As sub-Saharan Africa braces for continued rapid urbanization, local startups are racing to create affordable housing solutions for the 1.2 billion people expected to move into the region’s cities by 2050. Though the region is brimming with entrepreneurs poised to tackle the boldest housing challenges, a lagging ecosystem for housing startups threatens their ability to scale. Through ShelterTech, the world’s leading platform for affordable housing innovation, Habitat for Humanity is changing that.

Habitat’s model for advancing innovation

Habitat’s ShelterTech platform uses an accelerator model to fast-track innovations, advancing startups through a six-month program to improve their business models and get them investor ready.

Since its launch in 2017 through Habitat’s Terwilliger Center for Innovation in Shelter, ShelterTech has partnered with more than 70 startups around the world to accelerate their growth and build a global community for shelter innovation.

The ShelterTech accelerators were piloted at a country level and have since expanded regionally to meet the growing global interest in affordable housing solutions. At each of the accelerators — Mexico, Kenya, India, Southeast Asia, Latin America’s Andean region — entrepreneurs have tapped into an expanding ecosystem of investors, corporations, advisors and peers eager to help families facing housing challenges improve their quality of life.

Terwilliger Center regional director for East Africa, Jane Otima, says sub-Saharan Africa is ripe with big ideas and early-stage startups that can benefit from an accelerator.

“This will not only allow us to leverage the resources we have in Africa, but it will also make us more deliberate in how we deliver on housing solutions in the region,” Jane says.

Habitat is partnering with global industry leaders — including Hilti, Dow and Autodesk— who will provide access to technical mentorship and other resources for the selected startups. Plug and Play, our anchor partner, will help lead the delivery of the program. 

A holistic approach to housing solutions

A decent home consists of more than walls, floors and roofs; the 10 startups participating in the ShelterTech accelerator in sub-Saharan Africa are “looking at the entire housing value chain,” says Lizan Kuster, Terwilliger Center associate director for entrepreneurship and innovation. Beginning in 2022, these entrepreneurs are bringing groundbreaking innovations to key elements that make homes livable, sustainable and healthy: construction technology, affordable financing, potable water, clean and renewable cooking and lighting energy, proper waste disposal, and access to land and insurance.

Building on successes of past accelerators

Entrepreneurs joining the ShelterTech accelerator in sub-Saharan Africa can look to the wide array of startups that partner with Habitat through the Terwilliger Center. By participating in the Kenya accelerator in 2018, these three diverse companies have been able to refine their business models and reach more low-income families as a result:

• Gjenge Makers is a woman-led social enterprise transforming plastic waste into strong, low-cost bricks for paving. Its founder, Nzambi Matee, won the UN’s Young Champion of the Earth Africa award in 2020 for her innovative and sustainable solution to plastic waste.
• MycoTile makes sturdy, fire-resistant walls and roofing materials sourced from agricultural waste and mushroom mycelium.
• The Vlage is an easy-to-use online platform where low-income young professionals across Africa’s urban centers can access affordable co-living accommodations.

Melany crouches and chooses a red colored pencil from a rainbow of options spread out on the ground. As her right hand begins working on her coloring book, the toddler plants her left hand firmly on the concrete floor to steady herself.

Much of Melany’s play time is spent on the floor of her home in San Juan Sacatepéquez, Guatemala — when the floor isn’t doubling as her easel, it serves as center stage for her dolls. Watching Melany play on their new concrete floors, her mother Silvia is at peace knowing her daughter’s play space is keeping her healthy, happy and imaginative.

“She rarely gets sick”

Prior to installing concrete floors in partnership with Habitat for Humanity and the Inter-American Cement Federation, known by its Spanish acronym FICEM, Silvia says the dirt floors in her home caused Melany to get sick every 10 to 15 days. “Now, with concrete floors she rarely gets sick,” Silvia says.

When a family builds a home with Habitat for Humanity, they build a strong foundation that helps them flourish. That foundation is a home that is affordable, durable, healthy and easy to maintain for years to come. 

From building resilient, hurricane-proof homes in Florida to prototyping with a 3D-printed home in Virginia, Habitat affiliates in the U.S. seek innovative solutions to local, pressing needs. 

