GLOBAL SUMMIT                             2010                        Draft Cases anD                       reCommenDation...
Acknowledgementsthe authors would like to thank the social entrepreneurs who shared their innovative work,and the experts ...
Access to Housing for theBase of the Pyramid:A Working Reportaccess to Housing for the Base of the Pyramid: foreword ........
About the Authors    Ashoka Innovators for the Public: founded in 1980, ashoka    is the world’s working community of more...
Access to Housing for theBase of the Pyramid:ForewordWritten by practitioners for practitioners, this report (due for publ...
the key differences between market Based Cases and solutions addressing     Barriers to scale are summarized below:       ...
Market Based CasesPatrimonio HoyJamii BoraHousing For All - India                          7
market BaseD Case                                                                            PATRIMONIO HOYPatrimonio Hoy ...
market BaseD Case                                                                  PATRIMONIO HOYThe Business Modelover th...
market BaseD Case                                                                                PATRIMONIO HOY           ...
market BaseD Case                                                                                                         ...
market BaseD Case                                                                      PATRIMONIO HOYEvaluation FrameworkI...
market BaseD Case                                                                                 PATRIMONIO HOYIs the sol...
market BaseD Case                                                                                                JAMII BOR...
market BaseD Case                                                                                                   JAMII ...
market BaseD Case                                                                           JAMII BORA                    ...
market BaseD Case                                                                           JAMII BORA                    ...
market BaseD Case                                                                                                         ...
market BaseD Case                                                                                   JAMII BORAEvaluation F...
market BaseD Case                                                                                       JAMII BORAIs the s...
market BaseD Case                                                                                               JAMII BORA...
market BaseD Case                                                                HOUSING FOR ALL - INDIAHousing For All - ...
market BaseD Case                                               HOUSING FOR ALL - INDIAWhile pre-bookings look positive in...
market BaseD Case                                                    HOUSING FOR ALL - INDIASales and Marketing: Aggregate...
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
Draft casesrecommendations access to housing
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Draft casesrecommendations access to housing

  1. 1. GLOBAL SUMMIT 2010 Draft Cases anD reCommenDationsWith the support of:
  2. 2. Acknowledgementsthe authors would like to thank the social entrepreneurs who shared their innovative work,and the experts who contributed insights over the course of this investigation. the researchand writing of the following cases and recommendations would not have been possible with-out your support. We invite your continued collaboration, at the Global summit of Housingentrepreneurs in Barcelona, to inform the final version of this report.this Working report on access to Housing for theBase of the Pyramid is sponsored by:
  3. 3. Access to Housing for theBase of the Pyramid:A Working Reportaccess to Housing for the Base of the Pyramid: foreword ........................................................ 5market Based Cases ................................................................................................................7 Patrimonio Hoy ................................................................................................................................ 8 Jamii Bora ......................................................................................................................................... 14 Housing for all - india..................................................................................................................22solutions addressing Barriers to scale ..............................................................................9 CoDi - Community organizations Development institute ...............................................30 saiban ................................................................................................................................................36 terra nova ......................................................................................................................................42 sParC – society for the Promotion of area resource Centres ......................................48Draft recommendations for Various stakeholders ......................................................55 financial institutions: .....................................................................................................................56 Commercial Banks .................................................................................................................. 57 microfinance institutions .......................................................................................................58 Housing finance institutions................................................................................................. 61 Citizen sector organizations......................................................................................................62 real estate Developers (new Homes) ....................................................................................63 Building material manufacturers / retailers (Home improvements and new Homes)...65 Building materials retailers and Distributors (Home improvements).............................69 Public sector actors: national Government, Local Government, municipalities and Public Housing finance agencies ............................................................ 71 investors and funders:.................................................................................................................. 74 Philanthropists and foundations.......................................................................................... 74 social investors ........................................................................................................................76 Private investors ......................................................................................................................77
