ADB to help finance housing for low-income families

MANILA, Philippines — Manila-based Asian Development Bank (ADB) will provide microloans to finance housing projects for low-income families and vulnerable communities in the Philippines.

ADB has partnered with non-profit organization Habitat for Humanity International to aid microfinance institutions (MFIs) in delivering housing loans to several low-income families.

An initial $30 million (P1.45 billion) has been allocated to help MFIs obtain financing from commercial banks for beneficiaries in the Philippines, as well as in Bangladesh, India and Indonesia.

Priorities are families in rural and peri-urban areas or those transitioning from rural to urban land uses located between the outer limits of regional centers.

For the first phase, some 20,000 households will receive housing microloans from partner MFIs to enhance construction quality and climate resilience, including upgrading semi-permanent structures and installing sanitation and water connections.

ADB and Habitat’s team-up will expand the multilateral lender’s Microfinance Risk Participation and Guarantee program to include microloans for housing, home improvement, and water and sanitation for vulnerable and climate change-exposed communities.

“Low-income families find it difficult to build resilient houses as they lack adequate and affordable financing options due to the collateral requirements of commercial banks,” ADB Private Sector Financial Institutions Division director Christine Engstrom said.

“MFIs have the networks to reach these communities, but often lack the technical capacities to deliver housing microloans to them. This will better address this market gap,” she said.

Habitat, for its part, will build the MFIs’ capacity to design, pilot-test, and roll out the loans, with technical assistance from ADB.

Habitat chief operating officer Patrick Canagasingham emphasized that demand for urban housing in Asia remains largely unmet, giving the private sector a critical opportunity to deliver affordable materials, construction quality, access to energy, gender equity, water supply and sanitation services.

“With ADB, we will create enabling environments for MFIs through risk-sharing and capacity building, helping unlock local private sector capital for housing,” he said.

ADB maintained that micro-housing for the poor and investing in community resilience are key drivers of economic recovery from the pandemic.

ADB said it aims to encourage private sector financing through risk-allocation and guarantees, as well as empower women as 90 percent of financing is targeted for women micro-borrowers. Since 1976, Habitat has been working with the private sector to pilot new products and approaches for housing finance, materials, and services. It is present in over 70 countries.

In the Philippines, Habitat has served more than 140,000 families nationwide and mobilized volunteers who have contributed more than 500,000 hours through building and repairing homes and communities.

ADB is also exploring opportunities to work with Habitat to scale its initiatives, including the MicroBuild Fund, which has deployed over $140 million in housing finance loans through MFIs, with 19 percent allocated in Asia and the Pacific.