Loan of up to $5 million has mobilized an additional $5 million through a B-loan syndication
The Inter-American Development Bank (IDB) has approved a loan of up to $5 million to Banco Multiple Ademi, a leading financial institution in the Dominican Republic with 60 percent of the microfinance market share, for on-lending to an estimated 5,000 Base of the Pyramid (BOP) families in need of home improvement financing.
Banco Ademi’s loans will be bundled with financial education and construction technical assistance for borrowers.
According to the IDB’s 2012 study Room for Development, Housing Markets in Latin America and the Caribbean, 41 percent of households in the Dominican Republic suffer from some sort of qualitative housing deficit, meaning that they require repairs and improvements to replace inadequate or unhealthy construction materials, or lack connection to basic services.
Moreover, a large part of the country’s population lacks access to financial services, including home financing. The gap is particularly acute among BOP households because they are employed in the informal sector of the economy and lack the credit history to qualify for traditional loan products.
Banco Ademi’s loan origination process in the BOP home improvement market segment stresses on-site interviews with families, as well as referrals from key players in the home improvement supply chain: “Banco Ademi is creating innovative partnerships with entities such as hardware stores that provide construction materials, and with a network of payment agents that facilitate mobile payments,” said Luiz Ros, Manager of the IDB’s Opportunities for the Majority Sector. “It is a benchmark for other home financing business models in the Caribbean.”