To many Kenyans, owing a home is the dream of a lifetime. However, the majority, who are low-income earners, never achieve this dream due to lack of finance. "One thing that is clear is that, although the country has seen dramatic developments in the housing sector, most of that growth has not been felt by low and lower-middle income segments," says Mr John Kimani , the director of Roadmast Enterprises . Mr Kimani says that after carrying out in-depth surveys of the housing market, "We realised that the main reason many in this income bracket cannot afford homes is that the homes available for sale are priced way beyond what many mortgage buyers would qualify for." He says the survey also indicated that this group of people save mainly through saccos, where it takes a considerable time before they can get a loan to buy a plot, which they repay for several years before borrowing again to build a house, even on piece-meal basis. "Such a process might take seven to 10 years, and also gets costly due to the increase in building costs as time goes by. Some of them end up with an incomplete house after a long time investing in it," notes Mr Kimani . To make homes affordable to such people, Mr Kimani , launched a campaign, called "Affordable Homes Are Real" on December 3 last year. It ends on January 17 . "The campaign aims at getting people who are interested in housing to provide seed capital to enable us to start a housing project near Nairobi ," he says. DIVERSIFYING CUSTOMER BASEThe project will be loosely tailored along the lines of a project by Cemex, a company in Mexico . Cemex is a construction materials giant, earning billions of dollars per year. However, the 1994/1995 economic crisis in Mexico saw its earnings drop by 50 per cent. During that same period, the revenues of low-income families building their own houses declined by less than 10 per cent. Cemex believed that this $500m market had the potential for growth, and could also help diversify its customer base and hedge it against business cycle fluctuations. However, building houses for the poor had often proved a risky endeavour in the past, so to serve this segment, Cemex designed a project, Patrimonio Hoy (Property Now), in 1998. The project addressed key issues, such as lack of savings or access to credit. Cemex divided the market into areas comprising 100,000 people each and established small managerial cells in each area, consisting of just one to four full-time staff members, typically a manager, an engineer and an architect. It contracted promoters from the local community, mostly women, and paid them a commission for attracting clients. Linking the commission to the customer's membership ensured that promoters had an interest in ensuring long-term financial discipline of participants. Through this membership system based on small monthly fees, Cemex provided collateral-free microfinancing. When the company realised that distributors were not keen on delivering small volumes of building material to remote areas where the poor lived, while materials saved up over the years deteriorated for lack of adequate storage space, it provided suitable storage space. And the problem of lack of expertise, which led to shoddy or incomplete constructions, was solved by providing engineering and architectural expertise as part of the membership. Patrimonio Hoy turned out to be a success, with Cemex reports indicating that the project has reached 265 million families so far. Over the years, it has been rolled out in other countries, including Colombia , Costa Rica , Nicaragua , and the Dominican Republic . Borrowing from the Cemex model, the " Affordable Homes is Real" campaign seeks to raise US$2.5 million (Sh215 million). The ultimate aim is to provide a decent home at an affordable price, that is below Sh3.4 million. The project will buy parcels of land measuring between 40 and 80 acres in Mavoko, where land costs less than Sh2 million per acre, with the main target being Nairobi's urban dwellers who can access Sacco loans and others who can afford it. "Besides looking for affordable land, we have also shopped for rapid construction technology to execute the projects quickly, such as the building panels' technology from Mexico . We plan to provide 400 to 800 decent and spacious three-bedroom bungalows," says Mr Kimani . "We believe our affordable homes offer will sell, now that people can use up to 60 per cent of their pension savings as collateral for a mortgage and the introduction of new mortgage products offering up to100 per cent financing is also an added advantage, not to mention that many Saccos are willing to finance homes for their members," he adds. In an article titled Trust the Poor, Reap the Benefits, Kishore Biyani , CEO of Future Group , says the unique aspect of Cemex's Patrimonio Hoy innovation, is that it combined a basic human aspiration with an age-old tradition in Mexico . Everyone aspires to build his or her own home, but for low-income customers, it is often not financially feasible. In Mexico , there is a traditional system called "tanda" that essentially serves as a rotating credit system. Members of a community put their resources in a common fund, from which credit is extended on a rotational basis. Through this unique innovation, Cemex was able to enlarge its market, build customer loyalty and long-term partnerships with distributors and municipalities, as well as acquire the image of a socially responsible and innovative entity. AFFORDABLE HOUSING IS REAL • Based on a model by a Mexican firm, Cemex • Seeks to raise Sh2.5 million seed capital • Aims to provide decent three-bedroom bungalows • Will charge less than Sh4 million per unit • Targets mainly Nairobi dwellers with SACCO savings • Will buy land measuring between 40 and 80 acres
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