Housing Microfinance QuIP in Southern India
20 September 2017 | Latest QuIP News|
Guest blogger, QuIP-Accredited Consultant Max Nino-Zarazua
I recently returned from the 6th Asia-Pacific Housing Forum hosted by Habitat for Humanity in Hong Kong. The forum addresses housing challenges in the Asia-Pacific region and I was invited to present the results of a housing microfinance impact study I led in Kerala and Tamil Nadu, India.
The aim of the study, commissioned by the Habitat for Humanity International’s Terwilliger Center for Innovation in Shelter, was to evaluate the impact of housing microfinance products and services offered by two microfinance institutions (MFIs) in Southern India. The study used a combination of QuIP and institutional assessment methodologies (led by Micro-Credit Ratings International Ltd) to understand how housing improvement loans and services were changing the social, economic and housing conditions of low-income households and to explore the institutional performance and sustainability of their housing microfinance operations.
Why use QuIP in this type of study? It was important to find out more detail about what drivers were affecting outcomes in the target population, which we knew the QuIP is designed to address, but in addition it helped us to overcome the issue of no baseline data. By asking respondents about the most significant changes in their lives during the period when the MFIs’ introduced their housing loans, they provided their own baseline reference for the study.
As per the standard QuIP approach, the interviews were conducted ‘blindfolded’ as far as possible, helping to mitigate the potential of both pro-project bias and unconscious prompting by researchers. Researchers had no knowledge of the project being assessed and were simply asked to collect information on reported changes in the lives and livelihoods of respondents, using a specially designed semi-structured questionnaire.
Analysis of the qualitative data demonstrated clear evidence that home improvement loans contributed to a range of positive outcomes in the lives of urban and rural clients of both MFIs. Changes were particularly evident in people’s reported experiences of housing conditions, housing finance & services, health, safety & security and relationships. Some of the most important findings of the study include:
- Increased sense of security. Clients particularly in rural areas took out home improvement loans to undertake a variety of home repairs and improvements to be better shielded during the monsoon season and live without fear of being flooded.
- Improved housing conditions also engendered an increase in social status and inclusion, and as a result increased feelings of self-worth and pride, particularly in the urban context.
- Extending dwellings provided urban and rural clients with enough space for all family members, allowing children to have their own space to study and sleep resulting in improved family relationships. Housing improvements also increased people’s privacy and enabled others to start or expand their home-based small businesses.
- Taking out loans enabled women to be part of a savings group. Respondents reported that being part of a group made them feel more confident in managing financial matters and offered more opportunities to socialise, as well as discuss and share their problems with others, creating a greater sense of solidarity – particularly in urban areas.
- They majority of respondents, particularly from urban areas, felt that they had better access to credit. Several clients said that having access to easy access loans led to a feeling of increased financial security and many also highlighted that the increased presence of MFIs in the area had changed borrowing habits as they had stopped borrowing from local moneylenders.
The study also uncovered several factors that could be used to inform improved future programme design.
- There was concern that greater availability of loans can also lead to over-indebtedness and anxiety about repayment, particularly about potentially losing assets.
- Reduced ability to work due to ill health and subsequent loss of income placed further strain on low-income households.
- We found significant differences in the housing quality conditions between clients of the two MFIs. These differences are important to guide future credit policies and housing microfinance product design, taking into account factors that are unique to specific geographies and locations.
These findings can inform future efforts to improve the supply of housing microfinance products and services. For example, there is a need to focus on the provision of other non-financial services to support access to and use of housing improvement loans; e.g. advice on financial management, using loans to support income generating activities, education and counselling. Low-income households have greater access to more financial products and are dealing with multiple loans with multiple tenures. Over-indebted clients need help to reduce the negative social and health effects associated with their debts.
As regards housing conditions, home improvement loans alone may not be enough to improve housing quality and should be complemented with technical assistance to aid clients to make informed decisions about appropriate materials and construction specification.