Housing Microfinance and the 6 S's: Services and Space Plan

In How Buildings Learn: What happens after they're built, Stewart Brand states that “The flow of money through a building acts to organize the building.” [1]  In Sub-Saharan Africa, low income households face challenges with this flow of money due to lack of access to the type of mortgage finance that is the norm for middle and upper class households in other parts of the world. Money for home construction tends to be accessed in relatively small quantities compared to the task at hand, often over a period that can be measured in years. The result is a home that is built incrementally. Incremental construction becomes an exercise in prioritizing the flow of money across what Brand calls the Six S’s: Site, Structure, Skin, Services, Space Plan and Stuff. Services and Space Plan naturally fall after site and structure as priorities, but often surprisingly fall after skin as well.

Services typically include water, electricity or gas connections to a building. Because of climate considerations and the relative cost of various building materials, the most common construction material in Africa is some kind of brick or block. [2] This means that the services must be added through and on top of a block wall. Cladding over the block is extremely uncommon in low income households, with a plaster and paint being the most common interior skin, if there is one at all. Conduits are frequently placed into channels carved into the wall and covered with plaster with the exception of the socket outlets. There is not, however, a significant taboo against having visible conduits in low income households. It is not uncommon to add them directly over the skin instead of the skin being added after the services to hide them.

Housing Microfinance loans for services can link to water and sanitation efforts in upgrading informal settlements. Clients may use a housing microfinance loan to connect to potable water, sewage or a septic tank. The housing microfinance program in which I currently work is in an urban setting and electricity connections are a popular loan use. Loans for electricity connections tend to be taken by households that have reached some level of satisfaction with the structure and skin of their home. These loans are sometimes associated with home-based businesses that may use a refrigerator, freezer, electric sewing machine or other gadget. It is interesting that the “stuff” that uses the electricity is often acquired before the service is connected to the house, having been used in rented accommodation, kept in another person’s house, or used with car batteries that are periodically sent out for charging.

The Space Plan includes non-load bearing walls, ceilings and doors and windows. Because it is very common for low income households in Africa to move into a house before it has all (or sometimes even any) of its doors and windows, these become a common use for housing microfinance loans. In our MAKAZI BORA home improvement loan program in Dar es Salaam, Tanzania, doors and windows may be the most common house component sought, sometimes on their own but often as part of applications for roofing, or other improvements. Some loans have been used for improving existing windows with screens (to keep out mosquitoes) or bars (to keep out other unwanted visitors). Clients with very low incomes have purchased and installed second-hand windows and doors to shut their houses, while clients with slightly higher incomes have used the opportunity of a housing microfinance loan to purchase doors and windows of higher quality and durability.

Ceilings have also been a popular loan use. Like electricity connections, these tend to be for clients who have basically satisfied the rest of their housing priorities as they have worked through their incremental building process. Loans for ceilings are sometimes for relatively wealthier clients, but sometimes simply for clients who are further along in their process as they continue to build and organize their houses according to their own image of what their home should be.

Housing microfinance can be made flexible enough to assist people at all stages of their housing process as they acquire, add, or modify site, structure, skin, services and space. Access to housing finance increases the velocity at which a low income household is able to develop and organize its home. The more flexible a housing microfinance product is, the more utilitarian value it will have for dwellers in their housing process and the greater the potential demand for the product. Although this is a hypothesis to be explored more in-depth at another time, the very awareness of the ability to access affordable housing finance may assist a household in organizing and planning its journey through the 6 S’s.

[1] Brand, S. (1995). How Buildings Learn: What happens after they’re built. New York: Penguin. p. 85.

[2] This is not inclusive of traditional construction methods in rural areas that may use mud walls or a waddle and daub construction, which may still be statistically the most common construction forms in Sub-Saharan Africa.

Housing Microfinance and the 6 S's: Skin

When describing a sort of hierarchy of the 6 S’s, Stewart Brand wrote that “Site dominates the Structure, which dominates the Skin, which dominates the Services, which dominate the Space plan, which dominates the Stuff.” [1] Skin is the layer of the building that meets the eye and covers the structure. Brand calls skin mutable. In How Buildings Learn, he demonstrates its mutability with examples of how buildings’ facades change over time. In Sub-Saharan Africa, it is common for houses to be built and occupied with very little in the way of skin, which is then progressively added. This makes the addition or modification of skin a very popular loan use for housing microfinance in Africa.