  4. 4. About the Authors Ashoka Innovators for the Public: founded in 1980, ashoka is the world’s working community of more than 2,000 leading so- cial entrepreneurs. it champions social change ideas and supports the entrepreneurs behind them by helping them get started, grow, succeed and collaborate. as ashoka expands its capacity to inte- grate and connect social and business entrepreneurs around the world, it builds an entrepreneurial infrastructure comprised of a series of global initiatives that supports the fast-growing needs of the citizen sector. ashoka’s vision is to create change today, for an ‘everyone a Changemakertm’ society to become the reality of tomorrow. for more information, visit www.ashoka.org. Ashoka’s Full Economic Citizenship (FEC): is one of ashoka’s global initiatives striving to enable an environment where every citizen has the opportunity and the capacity to exercise his or her economic, social and cultural rights. the full economic Citizenship initiative builds business partnerships that serve low- income communities in the sectors of housing, healthcare and small farming. these collaborations are Hybrid Value Chainstm which combine the resources of the business and citizen sectors to transform markets and redefine value in game-changing ways. for more information, visit fec.ashoka.org. Hystra: is a new, hybrid type of consulting firm. Hystra works with business and social sector pioneers to design and implement hybrid strategies through innovative business approaches that are profitable, scalable and eradicate social and environmental prob- lems; and combine the insights and resources of business and citi- zen sectors. Hystra itself is a hybrid organization, a for profit tool for social change. Hystra consists of a core team of full time con- sultants and of a growing network of partners already present in 7 countries. for more information, visit www.hystra.com.4
  5. 5. Access to Housing for theBase of the Pyramid:ForewordWritten by practitioners for practitioners, this report (due for publication in early2011) looks at international examples of promising and already successful affordablehousing solutions that provide both new homes and home improvement solutionsfor the urban poor. the following pages consist of two types of cases; marketBased Cases, and solutions addressing Barriers to scale; as well as a draft synopsisof recommendations for various stakeholders who act across the affordable hous-ing value chain, derived from the experiences of practitioners and industry experts.A Word on Methodologyafter an extensive review of over 70 housing solutions, we identified geographicallydiverse cases titled market Based Cases, of which three are included in this draft.these cases are termed as “market based” due to two primary criteria: • the initiative delivering the home improvement or new home is not highly subsidized • the client purchasing the new home or home improvement solution pays market value for the purchasefrom these market Based Cases, which illustrate promising approaches to deliv-ering new home and home improvement solutions, we surfaced some key crosscutting themes. apart from context specific factors, we identified four key barriersthat, according to the practitioners involved in these cases, restrict the scale andreplicability of their solutions.these Barriers are: 1. the lack of access to clear and secure land title (hereafter, Land rights ) 2. Limited collaborative and cross-sector collaborative action 3. the lack of access to a policy environment supportive of affordable housing markets (hereafter, supportive Policy) 4. the lack of access to appropriate finance options for low-income clients (hereafter, finance)We then identified additional solutions, called solutions addressing Barriers toscale, which are not necessarily market based, but provide interesting and insightfulexamples of addressing one or more of the above mentioned barriers. 5
  6. 6. the key differences between market Based Cases and solutions addressing Barriers to scale are summarized below: soLutions aDDressinG market BaseD Cases Barriers finance, advocacy, access to land rights or any product or service that alleviates enD new homes or home a barrier to scaling affordable housing ProDuCt improvement solutions solutions. occasionally new homes or home improvement solutions are end products as well systemic issues, policy constraints, Quantity or quality shortfalls in capacity constraints of low income aDDressinG affordable housing segments, all of which inhibit scaling up of affordable housing DeGree of Limited subsidies if any Higher level of subsidy suBsiDy sCaLe operational sustainability, expan- mobilizing subsidies, removing systemic sion and replication, opening and tHrouGH barriers and influencing policy developing markets CLients upper BoP income segments Lower BoP income segments reaCHeD the cases and analysis contained in this report culminate in series of recommen- dations for various actors in affordable housing, from finance providers to Public sector actors, from real estate Developers to Building materials retailers. a draft of these recommendations follows. A Collaborative Endeavor this project, sponsored by the Hilti foundation, was completed over the course of 6 months in 2010, and was led by ashoka’s full economic Citizenship initiative with input from Hystra consultants, and industry experts. the report reflects a co-creation process with social entrepreneurs and business leaders. the case stud- ies in particular, have been discussed with the contacts from each project and the recommendations that follow are the product of the insights of practitioners and industry experts. We invite your feedback and suggestions on the Cases, solutions and recommendations that follow.6
  7. 7. Market Based CasesPatrimonio HoyJamii BoraHousing For All - India 7
  8. 8. market BaseD Case PATRIMONIO HOYPatrimonio Hoy ProJeCt DetaiLs Geography: Latin-america: mexico (45 cities), Colombia, Venezuela, nicaragua, Costa ricaExecutive Summary Products: incremental home improvements; integratedLaunched in 2001, Patrimonio Hoy (PH), is a profitable program and materials and financing for complete rooms, bathrooms and kitchensbusiness unit of CemeX,1 an international cement producer and sup-plier of aggregates (sand, gravel, etc.). the program provides low- Stakeholders:income families in mexico and several other Latin-american coun- Private: CemeX, other suppliers, Distributors social: Community based promoterstries the opportunity to build additional rooms (bedroom,bathroom, kitchen etc.) in their homes in about a thirdof the normal time for roughly two thirds of the cost.2 low-income clients of a solution advancedthis is accomplished through an innovative arrangement, where by a private sector company. addition-groups of 3 families use a combination of upfront savings and credit ally, PH has expressed its commitment toextended by PH (76% of the project cost) to design and build a room serving low income communities throughin each of the participating 3 homes in 70 weeks. During the early improving public school infrastructureweeks of the program, PH offers technical assistance to its customers through its PH escolar5 program.to design and plan the project. 3 PH provides building materials fromCemeX and complementary building material suppliers (for windows, During its 10 years of operations, thetiles, etc.), through selected CemeX distributors that offer a choice program has provided 250,000 6between direct home delivery or temporary storage of materials.4 families (socios) with credit, ma- terials and assistance to buildto qualify as a PH distributor, a company must not distribute products new rooms. PH is now poised forwhich directly compete with CemeX offerings (to minimize odds that further national and internationalcompeting cement and materials providers will benefit from CemeX growth.financing and investments into this target segment). only 10% ofCemeX’s current distributors meet these stringent requirements. House upgrade in progressthe projects are marketed and sold through promotoras, local sales-people (mostly women) with strong ties inside the target commu-nities. these promotoras help overcome initial distrust by potential stakeHoLDers ContriButeD GaineD CemeX Building materials, new business opportunity, com- full product financing, munity based sales force, under- distribution system standing of customer segment otHer suPPLiers Building materials Growth in sales, steady demand Promotoras reach and trust inside income through sales commis- low-income communities sion, social capital, sales training Photo : Patrimonio Hoy DistriButors Home delivery of prod- Growth in sales, highly profitable ucts, storage facilities product mix, steady demand Consumer market demand for improved living and hygienic home improvement conditions projects8
