Step by step: Supporting incremental building through housing microfinance

Habitat for Humanity International

Housing in the developing world is typically improved one step at a time through a process known as “incremental” or “progressive building”.  Families build their homes bit by bit as needs change and resources become available.  Incremental building accounts for up to 90 percent of residential construction in the developing world.  Although this model for building simple, durable shelter takes time, having access to appropriate financial products and construction advice enables families living in poverty to dramatically improve their living conditions.

By facilitating incremental housing efforts, Habitat for Humanity and other organizations can help create more safe and secure dwellings and can reduce
the financial burden on governments that subsidize housing.  By improving the incremental process, we can help create better planned communities rather than ad hoc solutions.  Access to financing that low-income families can afford is a crucial element for the success of incremental building.  Recognizing the need for greater access to housing finance among low-income people, Habitat has been working in many countries to spark innovation and scale housing microfinance.  Two important global initiatives that complement this work are the MicroBuild Fund, a $100 million impact capital fund for housing microfinance, and the Center for Innovation in Shelter and Finance, our advisory service arm that provides training and technical assistance to help local institutions develop appropriate shelter products for their context.

Efforts to provide new housing in the developing world are limited, and existing lenders rarely serve lower-income people.  We need to encourage market solutions such as housing microfinance to support high-quality incremental building. If these are bundled with basic housing support services, we can create scalable, replicable and sustainable solutions.