INTRODUCING MICROFINANCE HOUSING INTRODUCING MICROFINANCE HOUSING - - PowerPoint PPT Presentation

INTRODUCING MICROFINANCE HOUSING LOANS An initiatives Undertaken by YOSEFO A presentation at the African Microfinance

conference August 12-15, 2013 Durban, South Africa

INTRODUCING MICROFINANCE HOUSING LOANS An initiatives Undertaken by YOSEFO A presentation at the African Microfinance

conference August 12-15, 2013 Durban, South Africa

By

Altemius Millinga Executive Director P.O.Box 75379 Dar es Salaam Tanzania Email: amillinga@yosefo.org

Profile of YOSEFO Profile of YOSEFO

• YOSEFO is a Microfinance Institutions
• Established in 1997
• To date Operate through network of five branches (

Mbagala and Mizizima in Dar es salaam , Ifakara (Morogoro region), Zanzibar and Kilwa (Lindi region)

• 24,860 clients
• 33 clients for rural housing (pilot): Portfolio Tzs

22,500,000

• Outstanding loan balance as of June 30th , 2013 ; Tzs

6.24 billion or US$ 3.9 million

• 52% of clients (rural)
• YOSEFO is a Microfinance Institutions
• Established in 1997
• To date Operate through network of five branches (

Mbagala and Mizizima in Dar es salaam , Ifakara (Morogoro region), Zanzibar and Kilwa (Lindi region)

• 24,860 clients
• 33 clients for rural housing (pilot): Portfolio Tzs

22,500,000

• Outstanding loan balance as of June 30th , 2013 ; Tzs

6.24 billion or US$ 3.9 million

• 52% of clients (rural)

FACTS ABOUT RURAL HOUSING IN TANZANIA FACTS ABOUT RURAL HOUSING IN TANZANIA

• The problem of rural housing is the improvement of its

quality and durability.

• All families own their own homes
• Majority built on non durable materials- mud and pole

walls, earthen floor and grass thatched roof

• Most rural houses require significant maintenance and

pose a serious health risk to the occupants

• A rural resident can have own as many as 500 cows but

his housing is poor

• Policy makers are pre-occupied by urban housing

issues

• The problem of rural housing is the improvement of its

quality and durability.

• All families own their own homes
• Majority built on non durable materials- mud and pole

walls, earthen floor and grass thatched roof

• Most rural houses require significant maintenance and

pose a serious health risk to the occupants

• A rural resident can have own as many as 500 cows but

his housing is poor

• Policy makers are pre-occupied by urban housing

issues

A HOUSE OF ONE OF YOSEFO’S CLIENT A HOUSE OF ONE OF YOSEFO’S CLIENT

• .

WHY IS HOUSING/SHELTER IMPORTANT FOR THE RURAL POOR WHY IS HOUSING/SHELTER IMPORTANT FOR THE RURAL POOR

• Improves the quality of life
• Creates conditions for attainment of better

health, hygiene and education

• Stimulates economic activities
• Enhances productivity
• Motivates savings
• It is basic need, a personal asset, and a

productive asset- produce goods, store inventory, and conduct business.

• Improves the quality of life
• Creates conditions for attainment of better

health, hygiene and education

• Stimulates economic activities
• Enhances productivity
• Motivates savings
• It is basic need, a personal asset, and a

productive asset- produce goods, store inventory, and conduct business.

Housing needs of the rural poor Housing needs of the rural poor

3 or 4 bed room house 3 or 4 bed room house

1 Bed room for parents 1 Bed room for parents 2 bed rooms for children – boys and girls 2 bed rooms for children – boys and girls Spare room for visitors Spare room for visitors Spare room for visitors Spare room for visitors

Other buildings Other buildings

Grain store Grain store small shop (Kiosk) small shop (Kiosk) Animal shed/building Animal shed/building

Improvement of services Improvement of services

Connecting to electricity/solar Connecting to electricity/solar Latrine Latrine Domestic Water system Domestic Water system

HOUSING MICROFINANCE MODEL HOUSING MICROFINANCE MODEL

CORE PRINCIPLES

• Sequential financing approch
• User focus
• Client control the building this increases the level
• f ownership and satisfaction by the clients and

also helps ensure that the assistance offered is affordable and fits within a family’s livelihood strategy.

• Are priced to ensure long term financial viability
• f the provider (YOSEFO)

CORE PRINCIPLES

• Sequential financing approch
• User focus
• Client control the building this increases the level
• f ownership and satisfaction by the clients and

also helps ensure that the assistance offered is affordable and fits within a family’s livelihood strategy.

