Housing Microfinance in South Africa: Status, Challenges and Prospects

This paper outlines the housing microfinance (HMF) sector in South Africa, describing the players, and the frameworks that guide their operations. It maps the sector’s progress and the challenges and opportunities it will face in the future. 

South Africa is host to a small, yet vibrant group of MFIs. The total market for HMF in South Africa is, however, potentially much larger than what they currently serve. HMF is constrained by the government’s housing policy and delivery approaches. Garnering acceptance of incremental housing delivery as the most effective route to delivering accommodation to low-income households is another challenge..

Inputs from several actors at different levels will be required if HMF is to fulfill its potential in meeting South Africa's low-income housing goals. The paper recommends the following:

• Changes in institutional infrastructure, such that it is more conducive to a HMF-facilitated housing system;
• Creation of organizational infrastructure, with facilitative and support programs implemented by provincial and local governments, NGOs, HMF providers and building trades;
• Development of pilot lending programs to foster innovation in HMF;
• Development of a proactive and coordinated lobbying platform for HMF.