Step by step

By Dan Petrie, Habitat for Humanity International’s associate director of congressional relations

From mapping land rights in Haiti, to retrofitting energy-efficient homes in Macedonia, to traveling the U.S. as part of a group of RV Care-A-Vanners, Habitat’s programs are as diverse as the more than 70 countries in which we operate.

With such a wide range of interests, how did we decide on housing microfinance for the theme of the 2014 Shelter Report?

Our main goal was to raise the profile of a policy issue that significantly affects housing. To meet this goal, we carefully considered questions such as:

  • “What issue is essential to Habitat’s mission?”
  • “How can we draw upon our experience to share lessons learned?”
  • “How does housing fit into the broader discourse on development?”

Housing microfinance was the answer to these questions, and many more.

The numbers are staggering. In the developing world, 170,000 people — about the population of Chattanooga or Fort Lauderdale — are moving to cities every day. As people flock to cities in search of jobs and health care, they often settle in slums without decent housing and access to basic services such as clean water and sanitation. Slums, which currently house 1 billion people, are set to double in size by 2030.

Too often, people forget that housing is a critical tool to break the cycle of poverty. Lenders rarely serve people living at the bottom of the financial pyramid and, without the cash or credit to build a house all at once, up to 90 percent of the developing world resorts to building in stages. Thankfully, market-based solutions like housing microfinance are gaining traction and hold promise. Small, non-mortgage backed loans starting at just a few hundred dollars are improving living conditions bit by bit.

Recognizing these trends, Habitat launched two important initiatives. MicroBuild Fund is a $100 million impact capital fund for housing microfinance. The Center for Innovation in Shelter and Finance is an advisory service which provides training and technical assistance to help microfinance institutions develop shelter solutions. Both Habitat programs operate on the premise that the lessons from the microfinance movement can be applied to housing. Small loans, offered in succession to support the incremental building practices of the developing world, can bridge an important gap between modest entrepreneurial loans and traditional mortgage financing.

Through the 2014 Shelter Report, Habitat demonstrates there are ways to reach scale. Read how we are working toward a world in which everyone has a decent place to live, and join us Nov. 20 in Washington, D.C., for a panel discussion regarding how microfinance is aiding development.