“Your pay stub, please.” That’s what mainstream banks usually say to customers in developing countries who come in looking for mortgages—because the bank needs some kind of proof that the loan will be repaid. But artisans, entrepreneurs, self-employed shop owners, and other workers in emerging markets who earn a living through informal jobs have no pay stub to show. It’s a high figure—over 70 percent of people in Kenya, for example, are employed informally.
My team and I have been researching how financial institutions can help deliver affordable housing, making mortgages more available to these workers and their families. We started by asking the question, “How do we use technology to establish an informal borrower’s capacity to pay?” The answer, as I explain here, offers African banks a way to extend mortgage tenors to low- and lower-middle-income individuals searching for homes in Africa—getting them out of the slums and settled into a place of their own.
RELATED LINKS
