Presentation of the Jamii Bora low income housing Model during a Symposium on Low income housing in Rwanda. Hosted by Shelter Afrique

1. “ The Jamii Bora Makao Model”

2. Agenda
2. Low Income Housing in Africa - Context
3. Overview of Jamii Bora Makao Project
4. Development Planning
5. Financing the Development
6. Property Development
7. Property Management
8. Social Impacts
9. Financial Performance

3. Africa’s explosive demographic growth
 The African population is growing
at a rate of 2.4% a year.
 It is estimated that by 2030, 50% of
Africans will live in cities;
 The African workforce will reach
1.1 billion people by 2040 - the
largest in the world ( McKinsey);
 And by 2050, Africa will be home to
1.9 Billion people.

4. Africa’s is facing an urban challenge
 By 2040 Africa is expected to be the
2nd most urbanized continent after
China.
 At current urbanization rates, an
additional 14 million housing units
per annum are needed in order to
accommodate the increasing urban
demand.
 62% of the populations living in
Africa’s cities ( 32 million
households) live in informal
housing where basic services are
poor or non-existent.

5. Africa faces a large gap in low income housing
Region Demand Supply
Sub- Saharan  32 million households in Sub-Saharan Africa are  308 million people; 191 million of whom live
Africa considered inadequate. in inadequate housing.
 Under current urbanisation rates , an additional 14
million housing units per annum are required
Kenya  60% of households are considered ‘inadequate’ housing  Less than 30,000 units supplied per year
and are located in slums.  The annual deficit is thus more than 120,000
 150,000 units are required per year housing units per year
Ghana  Ghana’s annual demand for housing currently stands at  Current housing supply provides 42,000 units
120,000 housing units per annum per annum which is only 35% of the demand
Nigeria  33.6 million Nigerians living in urban areas (46% of the  The annual deficit is 16 million units
urban population) are considered to be living in  720,000 units need to be created annually to
inadequate housing meet the demand
 Current supply is however meeting only 3%
of this demand
Tanzania  80% of the entire population is living in unplanned,  The housing deficit in urban areas is
informal housing. estimated at 1.2 million units.

6. In t r o d u c in g J a m ii
B ora Ma ka o
 Founded in 2007 as a subsidiary of
Jamii Bora Group.
 Group initially focused on Microfinance
and then expanded into a full range of
social services including Housing and
Insurance
 Kaputei New Town is the flagship
project. Targeting 2000 low income and
middle income houses by 2014.
 Concept is an integrated community
with residential, commercial and social
aminities.
 Group provides and end to end solution
including financing and propery
management.

7. Development concept
Jamii Bora Makao contributes to  Integrated construction: Integrate
resolving the problem of affordable the entire value chain and pass on
housing in Kenya using the following tools; saving to buyers.
 Low cost of ownership: Reduce
Cross subsidization: Achieve recurring cost to owner by using
affordability through mixed income green technology ( Waste recycling,
housing communities, and apply cross Solar energy, rain water storage
subsidization between middle and low etc..)
income housing units.  Building at the periphery: JBM
Collaboration: Create a network of achieves affordability by building
partners around each project including integrated housing communities
designers, contractors, bankers, financiers with Residential, Economic and
Employ beneficiaries of the low income Social amenities at the periphery of
houses in the construction process large urban centers.

8. Kaputei NewTown Site Plan
School facility – Primary
and Secondary ( 350
Waste Water recycling
students)
facility
2000 bungalows – 2 and 3
Bedrooms – grouped in 8
neighborhoods.
750 houses delivered to
Commercial Center with date.
1,000 shops and light
industries
Social Amenities including
places of worship,
community center, police
station etc..

9. D e v e lo p m e n t
P la n n in g
The cost of land is an important  An MOU was signed with the Massai
component of low income housing community allowing access to Construction
development. jobs, community Borehole, schooling and
access to ownership in the commercial
JBM acquired a 293 acres land 60km from center shops.
Nairobi. The distance and agricultural  Government participation was minima. To
classification allow the land to be purchased the contrary, the school was donated to the
at a discount. state as a public school.
The change of use and statutory approval
process took 3 years and included a lawsuit
introduce by environmental groups. JBM
prevailed.

