IN DEMAND

Tanzania 2018 | CONSTRUCTION & REAL ESTATE | INTERVIEW

TBY talks to Nehemiah Kyando Mchechu, Director General of the National Housing Corporation (NHC), on housing demand in the new capital, affordable housing, and urban planning.

Nehemiah Kyando Mchechu
BIOGRAPHY
Nehemiah Kyando Mchechu was formerly Managing Director & CEO of Commercial Bank of Africa Tanzania Ltd., where he was the youngest CEO in the banking sector in East Africa at the time. Previously, he worked for Standard Chartered Bank Tanzania Ltd. in several capacities. 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 dialog forum for the country’s top 50 CEOs.

Aside from the drive to add 30,000 new houses to the market by 2025, what other priorities are highlighted in the NHC's Corporate Strategy Plan?

The 2015-2016 strategy plan includes our commitment to build 30,000 houses over the next 10 years; however, this is not our sole focus. Aside from directly constructing these properties, we will ensure that many houses are being built for Tanzanians in various ways. One way is by entering into strategic partnerships; another is our portfolio dealing with land development—access to planned land with the infrastructure in place. We have another portfolio due to start next year, which will deal with the production of building materials as part of our alignment with the government's drive to boost industrialization, beginning with roofing materials, painting, and brick making. With that, our overall contribution to the sector will be extremely high, more than the numbers we have committed. Finally, we are midway through negotiations with partners on a deal for prefabricated industrial houses. Dodoma will be our key focus now as there is great demand for houses with the new administration moving there, and we must support the government in this.

One of the challenges faced by the real estate market is the availability of affordable housing. How does the NHC leverage PPPs to work to resolve this issue?

There is no lack of interest; we are in talks with companies from Turkey and the Middle East, and recently we had our first engagement with a group from Norway, though we have yet to progress further. We have been through the first round of meetings with 22 business people in real estate construction. The difficulty is that many people with plans to invest in real estate in Tanzania look at mid- and upper-level housing. We have not yet been fortunate enough to find people who are keen to support the low-income and affordable houses, where there is growing demand. However, it is important to stress that business in that sub-market can be huge. The amounts might not be large themselves; however, the volume is certainly there, and investors can double in profit on medium- or high-income developments. The NHC works hard to bring the right partners on board for this venture. We seek to improve the understanding of our philosophy behind affordable housing; we are not referring to socially subsidized houses, but a social business project that we fully intend to be financially viable. The other part is that we bring a level of flexibility to the transaction: we are willing to stretch investors' guarantees so that capital remains safe. That said, we have seen an appetite from impact financers, and we hope this will increase in the coming years so that we can make headway on these plans.

How do you deal with problems that arise from large-scale urbanization across Tanzania?

Urbanization is an issue not just in Tanzania, but the entire continent. In Tanzania, one of the side effects of urbanization has been a squatter crisis. Across the country there are valuable properties in badly planned areas. People have invested in houses in places that were not planned, simply because there were not enough plots being produced or enough developers putting up properties. When these houses are left unoccupied due to a lack of surrounding infrastructure, they invariably end up hosting large numbers of squatters. The NHC is tackling this problem with an extra emphasis on land planning: providing more surveyed roads and other resources to help meet the demand of people looking for areas in which to build. We also want to boost construction and development ourselves, to prevent people from needing to venture out by themselves. With that we have focused on Dar es Salaam, Dodoma, Arusha, and Mbeya. We also see great opportunities in Musoma.