There are few cases where a microfinance bank transcended its role as a financial institution to become the champion of an affordable housing project. Jamii Bora is an example of one of these microfinance institutions, and there is much to be learned from their accomplishments with their housing project in Kaputei, Kenya. Jamii Bora started the project as a microfinance bank and quickly transformed into a developer, facilitator, and community planner. Among many things, Jamii Bora’s project exemplifies how to design a business model, using a variety of partnerships to create lively, green, and affordable community developments. The cross-sector partnerships leveraged by Jamii Bora and a focus on sustainability ideals were essential for the microfinance bank to produce the results that many would have thought were beyond its capabilities.
As a brief background, Jamii Bora is Kenya’s largest microfinance institution with a client-base of more than 300,000. In 2002, Jamii Bora bought land about 60km outside of Nairobi in a town called Kaputei and succeeded in building 2,000 homes at a price range of $4,375 - $8,750. The details and intricate aspects of Jamii Bora’s business model in Kaputei are documented in Hystra’s report, Access to Housing at the Base of the Pyramid, and this post is here mainly to summarize what we, as industry practitioners, can take away from Jamii Bora’s experience.
Developing Community: Jamii Bora made the community aspect a central part of its strategy in the Kaputei development. The microfinance bank understood that a neighborhood development is not fully sustainable unless residents have access to services, commerce, and opportunity for continued livelihood. They incorporated this into the process of choosing eventual home-owners. Entrepreneurs and individuals that could service the community were prioritized because Jamii Bora understood that they would contribute to the livelihood of the community.
Green Building: Jamii Bora did not simply use green-building best practices because it was one of their ideals. The green technologies were actually used strategically to reduce costs. The town of Kaputei did not have access to basic government utilities so Jamii Bora had to find alternative, local means to supply these services. They worked with architects, engineers, power companies, and even university academics to find an integrated solution that involved solar panels and wastewater treatment facilities.
Financing: Jamii Bora utilized many strategies to engineer more affordability in the development. Jamii Bora sourced all raw materials locally and established a local production site in order to reduce the costs of transportation that come with outsourcing. They hired their own clients as laborers, effectively reducing labor costs and the employment of the home-owner reduced the likelihood of default. The selling price of the home covers the construction cost of the home and 50% of the costs of infrastructure and land. The other 50% of those costs is covered by the rent payments from commercial and industrial space. The various strategies used by Jamii Bora ensured that the monthly payments for the new homes were roughly equivalent to what customers were previously paying in rent in a Nairobi slum.
Community Knowledge: Jamii Bora partnered with various Citizen Sector Organizations (CSOs) to develop their understanding of the needs of the community. The CSOs are most knowledgeable about the current and future needs of low-income customers and this knowledge was essential for Jamii Bora to plan and design the construction of the neighborhood.
Jamii Bora’s ability to create the sustainable and lively community in Kaputei was dependent on its ability to communicate effectively with the various project stakeholders and find creative, low-cost solutions. This is the kind of holistic approach we need as industry practitioners. Housing development such as the one completed in Kaputei involved microfinance banks, architects, engineers, academics, commercial and retail partners, NGOs, all playing a key role. These links have to be strengthened and maintained in the affordable housing community to ensure the continued progress in the sector. Ingrid Munro, Founder and Managing Trustee at Jamii Bora put it best when she said, “housing projects for the poor fail because they focus only on housing. You can’t separate housing from the other issues because poor people have so many needs. Poverty has to be tackled from all angles”.