'Microfinance and housing, one brick at a time' - preview of EMW Plenary from MicroCapital
MicroCapital previews one of the exciting plenaries of European Microfinance Week, 'Microfinance and housing, one brick at a time', in an interview with the panellists Rajnish Dhall of Micro Housing Finance Corporation, Mark van Doesburgh of Triple Jump and Daniel Rozas, e-MFP:
MicroCapital: How does housing finance differ from traditional microfinance?
Rajnish Dhall: In India, traditional microloans usually are: (1) sized less than USD 1,000; (2) targeted for productive assets; (3) priced at around 22 percent per year; (4) repaid within less than a year or two; and (5) carry a group guarantee in lieu of collateral. In contrast, the micromortgages that Micro Housing Finance Corporation (MHFC) offers first-time homebuyers: (1) average about USD 8,000 in size; (2) carry interest rates of about 12.5 percent per year; (3) usually have a term of 15 years; (4) are individual rather than group-based; and (5) most importantly, are secured with the home as collateral. While the audience is quite similar, the products are almost at opposite ends of the spectrum.
Mark van Doesburgh: The MicroBuild Fund (MBF) we manage for Habitat for Humanity provides tenors of up to five years. While most traditional microfinance loans are for working capital for businesses, housing is technically "consumption." The principle upgrades we see are: (1) changing dirt floors to ceramic tile; (2) upgrading from adobe to plaster walls; (3) replacing reed or bamboo roofing with iron sheeting or ceramic tiles; (4) constructing bathrooms; and (5) adding additional rooms or levels.
For the full interview click here