  9. 9. market BaseD Case PATRIMONIO HOYThe Business Modelover the last ten years PH has refinedits business model to successfully serve tHe stories of rosa anD marÍalow-income markets in mexico and else-where. the stories of rosa magañaOperations established in and maría Diega, twothe communities7 customers of Patromonio Hoy (PH), illustrate thethe core of PH’s operations ist “cells” life-changing impact that thewhich are established in every neighbor- program can have.hood where PH is launched. Cells typi-cally have 1 to 4 employees whose roles rosa magaña, Patrimonio Hoy’s first customer, creditsinclude recruiting and training promotoras, Patrimonio Hoy withplanning, designing and scheduling proj- changing her life. she and herects, coordinating distribution deliveries, husband built their 120 sqreceiving payments and handling consum- meter house after living wither inquiries. their two children in a 10-sq meter carton shed with no bathroom for six years. theySales and Marketing through are now completing twotrained promotoras additional rooms and aCemeX hires local promotoras – more soldering and welding workshop. PH has helped rosa and her children in front of herthan 90% percent of whom are women8 – them build both a home and home, expanded from 10 sq- meters toto identify prospective customers and 120 sq meters. Construction is ongoing their own business. “Without on 2 rooms and a welding shop for hermotivate them to enroll in the program. the program,” rosa says, “i’m husband.these promotoras are the key to establish- sure we would still be living ining relationships with target clients and the same conditions.”developing the trust necessary for the maría and her family of six lived in a single-room dwelling for eightprogram to work within informal com- years. in just five years after maría became a PH participant—rathermunities. Promotoras are compensated for than the lifetime of work it may have taken otherwise—she and hertheir work through a commission, based family added seven rooms and a staircase to their home. according to maría, “Without Patrimonio Hoy, we would still be crowded,on the number of families they attract and uncomfortable, and angry. since we became part of the program myhow long they stay in the program. husband and i are more united, as he stays home during the week- ends to keep building our house. We see the Patrimonio Hoy teamthe PH program is further marketed as part of our family.”through branding initiatives, for instancethe placement of PH logos on trucks de-livering materials to homes.Integrated offerings forcomplete rooms, not justCEMEX products Photos : Patrimonio HoyPH supplies not just cement and aggre-gates but a comprehensive and inte- maria Diega Chavero and children in front ofgrated offering of construction materials their expanding home,for the completion of the room, kitchen under construction.or bathroom. all items are packaged bydistributors and delivered according to 9
  10. 10. market BaseD Case PATRIMONIO HOY week for the complete 70 weeks. of that, mXn 165 per week goes to the purchase of building materials and the remaining mXn 35 per Poor people can spend more week is the PH membership fee.money than we think, on homeimprovement. Companies need to the membership fee covers access to technical assistance, fixed pric-re-invent, in large part, even core ing for materials during the 70 week project, materials storage, homecompetencies to successfully serve delivery, community development projects through PH escolar, andlow-income markets.” the interest charged on PH financing. – israel moreno, Director, after 2 weekly payments are completed in each cycle (20% of the ma- Patrimonio Hoy terials needed for completing that cycle of the construction project), credit is granted by CemeX without additional prerequisites for the remaining 8 weeks. the first cycle is an exception, where 5 payments are needed before credit is disbursed (in total credit represents 76% of the project cost). the group savings and credit program of PH was built upon local “tanda” (private savings groups) practices common in low-income mexican communities, where groups of women set aside savings for a specific purpose each week and one of the members is responsible for collecting payments on a weekly basis. Distribution: Flexible home deliveries throughPhoto :Patrimonio Hoy selected suppliers11 When they purchase material, PH customers have the choice be- tween immediate home delivery or temporary storage at the dis- tributor’s facilities. this helps minimize wastage of materials and ad- ditional transportation costs to consumers. Olivia Villanueva, a PH client, unlike its parent company CemeX, PH mandates its distributors to and children in front be able and willing to provide a home delivery service and have stor- of an upgraded house age capacity.a pre-approved schedule. PH receives acommission of 6% on other constructionmaterials which are packaged into PH de-liveries and financed by PH.9 Photo :Patrimonio HoyFinancing: credit for groups CEMEXof 3 families, based on local employeesgroup savings practices10 at workPH programs are divided into 7 cycles of10 weeks, permitting each family enrolled Additional social impact: school constructionto complete a 100 sq foot room after70 weeks. Groups of 3 families organize additional programs have been launched for participant communities.themselves to participate in the program, one such example is PH escolar, which helps improve infrastructureand require only an official iD (no formal of local schools. four per cent of the membership service fee is al-land title) to do so. each family contrib- located towards PH escolar.12 CemeX provides participating schoolsutes mXn 200 (roughly usD 15) per technical assistance and building materials free of cost.1310
  11. 11. market BaseD Case PATRIMONIO HOYPatrimonio Hoy TimelinePatrimonio Hoy Timeline 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Project Milestones First launch in Re-launch Launch of additional PH reaches PH receives World Guadalajara including CEMEX programs (Te Impulsa, self-sustainability Business Award by financing Calle Digna, PH Escolar) UNDPCumulative credit extended (As of December of previous year) $1.6m USD $9.4m USD $22.7m USD $38.5m USD $52.9m USD $66.6m USD $82.3m USD $112.1m USD $134.8m USDSocial Value Creation (Members served) 10,000 36,000 68,000 103,000 126,000 154,000 183,000 219,000 252,000Patrimonio Hoy Operations Recruiting and Training PH Products Direct Sales of PH Products PH Products PH Products Legend Other building Clients Product CEMEX material Distributors Promotoras (groups of 3) suppliers Services $ Payments Consumer Finance Private Enterprise Payments Citizen Sector Organization $ Commission on Sales Customer $The Patrimonio Hoy Value Chain ProJeCt ProDuCt ProDuCt marketinG retaiL after ProCurement DistriBution finanCe DesiGn DeV anD saLes finanCe saLes• all materials • CemeX invested • CemeX • Technical • Direct sales • savings in groups • Distribution • Project and(CemeX and in launch and provides assistance by to families by of 3 families, 76% through selected payment follow-upcomplementary invests in expan- integrated cell at start local sales- product financing distributors, by promotorasproducts) by other sion of profitable home of project people by CemeX storage facilitiesmanufacturers business unit PH improvement (no constructionprovided through materials plus services)CemeX distributors creditsocial sector actors Private sector actors 11
