All slides used in the Housing Finance webinar on May 16th 2012.

1. Housing Finance for the Poor in
Asia
Two Perspectives on Best
Practices and Promising Trends in
the Region
The Banking with the Poor Network
featuring
Habitat for Humanity
and
LFSUS

2. Webinar Agenda
3:00 – 3:10pm About this Webinar
3:10 – 3:30pm Jennifer Oomen and Rajan Samuel
of Habitat for Humanity will present trends and best
practices in housing microfinance in the Asia-Pacific
region, and considerations for adding value to the
borrower experience.
3:30 – 3:50pm Ayanthi Gurusinghe of LFSUS, will
discuss affordable housing finance through making
low-income settlers bankable.
3:50 – 4:15pm Discussion and question time

3. About this Webinar
- Attendees will be muted during the presentation;
they will be given the possibility to speak only
during the discussion time
- At the end of the Webinar a follow-up email
containing a survey will be sent to all the
attendees
- Two practical tips:

4. How to raise a question
To ask questions or
make comments type
them into the
“questions” window in
your menu and we will
answer during the
discussion time

5. How to ask to participate actively
To participate actively
use the tool “raise hand”
from your menu during
the discussion time.
We will allow you to talk
making you unmuted.

6. The Banking with the Poor
Network (BWTP)
• Association of microfinance stakeholder organizations from
across Asia - most of BWTP’s members are MFIs and the
secretariat based in Singapore.
• Committed to improving the quality of life of the poor, through
promoting and facilitating access to sustainable financial
services.
• We do this through co-operation, training and capacity building
initiatives, with the aim of achieving innovative, appropriate and
demand-driven financial services for the poor.
www.bwtp.org
the poor.

7. Housing Finance for the Poor in
Asia
Two Perspectives on Best
Practices and Promising Trends in
the Region
The Banking with the Poor Network
featuring
Habitat for Humanity
and
LFSUS

8. Housing Finance in
Asia-Pacific
Best Practices and Trends from
the Grassroots Level
Presented By:
Rajan Samuel, Housing Finance Manager
Jennifer Oomen, Housing Finance Manager
Habitat for Humanity International
Center for Innovation in Shelter and Finance

9. Presentation Outline
• Trends in Housing Finance in the Asia-Pacific
Region
• Habitat’s experience in housing finance
• Adding Value through non-financial support
services
2

10. Dedicated to eliminating poverty housing
 Improving shelter in nearly 90
countries and territories around the
world.
 HFHI has helped over 2 million
people in 3,000 communities gain
safe, decent, affordable shelter since
1976.
The Center for Innovation in Shelter and Finance facilitates
collaboration between public, private, and third sector partners to
develop sustainable, and innovative housing solutions.
3

11. Housing
Finance in
Asia Pacific
Region
4

12. The challenge of
poverty housing
Only 5% of developing country households have
access to formal housing finance
 Lack of formal jobs
 Lack of land title
 Money lenders may charge
200-300% interest per year
5

13. Opportunities in the
Poverty Housing Pyramid
HOUSING SUPPLY
Primarily commercial
Mortgage
bank housing
sector
Micro Housing Finance Greater
Mortgage Corporation – Nano than $400
Sector Housing
Low Income
Group – MFI / HMF
Less than
Bankable Poor $400
Economically
Weaker Section – MFI / Less than $200
Subsidy
Below Poverty Line
Vulnerable Beneficiaries Grant Less than $100
HOUSING DEMAND INCOME RANGE PER MONTH
6

14. Habitat’s Product
Mix: Lending Models
1. Philanthropic Model
o ReBuild post-disaster; Retail Mortgage Program
2. Save & Build Model
o Sri Lanka Savings Groups
3. Partnership Model (institutional lending)
o Nepal’s Village Banks
4. MFI Partnership Model
o HFH India Technical Assistance
7

15. Products
Continued
• Lending terms & loan size is based on the lending
model & product offering
– ex: Save & Build (Nepal) – savings account for more than
75% of the loan
• “Sweat equity”
– Client + family is expected to contribute 200- 1000 hours of
sweat equity (depending on the type of housing intervention)
• Eligibility
– Poverty indicator – per capital income of the family (ex:
Cambodia US $ 2 per day)
8

