Affordable Housing Investment Summit Africa, 2019 - Radisson Blue Hotel, Nairobi, Kenya

Affordable Housing Investment
       Summit Africa, 2019
Radisson Blue Hotel, Nairobi, Kenya
                  26-27 June
                Presentation:-
    Cooperative Housing and the Big Impact
                 By Mike Duru
             duru.mike@yahoo.com
       +263 774 733 631/ +263 713 289 654

• Shelter is a basic human right hence
  governments’ effort fighting hard to overcome
  housing shortages.
• African cities will have to accommodate more
  than 300 million new residents by 2030.

Africa Map

         1
1,2 billion urban
  residents by                      4,5 million new
      2050                            residents in
                                 Informal settlements
    Housing                            each year
  Investments
represents 6% of                  5 jobs per house
      GDP                               built

-

COOPERATIVE HOUSING DEFINED
• People-centered approach, where housing is
  designed and developed for specific needs.
• Cooperative housing is usually aimed at providing
  affordable housing for:-
  – Low to moderate –income people
  – Can be adapted to any range of income groups by self
    help or mutual aid.
  – Cooperative housing can deliver a range of housing
    that provides for the needs of the community at
    different stages of life and caters for diverse
    household types.

• It is an alternative to convectional commercial or
  public housing models where projects are owned
  and controlled by the residents who use their
  services.
• Encourages innovation in housing design with a
  focus of planning for vibrant communities,
  environmental sustainability and the productive
  use of shared spaces.
• Combines most of the advantages of home
  ownership with the economy and stability of
  large scale enterprise.
• A registered corporate.

The Cooperative Model
1. Effective for vulnerable groups like
   -Senior people living with disability
   -low income earners
   -homeless people
   -ethnic groups
2. Is community-owned and controlled
3. Gives residents democratic control of their property in
   which they live.
4. Gives residents a greater say over the management
   and maintenance of their properties.

5. Residence also decide codes of contact and rules
   of membership.
6. Operates in a democratic governance structure.
7. Business is amongst members and non-members.
8. Membership requires compliance with the
   legislation guiding their operations.
9. Provides infrastructure such as roads,
   transportation, water system and open spaces.
10. There is joining fees; buying of shares and
   monthly subscriptions to meet building expenses.

11. Based on a combination of rights with
  responsibilities and a respect for mutualism.
12. Individuals holds an ownership share in the
  cooperative, which entitles them to a unit in
  the dwelling.
Area of Operations
Urban areas
Rural areas
Townships
Farmlands

• Cooperative housing concept has been there
  in history although the approach has not been
  used to provide houses at scale in most
  countries.
• Countries like Sweden; German; Turkey;
  Morocco, Norway; South Africa, Kenya; Egypt
  and Zimbabwe had used the approach to
  produce housing at scale.
• In Africa, governments, have now accepted
  that housing cooperatives are good partners
  in building African cities.

5. Contribution of cooperatives to housing
   developments

                                             Zimbabwe        Rwanda
      KENYA                  Egypt                             House
 Housing picture by      Housing picture     House picture
                                                               Picture
2030 cooperative will   43% of the housing    40% from
                                                                1,8%
   go up to 90%         plan (Cooperative)   cooperatives
                                                             cooperative

Source of Funding
1. While housing finance is an important ingredient
   in the housing delivery chain, it is limited in
   most African countries.
2. Cooperatives could use other sources of funding
   apart from their monthly subscriptions.
3. Cooperative owners contribute some equity
   towards the purchase of their share.
4. Mortgages
5. Housing Micro-Finance.

Funding Options
                                                       Proceeds
                                                     from Public-
-      Member                                           private
     Subscriptions                Housing            partnerships
                                Cooperative
                                  Funding
       Constituent                Options                Donations
      development                                       from NGOs
          Fund

       Government                                      Bank Loans
         grants/                 Formation of          and pension
        mortgage                  Savings and             funds
                                loan schemes

       Egypt, Mauritius,
    Namibia, Sychelles, South                    Rwanda; Kenya, Uganda,
       Africa and Tunisia                       Tanzania, (Pension Funds)
          (Mortgages)

Cooperatives embark on cost reduction efforts

Tenure
1. Cooperative housing is either
     a. Rental housing
     b. Individual ownership
2. a. Housing cooperative is a legal entity that owns the
    housing project
   b. The land
   c. Improvement on it
3. Each member owns a share in that housing
    cooperative.
   -Signs the right of occupancy agreement with
    members.

