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Low-income Housing Finance CODI Experience. CODI in brief Founded in 2000 Founded in 2000 A public organization: having a government institution status.

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Presentation on theme: "Low-income Housing Finance CODI Experience. CODI in brief Founded in 2000 Founded in 2000 A public organization: having a government institution status."— Presentation transcript:

1 Low-income Housing Finance CODI Experience

2 CODI in brief Founded in 2000 Founded in 2000 A public organization: having a government institution status with flexibility in organization management A public organization: having a government institution status with flexibility in organization management Main objective: strengthening poor community organizations Main objective: strengthening poor community organizations

3 Current Activities Citywide slum upgrading ( Baan Mankong) Citywide slum upgrading ( Baan Mankong) Poverty Alleviation (Supporting communities in savings, credits and loans and community development plan, etc.) Poverty Alleviation (Supporting communities in savings, credits and loans and community development plan, etc.) Community Welfare Community Welfare Assisting in setting up of Community Organization Councils throughout the country Assisting in setting up of Community Organization Councils throughout the country Promoting natural resource management and sustainable agriculture Promoting natural resource management and sustainable agriculture Solving land and housing disputes in rural areas Solving land and housing disputes in rural areas

4 CODI strategies To play supporting role in community development process To play supporting role in community development process People, not CODI, are the owners and key actors of the process People, not CODI, are the owners and key actors of the process To coordinate with govt. agencies, NGOs, other civic groups To coordinate with govt. agencies, NGOs, other civic groups To promote community-based savings To promote community-based savings To use finance as a tool for development To use finance as a tool for development

5 Community Development Committee Academics Supported Agencies NGOs Local Authorities Others CODI Network WELFARE LAND - HOUSING SAVINGS - CREDIT COMMUNITY ENTERPRISE ENVIRONMENT OTHERS

6 CODI provides financial support by lending its capital funds to community organizations. CODI provides financial support by lending its capital funds to community organizations. At present, CODI credit facilities comprise four types of loans as follows; At present, CODI credit facilities comprise four types of loans as follows; -Loans for housing and development -Loans for community enterprises/income generation -Loans for holistic development -Short-term revolving funds

7 Income Generation Activities

8 Baan Mankong Housing Program Citywide slum upgrading a breakthrough in solving slums on a citywide scale a breakthrough in solving slums on a citywide scale Comprehensive approach in dealing with problems of land tenure, infrastructure, environment, construction and financing Comprehensive approach in dealing with problems of land tenure, infrastructure, environment, construction and financing Combination of self support, government subsidy and private cooperation Combination of self support, government subsidy and private cooperation Lead to amendments in rules and laws which are obstacles to housing solutions for the poor Lead to amendments in rules and laws which are obstacles to housing solutions for the poor

9 BMK demonstrates strong PPP partnership P- Poor people/communities as key actors in identifying problems, developing plans to resolve problems and implementing those plans themselves P- Poor people/communities as key actors in identifying problems, developing plans to resolve problems and implementing those plans themselves P- Public; government, CODI, local authorities, etc. Government as subsidy provider: CODI as facilitator, provider of long-term housing loan P- Public; government, CODI, local authorities, etc. Government as subsidy provider: CODI as facilitator, provider of long-term housing loan P- Private sector; NGOs, professionals, educational organizations etc. provide technical support P- Private sector; NGOs, professionals, educational organizations etc. provide technical support

10 City-wide upgrading involving many possible city development actors and find various secured housing solutions for all communities in the city City-widesurvey / joint planning, search forsolutions together Find various solutions suitable for all communities in city Community Municipality Community Other dev.agencies On-site Upgrading Land-sharing& reconstruction Reblocking & readjustment Resettlements Row-house Flat Detach house Row-housing Flat Mixed approach

11 Baan Mankong Procrss City-Wide Planning City-Wide Planning Organize meetings of stakeholders Organize meetings of stakeholders Establish joint committee to oversee implementation Establish joint committee to oversee implementation Survey all communities to identify problems and create holistic plan Survey all communities to identify problems and create holistic plan Develop housing, land tenure and policy plan for whole city Develop housing, land tenure and policy plan for whole city

12 Form savings groups Form savings groups Mobilize local resources, strengthen local groups, and build collective management skills Mobilize local resources, strengthen local groups, and build collective management skills Set up community working team Set up community working team Collect information about land, housing, physical infrastructure, income, employment, problems, and existing development initiatives Collect information about land, housing, physical infrastructure, income, employment, problems, and existing development initiatives

13 Conceptualize housing and development goals regarding land tenure, upgrading scheme, involvement of local authorities, NGOs, etc. Conceptualize housing and development goals regarding land tenure, upgrading scheme, involvement of local authorities, NGOs, etc. Formulate financing plan Formulate financing plan Work with architecture and engineer on developing housing designs and infrastructure Work with architecture and engineer on developing housing designs and infrastructure Submit detailed plan to BMK committee Submit detailed plan to BMK committee

14 Community Survey all communities in districts and city Community survey of all households In the community and all communities in the city carried out by community people

