Home Sweet Home: Mobilizing Microfinance for Housing

Next Billion, 11 April 2017 (with Sam Mendelson)

A thought experiment. What if we designed financial services based on the hierarchy of human needs? We would prioritize food, shelter … hmm. Shelter. That’s pretty high on the list.

Consider the financial portfolio of a typical reader of this site. What’s the single largest financial product this person has ever relied on? Most likely the answer will be a home mortgage. In fact, home mortgages comprise the bulk of retail credit in wealthy economies, nearly 90 percent in the U.S. and UK. And yet, housing finance plays but a bit part in the financial inclusion story. Habitat for Humanity, the world’s leading NGO dedicated to housing, estimates that while 1.2 billion people need improved shelter, only 2 percent of microfinance portfolios consist of housing loans. Why?

As a fundamental human need, housing has tremendous social returns. Substandard housing greatly deepens the effects of poverty. Exposure to the elements, poor ventilation and insufficient hygiene and sanitation facilities all contribute to poor health, including major killers such as childhood diarrhea. Poor building structures and risky locations undermine physical safety, vastly increase vulnerability, and are the leading cause of death following natural disasters. Lack of lighting and sufficient space limit children’s ability to study, affecting educational opportunities. Insufficient privacy and lack of toilet facilities can contribute to sexual assault and constrain opportunities for women and girls. And lack of clear property rights are major contributors to crime and social injustice, while creating a negative feedback loop by limiting families’ ability to invest in better housing. more →

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>