Traditional houses in Africa usually have skin. When the structure is poles, builders weave bamboo, reeds or sticks through them and apply a mud or clay skin. Plaster of one type or another is the most common skin in Africa, both on traditional and "modern" houses. It is indeed dominated by the structure, because the plaster (skin) must be of compatible material to bind to the structure. In some of my previous work in the Democratic Republic of Congo and Ghana we built low cost houses using mud bricks as structure in communities where this seemed to be the most feasible option. The structure was then plastered with a mixture of cement and the same type of soil that made the bricks. Taking initiative in their self-help, clients would sometimes increase the cement component of the plaster ratio in the belief that it would make the skin stronger. The actual result was a plaster that could no longer bind to the structure and would soon start falling off. As the skin fell, so did repayments. Despite the fact that the clients’ actions directly caused the problem, the house design, selection of materials and technology and the overall process were ours and Turner's Third Law still seemed to apply.

In other communities where the soil was too sandy for mud bricks or where burnt bricks were an option, we built burnt brick or cement block structures. In an effort to reduce construction costs and keep clients’ income directed towards their loan repayments, we had a policy that houses could not be plastered until their loans were paid off. Complaints were seemingly endless when we (the providers) considered skin to be a luxury that a resilient structure made unnecessary. This was a constant source of conflict and we were ignoring a demand for skin as a loan product and as a key part of people’s housing wants and needs. Necessity and importance are not always the same thing when housing is viewed as a personal process as opposed to a shelter or commodity.

Skin is often a secondary or tertiary priority for households in Sub-Saharan Africa, after site and structure. It is extremely common for dwellers to move into a building before there is any skin except the roof covering. This is incremental building in action: An informal finance strategy that prioritizes available funds against housing as a livelihood component. Once the house is occupied, however, housing microfinance frequently assists dwellers to continue their housing process by adding interior and exterior skin. Plaster, paint, tiles, skirting, rough exterior finishing and embellishment on verandas are very common housing microfinance loan uses with demand even from very low income households. Skin brings a sense of pride to the dweller and adds a personal touch to their home that gives housing a deeper meaning than basic shelter. There is tremendous value in this as well as demand. Skin as a loan use is undoubtedly one key to housing microfinance reaching the scale needed to be sustainable and profitable.

My approach to skin has changed drastically over the years from the days when I was trying to enforce “no plastering” policies. Should we allow a household to use a housing microfinance loan to paint their house pink when there is some other item of apparent necessity still incomplete? Why not? They are probably more aware than we as to what is complete and incomplete on their own house. They probably have a reason why they want to paint it and we, as outsiders to their home, have little idea what painting their house pink means to them. Effective demand and a supportive, personalized housing process ultimately go hand in hand.

[1] Brand, S. (1994). How Buildings Learn: What happens after they’re built. New York: Penguin, p. 17.

The 6 S's and Housing Process

I previously wrote about a housing concept from Stewart Brand’s How Buildings Learn: What happens after they are built. (See Incremental Building and Housing Microfinance Part III, posted on 13th September 2009) Brand built upon  work by Frank Duffy and identified “The 6 S’s” of a building: Site, Structure, Skin, Services, Space and Stuff.[1] How the Six S’s are integrated into a building varies, depending on whether the building was constructed through a formal or informal housing process and the degree of access to housing finance. As Brand states, “The flow of money through a building acts to organize that building.”[2]

Let me start with a brief look at the 6 S’s:

• Site: This is the location of a building. In the western setting, it is almost certain to be legally and specifically defined. In other parts of the world, there may be no legal title. Many countries have yet to conduct cadastral surveys for the vast majority of land, making formal title nearly impossible and resulting in  alternative forms of land tenure. Site has a tremendous impact on the building process in terms of the eventual form of structure and  the availability of housing finance options.
• Structure: Brand writes that “The foundation and load-bearing elements are perilous and expensive to change – so people don’t. These are the building.” [3] The structure of a building is  defined by its foundation plan and, as Brand notes,  is not likely to be significantly altered. Structure can be added incrementally through additions and extensions, using either formal and informal housing processes.
• Skin: The skin of a building is what meets the eye. It has a functional purpose of protecting the structure and providing insulation, security and safety, but it also frequently has aesthetic purposes. It is not uncommon for waddle and daub traditional houses in Africa to have an extra layer clay added to the outside to protect the structure. This is sometimes painted in designs with different color clays. “Keeping up with the Jones’” knows no socio-economic boundaries and often involves improvements or changes to the skin of a building.
• Services: Services include heating, electrical wiring, gas fittings, plumbing communication or other utilities and services in and around a building. Efforts are often made to hide the majority of services behind the skin of the building with the exception of access points like sockets, plumbing fixtures, etc.
• Space: The space plan includes the non-load bearing walls which delineate how space is used within the structure, as well as elements such as ceilings, doors and windows. Years ago I remember my father taking a sledge hammer and tearing out a wall between our dining room and kitchen to join the rooms and add a wood-burning stove. At the time, I didn’t think of it as a modification of the space plan and addition of a service, but that’s exactly what he was doing.
• Stuff: These are the things we put into the house and usually take with us when we move. Furniture, appliances and personal items all fall into this category. “Stuff” is clearly separate from what we usually consider as the building, but you will almost never see a building that is being utilized without it!

