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by
Waren Brown
Date: April 30, 2002
Time: 12:30 - 2:00
Location MC6-W150
Presentation Abstract
It is well documented
that poor households in developing countries have
limited
access to formal finance to help them build or
improve their homes. Issues of
affordability, lack of legal titles, informal
incomes and small loan sizes
typically exclude poor households from traditional
mortgages. Moreover,
government housing programs seldom reach more than a
small percentage of those
in need. The success, over the past 20 years, in
innovating methodologies and
institutions to finance microenterprises raises the
question of whether these
same methodologies and institutions can also fill
the gap in low-income
households' access to formal housing finance.
With almost 70,000 active borrowers, Mibanco is one
of the largest microfinance
institutions (MFIs) in Latin America. Although
Mibanco's entry into housing
finance is recent, its experiences are of interest
for a number of reasons:
-
Use of
"Progressive build" lending versus traditional
mortgage lending;
-
Application of
"best practice" microenterprise methodology to
housing finance;
-
"Minimalist"
approach to construction assistance;
-
Rapid, profitable
early growth.
While Micasa's early
success provides strong indications of the potential
of
Mibanco's approach, it also identifies some of the
key issues and obstacles to
further expansion of the microfinance of housing,
including:
-
Is construction
assistance for all borrowers really a necessary
part of a microhousing loan program? How can
assistance be cost-effectively designed to serve
the varied needs of different clients?
-
How do or can
microfinance of housing programs interact with
efforts to improve property rights for the poor?
-
How much of the
potential market can housing microfinance
products serve? Can sustainable
progressive-build lending be designed or adapted
to effectively reach the "extremely" poor? When
does traditional mortgage finance become more
attractive for wealthier households?
-
Where will the
medium-term sources of funds needed to finance
the growth of low-income housing finance
portfolios come from?
This Brown Bag lunch
will present the results of the recent Cities
Alliance case
study on Micasa and provide an opportunity for an
open discussion of these and
other issues of interest to participants.
About
the presenter:
As a Director in ACCION's Research and Development
Department, Warren is part
of a team is tasked with supporting our affiliates
and partners in researching,
developing and piloting new products and services to
better serve the financial
services needs of the working poor. Since joining
ACCION in 2000, much of
Warren's work has focused on exploring and
developing the microfinance of
housing within ACCION and its network. Warren has
coached institutions in the
Dominican Republic and El Salvador in implementing
microhousing products,
organized and facilitated the "International Seminar
on the Microfinance of
Housing" for members of ACCION's network and is
co-author, with Angel Garcia,
of the in-depth case study, "Micasa: Financing the
Progressive Construction of
Low-Income Families' Homes at Mibanco." In 2002,
Warren will guide teams
implementing or improving microhousing products in
Nicaragua and El Salvador.
Prior to ACCION, Warren co-led Calmeadow's research
effort in the developing field of microinsurance. He
is author and co-author of more than 5 publications
on the topic, including "Insurance Provision for
Low-Income Communities: Parts I and II" (USAID/MBP)
and "Microinsurance: The Risks, Perils and
Opportunities" in the Small Enterprise Development
Journal. While at Calmeadow, Warren also conducted
research and published on disaster-management
mechanisms for MFIs and performance monitoring
systems for network organizations. Warren's
microfinance experience is complemented by his 3
years as a corporate strategic consultant with the
international consultancy, Monitor Company, where he
worked to design strategies for several Canadian
banks to target the opposite end of the market,
high-net worth clients. Warren is a graduate of the
Ivey School of Business at the University of Western
Ontario in London, Canada.
Video for MICASA Housing Loan for the Poor
Presentation:
http://www.worldbank.org/wbi/B-SPAN/sub_micasa.htm
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