Housing microfinance and housing financialisation in a global perspective

Abstract

The application of microfinance to the provision, improvement or adaptation of housing—‘housing microfinance’—is an increasingly significant area of practice and research interest. Housing microfinance has proliferated, predominantly but not exclusively in the global South. Its proliferation must be understood in the context of financialisation and the concurrently growing importance of financial self-help and private real estate investment. Promoter perspectives emphasise the affordability of microfinance solutions for housing, their appropriateness for incremental housing strategies, and potentially interesting new business models. Critical perspectives emphasise the high costs and continual need for subsidies, risks faced by borrowers and the discipline demanded from them. To advance the debate, we present an analytical typology which maps different housing microfinance approaches in terms of how they connect finance with housing, whether they are credit-led or savings-led, whether the market or the state dominates, whether they are individualistic or community-oriented, and how formal or informal they are. The five articles in this special issue, presenting material from Kenya, Mexico, U.S.A, Thailand and Argentina, collectively advance six avenues of research on housing microfinance: (1) its immediate social impacts; (2) wider impacts in terms of housing affordability, markets and policies; (3) implications for construction and retailing markets; (4) consequences for urban development and societies, (5) the financial work required from participants; (6) and the significance of the ongoing experimentation in housing microfinance.

Keywords:

• Housing
• microfinance
• financialisation

Housing microfinance in the context of housing financialisation

With the growth and maturing of the microfinance industry and structural changes in the housing sector, both at a global scale, housing microfinance has become an increasingly important activity at the interface of housing policy, social policy, international development, and financial inclusion. Yet few scholarly studies have engaged with housing microfinance so far. This is surprising in light of a thriving donor-practitioner literature that strongly advocates the extension of financial services to low-income households as a viable and important route toward improved shelter (Kihato, 2013; Stickney, 2014; Terwilliger Center for Innovation in Shelter, 2017; UN-Habitat, 2005). The five papers in this special issue expand the nascent critical scholarly engagement (Grubbauer, 2019) with the origins, micro and macro politics, and potentials and ambivalences of housing microfinance. This editorial contextualises these papers in debates on financialisation and juxtaposes promoter and critical perspectives on housing microfinance. As a key contribution, we present an analytical typology for mapping different housing microfinance approaches, and we discuss the progress made by the papers along six avenues of research.

Microfinance is the provision of financial services, predominantly credit, to poor and low-income people, mostly by specialist providers (see Mader, 2015, pp. 8–10). By ‘housing microfinance’ we mean the use of small, mostly non-mortgage loans for the provision, improvement or adaptation of housing, whether the application is designed by the provider or is the borrower’s choice (as explained in the analytical typology in the succeeding section). Housing microfinance clearly overlaps with the market-driven expansion of housing finance among low-income populations in the global North, notably the rise (and fall) of subprime lending. Yet a number of features make housing microfinance distinct, including its openness towards more informal borrowers and housing arrangements, the common expectation that finance-using households undertake some of the physical work of housing production themselves, and the fact that it is widely promoted by non-profit or not-quite-for-profit organisations. For these reasons, housing microfinance has proliferated much more widely in the global South, although it is also gradually taking hold in contexts of poverty and informality in the global North. Its diverse roots also include community-based and activist self-organised housing initiatives in the global South, whose importance in shelter provision has often been overlooked, as Mullins and Moore (2018, p. 11) point out.

On a global/macro scale, the emergence and growth of housing microfinance must be understood in the context of the multi-faceted global process of financialisation: the extraordinary ‘expansion of the frontier of financial accumulation’ (Mader, 2015, p. 27), approximately since the 1980s, which has seen financial motives, markets, actors and institutions become increasingly dominant in higher- and lower-income economies and societies (Epstein, 2005; Krippner, 2005; Mader et al., 2020). One of its central implications is people’s increased dependence on finance for the fulfilment of various needs, as previously public provision systems ranging from pensions (Van der Zwan, 2017) to healthcare (Hunter & Murray, 2019) and basic welfare (Lavinas, 2018) have been transformed and privatised. One important facet of financialisation has been a marked increase in global financial investment in real estate (Rogers & Koh, 2017), which made real estate ‘more significant in the political economy of the last three decades, not primarily in terms of housing production, but rather as store of value’ (Aalbers et al., 2020a, p. 201).