• Are priced to ensure long term financial viability
• f the provider (YOSEFO)

CORE PRINCIPLES

• Sequential financing approch
• User focus
• Client control the building this increases the level
• f ownership and satisfaction by the clients and

also helps ensure that the assistance offered is affordable and fits within a family’s livelihood strategy.

• Are priced to ensure long term financial viability
• f the provider (YOSEFO)

CORE PRINCIPLES

• Sequential financing approch
• User focus
• Client control the building this increases the level
• f ownership and satisfaction by the clients and

also helps ensure that the assistance offered is affordable and fits within a family’s livelihood strategy.

• Are priced to ensure long term financial viability
• f the provider (YOSEFO)

Microfinance, Agricultural Microfinance loans and rural housing Microfinance, Agricultural Microfinance loans and rural housing

Microfinance Agricultural Microfinance loans Housing microfinance Microfinance Agricultural Microfinance loans Housing microfinance

A rural microfinance client- Looking at the bigger picture A rural microfinance client- Looking at the bigger picture

Low level of education Poor markets Low productivity of agriculture Low productivity of agriculture Shelter Shelter Education Education

9

Surrounded by Poor infrastructure Superstition Contribution to development projects Taxes- Money lenders Shelter Shelter Education Education Extended Family Extended Family Health Health Use of Microfinance Loans Use of Microfinance Loans

Who are the clients

Definition  Existing YOSEFO clients ( Micro enterprise loans)  Must have joined a the agricultural loans program  Permanent resident in a village  In general, rural poor households that do not enjoy access to traditional housing finance Definition  Existing YOSEFO clients ( Micro enterprise loans)  Must have joined a the agricultural loans program  Permanent resident in a village  In general, rural poor households that do not enjoy access to traditional housing finance Definition  Existing YOSEFO clients ( Micro enterprise loans)  Must have joined a the agricultural loans program  Permanent resident in a village  In general, rural poor households that do not enjoy access to traditional housing finance Definition  Existing YOSEFO clients ( Micro enterprise loans)  Must have joined a the agricultural loans program  Permanent resident in a village  In general, rural poor households that do not enjoy access to traditional housing finance

APPROACH: product linked to agricultural microfinance loan APPROACH: product linked to agricultural microfinance loan

 Existing YOSEFO clients ( Micro enterprise loans)  Must have joined a the agricultural loans program  Permanent resident in a village  In general, rural poor households that do not enjoy access to traditional housing finance : focus on land with title deeds  Existing YOSEFO clients ( Micro enterprise loans)  Must have joined a the agricultural loans program  Permanent resident in a village  In general, rural poor households that do not enjoy access to traditional housing finance : focus on land with title deeds  Existing YOSEFO clients ( Micro enterprise loans)  Must have joined a the agricultural loans program  Permanent resident in a village  In general, rural poor households that do not enjoy access to traditional housing finance : focus on land with title deeds  Existing YOSEFO clients ( Micro enterprise loans)  Must have joined a the agricultural loans program  Permanent resident in a village  In general, rural poor households that do not enjoy access to traditional housing finance : focus on land with title deeds

Product design Product design

• Target Clientele: Rural YOSEFO clients with an

agricultural loan

• Average loan size: Tzs 750,000 (US$ 468)
• Maturity: 1-2 Years/farm seasons
• Security

 For linked product: accumulated savings as collateral, or group members,  The house/property

• Interest: Market interest ( similar to micro enterprise

loans

• Required time with YOSEFO: Two years
• Construction Assistance: Borrower allowed to

determine and secure where necessary

• Other conditions: Spouse concern needed
• Target Clientele: Rural YOSEFO clients with an

agricultural loan

• Average loan size: Tzs 750,000 (US$ 468)
• Maturity: 1-2 Years/farm seasons
• Security

 For linked product: accumulated savings as collateral, or group members,  The house/property

• Interest: Market interest ( similar to micro enterprise

loans

• Required time with YOSEFO: Two years
• Construction Assistance: Borrower allowed to

determine and secure where necessary

• Other conditions: Spouse concern needed
• Target Clientele: Rural YOSEFO clients with an

agricultural loan

• Average loan size: Tzs 750,000 (US$ 468)
• Maturity: 1-2 Years/farm seasons
• Security

 For linked product: accumulated savings as collateral, or group members,  The house/property

