Investigating the feasibility of adapting bank-housing finance to progressive housing – the case of Maseru, Lesotho

Abstract

Paper presented at the XXXIII IAHS World Congress on Housing, 27-30 September 2005,"Transforming Housing Environments through Design", University of Pretoria.

Urban settlements in Lesotho as in other developing countries experience rapid population growth exacerbating the already eminent problem of inadequate shelter. One of the factors attributable to this rapid growth is increased industrialization perceived as an antidote to the unemployment problem. The government on the other hand is unable to assist in the ever-growing housing needs. The two reasons for this state of affairs are (i) the limited resource base, making the provision of housing subsidies not practicable; and irregular incomes which characterize the major part of the economy, which make extension of loans by the financial institutions difficult. The need for survival strategies therefore compels people to employ various informal credit methods to finance their houses, which are built incrementally. Therefore the purpose of this paper is to investigate the feasibility of adapting bank-housing finance to progressive housing, using the Maseru as the research focus. In order to achieve the above aim a household survey was conducted coupled with structured interviews. The structured interviews were held with the commercial banks as well as the government housing authorities. These interviews were mainly to elicit their views about the option of Microfinance of housing. It was established that the respondents as well as the government authorities were not aware of this option. The banks were neither aware of it and the risk issue brought skepticism. As such these made the phenomenon not practicable in the short-run in Lesotho. However the room for improvement calls for the need to mobilize the formation of a revolving fund to which the commercial banks could on-lend, as a solution to a lacking housing finance.