To understand the expansion of housing finance to low-income populations in the Global South, two more specific factors are important. The first crucial factor, itself entangled with financialisation, is the rise and institutionalisation of financial inclusion, as part of a wider agenda of ‘social finance’ which ‘attempts to resolve the unequal and often unjust results of capitalism with the application, albeit re-tooled, of more capitalism’ (Rosenman, 2019, p. 142). By making visible and redefining low-income populations’ various needs and desires as financial needs, and hence as opportunities for capital market expansion (Mader, 2016), financial inclusion has created new finance-led engagements with low-income people. Housing is one among many needs that are presented as fulfillable through access to financial services, alongside others like pursuing a livelihood (e.g., loans for micro-entrepreneurship) or dealing with climate risks (e.g., index weather insurance for farmers). At the heart of this financial inclusion agenda lies microfinance, which became a hegemonic ‘market-led’ poverty alleviation strategy under the aegis of multilateral donors from the 1980s on (Bateman, 2012; Weber, 2004). Since roughly the 2000s, microfinance proponents have de-emphasised income generation and promoted microfinance for a wider range of things, such as access to basic services and municipal infrastructures, water, sanitation and electric power (Mader, 2011).

The second important development which needs to be highlighted is the expansion, and also recent reconfiguration, of the global ideology and institutional landscape of (home)ownership societies in the wake of the global financial crisis of 2008 (Fikse & Aalbers, 2020). Over the past two decades, the state has retreated from providing social housing for low-income households in most contexts in both the global South and North. This went along with the weakening of rent controls, the selling-off of public housing stocks, and a wider political shift from support for rental toward owner-occupied housing (Beswick et al., 2016; Marcuse & Madden, 2016). Yet, as public housing complexes have been privatised or demolished, the local state has also become an important actor involved in real estate speculation and gentrification (Mösgen et al., 2019). Moreover, with rising rents and heightened demand because of demographic growth in many cities, and the acquisition of increasing shares of housing stock by institutional investors, rental housing is now also increasingly financialised (Fields & Uffer, 2016; Janoschka et al., 2020; Rogers et al., 2018). The consequences of the above shifts have included rent increases, displacement and heightened political conflicts around housing, but also surplus liquidity and a search by financial actors for new financial opportunities, including experimentation with housing microfinance.

In the light of these two developments, recent research has examined the dynamics of housing financialisation beyond Europe and North America, and more specifically in low-income countries characterised by informality and non-formalised modes of housing production (e.g., Aalbers et al., 2020c; Klink & Denaldi, 2014; Monkkonen, 2012; Soederberg, 2015; Vidal, 2018). This has been accompanied by intensified discussions around the consequences for housing policies in these contexts (e.g., Molina et al., 2019; Monkkonen, 2018). Many scholars have argued against treating financialisation as a single generalised and totalising process unfolding on a global level, arguing this disregards the diversity of political economies and cultural frameworks. For the case of housing financialisation, Aalbers et al. (2020b) have recently expanded this argument in a special issue dedicated to the financialisation of housing in capitalism’s peripheries. Aalbers, Rolnik and Krijnen (2020b) emphasise the diversity and unevenness of patterns of housing financialisation which dualistic accounts that contrast typical and dominant processes of housing financialisation in Europe and North America with deviating or delayed trajectories in the rest of the world overlook. Nevertheless, they see commonalities in how the subordinated role of southern countries in the world economy shapes patterns of housing financialisation, including the power multinational organisations have to impose housing market reforms, a crucial role of direct state intervention in subsidising mortgage lending, and strong alliances between real estate and finance actors in pushing a financial inclusion agenda (Aalbers et al., 2020c). While their call for ‘a relational understanding of financialisation’ (p. 484) is important, and the papers in their special issue demonstrate the variety of patterns and trajectories of how housing financialisation unfolds, their dominant lens remains mortgage finance.

