• State of housing finance in sub-Saharan Africa (Monday)
• Getting housing on the ground (Tuesday)
• Scale lending (Wednesday)
• Identifying opportunities; and hot topics (Thursday)

Site visits and practitioners' meetings took place on the Friday.

For the full workshop report, click here.

Access to housing and access to housing finance by low income earners is a critical development issue facing most countries around the globe. UN Habitat notes the predominance of "two extreme outcomes of current shelter systems that are being witnessed today: affordable shelter that is inadequate, and adequate shelter that is unaffordable." That report goes on to state that within the next 20 years it is unlikely that conventional sources of finance will be available in many developing countries for investment on the scale needed to meet projected demand for infrastructure and housing. With deficits in public budgets and the persistence of weak financial sectors, the situation seems untenable. In sub-Saharan Africa, this reality is especially dramatic.

The problem is quite simple: throughout sub-Saharan Africa, income levels are such that the majority of households cannot afford to buy the least expensive house, even if mortgage finance were available. Research commissioned recently by the FinMark Trust in four countries has found that at best, 17% of the population in Zambia, Botswana, Namibia and Kenya might be eligible for mortgage finance - but even here, the cost of housing has meant that such solutions are still unrealistic.

It is within this environment that housing micro lenders have emerged as an important source of housing finance for low income earners whose access to more traditional forms of credit is constrained both by their affordability, and the housing circumstances in which they live. Growing either from NGO movements supporting housing delivery for the poor, or micro enterprise lenders seeking to diversify their product range - or any other number of institutional models - "housing micro finance has emerged over the past decade as a crucial component in facilitating housing in slums and for low income groups." (SINA Newsletter, Special Edition, February 2007)

However, large scale capital - institutional investors, commercial banks, and so on - struggles with the concept, as do some governments. Housing micro finance is perceived as being insignificant. The loans are small and the low-income target market is perceived as being inherently risky, demanding more intensive origination and servicing methodologies that are expensive. The housing process that such loans support is seen as overly lengthy and unable to reach the kinds of scale that the housing demand would suggest is necessary. And, its incremental nature is seen to undermine the long term quality objectives that the housing process is expected to realise. This is not the simple, over-the-counter loan approval that commercial lenders and other financial sector players are used to.

What has emerged throughout Africa, therefore, is a dual housing finance sector. On the one hand, there is a small, but energetic cadre of grassroots NGOs and lenders seeking to deliver housing finance solutions for their very low income and disadvantaged target markets. These lenders are still in their relative infancy, many with less than a decade of experience, and they struggle with key issues of technical capacity and the necessary capital to lend to the scale of demand they see. On the other hand, commercial lenders, international capital and others in the established financial sector are seeking to deliver mortgage finance in the emerging African markets. Their work is groundbreaking - in the process of delivering loans they are revising institutional and regulatory structures and stimulating housing production. And yet, this energy notwithstanding, the numbers are not as dramatic as might be expected: in the few countries in which mortgages are offered (and with the exception of South Africa), it appears that less than 1000 loans are delivered nationally, per annum. This is no where near the scale required to address the housing shortage in sub-Saharan Africa.

A key point of exploration and development, therefore, must be the alignment of these two housing finance sectors. While housing micro lenders offer products that are relevant to the vast majority of sub-Saharan Africa's populations, commercial lenders and big finance have the capital they lack. Is there an opportunity for collaboration, and what might this involve? How might financial arrangements be structured? To receive such capital, housing micro lenders would also need to aggressively build their technical and operational capacity -are there players in the sector who might provide such support, offering a bridge between the two housing finance sectors? And if the various parties were to engage in such a way, what are their respective expectations? These are the key questions that this practitioner's workshop will address.