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Another path home -- Habitat for Humanity Int'l 1

Another path home

How housing microfinance works for Habitat Uganda
By Phillip Jordan. Photos by Ezra Millstein.

The dusty, rutted road that leads to Halima Bagaaya’s house doesn’t bear the load of cars often. The route from northwestern Uganda’s Katasenywa village is usually accomplished on foot.

Young boys push bicycles overloaded with green banana bunches. Women walk the road to reach the nearest well, balancing the ubiquitous, bright-yellow water jugs that are mass-produced in the capital city of Kampala. Only the slow crescendo of an approaching boda-boda — Uganda’s motorcycle taxi — forces foot traffic to the side.


A pair of Habitat Uganda housing loans helped Halima Bagaaya complete her brick house.


Three years ago, a passerby wouldn’t have seen much of Halima’s house along this road. At that point, the 41-year-old widow had completed only the foundation of her future home. Halima had the know-how and labor help she needed to build the rest — money and building materials, however, were another matter.

As work remained at a standstill, Halima continued to pay rent for temporary housing elsewhere. “It was frustrating,” she remembers. “Having to pay rent and other costs, it was difficult to store up all I needed to finish the house.”

Then, one of Halima’s cousins told her about Habitat for Humanity Uganda, and something new Habitat was offering: housing microfinance. Halima decided to apply for a housing loan through the program. She completed an education course at Habitat Uganda’s Masindi branch office, and Habitat staff visited her to assess her situation.

In early 2009, Halima received her first Habitat housing loan. She used it to build the walls of her house. She had been able to secure some materials for the roof and used some of her savings to complete it.

After paying off her initial loan in 2010, Halima took out a second Habitat loan to plaster, paint and complete the flooring.

Today, her brick home is complete. She has a door that locks, offering protection for her, her sister Zahara Kimuli, and Halima’s 2-year-old niece, Halima Byanjeru. A white curtain blows back and forth on the breeze that sails through the window into the sitting room. Out back, Halima has been able to construct a chicken coop; hundreds of chicks provide her household with a steady source of income.

To the front and sides of the house, Halima and her sister have planted Irish potatoes, yams, tomatoes and onions. There are also several trees: mango, jackfruit and, of course, plantain — which is necessary to make matoke, the ever-present national dish in Uganda.

“It just makes you feel like you belong somewhere,” Halima says.


Subra Echum loves the windows in her family’s new house best. “It was dark in the hut,” she says, “but now we have light.”


Why housing microfinance?

Since 2008, Habitat Uganda has distributed more than 1,600 housing loans to people like Halima Bagaaya. While the approach remains relatively new in Uganda — where Habitat has worked since 1982 — it’s become a much more common tool for Habitat worldwide over the past decade. Habitat now has housing microfinance programs in more than 30 countries, including Kenya, Mexico, Tajikistan and Vietnam.

“Housing microfinance aims to fill the gap when families can’t finish a house or need help making home improvements,” says Mike Carscaddon, Habitat’s executive vice president for international field operations.

Habitat’s housing microfinance programs vary by country. In some places, Habitat partners with a proven, local microfinance institution to offer housing-specific financial services, such as savings programs and loans. In others, Habitat works directly with individual families — or with savings groups that a neighborhood of families have created to pool their resources. Habitat Uganda offers both options.

Either way, housing microfinance gives families the flexibility to build in stages, at a speed that fits their needs and their resources. “In the developing world, we have learned that housing is a process,” Carscaddon says. “Housing is a verb — not a noun or a final product.”

Habitat often supplements its housing microfinance with technical construction assistance, savings programs and financial-education classes. Together, the approach remains consistent with Habitat’s commitment to empower families and to treat them as true partners. That principle began with Clarence Jordan, the founder of Koinonia Farm and the creator of the partnership housing concept that gave birth to Habitat. As Jordan wrote in the 1960s: “What the poor need isn’t charity, but capital; not caseworkers, but co-workers.”


Habitat Uganda staffers, such as Collin Semakula and Joseph Bawalana, travel Uganda’s countryside by motorbike.


How it works in Uganda

In 2007, Habitat Uganda realized its traditional, single-family house-building model wasn’t reaching enough people by itself. To help even lower-income families, they needed to broaden their methods. The solution: two additional housing options — one that focuses on homes for orphans and vulnerable children and another that offers housing microfinance.