The critical perspectives on housing microfinance assembled in our special issue expand upon the above debates by examining modes and patterns of housing financialisation beyond ‘typical’ mortgage finance arrangements. We connect, on the one hand, to the wider debates in housing and urban studies on housing affordability and housing struggles (Fields & Hodkinson, 2018; Marcuse & Madden, 2016; Schönig et al., 2017). Housing is a particularly important sphere of household expenditure because of its fundamental importance for quality of life and its high cost compared to other goods. Low-income households have had to accept investing large proportions of their income into securing their housing needs, along with either high levels of indebtedness (García-Lamarca & Kaika, 2016) and/or long processes of incremental building (Grubbauer, 2020). The papers show how non-mortgage loans play a central role in these processes of households negotiating their housing need against the opportunities, logics and constraints brought by capital markets, at the level of household and community practices. On the other hand, we connect to macro-level debates in international political economy and development studies about the causes, processes and consequences of multi-level state transformation and the attendant financialisation, commodification, and marketisation of social reproduction (Bayliss et al., 2017). As political economy research has highlighted, the combination of state retrenchment, weakened social protection and stagnating real wages has made households across the globe more dependent on ‘asset-based welfare’ (Mertens, 2017) and ‘debtfare’ (Soederberg, 2014). International development has increasingly been opened up to private capital to create investment opportunities, such as in microfinance, which are designed to attract and ‘crowd in’ investors (Mawdsley, 2018). The papers in this special issue highlight the need for locating housing microfinance in light of these political shifts.

Promoter perspectives vs. critical perspectives

Perspectives on housing microfinance differ greatly between those put forward by its promoters in mainstream finance and development organisations and those put forward by critical academic researchers. The differences revolve around the distribution of risks and profits between households and investors, the nature of the benefits for households and wider society, and more fundamental questions of justice and debt.

Regarding the first point, risks and profits, for investors housing microfinance is seen primarily as an expansion and diversification of their products (Center for Innovation in Shelter & Finance, 2015; Kihato, 2013). Many microfinance providers come from conventional banking and mortgage financing and have expanded into the market for non-mortgage loans. Similarly, conventional microfinance institutions have expanded their portfolio by offering more or less strictly regulated housing microfinance products. Finally, large suppliers of building materials have also entered the market and provide consumer loans targeting self-builders, particularly in the Latin American context. However, as low-income groups are seen as risky clients, costs for loans will be high to minimise risks for investors. A particular argument around the housing microfinance business case is that borrowers will be more financially disciplined and less likely to default when they invest in their own home (Bondinuba et al., 2020). From a critical perspective, this expansion of financial services to low-income groups is seen as mainly generating profit for investors by redistributing already scarce resources and exploiting the motivation of households to secure their housing needs and invest in their ‘home futures’ (Grubbauer, 2020). Moreover, until now, housing microfinance has not turned out to be a self-sustained business model because of the small scale of transactions and limited profit margins and has required additional state or donor subsidies to be financially viable (Chongo & Laufer, 2016).

With regard to the nature of the benefits for households and the wider society, the assessment also varies fundamentally. The argument made by financial actors and development funders such as the World Bank is that households will benefit because loans allow them to invest in their housing needs and improve housing conditions more efficiently than over more prolonged periods of incremental construction (Bredenoord et al., 2014; Smets, 2006). This is coupled with a suggestion that households benefit from learning how to handle financial instruments and will show greater financial literacy and discipline. In terms of the wider impact, housing microfinance is seen as contributing to the formalisation of housing markets which, in turn, is seen as a major strategy of poverty alleviation by allowing households to exploit their homes as assets. The critique of such arguments is centred on questioning the nature of the alleged material and moral benefits for households and communities. While improving the layout and interior of self-built homes can decisively contribute to quality of life, research shows that the extent and impact of such improvements will decisively depend on technical assistance and complementing loans with direct subsidies to make interventions more efficient and impactful (Grubbauer, 2020). Moreover, the focus on material improvement neglects social aspects of welfare and income security. Finally, the moral benefits of learning financial discipline are questioned in terms of further normalising calculative and entrepreneurial logics within everyday life (Montgomerie, 2020).

