Africa Home Builders (AHB) is reframing the affordable housing market for lower-income Africans.

Africa Home Builders (AHB) is reframing the affordable housing market for lower-income Africans.

Ghana
Organization type: 
for profit
Budget: 
$10,000 - $50,000
Website:
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

The change we want to bring to the world is creating home ownership opportunities for informal and marginalized people of the developing world. Housing assets and secure property rights are the foundation for building a modern middle-class society and affordable housing can serve as the catalyst that transitions people from survival economics to market actors. Individual homeownership creates strong communities and incentivizes civic participation to find local solutions to national development challenges.
We want to create a housing development cycle that incentivizes and supports developers, mortgage lenders and community organizers to stabilize urban housing markets and provide viable alternatives to informal slums and rental housing for low-income earners across Africa.

About Project

Problem: What problem is this project trying to address?

Ghana is a former British colony, and one of the first African nations to gain independence in 1957. Despite its strong macroeconomic fundamentals at that time, a combination of volatility of international commodity prices (as Ghana was a leading exporter of Cocoa and Gold) and mismanagement led the country to near bankruptcy by the 1960s. This led to a series of military coups, which only ended in 1992, when Jerry Rawlings restored multiparty politics and held the first democratic elections in the country. Rawlings ran for two years as the NDC president. Following Rawlings’ rule, the NPP party, led by John Kofour, took power for the next 8 years. In 2009, the NDC took power again, under the leadership of President John Atta Mills. These two parties dominate the political scene. The NDC is considered left leaning in its economic policy, while the NPP is considered to be more free market- oriented. Despite a close election in 2009, there was little political violence. As a former British colony, Ghana legal system is based in British Common Law, and when there are no legal precedents Ghanaian courts look to British legal precedents. Economic performance during the post independence period has been mixed. Pre 1992, there was uneven economic growth, with a number of years showing negative growth due to economic mismanagement and political instability. Since 2000, the economic outlook has significantly improved. Since 2000, SSA GDP growth has been 5.3%, while Ghana has managed to grow at an average of 6.6%. GDP growth is expected at over 7% in 2011 due to stronger macroeconomic fundamentals and increasing productivity from all sectors of the economy. Further, Ghana has recently discovered significant reserves of oil, and the first oil exports are expected to begin in 2011, which should contribute significantly to the country’s economic prospects.

Solution: What is the proposed solution? Please be specific!

AHB will transform developing world housing markets by reframing the relationships that support the delivery of new housing stock. Our housing technology introduces new construction concepts in the developing world that push the local market towards more sustainable and resource efficient development in order to save on costs and open up access to home ownership to marginalized groups of the local population. AHB is combining proven construction technologies and doing so in markets that have been slow to evolve away from traditional and inefficient building methods. In a market that seeks traditional brick and mortar construction, AHB brings manufactured and prefabricated building elements that match the security feeling of brick and mortar and uses significantly less material inputs to achieve a housing product desirable to local buyers. The AHB financing strategy is opening new ways for offshore capital to support development and poverty eradication work within a managed system that provides transparency and return on investment. By addressing affordable housing through market-based solutions, AHB is better suited than NGOs to incentivize the low-cost housing challenge by providing monetary returns to partners. MFIs have traditionally been limited in their lending capacity to low-income earners because of rates and conditions set by government lending policies. AHB expands the ability of local lenders to consider non-traditional qualification policies for loans to informal citizens while preserving the vetting and risk mitigation necessary for any loan applicant.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

Africa Home Builders (AHB) has a three-pronged approach to affordable housing innovation; construction, management and financing. In construction, AHB will import construction technologies such as composite and passive energy wall systems and prefabricated roof systems that increase durability and sustainability while lowering labor and material costs of house construction. By importing new technologies into the African market and establishing our own production facilities, we can control costs and generate new employment opportunities while preserving affordability in the market for new low-income housing. New building technologies also increase our ability to recycle and reuse domestic wastes for building materials that increases unskilled employment and environmental quality while further reducing input costs. In management, AHB uses incentivized local partnerships with existing companies to increase local capacity for construction and mitigate the risks encountered by foreign companies operating in the local context of developing world markets. Local partners help reduce political and operational risks when they are sharing in the financial success of AHB projects. Another primary purpose of AHB’s management strategy is to provide administrative services to ensure that each house sold by AHB conveys clean, formalized and individual property rights to each new buyer. In finance, AHB provides secure joint venture investment opportunities to allow the power of foreign capital to be combined with local capacity to execute large-scale projects. By using offshore investment funds and locals partners who provide equity in the form of land or services, all partners are incentivized to execute quality projects to generate strong returns. AHB also increases access to mortgage resources for low-income earners by seeding mortgage funds with offshore capital that is administered locally with more flexible loan products that reflect typical income and lifestyle conditions of low-income homebuyers while using creative credit profiling and risk assessment strategies for all applicants.
About You
Organization:
Africa Home Builders
About You
First Name

Campbell

Last Name

Mayer

Twitter
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About Your Organization
Organization Name

Africa Home Builders

Organization Country

, MA, Suffolk County

Country where this project is creating social impact

, GA

How long has your organization been operating?

