Scenarios For The Micro Lending Industry

Strategy is always determined in the context of scenarios, or alternative memories of the future. Considering the scenario options for the Low Income Housing Financing Industry in South Africa, the Strategic Forum agreed that the key Driving Forces of change (with the most potential impact) in the evolution of the Low Income Housing Financing Industry are:


  • the trends in SERVICE DELIVERY (from lack of financing for low income people, to multiple financing options including access to micro loans through to conventional mortgage products depending on household income and ability to pay);
  • the trends in CONSUMPTION (from no confidence and risk avoidance and preference for consumption spending and rental; to high confidence and risk taking and preference for spending on durable goods and home improvement); and
  • the trends in INTEGRATION of the banking industry (from a highly fragmented, competitive and elitist industry to one in which the banks, micro -lenders and other financing providers simultaneously compete, collaborate with, and complement each other, in an integrated lending environment, with a range of financing products, services and delivery mechanisms).


The scenario matrix has four end-states, which translates into a three-dimensional scenario space, with scenario pathways linking the four end-states dynamically, to create developmental (process) scenarios.


Consumption is characterized by a high percentage spend on durable goods and housing. Home Ownership is valued and affordable, a healthy secondary housing market and a culture of payment exists, and there is a highly developed savings culture; A range of appropriate services, end-user finance products, channels of distribution, and delivery mechanisms are available, and win-win relationships exist between clients, banks, and other banking service providers, employers in both the public and private sectors, and unions.