This connects to the third point of critique around the concepts of debt and justice. Promoters of housing microfinance argue that microloans will emancipate households to take better consumption decisions and invest according to their needs (Ferguson & Smets, 2010). This builds on long-standing arguments favouring the autonomy and self-organisation of low-income groups in securing their housing needs, going back to the contributions by John Turner from the 1960s and 70 s (Turner, 1976). Adopting this perspective, mainstream development institutions and practitioners argue that households have profound expertise about their housing needs which can be productively mobilised by providing them with small loans (Rahman & Ley, 2020). Finance (and debt) is seen thus as a means of empowerment and emancipation (Mitlin et al., 2018). In contrast, critics point out how debt through microloans deepens relations of dependence and exploitation, even if the nature of the debt relationship is obscured by rhetorically debt-free narratives of financial inclusion (Mader, 2015, 2016). Regarding the viability and justification of self-building, there is also a long-standing critique of Turner’s legacy, centred on pointing out the limits and inefficiencies of self-construction and claiming state responsibility in securing basic services (e.g., Marcuse, 1992).

The differences between these two perspectives are not easily resolved. This has to do in part with the fact that many of the academic debates related to housing financialisation which mobilise concepts such as risk and debt are still rooted in Eurocentric assumptions around how urban development proceeds. The realities of informal modes of urbanisation, however, draw some of these assumptions into question. A second reason is that despite expanded research on global urbanisation and informality over the past two decades, we still lack data on many issues related to informal urban development, such as household incomes, social networks, and consumption patterns. This makes a complete assessment of material and social benefits and costs for households involved in construction work in informal contexts very difficult. Finally, another reason is that the dividing lines between the two sides are not always clear-cut. Housing microfinance has partly evolved from community initiatives and has been informed by long-standing struggles of activists trying to assist households in their activities and invent finance schemes which meet their needs. We provide a mapping of housing finance approaches in the next section, to make sense of this complexity.

Mapping housing microfinance approaches

As Grubbauer’s (2019) research shows, and as contributions to a workshop in late 2018 underscored¹, the scholarly research on housing microfinance remains nascent and fragmented across geographies and different levels and angles of analysis. A quantitative empirical overview of existing housing microfinance models—e.g., their scopes and impacts—would exceed the scope of this paper and fail due to incomplete data. Hence, one contribution of this editorial paper instead is to propose an analytical typology of housing microfinance models, to aid future empirical evaluations by highlighting the key dimensions of difference between models, which the papers in this special issue collectively showcase. Based on the papers in this issue and the promoter and critical perspectives reviewed above, Table 1 summarises five dimensions along which different ideal-typical housing microfinance models may be mapped.

Table 1. Dimensions of difference in housing microfinance models.

Link of finance with housing	Designed—Financial services which are intended to be used only for housing purposes.	Incidental—Financial services with generic or other purposes are re/directed towards housing.
Credit- or savings-led	Credit-led—Households can borrow immediately.	Savings-led—Households must save up first, in order to borrow.
Market or state leadership	Market-led—Model is financed and/or implemented by the private sector.	State-led—Model is financed and/or implemented by the public sector.
Community focus	Individualistic—Borrowers are single individuals/households.	Community-based—Borrowers are collective.
Formality	Formal housing is provided using formal financial services.	Informal housing is provided using informal financial arrangements.

