Pilot Insights | Empowa & Casa Real: The Impact of Climate-Resilient Housing and How Web3 Technology Can Scale Its Development

Image courtesy of Empowa

90% of Africans live in informal housing which are often unsafe and lack basic services like clean water and sanitation. This is the result of insufficient affordable housing unit supply, home ownership pricing being prohibitive to the mass market, and lack of accessible credit options. Furthermore, many of these informal homes are built out of any available materials meaning they are structurally vulnerable to natural disaster and climate shocks, leaving occupants exposed to adverse health outcomes as well as safety, environmental, and security risks.

In September 2022, Mercy Corps Ventures partnered with Empowa and Casa Real to launch a pilot offering affordable, climate-resilient housing in Mozambique, under a rent-to-own model, with liquidity mobilized through non-fungible token (NFT) sales. Empowa raised a total of $300,000 from the online community and used the proceeds to enable 30 families to move into homes, partnering with Casa Real as the primary property developer to avail the climate-resilient housing units. Families were offered family-specific rental pricing and the ability to make equity pre-payments towards eventual home ownership.

Insights in Brief

The pilot significantly improved the safety of tenants against climate shocks. When considering climate shocks, the majority of tenants (88%) reported that their new living situation is safer than it was in their previous home. The quality of construction and location were cited as the key reasons for improved safety.

The pilot provided evidence of the creditworthiness of households which are excluded from traditional mortgages. Within just seventeen months, over one-third of tenants (37%) had paid at least 20% of their home’s equity. Remarkably, a majority (55%) of these tenants had paid 40% or more of their home’s equity.

The pilot unlocked home-ownership for low- and middle-income earners, for whom this would otherwise be impossible. Two in three tenants (64%) reported that they would have been unlikely to buy a house if not for Empowa’s rent-to-own solution.

Through the pilot, Empowa lowered the effective cost of home financing by more than 50%, with the interest rate dropping from over 22% to about 10%.

This report is the second of a two-part series. The first blog outlined the pilot launch, our learning questions, and the hypotheses we set out to prove. This final report provides an in-depth study of the market need, the pilot’s impact, and the key findings. If you’re short on time, have the TL;DR here.

Written by Timothy Asiimwe, Innovation Project Manager, Mercy Corps Ventures.