How impact measurement helps inclusive businesses in the affordable housing sector?
Access to safe and affordable housing is a fundamental need for people at the base of the economic pyramid (BoP). However, housing needs are frequently unmet in underserved areas. As a result of insufficient access to financing and materials, and a lack of technical skills, a significant number of households still live in low-quality dwellings or cannot afford their housing costs.
In order to understand these problems and serve low-income communities better, Business Call to Action (BCtA) members CEMEX Patrimonio Hoy, ¡Échale! A Tu Casa and Mahindra Rural Housing Finance are measuring their social impacts. These three inclusive businesses provide integrated housing solutions for low-income families through customized products and services, and their common objective is to understand the impact of their work beyond the number of housing units built or upgraded. With support from BCtA, the three companies mapped their business goals, strategies and operations against outcomes. To test their assumptions about how they will achieve long-term impact and understand where to make changes that improve these impact areas, it is essential for them to collect data on relevant activities and their resulting outcomes. To achieve this, the three inclusive businesses are measuring both housing and non-housing outcomes, which are focused on: 1) assessment of the housing itself; 2) impacts on individuals and families; 3) broader community impacts.
Assessment of housing
Inclusive businesses are commercially viable business ventures that engage people at the BoP. In the affordable housing sector, it has become increasingly essential to balance housing quality and affordability.
CEMEX Patrimonio Hoy, a subsidiary of the multinational Mexican cement manufacturer CEMEX, provides low-income families in urban and semi-urban areas with access to financing, building materials, technical expertise and related services. PH requires an active participation of customers in self-building, but the company notes that the biggest barrier to sales is potential customers’ reluctance to invest their time and limited disposable incomes in home construction.
While providing financing to customers, the company is also assessing customers’ housing quality that includes housing conditions, amenities, home design, and usable space (for living and income generation) pre- and post-construction. With these data, the company aims to demonstrate the returns customers receive on their investments. And feedback from customers also helps the company to improve its business model in order to reduce the costs associated with quality housing along with delivery time, as well as to improve its integrated products and services. PH has already enabled a progressive, efficient and sustainable improvement in the quality of life for more than 550,000 households, benefitting more than 2.5 million people.
Impact on individuals and families
In addition to the underlying benefits of producing quality low-cost housing, there are also incremental impacts on quality of life.
Mahindra Rural Housing Finance, a subsidiary of Mahindra and Mahindra Financial Services Limited, provides home loans to low-income families in rural India. With its social objective of “Transforming Rural Lives”, it aims to reach 1 million new customers by 2017-2018. While its management is well aware of the business’ financial impacts, it is measuring the social impact it creates in order to improve its product and service offerings, and inform customers about additional benefits. The results of a social-impact survey show that 78 percent of Mahindra’s existing customers possess toilets – much greater than the national average of 40 percent – but there is a wide variation across states. This gives the company an opportunity to focus on sanitation projects in states where in-home toilets are not common. While providing loans through these projects, the company is conducting marketing activities to raise customers’ awareness of home sanitation and its importance for health and well-being.
Broader community impacts
In today’s marketplace, building affordable housing is not enough: it should also have positive impacts on the community.
¡Échale! A Tu Casa is a social enterprise that provides affordable eco-friendly housing solutions to underserved communities in 23 Mexican states and has built 150,000 housing improvements and 30,000 new houses. Its integrated approach strengthens communities by actively involving community members in its housing solutions and encouraging them to be more engaged citizens. Customers are trained to assist in their homes’ construction and are paid for their work. In addition, the company appoints community leaders to facilitate decision making on behalf of their communities.
For ¡Échale!, measuring increased job opportunities in construction sector is an important criterion for assessing impact on the local economy. In the process, it found that over 90 percent of its customers had not participated in any community organizations before working with ¡Échale!. The company will examine changes in customers’ civic participation over time while assessing their willingness to take part in the construction of a community center.
While these affordable housing businesses’ models vary, they are all focused on improving access to housing and services in addition to long-term outcomes like improved living standards, increased economic opportunities and enhanced health and well-being. Measuring impact brings companies to their customers on a continuous basis, and this helps improve customer engagement. In the meanwhile, integrating impact measurement activities into operations also helps companies improve their internal efficiencies and processes. Furthermore, the impact framework provides a quantitative basis and analytical foundation for businesses. For instance, the alignment with the Sustainable Development Goals (SDGs) provides companies strategic insights on future opportunities that they can tap into.
Visit the webpage of BCtA Impact Measurement Services for more information and case studies.
This blog is a part of the August 2017 series on Affordable Housing in partnership with Business Call to Action.
Read the full series for more innovative inclusive business models, lessons learnt by practitioners, and the unique challenges of understanding and measuring impact in the housing sector.