument for the development of sustainable human settlements, in support of spatial restructuring Social • accelerated delivery as a key strategy for poverty alleviation • reducing crime and improving social cohesion and quality of life • helping to create a non-racial society Economic • using the provision of housing to create jobs • using property for wealth creation and empowerment • leveraging economic growth • reducing duality in the housing sector; supporting the functioning of the entire residential property market BNG and reducing duality in the property sector BNG argues that the residential property market has been skewed, to the detriment of those living in marginalised areas. As a result, it proposes promoting and supporting the residential property market as a whole. Figure 3 reflects the proposed elements of this initiative, highlighting the issue of access to title. 35
Lauren Royston Figure 3: BNG’s strategies for reducing duality in the property sector BNG therefore posits that enhancing access to title will help to realise the value of ‘dead capital’, and support the housing policy’s objective of alleviating poverty • Extending state housing subsidies to lower-middle income groups (thereby expanding the lower end of the property market) • Adopting a more flexible approach to demand, and shifting away from product uniformity • Enhancing the role of the private sector in housing provision by creating new opportunities for private sector participation in construction, collapsing the subsidy bands, providing housing finance, putting in place project management and other support and promoting employer-assisted housing. • Creating linkages between the primary and secondary residential property market by supporting individual housing demands, removing barriers to housing trade, focusing on the local level, and enhancing access to title BNG therefore proposes enhancing access to title as a means of reducing the duality in the property market. BNG and housing assets BNG problematises the investment value of the housing subsidy in stating that subsidised houses are not perceived as valuable assets. Its goal of supporting the entire residential property market represents a significant shift in focus. The creation of linkages between the primary and secondary residential property market is one of several strategies for realising the asset value of housing. It argues that a dysfunctional secondary residential property market undermines the realisable value of property Figure 4: BNG’s strategies for realising the value of housing assets • Supporting individual demands by making subsidies available for secondary market transactions • Reducing the prohibition on the sale of government-subsidised property from eight to five years • Enhancing access to title by stimulating the transfer of free-standing public housing stock and by expediting the registration of transfer of subsidised houses and the concomitant poverty alleviation aspects of subsidised housing. Figure 4 reflects those elements of BNG that address asset creation, and again tracks the role of formal property rights. BNG therefore posits that enhancing access to title will help to realise the value of ‘dead capital’, and support the housing policy’s objective of alleviating poverty. This brief overview of BNG shows that enhancing access to title features prominently as a means of reducing economic duality, and realising the value of dead assets. BNG promotes title in a way comparable to de Soto’s promotion of formal property, as summarised in figure 5. 36
Page 1 and 2: U N I V E R S I T Y O F T H E W I T
Page 3 and 4: Published in October 2007 by: Gradu
Page 6 and 7: Foreword This publication is the fi
Page 8 and 9: Introduction Are Hernando de Soto
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Page 12 and 13: Introduction increase lending to th
Page 14 and 15: PAPer 1 Making sense of de Soto Sco
Page 16 and 17: Making sense of de Soto of the form
Page 18 and 19: PAPer 2 Are title deeds a silver bu
Page 20 and 21: Are title deeds a silver bullet for
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Page 54 and 55: Paper 5 Mysteries and myths: De Sot
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Page 60 and 61: Mysteries and myths Ekuthuleni, Kwa
Page 62 and 63: Mysteries and myths R1 500 a month
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Page 66 and 67: Mysteries and myths Kingwill R. 200
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Are Hernando de Soto's views appropriate to South Africa?

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