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HOUSING FOR ALL INITIATIVE

Housing for All

Ashoka

Hybrid Value Chains


! Goals, Assets and Barriers for Businesses and Citizen Sector Organizations

! Benefits of a Hybrid Value Chain! The Market for Housing for All! Hybrid Value Chain Actors and their Roles! National Overview! Home Improvements in Brazil, Colombia and Egypt! New Homes in India! National Scale and Beyond ! Achieving Global Scale! Contact Us

Contents


“Currently, one-sixth of the world's population — one billion people — live in urban slums in emerging countries. In addition, virtually all net growth of 2.6 billion in world population between now and 2050 is projected to occur in these cities. In effect, relatively poor nations will need to build the equivalent of a city of more than one million people each week for the next 45 years.

New market-based approaches to affordable housing are essential to reach the massive scale commensurate with this enormous demand. Modern corporations in the home-supply/building materials sector can create great value for households and capture a large share of these markets through forging “hybrid affordable housing value chains.” Successful affordable housing products package key inputs (e.g. technical assistance in design and construction, housing microcredit, quality building materials, financial planning etc.) to make the process shorter, less expensive, and more efficient. Typically however, corporations have little access to, understanding of, and trust of poor communities. Hence, corporations usually work best in these environments through partnering with local citizen-sector organizations.”

— Dr. Bruce W. Ferguson, former Senior Housing and Urban Economist of the World Bank; Advisory Board of Global Urban Development Magazine, author of three books and 40 articles on housing and urban development in emerging countries and the US.


! Inadequate product offering ! Lack of affordable and integrated

solutions! Limited access to financing ! Lack of access to complementary

goods at scale (land, infrastructure)! Inefficient and costly delivery of

goods and services

Barriers

BusinessCitizen SectorOrganizations

! Access to markets! Greater profitability

! Improved products/services to communities

! Increased income streams

! Vital goods and services ! Ability to operate at scale! Investment Capacity ! Operational Capacity! Infrastructure and Logistics

! Deep knowledge of communities and consumers

! Ability to aggregate demand! Social Networks! Behavior change capacity

Assets

Goals Goals

Assets



! Enables collaborative entrepreneurship at a country and global level

! Identifies and engages partners providing complementary competencies

! Demonstrates how to deliver integrated solutions at scale

! Spread knowledge, learning and specific know-how emerging from HVC applications

Ashoka Hybrid Value Chain

! Access to markets! Greater profitability


! Increased income streams

! Vital goods and services ! Ability to operate at scale! Investment Capacity ! Operational Capacity! Infrastructure and Logistics

! Deep knowledge of communities and consumers

! Ability to aggregate demand! Social Networks! Behavior change capacity

Assets

Goals Goals

Assets



! Access to quality of life enhancing products and services at scale

! Increased livelihood opportunities at the community level

! Scaling up enabled through partnerships between companies and CSOs, local and national governments

! Market-based competition delivers quality services at lowest cost to empowered consumers

! Access to markets! Greater profitability! Goodwill in the community! Innovation blowback! First-mover advantages

Benefits


! Increased and more diverse revenue streams, greater sustainability

! Goodwill in the community

BenefitsBenefits


More Than aRoof Overhead

Health Implications! Basic health considerations! Safety! Sanitation! Clean water! Secondary impacts on education

and productivity

Livelihood Implications! A place of work! A productive asset that can be

leveraged! An appreciating asset

Social Implications! A social symbol and source of

dignity ! Point of connection to community

and social fabric

A home is more than shelter.Access to housing and better living conditions can transform the lives of individuals, families and communities.


The Market forHousing for All

! The Need! About 1.1 billion people are living in inadequate housing conditions in urban areas alone (United Nations Centre for

Human Settlements)! An estimated 21 million new housing units are required each year, in developing countries, to accommodate growth

in the number of households between 2000 and 2010. ! 14 million additional units would be required each year for the next 20 years if the current housing deficit is to be

replaced by 2020 (UNHCS)

! Market size ! Total low income housing market is estimated at $331.8 billion, where low income populations are classified as those

with incomes below $3000 in local purchasing power. (World Resources Institute)! Additional untapped US$ 9.3 trillion in estimated “dead capital” in informal housing, which could be leveraged


! Key Market Constraints and Opportunities! Lack of financing options.

! Mortgage Financing as a share of Gross Domestic Product- Brazil — 2 % - India- 4 %- Colombia — 7 %- As opposed to 79.6% in the United States and 54% in Germany

! Custom creation of technical solutions! Lack of collaborative efforts and hence, integrated and scalable solutions.

