Niall Mellon's charity is helping transform the townships for poor South Africans, he tells Joe Humphreysin Johannesburg

Niall Mellon has big plans. "We have set a mission by 2010 to be the planet's largest producer of homes for the poor," says the multi-millionaire builder and philanthropist. "There is every likelihood that, by end of next year, we will be the second largest [ overseas development] charity in Ireland." From anyone else, this sort of talk would come across as hyperbole, but Mellon's is a convincing sales pitch. When his home-building charity was set up in South Africa in 2002, it had an annual target of constructing 150 houses for impoverished shack-dwellers outside Cape Town. This year, the Niall Mellon Township Trust (NMTT) is due to build 5,000 homes - spread across South Africa - and next year it intends to build double that.

The Dubliner, who has put much of his commercial building operations on hold while he pursues his philanthropic dream, is being touted as a role model for Ireland's nouveau riche. He was featured in Charles Handy's recent book The New Philanthropists and American TV queen Oprah Winfrey has asked him on to her show. (Mellon says he is waiting for the most opportune time to accept the invite.)

The Government has also been impressed with his work, and is in discussions about injecting around €5 million - through Irish Aid, the Government's overseas development arm - into NMTT next year. In recent weeks, a number of major US donors have expressed an interest in backing the charity. Endorsements from African icons such as Archbishop Desmond Tutu and Nelson Mandela have helped to boost NMTT's budget for the year ending February 2008 to €11.5m.

It would be enough to go to most people's heads, but Mellon remains refreshingly humble. "The last 12 months have been particularly difficult for me because I have had to spent time fundraising in the US. I would prefer to be digging the ditches in the townships," says the 40-year-old father of two, who shuns formality and loathes having to wear a tie. There is modesty in his speech too, as he punctuates his sentences with phrases like "Eh, what's the word I'm looking for?", and "Umm, I'm sure you can put this better."

Deirdre Grant, a former TV3 news reporter who moved to Cape Town some years ago and is now working as a manager in the charity, says some people initially questioned Mellon's motives "but all you have to do is meet him to realise how genuine he is".

This weekend sees another philanthropic landmark for Mellon when he brings 1,350 volunteers to the Western Cape to help with the latest round of house-building. It is by far the biggest group travelling under Mellon's annual "building blitz" (last year there were 350 volunteers).

The aim is to construct more than 200 homes in a week, thus making a further dent in South Africa's housing waiting list, and also helping broaden the project's support base. Hailing the blitz's motivating effect on the charity, Mellon says: "It's the modern equivalent of the journey of Irish missionaries abroad. In the world of today, a week away is about as much as people can give."

MELLON'S ADVENTURE IN philanthropy began six years ago with a chance encounter with some locals at Imizamo Yethu, a township near the plush Cape Town resort of Llandudno where the developer had just bought a home. The Irishman used to drive past the shacks regularly and one day decided to pull into the township and step out of his air-conditioned BMW to see what he could do. "When I hit 35 I had made as much money as I wanted to make. I idly dreamt if I had made enough money I would do something good about it," he recalls.

In 2003, Mellon held his first building blitz, bringing 153 people to Imizamo Yethu to erect a total of 25 homes. Using his contacts in the building trade, Mellon steadily accumulated a range of sponsors. Some wrote cheques. Others donated the proceeds of house sales in Ireland.

This year, Mellon opened fundraising offices in New York and Washington, and registered his charity in the UK. He also expanded his operations on the ground, buying out a South African low-cost housing company called Marnol. The takeover resulted in NMTT spreading its wings beyond Western Cape to Gauteng, South Africa's industrial heartland which encompasses Johannesburg and Pretoria.

THE RATE OF progress can be seen at Eden Park, a settlement in Ekurheleni, on the outskirts of Johannesburg. A year ago, it was little more than a field of dust and shrubs. Today, it is home to row after row of grey, matchbox houses. "We have gone from 11 units to 505 in less than 12 months," says project manager Leslie Hlalele, adding that a further 900 homes are due to be completed by next April. "The beneficiaries phone us even at night. They want their houses," he laughs.

