ADB to help low-income families get housing loans

Diplomatic Correspondent

20 April, 2021 12:00 AM printer

Asian Development Bank, in collaboration with Habitat for Humanity, will promote housing loans for low income families in rural and peri-urban areas of Bangladesh.

The ADB will help the country’s microfinance institutions (MFIs) obtain up to $30 million funds in the first phase to deliver the housing loans, said an ADB statement on Monday.

Habitat is a non-governmental and non-profit international organization. 

This is an expansion of the ADB’s Microfinance Risk Participation and Guarantee Program.

The programme will include microloans for housing, home improvement, and water and sanitation for vulnerable and climate change-exposed communities, the statement said.

Such initiative will also be implemented in India, Indonesia, and the Philippines.

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 Program to better address this market gap,” Engstrom added. Habitat for Humanity International Chief Operating Officer Patrick Canagasingham said the demand for urban housing in Asia remained largely unmet, giving the private sector an opportunity to offer affordable and quality housing.

“The demand gives 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."

He added, “With ADB, we will create enabling environments for MFIs through risk-sharing and capacity building, helping unlock local private sector capital for housing.”

Lead of ADB’s Microfinance Program Anshukant Taneja described the partnership “timely”, as the micro-housing for the poor and investing in community resilience are “key drivers of economic recovery from the pandemic.”

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.

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 Private Sector Operations Department will also explore opportunities to work with Habitat for Humanity to scale the organization’s catalytic initiatives, including the MicroBuild Fund, which has deployed over $140 million in housing finance loans through MFIs, with 19% allocated in Asia and the Pacific.

ADB’s Microfinance Program has helped more than 6 million borrowers gain access to microloans.