Army rejects N$12b housing proposal

July 7, 2015, 8:17am

Army rejects N$12b housing proposal

By Shinovene Immanuel, Tileni Mongudhi
 

 

STATE military business empire August 26 Holdings turned down a proposal by private developers to take over the mass housing programme to build 70 000 houses within five years at a cost of N$12,5 billion.
According to a concept paper seen by The Namibian, August 26 Ultimate Building Machine (UBM) Construction was invited to be part of a consortium called the Namibia Okambashu Residents Block.
This proposal is part of a scramble for the second phase of the mass housing programme scheduled to start next year and would have muscled out the National Housing Enterprise (NHE). 
The consortium intends to build cheaper eco-houses using prefabricated material, which would cost N$128 000 per one-bedroom unit; N$200 000 for a two-bedroom house while a three-bedroom house with a garage would cost N$250 000. There are plans, the concept paper said, to secure funding of N$2,5 billion per year over a period of five years to construct 14 000 houses per year, at an interest rate of 9,75% maximum. 
Furthermore, the consortium would borrow money through an entity named Africa Energy and Eco Development which would secure long term loans, provided a government guarantee is given to source financing elsewhere. 
When all this has been done, development planners would then approve the construction method that will deliver houses at a cost of N$2 500 per square metre. 
VeiinaTobias OSDP Ltd would develop and manage the entire project, while the army company would collect payments from buyers. 
Although August 26 UBM Construction had talks with private partners to benefit from the proposed venture, August 26 Holdings board of directors decided to pull out last week. 
August 26 UBM Construction managing director colonel John Namoloh confirmed to The Namibian yesterday that they received a proposal from private firms to form a joint venture.
Namoloh said that the idea was good but their role did was not clear. “The idea was not bad but there were certain elements that were not making sense, such as our role in the project,” he said. 
According to Namoloh, the army's role would be like a banker collecting money from house buyers, a process he said was likely to expose the infant military construction company to mass debts if people failed to pay. He also confirmed that he took the proposal to the August 26 board, which turned it down. 
Namoloh said the idea would have been practical if the military firm was going into a turnkey project instead of being a debt-collecting vehicle only.
The colonel did not rule out chances of collaborating with the government to build houses. 
“We are definitely ready but it should be carefully explained,” he said.
Elvis Kausea, chair of the Okambashu Residents Block board, said they will now hunt for a replacement to slot into the void left by August 26 UBM Construction. He said they have updated their proposal to include the NHE. Kausea said there are financial backers willing to give the project the billions it needs, although he did not name any of them. The mass housing project has been put on hold while the government is looking into several alleged irregularities. Urban and rural development minister Sophia Shaningwa last week pleaded with contractors to give her time to sort out the project. 
“Our intervention is not necessary to disadvantage anyone, but to try and rectify a problem that is there, including contractors who still have huge unpaid bills owed to them,” she said in the National Assembly last week. 
The Namibian reported last month that over 10 companies from China and four others from European countries, such as Spain and Poland, have made business proposals to be involved in the N$45 billion mass housing programme that has been put on hold by the government.

 

The Namibian