CLIFF: Financing Third Sector Housing and Infrastructure delivery

8/3/2019 CLIFF: Financing Third Sector Housing and Infrastructure delivery

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Financing 3rd Sector Housing and

Infrastructure Delivery

Presented by:

Larry English

Chief Executive, Homeless international


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Limitations of Local Government and Private Sector:

Scale of Slums/ Limited Reach: 50% of cities comprise slum dwellers.Local Government cannot reach / plan for these communities

Poor relationship/ trust between Government and slum communities

Capacity frequently interrupted by change in leadership and politically

driven imperatives limited succession

Short-termism (Govt. and Private Sector)

Need for New Instutional arrangements/ New Institutions

Addressing the Slum deficit will take time (decades)

Institutions need to understand complexity, maintain a long term focus,build capacity/capability over time through planned succession

3rd Sector is key to addressing the institutional chasm

Why CLIFF*?

* CLIFF = Community/Civic-led Infrastructure Finance Facility


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Third Sector* Focus

Benefits of 3rd Sector Institutions

Independent

Maintain Focus (capable of buildingcapacity over time)

Enterprising Creating Value/Surplus

Non-Profit, Reinvest surpluses

Capable of taking risk (no Shareholders)

Capture subsidy in corporate ownership

Have the ability to create housing as publicgood (infrastructure) rather than private(rental)

Ability to borrow

ThirdSector

PrivateSector

Govt.Sector

Social Enterprises/Cooperatives/CDCs/ HousingAssociations etc.


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CLIFF Strategy

Challenge = Bridging 4 Gaps:

Institutional Gap:in urban institutional arrangements/ socialenterprises to provide tertiary provision

Solutions Gap:Develop appropriate/ affordable housing andbasic service solutions

Finance Gap: Build bankability and credit-worthiness to accesscheaper finance, and increase affordability

Delivery Gap:Scale up delivery/ Build project pipelines/economies of scale/ increase affordability

Method: Simultaneous focus on the deliverable and the delivery institution

Start with the end in mind (Scale, Sustainability, Capacity)


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Engage Market

STAGES ofDEVELOPMENT

Formation/ Mobilization

Engage Govt

1

2

3

4

5

CAPACITY SUPPORT SERVICES +INVESTMENT

Political

Social

Managerial

Technological

Financial

Demonstration

Self-Reliant

PROJECTS

CommunityBasedOrganisation(Dependent)

SocialEnterprise(Independent)

Projects Scale up CapacityScales up Projects

DEVELOPMENT FRAMEWORK

1,000s

10,000s

100,000s

1000,000s

10,000,000+

$ INVESTCLIFF

Development + Delivery

10,000

s

100,000s

1000,000s

10,000,000+

INVESTMNT($)

Graduation Facility

Capital Grants, Soft Loans CLIFF, OrgDevelopment/ Fund Mgmt. + HMF TA

Equity, Debt, Guarantees, Fund +Portfolio Dev. Twinning, C/Rating

CLIFF, Guarantees, Refinancing

Project/Pipeline TA Fund Mgmt.

Project Grants, Org Development TA,Savings + Credit Systems TA

Small Grants


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STAGE 1Community Mobilization& Organisation

Identify legitimate andcredible leadership

Establish CBO to facilitate

the delivery of housing andinfrastructure


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STAGE 2Demonstration(Precedent setting/

bridge building)

Developmentinnovative/affordable/

replicable housing/infrastructure models usingcommunity resources


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STAGE 3GovernmentEngagement

Government engages 3rdSector as partner.Facilitates:

Land Provision Subsidies/Matching Funds

Regularization of Tenure

Technical Support

Guarantees

Projects Scaled up

Seat at the table


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STAGE 4Market Engagement

NPO/ Social EnterpriseFormed

Leverage Land Market

Increase Scale/Affordability

Cross-subsidy (Mixed use)Development Projects

Cross-subsidy Real EstatePortfolio

Drive pro poor change

through practice/ seat attable


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Oshiwara Project, Mumbai: 5300 Households

STAGE 5Self-Reliance

Track record established

X-subsidise/ Local Subsidy

Leverage Assets (Portfolio)

Access to Private Finance Independent, Self Sustaining


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Local Banks& FinancialInstitutions

Homeless

International

$ 14.5 million

CLIFF

Leverage

CAPITALISATION

Land/Sale Rights Sale Housing/ Sale Rentals/ Service

Revenues Loan Revenues

LandProjects

Sanitationprojects

Incrementalhousingprojects

Completehousingprojects

Partners/Enterprises

HI /USAIDGuarantees

$ 83 million(Projectedproject value)

LEVERAGE

Funders

Repayments

Loans

GrantsSurplus $ 39

million (Projected)

RightsSales

Savings

LoanRevenues

Land Sales

LandDonation

ContractPayments

UserRevenues

Subsidies

Sales

LandDonation

Savings

Subsidies

Savings

LoanRevenues


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Looking Forward

Seed Funding:

$ 35 million (DFID/SIDA/HI/UKHA):

New Funding (UK Housing/ Venture MF )

New Funding Mechanisms Loans and Guarantees

Refinancing Facility (Africa)New Partners:

Portfolio 10 CLIFF Partners (Africa/Asia)

Graduate 7 to Self-Reliance

Projected Outputs:

35 000 Housing Units

Toilet: 1,2 million Users

Leverage: Est. $100 million


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Questions


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H.I.

FINANCE/CLIFF

CLIFF PARTNER

FUND MANAGEMENTCapital

Finance

Project

Developer

Home Loan

Loan Released

Loans

and

Interest

Repaid

EndUserPurchase

Unit

Loans

Repaid

Loans to

selected

beneficiaries

Project/

Bridging

Finance

(Stages)

End-user

Finance

Sanitation

Loan

PROJECT

PACKAGING

COMMUNITY

DEV/PREP

COMMUNITY

IDENTIFICATION

PIPELINE

Units Completed/ sold

to end user finance

Division

Loan Repaid

with interest

ProjectPrepared

Coordination

VMF INVESTORS/

TAKE OUT FIN

NOT FUNDED BY

CLIFF

CAPITAL FINANCING TAKE OUT FINANCING

CLIFF Financing (detail)

Funding Flows

Project Prep

FinanceCommunity

Mobilisation

LOCAL

ORG

Documents

CLIFF: Financing Third Sector Housing and Infrastructure delivery