IDB urges more private sector involvement in tackling housing crisis in Caribbean

Jul 29, 2024 News

MEXICO CITY — The Inter-American Development Bank (IDB) Group has proposed six structural reforms to reduce the housing deficit in Latin America and the Caribbean, with special attention to vulnerable and low-income populations.

During the 3rd Housing Forum 2024, held in Mexico City, public and private sector officials analyzed innovative measures and their effective implementation to guarantee access to housing for the region’s most disadvantaged groups.

An estimated 45% of households in Latin America and the Caribbean do not have decent housing. To reduce this gap, the IDB Group is proposing key reforms, including improving governance and regulatory frameworks to encourage private sector participation in the production and financing of affordable housing. Scarce access to financing for the most vulnerable sectors is leaving many families out of the housing credit system. Therefore, two of the suggested reforms seek to diversify subsidy schemes and design innovative financial products that facilitate access to housing for these sectors.

The set of six reforms recommended by the IDB Group at the Housing Forum 2024 also includes promoting business intelligence in the sector to improve housing deficit management alongside national statistics institutes; fostering innovation in construction systems and materials to reduce costs and adapt to climate change; and improving knowledge dissemination together with key actors in the sector.

“Lack of decent housing is one of the clearest manifestations of poverty, and reducing poverty is one of the IDB Group’s strategic goals,” said Tatiana Gallego, Chief of the IDB’s Housing and Urban Development Division. “That’s why we work actively with governments in the region to offer solutions that promote private sector participation and make it possible to close the housing deficit in a way that is inclusive and resilient to climate change.”

The IDB Group’s proposed reforms are the result of studies on the housing sector situation conducted with national governments in several countries in the region. These studies consist of an exhaustive analysis of the sector’s value chain in order to identify weaknesses and define corrective measures. More than 300 relevant LAC housing sector actors were interviewed for the report.

So far, such studies have been completed in Argentina, Brazil, Dominican Republic, Ecuador, Guatemala, Nicaragua, Panama, Paraguay, Peru and Nicaragua, and are still under way in El Salvador and Trinidad and Tobago. Some countries are already implementing structural reforms based on IDB Group recommendations. These include Panama, which is analyzing the introduction of changes in its housing and leasing laws, and Brazil, which is working on improvement products and developing a national housing supply and demand platform. Meanwhile, Ecuador is promoting housing loans with cooperatives and Peru has implemented a Sustainable Urban Development Act.

The Housing Forum 2024 was attended by 11 housing ministers and deputy ministers from Latin America and the Caribbean, U.S. government authorities and relevant actors from Europe and Canada. The event was also attended by mayors from the region, national housing agencies, development banks, builders, private banks, microfinance companies and institutional investors. All of them agreed on the need to find disruptive measures to better address the housing deficit in a highly urbanized region – 82% of the population resides in cities – and vulnerable to climate change. Changes in demographics and household composition, with more single-parent and female-headed families, are additional challenges that exacerbate the housing deficit and the need for inclusive solutions. The 3rd Housing Forum 2024 was organized in collaboration with Mexico’s Ministry of Agrarian, Territorial and Urban Development (SEDATU) and the National Workers’ Housing Fund Institute (Infonavit).

Caribbean, housing crisis, IDB, Private Sector

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IDB urges more private sector involvement in tackling housing crisis in Caribbean

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