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Housing for All

Ashoka
Hybrid Value Chains

HOUSING FOR ALL INITIATIVE

Contents
! Goals, Assets and Barriers for Businesses and Citizen Sector
Organizations
! Benefits of a Hybrid Value Chain
! The Market for Housing for All
! Hybrid Value Chain Actors and their Roles
! National Overview
! Home Improvements in Brazil, Colombia and Egypt
! New Homes in India
! National Scale and Beyond
! Achieving Global Scale
! Contact Us


“Currently, one-sixth of the world's population — one billion people — live in
urban slums in emerging countries. In addition, virtually all net growth of 2.6
billion in world population between now and 2050 is projected to occur in
these cities. In effect, relatively poor nations will need to build the
equivalent of a city of more than one million people each week for the
next 45 years.

New market-based approaches to affordable housing are essential to reach
the massive scale commensurate with this enormous demand. Modern
corporations in the home-supply/building materials sector can create great
value for households and capture a large share of these markets through
forging “hybrid affordable housing value chains.” Successful affordable
housing products package key inputs (e.g. technical assistance in design and
construction, housing microcredit, quality building materials, financial
planning etc.) to make the process shorter, less expensive, and more
efficient. Typically however, corporations have little access to,
understanding of, and trust of poor communities. Hence, corporations usually
work best in these environments through partnering with local citizen-sector
organizations.”
— Dr. Bruce W. Ferguson, former Senior Housing and
Urban Economist of the World Bank; Advisory Board of
Global Urban Development Magazine, author of three
books and 40 articles on housing and urban development
in emerging countries and the US.


Citizen Sector
Business Organizations

Barriers
! Inadequate product offering
! Lack of affordable and integrated
solutions
! Limited access to financing
! Lack of access to complementary
goods at scale (land, infrastructure)
! Inefficient and costly delivery of
goods and services

Goals Goals
! Access to markets ! Improved products/services
! Greater profitability to communities
! Increased income streams
Assets Assets
! Vital goods and services ! Deep knowledge of
! Ability to operate at scale communities and consumers
! Investment Capacity ! Ability to aggregate demand
! Operational Capacity ! Social Networks
! Infrastructure and Logistics ! Behavior change capacity


Citizen Sector

Goals Ashoka Hybrid Value Chain Goals
! Enables collaborative
entrepreneurship at a country and
global level
! Increased income streams
! Identifies and engages partners
Assets providing complementary Assets
competencies
! Vital goods and services ! Demonstrates how to deliver ! Deep knowledge of
! Ability to operate at scale integrated solutions at scale communities and consumers
! Investment Capacity ! Spread knowledge, learning and ! Ability to aggregate demand
! Operational Capacity specific know-how emerging from ! Social Networks
! Infrastructure and Logistics HVC applications ! Behavior change capacity


Citizen Sector

Benefits Benefits Benefits
! Access to quality of life enhancing
products and services at scale
! Increased livelihood opportunities
! Goodwill in the community ! Increased and more diverse
at the community level
! Innovation blowback revenue streams, greater
! Scaling up enabled through sustainability
! First-mover advantages partnerships between companies
! Goodwill in the community
and CSOs, local and national
governments
! Market-based competition delivers
quality services at lowest cost to
empowered consumers


More Than a
Roof Overhead

Health Implications Livelihood Implications Social Implications
! Basic health considerations ! A place of work ! A social symbol and source of
! Safety ! A productive asset that can be dignity
! Sanitation leveraged ! Point of connection to community
! Clean water ! An appreciating asset and social fabric
! Secondary impacts on education
and productivity

A home is more than shelter.
Access to housing and better living conditions can transform the lives of
individuals, families and communities.


The Market for
Housing for All

! The Need
! About 1.1 billion people are living in inadequate housing conditions in urban areas alone (United Nations Centre for
Human Settlements)
! An estimated 21 million new housing units are required each year, in developing countries, to accommodate growth
in the number of households between 2000 and 2010.
! 14 million additional units would be required each year for the next 20 years if the current housing deficit is to be
replaced by 2020 (UNHCS)
! Market size
! Total low income housing market is estimated at $331.8 billion, where low income populations are classified as those
with incomes below $3000 in local purchasing power. (World Resources Institute)
! Additional untapped US$ 9.3 trillion in estimated “dead capital” in informal housing, which could be leveraged


The Market for
Housing for All

! Key Market Constraints and Opportunities
! Lack of financing options.
! Mortgage Financing as a share of Gross Domestic Product
- Brazil — 2 %
- India- 4 %
- Colombia — 7 %
- As opposed to 79.6% in the United States and 54% in Germany
! Custom creation of technical solutions
! Lack of collaborative efforts and hence, integrated and scalable solutions.


