Agenda 2. Low Income Housing in Africa - Context 3. Overview of Jamii Bora Makao Project 4. Development Planning 5. Financing the Development 6. Property Development 7. Property Management 8. Social Impacts 9. Financial Performance
Africa’s explosive demographic growth The African population is growing at a rate of 2.4% a year. It is estimated that by 2030, 50% of Africans will live in cities; The African workforce will reach 1.1 billion people by 2040 - the largest in the world ( McKinsey); And by 2050, Africa will be home to 1.9 Billion people.
Africa’s is facing an urban challenge By 2040 Africa is expected to be the 2nd most urbanized continent after China. At current urbanization rates, an additional 14 million housing units per annum are needed in order to accommodate the increasing urban demand. 62% of the populations living in Africa’s cities ( 32 million households) live in informal housing where basic services are poor or non-existent.
Africa faces a large gap in low income housing Region Demand Supply Sub- Saharan 32 million households in Sub-Saharan Africa are 308 million people; 191 million of whom live Africa considered inadequate. in inadequate housing. Under current urbanisation rates , an additional 14 million housing units per annum are required Kenya 60% of households are considered ‘inadequate’ housing Less than 30,000 units supplied per year and are located in slums. The annual deficit is thus more than 120,000 150,000 units are required per year housing units per year Ghana Ghana’s annual demand for housing currently stands at Current housing supply provides 42,000 units 120,000 housing units per annum per annum which is only 35% of the demand Nigeria 33.6 million Nigerians living in urban areas (46% of the The annual deficit is 16 million units urban population) are considered to be living in 720,000 units need to be created annually to inadequate housing meet the demand Current supply is however meeting only 3% of this demand Tanzania 80% of the entire population is living in unplanned, The housing deficit in urban areas is informal housing. estimated at 1.2 million units.
In t r o d u c in g J a m iiB ora Ma ka o Founded in 2007 as a subsidiary of Jamii Bora Group. Group initially focused on Microfinance and then expanded into a full range of social services including Housing and Insurance Kaputei New Town is the flagship project. Targeting 2000 low income and middle income houses by 2014. Concept is an integrated community with residential, commercial and social aminities. Group provides and end to end solution including financing and propery management.
Development conceptJamii Bora Makao contributes to Integrated construction: Integrateresolving the problem of affordable the entire value chain and pass onhousing in Kenya using the following tools; saving to buyers. Low cost of ownership: ReduceCross subsidization: Achieve recurring cost to owner by usingaffordability through mixed income green technology ( Waste recycling,housing communities, and apply cross Solar energy, rain water storagesubsidization between middle and low etc..)income housing units. Building at the periphery: JBMCollaboration: Create a network of achieves affordability by buildingpartners around each project including integrated housing communitiesdesigners, contractors, bankers, financiers with Residential, Economic andEmploy beneficiaries of the low income Social amenities at the periphery ofhouses in the construction process large urban centers.
Kaputei NewTown Site PlanSchool facility – Primaryand Secondary ( 350 Waste Water recyclingstudents) facility 2000 bungalows – 2 and 3 Bedrooms – grouped in 8 neighborhoods. 750 houses delivered to Commercial Center with date. 1,000 shops and light industries Social Amenities including places of worship, community center, police station etc..
D e v e lo p m e n tP la n n in gThe cost of land is an important An MOU was signed with the Massaicomponent of low income housing community allowing access to Constructiondevelopment. jobs, community Borehole, schooling and access to ownership in the commercialJBM acquired a 293 acres land 60km from center shops.Nairobi. The distance and agricultural Government participation was minima. Toclassification allow the land to be purchased the contrary, the school was donated to theat a discount. state as a public school.The change of use and statutory approvalprocess took 3 years and included a lawsuitintroduce by environmental groups. JBMprevailed.
Financing the development The development was financed by a combination of in kind shareholder equity ( land), Grants and Shareholder loans. Jamii Bora Group invested the 293 acres valued at $4.7m as Equity. An additional $2.4 m in equity was invested by Jamii Bora Scandinavia. Jamii Bora Scandinavia provided a loan of $7m to the project ( 8% pa – 10 years). The project also received close to $5m in grants especially for electrification and social amenities.
P r o p e r t y D e v e lo p m e n t – C o s t m in im iz a t io n The houses are designed to be constructed using hallow concrete blocs and concrete roof tiles. The construction process is vertically integrated in order to keep cost down. Concrete blocs and tile and manufactured on the construction site. The factory employs residents. The simple design enables the use of relatively unskilled labor – Which allows the project to provide employment to residents. Thanks to the use of this approach, the construction material used is in average 30% bellow market cost.
P r o p e r t y M a n a g e m e n t – S e r v ic e D e liv e r y The residents are represented by anJBM has set up a property management association managed and governed byunit that is responsible for sourcing and elected members of the communitymanaging all basic services. The unitsprovides the following A property managed charge of $12/month is levied on the residents. Utility management The charge is included in the rent/mortgage Waste collection and disposal payments. Security Property Maintenance
P r ic in gThe cost of the 2 bedroom unit house is $9,000. Initially the company has beenselling houses at subsidized rate. Now houses are sold for $12,000 in order toremunerate capital.This cost includes the infrastructure received by the project. In the absence ofsuch subsidies , the cost would have exceeded $12,000.
S a le s A p p r o a c h JBM sells houses on Plan. The clients are required to save with the Jamii Bora Jamii Bora Group members are given Bank until they can afford to pay a 20% priority in the sales process. deposit on a house. 50% of the clients have been provided an The balance of the price of the house is installment sales arrangement by Jamii due on delivery. Clients are offered Bora Makao. Payments are scheduled over financing solutions 15 years. The construction process is broken The remaining clients have either paid for down by neighborhood ( 230 houses). A the houses for cash or secured a mortgage construction phase starts construction with Jamii Bora Bank. when 80% of the houses are reserved.. The average selling time for a phase is 30 days.
M o r t g a g e P r o v is io nThe innovative mortgage process has been mainly applied to Jamii Bora Bank but is inthe process of being applied to other local microfinnace and SME banks. Mortgage Bank Finance 80% of Price of the House Single Secured Mortgage Security Fund Bundled Deposits of 20% Instalments of 20 Jamii Bora Makao Sell Houses to Monthly Instalment Buyers 20 % Deposit Home Buyer Home Buyer Home Buyer
S o c ia l Im p a c t s - E n v ir o n m e n t a l R e s p o n s ib ilit yKaputei has been designed as anenvironmentally friendly community.Water supply is provided by a Borehole ( 2more being added). Pre paid water metersare being installed in the 750 houses.Waste water is recycled through aWetland. Recycled water is used forlandscaping. A second Wetland is plannedfor the end of 2012.Despite the recent connection to the grid,all houses are equipped with Solar kits.Security is provided by the municipalpolice and a team of local communitymembers ( Massai) hired by Jamii BoraMakao.
F in a n c ia l P e r f o r m a n c eThe objective of the the Kaputei project is to break even by end of 2014 when all phases arecompleted. The project has been able to generate enough cash flow to carry on thedevelopment without Bank debt. We expect to purse the same approach until completion.