Skip to main content
Improving housing conditions in Paraguay

An innovative way of allowing low-income families to afford home improvements

The Arguello family lives in a single room house in the outskirts of Paraguay’s capital, Asuncion. The family cooks, has meals and sleeps in the same room, which is also used as a play area by their three-year old child. Lack of credit has prevented the Arguellos from getting loans to improve their living conditions. There are millions of low-income families in Latin America who live in overcrowded, inadequate, and even unsafe spaces—and who can’t afford to move or to remodel the homes they have.

Image removed.Obstacles to providing loans to low-income households in the region are numerous: most of this population works in informal jobs and does not qualify for loans because it is considered very risky by potential lenders. A partnership between the Inter-American Development Bank, Paraguay’s Vision Banco, Habitat for Humanity and Paraguay’s Financial Agency for Development is helping solve this problem.

“The key aspect for a successful BoP business model is to work with this segment of the population to devise a solution that will help them improve their quality of life,’’ said Luiz Ros, who is in charge of the IDB’s Opportunities for the Majority Initiative (OMJ). “This means listening to their needs, offering affordable high-quality goods and services and providing technical assistance to allow them to make the best decisions.”

And this is exactly what this project in Paraguay is doing. Under the program, Habitat will use its expertise and its close relationship with local communities to help Vision Banco identify potential beneficiaries like the Arguello family. Vision Banco analyzes the applicants’ eligibility criteria and evaluates their debt repayment capacity. Then Habitat assigns an architect to work with the beneficiary on the design of the proposed construction. At the same time, Habitat provides the financial literacy workshops to the beneficiaries and oversees the construction works once the loan is approved.

This project is one of the innovative solutions that will be discussed at BASE: the First Forum for the Development of the Base of the Pyramid,which will take place in São Paulo on June 27-28. The forum will showcase business models designed to unleash the potential of the 360 million people who make up the social and economic base of the pyramid in Latin America and the Caribbean.

Image removed.There is little more critical to a family’s quality of life than a healthy, safe living space. Luis Sosa, president of Vision Banco, will participate in a panel discussion of the housing needs of low-income residents of Latin America and the Caribbean; and some of the ways private sector companies, from financial institutions to manufacturers of construction materials, are addressing these challenges through “base of the pyramid (BoP) business models.”

The IDB is supporting this project in Paraguay with a $2.5 million partial credit guarantee that has allowed Vision Banco to borrow locally to support a portion of the lending for the program. Paraguay’s Financial Agency for Development is financing the other portion of the program.

Jump back to top