The Inter-American Development Bank (IDB), a development financial institution (DFI), has approved a USD 7 million loan for the Fondo Nacional de Vivienda Popular (National Fund for Housing a.k.a. FONAVIPO) in El Salvador. The program was established to assist low-income individuals and families in acquiring homes. The IDB has invested USD 70 million in housing for low income families in El Salvador since 2001 [1].
FONAVIPO, a Salvadoran housing fund and public second-tier financial institution, was established to improve access to credit for Salvadoran families with incomes at or below minimum wage. For 16 years, FONAVIPO has helped 110, 262 families, providing USD 255.17 million in credit, and 59, 181 families with USD 106.71 million in donations. As of 2008, FONAVIPO reported total assets of USD 87, 325, 902, an ROE of 1.97%, and an ROE of 4.68% [2]. For FONAVIPO’s most recent annual report, click here.
FONAVIPO will use the IDB loan to extend its credit lines to MFIs. These MFIs, with access to credit lines from FONAVIPA, will provide loans to low-income households who may use the loans to purchase property, improve their existing property, or build their own dwelling. The program projects individual loans of approximately USD 3, 000, benefiting around 2, 300 families.
IDB’s Country Strategy Update (CSU) for El Salvador from 2005-2009 indicates allocation of USD 100 million for anti-poverty issues and USD 25 million for the University of El Salvador specifically [3].
Supplementing IDB’s loan is a technical cooperation grant which will go towards establishing a public information center for housing solutions. The centre, Centro de Información y Asesoría al Usuario para el Acceso a Soluciones Habitacionales (CIASUSH) is intended to assist low-income families acquire the necessary paperwork for obtaining funds.
The IDB was established in 1959 and specializes in developing economic growth in Latin America. It has approved lending and grants over the past 12 months to total 10 billion USD. At the end of 2007, IDB reported total assets of USD 69.9 billion. A previous MicroCapital story discusses IDB’s approval for financing a facility in Peru with USD 10 million, which was created to assist home improvement and mortgage financing in Peru. The facility was financed under IDB’s Opportunities for the Majority program [4].
By: Diya Chopra, Research Associate
Bibliography:
[1] Inter-American Development Bank
http://www.iadb.org/news/detail.cfm?language=English&id=5546
[2] FONAVIPO
http://www.fonavipo.gob.sv/descargas/memorialabores2008.PDF
[3] Inter-American Development Bank: Opportunities for the Majority
http://www.iadb.org/topics/om/index.cfm?
[4] MicroCapital
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