Building the Business Case for Housing Microfinance (in Sub-Saharan Africa)
In the absence of affordable housing solutions and accessible financing options, the majority of lower-income families resort to building incrementally based on their needs and available resources. Increasingly, financial institutions serving BOP markets have come to realize how microfinance loans tailored to these incremental building patterns hold great potential for addressing housing needs and building financially high-performing portfolios. These housing microfinance loans represent relatively small sums, borrowed for a much shorter term than a mortgage, to match both the income streams of low-earning clients and the construction costs of their incremental building steps. A critical feature of housing microfinance is that loans are not typically secured with a mortgage lien, and in many cases, possession of a formal land title is not a requirement.