The first dimension concerns the nature of the microfinance-housing link: whether the financial service is explicitly intended for housing, or whether this is the borrower’s decision. This distinguishes what may strictly be called a housing microfinance ‘model’ from cases in which microfinance services are applied to housing by users without this being necessarily intended, requested or enforced by the financial service provider. Many housing microfinance schemes are explicitly designed to address housing needs, as documented for instance by Shelby (2021) and Lehner and Gerscovich (2021). But in other cases, loans for business purposes may be partially or fully redirected by borrowers towards housing, as Bhagat (2021, p. 13ff) documents with financial access schemes for refugees in Kenya. Mortgage loans may be combined with non-mortgage finance instruments for housing, in a negotiated compromise, as Grubbauer and Escobar (2021) find in Mexico. Microloans intended for household water and sanitation improvements are sometimes creatively worked into co-financing housing expansions, as Mader (2011, p. 25) finds in India. Money is fungible, hence non-housing microfinance may become housing microfinance. Rahman and Ley (2020, p. 8) say this ‘undercover operation’ of microfinance in housing improvements is often overlooked. Vice-versa, some clients may also shrewdly redirect housing microfinance towards other purposes as they see fit. The nature of the housing-finance link nonetheless matters: microloans designated for housing are more likely to be used for housing, and will normally carry lower interest rates, because households are expected to show greater financial discipline and/or forms of social collateral are used. In the latter case, these loans can be integrated into wider community development efforts around housing.

Another dimension of difference is whether an approach is savings-led or credit-led—that is, whether up-front savings are required from the (prospective) borrower. Many housing microfinance models require savings, not only to serve as a contribution or form of collateral from the borrower, but also as a screening device, to ‘test’ borrowers’ commitment and discipline. For instance, the Baan Mankong model in Thailand first establishes communal savings groups, through which community members must collectively save ten percent of the loan amount (Shelby, 2021). By contrast, as Lehner and Gerscovich’s (2021) comparison of two models in Buenos Aires shows, one model required savings on the assumption that an obligatory saving-up period could prove that a client had the capacity to save money and was gaining financial education’ (p. 603), while the other had no savings requirement, although some borrower groups decided to set up their own informal savings schemes after receiving the loan.²

The third dimension concerns the relative roles of markets and states in driving the approach. While microfinance is often seen as a quintessentially market-based policy, and housing microfinance models often operate in contradistinction to (or in spaces vacated by) public sector housing provision, in reality housing microfinance approaches are often implemented by state, non-profit or not-quite-for-profit actors. These include national government housing programmes (Grubbauer & Escobar, 2021; Lehner & Gerscovich, 2021), large quasi-governmental organisations (Shelby, 2021) and city-scale community development organisations (Phillips, 2021). The funders also may in theory be private-market funders, but almost all approaches studied by the papers in this issue in practice involved some sort of public/state funding, even when the borrower-facing institution was a for-profit lender or an NGO. Public funders often use co-financing arrangements or provide subsidies to ‘crowd in’ private sector actors. In developing country contexts, the World Bank looms particularly large as a public-sector financier and promoter alongside the Inter-American Development Bank, although its models then are often presented to the public as market based (Bhagat, 2021; Grubbauer & Escobar, 2021; Lehner & Gerscovich, 2021).

A fourth dichotomy, explored in depth by Lehner and Gerscovich (2021), is whether models build on community self-management of housing or instead directly target individual (would-be) homeowners. While some lend directly to individuals, many financing arrangements involve groups, and even aim to foster forms of community organisation for self-management and collective ownership of housing (see also Mitlin et al., 2018; Mullins & Moore, 2018). Lending to, or via, groups may serve to lower the transaction costs for the finance provider, by transferring the work of managing financial relationships to the community and its (un-/underpaid) leaders (Shelby, 2021). Individual-oriented models, by contrast, often require individual households to self-build housing improvements (Grubbauer & Escobar, 2021). They also must learn to personally manage the ways in which their shelter becomes entangled with finance, for instance by improving their credit scores or ‘learning’ how to generate a profit in order to repay (Bhagat, 2021, p. 499; Phillips, 2021), reflecting the above-mentioned disciplinary dimensions of financialisation.

