Financial service providers are discovering that vast business opportunities exist within the lower-income housing markets of the developing world. Housing is a basic human need, and for the majority of households, their home (including land) constitutes their greatest financial asset. Market studies of the “base of the pyramid,” or BOP — defined as the approximately 4 billion people with incomes under US$3,000 per year in local purchasing power — have identified housing as one of the three largest market sectors (along with food and energy). A 2014 study by McKinsey estimates that meeting the increasing demand for urban housing from low-income households worldwide would cost $2.3 trillion by 2025, representing additional revenues of approximately $200 billion-250 billion annually for the construction industry. Nevertheless, for this lower-income majority, representing over 70 percent of the world’s population, financing options for housing remain scarce and largely informal.
This business case by Habitat for Humanity explores the housing microfinance business case framework and its application within Sub-Saharan Africa.