Habitat for Humanity Egypte (HFHE)

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Habitat for Humanity Egypte (HFHE)

Mismatches Price Financing Vulnerable groups
Policies and regulations
Financing Financial actors Supply subsidies Sustainable development financing Progressive financing

Main objectives of the project

Since 1989, Habitat for Humanity Egypte (HFHE) has effectively assisted more than 25,000 impoverished households across selected rural and urban areas by offering interest-free loans for essential housing improvements, renovations, and new construction projects. Within Egypt's developing microfinance sector, HFHE stands as the sole provider of micro loans dedicated solely to housing-related endeavors. These short-term loans, averaging EGP 7,000 (US$ 890) each, are repayable over a 24-30 month period in monthly installments, with the first payment due a month after loan receipt. All loans are structured without profit or interest, but include an inflation adjustment to safeguard HFHE's loan capital value and support the operational costs of partnering NGOs.

Date

  • 1998: En proceso

Stakeholders

  • Habitat for Humanity

Location

Continent: Africa
Country/Region: Cairo, Egypt

Description

In Northern Africa, addressing the housing sector's challenges, particularly in financing projects for low and medium-income families, remains a significant issue. Despite having homes and support from NGOs, non-profits, or the government, many struggle to secure financial assistance for refurbishment or reconstruction while maintaining their autonomy. This is where Habitat for Humanity Egypt (HFHE) steps in. Habitat for Humanity is an International NGO. Yet, has a great implementation in Egypt. Since 1989, HFHE has effectively aided over 25,000 impoverished households across selected rural and urban communities by providing "no-profit, no-interest" loans for essential housing improvements, renovations, and replacement home construction.

HFHE functions as a national intermediary NGO, abstaining from directly disbursing loans. Instead, it offers loan capital, technical assistance, training, and oversight to partner NGOs and participating community-based organizations (CBOs), which assume direct responsibility for loan management. In FY2015 alone, this decentralized network of independent non-profit entities disbursed 2,393 HFHE loans, totaling EGP 20.2 million ($2.6 million USD) to needy families in 22 rural and provincial urban communities. The process is straightforward: HFHE allocates loan capital exclusively for housing microloans to its NGO partners, who, in turn, supervise local CBOs and loan committees to administer and oversee these loans. HFHE provides training and technical support to partner NGO staff responsible for these loans, as well as to participating CBOs and loan committee members in each community.

HFHE operates autonomously from the financial system. It has never sought loan capital from Egyptian banks and maintains no microfinance relationship with local banks. Egyptian banks typically refrain from extending banking or home improvement loans to HFHE's clientele—poor and low-income households—due to their unregistered homes and lack of property ownership documents. Consequently, Egyptian banks and HFHE are not seen as direct competitors, with HFHE clients eschewing Egyptian banks as alternative lenders. Meanwhile, the annual interest rates on personal loans from Egyptian banks, ranging between 10.5% and 12.5% since 2008, far exceed the 7% annual inflation adjustment applied to HFHE microloans.

The lending approach of HFHE consists of three main strategies: normal lending, wholesale lending, and home improvements for the poorest households. In normal lending, HFHE partners with NGOs for an indefinite period, sharing the risk of bad loans. The loans have no end-date, with an average size of EGP 7000. In wholesale lending, a pilot initiative with CEOSS, loans are disbursed for five years, with the partner NGO bearing all risk. Higher fees are charged, and the repayment period is defined. Both approaches have identical loan terms and conditions. Home improvements for the poorest households are charitable initiatives, targeting those unable to repay loans. The improvements aim to enhance living conditions and are funded through various means, including donations and partner NGO commitments.

The majority of borrowers additionally benefit from complimentary engineering technical services for their intended home improvements. Notably, the expense is not incorporated into the loan amount for repayment; instead, HFHE covers the entire cost of these engineering services from its own budget. Skilled and trained engineering graduates are engaged on a part-time basis to support CBOs and loan applicants in defining construction requirements, creating engineering designs (if necessary), assessing actual costs for planned home renovations and new construction, and inspecting completed projects. These engineering graduates are engaged on an annual basis, with HFHE currently maintaining contracts with four part-time engineering graduates.

