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Providing market-based affordable housing solutions

A hand holds a key from the new houseAccess to affordable housing plays a crucial role in reducing global poverty

The Hilti Foundation, jointly financed by the Martin Hilti Family Trust and the Hilti Group, a provider of leading-edge technology to the global construction industry, signed a new $7.5 million global partnership with Habitat for Humanity in 2013. The partnership focuses on Habitat’s MicroBuild Fund and aims to help over 3 years approximately 18,600 low-income families, or an estimated 93,000 individuals, access affordable financing and housing support services needed to improve their homes.

The partnership supports the MicroBuild Fund, Habitat’s initiative to make affordable housing finance a vibrant part of the global microfinance sector while serving thousands of poor families with a combination of financial and housing support services to improve their homes incrementally. The cooperation with Hilti contributes to a significant sector impact in countries such as Philippines, Mexico, India, Brazil, Colombia, Peru, Cambodia, Uganda, Ghana, Kenya and Macedonia.

“For about 90 percent of poor families in the developing world, upgrading their housing is a process that they work on over many years as they gather the materials and resources they need,” said Jonathan Reckford, CEO, Habitat for Humanity International. “Many of these families have no access to affordable housing finance and no capital to improve their homes. Funding from the Hilti Foundation will help us change that.”

To date, around 5,300 families have received housing loans and have been helped with housing finance solutions as a result of investment and technical assistance from Habitat for Humanity’s MicroBuild Fund and Habitat’s Centre for Innovation in Shelter and Finance (CISF). Aside from micro-loan disbursement given through the MicroBuild, the CISF supports institutional advisory services to all investees to build up their capacity to provide Housing Microfinance as a product and  expand their product portfolio – as well as offer housing support services to the families. To ensure sector-wide impact, the partnership with the Hilti Foundation also  supports the dissemination of knowledge on a local and international level by presenting our work and lessons learnt at major housing, micro-finance or similar professional conferences and forums.  

Aim of the MicroBuild
The MicroBuild fund is designed as a demonstration fund with the aim of showing the microfinance industry that housing microfinance is viable and can be added as a standard product to their product portfolio. Habitat seeks to increase the amount of microfinance loans for housing, from 2 percent to 10 percent, a shift that would represent almost $4 billion of investment in affordable shelter for nearly 15 million households. The average MicroBuild loan is $1,500 with a typical pay-back period of 24 months.

A group of women in India meet with the housing support officerHousing microfinance work should focus more on supporting low-income groups

Funding from the Hilti Foundation is helping Habitat develop microfinance products, provide advisory services and social investment capital to microfinance partner institutions, and ultimately increase opportunities for families to improve their shelter using durable, affordable, appropriate and cost-effective methods.  Funding will also enhance Habitat’s Center for Innovation in Shelter and Finance, which facilitates collaboration among public, private and third sector actors in the market to develop sustainable and innovative housing solutions for the 1.6 billion people worldwide who lack adequate shelter.

“Developing sustainable housing solutions is a complex topic, and yet more relevant today than ever. Providing access to affordable financing and added services, such as technical assistance, play a crucial role in reducing poverty and promoting economic growth. Our partnership with Habitat for Humanity perfectly connects to our vision of creating large-scale solutions which have a lasting and positive impact on societal development,” said Bruno Walt, Managing Director, Hilti Foundation.

According to the Economic Research Department of Rabobank, Nederland, roughly 4 billion people in developing countries lack access to formal financial services. One of the most effective ways to improve housing conditions for these families is to provide access to financial services to build or upgrade their homes. These improvements may include installing concrete flooring in the place of dirt floors, adding a room to a house that is being built in stages or upgrading roofs to create adequate shelter from the elements.

Long-term Partnership
Hilti Foundation’s support for Habitat began in July 2012 when the company announced plans for a donation of tools and funding to support Habitat for Humanity Japan’s Solar Home Recovery Project, enabling disaster-affected families to save on utility costs and generate income by selling excess electricity to the regional utility provider.

The project assisted more than 40 families and demonstrated to families across Japan the efficacy and affordability of solar power solutions. Hilti North American employees have helped build safe, decent and affordable homes in partnership with 13 families in Tulsa, Oklahoma, and one in Joplin, Missouri, since 2006.

Hilti employees in Tulsa also partnered on Habitat’s A Brush with Kindness project in Tulsa, completing work such as building wheelchair ramps, to painting houses and cleaning landscaping in partnership with low-income families. The company also has donated refurbished tools to Habitat affiliates across the United States.