Outstanding performance of the Home Improvement Fund
As of December 2006 and after 18 months of implementation HFH Macedonia’s innovative microfinance programme disbursed 98 reconstruction loans, totaling $ 446,810. They resulted in 60 reconstructions completed, while 38 were being in progress.
During the calendar 2005 HFH Macedonia and Moznosti, a local implementing partner of the global microfinance coalition Opportunity International, initiated partnership through innovative program in Macedonia. It is first partnership of that kind in Europe and Central Asia region.
Starting FY2006 the partners set up a credit line that provides small loans ($ 2,400-5000) for reconstruction and renovation of substandard homes. The credit line is a disbursement tool of the Home Improvement Fund, established through joint financial contribution of HFH Macedonia and Moznosti. Microfinance partner contributes twice of HFH Macedonia’s contribution: on each $100,000 contributed by HFH Macedonia, Moznosti contributes $ 200,000. It is projected 5 years after its commencement, the Fund to have $ 1.5 mil. of which $ 500,000 HFH Macedonia’s capital and $ 1 mil. capital of Moznosti.
Generally, the goal of this approach is to address the poverty housing in Macedonia on a scale larger than the traditional Habitat program, in terms of the number of partner families served. Precisely, after 18 months of implementation 98 loans were disbursed, totaling $ 446,810. They resulted in 60 reconstructions completed, while 38 were being in progress.
The program provides non-financial services as well, in a form of advice and training for the loan beneficiaries. As the loan processing has been assigned to be part of the responsibilities of the partner, these non-financial services were named Habitat component.
The business model has several other, distinctive components: faster turnover of the funds; guaranteed repayment; and moderate interest rate imposition, projected to be higher than the inflation rate adjustment. These components combined, in time generating income necessary to cover the program’s operational expenses, are to provide long-term sustainability of the program.
