Digital technology and tech entrepreneurship in housing is rapidly evolving in the Indian context, especially around the affordable housing segment. This is the first post in a series on the India Housing Report focusing on this space, where we try and examine what motivates entrepreneurs in this area, the challenges and potential of using digital solutions, and whether India is ready for such innovative products in the informal housing market. In this piece, we interview Marco Ferrario, social entrepreneur and Founder of mHS Global Impact, about their product NEEV. Edited excerpts:
IHR: What is the specific problem that you are seeking to solve in the housing sector?
Marco: The complexities and challenges of ensuring quality housing for low-income communities across geographies are widely documented. While self-built incremental housing is often the main source of affordable housing stock, there are no doubts on its many limitations. One less discussed but extremely critical issue is related to the quality and safety of the buildings, which is the specific problem that we are seeking to address.
The problem of ensuring safety in informal housing exists in India and other countries, especially in highly disaster-prone areas, and is complicated by climate change that is leading to more and frequent disasters across the globe. This situation is exacerbated in urban areas due to the rapid vertical growth of structures, a result of the growing demand for affordable shelter solutions combined with lack/cost of land. The concept behind NEEV–the digital platform we developed–is to create a tool to specifically address the problem related to quality and safety of structures, and in the process also facilitate and support access to formal housing finance.
We are aware that in informal housing, no one is taking the responsibility to check on the quality and safety of construction. Even regulatory intervention is limited. In 2009, the National Disaster Management Authority sent a request to housing finance institutions, suggesting a check on the quality of the houses that were built as a result of their lending. When we discussed this with a CEO of financial institution (FI), he told us that providing door to door technical assistance would have added an operational cost that is impossible to manage.
Over ten years later, the situation is still the same. Construction Technical Assistance (CTA) is a resource intensive business and almost no-one offering housing loans offers this to their clients/beneficiaries. This is an issue not just in India, but in many other countries. We have been working in settlements such as resettlement colonies where hundreds of buildings have the same dimensions. It is incredible that no one thought of providing construction guidelines and later setting up a simple check during construction, which could have dramatically improved these houses. A seismic analysis we undertook of a portion of a resettlement colony in Delhi revealed that over 50% of the structures could collapse in case of an earthquake. Homeowners already spent a lot to build their units and now they live under this extreme risk. This is both a problem and a missed opportunity.
NEEV aims to address this in two ways. First, for the benefit of end users (low income households) the platform can generate customized budgets and technical drawings, thus addressing the significant gap in access to techno-financing information. The second benefit is the features NEEV offers for financing organizations–be it formal lenders, NGOs, governments or foundations. With very minimal training and onboarding, field staff can leverage the technical information to improve their own operational processes, disbursements schedules and at the same time, share this information with their clientele.
By leveraging technology and thus reducing the dependence from professionals and need for door-to-door visits, many more such agencies would be incentivized and able to influence the quality of housing. That is the vision–the ability for almost anyone to generate customized detailed construction inputs in few minutes–and at basically no cost, which could allow the implementation of minimum building standards at scale.
IHR: What motivated you to identify this as the problem? Tell us a bit about that journey. How did you arrive at a technology-oriented solution?
Marco: In 2009 when we set up micro Home Solutions (mHS) in India, the aim was to address urban poverty and specifically housing. Given that a large part of our team were architects and urban designers, the issues related to the safety of such structures came immediately to the center of our discussions. Almost no efforts or effective solutions existed at that time, prompting us to investigate possible solutions.
In 2009 with the support of a travel grant from FORD Foundation we were able to visit various cities in India. A key insight was that the lack of housing was not an issue of units, but an issue of substandard housing. Furthermore the quality of the structures (thus its safety) was not really linked to a desire to save money, but rather to the lack of easy access to the technical expertise other than the limited one provided by the informal sector construction workers.
Based on this research, we proposed an action-research pilot, supported by the Michael and Susan DELL Foundation. The main concept was to offer a product that bundled housing construction loans and CTA. Since there was almost no demand for the latter, we made the technical assistance mandatory for the families that were interested in the housing loans, for which there was a high demand. At that time, in 2010, it was a unique offering on the market. We partnered with BASIX, an MFI, and were able to provide about 30 loans in a settlement in Delhi.
The pilot was quite successful and it was clear that households that had first hand experience valued technical assistance. More importantly, the inputs were indeed able to improve quality and safety of the houses. However, providing door-to-door technical assistance proved to be extremely difficult. At the end of the project, the process for providing on-site assistance, involving hiring technical personnel and regular visits to each household, was not feasible at scale. The idea of using technology and leveraging mobile connected platforms to provide technical assistance at scale evolved from this experience.
We were inspired in this regard by ambitious attempts in other fields, in particular healthcare and education where mobile phones were used to provide last-mile digital support. We wanted to do exactly that with construction, since hiring and retaining construction professionals was the key problem. We imagined the digital tool as a way to form para-architects that could provide customized support.
With NEEV, after two years where we trained over hundred agents of various agencies in India, from FIs to NGOs and housing finance companies (HFCs), we proved that technical assistance can indeed be delivered by non-technical staff with minimal onboarding. Our longer-term goal is to make NEEV so simple that anyone can access and use it without any external handholding support.
IHR: How does your app work and what does it do, for whom?
Marco: The NEEV app provides customized budgeting and construction information which is accessible to agencies, masons and households. The unique aspect of NEEV is that it allows anyone to create customized estimates, BOQs (the list and quantity of materials needed for a construction) and structural plans for a variety of project types, from new construction to incremental interventions. These outputs are accurate and detailed for each specific project and it is not necessary for the user to have a technical background.
