Can FSDMoç support the housing finance sector in Mozambique? Some highlights from the Housing Finance Panel during the FSD Network Conference, December 2018
By: Benedito Murambire, Jr. FSDMoç Investment Manager.
Housing has a significant impact on any economy, which is not the subject of this paper. Obviously, in Mozambique, like in any other country, there are strong linkages between housing and economy.
Additionally, housing has strong linkages with financial sector development. This paper intends to highlight the efforts from FSDMoç in addressing the housing finance challenges. It will highlight “what we have learned”, “what we still learning” and “what we have been doing”.
We have learned the need to:
- Think differently, bottom-up and not top-down, since expanding mortgage finance doesn’t seem to be a solution for our market;
- Segment the market based on HCD approach, given that BoP segment is not uniform;
- Leverage on existing/informal local housing finance mechanisms, like savings groups, and xitique;
- Consider that people are building incrementally based on informal sources and in most cases consumer loans;
- Engage at macro level softening rules and regulations, to facilitate and enabling the housing value chain;
- Minimize rules and procedures and maximize flexibility within the housing value chain;
- Invest in partnerships in both in demand and supply, using innovative approaches;
- Invest in the provision of basic services through partnerships to reduce housing costs and attract developers to invest in the affordable housing;
- Create opportunities for communities to lead the process, design and implement affordable housing programs relying on their own resources;
- Apply the 5 A’s Principles of Adequate Housing: Availability; Accessibility; Affordability; Acceptability; Adaptability;
- Set up platforms for dialogue at all levels, but with clear and focused vision and goals;
- Involve people/communities in every stage of a housing finance strategy.
We are still learning that we need to:
- Leverage heavily on technology to serve the BoP;
- Scale up few success stories of leveraging on existing local housing finance mechanisms to demonstrate business case;
- Leverage on the informal sources for designing products that respond to “borrower” needs and capacities, based on a sustainable business models;
- Integrate informal sources of housing finance into formal financial systems, being the question how?;
- Support community savings as part of housing finance, as one of the main sources of resources;
- Explore innovative, community-based ways to provide loan security, if it’s considered adequate;
- Avoid restricting finance mechanisms to housing alone, or need to bundle financial products and services to BoP segment;
- Consider subsidies as tools to make housing more accessible, although a decision should be carefully made (demand or supply side or both?);
- Leverage on people’s motivations for such informal sources of finance to design products that are need and capacity driven; and
- Apply the concept of “housing as a verb” …(John Tunner).
Currently, efforts from FSDMoç in this regard, can be summarized as:
We have been doing …
Rules & Regulation
- Build awareness on the need to secure formally documented tenure;
- Ensure efficient and accessible land & property registration process;
- Engage in the implementation of Housing Policy & Strategy (MOPHRH, UN-Habitat, FFH, etc.)
- Provide inputs for the Housing Finance Component of the Housing Policy;
- Implement a Sandbox in partnership with CB, may allow innovation
- Lead the Housing Finance Working Group,
- Promote partnerships among key players in the Housing Finance value chain;
- Advocacy and building awareness;
- Advocate for the definition of standards (materials, building process, supervision, etc);
- Support to the incrementally building process via partnerships;
- Support throughout the housing value chain via partnerships (project design and building process (Architects, engineers, quantity surveyors, etc);
- Financial education on products (via partnerships);
- Engagement with FSPs, building materials suppliers (largers), developers (Casa Real) to provide support/facilitation in designing and test to specific products and services targeting the BOP segment;
- Leveraging on existing local financing mechanisms (e.g., combination of savings, salaries, earnings from Xitiques, savings groups), and other innovative housing finance strategies;
- Discuss technical assistance and capacity building to Housing Finance providers;
- Research/discussions to leverage on Savings Groups, Xitique, M-Pesa, Kaya Clinic, and Casa Minha.