The European Investment Bank (EIB) will provide €150-million to build 34 000 new low-cost homes in South Africa, as part of its social and affordable housing initiative.

The €150-million had been allocated to 30 different projects across the country, the financing arm of the European Union said on Monday.

By the end of January, €70-million had already been dispersed to build 17 000 rental and owner-occupied housing units. The balance would be used during the year to build another 17 000 units.

EIB vice-president for Africa Plutarchos Sakellaris said that funding was made available to Standard Bank, Absa and Nedbank, as well as two public institutions, the Development Bank of Southern Africa and the National Housing Finance Corporation (NHFC).

“Each institution can access up to €30-million, or about R300-million, provided that their projects met the criteria stipulated in the loan agreement and the EIB approved the project for allocation of funding,” he noted.

The NHFC has already secured approval for R216,01-million, which it would use for various inner-city building acquisition and refurbishment projects by the Trust for Urban Housing Finance, as well as social housing projects in the Eastern Cape and KwaZulu-Natal.

NHFC executive manager of projects Lawrence Lehabe said that inner cities would be the major focus of the funding programme, with Gauteng receiving funds for the first phase, while eThekwini, Port Elizabeth and East London would be next in line for funding.

“We will roll-out low-cost housing programmes nationwide, wherever there is a rental demand,” he noted.

The programme would also include funding for ownership, through other partners such as Old Mutual, which planned to roll out 25 000 units over the next five years.

The NHFC would keep an eye on progress from the ground level, while the EIB would monitor the financial viability and input of beneficiaries from the top.

The EIB’s engagement with housing in South Africa is its only financial support for housing outside Europe. Sakellaris noted that the institution was also in the process of completing the financing of the Mooi-Umgeni water project, which would ensure the supply of clean water to the increasingly dry KwaZulu-Natal.

“We are also progressing well in plans to engage in a number of different renewable energy schemes across the country in the wind and solar sectors,” he added.

The EIB has operated in South Africa since 1994 and is committed to providing €900-million for projects in the country between 2007 and 2013. The institution aims to focus on climate action initiatives in the next few years.