The construction sector plays a key role in the socio-economic development of a country as it contributes to the employment of people – unskilled, semi-skilled and skilled – and generates a high multiplier effect through its linkages with other sectors of the economy. Given the importance of the construction industry, the St. Kitts and Nevis Sugar Industry Diversification Foundation (SIDF) established the Fund for the Realization of Economic Empowerment through Subsidized Housing (FREESH) to encourage citizens to invest in residential housing. SIDF also established the Equity Assistance Fund (EAF) to allow applicants who qualified for funding under FREESH to make the required input in cases where they were unable to do so.
FREESH and EAF (The Funds) were established in January 2012 with a minimum capitalization of Ten Million Eastern Caribbean Dollars (EC$10,000,000.00) and One Million Eastern Caribbean Dollars (EC$1,000,000) respectively at the Development Bank of St. Kitts and Nevis (DBSKN). The maximum loan was $400,000.00 at an interest rate of 6% fixed for the life of the loan. The contribution from SIDF to FREESH was 33.33% of the total loan amount. At the inception of FREESH, the Development Bank of St. Kitts and Nevis (DBSKN) and St. Kitts Nevis Finance Co. Ltd. (FINCO) were the only two participating institutions and The Funds were managed by DBSKN.
The initiative was revised to be more attractive to prospective homeowners and new terms and conditions took effect on July 24, 2012. The maximum loan amount was raised to EC$500,000.00 and the fixed interest rate was lowered to 5%. Additionally, SIDF increased its contribution to FREESH to 40% of the loan while the remaining 60% was provided by the PIs. The Bank of Nevis (BON), the St. Kitts Co-operative Credit Union (SKCCU) and the Nevis Co-operative Credit Union (NCCU) joined as partners, bringing the number of participating institutions to five. SIDF assumed the role of administering the program - verifying that the eligibility criteria are met once the financial institutions approved the loan and requested funds, then disbursing the SIDF FREESH and EAF funds to them. The new procedure required the PIs to make the first disbursement of funds to successful loan applicants then request the full 40% SIDF contribution. As part of the rebranding of FREESH, SIDF created a portal on its website through which all applications are submitted to the lending institutions from which the loans are being sought.
In 2013, yet another amendment to the FREESH program was made. In response to feedback from the financial institutions and aspiring homeowners who had begun construction out-of-pocket, the eligibility requirements were broadened to include applicants with ongoing construction whereas previously only those undertaking new/breakground construction qualified for funding. In July 2014, St. Kitts-Nevis-Anguilla-National Bank joined the FREESH program, providing 100% of the loans funds to mortgagees.
As of February 2015, 187 loans were disbursed (99 in St. Kitts and 88 in Nevis) and the total contribution from SIDF towards FREESH and EAF was EC$22,333,958.52.