How Buildings Learn addresses the change and adaptation that takes place in a house or structure after it is built. Owners personalize and adapt buildings to their needs and wants over time. Brand uses the 6 S’s as a frame for identifying the types of transitions through which buildings pass. Brand looked at the change process primarily in the context of the formal housing sector. Although there are many similarities, there are also a number of differences when viewed through the lens of informal housing.

The 6 S’s in a formal housing process:

• Instant House: Whether built as new construction or bought as a pre-existing building, all of the 6 S’s (except “stuff”) are usually complete at the time of purchase. The incremental process of change begins after the owner has acquired a complete unit. At the time of sale, one owner’s ending point with a building becomes the next owners starting point, but it almost always starts as a complete unit in terms of the S’s.
• Built to Standards: The S’s themselves are built to standards, with inspection being a requirement. The formal housing process is highly regulated and the builders, sellers and just about everyone involved must be licensed and /or conform to standards. This is in an effort to guarantee quality and safety.
• Financed with Formal Housing Finance: The mortgage market is designed to facilitate the purchase of complete units with repayments over a long period of time. The structure, skin, services and space plan must meet quality standards and there must be legal tenure for the site, because mortgage financing is based on the presumed legal ability to resell the asset (the building) in case of default. Mortgage financing supports the acquisition of the 6’s in one complete unit, but it is also dependent on the ability to do so according to local quality standards and regulations.

The 6 S’s in an informal housing process:

• Incremental Construction: Most informal building processes are incremental. The time from the start of construction to when a building is complete with all of the 6 S’s can often be measured in years. Many buildings never have a complete set of the 6 S’s in their entire lifespan. In the incremental building process, structure is king. Buildings often sit on an untitled site and are occupied with incomplete skins, space, services and stuff. The S’s are added for the first time as the building is already in use by the owners.
• Questionable Standards: Even where regulations and standards exist, low income households often cannot afford to comply with them. This results in houses being built outside of standards. Builders are usually people who may have some knowledge of simple construction, but have not received formal training or licensing and are difficult to hold liable for the quality of work. There are few guarantees or avenues for recourse in the case of a poor quality construction.
• Financed Through Informal Sources: Houses built using informal process are  commonly built by people who do not qualify for loans from a bank. The site may not be legally viable as collateral and an informal building process undertaken by builders of indeterminate skill may appear risky to conservative bankers. As a result, owners build using whatever sources of finance they can access. This is often self-financing through savings, but could also include small loans from family, friends or places of employment. With the growth of the microfinance industry it is not uncommon for small business loans from MFIs to be diverted into housing. Whatever the source of funds, it tends to be piecemeal and the incremental building process becomes an exercise of prioritizing the 6 S’s and then adding and improving them gradually. The flow of money does indeed determine the building process.

Owners usually don’t choose whether they want to use a formal or informal housing process. The policy, regulatory and finance environments linked with predominant sources and levels of income essentially predetermine the process that will be used in practice and how the 6 S’s will be acquired. How Buildings Learn demonstrates that incremental building is more common than often imagined within the formal housing sector. Although housing microfinance is often thought of as a tool to support informal housing processes, its use in terms of the 6 S's it is not too different from home improvement loans delivered through formal lending institutions to support housing modifications complete with building permits, inspections and qualified builders. When housing microfinance is applied to informal housing processes, however, the effect is to speed up the initial acquisition of the 6 S’s and to allow the dweller to move towards and eventually own a complete building. As Brand showed, however, buildings continue to transform long after initial “completion.”