  12. 12. market BaseD Case PATRIMONIO HOYEvaluation FrameworkIs the solution SOLVING THE PROBLEM? Is the solution ECONOMICALLY VIABLE?Patrimonio Hoy addresses a significant need PH is a profitable program for CEMEX andamong low-income communities — adding offers an affordable way for consumers tospace to existing dwellings — through an improve homes.integrated offering of all materials andnecessary financing and technical assistance. Solution is affordable and saves time for the targeted population.Problem Magnitude • average consumer family of 5 people has an income of• yearly housing gap of 750,000 houses in mexico. usD 8,500 per year, about 5 times the minimal yearly wage.• Half of homes built are in the informal sector, room by • Customer payment of usD 15 per week for buildingroom at a pace of ~ 4 years and a cost of usD 1,500 per materials, interest payments and ta, allowing them to relyextra room.14 on financial discipline, rather than current assets, to finance home improvement goals.• 16 million self-built homes, 2.2 million rooms added eachyear.15 • repayment rate of 99.8% since inception, proving affordability. • PH estimates each extra room built through its programQuality of Solution costs usD 1,000 (2/3 of typical cost) and takes on average 1.5 years to build (1/3 of usual time to build).• access to full range of building materials to construct anadditional room. PH is a lucrative program for CEMEX.17• Limited technical assistance in advising the right mix ofproducts for the project. • CemeX has invested usD 21million since launch. • Generated sales of about usD 100 million since 2000.Housing Impact- The Numbers Since Launch16 • extended usD 95million in credit to consumers in the• 156,000 rooms built. same period.• approximately 750 school infrastructure improvement • Donated usD 200,000 for public school infrastructureprojects with PH escolar. since launch. • PH profitable since 2006.Housing Impact- Quality of Life • 20% of PH’s profits sent to CemeX corporate.• increased family productivity and incomes based on ad-ditional usable space for work. • Besides financial returns, recognition of CemeX in com- munities as a business with a social conscience.• improved quality of life attributable to greater space.• Better health outcomes attributable to quality construc- For Social Stakeholders, Promotoras, PH is ation and sanitation upgrades. source of income and pride18 • 750 promotoras paid directly from CemeX, based on theOther impacts number of clients they attract and how long they stay in the• new training and source of income for promotoras, who program.are often consumers themselves. • usD 2.5 million in sales commissions to promotoras since• Creation of deeper community networks through reach of launch.promotoras. • in 2009, average usD 170 per promotora per month. Dependence on Subsidy or Grants Government subsidy is available for low income families who want to upgrade housing conditions, for ~1/2 PH’s members, representing ~ 30% of their weekly payments.12
  13. 13. market BaseD Case PATRIMONIO HOYIs the solution SCALABLE AND REPLICABLE?Patrimonio Hoy’s current structure as a pro- To be replicated by another manufacturer ofgram of CEMEX and its lack of partners with construction materials, this model requirescomplementary skill sets constrain its ability investment, appropriate financing and distri-to scale. bution systems.• in-house financing: limited amount available for loans and • a materials manufacturer willing to invest resources into alimited money available for re-investment. business unit catering to a new target market.• financial constraints of a business unit within CemeX: not • availability of finance partners to finance consumer pur-open to social capital or international donor funds, and with chases, or alternatively the capacity of materials manufac-funding streams subject to corporate processes in line with ture to extend finance.CemeX’s growth strategies, not PH’s. • Distributors capable of packaging complete offerings,• Lack of quality talent to manage growth and scale, knowl- and their willingness to extend storage and home deliveryedgeable about target communities (thus capable of identify- options.ing promotoras) and able to drive sales. • Community sales representatives with respect and reach• Difficulty finding viable social sector partners to aggre- in communities who can serve the function of promotoras.gate demand and recruit promotoras, in spite of trials withseveral Csos.Is the solution ENVIRONMENTALLY SOUND?environmental sustainability is not articulated as a primary goal of Patrimonio Hoy.Post ScriptCognizant of the above outlined barriers to scaling its operations, Patrimonio Hoy is looking to partner with socialsector organizations that have both an extensive network in communities and can adapt the business mindset re-quired to meet PH’s ambitious growth targets.1 Founded in 1906 and headquartered in Mexico, CEMEX is a global 7 Michigan Ross School of Business Case Study, December 12, 2003building materials company that produces, distributes, and markets ce-ment, ready-mix concrete, aggregates, and related building materials 8 Global Urban Development Magazine, Volume 4, Issue 2, Novem-throughout the Americas, Europe, Africa, the Middle East, and Asia ber 2008and has close to 47,000 employees worldwide. In 2008, the company 9 Interview with Israel Moreno, Director Patrimonio Hoy, Octoberrecorded a revenue figure of USD 20.1 billion. In 1996, with the ac- 15, 2010quisition of Colombia’s Cementos Diamante and Samper Companies,CEMEX became the world’s third largest cement producer; and, in 10 Habitat Business Award Application 2009; Best Practice, UN2005, the world’s largest ready-mix concrete producer after acquiring Habitat Website http://www.unhabitat.orgRMC Group Plc of UK. 11 Michigan Ross School of Business Case Study, December 12, 2003 12 Interview with Israel Moreno, Director Patrimonio Hoy, October2 Michigan Ross School of Business Case Study, December 12, 2003 15, 20103 Technical assistance typically comprises guidance at point of sale on 13 Interview with Israel Moreno, Director Patrimonio Hoy, Octoberwhat items to purchase and design of new room. 15, 20104 Families are not required to buy all products from the list, or all 14 Global Urban Development Magazine, Volume 4, Issue 2, No-products from selected suppliers/distributors. They can procure their vember 2008own materials, which would fall outside of PH financing, delivery andstorage services. 15 Harvard Business Case; Patrimonio Hoy: A Financial Perspective, November 1, 20075 Patrimonio Hoy Escolar is a partnership with local public schoolsthrough which PH supports infrastructure improvements through 16 Interview with Israel Moreno, Director Patrimonio Hoy, Septem-technical assistance and provision of building materials. Roughly 100 ber 14, 2010school projects have been completed. 17 Interview with Israel Moreno, Director Patrimonio Hoy, Septem-6 Habitat Business Award Application 2009; Best Practice, UN Habi- ber 14, 2010tat Website http://www.unhabitat.org 18 Interview with Israel Moreno, Director Patrimonio Hoy, Septem- ber 14, 2010 13
