Case Study | Patrimonio Hoy, Cemex

–Overview

One of the largest cement manufacturers in the world, Cemex, has developed and delivered a microcredit business model in 2002 that enabled the low-income do-it-yourself homebuilders in Mexico to construct their own houses. Using low fixed prices, materials on credit, pre-cost housing designs, and supervised construction services, Cemex helped over 200,000 families in 22 states of Mexico improved their lives through extending and building new houses. (Cemex Mexico.)

–Background & Challenge

The average low-income homebuilder in Mexico took four years to complete just one room, and 13 years to finish a small four-room house for themselves. This discouraging rate of progress reflects the many obstacles that low-income homebuilders face. Banks and commercial credit were out of reach for them. (Cemex Mexico.)

During the recession in the 90’s Cemex’s revenues from large corporate customers and middle-upper-income individuals dropped by 50% whereas the revenues from low-income, do-it-yourself homebuilders dropped by a lower figure of 10%-15%. The company saw a high potential market for its products in the lower income market segment especially among do-it-yourself homebuilders in order to reduce costs, and decided to move from selling only materials to selling microcredit solutions on materials. (Cemex Mexico.)

–Innovation

The program initially involved women—traditionally responsible for saving and purchasing within a Mexican household—in groups of three to form a "socio group." Once the socio is formed, a technical advisor visits them who help the members plan the next room and required materials for a small fee. No paperwork is required to join Patrimonio Hoy. Instead, like traditional organizations such as tandas, applicants are asked to provide the one thing they do possess: social capital – their word, honor and reputation. All they need to enroll is to promise to be consistent about making weekly savings payments. After the launch of the program, one room could now be built in one and a half years. The program also benefited the 'promoters' as it helped them to earn more money. (Cemex Mexico.)

–Keywords

Poverty relief (dwelling), trust-bond in local society, business sustainability, incentive for all stakeholders

–Reference

Cemex Mexico. [http://www.cemexmexico.com/se/se_ph.html], retrieved Nov 26, 2009.