[1] Brand. S. (1994) How Buildings Learn: What happens after they're built. New York: Penguin
[2] Brand, p. 85
[3] Brand, p. 13

Incremental Building and Housing Microfinance Part III: The Product Fit

If it is agreed that the poor tend to build incrementally and that housing microfinance can flourish where this type of home construction is actively taking place, then successful housing microfinance products will be designed to interface with incremental building processes. Perhaps the most common housing microfinance product is some kind of home improvement loan. Although often thought of as being for repairs and renovations, home improvement loans can be applied to a variety of uses in the incremental process. I usually group home improvement loans into five loan use general categories, which are by no means exhaustive or definitive.

COMPLETION: I currently define completion as when a home improvement loan (or similar housing microfinance product) is applied to new house construction on a house that has not yet been occupied. The objective of completion is to bring a structure to the point that the dweller can occupy it, (or to work towards occupation if it cannot be achieved with a single loan). I generally consider “completion” of a structure as dweller-defined by occupation: A house is complete when the household decides to occupy it. This is unlikely to ever be accepted as an industry standard, but it comes with the caveat that a house can be complete (good enough for occupation by the dwellers’ standards and/or current needs) without being “finished.” The point at which dwellers decide to enter the home varies from household to household, depending on their individual circumstances and livelihood strategies. Some are quite willing, or find it necessary, to occupy a structure as soon as there is a roof for shelter. Others require more substantial work to be completed prior to occupation.

Completion loans bridge financing bottlenecks to make a house at least minimally habitable (according to the criteria of the dweller) and usually build upon previous in-kind savings in the form of the materials and structure of the walls. In Sub-Saharan Africa, completions commonly translate into roofing a structure and / or shutting the structure with doors and windows. Because the roof is an expensive and challenging investment for many households, loans for completion  help a household occupy their new home and continue work on it as they enjoy its shelter.

The foundations and walls of a new house would also fall under the category of completion. In the housing microfinance products which I have developed, however, we have favored working with structures that already have the foundations and walls built. This helps to ensure that the client is actively committed to his or housing process and has some stake and investment in the structure. By the time a client has constructed a house to wall plate level, he or she has much experience in the housing process and has more realistic expectations of what is ahead compared to someone who has yet to start building. I have, however, seen foundations as a housing microfinance loan or component thereof.

The house above appears to have had the wall raised in several stages and then been left for some time (tall weeds inside). It is typical of a loan used for roofing to work towards occupation.

Construction on this house appears more recent, but would also fall under the "completion" category.

The small house is ready for a completion loan (roofing, doors and windows), but the owner has plans to extend to the right in the future.

FINISHING: I consider finishing as new work undertaken on an occupied house. Housing is a process that is rarely ever truly “finished.” In How Buildings Learn: What happens after they’re built, (which is fascinated reading), Stewart Brand demonstrates that even buildings that have been “completed” and/or “finished” still often undergo significant change over the course of time. Building upon the work of Frank Duffy, Brand identifies “six S’s” that define a building and are subject to change: Site, Structure, Skin, Services, Space Plan and “Stuff.” [1] Brand’s concepts are broadly applicable and visible, even in the informal settlements and rural communities of Africa. Brand focuses on changes to a building that may have otherwise have been considered “finished” at one time, much of which would be considered extension or repair/renovation in my loan categories. Finishing as a housing microfinance loan use tends to add structure, skin and services for the first time as the dwellers occupy the house. This includes key house components such as floors, ceiling, doors and window, plaster, utility connections, etc. The finishing loan use category corresponds to an incremental building strategy of moving into a structure before it is completely finished.

The dweller-influenced loan use classification I have utilized is sometimes initially confusing to loan officers. What is classified as a completion for one household may be finishing for another, even though the actual work done is exactly the same. A common example of this is windows and doors. Some households are willing to occupy a structure before the windows (and sometimes even doors) are installed. They cover the window and door openings with some provisional solution, such as plastic, old sacks, mats, blocks, old iron sheets or just about any other  imaginable item. Other households, however, find this totally unacceptable and will not occupy a house that has temporary shutting (e.g. see picture above of roofed house lacking windows). The amount and value of household assets (stuff) at risk from theft, the likelihood that the house may be left unattended for periods of time and the security situation in the neighborhood may be some of the factors influencing thes decisions. In summary, the completion and finishing loan use categories tell whether the work was done on an unoccupied or occupied home.