The software elaborates the inputs in an algorithm based on engineering and architectural data and produces the estimates and BOQs. A parallel BIM (Building Information Modeling) algorithm generates the graphics for the project’s manuals. NEEV follows a simple linear process where it takes only a couple of minutes to place inputs and generate results and it’s totally automatic. One other key feature is the capacity to monitor site visits where projects can be geo-tagged and images collected during visits and it is possible to calculate and track the expenses related to a project, again a task that can be done automatically by a field agent or directly by the masons or household following the construction.
Based on demand, NEEV is also a customer resource management (CRM) platform, and can be used to store data of agents, locations and end-users. It has a module to conduct socio-economic assessments and approve loans including the capacity to store documents and signatures. These functions have been added to offer small agencies whose operational processes are yet to be digitalized the option to do so while adopting NEEV. All this is hosted a cloud environment, so data is real time available and secured. For agencies that already adopt other digital systems, NEEV has an API (Application Programming Interface) that allows integration.
NEEV can be easily accessed through a WebApp (stored directly on a server) or through its Android app. There are two versions, a basic one for individual homeowners and masons that allows you to generate estimates, BOQs and manuals, and a full version with all the features mentioned earlier, for agencies that are offering housing related services or products. NEEV can be used by homeowners, housing finance companies, local masons, small contractors, construction material companies and the local authorities. In addition, it is useful to external technical vendors who are hired by housing loan companies to evaluate the project cost and monitor the construction.
IHR: What were the challenges involved in developing NEEV in terms of funding, partnerships, talent?
Marco: When we started developing NEEV, we were sure of the impact we wanted to see: digitizing all the technical information on construction and making it accessible at scale through mobile connected platforms. We didn’t have any similar software to refer to, so on the technical side it has been really complicated.
We had to build the system from scratch which means we also made many mistakes. Luckily, we attracted passionate and talented professionals, and working together we eventually made good progress and arrived at a solution. It has been crucial to work closely with developers for continuous product development based on the results from our field interactions. Initially we developed the software in-house, later on we worked with external companies and now we have a mixed model.
Long-term funding for the project has been the biggest challenge. The initial two-year period was self-funded (by the founders) after which we were able to continue thanks to a series of grants, mainly the support of CISCO CSR USA. The point is that digital platforms are resource intensive and despite the valuable in-kind support we received from SVAM International (an International software company), the technical development and related financial support is far from secure. Currently we are working with a small grant from Habitat for Humanity’s Terwilliger Center for Innovation in Shelter, closely monitoring the impact of NEEV on end-users and in parallel improving its UI-UX (user interface).
When we look for support, we are often asked where we want to make an impact. Is it financial planning, water and sanitation solutions, resilient housing, support to agencies offering housing service/products? Well, NEEV is all of that, but sometimes grant makers want to have a neat and precise target. Innovation brings risks and it is not always easy to find support. However, now that results are coming out we hope that it will be easy to access more resources at scale.
IHR: At what stage is NEEV now and where do you see it going in the future in terms of scale and impact?
Marco: Currently NEEV is scaling up the pilots in India, and testing and developing new features for different use-cases. There are many features that we have been able to validate from past pilots in India and Afghanistan. HFCs, NGOs and agencies supporting government housing schemes are currently our clients and partners.
While initial partnerships in India have been extremely encouraging and gave much needed validation for our ambitious project, longer term strategic partnerships with global agencies will be critical for scaling adoption of NEEV not only in India but also the opportunity to adapt and leverage it in other regions/countries. These partnerships could be with University labs supporting the digital development and/or with organizations that stand to promote disaster resilient housing, WASH projects, reconstruction after disasters or improving skills of construction workforce. While the government would be a natural partner for social impact, there are slower paced conversations to engage with local, national or multilateral agencies that would need to continue.
We were having interesting plan for adoption in Mexico and other countries, I was there just before the pandemic to discuss possible pilots, unfortunately the COVID-19 situation has limited and stalled our plans. Anyway NEEV has been designed to be adopted in different geographies and we are moving in this direction.
IHR: Do you think digital technology will have a transformative effect on the Indian housing sector? In what way?
Marco: The opportunity to adopt digital technology to improve the processes related to the housing sector has been validated across different contexts. For the formal housing sector, where process of approvals and monitoring are in place within a structured system of property, tax and land zoning, the opportunity is to simplify the bureaucracy and speed the processes. This is already happening in various countries including India. New technologies like blockchain can be adopted to achieve more security and transparency, and may also represent an efficient way to mitigate corruption that in many countries represent one of the main barriers to positive change.
For the incremental housing context, we believe that digital technology can offer a great way to catalyze and improve the delivery system of services of products, including many existing ones, which are essential to support the key stakeholders of low-income communities. Technologies that are able to map and record land legal status, transactions, tax and whatever approval systems are in place, along with fostering streamlined interaction between different authorities, will make the incremental housing process more efficient.
Despite the opportunity that technology provides, the game changer within the incremental housing context will be strong leadership and the willingness to support change. Currently, despite no formal approvals being in place, low-income homeowners are still paying various fees or bribes to various actors, amounting up to 10% of the cost of the project. An even bigger problem is related to the land tenure and regularization of informal settlements. Thus, digital could facilitate and allow a change in the incremental housing process but alone will not fix it.
IHR: Drawing from your experience, what insights do you have for global housing practitioners?
Marco: Our insights are to work bottom-up and propose innovations that optimize resources and unlock the day-to-day challenges currently facing the end-users. A concept that focuses on impact on the field, however small in scale, can be a powerful way to influence policy and inspire other projects and stakeholders in the housing ecosystem. Pilot projects that test innovation in design, policies, technologies, community participation etc. should be promoted and implemented continuously. This approach creates a momentum for partnerships, funding and longer-term impact.