  14. 14. market BaseD Case JAMII BORAJamii Bora ProJeCt DetaiLs Geography: kaputei town, kenya 60 km outside the city center of nairobiExecutive Summary Product: new homes in new townshipWith more than 300,000 members, Jamii Bora (JB) is the largest 1 Stakeholders:microfinance institution in kenya.2 Beyond micro credit, the organiza- Private: Construction and environmental expertstion provides savings accounts, life and health insurance, counseling (e.g., architects, engineers, professors, and roadservices focused on community capacity building, business classes and builders); funding Partners social: Jamii Boralarger ticket housing loans. finance: Jamii BoraLeveraging its assets as a micro finance institution andits experience delivering a host of services to its mem-bers, JB launched its affordable housing initiative in2002. it did so by purchasing and delivering private land3 60km out-side of nairobi. its vision was to create a complete ecosystem that in total, JB plans to include 2000 newwould provide its members with residential, commercial and social homes (for 10000 individuals), cultural andservices.4 social centers, and commercial/ industrial areas in kaputei. total cost is estimatedeach resident of this new town, called kaputei, purchases new homes to be kes 900 million (usD 11.25 mil-and therefore access titled land and infrastructure. all residents are lion), half for residential development andexisting JB clients who have a strong borrowing history with the mfi the other half for commercial develop-and are either entrepreneurs or can support local entrepreneurs. JB ment. Construction costs have been re-is the exclusive provider of financing for purchase of these homes. 5 duced through standardized design, localCost of homes depends on how long the client has been a mem- manufacturing of building materials andber of JB and can range from 350000 kes(usD 4320) for those who construction of homes by residents whohave been members over 10 years up to 750000 kes (usD 9375) for are paid by JB. the project is financednewer members. through private loans, JB company savings and consumer down payments, with mini- mal funding through donations. stakeHoLDers ContriButeD GaineD kaputei is still under construction6 as Jamii Bora Provides homes, land Home loans are a new line legal protests7 from local environmen- tenure, commercial of products cross sold to properties, loans for their existing clients; additional tal nGos and neighboring towns have purchase , infrastructure, revenues from rent on delayed the process. as of september community centers commercial units 2010, two neighborhoods, en- PriVate funDers Provide funding for the equity; interest income, compassing ~500 homes in total, (e.g., acumen fund, project impact investing related stromme foundation) social value have been built and ~200 are un- der construction. Residents are HousinG technical, environmental and service fee for technical ProfessionaLs construction advice, knowledge of a new moving into completed houses (e.g., architects, engi- knowledge market segment on an ongoing basis. 8 Some fami- neers, professors) lies, that have already bought inDustriaL / Jobs to kaputei residents, Labor and new markets CommerCiaL rent for offices homes, have delayed their move enterPrises due to personal considerations Jamii Bora Demand for housing, con- new homes, additional of distance to work, and impact memBers struction labor income through on businesses. JB has also opened two construction jobs schools in kaputei — a primary school14
  15. 15. market BaseD Case JAMII BORAin January 2009 and a secondary schoolin January of 2010.9 management expectsthe township to be completed early 2012.10 tHe story of Jane nGoiriWith a current waitlist that far exceedsthe available homes, JB is in negotiationsfor the purchase of additional land to cre-ate another township. as the companycontinues to expand, JB believes it mustactively manage its costs, while lookingfor innovative ways to increase qualityand service for residents.11 Jane ngoiri outside her new home in kaputeiThe Business Model Jane ngoiri, a third generation slum dweller, lived in a small one bedroom shanty in the mathare slum of nairobi, along with her fourseveral features of the JB operating children. Her home was a 6 square meter, mud structure. a halfmodel, including engineering in-house complete wall divided her home from her neighbor’s, who made amaterials production, implementing a living from the illegal brewing of alcohol.standardized manufacturing process, and Jane was a commercial sex worker who had been struggling forleveraging its existing client base and sales many years to support her family when she found out that she waschannels, have allowed JB significant cost HiV positive. in late 1999, it took the mathare branch manager,reductions in delivering homes to low in- Jane njoki, several months to convince Jane and her colleagues thatcome households. another life was possible for them. the entire group decided to be- come Jamii Bora members in December 1999 and their lives slowlyProcurement: Cutting costs but surely changed.through making building Jane took sewing classes and started her own tailoring business. shematerials on-site buys old clothes and recycles them into children’s dresses for sale.JB evaluated and reduced multiple cost she purchased her first simple second hand manual sewing machine with a loan of usD 40 from Jamii Bora.drivers in the procurement of raw ma-terials. first, JB bought cheap land near Jane’s business is growing and she has taken out and repaid Jamiithe township to extract the raw gravel Bora loans 11 times over the past 10 years. However, even with aneeded for construction. it also built relatively stable income, an improved home remained unrealized dream. Given her profile as a HiV positive former-sex worker witha temporary, basic factory and hired no formal income or official address, commercial banks would not consider her a candidate for a home loan. in 2002, Jane turned to Jamii Bora for a home loan for a house in Jane ngoiri and family members in her new sitting room kaputei. Given her strong track record with previous business loans, Jamii Bora accepted her loan application in 2008. it took Jane six years to save enough for the down payment of 10% (usD 440). today, Jane lives in a two bedroom home in kaputei. she has a kitchen, a bathroom, a sitting room, two bedrooms, a garden and enough space to sew and grow her business. she pays usD 40 a month, which is not much more than what she paid for rent in nairobi. Photos : Jamii Bora Jane says she is proud to be a home owner and she thanks God every day for the miracles that have happened in her life. she says that even though she is HiV positive, she is determined to live to see her children grow up and also wants to see her grandchildren. 15
  16. 16. market BaseD Case JAMII BORA members to produce cement blocks and roof tiles, saving on both labor and transportation costs. on site production costs were kes 30 per block and kes 17 per tile, whereas purchased machine cut blocks would have cost kes 28-35 each plus kes 4,000-8,000 (usD 50-100) in transport.12 the factory has also provided jobs to over 100 JB families, improving their ability to pay back loans. Sales and Marketing: Cross selling to entrepreneurs with strong credit history JB leverages its existing sales channels to cross sell new housing loans to its base of approximately 300,000 clients across kenya. Housing loans are approved for clients who have a minimum three year engagement with JB and successful repayment of at least three business loans. those eligible for home loans in kaputei are either proven entrepreneurs or hardworking individuals who can support the work of entrepreneurs. JB proactively selects entrepreneurs who can ei- ther provide goods and services to the town (e.g., food shops), who can serve the surrounding areas (e.g., carpenters), or have outgrown their current business space and need bigger homes or the commer- cial area of kaputei.13 However, several entrepreneurs are hesitant to move to kaputei until a critical mass of residents moves in, to support their businesses and electricity (currently solar powered) is provided as a utility. Product Design and Development: Cutting costs in a low cost Professionals working with the community onhousing project is a combination standardized homesof hundreds of aspects of building to ensure quality construction, JB hired professional architects, en-materials production, designs