Floors, plaster, ceilings, utility connections and even windows are often added to houses gradually after occupation. These activities are well suited for housing microfinance loans and can makes a significant improvement in living conditions for the household.

Windows are often details left to be finished after occupation. The houses above are examples of occupied structures with windows made of temporary materials.

EXTENSION: Extension involves adding new rooms to an existing house. Many houses are designed constructed for possible future extension. A growing family is often a cause for extension to a home. Sometimes, homes are also extended to earn income through a home-based business or rental units.

Extensions take many forms and are also often built incrementally. The houses above have begun extending incrementally, with partially completed walls in the areas being extended.

REPAIR / RENOVATION: Replacing old components of a home with newer components. Re-roofing is a common repair undertaken in older informal settlements. I also consider upgrades as being in the repair / renovation category, such as replacing older doors or windows with new ones.

Houses that could benefit from a loan for repairs. Built with sun-dried blocks, the structures are at risk due to the condition of the roofs.

AUXILIARY STRUCTURE: Adding additional structures on one’s plot. In areas where there is no sewage connection and no access to electricity, outdoor cooking, bathing and cooking are the norm. Bathing areas and even toilets are often open and sometimes only made of temporary materials such as plastic, mats or reeds. The construction of such outdoor structures can provide greater privacy and living conditions by improving sanitation on the property.

Examples of outdoor baths and latrines that could be replaced with a loan for an auxiliary structure on the client's  property.

Names for loan use categories are not necessarily important. What is most important is that a housing microfinance product is flexible and aligns with the local building realities for low income households. Flexibility allows multiple options to borrowers in their housing process. The housing microfinance program with which I am currently involved in Dar es Salaam is still very new, but the breakdown of loans by loan use category so far is approximately as follows:

Finishing:                             54%

Completion:                         22%

Repairs:                                11%

Auxiliary Structures:           9%

Extensions:                           4%

This is likely to change in the future as we gain more clients and enter into new areas. Older settlements are more likely to have finishing and repairs, while new settlements have more completions.

The loan use categories presented here are simply ways of tracking what the loan was used for and do not represent different loan products. In time, however, they may provide information that could identify a need to adjust product features for specific loan uses. Regardless, flexibility that fits into the local practice and keeps the dweller in control is likely to be a key in making a housing microfinance intervention successful in reaching large numbers of households in a sustainable manner.

[1] Brand. S. (1994) How Buildings Learn: What happens after they’re built. NY: Penguin. 13.

Increment Building and Housing Microfinance Part II: Provider Controlled Incrementalism

There are at least two very different approaches to incrementalism within housing and housing microfinance. The approach I advocated in my previous posting was to design housing microfinance products that support existing, dweller-controlled incremental building efforts. In this approach, clients are already building incrementally according to their own house designs and process. Another approach, however, is to provide clients with an incremental building design and process. I will call this “provider controlled incrementalism” and personally see it as a second-best option that has numerous drawbacks. This prescribed building in stages may, however, meet some specific housing needs and have a niche market in some areas. The challenge will be whether it can be sustainable.

In my 8th August posting on Housing Paradigms and Housing Microfinance, I mentioned that one difference between the Provider and Supporter Paradigms of housing, as described by Nabeel Hamdi in Housing Without Houses: participation, flexibility and enablement, is that providers tend to seek “instant housing” in the form of units that are completed to a given standard, while supporters tend to be more comfortable with incremental processes. The challenge for providers then becomes making “instant housing” affordable for low income households. Where heavy subsidization is not an option, providers may tend to appropriate the incremental building concept and develop incremental building designs. These building in stages designs are usually small units built to a given standard that can be extended at a later date using subsequent loans. Clients building under this method will use a provider’s design and fit into an incremental process as defined by the provider. Providers and supporters may use similar language and acknowledge that incremental building is common among the poor, but supporters are more likely to “go with the flow” of how households are already building while institutions leaning more towards the provider paradigm are likely to control (or attempt to control) a household’s incremental process from start to finish.

Client dissatisfaction over real or perceived problems with a house that is dictated through a forced incremental process can translate into portfolio performance challenges. Although a stated theory is that the desire to extend the house will result good repayment, provider controlled incrementalism can often result in dissatisfaction on the part of the client when the house is considered too small or the client perceives that it is taking too long to move on to the next stage of the design. When the provider controls a significant portion of the housing process, it runs counter to Turner’s Third law of housing which states that “deficiencies and imperfections in your housing are infinitely more tolerable if they are your responsibility than if they are somebody else’s”[1] (posting see Turner’s 3 Laws and Housing Microfinance, 25th July).

