8th European Microfinance Award 2017
MICROFINANCE FOR HOUSING
Housing is not just an identifier of poverty, but rather it is the cause of a host of developmental problems. Exposure to the elements, poor ventilation, and insufficient arrangements for basic hygiene are major causes of poor health. Improper building structures undermine safety and increase vulnerability to disaster. Lack of lighting and
sufficient space limits children’s ability to study. Insufficient privacy and lack of toilet facilities contribute to sexual assault and constrain opportunities for women and girls. And lack of clear property rights are major contributors to crime and social injustice, while limiting families’ ability to invest in better housing.
The European Microfinance Award 2017 “Microfinance for Housing” is intended to highlight the role of microfinance in supporting access to better quality residential housing for low income, vulnerable and excluded groups, with no or limited access to housing finance in the mainstream sector.
Cooperativa de Ahorro y Préstamo Tosepantomin - Mexico
Cooperativa de Ahorro y Préstamo Tosepantomin (Tosepantomin) started operations in 1999. The cooperative offers savings, deposits, insurances and remittances as well as nonfinancial services to rural communities in the states of Puebla and Veracruz.
In Mexico, it is estimated that over 35 million people live in unsuitable housing (overcrowded, in an alarming state of deterioration or made of inappropriate materials). Roughly, half of all new housing and two-thirds of existing housing are self built. Self-building often magnifies the problem, due to the use of low quality materials and the lack of technical knowledge. In rural areas, 25% of the population lack access to sanitary services while 8% lack access to water.
Tosepantomin targets rural communities living in marginalised municipalities to which it offers savings and loans for housing improvement and house building. The cooperative mainly applies the solidarity group methodology and uses a holistic approach to its housing programme, with technical support that includes architecture planning, elaboration of housing project budgets, and oversight of the construction processes. The programme also promotes ecological and sustainable housing through eco-friendly building techniques, recycling, renewable energy and energy efficiency.
Cooperativa de Ahorro y Préstamo Tosepantomin was awarded the prize of €100,000 on November 30th 2017.
Mibanco - Peru
Mibanco's roots go back to the early 1980s, as an NGO that began lending to the poor. Since then it has evolved to become the largest microfinance bank in Peru serving micro- and small enterprises (MSEs) and other low-income clients. Mibanco offers a wide range of financial services.
The housing deficit in Peru is estimated at 1.5 million housing units (23% of all housing units in the country). 50% of them are overcrowded, 35% lack access to basic services, 15% have walls and/or roofs in bad condition.Low-income people have no access to quality construction, due to their limited resources they are forced to engage in incremental self-construction of their own houses with the help of self-trained local masons. This results in low quality housing in terms of design, durability, functionality and quality of materials used.
Mibanco offers 3 housing loan products, all combined with obligatory credit-life insurance:
- Mihipoteca - a mortgage loan for clients with collateral
- Micasa - for gradual housing improvements, repairs, expansion
- Crediagua - for connections to potable water and sanitation
The bank reaches out to mostly micro-entrepreneurs and low-income salaried workers. Loans are offered together with educational material (video and infographics) to all clients (developed with Habitat for Humanity). The bank also cooperates with homeowners associations and a network of construction material suppliers. Mibanco also organises educational road shows to promote water and sanitary improvements.
Mibanco, as runner-up received €10,000.
The First MicroFinance Bank-Afghanistan
The First MicroFinanceBank - Afghanistan (FMFB-A) is the largest microfinance bank in Afghanistan serving low-income populations. In addition to providing loans, FMFB-A also offers savings products as well as local and international payment services.
Impacted by a dramatic population growth due to job migration from rural to urban areas, and refugees escaping the conflicts and the war, the housing deficit increased to 1.5 million units in 2014. High birth rates over the last few decades and frequent earthquakes add to the picture. On the supply side, Afghanistan suffers from a lack of building codes, of quality materials and of skilled masters. The shortage of housing in urban areas led to an explosion of informal settlements with no access to basic services. Establishing clear land title is a major problem, and inappropriate regulatory framework prevents financial institution offering housing finance. Women face particular challenges, since men are typically the legal holders of the property.
Since 2008, with the support of grants and technical assistance from expert partners, FMFB-A has been developing housing services, based on regular and extensive marketing research. The purpose of the housing improvement loan (HIL) is to improve the house conditions or to extend the house structure. It is offered mainly in urban areas. The terms and conditions are flexible and in 15 branches, the product is accompanied by construction advisory services: there are 11 engineers hired to provide clients with technical advice on house structure intervention projects as well as to disburse the loans. The Bank has also built 3 demo houses, where clients can experience and understand how to construct, add units or renovate the structure of their house.
The First MicroFinance Bank-Afghanistan, as runner-up received €10,000.