The Market forHousing for All


BusinessCitizen SectorOrganizationsHousing for All

! Microloan products! Mortgage products

Finance

! Architects! Builders! Real Estate Developers

Builders and Technical Assistance

! Construction materials! Tools

Housing Related Products

! Access to water/electricity! Link to municipality

Access Enablers

! Permits, documentation! Screening! Finance and loan products! Financial literacy

Complementary Services

! Aggregating pools of consumers! Mobilizing sales forces ! Aggregating small producers of

housing related products

Aggregators

Hybrid Value Chain Actors and their Roles


Overview! Goal: Demonstrate the power of

business/social alliances to address the housing needs of low- income people through sustainable business models scalable to diverse housing country environments! Engagement of key partners in the

development of Hybrid Value Chain applications

! Pilot Applications of housing HVCs! Capturing and sharing key learnings of

country programs ! Refining and scaling HVC business

models ! Houses improved and new homes built! Lives impacted

Housing for All

Multi- Country, Multi- Dimensional Housing For All


Overview! Goal: Demonstrate the power of

business/social alliances to address the housing needs of low- income people through sustainable business models scalable to diverse housing country environments

Home Improvements! Brazil! Colombia! Egypt

New Homes! India

Housing for All

Multi- Country, Multi- Dimensional Housing For All


Brazil! Low Income Market size: US$

10 Billion! Deficit of 7.2 Million Units! 10.5 M homes needing

upgrades to meet minimum quality standards

Colombia! Deficit of 1.3 Million

new units ! 2.5 M homes needing

home improvements

Egypt! Deficit of 3.7 Million Units

of low income homes! Estimated 20 M people

leaving in homes needing upgrades

India! Low Income Market size:

US $62.1 Billion! Deficit of 24.7 Million Units

NationalOverview


HomeImprovements —

Brazil

Highlights! Reforma Mais launched on February ‘10 with participation of 3 partners — Banco de Nordeste, ABCP and Cearah Periferia! Banco do Nordeste — CrediAmigo committed to include Housing Microcredit as part of its products offering to its clients! ABCP committed to develop tools and standard guides related to technical assistance for home improvements! Cearah Periferia committed to develop a social business. Reforma mais will become 50% of their business going forward! IFCE committed to provide TA services during Phase 1 and to develop a training program for construction technician to serve the low-

income market.! Ministerio das Cidades — Financial commitment for Phase 1 of $R268,000 (U$S150,000) to the cost of technical assistance! 24 businesses/social organizations committed to invest time over a six month period to develop the concept of the Clube da Reforma! Total Investment by Partners: US$ 1,635,000

Business Citizen Sector Organizations

State owned

http://www.abcp.org.br/home.shtml


Highlights! Phase I, Since 2007—2009! Over US$ 11.7 million in sales with 28,000 housing solutions delivered profitably (ex. floors, kitchens and bathrooms) ! More than 179 women earned average of US$230 month as sales promoters in 8 Colombian cities.! CSO’s generated new sources of revenues and more than US$70,000 in funding for community projects.

! Phase II, 2009 to present! Completed Feasibility study on the creation of new home improvement financial entity (HIFE) with capacity to deliver at scale —

over US$100mm — integrated financial and technical assistance solutions! Development of HIFE business plan in partnership with Affordable Housing Institute, with co-financing of Hilti Foundation and 3

local companies.! Ashoka leading creation of a national network of CSOs and a scalable system for delivering standardized home improvement

solutions

Business Citizen Sector OrganizationsHomeImprovements —

Colombia


Highlights! Business plan completed in January 2010 for a national program delivering sustainable home improvement financing and

technical assistance! Program to be launched in June ’10 and to be implemented by 4 Ashoka, including two microfinance institutions who will

finance themselves the credit component! HFA Centers will consolidate to form a Cooperative in 5 years and will focus on advocacy to scale up the program beyond

the 4 regions! Micro credit operations will breakeven in 30 months and continue to grow HFA centres! In five years, HFA will have improved and/or constructed 18,355 housing units and provided 44,600 working construction

days

Business Citizen Sector OrganizationsHomeImprovements —

Egypt

Pre- pilot phaseCorporate partnerships in development


! In most developing countries, self-financed progressive housing represent 50% or more existing housing market.

