Financing 3rd Sector Housing and Infrastructure Delivery

Presented by: Larry English Chief Executive, Homeless international

Why CLIFF*?
Limitations of Local Government and Private Sector:
Scale of Slums/ Limited Reach: 50% of cities comprise slum dwellers. Local Government cannot reach / plan for these communities Poor relationship/ trust between Government and slum communities Capacity frequently interrupted by change in leadership and politically driven imperatives limited succession Short-termism (Govt. and Private Sector)

Need for New Instutional arrangements/ New Institutions

Addressing the Slum deficit will take time (decades)
Institutions need to understand complexity, maintain a long term focus, build capacity/capability over time through planned succession 3rd Sector is key to addressing the institutional chasm
* CLIFF = Community/Civic-led Infrastructure Finance Facility

Third Sector* Focus

Benefits of 3rd Sector Institutions
Independent Maintain Focus (capable of building capacity over time) Enterprising Creating Value/Surplus Non-Profit, Reinvest surpluses Govt. Sector Private Sector

Capable of taking risk (no Shareholders)

Capture subsidy in corporate ownership Have the ability to create housing as public good (infrastructure) rather than private (rental) Ability to borrow

Third Sector

Social Enterprises/ Cooperatives/ CDCs/ Housing Associations etc.

CLIFF Strategy
Challenge = Bridging 4 Gaps:
Institutional Gap: in urban institutional arrangements/ social enterprises to provide tertiary provision Solutions Gap: Develop appropriate/ affordable housing and basic service solutions

Finance Gap: Build bankability and credit-worthiness to access cheaper finance, and increase affordability
Delivery Gap: Scale up delivery/ Build project pipelines/ economies of scale/ increase affordability

Method:
Simultaneous focus on the deliverable and the delivery institution Start with the end in mind (Scale, Sustainability, Capacity)

Development + Delivery
Projects Scale up Capacity Scales up Projects
Social Enterprise (Independent)

PROJECTS

CAPACITY

SUPPORT SERVICES + INVESTMENT

Equity, Debt, Guarantees, Fund + Portfolio Dev. Twinning, C/Rating CLIFF, Guarantees, Refinancing Project/Pipeline TA Fund Mgmt.

INVESTMNT ($)
10,000,000+ 10,000,000+ 1000,000s 1000,000s

5 4 3 2 1

Self-Reliant Engage Market

Engage Govt Demonstration

Capital Grants, Soft Loans CLIFF, Org 100,000s 100,000s Development/ Fund Mgmt. + HMF TA Project Grants, Org Development TA, Savings + Credit Systems TA Small Grants Technological Financial Managerial Political Social

10,000s 10,000s 1,000s

Formation/ Mobilization

STAGES of DEVELOPMENT
Community Based Organisation (Dependent)

$ INVEST CLIFF

Graduation Facility

DEVELOPMENT FRAMEWORK

STAGE 1 Community Mobilization & Organisation

Identify legitimate and credible leadership Establish CBO to facilitate the delivery of housing and infrastructure

STAGE 2 Demonstration (Precedent setting/ bridge building)

Development innovative/affordable/ replicable housing/ infrastructure models using community resources

STAGE 3 Government Engagement

Government engages 3rd Sector as partner. Facilitates:
Land Provision Subsidies/Matching Funds

Regularization of Tenure
Technical Support Guarantees

Projects Scaled up Seat at the table

STAGE 4 Market Engagement

NPO/ Social Enterprise Formed Leverage Land Market
Increase Scale/Affordability

Cross-subsidy (Mixed use) Development Projects

Cross-subsidy Real Estate Portfolio

Drive pro poor change through practice/ seat at table

STAGE 5 Self-Reliance
Track record established
X-subsidise/ Local Subsidy Leverage Assets (Portfolio)

Access to Private Finance

Independent, Self Sustaining

Oshiwara Project, Mumbai: 5300 Households

CLIFF Leverage

Savings Land Sales Rights Sales Land Donation

Savings Savings Loan Revenues Subsidies Loan Revenues

User Revenues Contract Payments

Land Donation

LEVERAGE
Sales Subsidies

$ 83 million (Projected project value)

Land Projects

Sanitation projects

Incremental housing projects

Complete housing projects

$ 14.5 million

Funders

Homeless International

Partners/ Enterprises

Grants Repayments Loans

HI /USAID Guarantees

Local Banks & Financial Institutions

CAPITALISATION Land/Sale Rights Sale Housing/ Sale Rentals/ Service Revenues Loan Revenues

Surplus $ 39 million (Projected)

Looking Forward
Seed Funding:
$ 35 million (DFID/SIDA/HI/UKHA): New Funding (UK Housing/ Venture MF )

New Funding Mechanisms

Loans and Guarantees Refinancing Facility (Africa)

New Partners:
Portfolio 10 CLIFF Partners (Africa/Asia) Graduate 7 to Self-Reliance

Projected Outputs:
35 000 Housing Units Toilet: 1,2 million Users Leverage: Est. $100 million

Questions

COMMUNITY IDENTIFICATION PIPELINE

Funding Flows
NOT FUNDED BY CLIFF

Coordination

Community Mobilisation

PROJECT PACKAGING
Project Prepared

COMMUNITY DEV/PREP
End User Purchase Unit

Project Prep Finance

H.I. FINANCE/CLIFF

Loan Released Loan Repaid with interest Project/ Bridging Finance (Stages)

CLIFF PARTNER
FUND MANAGEMENT
Capital End-user LOCAL Finance Finance

ORG

VMF INVESTORS/ TAKE OUT FIN

Loans to selected beneficiaries

Loans Repaid

Project Developer
Units Completed/ sold to end user finance Division

Loans and Interest Repaid

Home Loan Sanitation Loan

CAPITAL FINANCING

TAKE OUT FINANCING

CLIFF Financing (detail)