Developing 3rd Sector Housing Capacity + Delivery

Presented by:

Larry English & Joe de Swardt

Homeless international

Background:

Est.1987 by UK Social Housing Sector

Backward Linkages: – UK: Social Housing Federations of England, Ireland, Scotland

and Wales (1600 Housing Associations) / Chartered Institute Housing/ Tenant Services Authority

– Alliance: SCC, NBBL, Canadian and Dutch Social Housing Sectors

Forward Linkages (Partners):– Current: 17 partners, 15 Countries

– Extended Network: (HIC, ACHR , ICA AND SDI)

H.I. Background

HOUSING SECTOR(NHF, SFHA, C.CYMRU, NIFHA, )

INDIA, SPARC

INDIA, IVDP

NEPAL, Lumanti

PAKISTAN, OPP + SAIBAN

MOZAMBIQUE, Pamodzi

TANZANIA, CCI

KENYA, Pamoja/AMT

ZAMBIA, PPHPZ

NAMIBIA, HPF Namibia

MALAWI, CCODE

GHANA, PDG

AFRICA

ASIA

KENYA, NACHU

SOCIAL HOUSING UK

ANGOLA, DWA

BURKINA FASO (CREPA)

DEVELOPMENT PARTNERS

DONORS

ACADEMIC/ PROFESSIONAL, UNIV LONDON,

UNIV CARDIFF)

SRI LANKA, Sevanatha

PHILIPPINES, PACSSI

ZIMBABWE, ZINHACO, DZ

SOUTH AFRICA YEAST

Challenge is Urban

Global Urban/ Rural Population

1970

2030

2000

• More than 1 billion people - 1 out of every 3 urban pop live in slums

• 70% African/40% Asian urban pop. live in slums

• By 2030 the largest cities will be in the developing world - = 80% of global urban pop.

• Almost half the world live on less than $2 a day

• Affordable shelter that is inadequate, and adequate shelter is unaffordable

By the year 2030, every third person in the world could be a slum dweller.

Dharavi, Mumbai

Challenge: Growth of Slums

“Slums are the products of failed policies, bad governance, inappropriate legal and regulatory frameworks, dysfunctional markets, unresponsive financial systems and not least, a lack of political will” (Tannerfeldt, G. and Ljung P)

Limitations of Local Government and Private Sector:– Scale of Slums/ Limited Reach: 50% of cities comprise slum dwellers.

Local Government cannot reach / plan for these communities – Poor relationship/ trust between Government and slum communities – Capacity frequently interrupted by change in leadership and politically

driven imperatives – limited succession – Short-termism (Govt. and Private Sector)

Need for New Instutional arrangements/ New Institutions− Addressing the Slum deficit will take time (decades)– Institutions need to understand complexity, maintain a long term

focus, build capacity/capability over time through planned succession– 3rd Sector is key to addressing the institutional chasm

Why 3rd Sector ?

3rd Sector* Advantages

− Independent of Politics/Profit− Sustained /Regulated Focus (capable of

building capacity over time)− Enterprising – Creating Value/Surplus− Capable of taking Risk− Reinvest vs. Distribute Surplus − Capture Subsidy Corporately vs Privately− Create housing Public Good (infrastructure)

rather than Private Good − Ability to borrow (Creditworthy)− Key to establishing a BOP Market

Third Sector

Private Sector

Govt. Sector

Social Enterprises/ Cooperatives/ Community Development Corporations, Housing Associations etc.

How do we build the 3rd sector?

Challenge = Bridging 4 Gaps:− Institutional Gap: in urban institutional arrangements/ social

enterprises to provide tertiary provision − Solutions Gap: Develop appropriate/ affordable housing and basic

service solutions− Finance Gap: Build bankability and credit-worthiness to access

cheaper finance, and increase affordability − Delivery Gap: Scale up delivery/ Build project pipelines/ economies

of scale/ increase affordability

Method: − Link Project Delivery + Organisational Development (Cap Building)− Start with the end in mind (Scale, Sustainability, Capacity)

Engage Market

STAGES ofDEVELOPMENT

Formation/ Mobilization

Engage Govt

1

2

3

4

5

CAPACITY FUNDING + SUPPORT

Po

litica

l

So

cia

l

Ma

na

ge

rial

Tec

hn

olo

gic

al

Fin

an

cia

l

Demonstration

Self-Reliant

PROJECTS

Community Based Organisation(Dependent)

Social Enterprise (Independent)

Projects Scale up Capacity Scales up Projects

ORGANISATIONAL GROWTH

1,000’s

CLIFF

Delivery and Development

10,000’s

100,000’s

1000,000’s

10,000,000+

COST($)

Graduation Facility

Capital Grants, Soft Loans CLIFF, Org Development/ Fund Mgmt. + HMF TA

Equity, Debt, Guarantees, Fund + Portfolio Dev. Twinning, C/Rating

CLIFF, Guarantees, Refinancing Project/Pipeline TA Fund Mgmt.

