Windhoek — The government's decision directing the City of Windhoek to discontinue the outsourcing of contracts for the servicing of municipal land to private contractors is set to deal a heavy blow to this sector, which relies solely on town councils for its survival.

It has emerged, through the City of Windhoek media briefing yesterday, that government has asked the City of Windhoek to service land on its own and to discontinue the practice of putting out tenders for the servicing of land, or as in a few recent cases - entering into partnerships with black empowerment firms and asset management funds to service land for housing and other developments. It is not yet clear when the directive would be extended to other town councils across the country.

The practice of outsourcing the servicing of municipal land to private firms raised questions last year when a joint venture with private investors was announced to service land for middle-income earners who are also first time home buyers in Otjomuise. Doubts have been cast on the affordability of the finished erven, given that private investors are profit-driven and the steep prices charged for the erven to first-time bidders.

Yesterday the City of Windhoek said that it has received directives from the Ministry of Regional and Local Government, Housing and Rural Development, which among others, "urged the [municipality] to set up a department responsible for servicing land as this could ease the burden of hefty fees that are currently incurred via the service rendered by private commercial firms who are profit-driven." The ministry also "made a direct call to the City of Windhoek to consider building houses [itself] since there is no law that prohibits it from doing so."

The directives are aimed at curbing the runaway house prices, and are part of last year's ministerial directive to town councils to suspend the auctioning of land, which is seen to "encourage the empowerment of the well off to the detriment of the poorest of the poor members of society." Last year the City of Windhoek entered a public private partnership with various independent investors - of whom Acacia Investments was the first - to service land in Otjomuise Extension 4.

Acacia Investments will ensure the provision of all municipal services, such as water, sewerage, tarred roads and electricity. Once completed, the erven will be sold on a 'first-time buyer tender basis' to middle-income groups. Acacia Investments, headed by lawyer Patrick Kauta, is using N$120 million loaned from Old Mutual's infrastructure investment fund, MIDINA (Managing Infrastructure Development in Namibia).

At the time Niilo Taapopi, the chief executive officer of the City of Windhoek said though the arrangement with private investors is in a pilot phase, it is needed because the City of Windhoek cannot service land at the required pace, without employing additional people to do the work. About affordability, Taapopi said then that the public must be patient until erven are allocated, adding that the municipality is in the process of determining the prices.

Taapopi said the determination of prices would eventually be referred to the city council for further advice. "Let us not cross the bridge before we get there," said Taapopi, adding that the involvement of private investors is limited to putting up infrastructure, but the land remains the property of the city. He said Windhoek, along with other town councils is "already under considerable pressure [from politicians] not to auction land", hence the city will strive to strike a balance between affordability and realistic prices, while still having sufficient money to render crucial municipal services to residents.