Advantages of Cooperative Housing
Housing cooperatives offer a unique form of home
  ownership to many families, community groups,
  churches, local and national government because
  cooperatives:-
1. Provide permanent tenure to members.
2. Stabilization of their lives and community
3. Build community spirit. Members learn to work
   together and form bonds with one another.
4. Provide positive community environment.
   Programs to fight vandalism; reduce crime etc.

5. Financial inclusion.
6. Incremental development.
7. Supply own labour and expertise (member
   skills) and low costs through:-
   -Infrastructure material production (brick
   moulding at sites)
   -production of building material (doors,
   window frames)
   -Income generating projects

8. Fundraising potential – greater chance to
  attract support.
9. Monitoring and evaluation through:-
•     Supervisory committee – a cooperative
  watch dog.
10. Stakeholder team (Central/Local
  Government, Cooperative leaders, Financial
  Institution Rep, Legal Representative).

Raising money for subscription                 Raising money for housing project

                                           -

Making own window frames – reducing cost       End result- beautiful new community

Big Impact
Provide social projection
Housing and provide tenure to over 15 million
 people across Africa (regardless of income)
Cooperative ownership is positively associated
 with building quality; better safety and security.
There is more evidence of pro-social norms.
 Educated and high earners in cooperatives, tend
 to stay in the cooperative and invest resources in
 improving their living conditions.

Longevity of cooperative tenants.
Creation of employment over 500 000 workers
Improved social contacts, life satisfaction,
 sense of personal safety, and happiness in
 cooperatives.
Cooperative ownership significantly reduced
 operating costs (including marketing,
 administration, operating and maintenance
 costs).
Building of private public partnerships.

Impacts-cont
                            Promotes         Cost savings
-    Diversity of
                            ageing in        build more
    communities
                              place            for less

                                               Maintaining
    Community                                     your
     stability                                independence
                          Benefits of
                      Cooperative Housing
     Better Health                            Democratic
    and well-being                             structure
      outcomes
                           Active
                        Contribution          Connected
    Improved
                        and ongoing         communities of
    quality of
                         education             interest
       life

*Policies and law enactments e.g. 30% of state-land
  to be allocated to housing cooperatives in
  Zimbabwe:-
• Law 03/07- of Uganda :- Promotes Public –
  Private housing policies. (The Framework Law for
  housing).
• Kenya – NACHU, supported by the Housing Policy,
  to contribute 50 000 units in 2019.
• In Egypt:- Government exempt housing
  cooperatives from taxes and fees. 25% discount
  on all State-owned land, which has since gone up
  in percentage.

• Morocco recognised the work of housing
  cooperatives and helped housing cooperatives to
  get mortgages, known as Master Mortgages
  (generally large sums)
• Investment into poverty:- NAHCU, Kenya built a
  high raise building for rentals.
• Decongestion of communities.
• Infrastructure development; (Community
  Schools; halls; shops; recreation centres, health
  centres and other social amenities).
• Development of industrial areas; Masvingo in
  Zimbabwe for housing related material (door
  frames; tiles; brick molding). Last 5 years the
  cooperative housing built over 185 000 houses.

• In Senegal and Ethiopia, their governments are
  subsidizing the housing cooperatives after
  realizing their importance.
• Restoration of dignity of African persons in
  housing cooperatives by giving them own houses.
• Provision of Microfinance loans to housing
  cooperatives by NACHU – Kenya.
• Tanzania:- Housing Cooperatives in 2017; got Sh6
  billion from Commercial banks to build 18000
  affordable houses (repayment period more than
  10 years).
• Zambia housing cooperatives employed 55252
  workers.

Conclusion
With Africa braced to accommodate more
than 300 million new residence by 2030; it is a
window of opportunity for an investor who so
wish to invest in housing to partner housing
cooperatives and use their business model to
provide shelter and develop African cities.