Since it was launched in 2003, CODI’s Baan Mankong Program has helped more than 104,000 urban poor families around Thailand get secure land and housing, in over 1,000 projects. All of these projects were financed by loans from the CODI Fund to registered community cooperatives, which manage the loan repayments for their individual members and make a single community loan repayment to CODI each month. With such a big scale, it’s no surprise that there have been loan repayment problems.
Repayment is one of the biggest challenges for any institution that gives housing loans to the poor. Sometimes repayment problems are caused by management issues within the community cooperative or the savings group. And sometimes the cause is a disaster – a fire, storm or flood – that affects the whole community. But often, repayment problems come when community members experience some kind of crisis – a lost job, a sickness, an injury, a death – and the household income plunges and the family finds itself unable to make regular housing loan repayments. Even though they have good, secure housing now, the poor still struggle with low and irregular incomes and remain vulnerable to crises which put their hard-won tenure and housing at risk. And when members have trouble repaying, that affects the community’s ability to repay its collective loan to CODI – and CODI’s ability to loan to other communities.
Eventually, the issue of bad loans became the subject of a national discussion, in which CODI and community networks around the country tried to understand the causes and explore ways to improve the situation. If the goal was a permanent housing finance system for the poor, it was very clear that this economic vulnerability during the loan repayment period had to be addressed. Part of this exploration included looking at other kinds of housing loans on the market. What they found was that most of formal sector housing loans require that borrowers to buy some kind of insurance to go with the loan. But this loan insurance was missing in all the informal housing finance arrangements – not only in Thailand but in other countries as well.
So after a lot of discussion with the community networks, CODI launched a new housing insurance scheme in 2010, called Raksa Din Raksa Baan (“Keeping the land and house”), in which networks of community housing cooperatives around the country are the owners and operators of a national housing insurance program. CODI seeded the program with a 20 million baht (US$ 625,000) grant, and each family that borrows for housing or land contributes 200 baht (about US$6) per year to the fund. If there are problems which prevent a community member from making his or her loan repayments to the cooperative (like illness, loss of jobs, accidents, death or disasters), and if nobody else in the family is earning enough to make the payments, then the insurance fund will cover up to half of the repayments and ensure the family can keep their house and remain in the community, until someone can start earning and repaying the loan.
In the first stage of implementation, in order to better understand what kind of situations required insurance payouts, and to figure out how to make decisions, all the cases were discussed and decided upon at the center, by a committee of community network leaders from around the country. It soon became clear, though, that this centralized system of considering insurance cases took too much time. So the process was decentralized, and the community network in each city then began managing its own insurance cases locally. In this decentralized system, part of the insurance fund is kept in a national-level fund, and part goes into city-level housing insurance funds, which are managed by the urban community networks under the umbrella of their city-level CDFs, where all decisions about local insurance payouts in that city are made.
Insurance and community welfare go together: The housing insurance scheme has been a win-win proposition for almost everyone: poor families can keep their houses and their place in the community even when crises come, community cooperatives can make their loan repayments and CODI can get the loans back which it can then revolve in loans to new projects. But in many of the Baan Mankong housing projects, some families don’t take housing loans at all, and the benefits of the housing insurance program are only for borrowers. There are also communities in each city that haven’t made housing projects yet, and these people also experience problems of irregular income and crises. So to make a more holistic and more citywide safety net, part of the 20 million baht grant from CODI was used to help the community networks set up city-based funds, in order to deal with the general welfare, so that everyone in all the communities in the city can be be part of a welfare program, even those who haven’t taken loans from CODI. It’s a package which reaches everybody, with two different tools: insurance and community welfare.
Housing insurance fund figures, as of December 2018 (32 baht = US$1) 128 housing cooperatives had registered with the insurance fund, with 31,444 members, and the fund had supported housing loan repayments for:
- 190 families whose main income-earner died (total 9.23 million baht – $288,438)
- 47 families whose main income-earner fell ill and couldn’t work (total 0.82 million baht – $25,625)
- 786 families who faced disasters (total 2.28 million baht – $71,250)