! Tremendous opportunity cost of not participating negates impact in terms of higher #’s of families to be benefited as well as less disruption for them in terms of social networks and proximity to jobs

! Untapped existing low income asset base of over US$ 9.3 trillion- this "dead capital" is not leveraged or active in the market

! Significant impact and return for relatively small investments per household in the short and medium terms

Opportunities

Challenges! Infrastructural impact is limited! Achieving scale requires system innovations at

multiple levels! Striving towards quality and standardized solutions! Achieving scale through standardizing Technical

Assistance and upgrade kits

Home Improvements: Key Innovations and Successes! Community based distribution model, resulting in consumers and sales force from the

same community. Access to products and livelihood improving opportunities! Creation of a consortium of diverse players who are committed to participate in HVC! Greater competition, greater value

Global Overview of Housing for All: Home Improvements


Highlights! Pioneering a new way of working between mortgage financers, developers, CSOs and the community (informal sector)! Business plan completed and advisory committee being set up! First project launched and fully sold within a week of launch! 12 deals in pipeline — across 5 cities in India! 2200 new homes to be launched by August 31, 2010! Online resource base for Housing sector stakeholders to be launched by June 2010

Business Citizen Sector OrganizationsNew Homes —India


Opportunities

Challenges! Context specific factors, particularly available land

near sources of income! Competition with government subsidized programs! Smaller market share compared to Home

Improvements, particularly in terms of numbers of families whose lives can be improved in 10 to 20 years

New Homes: Key Innovations and Successes! 12 deals with developers and mortgage finance companies in the works! Online Web Application as avenue to scale HVC efforts and connect both sectors! Preserving social structures through common service areas — new type of affordable

community

! Ownership, access to title rights! Infrastructure improving solutions! Scale-up can be managed through a deployment of

new units by real estate developers

Global Overview of Housing for All: New Homes


Knowledge and Spread Creating an Open Network! Enable a core set of services to

companies and CSOs so that HVC models can self-multiply

! Introduce web-based and social marketing tools to accelerate HVC mindshift and change negative perceptions

! Mobilize competitive and sustainable home financing at a global level

Collaborative Entrepreneurship! Develop clear incentives for

competition to trigger collaboration within each country program and beyond

! Refine model to focus on leveraged points of intervention with the highest potential to accelerate sector transformation (ex. policies, financing at increasingly larger scale)

! Think and act system change

At a Turning Point —HVC’s Next Endeavors

! Synthesize key insights about housing business models, barriers to growth and scale

! Communicate learning and best practices

! Engage thought leaders, practitioners and stakeholders as part of the solution


Brazil! Establish Reforma Mais

as a profitable model to deliver HI credit + TA

! Explore Clube daReforma as a national alliance of 30+ companies and CSOs

Colombia! Launch HIFE, a new

entity to be owned by a consortium of companies, financial institutions and CSO players

! Enabling a sustainable and scalable system capable of delivering hundreds of thousands of integrated services: TA + building materials + financing

Egypt! Establish Housing for All Centers

as profitable models to deliver HI credit + TA

! Explore partnerships with formal financial institutions and large private companies

India! Establish HVC

application where new housing solutions to informal sector families are produced by Real Estate developers and mortgage institutions in partnership with CSOs

! Explore tools to enable the spread of the model beyond the initial 12 pilots

NationalScale


Enable a global competitive housing market of product and service providers serving over 500,000 to a million of low-income families annually around the world

BeyondNational

Scale

Opportunities Competencies! Facilitate private sector investment to expand housing

related financial services and products to informal sector families

! Understanding what works and what does not work from the informal client credit perspective

! Ability to translate the social and impact opportunity into a commercial investment

! Engage engineering and design schools! Ability to capture grassroots innovations and transform

into scalable concepts ! Experience in unleashing dead capital in informal housing

! Demonstrated experience with policy change in multiple settings

! Access to organized local groups and/or the ability to mobilize trust-based relationships at the community levels

! Understanding of motivations and pressures of diverse stakeholders

! Catalyze significant private sector investment in companies and financial institutions committed to delivering housing solutions in low income markets

! Close the gap between formal sector and grassroots based product design, technical assistance and construction services

! Enable system change solutions to secure land tenure and free-up dead capital in informal housing

! Engage governments — particularly at the local level — as part of the solution and as an ally of organized local communities


Key HVC Innovations! Integrated, localized solutions! Large commercial applications in

low income markets! Congruence of wealth creation

and social value creation

Achieving Global Scale through an Open Network! Catalyze entrepreneurship by

building a global community of peers with the capacity to self-multiply HVC housing applications

! Foster a set of partnerships with key players internationally, combining North-South and South-South alliances

! Incentivize collaborations focused on the development of standardized and scalable solutions for both home improvement and new homes

AchievingGlobalScale


Marketsfor Good

Foster greater market growth Foster greater economic citizenship


! Valeria BudinichVice-President, AshokaFull Economic Citizenship [email protected]

! Shivani ManaktalaSenior Advisor, AshokaFull Economic Citizenship [email protected]

! Iman Bibars, PhDVice President, AshokaRegional Director, Ashoka Arab [email protected]

Contact Us! Jacques Rajotte

Senior Legal Consultant, AshokaHousing For All, Brazil [email protected]

! Maria Lucia Roa Ashoka Country Director, AshokaHousing for All, Colombia [email protected]

! Vishnu SwaminathanDirector, AshokaHousing for All, India [email protected]

mailto:[email protected]







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