5) Description of housing product/service offering: CentroMigrante recognizes the trend that the world’s mega-cities are becoming increasingly populated by rural-to-urban migrants, rather than permanent city-dwellers. Failure to address this issue in urban planning is the major reason for the increase in urban poverty and the informal housing sector. In developing countries around the world, it is estimated that more than 200 million people have been driven by poverty to leave their rural hometowns and seek employment in urban areas, where they are usually unable to afford decent shelter while searching for jobs. Unless they are lucky enough to find a job immediately, they quickly expend their meager savings on living expenses, and in order to be able to stay in the city they resort to building shanties, becoming squatters on public or private lands. In the Philippines, as many as 1 million Filipinos a year spend months away from their home provinces and in Manila’s port areas looking for jobs as seafarers. The Philippines is the largest source of seafaring labor in the world, supplying over 25% of the world market. While looking for job contracts, most Filipino seafarers live in shanties under depressed and undignified living conditions. CentroMigrante will provide them with housing that is clean, safe, and affordable, to which it will attach a work-for-stay system and support services like job search assistance and skills training. It will accomplish this by using durable, cost-efficient, and scalable architecture, paired with a self-help program that mobilizes the migrants themselves in building and maintaining their own housing. A prototype of this business concept has already been built in the form of Pier One Seafarer’s Dorm, a 1,500-bed concern in Manila that has been operating profitably since 2003. CentroMigrante will start with migrant seafarers in the Philippines, then expand the business in two directions: 1) seafaring populations in other countries, and 2) migrant populations of other professions.

6) Description of innovation: The only other affordable option for transient dwellers is to live in slums or on the streets. CentroMigrante’s innovation is that it is an integrated product providing: 1. housing; 2. skills training; 3. career assistance. These are all incorporated in CentroMigrante, with no other comparable product. CentroMigrante’s innovation lies in the idea that it will generate long-term consumer and public welfare while still maintaining a self-sustaining, profitable business model. It provides affordable accommodation for seafarers with good amenities. The self-build concept is an example of modular design that will be adopted for the family housing scheme. CentroMigrante’s structures are designed for deconstruction, allowing for expansion of rentable space while reusing the materials and the same land area. Construction cost is $1,000.00 for one Family Housing Unit. Beyond its use of innovative architectural design and integrated service offering, CentroMigrante has a triple bottom line that gives it a key advantage over traditional urban housing models: * Financial. CentroMigrante is financially self-sustaining. Its ability to generate a profitable return on the initial investment allows it to self-finance its operations and growth. This is an advantage over charity models that use a cash burn system and are contingent on continuous inflow of funding – a problem for cash-strapped governments of developing nations. * Environmental. By building on non-performing land assets, CentroMigrante makes idle property productive and also prevents shanty towns from propagating. * Social. Through its tailored offering to the seafarer community, CentroMigrante helps thousands of impoverished people get access to decent shelter, find jobs, and upgrade their skills, and by doing so supports their aspirations for a better life.

7) Benefits to clients: The key to CentroMigrante’s low cost strategy is in offering seafarers free accommodation in exchange for their short-term labor in building the center. This allows CentroMigrante to lower initial building costs and keep rents low, while providing for tenants’ immediate need for shelter. The amount of free accommodation given is proportional to the amount of work put in, and is in the form of transferable coupons that can also be sold for cash. Essentially the tenant, for a day’s of work of construction, gains a week’s worth of coupons that can be sold to another seafarer at manning agencies or at the common gathering areas where seafarers congregate. It has been established that 88% of this sector learns about accommodations by word-of-mouth, so this would be the most efficient way to promote the dormitory. CentroMigrante will also be disseminating electronic marketing materials that can be printed out, mailing posters and introductory price offers to different recruitment and government agencies where the seafarers process their documents upon arriving or before departure. This method of employing tenants to sell their coupons to others in their profession, and sending posters to hiring and government agencies with high applicant turnover will be a central strategy in delivery. This pattern could also be applied to subsequent target transient groups. Since 73% of the seafarers are married, they will themselves be the ones to recommend their wives to stay at CentroMigrante’s family housing area to meet them before they come into port. Having stayed at the CentroMigrante dorm before being hired, the seafarer will have experienced the safety and security of the dorm. The wife usually comes a week before the husband to Manila and remains for a total of three weeks in Manila. This allows them to spend time as a family unit before the seafarer leaves for the next contract overseas.

8) Key operational partnerships: CentroMigrante partners with training agencies – government and non-profits – that target the seafaring population, to provide on-site seminars on personal finance, entrepreneurship, and skills training. These training programs are offered to the tenants and their spouses as an alternative to working hours as a method of accruing rent credits. Such courses are aimed at helping the workers manage and put to good use the money they earn on their eventual contracts and remit back to their families. Eventually this will reduce the dependence of the national economy on foreign remittances by growing the local economy through small business. CentroMigrante also assists in job matching by maintaining communications (via the internet) with manning agencies and posting job openings on the community bulletin board. The key is to link up with partner organizations having allied interests and who can benefit from the CentroMigrante operations. - The Housing and Urban Development Coordinating Council, and the National Housing Authority: interested in solving the squatter/urban housing problem - Philippine Overseas Employment Agency: interested in the welfare of overseas workers, also in the proper utilization of remittances - Technical Education and Skills Development Authority: interested in providing skills training to the country’s labour force - Recruitment agencies: interested in securing quality hires efficiently - Non-profits: provide training programs in relevant areas.