16. Promising Trends
in the Region
• MFI Market: Demand to diversify products and
services
• Current Research supporting separate housing
finance product provision
• National Housing regulators promoting housing
finance through MFIs
• Micro-mortgage space is developing but housing
microfinance is a emerging market opportunity
9

17. MicroBuild Fund
Investments in Asia-Pacific for 2012
include India, Cambodia and
Philippines.
10

18. Adding value to the borrower
experience through technical
assistance
11

19. Adding value to the
borrower experience
70% of home improvements or upgrades are
completed via self-construction
Increasing availability of both financing and technology is important.
12

20. Support Services &
Housing Value Chain
On-going
Construction support
Design supervision services
Assistance to or technical
advice,
obtain or assistance
Assistance to building Community
produce quality Development
access finance, services
building Housing
Assistance subsidy, or
materials
to secure or savings Design and
Assistance improve facilities building
to secure services
Building skills/services
materials
land and Financing
tenure
Essential
services
Land and (WATSAN, The value chain identifies all of the main
Tenure power, etc.) components needed for access to adequate and
affordable housing solutions.
13

21. Connecting finance
with technical
assistance
Financial Education with technical assistance to make home improvement goals a reality.
Goal Setting & Planning for your home improvement
Family Finance: Family budgeting, debt management, managing
remittances & savings
Making your goal a reality: Budget & Save for home
improvement, financing options
Implementing your home improvement: Choosing the best
materials, skilled workers, negotiating with contractors, etc.
By linking financial literacy with technical assistance
we are bringing together the borrowers and the skilled workers into the same room.
14

22. Example from India
• Go Finance providing loans to their high-performers
• 100% are women
• Loan size averages US$700
• Loan product is introduced with a 90
minute “Financial & Construction
Technical Briefing” where clients:
– Identify their housing goals and needs
– Calculate their debt capacity
– Hear about different material options
– Ask questions to a licensed architect
15

23. Results
Before preparation: Added-Value of Financial
Orientation & Technical
Assistance:
• 95% clients seek a
higher loan amount than • Set a process to achieve their
goals
is needed. • Prioritizing health-related
• 90% are not saving for improvements
housing • 75% of housing clients seek low-
level of support services in the
• 40% unable to calculate form of designs and information
their EMI • Clients are willing to pay fee for
getting accurate Bill of Quantities
16

24. Sanitary Toilets in Cambodia
Self-Build Latrine Core Thatch/leave Brick Brick with
Component Component Superstructure Superstructure plaster finish
10 USD 40USD 87-100 USD 187-200 USD 242-300 USD
Different Water & Sanitation Solutions at various price points.
17

25. Costing Technical
Assistance
Moving beyond cross-subsidy, examples from the sector:
PRODEL, Nicaragua; Interest Rate Percentage fee tied to loan
TSPI, Philippines amount technical assistance;
5% on loan amount
Technical Assistance Fee for Service $5 on $500, $10 on $1000
Center, India
Business case is supported when technical support responds
adequately to the demand.
18

26. Trends
• Demand to diversify
products and services.
• Financing with technical
support can improve the
loan usage.
• Small fees can offset
additional costs.
19

27. Resources for further
information
Habitat for Humanity’s Center for Innovation in Shelter and Finance
Toolkits and advisory services available globally
THE BIG IDEA: Global spread of Affordable Housing Series of articles
on Housing for the BOP compiled by ASHOKA and including writings
by Habitat
White Paper: The Role of Financial Education in Improved Housing
written by Habitat for Humanity International
20

28. Please contact us at:
Rajan Samuel, rsamuel@habitat.org
Jennifer Oomen, joomen@habitat.org
Habitat for Humanity International
Center for Innovation in Shelter and Finance
Based in Makati City, Metro Manila, Philippines
21

29. LFSUS%
Making''
Low+Income'Settlers'
'Bankable'
By%Ayanthi%Gurusinghe%
Chief%Executive%Of;icer%%
Lanka%Financial%Services%for%Underserved%Settlements%