HFHE imposes specific criteria for borrower selection, categorized into three areas: the need for adequate shelter, ability to repay the loan, and willingness to partner. Eligible borrowers must be homeowners within the community, with no discrimination based on demographics. To qualify, households must lack adequate shelter, demonstrate low income, and exhibit financial stability. They should also display willingness to contribute to home improvement costs and participate in related activities. The organization gives priority to vulnerable groups like orphaned children, widowed women with dependents, and married couples with dependents.

The loan application process of HFHE involves several steps. First, applicants submit a one-page Loan Request Form to the CBO loan committee, providing personal and project details. Then, the committee reviews the form and contacts an engineer for a home inspection and cost estimate. Together with the applicant, they complete a Loan Request Review Form gathering financial and household information. The committee periodically meets to approve loans, determining sizes based on their discretion. Disbursements occur in two installments, contingent on satisfactory completion of construction work. Repayment typically starts 30 days after the first tranche. Finally, an HFHE engineer inspects completed work for quality assurance. Loan documents are maintained by the partner NGO for audit, while CBOs keep records for active loans. Additionally, the average cost per loan includes engineer fees for initial visits and inspections.

With this simple scheme, HFHE provides finance resources to the communities and the poorest homeowners in Egypte. Thanks to it, and without the burden of the financial system, people can have an affordable and decent housing.

Al-Darb al-Ahmar Housing Rehabilitation Programme (ADAA HRP), Cairo

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Al-Darb al-Ahmar Housing Rehabilitation Programme (ADAA HRP), Cairo

Mismatches Financing Segregation Functional adequacy Cultural suitability Vulnerable groups Demographic/Urban growth
Policies and regulations Local policies Planning Data and monitoring Public-private initiatives
Financing Financial actors Supply subsidies Public-private collaboration
Urban Design Urban fabrics Environments Liveability Public-private initiative
Promotion and production Public-private partnerships Private promotion

Main objectives of the project

The district of Al-Darb al-Ahmar in Cairo holds significant historical importance, yet its approximately 100,000 residents are among the most economically disadvantaged in the city. Despite being home to numerous Islamic landmarks, the area suffers from inadequate infrastructure and services, leading to a high prevalence of health issues among its inhabitants. In response, the Housing Rehabilitation Programme (HRP) was initiated to enhance both the quality and quantity of housing while adhering to health standards and preserving the district's architectural heritage. Launched in 2004 with a goal of rehabilitating 200 houses by the end of 2009, the programme has since continued with ongoing efforts, reliant on the involvement of local communities and contributions from various donors. The HRP is committed to improving housing conditions sustainably by addressing the root causes of deterioration through a collaborative, multidisciplinary approach involving all stakeholders. The goal is to change the “Action Areas” and the surrounding of monuments into vivid communities.

Date

  • 2004: Rehabilitación

Stakeholders

  • Promotor: Aga Khan Trust for Culture
  • Aga Khan Agency for Microfinance
  • Ford Foundation
  • Cairo Government

Location

Continent: Africa
Country/Region: Cairo, Egypt

Description

The Greater Cairo Region, with a population exceeding 18 million, confronts substantial challenges, notably over half residing in informal settlements. The Cairo Governorate alone hosts over 7 million inhabitants, positioning Cairo as one of the Arab world's most populous cities boasting a rich Islamic architectural heritage. Over the past century, urban management policies have grappled with the region's burgeoning population and associated issues such as informal housing proliferation, overcrowding in historic areas, and the deterioration of ancient urban fabrics due to transformations and gentrification.

