Climate Resilient Housing Loans (Build Change)
Location
Indonesia
Sector
Housing
Type of Investment
Grant
Project Stage
Pilot
Length of Investment
2024 +
Website
Investment Overview
Working with one of Indonesia’s largest microfinance institutions, Build Change will develop and test loan products, underpinned by customised digital advisory services, to enable women making less than $5 per day to adapt their homes to be more resilient to climate shocks, especially extreme heat.
The Development Challenge
Indonesia experiences consistently high temperatures and is one of the top five countries globally for greatest exposure of vulnerable people to heatwave days. Extreme heat adversely affects health outcomes, heightening the risk of heat strokes, as well as worsening existing illnesses and excess mortality. Extreme heat also decreases productivity which in turn impacts livelihoods. Poor house design, construction and maintenance can mean that internal temperatures regularly exceed safe thresholds, often for several hours a day. Low-income households may not be able to channel their limited resources towards making their homes climate resilient in the face of competing financial demands, and they may also lack access to know-how and affordable solutions.
The Innovation
Build Change responds to these challenges in three ways. First, the organisation has developed, and will refine during this pilot, a suite of interventions which homeowners can implement at low cost to reduce internal temperatures and heat stress.
Secondly, Build Change is partnering with KOMIDA, one of Indonesia’s largest microfinance institutions, to develop and offer Incremental Climate Adaptation Loans (ICALs), which will enable members to invest in their homes.
Thirdly, Build Change will train KOMIDA in the use of the Build Change Technical Assistance Platform (BCtap), a digital innovation which allows loan officers to assess the vulnerability of households, generate recommendations on how to improve climate resilience, assess homeowners’ borrowing and repayment capacity, and allow homeowners and loan officers to monitor construction and ensure quality. Together, these interventions will shift power to women to assess their individual risk, have greater confidence in their options for reducing heat, and to access affordable loan products to make the necessary adjustments.
Our Investment
GIF’s $460,000 pilot investment will enable Build Change to work with KOMIDA to understand members’ experiences of heat stress, and to design ICALs and intervention packages that are both affordable to low-income households and effective at mitigating the effects of extreme heat. Build Change will support KOMIDA to offer loans across 50 branches, aiming to enable 2,000 women members to invest in their homes. GIF’s investment also focuses on generating learning on the viability and effectiveness of ICALs.
Build Change in numbers
GIF pilot investment
Households to be supported to make their homes more climate resilient
Innovating for Climate Resilience
This investment is supported through GIF's Innovating for Climate Resilience Fund.