• Interest: Market interest ( similar to micro enterprise

loans

• Required time with YOSEFO: Two years
• Construction Assistance: Borrower allowed to

determine and secure where necessary

• Other conditions: Spouse concern needed
• Target Clientele: Rural YOSEFO clients with an

agricultural loan

• Average loan size: Tzs 750,000 (US$ 468)
• Maturity: 1-2 Years/farm seasons
• Security

 For linked product: accumulated savings as collateral, or group members,  The house/property

• Interest: Market interest ( similar to micro enterprise

loans

• Required time with YOSEFO: Two years
• Construction Assistance: Borrower allowed to

determine and secure where necessary

• Other conditions: Spouse concern needed

Potential customer of Sequential Step in financing of housing microfinance Potential customer of Sequential Step in financing of housing microfinance

Steps of financing this customer Step 1: Provide roofing (corrugated iron sheets ) for the main house, doors and windows. Estimated loan size: Tzs 750,000 Step 2: Floor and plastering : Estimated loan size at Tzs 650,000 Step 3: Roofing, doors and windows for kitchen, store and visitors room : Estimated loan size Tzs 750,000 Steps of financing this customer Step 1: Provide roofing (corrugated iron sheets ) for the main house, doors and windows. Estimated loan size: Tzs 750,000 Step 2: Floor and plastering : Estimated loan size at Tzs 650,000 Step 3: Roofing, doors and windows for kitchen, store and visitors room : Estimated loan size Tzs 750,000

Removing grass and replacing it with corrugated iron sheets Removing grass and replacing it with corrugated iron sheets

The numbers The numbers

 Target customers over the next three years: 12,900  Customers participating at pilot stage: 33  Average loan size: 750,000  Total loan fund needed : Tzs 9.7 Billion or US$ 6 million  Target customers over the next three years: 12,900  Customers participating at pilot stage: 33  Average loan size: 750,000  Total loan fund needed : Tzs 9.7 Billion or US$ 6 million  Target customers over the next three years: 12,900  Customers participating at pilot stage: 33  Average loan size: 750,000  Total loan fund needed : Tzs 9.7 Billion or US$ 6 million  Target customers over the next three years: 12,900  Customers participating at pilot stage: 33  Average loan size: 750,000  Total loan fund needed : Tzs 9.7 Billion or US$ 6 million

Opportunities and challenges Opportunities and challenges

 Customers are ready to pay market interest rates As more clients’ children join secondary schools pressure to parents for better houses mounts Micro enterprise loans has given our rural clients the confidence to change lives  The market is huge Red clays bricks are commonly used and affordable ( can be made with family labour Agricultural waste is available for burning of the red clay bricks.  Customers are ready to pay market interest rates As more clients’ children join secondary schools pressure to parents for better houses mounts Micro enterprise loans has given our rural clients the confidence to change lives  The market is huge Red clays bricks are commonly used and affordable ( can be made with family labour Agricultural waste is available for burning of the red clay bricks. Opportunities  Customers are ready to pay market interest rates As more clients’ children join secondary schools pressure to parents for better houses mounts Micro enterprise loans has given our rural clients the confidence to change lives  The market is huge Red clays bricks are commonly used and affordable ( can be made with family labour Agricultural waste is available for burning of the red clay bricks.  Customers are ready to pay market interest rates As more clients’ children join secondary schools pressure to parents for better houses mounts Micro enterprise loans has given our rural clients the confidence to change lives  The market is huge Red clays bricks are commonly used and affordable ( can be made with family labour Agricultural waste is available for burning of the red clay bricks.

Opportunities and challenges Opportunities and challenges

 Funding sources are limited as many funders are used to micro enterprise funding Build yourself culture is not known among our western partners- always think of selling a house Rural communities face high priced building materials  Quality assurance ( building materials and structures)  Funding sources are limited as many funders are used to micro enterprise funding Build yourself culture is not known among our western partners- always think of selling a house Rural communities face high priced building materials  Quality assurance ( building materials and structures)

Challenges

 Funding sources are limited as many funders are used to micro enterprise funding Build yourself culture is not known among our western partners- always think of selling a house Rural communities face high priced building materials  Quality assurance ( building materials and structures)  Funding sources are limited as many funders are used to micro enterprise funding Build yourself culture is not known among our western partners- always think of selling a house Rural communities face high priced building materials  Quality assurance ( building materials and structures)

Thanks and have a nice day