10. Financing the development
 The development was financed by a
combination of in kind shareholder equity
( land), Grants and Shareholder loans.
 Jamii Bora Group invested the 293 acres
valued at $4.7m as Equity. An additional
$2.4 m in equity was invested by Jamii
Bora Scandinavia.
 Jamii Bora Scandinavia provided a loan of
$7m to the project ( 8% pa – 10 years).
 The project also received close to $5m in
grants especially for electrification and
social amenities.

11. P r o p e r t y D e v e lo p m e n t – C o s t m in im iz a t io n
 The houses are designed to be
constructed using hallow concrete blocs
and concrete roof tiles.
 The construction process is vertically
integrated in order to keep cost down.
 Concrete blocs and tile and
manufactured on the construction site.
The factory employs residents.
 The simple design enables the use of
relatively unskilled labor – Which
allows the project to provide
employment to residents.
 Thanks to the use of this approach, the
construction material used is in average
30% bellow market cost.

12. P r o p e r t y M a n a g e m e n t – S e r v ic e D e liv e r y
 The residents are represented by an
JBM has set up a property management association managed and governed by
unit that is responsible for sourcing and elected members of the community
managing all basic services. The units
provides the following  A property managed charge of $12/month is
levied on the residents.
 Utility management
 The charge is included in the rent/mortgage
 Waste collection and disposal payments.
 Security
 Property Maintenance

13. P r ic in g
The cost of the 2 bedroom unit house is $9,000. Initially the company has been
selling houses at subsidized rate. Now houses are sold for $12,000 in order to
remunerate capital.
This cost includes the infrastructure received by the project. In the absence of
such subsidies , the cost would have exceeded $12,000.

14. S a le s A p p r o a c h
 JBM sells houses on Plan. The clients are
required to save with the Jamii Bora  Jamii Bora Group members are given
Bank until they can afford to pay a 20% priority in the sales process.
deposit on a house.  50% of the clients have been provided an
 The balance of the price of the house is installment sales arrangement by Jamii
due on delivery. Clients are offered Bora Makao. Payments are scheduled over
financing solutions 15 years.
 The construction process is broken  The remaining clients have either paid for
down by neighborhood ( 230 houses). A the houses for cash or secured a mortgage
construction phase starts construction with Jamii Bora Bank.
when 80% of the houses are reserved..
 The average selling time for a phase is
30 days.

15. M o r t g a g e P r o v is io n
The innovative mortgage process has been mainly applied to Jamii Bora Bank but is in
the process of being applied to other local microfinnace and SME banks.
Mortgage Bank
Finance 80% of
Price of the House Single Secured Mortgage Security Fund
Bundled Deposits of 20%
Instalments of 20
Jamii Bora Makao
Sell Houses to Monthly Instalment
Buyers 20 % Deposit
Home Buyer
Home Buyer
Home Buyer

16. S o c ia l Im p a c t s - E n v ir o n m e n t a l R e s p o n s ib ilit y
Kaputei has been designed as an
environmentally friendly community.
Water supply is provided by a Borehole ( 2
more being added). Pre paid water meters
are being installed in the 750 houses.
Waste water is recycled through a
Wetland. Recycled water is used for
landscaping. A second Wetland is planned
for the end of 2012.
Despite the recent connection to the grid,
all houses are equipped with Solar kits.
Security is provided by the municipal
police and a team of local community
members ( Massai) hired by Jamii Bora
Makao.

17. F in a n c ia l P e r f o r m a n c e
The objective of the the Kaputei project is to break even by end of 2014 when all phases are
completed. The project has been able to generate enough cash flow to carry on the
development without Bank debt. We expect to purse the same approach until completion.

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