 Housing in Africa. Could this be an opportunity within a crisis? The housing situation in Africa is a subject of contention in many conversations. Tonight, we are going to shed some light on it as well as see what is happening in the African housing market. This is the Private Property Podcast. I'm Tumi. Welcome. Congratulations once again to Polina and Kosi for walking away with that 500 grand cash prize from Friday's show. I'm sure Polina's weekend was absolutely amazing spending that money. And if you want to be like her, join the conversation on Facebook by sharing this post and tagging your friends. And the person with the most shares wins 500 grand. Remember, in tonight's episode, you need to share this conversation with anybody you think needs to hear the information we are talking about tonight. In honor of Africa Month, let's take a look rather at some of the history of our beautiful continent. Number one, Africa is the second largest and second most populous continent after Asia on the planet. It is an almost entirely isolated land mass with only a small strip of land connecting it to Western Asia, which is popularly known as the Middle East. Number two, the history of Africa begins with the emergence of hominids, early humans and homocipians in East Africa. Number three, according to experts who research the history of the African continent, the original name for Africa is Alke Bulan. This name translates to mother of mankind or the garden of Eden. Number four, the archeological finds in Central Africa have been discovered dating back to over 100,000 years. Extensive wall sites as well as settlements have recently been found dating to the first millennium. We hope that you enjoyed learning about the beautiful history that Africa contains. Remember, if you don't know where you've come from, you might just not know where you are going. Tonight's guest boast of 21 years of experience in the African housing market. He holds an MBA from the Durham University Business School in the United Kingdom. And if there's anybody to help us unpack this topic tonight, it's none other than shelters, Africa's group CEO, Mr. Andrew Pandeka Chimponda. Good evening, Mr. Chimponda. And thank you so much for joining us right here on the Private Property Podcast. To me, good evening to you and obviously your listeners. Thank you so much for joining us and we really, really appreciate you taking our time, you know, talking about such an important subject. I mean, all of us are living in Africa currently and it's beautiful that we learn about it. So let's just delve straight into the conversation and talk about our housing markets. The African housing market is unique. And could you just take us through some of those reasons or headlines, why it's so unique as compared to others in the world? All right, to me, thank you very much. And for me, I've had the privilege to operate at Shelter Freak, where I've actually visited at least about 45 countries in Africa. Okay, so I have an understanding a bit in terms of the lay of the land in Africa. I'm currently now focusing on my PhD thesis on Africa as well and innovative products to enhance housing. Africa is unique because, like you mentioned in the fact finding, Africa has got a lot of potential in terms of population growth. It has one of the highest population growth rates. So you find that the current population of Africa might be about 1.4 billion people. When we get to 2050 that's estimated to be at about 2.5 billion. So you see a lot of opportunity. At the same time, when we come back to housing, there's a high rate of urbanization. What we mean to me is the movement of people from rural areas to urban areas. It's very high across Africa. So you find that from as far as Uganda at 5% urbanization rate, the average in Africa is about 4%. You're beginning to see that there's a lot of pressure in the urban areas. I'm talking about the cities now because the rate at which people are moving to the towns cannot keep up with the rate at which houses are being built to accommodate these people. Hence you start having a proliferation of slums. So what is unique about Africa is the migration of people to the town areas. What is unique about Africa is that there's a huge shortage of housing in Africa, which we estimate at about 56 million housing units. That is the shortage in Africa. Now to put it in perspective, it's about 22 million in Nigeria. It's about 4 million in DRC, Congo, South Sudan, 4 million. Tanzania about 3 million shortage coming close to Ghana about 2 million shortage and the like. So that is the problem. That huge shortage of housing units also presents itself an opportunity. And the high rate of urbanization rate coming in from rural areas to the urban areas or centers obviously creates a huge demand for housing. Otherwise, of course, you're going to have a proliferation of slums to informal settlements because you won't be able to cater for the huge demand for housing that is created in the cities within Africa. Thank you so much for that. And coming into this market and the African one specifically, what are currently our trends? What are the current trends that are happening in the headlines that are currently in the housing market as unique as you've mentioned it to be? Okay, I think what you could say in terms of the trends is that you are now seeing the realization of governments in terms of putting their focus on housing. Most governments in Africa have a housing ministry and beyond that they have a delivery vehicle to either try to develop housing units. You have also in Africa a realization of the need to work together to deal with this housing problem. I think just in May a couple of weeks ago in May there was an African cities summit that was held in a town called Kisumu in Kenya. You will find