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FMFB and AKPBS collaborate for Safe and Self-Built Housing for the Poor

Chitraltimes.com Report

KARACHI- The First MicroFinanceBank Ltd, Pakistan (FMFB-P) and the Aga Khan Planning and Building Service, Pakistan (AKPBS,P) has signed an MoU to improve the living standards of the poor people in Pakistan by providing financial services along with technical advisory to support safe and self-built habitat improvement of the low income and poor communities in the country.

Under the arrangement, FMFB shall provide need-based, short to medium term financial services (housing finance) for both structural and non-structural improvements in the houses. FMFB would provide loans amounting from PKR 10,000 - 500,000 to poor individuals in a group at a relatively lower interest rate to help the poor build social and physical capital over time. For structural house improvements, the clients would save prior to the release of the loan to build up their equity contribution, as well as save after disbursement to mitigate any cash flow changes over time. To support the clients in repayment, a grace period would also be provided to them during the construction period. AKPBS,P shall provide technical consultancy to the client for developing a sketch of the proposed construction/improvement and monitoring construction of the houses to ensure safe built environment and mitigate natural risks. Seismic resistance, sanitation and energy efficiency are aspects which have been made an integral part of the product design.

In addition to the structural improvements, financial facilities shall also be provided for minor improvements. Primarily under this, FMFB and AKPBS,P shall support the purchase of Building And Construction Improvement Programme (BACIP) products which reduce the domestic biomass needs by over 50%, while at the same time making the home smoke-free, dust-free and better insulated and lighted. BACIP products include fuel efficient stoves, which reduce fuel wood consumption by half and stop smoke from polluting indoor air; roof hatch windows, which improve light and ventilation, save fuel wood and help in reduction of acute respiratory infection due to dust and cold; Water warming facility, which eases domestic chores, primarily done by women, saves fuel and reduces exposure to cold temperatures; and floor insulation, which warms up the traditional house floor allowing for comfortable sitting and sleeping.

The Housing Finance product, which would reach out to 27,000 households in the next three years, is one of the social products being offered by the FMFB for empowering the poor communities in the country. In addition to this product, the FMFB is already offering Health Insurance product for the poor in Karachi and is developing an Education Finance product to be launched in the year 2010. The Housing Finance product shall be pilot tested in Gilgit-Balistan and Chitral during this year and would be launched in other areas in the future.