Stage one of a building in stages design that was deemed affordable, but was highly unpopular. It was discontinued by popular demand.

If the house in a provider controlled incremental building scheme is perceived as too small, it can also result in low demand. Strangely, (or not so strangely depending on your viewpoint), some households would rather spend their money on a larger house built to their design, even if it is made with inferior materials or is incomplete in comparison to a smaller but complete unit. Between the cost of delivery and control of provider controlled incremental building models and the potential for low demand from the target group, there are challenges to sustainable housing microfinance using this method.

Another type of provider controlled Incrementalism has clients start building at foundation level. After paying off a foundation loan, a subsequent loan might be taken for walls and later a roof, etc. Again, client dissatisfaction is not uncommon in such schemes, especially in the early stages if the client perceives that they are paying for a piece of a house that they are unable to occupy. The key here is perception. I have experienced clients with complaints about this method, when many households collect blocks and/or remain only at foundation level for even longer periods of time without complaint when they are in control of their own housing process. It all goes back to Turner’s 3rd Law, which I have come to accept as a reality in housing.

There may be cases in which a prescribed building in stages model is effective or perhaps even appropriate. It can be used in housing projects in which the provider is also providing land as part of the package. Tapping into existing incremental building requires that the households have already somehow acquired land on which they are building. Because land availability and land markets are often a serious impediment to low income households in urban and peri-urban areas, building in stages housing schemes that involve land as part of the process may be aimed serving clients without land access. Such an intervention is still likely to experience the challenges of provider controlled incrementalism, but this use aligns easily with projects that undertake green field development. An alternative option to the problem would be land access as a loan or savings product, which might be followed by support of dweller-controlled incremental building at a later time.

Another niche market for building in stages designs may be households that do not have the skills, desire or confidence to control their own housing process. In one program with which I have worked, there seemed to be anecdotal evidence that women headed households were more likely to show interest in building-in-stages type designs. There may be cases in which forced Incrementalism meets a housing need in sufficient scale to make it sustainable. I have yet to see this in Sub-Saharan Africa, but am willing to assume that it could be possible. If someone knows of provider controlled incremental housing processes in Africa that are currently reaching significant scale and are sustainable, please write in and let us know about it. Housing microfinance is still essentially in a pioneering stage in Sub-Saharan Africa, but at this point I personally believe that fitting housing microfinance into existing incremental building will be more effective and have more impact than using a controlled incremental process as a vehicle for housing microfinance.

HMF Hypothesis Four: Provider Controlled Incrementalism holds inherent challenges that will make it difficult to reach scale and sustainability as a housing microfinance option in Sub-Saharan Africa.

[1] Turner, J.F.C. (1976). Housing by People: Towards autonomy in building environments. NY: Marian Boyars. 6.

Incremental Building and Housing Microfinance Part I: Building on Informal Housing Finance

It is widely acknowledged that the poor all over the world build incrementally. In the absence of any realistic formal housing options, the majority of low income households  around the globe build their homes progressively. Whether starting with a small unit and extending or building a larger unit slowly over time, incremental building is in its essence a housing finance strategy used by low income households to manage their housing process. Houses are constructed as funds become available and the structure itself becomes a savings mechanism.

In many parts of Sub-Saharan Africa, the incremental building process begins by saving blocks or bricks (after having acquired a place to build). In areas where cement blocks are common, people often purchase or produce blocks over time and store them on the building site. Where burnt bricks are used, kilns are often built and fired on-site where possible or the bricks are transported to the site to await future construction. The time between the acquisition of blocks or bricks and construction can often be extended, but this in-kind savings mechanism protects cash from household emergencies and consumption by converting it into building materials.

Cement blocks, although seemingly an expensive option, have the advantage of being able to convert relatively small amounts of cash into materials, by purchasing a bag or two of cement, acquiring sand and paying someone to make the blocks. The process is then repeated as more funds are available. Where burnt bricks are used, they can be a little more cash intensive whether they are purchased or brick makers are hired to produce them on site. When purchasing and transporting, it is usually done by the truckload to take advantage of economies of scale. When made on site, it is an intensive activity to mould, dry, stack and fire the bricks before they are damaged by rains. Burnt bricks are less commonly used as in-kind savings on a small scale as compared with cement blocks. Sun dried bricks are also a common and inexpensive building material, but they are rarely used as savings in-kind for an extended period without being converted into a structure and roofed  to protect them from the rain. (Stabilized soil blocks also exist as an option that is highly popular with housing practitioners, but has yet to become commonplace in the informal incremental housing processes for most low income households.)