and gineers and professors to design and oversee the construction of theconstruction methods, lay-out plans township, in consultation with residents.etc. there are no shortcuts or simplesolutions to cutting costs. every little With an emphasis on cost cutting, these hired professionals developeddetail counts, and only the sum of several standardized home layouts that could be mass produced, and involved simple, low tech construction processes and could leverageall these minor savings can lead to a cost savings through scale. each home was built with either 2 or 4solution that is truly and affordable bedrooms, a kitchen, sitting room and bathroom.14 Homes are basichome for the poor.” and finishings are minimal, as emphasis is placed on structural sound- – ingrid munro, ness, quality and space efficiency. founder and managing trustee, Jamii Bora initially, kaputei did not have access to government utilities, which necessitated the provision of basic services through alternative means, for example through solar panels on homes. JB recently began working with kenya Power & Lighting Company to bring electricity to kaputei. to address the water consumption needs of the community, university of nairobi professors were hired to conduct a hydro-geo- logical study. they found a water source at a depth of 85 meters and boreholes were drilled to create a hydro-pump system. additionally, hybrid wastewater management systems have been implemented to recycle 70% of water utilized in kaputei.1516
  17. 17. market BaseD Case JAMII BORA Financing: Installments roughly equivalent to slum rent, covering construction costs Housing projects for the as a microfinance organization leading an affordable housing initiative, poor fail because they focus only on JB offers financing to all of their home buyers. each client receives a housing. you can’t separate housing loan with a tenure of 5-20 years and an interest rate of 8.5-10%.16 from the other issues because poor Clients make a down payment of 10% of the total cost of kes 350000 people have so many needs. Poverty to ~700000 (usD 4,375-8,750) and the average monthly installment has to be tackled from all angles.” is kes 3,500 (usD 40).17 – ingrid munro, through lowering its own cost of capital by utilizing patient capital founder and managing trustee, Jamii Bora from its investors, JB offers a low interest rate to its clients. Com- bined with an increased tenure as compared to other microfinance loans offered, monthly installments work out to amounts similar to what residents formerly paid as rent in nairobi slums.18 the purchase price of the home covers all construction costs of the home (roughly kes 150,000 / usD 1,875 for 2-bedroom), 50% of infrastructure and land cost (kes 75,000 / usD 938), and a modest margin.19 the remaining 50% of infrastructure cost is covered through rent payments from commercial and industrial space. Aerial shot of Kaputei Township under constructionPhoto : Jamii Bora 17
  18. 18. market BaseD Case JAMII BORATime LineJamii Bora Feb. Sept. Jan. Oct. June Jan. 2007 Mar. 2009 Sept. 2010 Sept. 2002 2002 2003 2003 2004 2005 2007 2009 2010Project MilestonesJB Purchases land First plan for Temporary JB receives 1,000+ Kaputei project NEMA JB wins High Court To date 300 families School finished, Com - from private Kaputei factory built applications within approved by County rejects appeal and resumes moved into Kaputei mercial plan approved, owner completed the first month Council Kaputei production one 200 additional families project month later move to KaputeiJamii Bora Operations PRIVATE FUNDERS Equity $ Project finance Technical Advice Offices INDUSTRIAL/ CONSTRUCTON JAMII BORA COMMERCIAL PROFESSIONALS $ $ ENTERPRISES Service Fee Rent Legend Consumer finance $ Installments Product Home Service Construction Income $ Labor $ Payments Private Enterprise Labor Citizen Sector Organization Customer CLIENTS $ Employment IncomeJamii Bora Value Chain ProJeCt ProDuCt ProDuCt marketinG retaiL after ProCurement saLes finanCe DesiGn DeV anD saLes finanCe • JB set up • Project • Professionals • Professionals • Advertise- • JB provides • JB provides local factory to financed by design the supervise and ment to cur- housing loans community mass produce consumer standard, oversee quality of rent members at 8.5-10% maintenance tiles and down green com- contruction; and approval interest for •Commeri- cement blocks payments, munity with local resi- of those with up to 15 to cal center JB Trust and the residents’ dents, most strong credit 20 years provides private loans input of whom are record and livelihood to JB members, livelihood residents build homes opportunities in Kaputei social sector actors Private sector actors18
  19. 19. market BaseD Case JAMII BORAEvaluation Framework Is the solution SOLVING THE PROBLEM? Is the solution ECONOMICALLY VIABLE?Jamii Bora is providing quality home solutions The Kaputei Town Housing Project is a viablewith titled land to microfinance members model for Jamii Bora, investors and involvedby taking a comprehensive approach to low stakeholders. The provision of finance forincome population needs. Impact so far has purchase of homes makes this solution abeen small as the project is in mid stages of viable one for BoP communities in Nairobiconstruction. desiring home ownership.Problem Magnitude Slum dwellers pay roughly the same• ~1.5million slum dwellers in nairobi and 7.5 million in installment as their previous rent.kenya. 20 • Client families live in the nairobi slums, paying average• many households (~6 members each) live in a single room rent of kes 3500 (usD 40 for 2-bedrooms), roughly equiva-without security of tenure. lent to installments in JB program.• ~ 94% of nairobi’s slum dwellers are without access toadequate sanitation. • typical client family earns between usD 80 to usD 200 per month.21Quality of Solution • Client acquires loan for 90% of home value (kes 350,000 to 700,000 ie usD 4,375-8,750) over a 5-20 year term, at• Design and oversight of home construction by professional 8.5-10% interest rates.architects and engineers, with quality control on each home. • new homes result in increased incomes for some resi-• extensive consultations with potential residents to ensure dents who are employed by JB in home construction.needs are addressed. Jamii Bora is striving for financial sustainability,• inclusion of commercial space for entrepreneurial busi- ensuring loan repayment through selection ofnesses and livelihood generation. creditworthy clients. • in 2010, JB repaid in full a usD 250,000 loan to acumen fund.Housing Impact - The Numbers • Purchase price of homes allows break even on each home,• over 2000 JB member applications for a home in kaputei. land plot and related infrastructure.• 470 homes built and families served. • JB charges fees for additional services offered by JB to resi-• 50 entrepreneurs currently working in township, providing dents (e.g., schooling, electricity, township maintenance).jobs to other members (working from residential homes at • Credit extended at low rate of 8.5-10% made possible by atime of writing, as commercial center is not yet built). mix of funding sources including company savings, member deposits, and down payments.Housing Impact - Quality of Life • Home loans granted only to creditworthy JB members• ownership of a home and land title, a leverageable asset, (minimum 3 years as JB clients, at least 3 loans alreadyis an immense source of physical and financial security and repaid, capable of 10% down-payment).22pride, elevating social status. Other stakeholders benefit from additional• expected increased health outcomes due to improved revenues and value created for communities.sanitation conditions, access to clean water and sewage • fee for service for housing and environmental experts,systems. architects etc.• expected improved productivity outcomes due to • Local entrepreneurs access new revenue streams and abil-increased space for livelihood activities and solar lighting ity to expand business/revenue with additional work space.increasing productive hours. • Jobs created for 100+ JB members and local maasai community.• expected improved education outcomes due to commu-nity access to new resources like nursery schools, play- The solution is economically viable and is notgrounds, sports facilities, library and communal halls. reliant on subsidies. Clients pay the full cost of the home, land and related infrastructure. Additional programs such as the school and other facilities are subsidized by JB. 19
