The Asian Development Bank (ADB) has teamed with Habitat for Humanity International to help microfinance institutions (MFIs) deliver housing loans to low-income families in rural and peri-urban areas of Bangladesh along with India, Indonesia, and the Philippines.
The collaboration will expand ADB's Microfinance Risk Participation and Guarantee Programme to include microloans for housing, home improvement, and water and sanitation for vulnerable and climate change-exposed communities.
An expected 20,000 households will receive housing microloans from partner MFIs in the programme's first phase to enhance construction quality and climate resilience, including upgrading semi-permanent structures and installing sanitation and water connections. ADB also aims to encourage private sector financing through risk-allocation and guarantees. The collaboration will help to empower women, with 90% of financing targeted for women micro-borrowers.
ADB will help MFIs obtain financing for these purposes from commercial banks of up to USD 30 million in the first phase. Habitat for Humanity will build the MFIs' capacity to design, pilot-test, and roll out the loans, with technical assistance from ADB.
"Low-income families find it difficult to build resilient houses as they lack adequate and affordable financing options due to the collateral requirements of commercial banks," said ADB Private Sector Financial Institutions Division Director Christine Engstrom. "MFIs have the networks to reach these communities, but often lack the technical capacities to deliver housing microloans to them. Building on Habitat for Humanity's technical and training expertise, this inaugural partnership will enable ADB's Microfinance Programme to better address this market gap."
"The demand for urban housing in Asia remains largely unmet, giving the private sector a critical opportunity to deliver affordable materials, construction quality, access to energy, gender equity, water supply, and sanitation services, while supporting greater gender equity," said Habitat for Humanity International Chief Operating Officer Patrick Canagasingham. "With ADB, we will create enabling environments for MFIs through risk-sharing and capacity building, helping unlock local private sector capital for housing."
"This partnership is timely, as micro-housing for the poor and investing in community resilience are key drivers of economic recovery from the pandemic," said Lead of ADB's Microfinance Programme Anshukant Taneja.
Habitat for Humanity began in 1976 and has grown into a leading global nonprofit, working in more than 70 countries. Habitat's Terwilliger Center for Innovation in Shelter works with the private sector to pilot new products and approaches for housing finance, materials, and services. From July 2019 to June 2020, Habitat helped more than 1.9 million people in Asia and the Pacific gain access to better housing.
ADB's Microfinance Programme has helped more than 6 million borrowers gain access to microloans.