Lessons learned scaling up housing microfinance
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Lessons Learned Scaling Up Housing Microfinance. Richard Shumann Technical Officer, Housing Finance CHF International SEEP Annual Meeting 2006. Housing Microfinance and CHF -2000. 64% of CHF’s microfinance portfolio Loans as means to the goal of better housing

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Lessons Learned Scaling Up Housing Microfinance

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Lessons learned scaling up housing microfinance

Lessons LearnedScaling Up Housing Microfinance

Richard Shumann

Technical Officer, Housing Finance

CHF International

SEEP Annual Meeting 2006


Housing microfinance and chf 2000

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


Housing microfinance and chf 2006

Housing Microfinance and CHF - 2006

  • 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


Lessons learned scaling up housing microfinance

CHF Loan Portfolio 2000 - 2006


Why these changes

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

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

Challenges to Scale

MARKETS

Research

Respond

COSTS

Expenses

Income

STAFF

Profile

Training


Markets

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

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

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


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