Presentation kecia rust

THE STATE OF HOUSING MICROFINANCE IN AFRICA African Union for Housing Finance Annual General Meeting and Annual Conference “ Housing Finance - A Public-Private Partnership” Joaquim Chissano International Conference Centre Maputo, Mozambique 8-11 September, 2009 Kecia Rust (kecia@iafrica.com)

Outline ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

What is housing microfinance? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

A growing sector… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],The Financial Bank in Benin was the first to propose social loans in 1995 to people who could not access formal funding from banks to improve their housing and buy land. In November 1998, Financial Bank created FINADEV as their microfinance subsidiary. Since its start up, FINADEV SA has given access to microcredit to more than 25 000 small borrowers in Benin. Apart from traditional microfinance products, it provides housing loans. FINADEV suffers from similar problems as other microfinance institutions including limitation of funding, a lack of innovation in loan management, difficulty in adjusting to risks, increasing unmet demand as well as weaknesses of MIS and governance. For example: in Benin

A growing sector… Borrowers HMF Retailers Investors: public / private / institutional Wholesale lender Private equity firms / hedge funds Donors HMF Retailers Rating Agency Provides support and spurs on community organisation around land and infrastructure issues Acts as a type of guarantor and grades institutions Bank NGO, building material suppliers, etc. Work individually or together to finance HMF retailer: loans, equity, guarantees

A growing sector… lenders Third tier Second tier First tier Category Description / examples County Informal, locally established (susu, umpato) Savings based, locally defined. Approach and use of funds defined by group: individual or collective loans All countries – lessons? Community based shelter funds Usually donor supported (i.e. Slum Dwellers International) largely collective loans, targeted at most poor Trust Fund of the Housing People of Zimbabwe, WAT Human Settlements Trust in TZ; Angola, Namibia; Kenya Cooperatives and credit unions (Saccos) Individual loans for housing often a coincidental focus NACHU in Kenya; WAT SACCOs in TZ; Namibia; Zambia Non-bank Micro lenders (credit-only) Origins in housing delivery / shelter NGOs that saw demand for finance Kuyasa Fund & Lendcor in SA; Zambia Low Cost Housing Development Fund; Origins in microcredit for SMMEs; housing the next progression. Uganda Microfinance Ltd; Jamii Bora in Kenya; PRIDE in TZ; others… Microfinance banks (deposit taking and lending to members and sometimes non-members) Usually when micro lenders convert to banks to access capital - a focus on housing loans usually comes later K-Rep in Kenya; Zambia National Building Society; Pulse Holdings in Zambia; African Bank, and Capitec Bank in SA; etc. State owned banks offering microloans Trend is now moving away from these as many sustained losses Ghana, Tanzania, Guinea, Uganda,… Commercial banks offering microloans SA banks have offered unsecured loans for some time. The NCR estimates that 10-30% of these are used for housing. Standard Bank, ABSA in SA; Indo-Zambian Bank; Namibia, Tanzania…

… with growing demand Country Population ------------------ Average household size ,[object Object],[object Object],[object Object],[object Object],[object Object],x No. of potential borrowers (assuming one per household) = % of urban households who may afford a loan x % of rural households who may afford a loan x x % of urban population not served by formal mortgages % of rural population not served by formal mortgages % of urban households who may want a loan x % of rural households who may want a loan x

… with growing demand (urban)

… with growing demand (urban) No. of potential borrowers (assuming one per household) Average loan size (HDI proxy or avg) x = Estimated total value of the market ($) Avg $700 (DiD figure) Morocco $1150 South Africa $430 Kenya $533 Uganda $942 Ethiopia $228 Benin $666 Rwanda $350

Opportunities ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Opportunities ,[object Object],[object Object],[object Object],[object Object],[object Object],For example…

Challenges ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Public / private partnership opportunities Role for donors, DFIs, NGOs NGO / commercial partnership opportunities

Conclusion ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Conclusion ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Ugafode, Uganda Faulu, Kenya KixiCredito, Angola Nachu, Kenya Kuyasa Fund, South Africa Development Action Group, South Africa Centenary Bank, Uganda Mchenga, Malawi Zakouara with Shorebank Int’l & USAID’s DCA WAT, Tanzania Nachu, Kenya Teba Bank, South Africa

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