Hybrid Value Chain Actors and their Roles
Citizen Sector
Business Housing for All Organizations

Housing Related Products Aggregators
! Construction materials ! Aggregating pools of consumers
! Tools ! Mobilizing sales forces
! Aggregating small producers of
housing related products
Builders and Technical Assistance Complementary Services
! Architects ! Permits, documentation
! Builders ! Screening
! Real Estate Developers ! Finance and loan products
! Financial literacy
Finance Access Enablers
! Microloan products ! Access to water/electricity
! Mortgage products ! Link to municipality


Housing for All

Overview Multi- Country, Multi- Dimensional Housing For All
! Goal: Demonstrate the power of
business/social alliances to address the
housing needs of low income people
-
through sustainable business models
scalable to diverse housing country
environments
! Engagement of key partners in the
development of Hybrid Value Chain
applications
! Pilot Applications of housing HVCs
! Capturing and sharing key learnings of
country programs
! Refining and scaling HVC business
models
! Houses improved and new homes built
! Lives impacted


Housing for All

Overview Multi- Country, Multi- Dimensional Housing For All
! Goal: Demonstrate the power of
business/social alliances to address the
housing needs of low income people
-
through sustainable business models
scalable to diverse housing country
environments
Home Improvements
! Brazil
! Colombia
! Egypt
New Homes
! India


National
Overview

Colombia
! Deficit of 1.3 Million India
new units ! Low Income Market size:
! 2.5 M homes needing US $62.1 Billion
home improvements ! Deficit of 24.7 Million Units

Brazil Egypt
! Low Income Market size: US$
! Deficit of 3.7 Million Units
10 Billion
of low income homes
! Deficit of 7.2 Million Units
! Estimated 20 M people
! 10.5 M homes needing leaving in homes needing
upgrades to meet minimum upgrades
quality standards


Business
Home Citizen Sector Organizations
Improvements —
Brazil

State owned

Highlights
! Reforma Mais launched on February ‘10 with participation of 3 partners — Banco de Nordeste, ABCP and Cearah Periferia
! Banco do Nordeste — CrediAmigo committed to include Housing Microcredit as part of its products offering to its clients
! ABCP committed to develop tools and standard guides related to technical assistance for home improvements
! Cearah Periferia committed to develop a social business. Reforma mais will become 50% of their business going forward
! IFCE committed to provide TA services during Phase 1 and to develop a training program for construction technician to serve the low-
income market.
! Ministerio das Cidades — Financial commitment for Phase 1 of $R268,000 (U$S150,000) to the cost of technical assistance
! 24 businesses/social organizations committed to invest time over a six month period to develop the concept of the Clube da Reforma
! Total Investment by Partners: US$ 1,635,000


Business
Improvements —
Colombia

Highlights
! Phase I, Since 2007—2009
! Over US$ 11.7 million in sales with 28,000 housing solutions delivered profitably (ex. floors, kitchens and bathrooms)
! More than 179 women earned average of US$230 month as sales promoters in 8 Colombian cities.
! CSO’s generated new sources of revenues and more than US$70,000 in funding for community projects.
! Phase II, 2009 to present
! Completed Feasibility study on the creation of new home improvement financial entity (HIFE) with capacity to deliver at scale —
over US$100mm — integrated financial and technical assistance solutions
! Development of HIFE business plan in partnership with Affordable Housing Institute, with co-financing of Hilti Foundation and 3
local companies.
! Ashoka leading creation of a national network of CSOs and a scalable system for delivering standardized home improvement
solutions


Business
Improvements —
Egypt

Pre p phase
- ilot
Corporate partnerships in development

Highlights
! Business plan completed in January 2010 for a national program delivering sustainable home improvement financing and
technical assistance
! Program to be launched in June ’10 and to be implemented by 4 Ashoka, including two microfinance institutions who will
finance themselves the credit component
! HFA Centers will consolidate to form a Cooperative in 5 years and will focus on advocacy to scale up the program beyond
the 4 regions
! Micro credit operations will breakeven in 30 months and continue to grow HFA centres
! In five years, HFA will have improved and/or constructed 18,355 housing units and provided 44,600 working construction
days


Global Overview of Housing for All: Home Improvements
Opportunities
! In most developing countries, self-financed
progressive housing represent 50% or more existing
housing market.
! Tremendous opportunity cost of not participating
negates impact in terms of higher #’s of families
to be benefited as well as less disruption for them
in terms of social networks and proximity to jobs
! Untapped existing low income asset base of over
US$ 9.3 trillion- this "dead capital" is not leveraged
or active in the market
! Significant impact and return for relatively small
investments per household in the short and
medium terms

Challenges
! Infrastructural impact is limited
! Achieving scale requires system innovations at
multiple levels
! Striving towards quality and standardized solutions
! Achieving scale through standardizing Technical
Assistance and upgrade kits

Home Improvements: Key Innovations and Successes
! Community based distribution model, resulting in consumers and sales force from the
same community. Access to products and livelihood improving opportunities
! Creation of a consortium of diverse players who are committed to participate in HVC
! Greater competition, greater value