30. Lanka%Financial%Services%for%Underserved%Se3lements%
LFSUS%
The#Credit#Enhancement#/#Guarantee#mechanism###
was#created#:…….#
TO#Bridge#the#gap#between#informal#market#
######and#the#formal#market##
TO#Leverage#finance#opportuni;es#within#
######microfinance#ins;tu;ons##
TO#Package#financially#viable#projects#

31. • #Long#Term##Financing#
• #Collateral#with#clear#
###;tle#deeds#?#

32. Service%Delivery%Mechanism%
! No#ReKInven;ng#the#Wheel#
! Long#Term#Microfinance#Loans#
! Simple#Procedures#
! Door#to#Door#Service#
! Daily#,#Weekly#Repayment#Collec;on#
! Collateral#less#lending##
! Introduc;on#of#Commercial#Financing##
#
#

33. Challenges% • !No!Direct!Income!Genera:on%%
# • !Issues!With!Ownership!
• !Probable!
Ownership!changes!
X# • !Long!Term!Financing!!
X##Conven;onal#forms#of#collateral#were#not#available#
#
X##There#are#high#lending#risk#because#of#the#financial##
#####vulnerability#of##group#lending#
#
X##There#was#no#blueprint#to#follow,#in#terms#of#banking#with#
####lowKincome#communi;es##

34. LFSUS%
%
LENDING%
#
MECHANISM%

35. LFSUS%%Supports%its%
MFI%Partners%
to………..%
! MFI#member#and#their#families#out#of#homelessness#
! Helping#them#to#upgrade#their#homes#thereby#
####improving#access#to#water,#sanita;on#and#other#
####basic#infrastructure#services#
! Providing#an#asset#to#increase#their#economic##
####security#

36. Overcoming%Challenges%%
! Assessing#the#credibility#and#financial#behaviors#of#
the#members,#rather#than#depending#on#tradi;onal#
concepts#of#collateral#for#repayments#
#
! PuUng#emphasis#on#peer#groups#pressure#as#a#
mechanism#to#ensure#prompt#repayments#
#
! Providing#extensive#credit#extension#services#
! Prepara;on#of#project#feasibility#reports#formats#as#
per#bank#requirements#

37. Overcoming%Challenges%%
! Crea;ng#Banking#track#records##through#savings#
###records#
#
! Linking#with#other#formal#services#to#secure#lending#
####eg:#insurance#
#
! Establishing#a#con;nues#rela;onship#with#the#MFI#
####partner#and#the#community#

38. $
Why%Leverage%Finance%?%
Why%Commercial%Financing%?%
• #PorKolio%Increase%
!!!To!support!larger!number!of!community!members!!to!
!!!access!!!housing!finance!
• #Capital%redistribu:on%%
!!!Exis8ng!capital!is!release!to!!support!other!sectors!
• #Time%value%of%capital%funds%%
!!!Capital!funds!can!con8nued!to!be!used!for!short!term!
!!!investments!
• #Sustainability%%
Access!to!long!term!funding!opportunity!

39. Housing%and%Infrastructure%Loans%%
Include………………..%
#
• House#upgrading##and#Repairing##
• Access#to##services##
Water#,#Electricity#and#Drainage##
#

40. Reasons%for%the%growth%in%the%sector%
# #
• Demand#
• Affordability#
• Compe;;on#
• Policy#
• Securi;za;on#
#
#

41. LFSUS%Operations%
Ongoing%
Kirulapona%
Ratnapura%
Hambantota%–%1%%
Nuwara%Eliya%–%1%%
Deniyaya%
Nawalapitiya%
Kaduwela%
Nuwara%Eliya%–%2%%
Hambantota%–%2%%
Tissamaharama%#
PorZolio#of#USD#1.4#million##

42. ! Credit%worthiness%
! Security%of%Tenure%
! Financial%literacy%
! Nego:a:ng%Power%
! Sustainability%………..%
LFSUS%:%Transforma:on%in%to%
Genera:ons%

43. THANK%YOU%