“Owning our own home gives us peace of mind and makes life easier,” explains Alimatou Diakité, a member of the Réseau des caisses populaires du Burkina Faso (RCPB). Home ownership is an essential development tool for societies and a dream around the world. Healthy and durable housing provides a foundation for building up family assets, an important step in emerging from poverty on a sustainable basis. However, owning your own home in developing countries presents challenges that we in more developed countries find hard to imagine. To promote access to home ownership, Développement international Desjardins (DID) and its partner institutions members of the Proxfin network in developing countries have been innovative. Their preferred solution is to offer products adapted for housing credit needs.
“We rented for a long time until I obtained a housing loan and we were able to finish building our house and move in,” says Alimatou Diakité. She and her husband live in Ouagadougou, the capital of Burkina Faso. “What motivated me to go to the coop and apply for a housing loan was the desire to finalize construction of our house so that we would have our own home,” she explains. The coop did not offer them a mortgage loan, but instead a housing loan.
“The amounts involved for housing credit are not excessive, loan terms are acceptable and the requirements to secure the loan are within the reach of our clientele,” affirms Patrice Ouédraogo, director of the Cissin financial cooperative (affiliated with the RCPB). Daouda Sawadogo, director general of the RCPB, explains that “Offering this product is in line with the social mission of our network. By providing housing we meet a basic need. We offer a solution to a social issue.”
Unlike a mortgage, which covers new construction or the purchase of an existing home, housing finance is normally used to expand or improve an existing dwelling. In addition, housing credit often becomes productive credit by enabling the borrower to use the new premises for income-generating activities. This was the case for Abel Ilboudo, a merchant whose wife set up a sewing business in their new house. “I am very pleased and very proud. Owning my own home and no longer having to pay rent is a relief for me,” he points out.
To provide housing finance, the financial cooperatives need sufficient liquidities to make loans over longer terms. To increase their liquidities, the financial cooperatives in Burkina Faso rely on local savings deposited in home savings products or term deposits. For the financial cooperatives in Ouagadougou that provide housing finance, compulsory savings are a prerequisite.
“A contractual savings plan plays an extremely important role in several ways. First, it develops the habit of regular savings before taking out a loan. Second, it encourages the member to participate in the financing plan for the property that will become a family asset. Finally, it instills a pattern of payment that will help when repaying the loan,” explains Anne Gaboury, DID President and CEO.
Alimatou Diakité deposited 15% of the amount of her loan into an account before obtaining the loan. The home savings program is working very well. Over the course of a year, it multiplied the average savings of participating clients by a factor of twelve and in the process provided the financial cooperatives with stable financial resources for the housing finance program.
“After two and a half years of testing, we now have over 350 loan files and CAN $3 million in outstanding housing loans. There are also over a thousand members who have subscribed to the housing savings program with deposits totaling about CAN $300,000”, adds Daouda Sawadogo proudly.
“We can see that this fulfills a basic need for members both for their security and for their commercial activities. When loan products are suitably designed and delivered, the markets react extremely well. Housing finance products have great potential, both for the institutions that are currently testing them, and for all DID partners,” concludes Anne Gaboury.