Even with the government stepping in to address the country’s housing woes, experts in the real estate sector continue to argue that it will take everyone’s efforts, young and old, to put the problem behind us.
A recent World Bank report states that out of an annual demand of 250,000 housing units, developers can only put up 50,000. More worrying is that 49,000 of these units go to upper-middle and high-end segments of the market, leaving the low-income group seriously under-supplied, with only 1,000 units to share.
For a long time, real estate, and especially the housing sector, has been made to appear like a preserve for pensioners, businesspeople looking to secure their futures or technocrats with money to spare. This, even as the urban population grew by more than four per cent per year, further straining demand for accommodation.
In a sector that has appeared like a no-go zone for young people, it is almost incredible that they are daring to look for solutions to the housing problems.
At iBiz Africa, a business incubator based at Strathmore University, a group of 30 start-ups are undergoing incubation under a programme, ShelterTech Accelerator. Their solutions are targeting the housing sector with the aim of addressing access to decent and affordable housing in different focus areas such as renewable energy in homes, waste management, housing and construction, and water and sanitation.
The programme is making its Africa debut in Kenya after a successful implementation in Mexico and currently being implemented in India.
Habitat for Humanity, a leading global NGO, is behind the initiative that is implemented by BDO East Africa, an accounting and tax company. Pangea Accelerator, a Norwegian company based at iBiz Africa, is a partner in the initiative.
Pangea runs accelerator programmes and an investment platform that matches African start-ups with investors. Safaricom, iBiz Africa, IKEA Foundation and Hilti Foundation support the programme.
The 30 start-ups and scale-ups selected from over 94 applications from across Kenya will undergo a six-month acceleration programme, through which they will have access to expertise, mentorship, networks and a chance to win investment of up to $50,000 (about Sh5 million) into their business. The programme that began last November ends in May.
“Africa is the fastest urbanising continent and its cities’ infrastructure and housing are not keeping up. This creates the risk of having major cities in these countries turned into gigantic slums. Also, we are going to have a billion people moving into cities in Africa in the next 25 years. So this is one of the biggest business opportunities presented in terms of looking for solutions in urbanisation, hence the need to stimulate young entrepreneurs and innovators in this sector,” Pangea Accelerator CEO Mr Jonas Tesfu told DN2.
A related programme is going on in Norway, where investors are being taught how to invest in African start-ups, Mr Tesfu revealed. At the end of the project, he says, the Kenyan finalists will interact with prospective investors from the other end for three months as investors decide where to put their money.
DN2 met some of the innovators taking part in the programme to find out the problems they seek to solve in the housing sector.
The VLage’s co-living communities: Aims to cut hours wasted in traffic
It has been determined that time wasted in traffic jams represents a cost of Sh58.4 million a day in lost productivity, which is equivalent to Sh2.1 billion a year. Moreover, Kenya’s urban population has been increasing by around 4.3 per cent a year as more people move to urban centres in search of greener pastures.
By 2017, it was estimated that more than 12 million Kenyans would have moved to urban centres, with about a third of these living in Nairobi. However, the country’s transport infrastructure has not been expanding at the same rate, meaning, there is no end in sight for the rush in the mornings and afternoons that create gridlock in the city.
So by creating co-living communities (first in Nairobi and later in other cities and major towns) where young people between the ages of 18 and 25 years share living spaces, VLage’s co-founders, Ms Christine Mutisya and Mr Isaac Kamau believe they will not only be solving the housing crisis by easing pressure on demand, but they will also be improving the young workers’ productivity.
“The co-living communities will be located closer to where they work. This means they won’t waste valuable hours in traffic jams commuting between home and work place,” Mr Kamau says.
“Getting stuck in traffic can be stressful and tiring. By the time the employee gets to work, he or she is not in the right frame of mind, and this affects their productivity. By creating co-living spaces near the workplace, we are talking of less time spent in traffic and more productive time spent at work,” Ms Mutisya says.
Bookings will be done online, VLage co-founders say. Young people will need to provide their personal details and preferences in terms of best location, and type of house, among others, before being matched with their age mates looking for similar arrangements.
“The houses will be fully furnished and will come with additional services such as Wi-Fi,” Ms Mutisya says.
Mr Kamau told DN2 that the first pilot project is coming up in February. They are engaging developers in Westlands, Upper Hill, Mombasa and Ngong road areas to provide vacant houses for this venture, he said.
Ejenzi: Provides an opportunity to buy construction materials at the click of a button
The conventional method of buying building materials can be tedious and time-consuming. It involves running around hardware shops, queuing in banking halls for hours to make payments because of the huge amounts involved, not to mention the logistics of ferrying the materials to the site.
Many would rather delegate this task to the site manager or foreman. However, a start-up by some four young people is promising to ease buying of building materials.