Andrew Sooka, Habitat Uganda’s housing microfinance project manager, says the incremental building approach works well in Uganda. “Previously, we were one-size-fits-all,” he explains. “We had our model, and people could take it or leave it. But now people can build as they want to, at their own pace.”

With housing microfinance, sometimes change can be as dramatic as a new house that radically improves an entire family’s health and quality of life. Sometimes, change is more subtle. Maybe a new roof to keep a family dry and warm. Perhaps solar panels to power a home, or new access to clean water and a sanitary toilet.

“Housing microfinance has the ability to reach lower-income people in a much more flexible way,” Sooka says. “The money comes back faster, too, because these are smaller, shorter-term loans. That means more money keeps recycling through our revolving fund to help more people.”

Making the connection

Habitat Uganda created two ways for families to access housing loans. First, Habitat Uganda partnered with an established microfinance institution, the Uganda Agency for Development, also known as Ugafode.

Ugafode began in 1994 and quickly became a respected provider of microcredit business loans; however, it never developed its own housing products.

“We knew the need was there, but it just wasn’t our expertise,” says Joseph Tukamushaba, a Ugafode program manager. “When we did customer surveys in 2006 and 2007, one of the main things we found was that our clients were diverting up to 30 percent of their business loans to use for home-building.”

Enter Habitat Uganda. Habitat created a housing loan package for Ugafode that began in early 2008. By the end of 2010, Habitat Uganda had funded more than 1 billion Ugandan shillings through Ugafode (about USD$426,000), providing more than 700 housing loans for low-income families. Habitat Uganda also trained Ugafode staff to evaluate housing needs and to appraise families’ ability to partner and pay.

In addition to partnering with Ugafode, Habitat decided to offer housing microfinance directly to families, along with financial-education classes. The effort focuses on the rural regions of the country where microfinance institutions are not as prevalent. Habitat offers loans that range from 100,000 Ugandan shillings (about USD$42) to 3 million Ugandan shillings (about USD$1,200).

Most days, after morning devotions, Habitat Uganda branch officers don motorcycle helmets and ride boda-bodas into the countryside, promoting Habitat’s program and evaluating the housing needs of potential partner families.

“We’d like our long-term strategy to be: Go to an area without access to housing microfinance, and start educating the community and providing loans directly,” explains Sooka, Habitat Uganda’s housing microfinance manager. “Then advocate to microfinance institutions why they should come to that area and provide housing loans. Once that happens, we’ll work through them as partners, and Habitat can move on to another region in need.”


Ayediida Mbagaineki was able to finish the roof of her house with a housing microfinance loan from Habitat Uganda


‘Now I can sleep comfortably’

Half-finished houses dot the landscape throughout Uganda. Families are accustomed to building incrementally, and many can save enough to raise the walls for a house. The difficulty comes when they have to come up with the money and materials needed for things like windows, doors and — especially — roofs. Roofs here typically cost about twice as much to finish as four brick walls.

Ayediida Mbagaineki found herself in this situation in 2009. The 56-year-old mother lived with her daughter, Asaba Prossy, and a 12-year-old nephew in a pair of mud huts near the Budongo Forest Reserve in a remote section of midwestern Uganda.

“Whenever it would threaten to rain, I would always try to move my mattress and clothes to safer, drier spots in the hut,” Ayediida remembers. “We replaced the grass roof every six months, but the rain and the bugs still got in.”

After years of saving, the mother and daughter were able to get brick walls built for a new, permanent home. After that, they were stuck. “We got it to window level, but we just didn’t have enough materials and money on our own to do the roof.”

One day, they heard an advertisement on the radio for Habitat. Asaba took a two-hour taxi ride to Habitat’s branch office in Masindi and applied for a housing loan. They were approved for 1 million Ugandan shillings and used the loan to buy the timber, nails and roofing sheets needed to create a secure covering for their house.

“Now I can sleep comfortably,” Ayediida says with a smile. “I don’t worry if it’s going to rain or not.”

Inside her living room, Ayediida offers her guests some peanuts that came from her garden: “And when a visitor comes, I have a sitting room to sit and talk with them in!


Jackson Ssemakula used a Habitat housing loan to buy the roofing supplies he needed to finish his family’s home in Kigege, Uganda.