Less than a year

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Innovation
What stage is your project in?

Idea phase

Share the story of the founder and what inspired the founder to start this project

AHB was founded by Abbai Belai and Campbell Mayer and the AHB idea emerged when they met while pursuing mid-career academic degrees in Boston, Massachusetts. Abbai Belai is an experienced banker and investor, working with a number of international institutions in financing and investing in projects in the emerging markets. Campbell Mayer is a technical expert in residential design and construction management; he has robust experience on residential housing projects in East Africa.
Together, we harness the financial resources and technical skills to design and implement housing projects that compete in local markets of the developing world. We are motivated by the overwhelming need for affordable housing stock across the developing world and use cutting-edge technologies and market-based strategies to reduce costs and increase access to housing for low-income and informal people.
Having both worked extensively in the developing world in various capacities; we have focused our housing projects on the importance of conveying clean and clear property rights to all purchasers of AHB homes. By formalizing land in the developing world we are able to help low-income families to begin building tangible assets and increase long-term value by reducing family housing costs and increasing their economic self-sufficiency.

Social Impact
Please describe how your project has been successful and how that success is measured

AHB is still in the idea stage and has not yet achieved on-the-ground success to date. The AHB concept has been recognized as a new and viable solution to housing challenges facing the developing world by entrepreneurial institutions such as the MIT venture mentoring service and the Legatum Center for Development and Entrepreneurship. At this stage in AHB’s growth, we have measured our success by our ability to secure support and partnerships with experienced professionals in the USA as well as Ghana. In the USA, our support has come from academics and professionals in the field of housing who advise and track our progress for potential investment. In Ghana, we have developed partnerships with industry professionals and local landowners who see the unique housing strategy of AHB as a potential market changer for affordable housing.

How many people have been impacted by your project?

How many people could be impacted by your project in the next three years?

More than 10,000

How will your project evolve over the next three years?

Over the next three years AHB will scale up to deliver over 1500 houses per year in Ghana while reducing costs to sell houses below local market prices. AHB will also expand into other urban markets of Sub Saharan Africa as we franchise our housing strategy and technology to respond to the regional housing deficit. Within three years we will also diversify our housing strategy to include higher density projects and urban renewal projects to convert urban slums into functional and sustainable communities.

Sustainability
What barriers might hinder the success of your project and how do you plan to overcome them?

Our first main barrier will be the transparency in the market; both in land title and our partners we will be working with. Second will be in the funding of the projects; both in the initial start up and due diligence of the projects, as well as the project funding itself and making sure sufficient resources exist to finish on time and on budget. Finally, the lack of a developed supply chain and local technological inputs increases the logistical complications of real estate development, and require additional planning and foresight.

On the transparency issues, we plan do devote significant time in due diligence, both in terms of our partners and the land we will be investing in, considering personal references and conducting a through background check on their business integrity and reputation. As far as the land, we will identify and resolve title ownership prior to beginning development, eliminating the risk of dispute once title is transferred. With respect to access to capital, we plan to secure sufficient capital from our offshore financial partners to comfortably finalize the project in successive stages. Furthermore we plan to work with local financial partners, to secure both construction and mortgage finance to develop and sell the properties. As far as the technological inputs, we plan to partner with technology providers allowing us to manufacture innovative wall and roof systems, allowing us to control our supply chain and use local waste agriculture and plastics in their manufacture.

Tell us about your partnerships

We intend to have partners on a number of different levels. The three main types will be our local / development partners, our technical partners, and our financial partners. Our local and development partners will be either local real estate developers or land owners who wish to develop a specific site. To align interests, we would expect our partners to contribute the land into the investment vehicle, for which they would get an ownership share. Our technical partners would consist of those who own the license to the specific technology that we will use to implement our developments. This technology will have the benefit of bringing down the cost of our housing, as well as lowering the execution risk of delivering a high volume of houses within a limited amount of time. Finally our financial partners will be those entities that give us the financial resources to create high quality houses that will be desirable to our client base. Our offshore investors will be investing directly into the project companies, and will look for returns once the project is completed and all obligations of the project company have been satisfied. Our onshore partners will be providing construction finance to augment the equity funding provided by our offshore partners. Furthermore, we would be looking them to provide mortgages to the home purchasers at the completion of the project, if such demand exists.

