A few months ago I gave a presentation on housing microfinance to a delegation from various microfinance institutions that was organized by Stromme Microfinance East Africa. I borrowed elements from Franck Daphnis’ work and added a few of my own interpretations. The following day, we attended the Housing Microfinance Working Group Tanzania’s workshop and Jamie Ritchie from Rooftops Canada gave a presentation titled An Introduction to Housing Microfinance. He had a slightly different definition and interpretation of housing microfinance. How we define, interpret and envision housing microfinance plays a key role in how we implement it in practice.
Housing Microfinance applies the principles of microfinance to housing, addressing a bottleneck in the housing value chain for many low income households. In Housing Microfinance: A Guide to Practice (Daphnis and Ferguson, 2004), Franck Daphnis described Housing Microfinance “...as a discrete practice that intersects housing finance and microfinance” (p.3). I have seen this represented in a graphic as part of several Housing Microfinance Presentations by Franck Daphnis.
Whereas Daphnis places an emphasis on housing microfinance’s position in the field of housing finance, Jamie Ritchie's Presentation at the HMFWGTZ Workshop focused on housing microfinance as a combination of microfinance and prudent, pro-poor real estate development. Jamie places a strong emphasis on housing support services and community development in his definition and resulting model of housing microfinance.
The graphic I have used for trainings in the MAKAZI BORA program simply states that housing microfinance is the intersection of housing and microfinance. (It almost seems too simplistic!) My use of housing refers to the "housing as a verb" concept (see John F. C. Turner's Freedom to Build) and the housing process in practical use by low income households.
The differences between my definition and those of Franck Daphnis and Jamie Ritchie are primarily ones of emphasis. On the housing finance side, I would tend to emphasize how housing microfinance fits into the strategies that low income households use to self-finance their housing activities more than any similarities to traditional housing finance in the form of mortgage lending. On the housing side, I approach housing from the support paradigm and emphasize how housing microfinance integrates with informal and incremental building practices that are common to low income households, regardless of whether or not they conform to what may be considered prudent real estate development at the time.
These three slightly different explanations of housing microfinance are not mutually exclusive and I am confident that a simple definition such as the application of microfinance principles to housing would be broadly accepted by most of the housing microfinance community with whatever additions one might add on to it. How we describe this thing called housing microfinance is a reflection of our backgrounds and assumptions. Put all of the descriptions together and we start to get a picture of the current practice of housing microfinance. Each definition at its core, however, may imply a slightly different model of housing microfinance in practice. I will be discussing this more in the coming weeks and months.