Lessons Learned Scaling Up Housing Microfinance Richard Shumann Technical Officer, Housing Finance CHF International SEEP Annual Meeting 2006
Jan 11, 2016
Lessons LearnedScaling Up Housing Microfinance
Richard ShumannTechnical Officer, Housing Finance
CHF InternationalSEEP Annual Meeting 2006
Housing Microfinance and CHF -2000
• 64% of CHF’s microfinance portfolio• Loans as means to the goal of better housing • Intensive technical assistance to ensure quality
– Architect visits, loans in kind, disbursements in kind
• Microfinance as projects within
CHF Offices• Donor driven
• 30% of CHF’s microfinance portfolio • Housing as a way to expand microfinance
outreach and meet market demand – Jordan: 1,110 loans, $980,000 in one year of new
product
• Wide range of technical assistance models • Projects becoming local institutions with
separate identity and financials • Client driven
Housing Microfinance and CHF - 2006
0
10
20
30
40
50
60
70
2000 2001 2002 2003 2004 2005 2006
US
$ M
illi
on
0%
10%
20%
30%
40%
50%
60%
70%
Housing CHF Total % Housing
CHF Loan Portfolio 2000 - 2006
Why these changes? • More attention to markets, client needs and competition• Stronger push for sustainable institutions within MF
community• New competition gives clients
more convenient options• Consumer finance companies
and building suppliers • Clients do not necessarily
need architects• Need to cover costs,
especially for technical assistance
Housing-Only Lending Institutions • Palestine started 1995• Mid-2006: 3,749 loans, $11.5 million portfolio • Limited scale in microfinance but successful housing
projects• Constraints to profitability:
– Covering costs of architectural assistance– Improving efficiency of loan process– End of subsidized loan capital
• Pricing policy not flexible due to competition and interpretation of social mission
• What’s more important: Housing or Lending? • Mexican institutions moving into microenterprise loans
Challenges to Scale
MARKETSResearchRespond
COSTSExpenses
Income
STAFFProfile Training
Markets• Housing an untapped opportunity
• Seek new segments, low level civil servants
• FONDEP Morocco: 95% housing clients new to MFI in first year
• Adapt procedures and policies to new competition and client needs
Costs• Housing loans tend to have higher
amounts and lower delinquency than business loans but
• Are more expensive to provide (extra loan officer time, assistance)
• And often at lower interest rates
• More study needed
Staff • Where do you put the architects, if you have
them?• Train existing credit staff
to reach new markets
and be efficient• FUNHAVI Mexico:
third of new clients from
small satellite offices