HOUSING MICROFINANCE: FASHION OR FOOTWEAR David Porteous

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HOUSING MICROFINANCEFASHION OR FOOTWEAR?David
Porteous
African Microfinance Conference Cape Town 29
August 2005
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Content

• What is it?
• Whats fuelling the recent surge in interest?
• What do we know about it?
• What does this mean for the future?

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What is it?

• Shelter microfinance
• Progressive/ incremental build
• NOW Inclusive financial sectors
• Asset building versus income generating
• Savings and credit, even insurance
• Financial instruments which improve housing
  situation of low income people

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Prevailing winds 1

• Demand side Urbanization

Source B. Renaud 2003
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Prevailing winds 1 contd

• MDG 7 (Target 11) improve conditions of 100m
  slum dwellers by 2020
• 900m in slums (2005 MDG TF report)
• Slum upgrading facility (UNHABITAT)
• Increased donor focus

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Prevailing winds 2

• Supply side MFI pressures opportunities to
  grow fast

Source Cities Alliance 2003
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Prevailing winds 2

• Supply side MFI pressures opportunities to
  grow fast

Source Cities Alliance 2003
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What do we know?
Purpose
Client
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What do we know?
Client
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What do we know?
Client
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What do we know?
Client
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What do we know?
Client
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What do we know?
Client
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What do we know?
Client
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Traditional HMF

• Same loan officers could handle working capital
  housing MF
• Building material suppliers
• Some tied, some not
• Technical assistance for building
• No noticeable difference

Accion Insight 12, 2004
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New HMF

• Patrimonio Hoy (1999- )
• Cemex, Mexico
• Savings and credit on building materials
• 75 000 clients (2004)
• CODI (1992 - )
• National Housing Authority, Thailand
• Support for community associations
• Baan Mankong 300 000 h/h by 2007 (2004 14 600)
• Wheres the scale going to come from?

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The future

• Distribution vs. risk management
• When can/ should they be unbundled?
• Product side importance of point of sale
• New technology reduces cost
• Retailers credit cards
• Ongoing tussle affinity branding

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The future (2)

• So far, similar to MF in general
• Housing
• Special importance of liquidity facilities
• Special importance of subsidy blending
• www.HFGateway.org

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Housing microfinance?

• No fad but also only baby boots