  20. 20. market BaseD Case JAMII BORAIs the solution SCALABLE AND REPLICABLE?Jamii Bora’s ability to scale is constrained by Going forward, Jamii Bora is attempting toa lack of partnerships and access to funds: address these barriers by:• Limited amount of funds for disbursable loans due to lack • recently becoming a registered bank, giving it access toof access to funds with low cost of capital and long term funds with lower cost of capital.maturity. • Considering partnering with other organizations to in-• Difficulties convincing would-be BoP clients to relocate crease scale and reduce costs.outside the city, especially to new townships, before acritical mass of residents is reached (due to limited liveli- To be replicated, this model requires:hood options, increased commute times, and lack of public • Large pool of low income individuals willing to move, andinfrastructure in new townships). an effective organization, with deep knowledge of the com-• Lack of government relationships to effectively provide munity able to aggregate demand.public infrastructure and utilities (and ideally limit JB’s • understanding of low income individuals’ creditworthinessinvolvement in creating access roads, electricity water and (likely require a long term relationship with clients).sewage systems). • access to affordable, long-term financing with low cost of• Lack of partnerships with private sector players that could capital or subsidies to offer low-interest loans.boost employment opportunities in new townships or oth-erwise alleviate JB’s need to reinvest in various processes, • availability of affordable and contiguous land, in closesuch as training labor in construction practices in potential enough proximity to city centers.new townships. • economic opportunities near location of new homes, or transportation to these opportunities. • a culture and environment where standardized low tech building is acceptable. • Productive relationships with local groups and neighbor- ing towns to avoid delays and potential legal battles and protests.Is the solution ENVIRONMENTALLY SOUND?Jamii Bora has attempted to build aneco-friendly township after legal fights with • inclusion of sewage system that cleans and recycles waterenvironmental NGOs. back into the community.• JB prevailed in court proceedings after a 2-year legal battle • Homes powered by solar panels and technologies such asagainst nGos, who claimed kaputei would disturb wildlife hybrid waste water management.migratory patterns.20
  21. 21. market BaseD Case JAMII BORAPostscriptat kaputei, Jamii Bora has been able to develop a sustainable, relatively closed ecosystem by allowing communities toengage in the construction of their own homes, by supplying infrastructure and relying on members’ entrepreneurialnature to stimulate livelihoods. However, as the organization considers growing their housing initiative both in kaputeiand through new ecosystems, partnerships with the government and private sector players are likely required to moreeasily scale and replicate.Partnerships with the government for the provision of infrastructure and public utilities, like the one being pursuedwith the kenya Power & Lighting Company, would allow JB to scale to new areas more efficiently. Private companiescan provide more scalable employment opportunities, thereby allowing Jamii Bora to offer homes to a greater numberof its members who do not fit the current entrepreneurial criteria. With more occupational opportunities, more slumdwellers will be willing to relocate to Jamii Bora’s ecosystems. Leveraging cross sector partnerships would better al-low JB to focus its efforts on scaling home development and financing.1 Jamii Bora means “good family” in Swahili Company%20Industry/-/539550/861970/-/item/1/-/514y0hz/-/index. html2 JB founded in 1999 as a small micro-finance operation for a groupof 50 beggars 13 Interview with Ingrid Munro, Founder and Managing Trustee, Jamii Bora, July 20103 350 acres of contiguous land were purchased 14 Interview with Ingrid Munro, Founder and Managing Trustee, Jamii4 Interview with Ingrid Munro, Founder and Managing Trustee, Bora, July 2010Jamii Bora, July 2010 15 Jamii Bora Company Website, http://www.jamiibora.org/index.5 Two types of homes are offered. The first, a 2 bedroom, sitting htmroom, bathroom and kitchen layout is approximately 540 sq feet insize on a 2000 sq feet plot. The second type of home is 4 bedroom, 16 Jamii Bora Company Website, http://www.jamiibora.org/index.740 sq feet, on roughly the same sized plot. htm6 Construction began in late 2007 and is ongoing. 17 Yasmina Zaidman, Helen Ng & Adrien Couton. Knowledge Neces- sary to Meet Poverty Alleviation Goals: Building Enterprise to Reach7 Jamii Bora prevailed in a court case brought on by local NGOs Low-Income Markets.alleging that Kaputei township blocked the animal migration corridorto Nairobi National Park. 18 Interview with Ingrid Munro, Founder and Managing Trustee, Jamii Bora, July 20108 Over 250 families had moved in at the time of writing 19 Jamii Bora Company Website, http://www.jamiibora.org/index.9 Roughly 250 students are enrolled in the primary school. In 2010, htmthe government recognized both schools as official public schools. 20 Homeless International (http://www.homeless-international.org/10 Interview with Ingrid Munro, Founder and Managing Trustee, Jamii standard_1.aspx?id=0:2350&id=0:276&id=0:262)Bora, July 2010 21 Interview with Ingrid Munro, Founder and Managing Trustee, Jamii11 Interview with Ingrid Munro, Founder and Managing Trustee, Jamii Bora, July 2010Bora, July 2010 22 Jamii Bora Company Website (http://www.jamiibora.org/housing-12 Turana, Johnstone ole. Private Sector Now Steps In To Provide Low- time.cost Housing. February 15, 2010. http://www.businessdailyafrica.com/ 21
  22. 22. market BaseD Case HOUSING FOR ALL - INDIAHousing For All - India ProJeCt DetaiLs Geography: india, Gujarat; ahmedabad (more cities in pipeline). other Hfa projects in Colombia,Executive Summary Brazil and egyptashoka’s Housing for all (Hfa) initiative, supported by the Hilti Product:foundation,1 works to catalyze sustainable and scalable new home new homes in new apartment developmentsand home improvement solutions for low income communities. it Stakeholders:does so by advancing business models for collaborative action be- Private: real estate Developers: santoshtween private and social sector actors capable of delivering solutions associates, Vintron, DBs. CHL (Community Housing Limited) - construction managementin this sector.2 company and ksa DPs - architecture and design finance: seWa microfinance, micro HousingLaunched in 2008, Hfa3 india brings together real estate de- finance Company, GruH finance, Dewanvelopers with access to land and capital; Citizen Sector Or- Housing finance Ltd.ganizations (CSO) with the ability to aggregate demand in target social: saatH and mahila Housing trust (selfcommunities; and housing finance institutions willing to lend employed Women’s association, seWa)to low income clients. all partners benefit