Benjamin Maseko (53), a married father of one, was among the first residents to move into the estate. "I have a very happy," he says. "Since 1996 we had been living in a shack." Already he has made some home improvements, adding kitchen shelves and a security gate to the front door. He is planning to paint his outside walls shortly, having chosen peach from the four colours offered by NMTT's contractors.

Outside his house are signs of further uplifting. A telephone shop and a small grocery store have opened up. One of Maseko's neighbours has started planting grass seed behind a newly erected garden wall.

The Eden Park development is typical of NMTT's operations in that it is done in collaboration with South African local authorities, from which the charity gets a subsidy of up to €4,600 on each home it builds - enough to cover roughly two-thirds of the total basic construction costs. The charity pays the remaining third, plus the cost of fitting out the homes.

As part of the arrangement, NMTT doesn't select the beneficiaries. Instead, they are chosen by the local authorities in line with their waiting lists.

The charity distinguishes itself from other house-builders in South Africa by providing added benefits to households. Solar panels have been installed in its many homes to allow people heat their water for free. Dual-flushing toilets and other energy-saving devices are standard.

Under local authority rules, the houses can't be sold by their owners for five years. After that, says Hugh Brennan, "we hope to see people move into middle-income housing". A resident of Bray, Co Wicklow, the former developer volunteered for three consecutive years for the building blitz before Mellon asked him to come on board in a management role. He has since been reading up on the theories of Hernando do Soto, a Peruvian economist who believes that spreading property rights is the key to alleviating poverty in the developing world. "If people have a home they can use it as leverage for credit," he says. "There are so many other knock-on benefits from housing - in health, education and employment."

Mellon has been careful not to mix his charity work with his commercial operations. While he has extensive business interests in the UK and Ireland, including a stake in the controversial Knockrabo development site in Goatstown, Co Dublin, the developer has held back from investing in South Africa. "I saw several opportunities but I haven't pursued them. I felt it would cloud the reasons for my being in South Africa. I have bought one farm in George (a town on the Garden Route) with development potential but I don't know what I am going to do with it."

The Dubliner has also been careful to keep on side with the African National Congress (ANC) government, an entity that is notoriously sensitive to outside criticism. Mellon has occasionally hit out at institutional torpor, and recently expressed concern about skilled builders being diverted away from housing into stadiums for the 2010 World Cup, which is being held in South Africa. He is keen, however, to publicly praise the ANC for its success in building two million homes since the end of apartheid. "It is not just up to the government to solve this crisis," he says, adding that with 10 million South Africans still living in shacks, "radical solutions" are needed.

Hence NMTT's latest venture: the planned construction of a €9 million timber-frame factory in Western Cape which, when fully operational, will allow the charity to build 5,000 homes with 200 employees rather than the current 2,000. Mellon says if the pilot project proves successful it could be rolled out across South Africa and even beyond the country's borders.

MELLON'S ENTREPRENEURIAL ZEAL has already won fans in business. But increasingly he is drawing plaudits from the development sector too. In a major vote of confidence, Paddy McGuinness, deputy chief executive of Concern, has taken a year's sabbatical from that charity to join NMTT. "I think we need innovative development approaches," says McGuinness who, ironically, had a spell working in the construction industry 30 years ago. He says aid workers have an "innate suspicion" of businesspeople, and this is partly justified, "but it is almost beholden on people in the established development community not to pooh-pooh people from the private sector without first engaging on a meaningful basis with them. Africa needs as many hands on deck as it can get."

Mellon says he would like to see Irish Aid engage more with entrepreneurs. He believes the Irish business community is becoming more interested in "social responsibility" - or "social opportunity", as he prefers to call it.

But, he says, Ireland still has "a lot to learn from America in terms of philanthropy and giving back".

There are growing fears, moreover, that a slowdown in the Irish economy might lead to a dip in corporate generosity. Mellon himself admits that the changing business environment might force him to "spend a bit of time regrouping" his affairs, having recently worked "only a day or two a month on my own business".

Whatever about his personal plans, the ever-ambitious Mellon is determined to keep things expanding in Africa. "It's simply magical that four Airbuses will be leaving Ireland today with volunteers," he says, with reference to this year's building blitz. "But I know we can achieve even more."