Govt takes over National Housing Authority debt to avert seizure and evictions of people who bought houses built on borrowed money.
By Staff Reporters
Ministry of Finance has taken over National Housing Authority (NHA) owed to Nairobi based firm Shelter Afrique Centre, following NHA failure to pay back the loan it obtained from the company to build houses at North Gate Garden along Kasangula road in Lusaka.
Despite NHA defaulting to pay back the loan, the authority had either sold or rent out some of the houses built on borrowed money.
According to sources at Ministry of Finance, NHA obtained a loan worth US$ 6. 5 million from Shelter Afrique Centre to build the houses but defaulted despite selling some of the houses at North Gate Gardens.
“The loan was obtained to construct houses at North Gate Gardens along Kasangula road, near Heroes Stadium but National Housing Authority defaulted and Shelter Afrique Centre sued,” said a source.
According to Court documents obtained by the Globe newspaper, NHA was saved with writ of possession on June 27, 2018 under which about 65 housing units at North Gate Gardens were to be repossessed and sold by Shelter Afrique Centre.
“Whereas in the above mentioned action, it was on the 28th February, 2018 ordered that the Respondent should pay the sum of US$4, 879, 668.95 due from the Respondent to the Applicant as at 31st September, 2017; And Whereas it was further ordered that execution of the total judgment debt of US$4, 879, 668.95 be stayed on condition that the said judgment debt should be liquidated by the Respondent in 2018 in quarterly instalments of US$1, 219, 917.12 and that if the Respondent defaults in the payment of any instalment, then the whole amount outstanding at the time of such default shall attract contractual interest, penalties and other charges up to the date of full payment,” read the writ of possession in part. “And Whereas it was further ordered that the Respondent will bear the legal costs of US$255, 186.76 to be paid to the applicant’s Advocates on 2018 in four equal quarterly instalments of US$63, 796.69; And Whereas it was further ordered that if default occurs in the payment of any instalment, the Applicant shall have course to execution on the mortgaged property herein above listed; And Whereas the Respondent has since defaulted in the payment of the judgment debt of US3, 716, 924.66 with interest at the contractual rate of 10.19% per annum, default interest rate of 5.10% per annum and management fees of 0.5% per annum to the date of full payment and the legal costs of US$255, 186.76 as ordered; Now therefore we command that you enter upon the said property and evict the Respondent and whosoever occupies the property and cause the Applicant, the company for Habitat and Housing in Africa (Shelter Afrique), to have possession of them and sale them.”
According to sources at Ministry of Finance, the Writ of Possession caused some fears within government as the execution of the Writ of Possession could have resulted into mass evictions of home owners and tenants who had since paid NHA.
Source further revealed that home owners and tenants of the affected houses were not aware of the impending eviction.
“Any further delay in paying this debt will result in mass evictions of people some of whom have fully paid for the same houses but still under Shelter Afrique Mortgage,” said a source.
In a of letter commitment to Shelter Afrique Centre’s lawyers dated 4th July, 2018, Secretary to the Treasury Fredson Yamba stated that government had taken over the NHA debt and committed itself to liquidate the loan.
“This letter serves to inform you that government is committed to complete paying off the debt owed by NHA as shown by previous payments made by government towards the debt. As a shareholder of the National Housing Authority, government will continue to give the company support as is necessary to enable it to continue to operate in the foreseeable future,” read Yamba’s letter in part. “This letter is given by way to commitment to reassure Mwansa, Phiri, Shilimi and Theu Legal Practitioners representing Shelter Afrique that balance owed by National Housing Authority will be settled. In this regard, we request that the Writ of Possession be suspended as government continues to settle the amount due.”
Government’s taking over of NHA debt is in a wake of increasing concerns about the country’s swelling debt. But Finance minister Margaret Mwanakatwe last week assured the country that Zambia’s debt accumulation would slow down in 2-3 years.
Mwanakatwe said the measures are swiftly being implemented as part of their broader policy reform to tackle the challenges that relate to debt, liquidity, and the fiscal deficit.
She said these measures will lead to slowing down the rate of debt accumulation in 2018, and over the medium term and tackling the fiscal deficit which is forecast to be below the 2017 announced deficit of 7.8% of GDP.
Mwanakatwe said measures to address tight liquidity in the domestic and external sectors were progressing.
Mwanakatwe further said government is proceeding on its strategy to dismantle arrears in the different sectors and as a minimum, the arrears dismantling provision will be maintained at the current level as it is cardinal to fiscal sustainability and liquidity normalisation.
“From the work we have done so far in implementing measures, Zambia’s debt accumulation will slowdown in the next 2 to 3 years. It is projected that we will attain a reduction in debt ratios after 2022. Given this scenario, fiscal slippages will recede and further, we do not see protracted debt because we will stand firm on our fiscal sustainability measures,” said Mwanakatwe.
She said government has progressed on reforms to different legislation that will anchor the fiscal management in law.
Mwanakatwe said this law will tackle the recurring problems of fiscal mismanagement through strict sanctions for imprudent management of resources.