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8/3/2019 CLIFF: Financing Third Sector Housing and Infrastructure delivery
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Financing 3rd Sector Housing and
Infrastructure Delivery
Presented by:
Larry English
Chief Executive, Homeless international
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Limitations of Local Government and Private Sector:
Scale of Slums/ Limited Reach: 50% of cities comprise slum dwellers.Local Government cannot reach / plan for these communities
Poor relationship/ trust between Government and slum communities
Capacity frequently interrupted by change in leadership and politically
driven imperatives limited succession
Short-termism (Govt. and Private Sector)
Need for New Instutional arrangements/ New Institutions
Addressing the Slum deficit will take time (decades)
Institutions need to understand complexity, maintain a long term focus,build capacity/capability over time through planned succession
3rd Sector is key to addressing the institutional chasm
Why CLIFF*?
* CLIFF = Community/Civic-led Infrastructure Finance Facility
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Third Sector* Focus
Benefits of 3rd Sector Institutions
Independent
Maintain Focus (capable of buildingcapacity over time)
Enterprising Creating Value/Surplus
Non-Profit, Reinvest surpluses
Capable of taking risk (no Shareholders)
Capture subsidy in corporate ownership
Have the ability to create housing as publicgood (infrastructure) rather than private(rental)
Ability to borrow
ThirdSector
PrivateSector
Govt.Sector
Social Enterprises/Cooperatives/CDCs/ HousingAssociations etc.
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CLIFF Strategy
Challenge = Bridging 4 Gaps:
Institutional Gap:in urban institutional arrangements/ socialenterprises to provide tertiary provision
Solutions Gap:Develop appropriate/ affordable housing andbasic service solutions
Finance Gap: Build bankability and credit-worthiness to accesscheaper finance, and increase affordability
Delivery Gap:Scale up delivery/ Build project pipelines/economies of scale/ increase affordability
Method: Simultaneous focus on the deliverable and the delivery institution
Start with the end in mind (Scale, Sustainability, Capacity)
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Engage Market
STAGES ofDEVELOPMENT
Formation/ Mobilization
Engage Govt
1
2
3
4
5
CAPACITY SUPPORT SERVICES +INVESTMENT
Political
Social
Managerial
Technological
Financial
Demonstration
Self-Reliant
PROJECTS
CommunityBasedOrganisation(Dependent)
SocialEnterprise(Independent)
Projects Scale up CapacityScales up Projects
DEVELOPMENT FRAMEWORK
1,000s
10,000s
100,000s
1000,000s
10,000,000+
$ INVESTCLIFF
Development + Delivery
10,000
s
100,000s
1000,000s
10,000,000+
INVESTMNT($)
Graduation Facility
Capital Grants, Soft Loans CLIFF, OrgDevelopment/ Fund Mgmt. + HMF TA
Equity, Debt, Guarantees, Fund +Portfolio Dev. Twinning, C/Rating
CLIFF, Guarantees, Refinancing
Project/Pipeline TA Fund Mgmt.
Project Grants, Org Development TA,Savings + Credit Systems TA
Small Grants
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STAGE 1Community Mobilization& Organisation
Identify legitimate andcredible leadership
Establish CBO to facilitate
the delivery of housing andinfrastructure
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STAGE 2Demonstration(Precedent setting/
bridge building)
Developmentinnovative/affordable/
replicable housing/infrastructure models usingcommunity resources
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STAGE 3GovernmentEngagement
Government engages 3rdSector as partner.Facilitates:
Land Provision Subsidies/Matching Funds
Regularization of Tenure
Technical Support
Guarantees
Projects Scaled up
Seat at the table
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STAGE 4Market Engagement
NPO/ Social EnterpriseFormed
Leverage Land Market
Increase Scale/Affordability
Cross-subsidy (Mixed use)Development Projects
Cross-subsidy Real EstatePortfolio
Drive pro poor change
through practice/ seat attable
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Oshiwara Project, Mumbai: 5300 Households
STAGE 5Self-Reliance
Track record established
X-subsidise/ Local Subsidy
Leverage Assets (Portfolio)
Access to Private Finance Independent, Self Sustaining
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Local Banks& FinancialInstitutions
Homeless
International
$ 14.5 million
CLIFF
Leverage
CAPITALISATION
Land/Sale Rights Sale Housing/ Sale Rentals/ Service
Revenues Loan Revenues
LandProjects
Sanitationprojects
Incrementalhousingprojects
Completehousingprojects
Partners/Enterprises
HI /USAIDGuarantees
$ 83 million(Projectedproject value)
LEVERAGE
Funders
Repayments
Loans
GrantsSurplus $ 39
million (Projected)
RightsSales
Savings
LoanRevenues
Land Sales
LandDonation
ContractPayments
UserRevenues
Subsidies
Sales
LandDonation
Savings
Subsidies
Savings
LoanRevenues
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Looking Forward
Seed Funding:
$ 35 million (DFID/SIDA/HI/UKHA):
New Funding (UK Housing/ Venture MF )
New Funding Mechanisms Loans and Guarantees
Refinancing Facility (Africa)New Partners:
Portfolio 10 CLIFF Partners (Africa/Asia)
Graduate 7 to Self-Reliance
Projected Outputs:
35 000 Housing Units
Toilet: 1,2 million Users
Leverage: Est. $100 million
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Questions
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H.I.
FINANCE/CLIFF
CLIFF PARTNER
FUND MANAGEMENTCapital
Finance
Project
Developer
Home Loan
Loan Released
Loans
and
Interest
Repaid
EndUserPurchase
Unit
Loans
Repaid
Loans to
selected
beneficiaries
Project/
Bridging
Finance
(Stages)
End-user
Finance
Sanitation
Loan
PROJECT
PACKAGING
COMMUNITY
DEV/PREP
COMMUNITY
IDENTIFICATION
PIPELINE
Units Completed/ sold
to end user finance
Division
Loan Repaid
with interest
ProjectPrepared
Coordination
VMF INVESTORS/
TAKE OUT FIN
NOT FUNDED BY
CLIFF
CAPITAL FINANCING TAKE OUT FINANCING
CLIFF Financing (detail)
Funding Flows
Project Prep
FinanceCommunity
Mobilisation
LOCAL
ORG