The 2021 Habitat House Design Contest, generously sponsored for a second year by Simpson Strong-Tie, invited local affiliates to submit their home designs across a range of categories, including equity, multifamily, sustainability and many more. 

Click through to see these innovative designs.

Grasping the ins and outs of purchasing a home can set homeowners up for long-term success. Habitat works with families in need of safe, affordable homes to unlock access to buyer-friendly home loans, commonly referred to as mortgages. We leverage more than four decades of organizational experience to connect homebuyers with the tools and resources needed to establish financial freedom and security.

Read on to learn more about the most common types of mortgages and the ways Habitat improves access to affordable mortgages.

What is a mortgage?

A mortgage is a common way of referring to any loan that uses real estate as collateral, meaning that a home is pledged as security for repayment and the lender can take back the home if the borrower defaults on their payments.

Across the United States, the homeownership gap between Black and white households has steadily widened over the past two decades to create one of the starkest gaps since the 1960s, when race-based discrimination was legal. This is more prominent in Minnesota’s Twin Cities than in any other metropolitan area, with the nation’s largest Black and white homeownership gap at 51 percentage points — more than 20 percentage points above the national average.

Uncovering who Twin Cities Habitat serves

On the surface, Twin Cities Habitat for Humanity could have made a compelling case that they were adequately, even exceedingly, serving the area’s Black community. Year after year, 85-90% of their homebuyers were people of color. Yet the starkness of the area’s homeownership gap prompted them to dig deeper. Three years ago, the affiliate disaggregated their data to get a better understanding of the families they were serving and who they were “leaving on the sidelines,” says Shereese Turner, Twin Cities Habitat’s chief program officer.

The reality was startling. More than 60% of Twin Cities Habitat homebuyers were East and West African immigrants, largely hailing from Ethiopia, Somalia and Liberia. Those on the sidelines, representing just 5-7% of Habitat homeowners in the Twin Cities, were Foundational Black Americans, defined as Black descendants of enslaved Africans. For these individuals, generations of systemic exclusion through harmful practices — redlining, predatory lending and inequitable access — have led to markedly different experiences than that of their Black immigrant neighbors.

A pattern of housing exclusion

One of the longstanding discriminatory practices in the Twin Cities, and elsewhere, is the prevalence of racial covenants, which are clauses attached to property deeds excluding non-white people from buying land. When a team of University of Minnesota researchers leading a Mapping Prejudice project joined a Twin Cities Habitat board meeting, they revealed that even some of the organization’s board members owned homes that had these now non-binding covenants.

Robyn Bipes-Timm, chief strategy officer at Twin Cities Habitat, says this was an “illuminating” exercise that brought closing the homeownership gap to a more personal level. “We were complicit at a minimum in creating this racist housing system,” Robyn says. “We now need to be as deliberate in fixing it as we were complicit in creating it.”

Twin Cities Habitat uncovering exactly which families were closing on homes was the first step toward this deliberate commitment to closing the gap. In reviewing the disaggregated data, Habitat found that Foundational Black Americans were the least likely racial group to advance to homeownership despite putting forth the second most applications. Pa Lor, Twin Cities Habitat’s homeowner development manager, says Foundation Black Americans face many financial barriers to homeownership, including high debt-to-income ratios, modest savings and poor credit scores.

Though financial barriers present a sizable hurdle to homeownership, they fail to capture the full story. Twin Cities Habitat called on the expertise of Dr. Brittany Lewis of Research in Action to help garner a better understanding of the experiences Foundational Black Americans face when progressing through Twin Cities Habitat’s homeownership program.

Strategic steps toward closing the Black homeownership gap

The research found that families in the homeownership program wanted a more individualized journey that was tailored toward their life experiences, peers and coaches who looked like and represented them, and less stringent mortgage criteria. Twin Cities Habitat is responding to each of those findings in its new strategy, which seeks to increase the percentage of Foundational Black homeowners being served to 25-30% by 2025.

To create a more personalized journey, the team is asking 40 Foundational Black families in their homeownership program to join a Black-coached cohort that will feature customized financial coaching. Twin Cities Habitat will leverage critical insights gleaned from the cohort to create a homeownership program that sets Foundational Black families up for success.