Explain your selections

Our initial funding will come from private resources and friends and family as it is important that we conduct due diligence on the specific project and partner before soliciting investors. It is imperative we present a clear view to investors what the legal issues are, along with the financial risks and rewards. Further, we need time to understand the local environment we are operating in, and this is best done through funding sources that are patient and will not press for immediate returns.
Once we have identified a specific project, we will look to raise finance to support that project. This will cover all costs of that individual project, where friends and family will support costs underlying the company. Project specific investors would include private equity firms and other real estate investors; however we would also pursue funding from foundations and social investors for projects that deal with low-income housing, where the returns may not be high enough for traditional investors. We intend to facilitate the development of a mortgage market, and funding is likely to come from the offshore development agencies who have been traditionally been active in this space.
We will look to partner with regional governments to facilitate the creation of low cost housing. Specifically, we would work with local governments to provide land and other concessions, which would allow us to develop and sell houses to low-income residents. We would not expect to receive any direct funding from these entities, as generally they are cash constrained.

How do you plan to strengthen your project in the next three years?

As we deliver and sell housing projects over the next three years, AHB will internally finance an increasing percentage of project costs as our debt obligations are fulfilled. We will look to more strategic partnerships for technology innovations that improve housing performance or reduce construction costs so that our partners have a platform to implement new technologies and the incentive to share in successful project outcomes. We want to standardize the client qualification process to include a greater range of community groups that can assist low-income people with accessing affordable housing opportunities. To further help our low-income clients, we will create an independent mortgage fund that allows for more creative credit risk analysis and mitigation for low-income clients.
With our housing products, we intend to refine our construction processes to reduce the carbon footprint of each house and reduce the home operational costs for our clients. We will expand our supply chain for construction materials to engage the problems of the locales we are operating in so that urban waste can be recycled and agricultural waste can be combined into materials used to build our houses that increase durability, expand local employment opportunities and close inefficient waste loops.

Challenges
Which barriers to employment does your innovation address?
Please select up to three in order of relevancy to your project.

PRIMARY

SECONDARY

Restrictive cultural norms

TERTIARY

Restricted access to new markets

Please describe how your innovation specifically tackles the barriers listed above.

One challenge is the inefficiencies of a fragmented and non-transparent local construction industry. By hybridizing new construction technologies we can deliver large numbers of homes with a known cost structure. Our second challenge is inefficient land markets resulting from antiquated land title systems. By generating clean title over a large plot of land it makes the prohibitive costs of getting good title accessible for the individual. Our third barrier is our customer’s lack of access to formal financial markets through mortgages. In response, our innovation of seeding mortgage funds, with funds sourced from offshore development agencies, will facilitate the purchase of lower and middle-income homes, a segment that has been traditionally ignored by the financial sector in the region.

Are you trying to scale your organization or initiative?
If yes, please check up to three potential pathways in order of relevancy to you.

PRIMARY

Grown geographic reach: Multi-country

SECONDARY

Influenced other organizations and institutions through the spread of best practices

TERTIARY

Leveraged technology

Please describe which of your growth activities are current or planned for the immediate future.

Scaling our operations to the greater Sub Saharan region is possible after completing our proof of concept and low-cost housing projects in Ghana. We have partners in Nigeria as our next country of operation. As we scale up production of our building materials (wall and roof systems) we will supply the local market with excess product when possible. We will share with our competitors the legal structure for new management strategies using cooperative land ownership and home owner's associations to preserve and enhance neighborhood dynamics over time. We encourage other developers to imitate our approach and ideally use our technologies that we can license out in the future. Scale will not come only from our company; but through capacity building in the real estate sector as a whole.

Do you collaborate with any of the following: (Check all that apply)

Technology providers, NGOs/Nonprofits, For profit companies.

If yes, how have these collaborations helped your innovation to succeed?

In the government sector, we will collaborate to use best practices in urban planning that conform to local regulations. We use modern technologies to lower the carbon footprint of our homeowners, and use economies of scale in utility provision to lower the overall burden to the cities that are now overstretched. We will work with our technology partners to help roll out newer technologies in difficult to implement jurisdictions, thus making them more accessible to others in the community. We will work with non-profits for areas where we will need to do research and development; to adapt the technologies we use to the local environment, and in certain cases use their contacts in the community to help organize homeowners associations and microcredit to low income purchasers.