Class in session

Just like everyone else, Ayediida and Asaba received an education on Habitat Uganda’s housing microfinance program before they even applied for a loan. The education comes courtesy of Habitat Uganda training officers such as Nelson Kibego.

On Tuesdays and Thursdays, Kibego leads a training session in Luweero for those interested in the program. Potential partner family members sit on benches while he stands near the opening to the office’s courtyard, so that everyone can feel the cooling wind through the doorway. Using a flip chart on a tripod stand, he explains Habitat’s history and its Christian foundation, before moving to the housing microfinance program.

Kibego describes how Habitat works with each family to determine the size of a loan. He emphasizes that the repayment period lasts no longer than two years so that payments don’t become a burden for families. He encourages those in attendance to budget and save, and he encourages husbands and wives to make decisions together. It’s a point that Habitat Uganda often stresses — Habitat won’t allow a husband (or wife) to sign for a loan without their spouse also present.

Kibego then details the repayment process. Habitat Uganda includes 5 percent interest the first month, he explains, but the interest rate drops to 2 percent the following month if the family begins using the loan and makes repayments on time. With the costs involved in offering hundreds of small-scale loans each year, the interest allows Habitat Uganda to ensure the program’s long-term sustainability — without overburdening families.

Kibego ends by explaining how each partner family becomes an important part of Habitat’s mission: “Each time you pay us on time, that’s money that goes into our revolving fund that we can use for a loan to another client. Your repayments help more people in your community improve their lives.”


Hassim Oguta Echum partnered with Habitat Uganda to build a home for his own family — a house that, as a self-employed builder, he takes pride in creating.


View more images of Habitat’s work in Uganda in this photo slideshow.


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‘A new day’

Hassim Oguta Echum is another homeowner who has both benefited from — and contributed to — Habitat Uganda’s housing microfinance program.

Hassim fled his hometown of Lira when civil war began ravaging Uganda’s Gulu district. He resettled his family outside the Masindi district town of Bweyale. They built four mud-and-grass huts — one for Hassim and his wife, Zaitun; one for Hassim’s parents; one for the children; and one for Hassim’s siblings.

He found work as a homebuilder, a trade he became passionate about after watching his uncle at work. “I knew from age 7 I wanted to be a builder,” Hassim says. Unfortunately, with business and family costs, he couldn’t save the money needed to start the job he desired most: building his own brick home.

“Every time when I would complete a nice house for someone else, I would think about how I was living in a poor place,” Hassim says. “I would pray, ‘Let me build a nice house for me and my family, like I have done here for this person.’”

He constantly set aside surplus building supplies, but still needed help with the materials he couldn’t access or afford. Banks wouldn’t lend him money because his income varied so much as a self-employed builder.

Things changed for Hassim when he met Freedom Turyahnibisa, a Habitat Uganda credit officer based in the Masindi office. “Freedom had come out to the village and told me about Habitat and about how they could help,” he remembers with a smile. “It was a new day for me.”

Turyahnibisa helped approve Hassim’s family to receive a 1 million shillings housing loan (about USD$420). Since then, eight more families nearby have partnered with Habitat to find a way out of their own mud-and-grass huts.

Eager to show off his new home, Hassim directs his guests toward the nearly finished house. As he walks, he pushes his bicycle, which has four pieces of red tape hanging from the seat — reflective tape for night pedaling. A financial record-keeping book and spiral notebook are strapped to the back of the bike; Hassim keeps all his building notes inside.

At the house, he points out the features he is proudest of and talks about his desire to continue building in stages with Habitat’s help. He hopes to add solar panels to his house soon and perhaps construct separate buildings for a kitchen and a chicken house.

His family has already moved into the home. “We have our own room, and there is privacy here,” says Hassim’s 15-year-old daughter, Subra. “And this house has light. It was dark in the hut, but now we have light.”

“There was continuous sickness in the old places, squeezed in like we were,” Hassim adds. “There, when one coughs, everyone coughs. If one gets malaria, soon everyone gets malaria.”

Beyond the physical and health-based benefits, Hassim says there is something else the new home has given him, something that might not be visible in the bricks or the mortar, but can be glimpsed in his eyes.

“I am proud now,” he says. “In life, you want to achieve a goal. Part of my goal in life is what Habitat helped me to achieve. Telling people I built houses, but I was living in that [old hut], I didn’t like that feeling. I didn’t like that in my heart. But now, I have the pride. I feel contented.”