KATHMANDU: A policy advocacy workshop has called on the government to devise a national housing microfinance policy that would support low-income families’ access to affordable housing through microfinance loans and promote adequate shelter nationally.

Participants viewed such housing microfinance policy would also complement and diversify existing microfinance lending activities while benefiting low-income families’ access to safe housing in the country.

Nepal Microfinance Bankers’ Association (NMBA) with the support of Habitat for Humanity Nepal and Business Partnerships Platform, Department of Foreign Affairs and Trade, Australian Government, organized the one-day workshop at Hotel Himalaya, in Lalitpur, on Tuesday.

Over 60 participants from the microfinance industry, donor, community, and the regulator took part in the workshop.

Making opening remarks, Australia’s Ambassador to Nepal, HE Felicity Volk, said, “Long term sustainable solutions lie in innovative and inclusive business enterprises that generate sustainable commercial returns.”

She further said: “Low-income families find it difficult to build resilient houses as they lack appropriate and affordable financing options due to the collateral requirements of commercial banks. The microfinance institutions have the networks to reach these communities, but often lack the technical capacities to deliver housing microloans to them. And that’s where a business partnership comes in.”

The workshop also called on the Central Bank, Nepal Rastra Bank (NRB), to formulate standard guidelines on housing microfinance in its directives to all microfinance institutions in the country.

Present on the occasion, NRB Executive Director Dr. Gunakar Bhatta (Banks and Financial Institutions Regulation Department) expressed sincere thanks to NMBA, Business
Partnerships Platforms, Department of Foreign Affairs and Trade, Australian Government, and Habitat for Humanity Nepal on behalf of the Central Bank.

He acknowledged the support and said it is a remarkable effort of the associated organizations. He
further assured that, ”The result of the workshop shall be discussed during policy formulation and implementation to benefit the low-income people of Nepal.”

Jeevan Bikas Laghubitta Bittiya Sanstha Limited and Sahara Nepal Saving and Credit Cooperative
Society, which received technical assistance for developing an appropriate and affordable housing loan products from Habitat Nepal, also shared their key learnings at the workshop.

Jeevan Bikas highlighted their development of a viable, client-focused home improvement loan product to promote adequate shelter in the country.

Jeevan Bikas was the subject of a case study on achieving affordable housing through microfinance loans in Nepal, published by Habitat for Humanity’s Terwilliger Center for Innovation in Shelter.

In the 2011 population census, one in two Nepalis was living in substandard housing. Many low income families lack access to formal financing options due to the lack of proof of steady income and collateral for the mortgage.

Another 2 million housing units ― just under one-third required in rural areas ― are needed by 2024, according to Nepal’s Department of Urban Development and Building Construction.

Market research conducted by Habitat Nepal in 2020 and 2021 showed untapped opportunities for
housing microfinance products targeted at low-income families.

In this research, it was found that 62% of respondents planned to make home improvements, including new construction or home repairs, in the next two years. Another 26% of the respondents said they had taken out loans for other purposes to invest in home improvement instead.

In addition, positive outcomes were observed after families accessed housing microfinance loans.

Citing Habitat Nepal’s own research at the workshop, Sunil Khanal, senior manager for financial
inclusion, said 65 percent of housing microfinance clients reported enjoying greater dignity and respect in their community. A great majority, or 80%, have realized that they had more time to focus on increasing income.

Habitat Nepal has been working with partner housing microfinance institutions since June 2019 to disburse more than 57,000 housing microfinance loans with over NRs 6 billion (over US$48 million) in capital mobilized.