“If you could buy construction materials at the comfort of your desktop, then it would save you a lot of time,” the director and co-founder of Ejenzi, Mr Seth Mundhe, says.
Coined from the Swahili word ujenzi, meaning building or construction, Ejenzi, is an online store specialising in the sale of building materials.
At the moment, they are focused on Nairobi and its environs, but Mr Mundhe hints that they are eyeing Kisumu, Mombasa and Eldoret as their next markets. They say that their first birthday late December, could not have come at a better time than this. They are among the start-ups under Pangea’s incubation programme gunning for the Sh5 million top prize.
“We are hoping to give the buyer the ability to choose, which is key, because with options, then you are able to tell who is giving you a better deal,” Mr Mundhe told DN2 at Strathmore’s iBIZ, where the accelerator programme is happening.
“What happens is that a buyer of building materials simply visit sour website, makes his or her selection, places an order, puts down his or her location and then makes payment. Ejenzi takes it from there, to coordinate how the products will be delivered depending on when they are needed,” Mr Mundhe says.
All the vendors on the platform are verified to ensure the materials and products they are selling are of the right quality, he adds. Their platform also has a feedback and a vendor rating mechanism, which ensures that before a customer makes a purchase, he or she can tell the reputation of the vendor.
KodiPoint, an automated rent collection system to enable landlords access credit based on rental income
A major drawback to investing in real estate is access to credit. This is especially true for first timers, who do not have much to offer to a financial institution as security for a loan.
But every problem requires a solution, and for savvy entrepreneurs, this is an opportunity waiting to be exploited.
That is exactly what a team of seven ambitious young people are promising to do, under their flagship start-up, KodiPoint.
“Not everyone can walk into a bank and walk out with enough money to erect a multi-storey building. If you walk around, you will come across landlords building at a snail’s pace, not because they like it, but because they are either relying on their little savings or on income generated from one floor of the house to build the upper one,” the co-founder and CEO of Kodipoint Ltd, Ms Joyce Beck, says.
“KodiPoint is an online platform that links qualified landlords to verified funding sources to finance sufficient supply of decent affordable housing in Africa and beyond. Our mission is to champion sufficient supply of decent, yet affordable, housing through the use of technology and to facilitate access to development funding for landlords serving the middle-to-low income segments of the population,” she says.
The system will kill two birds with one stone. One, it automates rent collection for landlords and agents and two, as this is done, the rent income data generated is used to create a credit profile for the landlord. This profile will be used to determine the landlord’s creditworthiness based on rent income.
“With this database, they can borrow money to build another house or complete the one already under construction on the platform. The repayment will also happen through the system,” according to Ms Beryl Angaka, the start-up’s administrator.
She adds that they are also targeting landowners who don’t have finances to start construction.
To make sure that this dream becomes a reality, the young entrepreneurs have managed to convince a number of landlords to get on board and just this month, they started collecting rent on their behalf. It will, however, take at least six months before any landlord receives credit.
“We have managed to secure one international investor, and we are in advanced talks with two financial institutions from Morocco, who want to come on board as financiers,” reveals Ms Beck.
She, however, expressed concern that local venture capitalists and banks they approached seemed unwilling to put money in the venture.
“We have received a lot of interest from outside, but very little from within. How are we going to grow our economy if we don’t support our local start-ups?” she poses.
Greenhub, transforming the built environment into a sustainable and eco-friendly homes
In 2016, Brian Ouma was working in the solar systems industry, doing sales and installation for customers when he realised he was facing a common problem with almost every home he visited.
“Various houses needed additional work before making any installation. For instance, some roofs were not strong enough to hold the weight of a water heater,” Mr Ouma says.
Motivated by this experience, the mechanical engineer founded Greenhub, a sustainable design hub that brought together three of his friends from university and two more skilled young people to form a strong team of five.
Speaking to DN2 Mr Brian Chege, a co-founder whose expertise is in financial and business development, said the team brings on board architectural designs, engineering, and finance and business development expertise.
This team hopes to build eco-friendlier homes by encouraging people to incorporate green features as a package at the design and construction phases of their homes.
“We aim to develop a world of not only affordable, but sustainable buildings by guiding developers, investors and homeowners in building structures and systems that have minimal impact to the environment and offer their users a cleaner, safer environment,” Mr Ouma says.
This is done by incorporating green features such as solar energy systems, water and waste recycling and use of alternative building materials such as interlocking blocks and fibre cement boards.
With the built environment said to contribute to climate change, Mr David Miano, a co-founder and civil engineer, says he views designing eco-friendlier homes as his small of way of alleviating the problem.
According to the founders, the start-up has completed 20 projects, four of those outside Nairobi in its two years of existence. The young entrepreneurs are hopeful that they will make it to the finals.