A Vision for Housing Solutions in Paraguay A Partnership for Safe and Affordable Homes Over 800,000 Paraguayan families lack adequate housing; that number is growing by 15,000 every year. Low-income families have almost no access to the financial products they need to improve their living conditions. New solutions for such households are now available, thanks to an innovative four-way partnership involving local microfinance institution Vision Banco, the international nonprofit Habitat for Humanity, the commercial bank Citibank, N.A. Paraguay, and the Inter-American Development Bankâ€™s Opportunities for the Majority (OMJ) initiative. Low-income families will be able to access the loans they need to repair, expand, or improve their homes. They will also receive financial literacy training to help them manage their financial responsibilities. Housing and Banking Access: Two Persistent Issues Affecting the Poor Paraguayâ€™s housing deficit is not unique; most low-income communities across Latin America struggle with finding safe and affordable homes. Credit is virtually nonexistent for those at the bottom of the socioeconomic pyramid, so their prospects for improving their living conditions are grim. However, Paraguay faces a particular limitation in addressing the housing and banking challenges of its low-income residents. Its financial institutions have limited options for accessing long-term local currency lending, which further limits the capacity of local institutions to offer credit to traditionally marginalized sectors.
Financial Institutions and a Nonprofit Unite for Results With the support of a US$3 million partial credit guarantee from the Opportunities for the Majority initiative of the
Inter-American Development Bank, Citibank N.A. Paraguay will provide the long-term financing needed by local financial institution Vision Banco to fund a new home improvement credit line designed specifically for low-income households. Vision Banco, a leading Paraguayan commercial bank, specializes in microfinance; 75 percent of its loan portfolio corresponds to microcredit and loans for small and medium businesses. Habitat for Humanity, an international Christian nonprofit dedicated to building and repairing housing for the poor, has been working in Paraguay since 1998. Together, they have designed a program that provides low-income families with both the financial resources and technical expertise they need to make quality improvements to their homes.
Financial Tools for Low-Income Homeowners While some loan recipients are already microcredit clients of Vision Banco, Habitat for Humanity will play an important role in screening and training qualified applicants. Habitat architects will work with beneficiaries to plan and carry out the proposed construction projects, and will provide training in financial literacy to help the loan recipients understand how to manage the repayment of their loan, as well as make them aware of other financial services available to them. To be eligible for these new loans, clients must have been working for the same employer for at least three years, be supporting at least one dependent, already own land, have family income of no more than four times the minimum wage, and participate in mandatory financial education workshops led by Habitat for Humanity. This project is an example of the multisectoral approach frequently used by OMJ, as it combines the resources of a private financial institution, a commercial bank, and an experienced nonprofit to make the project stronger and better able to reach more clients than any individual partner could on its own. As a result, up to 2,500 families will lead healthier, more secure lives and will have increased access to financial services.
For more information about the program, contact: OM-IDB@iadb.org