Finally, the approaches differ in terms of their relative formality or informality, regarding both the housing and the finance, with the more ‘designed’ housing-finance links tending to be more formal. Development funders and governments often intend to promote the formalisation of homeownership and—under the financial inclusion banner—greater usage of formal financial services. However, more formal models are more likely to bypass the very poor. Many of the world’s poorest people live in informal or not fully formalised housing arrangements, and use a combination of formal and informal financial services to meet needs including housing. This means the boundaries between formal housing microfinance and informal self-help inevitably often blur (Bhagat, 2021). In some cases, as in Buenos Aires, the recipients of housing microfinance loans are cooperatives that grew out of squatter movements, and the loan is part of a process of formalisation (Lehner & Gerscovich, 2021). In other cases, as in Detroit, housing microfinance is intended as a re-entry point for individuals who have been expelled by the formal financial system (Phillips, 2021).

Although Table 1 has presented these dimensions as clear differences, in reality these dimensions are evidently continuums. Most housing microfinance approaches have blended features; such as being savings-led to greater or lesser degrees; relatively more or less formal; ‘market-based’ approaches turning out to be enabled by or dependent on state and civil society actors; and so on. Above all, households themselves mix and match different arrangements creatively, as part of a socio-economy where different debts overlap and feed, rather than neatly substitute, one another (Guérin & Venkatasubramanian, 2020).

Directions of research emerging from this special issue

The papers in this special issue offer readers five differently critical perspectives on housing microfinance, each based on an in-depth study of a particular place. Ali Bhagat’s (2021) policy analysis of financial inclusion as a form of refugee management critically explores the landscape of financial interventions in Kenya, focusing on housing finance for refugees as a site of neoliberal ‘fast policy’ experimentation which has done little to reduce refugees’ vulnerabilities. Monika Grubbauer and Luisa Escobar (2021) also evaluate, at a similarly macro-political level, the continuous experimentation by policymakers in deploying microfinance as a route to self-organised housing in Mexico, and trace a series of policy shifts instigated in a top-down manner by World Bank loans which encountered ‘contrasting rationalities’ (p. 538) on the ground, among both different state institutions and different segments of civil society. The next three papers take a more granular look at particular models, in the U.S.A., Thailand and Argentina. Rachel Phillips (2021) deconstructs attempts to revive the mortgage market in Detroit via ‘alternative’ housing loan products targeted at low- and moderate-income households who suffered from the subprime housing collapse in 2007–2008, arguing that these are unlikely to address the structural issues of poverty which led to the initial collapse. Hayden Shelby (2021) evaluates the ambivalences of the Baan Mankong programme in Thailand, which uses a strongly community-focused approach to upgrade informal housing on a large scale but, as she argues, also ‘entails new forms of formalised social relations to facilitate the taking out of collectively-managed debt’ (p. 525). The final contribution, by Judith Lehner and Alicia Gerscovich (2021) deepens the community-versus-individualism theme with a comparative study of two programmes in Buenos Aires, Argentina, one of which treats the housing question as inextricably embedded in social relations, while the other emphasises commercial objectives and housing as a commodity and financial asset.

Collectively, these papers show progress along four ‘avenues for future research’ on housing microfinance previously identified by Grubbauer (2019), namely: its immediate social impacts; the wider impacts on housing affordability, housing markets, and housing policies; the economic implications for construction and retailing markets; and the consequences for urban development and urban societies at large. They also showcase two new emergent avenues of research, on the everyday work of managing finance performed by individuals or communities, and on the significance of the experimentation ingrained into housing microfinance.