Project Grants, Org Development TA, Savings + Credit Systems TA

Small Grants

2

3

4

5

People InfrastructureHousing

Land

1

InfrastructureHousing

Land

PeopleSQUATTING

Land

LandSITES & SERVICES

MODERN

INCREMENTAL

Infrastructure

Infrastructure

Housing

People

People

Housing

People InfrastructureHousingLandTRADITIONAL

Dev. Sequence/Org Approach

Original CLIFF

Com

mu

nity M

obilisation

LOCAL ORG

X

YZ

PEOPLE

REAL ESTATE/ HOUSING

FINANCE

STAGE 1Community Mobilization & Organisation

• Identify legitimate and credible leadership

• Establish CBO to facilitate the delivery of housing and infrastructure

STAGE 2Demonstration (precedent setting/ “bridge building”)

• Development innovative/affordable/ replicable housing/ infrastructure models using community resources

STAGE 3Government Engagement

• Government engages 3rd Sector as partner. Facilitates:• Land Provision

• Subsidies/Matching Funds

• Regularization of Tenure

• Technical Support

• Guarantees

• Projects Scaled up

• Seat at the table

STAGE 4Market Engagement

• NPO/ Social Enterprise Formed

• Leverage Land Market• Increase Scale/Affordability

• Cross-subsidy (Mixed use) Development Projects

• Cross-subsidy Real Estate Portfolio

• Drive pro poor change through practice/ seat at table

Oshiwara Project, Mumbai: 5300 Households

STAGE 5 Self-Reliance

• Track record established

• X-subsidise/ Local Subsidy

• Leverage Assets (Portfolio)

• Access to Private Finance

• Independent, Self Sustaining

Local Banks & Financial Institutions

Homeless International

$ 14.5 million

CLIFF Leverage

CAPITALISATION

• Land/Sale• Rights Sale• Housing/ Sale• Rentals/• Service

Revenues• Loan Revenues

Land Projects

Sanitation projects

Incremental housing projects

Complete housing projects

Partners/ Enterprises

HI /USAID Guarantees

$ 83 million (Projected project value)

LEVERAGE

Funders

Repayments

Loans

GrantsSurplus $ 39

million (Projected)

Rights

Sales

Savings

Loan

Revenues

Land Sales

Land

Donation

Contract Payments

User Revenues

Subsidies

Sales

Land

Donation

Savings

Subsidies

Savings

Loan

Revenues

H.I. FINANCE/CLIFF

CLIFF PARTNER FUND MANAGEMENT

Capital Finance

ProjectDeveloper

Home Loan

Loan Released

Loans and

Interest Repaid

En

d U

ser

Purc

hase

Un

it

Loans Repaid

Loans to selected beneficiaries

Project/ Bridging Finance (Stages)

End-user Finance

Sanitation Loan

PROJECT PACKAGING

COMMUNITY DEV/PREP

COMMUNITY IDENTIFICATION

PIPELINE

Units Completed/ “sold” to end user finance Division

Loan Repaid with interest

Project Prepared

Coordination

VMF INVESTORS/ TAKE OUT FIN

NOT FUNDED BY CLIFF

CAPITAL FINANCING TAKE OUT FINANCING

CLIFF Financing (detail)

Funding Flows

Project Prep Finance

Looking ForwardSeed Funding:– $ 35 million (DFID/SIDA/HI/UKHA):– New Funding (UK Housing/ Venture MF )– 75 Revolving

New Funding Mechanisms– Refinancing Facility (Africa) to expedite – Venture MFI partners

Expanded 3rd Sector Partner Portfolio:– Portfolio 15 Organisations (Africa/Asia)– Graduate 7 to Self-Reliance

Projected Outputs:– Housing Units 35 000 (2015)– Toilets: 1,2 million users – Leverage: $100 million

3rd Sector Key to Institutional Arrangement every country (now and future)

3rd Sector Building requires consideration of the 4 Gaps• Institutional/ solutions / financial/ scale • Capacity to close the gap

3rd Sector Institution requires Financial Sustainability• requires adoption of a Real Estate Development

Approach (Convergence of : People + Land + Finance Markets)

• requires consideration of Housing as Infrastructure (i.e. housing as a public good)

• Building Corporate wealth vs. Personal Wealth

Concluding Remarks