Housing need of poor to be addressed thru microfinance

 Lalitpur, June 21

Executive Director of the Nepal Rastra Bank (NRB), Dr. Gunakar Bhatta has said that the central bank would be supportive in creating policy to find solutions to address the housing challenges for lower-income groups through microfinance institutions (MFIs).

Speaking at a workshop organized by the Nepal Microfinance Bankers’ Association (NMBA) with the support of Habitat for Humanity Nepal and the Australian Government through its Business Partnerships Platform, he stressed having some impactful policies to eradicate extreme poverty.

Dr. Bhatta urged the MFIs to support increasing local production.

Research conducted by Habitat Nepal in 2020 and 2021 has indicated to the opportunities for housing microfinance products targeted at low-income families.

In this research, it was found that 62 per cent of respondents planned to make home improvements, including new construction or home repairs, in the next two years. Another 26 per cent of the respondents said they had taken out loans for other purposes to invest in home improvement instead.

In addition, positive outcomes were observed after families accessed housing microfinance loans.

Citing Habitat Nepal’s own research at the workshop, Sunil Khanal, Senior Manager for Financial Inclusion, said that 65 per cent of housing microfinance clients reported enjoying greater dignity and respect in their community.

A great majority, about 80 per cent, have realised that they had more time to focus on increasing income. Habitat Nepal has been working with partner housing microfinance institutions since June 2019 to disburse more than 57,000 housing microfinance loans with over 6 billion Nepali rupees (over US$ 48 million) in capital mobilized.

The workshop recommended that the NRB should provide standard guidelines on housing microfinance in its directives to all microfinance institutions in the country.

Likewise, the government should develop a national housing microfinance policy to diversify existing microfinance lending activities, thereby increasing low-income families’ access to affordable housing and ultimately promoting adequate shelter in the country, the workshop concluded.

Speaking on the occasion, President of the NMBA, Prakash Raj Sharma, said that for the last 30 years, the mission of the MFIs was to increase access to finance and support livelihood activities. According to him, the MFIs can play an instrumental role in extending the housing finance at their doorstep.

Jeevan Bikas Laghubitta Bittiya Sanstha Limited and Sahara Nepal Saving and Credit Cooperative Society had received technical assistance for developing an appropriate and affordable housing loan product from Habitat Nepal. Jeevan Bikas highlighted their development of a viable, client-focused home improvement loan product to promote adequate shelter in the country.

Australian Ambassador to Nepal, Felicity Volk, said that long-term sustainable solutions lie in innovative and inclusive business enterprises that generate sustainable commercial returns.

“Low-income families find it difficult to build resilient houses as they lack appropriate and affordable financing options due to the collateral requirements of commercial banks. The MFIs have the networks to reach these communities, but often lack the technical capacities to deliver housing microloans to them. And that’s where a business partnership comes in,” she said.

Christy Lynn Stickney, National Director of Habitat for Humanity, said that there was a lack of finance in housing for the people of lower-income group. Incremental housing could be one area of improvement. 

Published in The Rising Nepal daily on 22 June 2022.