A pathway to lasting, dependable access -- Habitat for Humanity Int'l 1

A pathway to lasting, dependable access

By Patrick Kelley


HFH Kyrgyzstan partners with a local microfinance institution to offer loans for low-income families to complete unfinished houses and renovate flats.


HFH Nepal initiated housing microfinance specifically incorporating sustainable building through the use of locally available, environmentally friendly construction materials.


The eight-foot sheet of tin, strapped to the back of a bike with old tire scraps, spans the width of this side street in Manila, Philippines. Marcos, a bicycle taxi operator, pedals carefully, protecting his cargo as he navigates traffic.

Marcos moved here from his home on the island of Palawan two years ago and lives with his pregnant wife and 3-year-old daughter in an informal settlement shelter on government land along the Pasig River.

The tin sheet, reclaimed after being rejected by commercial builders, is for their small makeshift home. Marcos and his wife paid the previous occupant for the right of possession, with the goal of improving the dwelling’s roof before their family grows to four at the beginning of the rainy season. The tin sheet is the third, leaving just five more and some structural timber to begin the improvement in earnest. They plan to aggregate their savings and take out a loan to complete the project before the rainy season begins.

Although Marcos’ family is fictional, their story is all too real. This road to improved shelter is common in low-income countries. Formal housing—built by a developer and financed by a formal bank mortgage—is rare, accessible only by the highest-income earners. Nearly everybody else acquires shelter informally—a process pursued over many years.

From building to enabling

The desire to help families navigate this “housing process” led many Habitat programs to expand from building houses to providing programs that address specific constraints in the housing value chain. Habitat’s housing microfinance programs emerge from this idea, addressing one of the most persistent challenges families face in acquiring adequate shelter: how to get access to appropriate housing finance services. To provide dependable, ongoing services to families in a way that reaches meaningful scale, a program has to be financially sustainable.

Financial Sustainability: The big idea

Financial sustainability is often under-imagined. It too easily becomes the burden of balancing budgets, reducing costs and collecting past housing loans. Though those tasks may have a role, they can distract from the big idea: program design.

Creative program design is the main driver of financial sustainability, and that requires imagination. Imaginative solutions usually start with an intimate understanding of the challenges, needs and price points at which people are willing to pay for housing solutions they prioritize.

Financially sustainable programs may end up looking very different than assumed. One of the most promising paths to financial sustainability for Habitat is through innovative local partnerships with stakeholders—governments, private-sector suppliers, financial institutions and community-based organizations—that may do some aspect of housing more efficiently than we do. Financial sustainability also points toward the use of “smart subsidy,” which may require spending less money directly on families’ housing solutions, and more on setting up a system that will serve their communities for the long run.

Those long-term considerations are what make financial sustainability important. A financially sustainable program provides consistent, ongoing and reliable services to a community. The community can rely on those services without worrying about ebbs and flows of donor giving. That is important, so that families can access those services when they are needed most.

Following are a few examples of Habitat programs emphasizing scale and replicability through financial sustainability.

Renovations and condominium upgrades in Kyrgyzstan

The program in Kyrgyzstan began as a pilot in 2007. It is executed in partnership with a local microfinance institution called Kompanion. The project offers five-year loans of up to $5,000 for low-income families to complete unfinished houses and renovate flats.

Habitat Kyrgyzstan provides families with housing support services, which includes technical assistance in project design and material selection, in addition to the selection of contractors. Kompanion acts as the intermediary for the financial services.

Applying the lessons learned from the pilot and the results of market research, Habitat Kyrgyzstan plans to scale existing projects to provide affordable loans to condominium associations that have partnerships with financial institutions and those that are incorporating innovative guarantee mechanisms and savings. This is commonly referred to as metafinancing, in which a community bands together to finance a project that is not owned by any one family (e.g., a green space, a sewage system, or in the case of the former Soviet States, external structures).

The project aims to provide loans to condominium associations to improve deteriorating common areas in the Soviet-style buildings and create self-sustainable associations that will continue maintenance of the condominiums.

To date, nearly 2,000 families—10,000 individuals— have benefited from this project.

Financial and environmental sustainability in Nepal

In Nepal, as in many parts of the world, low-income families are generally excluded from housing finance by formal financial institutions. That is beginning to change in three southeast districts, where Jeevan Bikas Samaj, a local partner of HFH Nepal, has been playing a vital role in addressing poverty-related issues through sustainable microfinance and social enterprise.

HFH Nepal initiated housing microfinance specifically incorporating sustainable building through the use of locally available, environmentally friendly construction materials.

Production of these materials provides housing-related income-generation activities. This innovation attracted Jeevan Bikas. Habitat for Humanity provided initial seed capital of 7 million Nepalese rupees, which Jeevan Bikas leveraged to make loans for home construction for very low-income families, using Habitat technology.

The success of this initial effort compelled Jeevan Bikas to help more low-income families improve their housing without being solely dependent on funds from HFH Nepal. Jeevan Bikas is supporting almost double the number of families (942) with housing solutions through an additional 11 million rupees borrowed from a variety of sources, including savings deposits, commercial and social investors, and lenders.

By diversifying its funding, Jeevan Bikas ensures it can continue to meet the needs of its customers and continue its poverty-reduction mission. Habitat continues to provide the home partners with technical assistance in construction.

When housing technology is synchronized with the practices of housing microfinance, affordable housing for the poor can be achieved more quickly.

Housing microfinance for low-income families in Peru

In Peru, the Multilateral Investment Fund and HFHI designed a project that aims to improve the housing conditions of 2,100 low-income families by increasing access to microfinance and construction services for home improvements.

Pilot projects are being conducted by four microfinance institutions, including Microfinanzas Prisma. A testimonial from their first client, Katia Chumpitas, sheds light on the positive impact the project is having.

“I have been looking for a way to build my house for months, but my limited income hasn’t allowed me to,” Chumpitas said.

Chumpitas applied to Microfinanzas Prisma and was approved for a 13-month loan of 3,000 soles (approximately US$1,000) to build the foundation and walls of his house.

“At the beginning I had only considered putting a fence around my small lot,” Chumpitas said. “But with the help of Prisma’s construction adviser, I could progressively build my house. My idea is to pay my loan early and continue with the roof and the floor. Now I am sure that with Prisma’s and Habitat’s help combined with my effort, I will be able to have my own house.”

By working with four indigenous partner institutions, the HFH Peru program aims to catalyze lasting service availability to communities in need there.

Patrick Kelley is director of international housing finance for HFHI, based in Atlanta. In this role, he coordinates global strategies to expand the poor’s access to financial services for housing.