In terms of immediate social impacts, none of the papers in our special issue provide decisive answers, but they do offer some indications. Academic supporters of housing microfinance make strong claims about empowerment through accessible and collective modes of financing (Archer, 2012; Mitlin, 2018). Indeed, the papers collected here illustrate how shelter advocacy groups have often been part of or initiators of microfinance schemes in order to address the challenge of financing housing upgrades for the poor (Thailand, Mexico, Buenos Aires). Similarly, in Detroit and Kenya, the experiments have mobilised and included impact-oriented NGOs and philanthropic foundations as partners. However, the picture emerging regarding social impacts is ambivalent: Bhagat says the marginality and precarity of refugees remains unchanged, while Phillips suggests the main beneficiaries are the finance providers themselves and borrowers are mainly exposed to risks. Shelby’s research suggests a more positive picture in terms of housing outcomes, while highlighting the ambivalences that come with formalising and financialising community relationships. Based on in-depth ethnographic research, she emphasises impacts such as ‘personal stress, interpersonal conflict, and tensions between individual and collective well-being’ (p. 516). Lehner and Gerscovich’s comparison suggests communally versus individually focused programmes have different effects, but also points to the difficulty of producing reliable evidence on whether housing improvements have actually been achieved. Clearly, much further research is needed, especially more rigorous mixed-methods evaluations, with a greater focus on the gendered dimensions of housing microfinance.

Wider impacts on housing affordability

The papers point to several critical issues. One, affordability depends in part on the affordability of the loan, which is a function of low-income households’ financial capacity and of interest rates, which on average in the microfinance sector are around 35% per annum. Two, as households engage in housing microfinance schemes, their financial practices, their tenure, their land titles and their status within social units/cooperatives become formalised. Beyond the repayment of loans, this formalisation also can increase the monthly costs of living, as Shelby (p. 519) highlights. Third, and related to this, higher regular costs also mean greater risks. Because incomes are unsteady, what may be affordable at one time can become unaffordable at another, and the risk of losing housing or land titles which had to be pledged as collateral needs to be factored into the affordability question. Finally, an obvious insight from the papers, which nevertheless is worth reiterating, is that the state as an issuer of credit can keep interest rates lower than commercial providers (Shelby 2021) or can indirectly subsidise commercial providers to make commercial loans cheaper (Grubbauer & Escobar, 2021; Lehner & Gerscovich, 2021). Interest rates can be lower where expected default rates are lower thanks to technical assistance helping households to realise their housing improvement goals.

Construction and retail markets

Not all papers are explicit about the consequences of housing microfinance for construction and retail markets, but both papers dealing with the Latin American context highlight how the construction industry is interested and actively involved in housing microfinance schemes, and how approaches can involve a greater or lesser profit orientation. Lehner and Gerscovich (2021) emphasise one major advantage of the older self-managed process undertaken by housing cooperatives being that cooperatives could freely choose construction firms and material suppliers, or engage in self-construction supported by interdisciplinary professional teams, which allowed them to work with local suppliers rather than large commercial retailers or construction firms. In contrast, the new microfinance scheme in Buenos Aires made purchasing construction materials from selected commercial retailers obligatory, which excluded locally (and informally) operating retailers. Similarly, the evidence from Mexico (Grubbauer & Escobar, 2021) shows how state-led experimentation with non-mortgage loans, which included accepting labour or construction materials as forms of savings, opened the door for non-profit financial institutions such as savings and credit cooperatives. As shown in more detail elsewhere, some cooperatives managed to develop solidarity economy approaches that prioritise cooperation with local producers and suppliers of building materials (Escobar & Grubbauer, 2021). Interestingly, as Phillips’ case shows, the idea of self-building has seemingly travelled north, with some of the new loan products experimented with in Detroit explicitly being intended for housing improvement by borrowers investing their own physical work to upgrade the dilapidated housing stock (Phillips, 2021).

