SATELLITES ON SHOW

Tanzania 2015 | REAL ESTATE & CONSTRUCTION | INTERVIEW

TBY talks to Nehemiah Kyando Mchechu, Director General of the National Housing Corporation (NHC), on performance, satellite cities, and private investor opportunities.

Nehemiah Kyando Mchechu
BIOGRAPHY
Nehemiah Kyando Mchechu was formerly MD & CEO of Commercial Bank of Africa Tanzania Limited, where at that time he was the youngest CEO within the banking sector in East Africa. Prior to CBA, he worked for Standard Chartered Bank Tanzania Ltd., and in his last role was an Alternate Director and Head of Global and Co-Head of Wholesale Banking. He has worked for Citibank and Barclays Bank Tanzania Ltd. Mchechu sits on several Boards including KCB Tanzania Limited, and is the Chairman of the Rightway Schools Board of Directors. He is also a Director and Founding member of the CEO Roundtable, a policy dialogue forum that brings together the top 50 CEOs in Tanzania.

How would you assess the recent performance of the National Housing Corporation (NHC)?

The performance of the NHC has continued to improve, and I think we have maintained the slot and are still doing well. The NHC has invested more in the execution of our strategic plan, focusing on six key elements. We aim to become a leading real estate developer, to become an efficient real estate manager, and to strengthen operational efficiency and control mechanisms. We have also put more emphasis on brand issues, and have maintained strong relationships with our tenants and potential customers. We are now completing a customer satisfaction survey to find out if our clients are happy with the services we provide. In addition, we are carrying out a staff satisfaction survey to get feedback from our employees to see which practices are working and which are not.

What were the main strategies behind the NHC's decision to commit to its satellite city projects?

NHC has three different business portfolios. One of them is to improve the existing cities, so we are trying to combine local properties situated in strategic areas to create something meaningful that will remain for another 40 to 50 years. The second portfolio deals with affordable housing, and our aim is to deliver affordable and good quality housing for local groups. Affordable housing should be the focus of the local authorities, too. The third portfolio, satellite cities, is also important for us. Within this portfolio, the NHC acts as a master developer. We will welcome developers in some of the satellite projects. As a master developer, we have to ensure that the master plan is delivered correctly. We are responsible for providing infrastructure to those who are participating in the projects. We already have four satellite cities and have another six to be built. Two of those are in Dar es Salaam, and we have two separate satellite cities in Arusha. They are not competing but rather complementing each other. We aim to create a community in those satellite areas where people can live, shop, have offices, and use recreational areas. Every project has a key feature; some of them have more office areas, business, and commercial facilities with residential areas to support them or vice versa. In some of the areas, we are targeting all classes of potential residency. Manza is another region to keep an eye on. It is the largest city in the north-west of the country. We are also looking at opportunities for establishing satellite cities in Mbeya and Dodoma. Most of these projects take five to 10 years to complete. To qualify as a satellite city, an area needs to be more than 1 million sqm in size.

How will the NHC finance these projects?

The financing differs across projects. We have enough sources for some of the projects, and we are also borrowing for some others. We intend to do to encourage more developers to participate. One of our options is to sell plots of land to investors. We also run some road shows outside the country to generate interest. Recently, we have organized a road show in Dubai, following successful ones in Tokyo and Singapore. We are focusing mostly on attracting developers from South East Asia, the Middle East, and China. Recently, we have also started to consider Europe.

How would you assess the level of interest from foreign private investors in these projects?

I think it has been quite high. One of the main reasons is that people understand that Africa is changing, and they see the various improvements in economy, management, and politics taking place in Africa recently. The continent is rich in resources, and human capital is one of its strengths, too. The average age is lower than that of other continents, so there is a larger working population than in China or India. NHC also has the biggest balance sheet in the country. We are the largest player in the real estate sector in Central and East Africa. We have the largest number of units. Management is also important to attract investment. We are trying to build an institution that is managed professionally, as we need to convince investors to come and put their money into housing.

What are the remaining concerns among potential investors, and how can these be addressed in the future?

They may have a few concerns. However, partnership with the NHC helps to resolve them. Other issues need to be addressed by the authorities. One of the main problems that needs resolution is property ownership for foreign nationals. The legislation that deals with this area should be updated.

What are your main goals for 2015?

By the end of 2015, we need to achieve every goal that we have set in the strategic plan for 2010-2015. We have already reached some of them, but it will also be the time for us to design a new strategic plan that should consider our achievements, financial situation, and human capital. One of the goals in the coming strategic plan is to make sure to have enough units in every area. The elections are coming soon, so people will be asking for housing. We will also need to improve our financial positions for finding alternative sources of raising money and selling more of our properties. We need to work on leadership and human capital issues, and will need to make sure we are able to sustain our success.