Business New Homes — Citizen Sector Organizations
India

Highlights
! Pioneering a new way of working between mortgage financers, developers, CSOs and the community (informal sector)
! Business plan completed and advisory committee being set up
! First project launched and fully sold within a week of launch
! 12 deals in pipeline — across 5 cities in India
! 2200 new homes to be launched by August 31, 2010
! Online resource base for Housing sector stakeholders to be launched by June 2010


Global Overview of Housing for All: New Homes
Opportunities
! Ownership, access to title rights
! Infrastructure improving solutions
! Scale-up can be managed through a deployment of
new units by real estate developers

Challenges
! Context specific factors, particularly available land
near sources of income
! Competition with government subsidized programs
! Smaller market share compared to Home
Improvements, particularly in terms of numbers of
families whose lives can be improved in 10 to 20
years

New Homes: Key Innovations and Successes
! 12 deals with developers and mortgage finance companies in the works
! Online Web Application as avenue to scale HVC efforts and connect both sectors
! Preserving social structures through common service areas — new type of affordable
community


At a Turning Point —
HVC’s Next Endeavors

Knowledge and Spread Collaborative Entrepreneurship Creating an Open Network
! Synthesize key insights about housing ! Develop clear incentives for ! Enable a core set of services to
business models, barriers to growth competition to trigger collaboration companies and CSOs so that HVC
and scale within each country program and models can self-multiply
! Communicate learning and best beyond ! Introduce web-based and social
practices ! Refine model to focus on leveraged marketing tools to accelerate HVC
! Engage thought leaders, practitioners points of intervention with the highest mindshift and change negative
and stakeholders as part of the potential to accelerate sector perceptions
solution transformation (ex. policies, financing ! Mobilize competitive and sustainable
at increasingly larger scale) home financing at a global level
! Think and act system change


National
Scale

Colombia India
! Launch HIFE, a new ! Establish HVC
entity to be owned by a application where new
consortium of housing solutions to
companies, financial informal sector
institutions and CSO families are produced
players by Real Estate
! Enabling a sustainable developers and
and scalable system mortgage institutions
capable of delivering in partnership with
hundreds of thousands CSOs
of integrated services: ! Explore tools to enable
TA + building materials the spread of the
+ financing model beyond the
initial 12 pilots
Brazil
! Establish Reforma Mais
as a profitable model Egypt
to deliver HI credit +
! Establish Housing for All Centers
TA
as profitable models to deliver HI
! Explore Clube da credit + TA
Reforma as a national
! Explore partnerships with formal
alliance of 30+
financial institutions and large
companies and CSOs
private companies


Beyond
National
Scale
Opportunities Competencies
! Facilitate private sector investment to expand housing ! Understanding what works and what does not work from
related financial services and products to informal sector the informal client credit perspective
families
! Catalyze significant private sector investment in ! Ability to translate the social and impact opportunity into
companies and financial institutions committed to a commercial investment
delivering housing solutions in low income markets
! Close the gap between formal sector and grassroots based ! Engage engineering and design schools
product design, technical assistance and construction ! Ability to capture grassroots innovations and transform
services into scalable concepts
! Enable system change solutions to secure land tenure and ! Experience in unleashing dead capital in informal housing
free-up dead capital in informal housing
! Engage governments — particularly at the local level — as ! Demonstrated experience with policy change in multiple
part of the solution and as an ally of organized local settings
communities ! Access to organized local groups and/or the ability to
mobilize trust-based relationships at the community levels
! Understanding of motivations and pressures of diverse
stakeholders

Enable a global competitive housing market of product and service
providers serving over 500,000 to a million of low-income families
annually around the world

Achieving
Global
Scale

Key HVC Innovations
! Integrated, localized solutions
! Large commercial applications in
low income markets
! Congruence of wealth creation
and social value creation
Achieving Global Scale
through an Open Network
! Catalyze entrepreneurship by
building a global community of
peers with the capacity to self-
multiply HVC housing
applications
! Foster a set of partnerships with
key players internationally,
combining North-South and
South-South alliances
! Incentivize collaborations
focused on the development of
standardized and scalable
solutions for both home
improvement and new homes


Markets
for Good

Foster greater market growth
Foster greater economic citizenship


Contact Us
! Valeria Budinich ! Jacques Rajotte
Vice-President, Ashoka Senior Legal Consultant, Ashoka
Full Economic Citizenship Initiative Housing For All, Brazil
vbudinich@ashoka.org jrajotte@ashoka.org

! Shivani Manaktala ! Maria Lucia Roa
Senior Advisor, Ashoka Ashoka Country Director, Ashoka
Full Economic Citizenship Initiative Housing for All, Colombia
SManaktala@ashoka.org maluroa22@gmail.com

! Iman Bibars, PhD ! Vishnu Swaminathan
Vice President, Ashoka Director, Ashoka
Regional Director, Ashoka Arab World Housing for All, India
ibibars@ashoka.org vram@ashoka.org


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