Less than two centuries ago, al-Darb al-Ahmar epitomized wealth in Cairo. Today, its 100,000 residents, living within a historic district spanning 1.2 square kilometers, rank among the city's poorest. Despite its central location, historical significance, and vibrant community, living conditions have steadily deteriorated, resulting in a 50% population decline since the 1970s. Contributing factors include infrastructure neglect, low incomes, and the degradation of monuments and private housing. Outdated planning regulations, coupled with tenure insecurity and unrealistic rent controls, exacerbate the situation. Nonetheless, al-Darb al-Ahmar maintains social cohesion and architectural authenticity, necessitating interventions meeting varied needs while upholding health standards. Thus, the Housing Rehabilitation Programme emerged, advocating against neighborhood demolition while enhancing housing quality and quantity, preserving original architectural elements.

In 1999, a survey in the Aslam Mosque neighborhood kick-started efforts to identify planning and housing strategies for area-wide preservation and development. Subsequent baseline surveys in 2003 revealed alarming deficiencies, with 22% of dwelling units lacking private lavatories, 51% deprived of consistent water sources in kitchens, and 32% suffering from non-ventilated rooms. Despite declining living conditions, 86% of residents expressed a desire to remain in al-Darb al-Ahmar.

The Aga Khan Trust for Culture spearheaded redevelopment post-survey, focusing on physical upgrades and socioeconomic development. By 2004, completion milestones included 19 community-owned houses, a health center, a business center, school building restoration, and reconstructed minarets. Additional housing rehabilitation projects ensued, supported by microcredit programs. Subsequent phases targeted broader infrastructure enhancements and private investment facilitation. Emphasizing local engagement and capacity-building, the project ensured staff recruitment from the al-Darb al-Ahmar community, foreseeing self-sustaining credit services and envisioning microcredit activities evolving into a formal microfinance bank.

The policy targets the residents, businesses, and social groups within the district. The proposed urban improvement program by AKTC necessitates coordinated physical, social, and economic efforts sustained over an extended period. It also emphasizes the importance of institutional capacity-building, including supporting the establishment of local NGOs across various domains until they can operate with reduced assistance. Additionally, a public/private Development Corporation has been set up as an overarching entity in Al-Darb al-Ahmar, tasked with coordinating ongoing activities, generating income from restored facilities and services, and ultimately overseeing a self-sustained rehabilitation process. Furthermore, there is a focus on promoting community awareness and self-governance as a means of restoring the traditional Muslim city feature in residential areas and enhancing cultural awareness among residents.

Resource types, roles, and team players are diverse. It has financial resources from the Social Fund for Development, Aga Khan Trust for Culture, and Ford Foundation grants; residents’ direct financial and in-kind contributions (cost share 30% to 50% of rehabilitation costs); and Aga Khan Agency for Microfinance’s housing loans to support different income levels. The technical expertise in rehabilitation comes from the Aga Khan Trust for Culture and the Community Development Corporation; partners at different levels ranging from Cairo Governorate, municipal authorities, community-based organizations, to communitymembers; and local HRP staff providing administration and technical support. And, as we stated, there is Microenterprises, suppliers, and small contractors in Al-Darb al-Ahmar providing construction and finishing works.

To bolster physical rehabilitation efforts, the Housing Rehabilitation Programme (HRP) has enlisted a social housing team. This team aids in procuring the necessary legal documentation for building rehabilitation, mediates among stakeholders, and ensures that all non-physical conditions are addressed prior to the commencement of physical rehabilitation. Once a preliminary agreement is reached with residents of earmarked buildings, an independent credit team evaluates the creditworthiness of individual families. Consequently, microcredit loans are allocated based on each family's earnings. This microcredit scheme serves both tenants and property owners while ensuring secure tenure. Notably, through negotiations with tenants, property owners, and public authorities, approximately 285 households facing eviction due to deteriorating structural conditions were granted secured tenure status. These households were part of the housing stock at risk of demolition, and their rehabilitation allowed tenants to retain their residences.

The Housing Rehabilitation Programme catalyzed policy shifts, influencing demolition regulations and urban planning practices to prioritize community needs and conservation. Notable outcomes include a decree protecting existing housing stock near monuments and a revised conservation plan fostering community involvement. In summary, the program safeguarded residents' tenure, established national planning norms acknowledging community needs, and circulated a significant percentage of rehabilitation costs within the community, fostering job creation and supporting local businesses.