Turner points to representation in clients and the organization as a critical lever in addressing the gap. Habitat’s financial coaching coordinators — Liberian, Hmong, Somali, Foundational Black American and a veteran — reflect the rich diversity of Minneapolis-St. Paul. “It’s hard to be when you don’t see,” Shereese says. “So that representation is critical.”

Twin Cities Habitat is actively exploring options to create a special purpose credit program, which would enable them to build a program “designed to meet the financial barriers of a certain group of people,” Robyn says. They hope this will open doors to customized financial coaching, tailored mortgage products and more flexible credit overlays for Foundational Black families.

These combined efforts will improve the homeowner conversion rate for Foundational Black applicants and thus move the Twin Cities area closer to achieving more equitable housing outcomes. There’s a long way to go to close the 51-percentage point homeownership gap looming over Minneapolis-St. Paul, but Twin Cities Habitat’s strategic, research-backed approach and energy toward advancing Black homeownership will move the needle in the right direction.

“It’s not just talking about closing the gap. It’s not just talking about racial diversity. It’s not just talking about equity issues,” Pa says. “We can’t close the gap without changing ourselves and how we approach our work.”

Without equitable access to affordable credit and investment capital, people living in low-income communities often face barriers to quality housing, education, health care, jobs and other essential services. Community development financial institutions, or CDFIs, can reduce those barriers by unlocking access to basic financial services for those traditionally excluded by mainstream financial systems.

In 2017 Habitat for Humanity International established Habitat Capital as our own CDFI. Together with local Habitat affiliates, some of which have decades of experience operating as or like CDFIs, we are increasing affordable homeownership through providing flexible capital, mortgage origination support and financial services. In this explainer, learn more about how CDFIs improve housing and livelihoods in underserved neighborhoods.

What are community development financial institutions?

CDFIs sprang onto the financial scene in 1977 following the passage of the Community Reinvestment Act, which encouraged financial institutions to serve low- and middle-income people who had been systemically excluded from equitable and basic financial services through practices like redlining. Further laws enacted by the U.S. Congress — namely the Riegle Act of 1994, which created the CDFI Fund — have reinforced the importance of CDFIs in American banking.

CDFIs are mission-driven financial institutions that serve low-income communities and residents across the U.S. who often lack access to financing. Where traditional banks might see risk when reviewing loan applications from low-income individuals, CDFIs see opportunity.

CDFIs partner with underserved businesses and individuals to spur growth at the community level, using a holistic and people-centered approach to inject much-needed capital and financial services into disinvested areas.

The collective impact of CDFIs nationwide has created millions of jobs, jump started businesses, increased affordable housing availability and expanded community facilities.

The four types of CDFIs

Though CDFIs share similar tenets, they operate in different ways. There are four types of CDFIs:

• Community development banks are federally insured for-profit institutions that operate much like a traditional bank, though they carry an imperative to direct a minimum of 60% of their financing to distressed communities.
• Community development credit unions are nonprofit, member-owned cooperatives that offer credit counseling, business planning and other basic financial services to low-income individuals often living in underprivileged communities.
• Community development loan funds provide financing and development services for microenterprises, small businesses, housing development and community service organizations. This is the most common type, representing more than half of all CDFIs.
• Community development venture capital funds pool money from investors to finance small businesses that improve community and economic development goals while also yielding financial returns. This is the least common type of CDFI, making up just 1% of all CDFIs.

Scalable impact: CDFIs at work

In 2020, 4.6 million clients were served by one of more than 1,000 CDFIs operating in the U.S., according to an annual impact survey conducted by the CDFI Fund. These community-based financial institutions are critically reaching the people who need capital the most. A survey of 269 CDFIs who are members of Opportunity Finance Network revealed that the clients they served in 2020 were:

• 84% low-income, low-wealth or historically disinvested individuals.
• 60% people of color.
• 50% women.
• 27% rural borrowers.

CDFIs, including those operated by Habitat, enable low-income individuals to access the basic financial services that can propel them out of poverty and into life-changing positions like homeownership and financial independence. They are mainstays for under-resourced communities and will continue to be a valuable investment, creating financial access for their neighborhoods and residents.