Ninety-eight percent of our clients are INFONAVIT beneficiaries. OMJ: What is the role of the government in the business model?ĪD: The government’s programs are a key factor. Our minimal requirements to enter a fraccionamiento and start the program include access to jobs 15-20 minutes away by public transportation, basic infrastructure such as hospitals, schools, and commerce, and no organized crime.Īmong the fraccionamientos that represent a business opportunity for Provive-that is, houses that need to be re-occupied-we estimate there are over 600,000 houses in Mexico. That’s what motivates them to buy a house from Provive. Like every family, low-income families in Mexico seek safe neighborhoods that are close to work and where kids can play freely in the streets. It was the interaction with the neighbors and a survey of community perception that made us realize that the key instrument to secure the purchase of the houses was building communities around them. Opportunities for the Majority (OMJ): Where does the idea of revitalizing communities come from?Īntonio Díaz: We started as a counter-cyclical model with the goal to buy abandoned and vandalized houses in Mexican cities, fix them and sell them at affordable prices to low-income people. On the occasion of the June 2014 launch of the IDB’s Opportunities for the Majority housing report, Many Paths to a Home: Emerging Business Models for Latin America and the Caribbean’s Base of the Pyramid, I interviewed Díaz about Provive’s business model and the idea of revitalizing communities as a business and social impact strategy. Her vecinos are no longer delinquents: nearby houses were rehabilitated and sold, and her home and those of her neighbors have gone up 30 percent in value. Thanks to Provive’s business model, now Miriam and her family live in a safe, welcoming neighborhood. Its largest shareholder is IGNIA, the Mexican impact investment fund. Since its creation in 2010, Provive has become a profitable social impact enterprise that both renovates houses and revitalizes entire communities. The abandoned, vandalized houses in Mexico would be bought, fixed up, and sold to low-income people in search of an affordable house and a safe environment. Then, in 2008, after the housing bubble collapsed and the financial crisis hit its peak, Díaz-a mathematician with an MBA from Wharton and experience in the financial sector in New York, Mexico, Buenos Aires, and Hong Kong-led a team of investors to propose an innovative counter-cyclical business model to counteract the effects of the global financial and economic crisis. Tamaulipas, Chihuahua and Baja California have the highest number of abandoned homes, with a total of 180,000 houses abandoned in all three states, Díaz said.These areas did not appear to present promising business opportunities. Most of these houses were built in areas where there was no community infrastructure, schools, transportation or employment. This negatively impacted the market price of about two million houses. The restructuring of INFONAVIT stimulated a dynamic through which private developers built thousands of houses that were bought by low and lower middle-income formal employees through credit subsidies and mortgages from INFONAVIT, replacing the traditional incremental construction process. INFONAVIT became the largest mortgage lender in Latin America.More than seven million houses were built in the last decade however, approximately 600,000 have now been abandoned, vandalized or invaded, according to Provive’s founder, Antonio Díaz. The result was a complete transformation in the way housing was constructed and purchased throughout the country. In the early 2000s, the Instituto del Fondo Nacional de la Vivienda para los Trabajadores (The National Fund for Workers’ Housing Institute-INFONAVIT)-a Mexican state agency funded through payroll contributions that offers affordable housing finance to formal workers-underwent a radical reorganization. But thanks to the Mexican social impact enterprise Provive, Miriam’s life has since changed. This is not an uncommon situation in the Mexican neighborhoods, or fraccionamientos, where more than seven million houses were built by developers with mortgages from the government in the last decade. Their streets were littered with garbage and dead animals. Three years ago, on any given day, Miriam and her three children would watch criminals, drug addicts, and vagrants frequent the empty house next door. Miriam Rodríguez, 43, lives in Cañadas del Florido, a low-income neighborhood in Tijuana, Baja California, the northernmost state of Mexico.

Abandoned houses