from these engagements:low income communities buy affordable new homes with options to designed with a long-term commitmentfinance mortgages and down payments, real estate developers and to community needs, notably through:finance institutions gain new clients, Csos receive a fee for their ser- 1) maximizing space utility according tovices and further their objectives to help communities through pro- the lifestyles of the target customers; 2)viding access to housing solutions. creating common spaces that preserveBeneficiary families have, on average, 5 family members collectively the social dynamics of low-income com-earning an average income of usD 6-104 per day. Low-income clients munities; and 3) in some developments,assume a mortgage against their new homes and repay regular loan including the designation of physical spaceinstallments to the finance provider. new home developments are for Cso resource centers where capac- ity building activities such as training for livelihood development is provided. stakeHoLDers ContriButeD GaineD reaL estate Land procurement, access to new markets, Cso Currently, four projects (all in ahmed- DeVeLoPers delivery of complete marketing partnerships, cash abad) are in various stages of develop- housing units flow benefits of shorter term ment, with the first expected to be com- and pre-sold developments plete at the end of 2010. roughly 2500 finanCe Consumer finance for access to new client base units are on offer for low income ProViDers low income clients and opportunities to cross sell; support from Csos customers across the 4 projects. All projects are scheduled for ProJeCt technical expertise, opportunity to work on manaGement design innovation innovative design challenges, completion by the end of 2011. ComPanies anD new market expertise arCHiteCts Twenty five units5 in the first Community knowledge of target service fee for sales and development have been sold to orGanizations population, network of marketing; opportunities low-income communities. advance potential clients, input for equity and diversified on appropriate design for revenue streams; ability to bookings (through payment of a deposit homes and developments, extend housing to clients of below 5% of the value of the home) community and livelihood generation projects in the other three projects are ongoing and were at 1540 at the time of writing. LoW-inCome Demand for new homes titled and design customized Customers new homes with access to Loan disbursements for mort- basic utilities; continued sup- gages are also ongoing, with 670 6 port from Csos loans originated to date.22
  23. 23. market BaseD Case HOUSING FOR ALL - INDIAWhile pre-bookings look positive inearly stages of the projects, the degree towhich low income communities are able tHe story ofto assemble necessary down payments,and can access and then repay mortgage sunita kanHayaLaLfinancing over several years, remains tobe seen. sunita lives in a small one-room house in a slum in indiranagar, 15 km away from the city of ahmedabad in Gujarat, india. she has been living there with her husband and two sons for more than 10 years, earning her livelihood by working as an attendant at a bankThe Business Model for the past decade. now that her sons are grown up, and are wage-earners them-Partnership: CSO and real selves, the family – which is increasingly crowded in their one-room space – has the capacity to afford a bigger home. owning a home,estate developers a secure asset, has been a longtime dream of sunita’s. However,as of mid 2010, the above actors are en- there was neither a home on the market that she could afford, norgaged in three kinds of partnership models did she have access to financing options which would allow her to consider such a large purchase.to deliver a total of 2500 new homes tolow income communities by end of 2011. today, her situation is much different. sunita has made an advanced booking for an apartment with an Lambha Hfa india project, and1. Cso is engaged as one of many pos- will soon realize her dream of owning a home with more space for sible marketing agents by the devel- her family and better facilities. the home costs usD 9050, and she oper and receives a commission for is in the process of being approved for a mortgage loan that will have her paying roughly usD 85 per month for 15 years. units sold. sunita was made aware of these affordable housing options through2. Cso is an exclusive marketing agent the work of community organizations who market these units. for a period of time and receives the community organizations also build the capacity of would-be commission. in one of the iterations customers like sunita, through livelihood training, access to govern- of this partnership model in india, the ment resources and other services. partner Cso founder has assumed a position on the developer corpora- sunita kanhayalal, Hfa india client, soon to move tion’s Board. this ensures greater into her new home. planning and design input by the Cso to represent the client needs in the development of homes and after sale of homes.3. Cso and developer corporation are formally engaged in a for-profit joint venture allowing equitable distribu- tion of risk and returns.these varying partnership dynamics are Photo by: Elisabeth Realcomplemented by the services of financeproviders, architects and project man-agement companies to enable target cli-ents to purchase high quality affordablehomes. 23
  24. 24. market BaseD Case HOUSING FOR ALL - INDIASales and Marketing: Aggregateddemand through CSOsCso partners play the role of marketing agents who aggregate de-mand for the developer as well as the finance providers involved inthe project. they market new homes to low income clients throughvarious channels which include existing physical spaces organized by Photo : Ashokathe Cso to address several needs of the community, and direct mar-keting managed by field workers.Financing: New Market, New Products,Many Unknowns A typical slum home, Ahmedabad IndiaHousing finance for low-income communities is a relatively nascentmarket in india. Hfa india works with several lenders from mfis tocommercial banks who are all on a learning curve in terms of defin-ing products and services responsive to this market, which are in linewith their cost structures and business models.at the time of writing, 670 loans7 were originated, supplied by lendersat a maximum Loan to Value (LtV) of 80%. Loan amounts range frominr 300,000 to 600,000 (usD 6500-14,000), with a tenure of 15years and at interest rates ranging from 12% to 14%. average monthlypayments amount to roughly inr 3000 to rs 6000 (usD 65-140), and Photo : Ashokatypically range from 35% to 40% of a household’s monthly income.several potential buyers of homes, though confident of their capacityto pay monthly installments on a home mortgage, experience difficul-ty accumulating the nearly 20% down payment required to originate New housing development site,a mortgage loan. Ahmedabad, Indiatoday, finance providers including mfis housed within partner Csos,are looking to provide shorter-term loans to finance specifically thisdown payment. on the one hand, short term financing along theselines might be looked at as necessary to enable low income families tobuy these homes. Conversely, conventional financial wisdom, whichcautions against extending finance beyond 80% loan to value on ahome, suggests that doing so would excessively increase the defaultson loans. the years to come will demonstrate the appropriate bal-ance of short term and long term finance and whether customers areable to afford down payments and the mortgages they take on. Photo : Ashoka New housing development under construction for low-income clients in Ahmedabad, India24

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