in South Africa you have a center for affordable housing foundation called CAF funded by a lady called Kersha Rust that tries to get all the data to do with housing throughout Africa and then of course you have institutions that are being developed. So if you look at it from a simplistic point of view, if you look at the supply side of housing, there's now a need and a shift towards developing or at least developing contractors or developers that can build at scale. You're now seeing that there's a strong realization that the biggest problem in Africa is affordability because in the past developers would build without a clear understanding of course of what the market can afford because the biggest problem in Africa is really affordability. So you need to build a housing units that are affordable. You need to provide financing for those beneficiaries that's also affordable in terms of long attorneys and then hopefully lower interest rates. So of course you need to, I mean post the pandemic of COVID, you started to see a more self reliance of different countries in Africa to be able to actually have their own raw materials because there was a huge dependency on importing as you know from the likes of China because of lower prices. But with the pandemic and borders closing, you know, countries are beginning to realize they need to be a bit more, you know, self sufficient. So what we're saying is post COVID-19, most countries are beginning to realize that housing construction is a very big, like I can call it panacea or it's a big opportunity for them to actually not only, you know, improve the growth of the economies in terms of the contribution of housing to the gross domestic product, which is a measurement of economic growth, but also in order for them to satisfy a large number of the populace. So governments are realizing if they can deliver in terms of mass housing across the scale, they are able to basically satisfy a big need that is needed across all countries within Africa. Of course, each country, of course, is different in terms of level of, you know, of development. What I can definitely say is that there is a use shortage of housing across, you know, all the countries within Africa and Africans themselves are now coming together to say how do we share learnings in terms of improving the delivery of housing in Africa. In the month of July alone, around the 26th of July, there's a big show called the Abuja International Housing Show, which has about more than 500 exhibitors and more than 15,000 participants to come together to share knowledge and skills to see how can we kickstart the supply side. Another trend is trying to embrace alternative building technologies. Of course, you've heard about 3D printing in terms of housing, you know, you've heard about a lot of other methods to try to reduce the shortages of housing. But what we are seeing now is that Africa is the only continent where you have a lot of urbanization without a concomitant industrialization. So there's a gradual shift towards how do we industrialize the delivery of housing? How do we get to that point where we are not focusing on the traditional brick and mortar, you know, technology to build housing, but we're now focusing on building factories so that housing construction is just assembly, reducing housing construction from maybe three months or so, a house to maybe two or three weeks or so, etc. So those are the trends. They're going to take time to be embedded within the different countries in Africa. But as I say, Africa, not all countries at the same level of development, not all countries at the same level of infrastructure development, not all countries at the same level of in terms of development of their, you know, financial systems, etc., you know, and that's what we're looking at. So what I can say to me is that, you know, when you look at mortgage penetration across the African continent, isn't it interesting to notice that if you look at Nigeria mortgage penetration usually is a measurement of how mortgages are supporting countries. Now, if you look at Nigeria, the penetration is only 0.5%. Yet it's got a shortage of about 22 million. So Africa has probably got one of the highest penetrations in Africa for about 12%. But across the board is very low compared to developed economies like America, Australia, where the penetrations are between 60 to 80% respectively. So in short, yes, there is a growing trend that we should focus not only on building houses, but making sure that the way we build them is in a manner which embraces alternative building technologies. It's in a manner whereby we try to industrialize housing so that we can benefit from low cost housing through the delivery of large scale houses. And then lastly, to come up with an affordable housing unit, there's a growing change towards trying to create sustainable public private partnerships so that the end product is going to be affordable to the would be beneficiaries of housing to me. Thank you so much for that. And, you know, as we start rounding up our conversation tonight, I just, I just wanted to talk because you have international experience in terms of studying and probably even, you know, the different work that you do. You are mentioning a lot of different countries now and which is great because Africa is big and its potential is is massive. So if we know that how the different markets look in the other different countries, there's so much learning that could happen. If we have these different, you know, engagements between the country. So looking at it internationally, what would you say attracts international investors and we specifically talking investments, you know, people who are from abroad who look at Africa as more than just a tourist site as more than just a place, you know, to