Shelter Finance for the Poor
Getting to Scale in Housing Microfinance: A Study of ACCION Partners in Latin America
A vast unmet demand exists for housing finance for low-income populations in the developing world. Though solutions have yet to reach significant scale, either from governmental or the private sector, the microfinance industry has recently made great strides in this area. Housing microfinance has shown signs of potential to reach scale.
Seeking to better understand the potential for scale in housing microfinance, ACCION International and Habitat for Humanity International joined efforts to conduct a study in conjunction with Cities Alliance financial support. This study covered ten of ACCION’s partners in Latin America, representing more than 90 percent of the ACCION Network’s housing portfolio. The objective of this research was to understand the key success factors as well as challenges and barriers for reaching scale in housing.
A Comparison of Housing Finance Programs for Low Income People in Peru
English (113 KB PDF)
Until recently, access to housing-related finance has remained extremely limited in the developing world for low income people. Commercial banks, unable to access secondary mortgage markets, typically extend mortgages or other types of housing loans only to middle or upper income clients. Some governments have initiated large-scale housing subsidy programs targeting the poor; however, these initiatives have often fallen far short of their objectives. In some countries housing finance offered by microfinance institutions, a private solution, shows promise of reaching more people sustainably.
This paper addresses the attempts of one country, Peru, and the various actors in the housing finance arena there, to improve access to housing finance at the bottom of the pyramid. It focuses on a comparison of three approaches to low income housing finance: the Mivivienda and Techo Proprio programs of the Government of Peru and the Micasa loan product of microfinance institution Mibanco.
Access to credit for the poor is a global policy challenge, which has a direct impact on incremental shelter delivery as well as local economic development. Innovations in providing sustainable financial and other services to poor people for shelter are emerging from different quarters, particularly in micro-finance. Several organisations have focused on gaining tenure and property rights for the poor and are also innovating with financial services for communities. To date, many of these experiences have not been documented, or at least analysed according to a common framework. Many commercial financial institutions, including those that started as micro-finance institutions (MFIs), are interested in learning from other experiences in order to improve their own product offerings to poor clientele. Governments and their funding partners are also interested in learning from successful and efficient housing finance schemes to improve their own models of support.
The Cities Alliance launched a primary analysis on this topic, initially through assessing innovations from field programmes. The Alliance partnered with Accion International, the Cooperative Housing Foundation and Frontier Finance, each of which is a network of financial institutions with a long history of commitment to and experience and success in delivering sustainable financial services to the poor. The initiative was intended as a learning exercise, with the different institutions working together to learn from each other's models and experiences and applying these lessons throughout their networks.
- Shelter Finance for the Poor
- Mibanco's MICASA Housing Loan for the Poor
- Mibanco: http://www.swwb.org/English/1000/address/gnbi/add_gnbi_mibanco.htm
CIVIS Issue 4: Shelter Finance for the Poor Series: