Habits, they say, are difficult to break. You cannot teach an old dog new tricks is the cliché most people use to describe the difficulty of embracing change. This brings me to my topic: Using technology in construction.
I have always said that the reason I went into the real estate industry is because, up until I completed university, I never had a room to myself. I look at the luxury my children enjoy – having their own rooms with en-suite facilities – and I cannot be grateful enough for how far I have come. But that was what I wanted while growing up. I wanted to ensure that my offspring did not have to suffer or go through what I did – sleeping in the same room with almost all my siblings; unable to turn the light (lantern) on and off when I wanted to study; or sleep when I wanted to. This was all due to the fact that homes in the part of Africa where I grew up were a rich man’s toy. If your parents were government workers or market traders, owning a house or apartment was the stuff made of dreams. Senior government officers lived in state-built bungalows or leftover Colonial buildings. Low-cost homeownership was practically non-existent. In fact, the 1970s government of Ghana tried building a type of low-cost home known as “nurses quarters”. This was about as far as a nurse/teacher or lucky government worker could aspire to. It was rented out to them, not sold.
Fast-forward 30 years (2014) and you will see the Africa I left behind over 20 years ago – completely different. In practically every African city – from Accra to Addis Ababa, Lagos to Nairobi – there are modern architectural buildings in cities with amazing skylines. Hotels, office accommodation, public buildings, hospitals, and retail malls are all built to a very high standard. Residential homes are now categorised into luxury, middle-range and affordable housing. The “L” word (low cost) previously used to describe cheap government buildings for the masses has now being upgraded to an “A” word (affordable housing). Everybody wants to be associated with something affordable. Who wants to be associated with “low cost”? The stigma of anything low cost is not something anyone wants to attach to themselves.
Making homes affordable for all
Even though times have moved on and inventions have helped expedite the building process, there are still huge challenges facing Africa. Almost all African countries have major housing deficits. The majority of people still live in squalor, and in tin shacks and mud houses. I like mud houses because I lived in one. I like the coolness the grass roof provides in the hot African sunshine. But that is beside the point. African governments must strive to make homes available to the majority who cannot afford to build on their own or purchase anything beyond their means. Doing this will require a concerted effort by governments to do anything possible to source the technology and funding to deliver housing policies that are designed to make the life of the average, hard-working person better.
To reduce the housing deficit, African governments must do “joined-up thinking” with the private sector. They must work together in dialogue on such key areas as use of technology, funding, land availability, mortgage availability, etc. I’m sure there have been many private companies that have tried to go it alone and have not succeeded. Government attempts to go it alone in most African countries have also resulted in failure.
About three years ago I received a telephone call from a Ghanaian entrepreneur about proposals to build affordable housing in that country. Due to the huge furore this project caused in Ghana, I prefer not to name names. This project had the entire country excited. It was the president’s trophy housing policy – a government seen to be doing something at last for the people: the down trodden. Lavish opening ceremonies were held, amid pomp and ceremony and sod cutting. After all the brouhaha, not a single home was ever constructed. All the excited “key workers” – military officers, police and other forces – had their balloons deflated in no time. The matter became a huge legal case between the parties involved and the government. What a mess that was! To my chagrin and (not to my) surprise, succeeding presidents have cut sods and promised to deliver the same housing units previous leaders failed to. This time, even schools have been included. African governments know no shame. In the West, such a government blunder will have the head, or heads, of the president, prime minister and housing minister on a silver platter in parliament, no questions asked. But in Africa, it is business as usual: complain at your peril.
Lessons from Russia
The use of technology and changes in building construction are important if we are to get anywhere. Instead of building horizontally and taking up land, we need to build vertically. It is therefore important to consult experienced companies that have the resources. Again, financial institutions must be brought in the loop to help provide the needed development funding and mortgages to enable eligible, hard-working families to purchase decent homes.
I read a UK newspaper recently about international construction firm, Mace, which is pioneering the use of building information modelling (BIM) with a $2 billion project in Russia. The project consists of medium and high-rise buildings. To reduce cost, the team settled for the use of a mixture of concrete and steel, instead of the usual traditional pre-cast concrete. The new technology will reduce the weight of the structure and will therefore be less taxing on the foundation – St Petersburg has very poor ground conditions. This is Russia, in 2014. African governments have abundant land. They have the people who are crying for affordable housing. The technology is available. The missing ingredients are funding and leadership. Funding can be obtained if the right investors are sought. That, in turn, is dependent on the business/project plan put on the table and “WIIIFI” (What Is In It For Investors).
“Investor” can have a loose meaning. But largely, it refers to an individual, corporation, or institution that has the financial resources to embark on an investment project with the aim of gaining financial rewards. This includes angel and equity investors, and pension funds, etc.
In most of my travels, when an African politician or businessperson tells me they are looking for investors, nine times out of 10, they are referring to Chinese, Arabs, Europeans, Americans or Asians. They hardly think that an African can come in and invest in their project. However, there are many active investors who happen to be of African origin. The trouble is no effort is made to reach out to them, preferring always to go for the foreign investor. In courting the foreign investor, however, little or no effort is made to put together a “bankable” proposal. Little due diligence is done; no convincing information about the risks involved, exit strategies, etc. No investor will put their money into a project they are not sure will give them returns. It is up to you, the fund seeker, to demonstrate that your project can make money for yourself and the investor, and therefore warrants looking at. This will be the subject of an upcoming diary note.
African governments and businesses in the real estate industry must learn to embrace changes in technology if they are to make headway in reducing the housing deficit. It involves going into bed with the private sector in “joined-up thinking”. It also involves embracing technology and changes in construction practices; using available expertise in-house or via consultants, such as Property Investor Africa, to carve out workable and bankable projects and proposals that are worth looking at by investors.
Similarly, banks and financial institutions must begin to look for and partner with more resourceful ones in Africa or beyond, with the aim of delivering financial products that meet the needs of the people and make them profits too. Until this is achieved, the housing deficit in most African countries will continue to increase: shanty towns will be on the rise and social vices will increase. “Tree-top” living will continue to become the order of the day. Africa rising will become Africa sinking.
Quote of the day:
No investor will put their money into a project they are not sure will give them returns. It is up to you to demonstrate that your project can make money for yourself and the investor, and therefore warrants looking at”
Douglas Oppong is Founder and CEO of Property Investor Africa. He consults on finance, infrastructure and
real estate projects for governments and companies doing business in Africa’s. email@example.com