Urban development and urban societies

Several papers discuss the wider impacts and implications for urban development dynamics. Most fundamentally, the papers by Shelby (2021) and Lehner and Gerscovich (2021) point out how access to land and/or the formalisation of land tenure remain at the heart of upgrading processes. Yet while upgrading individual homes is desirable, community control over land is ultimately crucial when low-income homeowners compete against other actors on the urban real estate market for the ‘right to the city’. Seeing housing problems only as part of urban development dynamics, however, risks foregrounding ‘issues that can be solved through financial channels (namely credit constraints and mortgage market dysfunction) over issues that cannot be addressed through an expansion of credit’ (Phillips, 2021, p. 582), as well as blocking or overlooking alternative political solutions at the city level or higher. All papers point to critical questions around social inclusion or exclusion beyond the individual experience with housing microfinance, as with Baan Mankong projects potentially impacting positively on the social status and ‘sense of legitimacy’ (Shelby, 2021, p. 524) of communities, or the opposite in Kenya, with a lack of community networks and an individualisation of risk rendering refugees more vulnerable and marginalised. The significance of community networks, and the way in which they are able to absorb or counterbalance potential negative effects of microfinance, should be taken into account in ongoing debates about community-led housing provision in the global North (see Mullins & Moore, 2018).

Everyday work

Several of the papers document the disciplining and work that come with managing the ‘everyday’ financialisation of housing, as households have to signal financial responsibility and maintain reliability as ‘good’ borrowers (Bhagat, 2021; Phillips, 2021; Shelby, 2021). Their work of managing finance is not necessarily bound up directly with embeddedness in global markets, but with ‘shifting financial responsibility for urban upgrading to poor communities and by creating mechanisms through which poor populations must monitor and manage themselves’, which includes ‘formalising social units’ and ‘mutual monitoring and auditing’ (Shelby, 2021, p. 507). Shelby’s study of the Baan Mankong model is illustrative, documenting how much management and monitoring work falls on community organisations. This labour is unevenly divided, particularly in terms of gender, requiring educated leaders, regular community meetings, and considerable diligence. As organic community relationships become repurposed towards ensuring financial responsibility, the risk is that the community ties which made the model possible may become victims of its success. This constitutes another ambivalent insight which debates about community-led housing models in the global North and South can take onboard. Yet, households are quite aware of the various financial and social risks and responsibilities folded into housing microfinance and are often reluctant to take them (Lehner & Gerscovich, 2021; Shelby, 2021).

Experimentation

Finally, the papers collectively reveal how housing microfinance is a site of ongoing experimentation. This arguably reflects the experimental and contested nature of financialisation itself, as expansions of the ‘frontier of financial accumulation’ (Mader, 2015, p. 27) are continually imagined, attempted, and subsequently either cemented or abandoned. In some respects, experimentation is a political choice, as with Bhagat (p. 490) suggesting that governments and intergovernmental bodies have ‘dragged and dropped’ financial strategies onto target populations in Kenya despite their uncertain effectiveness; or Phillips (p. 560) documenting how houses and housing needs in Detroit became an ‘incubator’ and ‘petri dish’ for new financing models; or Lehner and Gerscovich (p. 607) suggesting cities are becoming ‘laboratories for housing (micro)finance’. Experimentation also reflects housing finance recipes meeting impediments on the ground, and being implemented on shifting political and legal terrains, as with Grubbauer and Escobar’s case of re-negotiated housing policy agendas and corresponding housing microfinance shifts in Mexico. It reflects different actor coalitions and new intermediaries coming together and seeking compromises; as with housing activists encountering for-profit firms in Mexico (Grubbauer & Escobar, 2021); local associations, state bureaucracies and the private sector negotiating in Buenos Aires (Lehner & Gerscovich, 2021); and local government working with philanthropic actors and financial institutions in Detroit (Phillips, 2021).

The scope of experimentation points, positively, to the pragmatism and creativity different actors bring to the challenge of reconciling social goals with financial imperatives in housing. However, critically, it also reveals a landscape littered with failed or abandoned strategies, which seem to lead to ever-more experimentation, which in turn may stand in the way of consolidation, longer-term sustainability, scaling up and learning across projects, and which may keep marginal populations in a continual state of being experimented-on.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 ‘Critical Perspectives on Housing Microfinance’, International Workshop, 29-30 November 2018, HafenCity University Hamburg (HCU).

2 See also Rahman and Ley (2020) for a comparison of credit and savings-led models in Bangladesh.