Once sufficient blocks or bricks are on site, the incremental building process often continues to act as a savings mechanism in the form of the structure. Foundations can be laid and left on site for an indefinite amount of time. Walls are also built and left unroofed as resources are gathered for the next step. In areas where the soil does not permit burnt or sun dried bricks, low income households often build with cement blocks. Although this is often viewed as an unfavourable practice due to the cost per block, it actually works very effectively as a savings mechanism in the form of both the materials and an unroofed structure that is resistant to weather.

My first housing assignment in Africa was in the Democratic Republic of Congo (at the time it was called Zaire). When I arrived in Kinshasa, I noticed a prevalence of unroofed houses in the outlying sections of the city. This is a common sight in urban, peri-urban and even some rural areas around Africa and it represents one of the major challenges for households with low incomes: Roofing.

The roof is the most expensive single component of a house and it also poses a  challenge using in-kind savings methods. Unlike blocks, roofing materials cannot be saved progressively on the construction site because of the near certainty of theft. For households in small living quarters, the length of typical roofing materials makes them difficult to save and store in the security of the home. When they can be saved, items such as the ubiquitous corrugated metal roofing sheet have a high resale value and can easily be converted back into cash. This makes roofing materials less safe than blocks in times of family crisis, as they can be liquidated on short notice. Roofing is, therefore, a major use for housing microfinance products, because it represents a significant finance bottleneck in the housing process for many families.

Building a complete house and then moving in to occupy it is rarely an option for households with low incomes. The incremental building process takes place using two primary. The dweller can build a small, but essentially complete, unit and extend it later. Alternatively, many households begin building a large house over time, occupy it as soon as they deem it habitable, and then continue working on it while they occupy it. Many families occupy their houses as soon as the roof is in place.

Plans to extend can  be seen in "teeth" with which a planned extension will be joined to the initial structure. Sometimes the structure is built on part of a larger foundation, while at other times the foundation is extended as well. The "extension method" appears to be common with small families, with extensions taking place as the family grows.

In what I might call the "finishing method" floors, plaster, ceilings, electricity and other house components are  added gradually as the family resides in the house. It is not uncommon for dwellers to occupy their houses before even fixing doors and windows. In such cases, temporary coverings are used or window openings are blocked closed, with the doors and windows being added over time as additional funds become available.

HMF Hypothesis Three: Housing Microfinance will be most effective where there is a high prevalence of incremental building taking place.

Housing microfinance fits perfectly with incremental building. It fills a real finance gap and adds value to the housing process of low income households. Small home improvement or home construction loans can easily be applied various incremental building activities, such as roofing, finishing units, extending and other tasks. For housing microfinance to be effective, it must be able to achieve a level of scale that allows it to be implemented sustainably. This can be done where there is a vibrant informal housing sector and people are already building incrementally. This seems almost self-evident, but in practice it is not always the case. I have seen and personally been involved in housing microfinance initiatives that did not follow the lead of local housing activity and could not achieve scale and sustainability as a result.

When conducting market research, indicators of an active informal housing sector that may be one indicator of an area ripe for housing microfinance in Sub-Saharan Africa would include:

• Structures built to roofing level and left unfinished (or built to roofing level with durable materials and roofed with non-durable materials)
• "Teeth" extending from walls indicating a planned extension
• Structures that are built on only part of a larger foundation.
• Occupied houses with blocked-up windows, unfinished floors, etc.
• Visible savings in-kind in the form of materials (blocks, bricks, sand, stones, etc.) on construction sites.
• Block and brick producers (small scale producers)
• Hardware and building supplies shops
• Construction activity visibly taking place

Where the above are visible, there is probably a market for housing finance that will result in home improvements. Housing microfinance works hand in hand with incrementalism and small businesses and services that support construction. When viewed from the provider paradigm (see previous post on housing paradigms), incremental building and a fragmented, informal housing sector may be seen as the problem. When viewed from the supporter paradigm of housing, supporting incremental building efforts with housing finance can be seen as an effective means of helping low income households move forward in their housing process.