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Promoting Inclusive Markets and Financial Systems

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From Shelter to Solutions – Habitat for Humanity’s Evolving Market Strategy

by on Sep 20, 2017  |  posted in Annual Conference  |  0 Comments

The first few times Habitat for Humanity attended the SEEP conference, attendees would stop us to ask, “What is Habitat for Humanity doing here – you build houses, not markets, right?”

Indeed, take a survey of a random group of people anywhere in the U.S. and odds are good that, at some point, more than half have participated in a Habitat for Humanity build. Habitat for Humanity is synonymous with affordable housing built through a combination of a family’s sweat equity and volunteer mobilization. Working in this way since 1976, we have helped more than 9.8 million people worldwide improve their shelter conditions. In the US, we have become one of the largest private home builders, with affiliates working in over 1400 communities around the country.

As Habitat expanded globally in the 1980s, we replicated this strategy in other countries. But, when service areas jumped from hundreds to thousands of square miles and potential beneficiary households from thousands to millions, as is true for most of our country offices, new strategies were required to address this immense demand.

We asked ourselves how best to meaningfully improve housing for the 1.6 billion people worldwide who lack adequate housing. An important realization was that most low-income families already can and do use available market options to put a roof over their heads, though the result may not meet general standards for secure shelter. The number of housing solutions purchased by low-income people through the market—a few bricks here, a strip of tin there, a few hours of a mason’s time—far outstrip our philanthropic efforts to improve shelter. This realization birthed Habitat’s strategy for working with the private sector to provide shelter solutions that can continue without an ongoing need for charitable subsidy and expand to address demand.

In the late 2000s, we began working with financial institutions to spark innovation and scale housing microfinance products and services. This strategy grew in response to the realization that access to finance is a major need for low-income households around the globe, as evidenced by large unmet demand. Only a small percentage of traditional microfinance loans are designed for shelter improvement purposes, yet microenterprise loan funds intended for business are commonly diverted for housing.

Two important global initiatives propelled this work: the MicroBuild Fund, a US$100 million microfinance investment fund focused exclusively on housing, and an advisory services unit that provides training and technical assistance to local financial institutions in the development of appropriate shelter products. Since Habitat launched these two initiatives, we have been able to mobilize US$781,471,370 and benefit 2,524,260 families.

While we are encouraged by the resulting impact so far, we also recognize that improving access to finance alone is not sufficient to improve housing for the poor. In many cases, families also lack access to other housing services and products, such as design services or durable construction materials that enable them to build adequate shelter. We then experimented with different models for delivering these “housing support services” in tandem with our financial partners. This included alliances between financial institutions and housing supply firms, loan process improvements that incorporated project planning and cost estimation, and qualified technical construction assistance offered onsite, usually through third party providers, in coordination with the loan process.

A careful review of this work led to several conclusions:

  • Loan process strategies have generally been successful, as they have demonstrated clear value-add for clients. They are relatively low cost and implemented by the financial institution’s sales force.
  • Alliances built with Habitat’s support have generally been less successful, as financial institutions are frequently not motivated or well equipped to maintain these partnerships. Furthermore, clients have often preferred the freedom to choose their suppliers and builders.
  • Qualified technical assistance offered in tandem with the loans has not been shown to be financially sustainable for financial institutions.

Habitat noted that a more broadly defined market systems strategy was needed, unlinked from specific financial products and institutions. To that end, we formally launched the Terwilliger Center for Innovation in Shelter in 2016 at the historic Habitat III in Quito, Ecuador. Through the Terwilliger Center, we will continue our work in housing financial markets and expand to implementing housing market systems programs focused on the supply of housing components and services.

Our market systems programs take a three-pronged approach to improve the functioning of markets to better serve the needs of low-income families’ for adequate non-financial housing products and services:

  1. Targeting supply-side constraints by working with private sector actors to develop, test, and adapt market-based solutions;
  2. Addressing policy and regulatory constraints through targeted advocacy initiatives in partnership with other stakeholders
  3. Focusing on demand-side constraints by facilitating consumer education and social and behavioral change communication.

As a rare development actor taking a market systems approach to housing, we are experimenting and learning as we go along. Over the last year, the Terwilliger Center has worked with six private sector companies in Haiti, Kenya, and India to promote market-based solutions that address constraints faced by low-income households. The Terwilliger Center is also expanding its housing market systems approach to at least four new countries this year and will continue to work with companies to improve access to housing products and services for low-income households and to stimulate replication by other players as a means of generating wider change within the market. Parallel to these efforts, we are pursuing strategies to enhance or change consumer behavior and to improve building codes or local housing policies to make them more responsive to the needs of low-income households. We are also exploring a range of thematic topics, including resiliency in disaster-prone regions.

Through expanding the number of private sector partners we work with, as well as entering into new geographies, we expect to reach at least 1 million households globally by 2020. It’s undeniably a big goal, but it’s a necessary one if we wish to make meaningful strides toward impacting the more than 1 billion who live in inadequate housing today.

Habitat for Humanity will be well-represented at the 2017 SEEP Annual Conference. If you want to learn about how we are building not just houses but markets too, stop any one of us – we’re always happy to answer that question!


Sheldon Yoder is the global market systems and entrepreneurship manager for Habitat for Humanity’s Terwilliger Center for Innovation in Shelter. He serves as a market systems technical advisor on a portfolio of housing market development programs, providing support for market assessments, program design, monitoring and results management, and related training. He has worked for Habitat for more than four years, specializing in housing finance and market systems approaches and he has more than ten years’ experience as an international development practitioner, researcher, and communications professional focused on economic development and social issues. Mr. Yoder has a master’s degree in international development studies and a bachelor’s degree in journalism.

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