Initiative on Housing Microfinance ACCION International

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Initiative on Housing Microfinance ACCION
International

• Warren Brown
• December 10, 2002

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Where ACCION Works

• 27 Affiliates Partners in 23 Countries

The Americas

• Africa

BoliviaBrazilColombiaEcuadorEl Salvador
GuatemalaHaiti
Honduras
MexicoNicaraguaPanamaParaguayPeruTrinidad
Tobago
United StatesVenezuela
BeninMozambiqueSouth AfricaUganda Zimbabwe
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ACCIONs Services

• Technical Assistance
• Credit Technology
• Client Business Training
• Financial Services
• Representation
• Research and Development
• Policy Advocacy

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Why Housing?
Differentiates an MFI from its competition and
increases the value received by clients
Reduce the hidden risk of financing housing
within the microenterprise portfolio
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Why Housing Microfinance?
Community Developers
Need for MFIs to develop new skills / knowledge
increases

• Build new communities and finance the completed
  houses with mortgages

Traditional Mortgages

• Finance complete homes with long-term, mortgage
  guaranteed loans

Microhousing

• Finance housing improvements with short to medium
  term loans flexible guarantees

Largest potential market and most accessible
given MFIs current capabilities
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Housing Finance in the ACCION network
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Lessons Learned To-Date

• Demand Market research confirms substantial
  demand for housing microfinance. Potential for
  mortgages limited by multiple factors.
  
• Terms and Conditions Loan amounts and terms are
  smaller/shorter than one might expect, but
  greater than microenterprise. Guarantees need to
  be flexible, like microenterprise.
• Subsidies Not necessary to reach most
  households, few microfinance providers interested
  in subsidies unless tied to good repayment.
  
• Salaried Poor Housing microfinance products
  include the low-income salaried poor for the
  first-time, with encouraging results.

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ACCIONs Research Activity in Housing Microfinance
Case Studies with Cities Alliance

• Micasa Financing the Progressive Construction
  of Low-Income Families Homes in Peru
  
• The Enabling Environment for Housing
  Microfinance in Kenya.

Action Research / Pilot Tests

• 2002 Nicaragua (funding from DFID)
• 2003 Colombia, Ecuador, El Salvador, Mozambique,
  Uganda (funding from DFID Cities Alliance)
  
• 2004 To be determined

Market Research

• Demand surveys in El Salvador and Nicaragua
• Focus groups in Peru, El Salvador and the
  Dominican Republic
  
• 2004 To be determined

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On-going research Questions

• How to secure housing loans when 60 of people
  lack title?
  
• How to ensure the quality and reduce the cost of
  the financed homes?
  
• How to achieve scale ( 10,000 borrowers) with a
  housing microfinance product?
  
• Whether and how to connect to government
  initiatives? (E.g., subsidies, titling,
  infrastructure,etc.)
  
• Where to find the medium-term, commercial funding
  required to finance these portfolios?
  
• How to ensure product profitability?

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Housing Microfinance Results
Property Ownership Low-Income Families in Lima
and Nicaragua
Survey Respondents
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Housing Microfinance Results
Disbursed Loan Amounts Mibanco
of Disbursed Loans
Disbursed Loan Amount ()
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Housing Microfinance Results
Term of Disbursed Loans Peru, Dominican
Republic El Salvador
Loan Terms for Housing Mibanco, FDD INTEGRAL
of Disbursed Loans
Loan Term
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Housing Microfinance Results To-Date
Growth of Housing Microfinance Portfolios
After One-Year in Operation
Microhousing Portfolio / Institutions Total
Active Portfolio
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Housing Microfinance Results To-Date
Portfolio Quality of Housing Microfinance
Portfolios
After One-Year in Operation
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Housing Microfinance Results
MiCasa Growth in Active Clients
Aug. 2000 Sept. 2002
Active Loans
Active Portfolio 8.1 million