NHFC stands poised to solve South Africa's housing crisis amid climate reality and devastating floods

As torrential rains battered South Africa in January 2026, the nation watched in horror as floods claimed hundreds of lives, displaced thousands, and left communities submerged. From Limpopo to KwaZulu-Natal, rivers burst their banks and roads became impassable.

Homes (many of which were informal or poorly constructed) were swept away like debris. Amnesty International's 2025 report, titled Flooded and Forgotten, shows how South Africa's housing crisis, exacerbated by a backlog of millions of units, collides with climate change to create a deadly trap. Informal houses that are home to millions of South Africans are disproportionately vulnerable to extreme weather events.

When floods come, they destroy not just structures but people's livelihood, health, dignity, and futures. The scale of destruction from the latest floods is staggering. Entire settlements vanished overnight. Schools became emergency shelters. Families across the affected areas were left to salvage what little remained from the devastation. Emergency services struggled to reach isolated communities as infrastructure crumbled.

The human cost of these floods extends beyond immediate casualties. Children miss out on schooling, businesses collapse, diseases spread in overcrowded temporary accommodation, and the psychological trauma lingers for years. Yet amid the grief and chaos, one truth is clear. The floods did not strike evenly. Informal settlements and low-income communities suffered the worst damage.

These areas are often built on floodplains, riverbanks, or wetlands. They are constructed with weak materials and lack proper drainage, safe elevation, and resilient designs.

The National Housing Finance Corporation's (NHFC) 10x10 Turnaround Strategy, which is a comprehensive blueprint for institutional renewal, directly addresses such vulnerabilities by prioritising resilient, affordable housing solutions that can withstand climate shocks like these. South Africa's urbanisation has been rapid and profoundly unequal. Townships and informal settlements, legacies of apartheid spatial planning, remain concentrated in high-risk zones that wealthier communities abandoned generations ago.

Climate models predict more frequent and intense rainfall events; however, our housing response has lagged dangerously behind. This results in families waiting months, sometimes years, for temporary shelter after floods, as seen in recent reports from affected provinces. The cycle is vicious and self-perpetuating.

Poverty forces people into vulnerable locations that are flood-prone, which deepens their destitution. Climate change, in addition, accelerates the downward spiral. The National Housing Finance Corporation (NHFC) stands at the heart of this challenge.

As South Africa's premier development finance institution for affordable housing, NHFC's mandate is clear. It seeks to expand innovative financing mechanisms for low- to middle-income households, enabling renting, owning, or incremental building while mobilising sustainable capital into human settlements.

The mission of the NHFC explicitly includes promoting lasting environmental development, which is a commitment that has never been more urgent or consequential. However, to fully respond to the housing and climate crisis, the NHFC’s mandate must be understood and updated in line with South Africa’s economic reality.

The NHFC operates as a wholesale development finance institution and does not provide home loans directly to households. It provides finance to developers and intermediaries across the rental and affordable housing markets. The Corporation currently defines its affordable housing market up to a household income of R22,000 per month.

This threshold was historically appropriate; however, in the current climate, it leaves out too many families whose earnings are above. Increasing this threshold to R35,000, in line with the Banking Association of South Africa’s definition of affordable housing, will enable the NHFC and its partners to scale delivery to households presently locked out of the housing market. The current floods plaguing different parts of the country demand we confront uncomfortable realities. Many of the homes destroyed were not built to withstand climate shocks.

They lacked foundations, proper roofing, waterproofing, or structural integrity. High interest rates, rigid credit policies, risk-averse lending practices, and a stagnant loan book have historically limited NHFC's ability to scale resilient products and reach those who need them most. But the organisation is no longer standing still.

The newly adopted 10x10 Turnaround Blueprint, born from a pivotal board strategy session on 10 October 2025, charts an ambitious three-phase path that includes: Rescue, Stabilisation, and Sustainability. In the Rescue Phase (October 2025 to October 2026), NHFC is addressing root causes of abject performance: low morale, a dwindling loan book, adverse audit findings, and institutional paralysis, with decisive action.

The institution will be filling critical vacancies with experienced professionals, reforming cumbersome credit processes that delayed approvals, and accelerating disbursements to viable projects.

Crucially, the institution is reviewing and redesigning products to include climate-resilient options, such as blended finance mechanisms for emerging developers and support for inner-city regeneration and smart city initiatives that prioritise flood-resistant design, sustainable materials, and community resilience. The Stabilisation Phase (November 2026 to November 2027) will embed these changes deeply into organisational DNA.

Financial re-engineering will improve cost-to-income ratios while diversifying income streams through fee-based advisory services, technical assistance programmes, and green finance instruments. Product renewal will focus on value chain innovations, credit guarantee schemes that unlock commercial bank lending, wholesale instruments for micro developers, and strategic partnerships that de-risk investments in vulnerable areas. The institution is actively reconfiguring their organisational structure for a high-performance culture, attracting top talent, and strengthening governance frameworks to ensure accountability, transparency, and impact measurement.

By the Sustainability Phase (December 2027 to December 2028), NHFC aims to deliver clean audits, superior financial returns, developmental impact, and market leadership in affordable housing finance. Product diversification will include tailored offerings for rural housing projects, women-led development initiatives, and youth entrepreneurs.

This will include continuous innovation in digital platforms for better risk assessment, monitoring, and client service. The blueprint's emphasis on partnerships with government, municipalities, development finance institutions, and private investors will mobilise unprecedented capital for climate-adaptive housing across all income segments. This is not an abstract strategy or theoretical planning. It is a direct response to the floods and the underlying crisis they exposed.

NHFC is vigorously exploring green finance tools to support resilient construction practices: elevated foundations that rise above flood levels, permeable surfaces that manage stormwater, rainwater harvesting systems, and energy-efficient designs that reduce vulnerability while lowering household costs. NHFC is aligning closely with the Human Settlements Development Bank’s transition to scale impact and reach.

By sweating the balance sheet responsibly, managing risk intelligently, and growing a practical project pipeline, the institution will be able to finance homes that withstand storms rather than succumb to them. The stakes could not be higher. Climate change is not a distant threat for future generations to solve. It is here, intensifying floods, droughts, heatwaves, and storms with devastating regularity.

South Africa ranks among the world's most vulnerable nations to climate risks, with informal settlements facing a triple blow of poor housing quality, limited basic services, and extreme weather exposure. Yet housing finance offers a powerful lever for change. Adequately designed, climate-resilient homes save lives, reduce disaster recovery costs, preserve household assets, and build community stability and economic productivity.

The time is now for government to act decisively and fast-track policy reforms to enable NHFC to de-risk the market and unlock private capital at scale. Prioritise resilient building standards in subsidy programmes like First Home Finance and incrementally upgrade informal settlements. Partner with development finance institutions and the private sector to scale blended finance mechanisms that make climate-resilient housing affordable and accessible.

Communities deserve homes that protect, not endanger, their families. This can be achievable through a collaborative effort spearheaded by the NHFC. The NHFC is ready to lead this transformation.

The 10x10 Blueprint is our commitment to repositioning as a credible, innovative, and impactful force in affordable housing finance. In the wake of these devastating floods, we must not simply rebuild the same vulnerabilities and repeat past mistakes. We must build better because all our communities deserve climate-proof, sustainable, and dignified housing. The floods have exposed the fragility of our housing ecosystem with brutal clarity.

They have also illuminated a path forward if we have the courage to take it. Through bold financing innovations, strategic partnerships across sectors, and unwavering focus on resilience and equity, NHFC can help turn crisis into opportunity and tragedy into transformation. South Africans deserve homes that endure the storms ahead. Let us deliver them, together.

l Fakazi is the acting CEO of the National Housing Finance Corporation.

*The views expressed do not necessarily reflect the views of Independent Media or IOL.