Delays in housing delivery sink BHC revenue

BHC Phakalane houses
BHC Phakalane houses

The Botswana Housing Corporation (BHC) has reported a 36 percent slump in revenue during the 2013/14 financial year, citing delays in delivering 516 housing units in Phakalane.

In its 2014 Annual Report, the public housing agency recorded revenue of P300 million as compared to P467 million recorded in the previous year. Rental income remained flat at P187 million year-on-year as the corporation focussed on selling its new property instead of leasing them.

According to management, the corporation has maintained the 11,500 threshold rental stock over the last three years, and the main strategy of selling more and renting less is meant to empower Batswana through home-ownership.

BHC chief executive officer, Reginald Motswaiso said that the stagnation in the rental income stream is mainly attributed to the fact that the corporation has not increased its rental charges since 2004.


“Whilst rentals have remained stagnant, the costs related to the administration and upkeep of the properties making up the rental portfolio keep on increasing year after year due to the upward push exerted by inflationary pressures,” he said. As an illustration of this upward push, the CEO noted that the cost of maintaining the rental portfolio increased from P35.5 million in 2012/2013 to P39.5 million, an increase of 11 percent.

He pointed out that the combined effect of these factors is that the corporation’s surplus for the 2013/2014 financial year, declined by 57 percent from P37.6 million in the year 2012/13 financial year, to P16.3 million.

Motswaiso reiterated that BHC’s major revenue stream, sales revenue, decreased due to challenges experienced with the delivery of the Phakalane project.

“The corporation could not sell its recently completed 516 housing units at Phakalane due to the delays in upgrading of the sewage infrastructure in the area,” he explained.

However, he was adamant that the 2015 financial year will see a jump in revenue as the Phakalane units are delivered; enabling customers, who had to wait for two years, to conclude the sales process and take occupation of the houses.

Motswaiso revealed that for the 2014/15 financial year, the corporation has lined up a number of projects across the country, but mostly in the high demand areas of Gaborone and surrounding villages, including a high density development at Phakalane and further densifications of existing high density developments.

“These and other development projects are expected to boost the corporations earnings going forward,” he said. In an effort to empower Batswana with home ownership, the corporation had targeted to sell 1,036 housing properties during the 2013/2014 financial year. These properties were located in various parts of the country, but principally in Phakalane. However, the corporation only managed to sell some 290 housing units. Motswaiso said the second largest number of housing units, are the 185 at the BHC’s Mophane Estate in Francistown. He however noted that only five units were sold from this project due to some technical challenges, which affected some of the housing units.

“The technical challenges are expected to be resolved during the course of the 2014/15 financial years. Therefore, these units are also expected to be sold this year,” he enthused.

Apart from the housing shortage in Phakalane and Mophane Estates, the CEO said the other challenge which BHC faced in terms of selling of housing units, was that salaries in Botswana had increased marginally over a number of years while construction costs had continued to increase at a much faster pace. He added that this had resulted in the corporation’s potential customers being unable to afford their products. In recognition of this affordability challenge, Motswaiso said that the corporation adjusted its operating margins on its new developments downward.

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