PovertyFocused Housing Microfinance Case Studies from Haiti Rwanda

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Poverty-Focused Housing Microfinance: Case Studies from Haiti, Rwanda and Vietnam SEEP Annual Conference October

Poverty-Focused Housing Microfinance: Case Studies from Haiti, Rwanda and Vietnam SEEP Annual Conference October 26, 2006

HFH Objectives for Working with MFIs 1. Leverage HFH expertise in low-cost housing and

HFH Objectives for Working with MFIs 1. Leverage HFH expertise in low-cost housing and MFI expertise in micro-finance management to achieve greater impact in housing worldwide. 2. Increase access to improved housing with a wide range of affordability (vs. mortgage lending). 3. Enable access to new sources of capital (loans, equity, etc. ), thereby increasing overall investment in housing solutions. 4. Increase HFH learning in effective loan fund management, building on microfinance best practice.

Three Examples of MFI Alliances COUNTRY MFI PARTNER CLIENTS SERVED (info date) AVERAGE LOAN

Three Examples of MFI Alliances COUNTRY MFI PARTNER CLIENTS SERVED (info date) AVERAGE LOAN SIZE CLIENT SELECTION Haiti Fonkoze 90 (9/06) $348 Solidarity clients on +3 loan Rwanda URWEGO (World Relief) 189 (8/06) $265 Community Bank clients on +4 loan Vietnam Kien Giang Women’s Union 801 (7/06) $195 WU members individual assessment

Three Examples of MFI Alliances COUNTRY LOAN TERM REPAYMENTS Interest GUARAN- TYPE OF Rates

Three Examples of MFI Alliances COUNTRY LOAN TERM REPAYMENTS Interest GUARAN- TYPE OF Rates TEES DISBURSE(Monthly) MENT Haiti 18 months monthly Flat fee (adding 5% declining) Group pressure Materials and labor Rwanda 8 months Bimonthly 1. 5% flat Group guarantee Cash Vietnam 12 -36 months Monthly, 3 or 6 months 0. 65% declining Group Cash pressure & savings

Types of Projects Financed (in order of priority) • Haiti: Latrines, Roofs, Floors (only

Types of Projects Financed (in order of priority) • Haiti: Latrines, Roofs, Floors (only products currently offered) • Rwanda: Foundations, Walls, Roofs, Floors, Doors & Windows • Vietnam: Tube Wells, Foundations & Floors, Toilets/Sanitation, Roofs, Walls

Construction Assistance • Haiti Fonkoze housing specialists directly hire laborers, purchase materials and oversee

Construction Assistance • Haiti Fonkoze housing specialists directly hire laborers, purchase materials and oversee construction. • Rwanda URWEGO housing specialists review project budget, provide basic construction advice, and monitor construction progress. • Vietnam HFH staff provide training in project implementation, and direct construction assistance/advice to clients.

Habitat’s Role COUNTRY FINANCING PRODUCT DESIGN PROJECT ASSISTANCE Haiti Occasional Grant: $25 K Periodic

Habitat’s Role COUNTRY FINANCING PRODUCT DESIGN PROJECT ASSISTANCE Haiti Occasional Grant: $25 K Periodic assessment of consultations Loan: $40 K construction quality Rwanda Occasional Grant: $50 K Direct participation assessment of construction quality Vietnam Grant: $143 K (with 15% gov’t match) Direct Project participation management and monitoring

Benefits of Linking HMF to Existing Groups 1. Enables lower income populations to access

Benefits of Linking HMF to Existing Groups 1. Enables lower income populations to access housing microfinance. 2. Group screening and pressure strengthen repayment performance of housing loans. 3. Use of group structure to capture/monitor repayments reduces costs. Loan Officers divide origination and servicing roles. 4. Group coordination of construction-related negotiations and building activities. 5. Potential leveraging of savings-led groups (e. g. “Save and Build”).

Limitation of Linking HMF to Existing Groups 1. Break-down in groups’ operations can negatively

Limitation of Linking HMF to Existing Groups 1. Break-down in groups’ operations can negatively impact housing repayment performance. 2. May limit the access to HMF for other legitimate sectors (e. g. low-income wage earners, remittance recipients).

Key Issues Affecting Scale & Sustainability 1. • • Organizational Mainstreaming of HMF Develop

Key Issues Affecting Scale & Sustainability 1. • • Organizational Mainstreaming of HMF Develop product locally Link to institutional mission Determine loan officer roles and loads Integrate into branch structures and operational systems 2. Determining costs and monitoring performance • Price HMF products and services • Analyze affordability • Measure sustainability