9) Financial model: CentroMigrante uses a work-for-stay system where individuals without money or better paying jobs may sign up for several temporary jobs onsite. An example of an onsite job implemented in the Pier One pioneer model is manning distilled water bottling stations on the premises, through which tenants earn, at current labor rates, credit towards their rent. The concept of consumer charity involves soliciting business instead of donations from institutions and individuals. Thus, CentroMigrante management arranges for establishments to purchase their distilled water needs exclusively from CentroMigrante, with the profit being earmarked for expansion and maintenance purposes. CentroMigrante’s service goals include broadening the concept of rental to include other forms such as work-for-stay.

          • Costs as percentage of income: 75%

          • Financing: Most charity models for housing use a ‘cash-burn’ system. They can build only as much as donor funds will permit. Governments of developing countries are even more cash-strapped and have limited funds for housing. CentroMigrante’s strategy for self-sustainability is to be a pioneer in transient housing finance and construction: a. Create a viable and sustainable source of transient housing finance through the establishment of an active and liquid attached secondary small business (e.g., water bottling station); b. Increase the role of tenants in financing their own housing through a work-for-stay model based on current minimum wage rates; c. Aggressively pursue landowners’ non-performing properties and bank repossessed lands resulting in lower leasing rates.

10) Effectiveness

          • Project outcomes: A total of 80,000 people have been served by CentroMigrante in the span of two years. Implementation of a prototype called Pier One Seaman’s Dorm showed that the market was responsive with an extremely high turn-over rate and occupancy level that was consistently increasing. During the pilot, extra bed spaces had to be improvised because the demand was so great. The outcome of the project has been three-fold: SOCIAL - 40,000 people housed / year, 12,000 people trained / year, 70% job match success rate, job search time cut in half from an average of 7 months to 3 months due to job matching and career management services; ENVIRONMENTAL - 32,300 sq. feet Non-Performing Land Assets (grayfields) Re-Utilized; and FINANCIAL - Self-sustaining and profitable, positive return on investment.

          • Number of clients in past year: 40,000 clients have benefited from our program over the last year.

          • Percentage of clients that are poor or marginalized: 100

          • Potential demand: The market is transient communities in urban areas of developing countries. UN Habitat estimated that there are over 1 billion people in the world who live in slums. About 730 million of them are in the developing countries, and more specifically 430 million live in slums in urban areas. Transients, those who are temporarily living in cities to either find jobs or are unable to find permanent housing, number 219 million. In the Philippines, the government estimated a drastic need of at least 3.8 million housing units in the next 5 years to accommodate the large number of Filipinos flocking into Metro Manila. Since the 1970s, the Philippine government has had a large overseas employment program that is based in Manila that has placed over 7 million Filipinos into overseas jobs.

11) Scaling up strategy

          • Stage of the initiative: Scaling Up stage.

          • Expansion plan: For the next 3 years, the expansion plan is to continue to address the housing requirements of the informal, transient sector by a. Scaling up the proven and cost-effective Pier One housing model; b. Improving the security of seafarers’ families while they are in Manila; c. Providing shelter for transient seafarers and their families who are occupying dangerous and squalid areas in Metro Manila; d. Developing new centers for transient housing in major cities around the world. Priority areas for new housing development are the densely populated and fast growing urban centers nationwide. CentroMigrante will start with migrant seafarers in the Philippines, then expand the business in two directions: 1) seafaring populations in other countries, and 2) migrant populations of other professions.

12) Origin of the initiative: Illac Angelo Diaz (CEO) is a Research Fellow and a Fulbright / Humphrey Scholar in the Special Program for Urban and Regional Studies (SPURS) in the Department of Urban Studies and Planning at the Massachusetts Institute of Technology. He obtained a Master in Entrepreneurship degree at the Asian Institute of Management. Mr. Diaz founded MyShelter Foundation Inc., a non-profit organization that addresses the housing concerns of rural areas. The prototype for the CentroMigrante business concept is Pier One Seafarers Dormitory, founded by Mr. Diaz as his Master in Entrepreneurship thesis, awarded Best Thesis at the Asian Institute of Management. In May 2006, CentroMigrante won the Grand Prize in the Massachusetts Institute of Technology $100K Entrepreneurship Competition - Development/Social Impact Track.

Contact Information:
Artessa Niccola  Saldivar-Sali
Vice President
CentroMigrante, Inc.
(Social Enterprise)
28 Nicanor Reyes St., Loyola Heights, Quezon City 11
Philippines
Tel: 63(917)806-1701
Fax: 63(2)426-1078
Email: centromigrante@mit.edu