Experimental Reimbursable Seeding Operations (Erso)

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The overall goal of ERSO is to improve the living conditions of the poor in Developing Countries and contribute to the Habitat Agenda goals of adequate shelter for all and sustainable human settlements developing in an urbanising world. In addition, working towards achievements of the MDGs will be at the core of ERSO activities (GC 21//10, paragraph 7). The purpose of the ERSO programme is to:

• Field-test experimental and reimbursable seeding operations and other innovative operations for financing the urban poor housing, infrastructure development and upgrading through community groups, including where there is an expectation of repayments mobilizing capital at the local level;

• Strengthen the capacity of local financial and development actors to carry out those operations and to support the capacity of the United Nations Human Settlements Programme to enhance those operations

This experimental programme is designed to become a self-sustaining revolving loan fund which will balance three types of lending to expand housing finance markets globally:

1. Construction of new affordable housing units (reaching low-income salaried workers such as teachers, nurses, police and government workers, industrial sector workers), particularly in regions where there is a severe shortage of affordable housing stock;
2. Lead investments in microfinance/infrastructure/microfinance housing loan institution initiatives to create secondary finance programmes and access capital markets, and;
3. Very low-cost loans to allow early stage microfinance housing programs to grow to sustainable size.

The revolving loan fund is a highly effective tool to reach underserved populations from the 30th down to the 85th income percentiles. It combines well with and is highly complementary to our Local Finance Facility approach, reaching populations from the 70th income percentile to the bottom of the pyramid.