The rapid urbanization of poverty throughout the world is a significant contributing factor to the rise of housing finance on the international development agenda. As much as 70 percent of the urban housing stock in sub-Saharan Africa, 50 percent in South Asia, and 25 percent in Latin America and the Caribbean are of poor quality, out of compliance with local building and planning regulations, lack basic services of water and sanitation and are characterized as slums. UN-Habitat estimates that the number of slum dwellers will rise from one billion in 2003 to almost two billion by 2020, with the majority of new dwellers residing in secondary cities and regional towns. With the such rapid escalation of urban poverty, governments have not been able to effectively respond to the inter-related needs for basic services, housing and income opportunities for many people. Traditional approaches of subsidized housing for the poor, or resettlement of people residing in slums will not sufficiently address the growing problem. Rather, a sustainable approach leveraging people’s savings with market rate finance – will be the most likely way to reach scale in a timely manner.

Numerous housing advocates can attest to the fact that some of the most basic needs of a community include the provision of housing and urban services to its residents. Most of the world’s poor face an uncertain existence where many live without adequate access to water and sanitation, are surrounded by uncollected garbage, are subject to frequent violence, with limited access to education, and live in self-built homes on precarious land where they live in constant fear of eviction. Perhaps the most basic human service is the provision of shelter. Adequate housing is considered so important that 75 percent of countries in the world have ensured this right in national constitutions or legislation. Adequate housing is also critical to the social, economic, and political stability of a country. A viable housing sector can generate employment opportunities, improve public health, deepen the financial sector, provide a sense of ownership to the populace, and help develop complex institutions that provide benefits across many sectors of society. Housing is also typically the greatest source of wealth creation available to the poor. By investing in their individual homes, the poor accumulate equity which can then be used as collateral to start or expand a small business.