come and experience the beautiful heritage that we have and looking at it as an investment opportunity. What makes Africa so attractive to the international investors. Okay, well thank you to me for that opportunity. I have to say that I think one of the key things about Africa being an emerging market. It's the potential returns and I think investors outside for as long as a project is a clear understanding of what those risks are, particularly development risk, and how those risks can be mitigated. I don't want to enter the African market why so because of the fact that the returns are high. I mean, in most projects, even if you look, I'm talking residential or even if you look at the commercial areas, you have cap rates of 9% projects that can deliver ours internal rate of returns of at least 25%. Those returns you never going to see outside. And now with the advent of COVID, there's a lot of opportunity that investors are seeing because, you know, properties are more or less, I would say undervalued because of the fact that the supply of financing has been restrained, particularly for people wanting to buy houses, which reduces the demand even though it's growing slightly. So because of that, you know, supply and demand looks at the prices going down, not only for residential, but also for retail property and, you know, entrepreneurial perspective investors are looking at Africa as it stands as an opportunity to come in and just snap up all these properties so that by the time those economies start to pick up and grow, they'll have taken advantage of that opportunity. I mean, a lot of the statistics you find in Africa is if you look at the 2020 combined GDP was about I think 2.6 trillion, consumer spending in Africa for about 1.4 trillion and by, you know, the actual working age population by even 20, 30 or so in Africa is, you know, kind of estimated about 1.1 billion. So in essence, you know, as an investor, you've got the investors that, let's say for instance, big fund managers of big, you know, pension funds in overseas, particularly in America, as in a conference, whether we're discussing ticket sizes of the only 20 investment of not less than like 30 million dollars. This is about how we package those investment products. It's about how we understand what those prospective investors are looking at so that we can tailor make our proposition or our investor value proposition to meet those requirements. So don't make no mistake, there is funding out there to be able to come in and get that invested in property. But it's the question of how we make Africa attractive in terms of that. Some want to invest in big projects. Some want to invest in big funds like you have in South Africa GE, you know, PF, they want to invest in PIC, invest in big funds so that they can use the expertise of those African funds to help them kind of manage the risk. But make no mistake, Africa is the go-to place for prospective investors at a large scale. And at an individual scale, you have a lot of the diaspora population that has left Africa to go to the UK or America, you know, to search for additional returns, etc. But they always want to invest back into their country. And the biggest investment you find they get their money is tangled in with is specifically property because they want to have an underlying security for the money they put in. And because from a management point of view, once they put in someone to rent, it's easier to manage than to invest in a business where you've got to be involved on a full-time basis. So I believe that, you know, property is the safe investment to make. You've got the underlying security, there's potential for capital growth over and above the return you make from the rent that the prospective investor will be making. Of course, rental yields may be low, but at the same time you've got the security of the fact that you've got that asset which is earning income for you. No, thank you so much for that. I'm very insightful and very enlightening, you know, there's so much that is happening on the African continent that we can take advantage of. Thank you so much for joining us, Mr. Chimpon. And hopefully the next time we see you, you will have gotten that PhD and I'll be referring you to Dr. Yeah, well, to me it's such a pleasure. Yeah, that's something which I'm working on right now on a full-time basis and I pray that I should deliver that very soon. But I just want to thank you for inviting me to your platform to have the ability to share some insights. I'm very passionate about property except I think the time is a bit too short. I mean to really talk about Africa, you really need the full week, but I'm grateful to be able to shed light in terms of my bit of experiences in terms of operating in about 45, 46 countries on the African continent in the last three to four years. No, thank you so much. Really appreciate it and have a beautiful night before. Thank you. Thank you to me. Thanks to you and all your listeners. Have a good day. All right. Cheers. And thank you to you to staying for staying till the almost the end of our episode tonight. But before I let you go, of course, I need to announce the winner of the 500 grand cash prize today. And this is the person who's been engaging and sharing the link with their friends and family. And if you do the same, you could stand in line to win 500 grand cash. So tonight's winner goes to drum roll, please. Thank you so much to Glenn. Glenn Majosi. Thank you so much, Glenn, for engaging with us, sharing and ensuring that you stay on the time. And thank you. You have been absolutely amazing. If you want to be like him, join us every weekday here, 7pm on the private private property podcast. We absolutely enjoy spending the evening with you until next time we see you. Have a good one.