15 Participatory planning process

16 Loan process Loan approval Loan approval Screened by local and regional committees before being sent to CODI Screened by local and regional committees before being sent to CODI Approved by BMK sub-committee comprising reps from communities, CODI, NHA,GSB, GHB Approved by BMK sub-committee comprising reps from communities, CODI, NHA,GSB, GHB If loan amount exceeds THB50 mln.(~USD1.7), approved by CODI board of directors If loan amount exceeds THB50 mln.(~USD1.7), approved by CODI board of directors Loan disbursement Loan disbursement Loans are disbursed in tranches based on progress of project Loans are disbursed in tranches based on progress of project

17 Progress of Baan Mankong (up to March 2011) Number of project approval882 Number of project approval882 Number of cities278 Number of cities278 Number of communities 1,552 Number of communities 1,552 Number of families91,822 Number of families91,822 Govt. subsidy(THB mln.)4,706 Govt. subsidy(THB mln.)4,706

18 Baan Mankong Chantaburi Before and after

19 Baan Mankong: Financial Aspect

20 Providing Flexible Financial Support for City-wide Upgrading by Communities Grant 1)Upgrading of infrastructure and social facilities 2) Local management cost 3) Support for exchange visits, capacity building, seminars, coordinator Loans From CODI Revolving Fund Communities Government Subsidy Banks Interest 4 % Members

21 Source of Financing Three components of BMK financing: Local communities own savings (10% of project cost) Local communities own savings (10% of project cost) Government subsidy-THB80,000(~USD2,667) per family Government subsidy-THB80,000(~USD2,667) per family Housing loan from CODI Housing loan from CODI

22 Government subsidy Subsidy is given to community not to individual family Allocation of THB80,000 (~USD2,667) Allocation of THB80,000 (~USD2,667) - Infrastructure development 55% - Financial support 30% - Project management(incl.15% meetings, training, exchange visits, etc.)

23 CODI loan A collective loan to community organization, not to individual household A collective loan to community organization, not to individual household Collective land tenure Collective land tenure Loan maturity is 15 years and is payable in 180 equal monthly installments Loan maturity is 15 years and is payable in 180 equal monthly installments Interest rate is fixed at 4% p.a. Interest rate is fixed at 4% p.a. Maximum loan amount per household is THB 300,000 (~USD10,000) Maximum loan amount per household is THB 300,000 (~USD10,000) CODI finances up to 90% of the project cost. CODI finances up to 90% of the project cost.

24 Loan Security: 1) Land and buildings are mortgaged with CODI Loan Security: 1) Land and buildings are mortgaged with CODI 2) Guarantee agreement signed by chairman, committee and all members of the community organization. 2) Guarantee agreement signed by chairman, committee and all members of the community organization.

25 Re-lending to members A loan from CODI is on-lent to individual household with a margin of 2-3% added to e interest cost. A loan from CODI is on-lent to individual household with a margin of 2-3% added to e interest cost. The margin is set aside for the purpose of loan administration, community welfare and serves as a cushion for loan repayment in case any member fails to meet his or her obligation in any particular month. The margin is set aside for the purpose of loan administration, community welfare and serves as a cushion for loan repayment in case any member fails to meet his or her obligation in any particular month.

26 subgroup Community organization Subgroup management Subgroup daily savingsSubgroup daily savings Loan collectionLoan collection Group guaranteeGroup guarantee Help members who cannot payHelp members who cannot pay Interest 4% CODI Community Cooperatives on lends to members at 6-7 %. Margin for community development, management and welfare Loan management by community

27 BMK Loan Performance (as of Mar.2011) (Accumulated amt.) THB mn.(USDmn.) Approval 4,464(149) Approval 4,464(149) Disbursement 2,700 (90) Disbursement 2,700 (90) Repayment 519 (17) Repayment 519 (17) Outstanding 2,181 (73) Outstanding 2,181 (73) NPLs 2.05% NPLs 2.05% Beneficiaries Beneficiaries No. communities1,119 No. communities1,119 No. households25,866 No. households25,866

28 Funding sources Current funding sources for long-term housing finance Current funding sources for long-term housing finance CODI initial capital fund approx. THB 2,800 mln. CODI initial capital fund approx. THB 2,800 mln. Government budget (2009) THB 3,000 mln. Government budget (2009) THB 3,000 mln. CODI-GHB Refinancing scheme THB 500 mln. CODI-GHB Refinancing scheme THB 500 mln.

29 CODI-GHB Refinancing scheme Total amount: THB 500 mln. Total amount: THB 500 mln. GHB agrees to refinance BMK loans from CODI at the same interest rate and same terms and conditions GHB agrees to refinance BMK loans from CODI at the same interest rate and same terms and conditions CODI and GHB agrees on mechanism to compensate GHB for interest rate differentials CODI and GHB agrees on mechanism to compensate GHB for interest rate differentials

30 Project assessment Key success factors Key success factors Strong community leadership Strong community leadership Flexible, affordable financing for the poor Flexible, affordable financing for the poor People process which suits poor community livelihood People process which suits poor community livelihood Barriers Barriers Public land-use policies Public land-use policies Certain rules and regulations Certain rules and regulations Coordination among relevant agencies Coordination among relevant agencies

31 Challenges Challenges Future funding for the program Future funding for the program Scarcity of affordable land Scarcity of affordable land Linkage between formal and informal financial markets Linkage between formal and informal financial markets

32 New look of a slum in Pitsanuloke province

33 Bangbua Community before upgrading

34 Bangbua community during completion

35

36 Thank You


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