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 2050

Housing Investments

represents 6% of GDP

4,5 million new residents in

Informal settlements each year

5 jobs per house 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

KENYA Housing picture by

2030 cooperative will go up to 90%

Egypt Housing picture

43% of the housing plan (Cooperative)

Zimbabwe House picture

40% from cooperatives

Rwanda House Picture 1,8%

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

- Housing

Cooperative Funding Options

Member Subscriptions

Bank Loans and pension

funds

Donations from NGOs

Proceeds from Public-

private partnerships

Government grants/

mortgage

Constituent development

Fund

Egypt, Mauritius, Namibia, Sychelles, South

Africa and Tunisia (Mortgages)

Rwanda; Kenya, Uganda, Tanzania, (Pension Funds)

Formation of Savings and

loan schemes

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.

- Diversity of communities

Improved quality of

life

Better Health and well-being

outcomes

Community stability

Promotes ageing in

place

Cost savings build more

for less

Benefits of Cooperative Housing

Active Contribution and ongoing

education

Democratic structure

Maintaining your

independence

Connected communities of

interest

Impacts-cont

*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.