•Rwanda Based Property Developer
Mr Harmony Kunu is the CEO/Project Director, Workers Affordable Properties Limited (WAP), in Rwanda. He worked with Chevron Nigeria and USA for 25 years. Presently, he’s one of the leading real estate players in Rwanda; he’s currently leading the group of project team on affordable. He has a big target in Rwanda and that is to build a minimum of 1,000 affordable housing every year. He’s just two years in Rwanda but he has made a very huge impact in the sector. Currently, Mr Kunu is the toast of Rwanda government because of his remarkable track record he’s been able to infuse into the sector. Of course, Mr Kunu is a Nigerian and has worked and lived in Nigeria for many years before he relocated abroad (Rwanda) where he now plays big.
He visited Lagos, Nigeria a few weeks back and City People Head Of Real Estate Desk, ISAAC ABIMBADE (08155107955), spoke with him. He spoke about the Rwanda Real estate sector. He also advised the Nigeria Government on what they can do better in terms of providing affordable housing for the people. Below are excerpts of the conversation.
Can you please introduce yourself for the benefit of our readers?
My name is Engineer Harmony Kunu. I’m a retiree of Chevron Limited. I worked in the Oil & Gas sector with Shell Petroleum and Chevron for over 27 years and I took early retirement to pursue a new career. I’m currently based in East Africa, specifically in Rwanda with visits to other East and West African countries to see some potential project sites.
Your card says you are an engineer, can you tell us more about your Engineering career?
As an Engineer that worked in the Oil & Gas sector, we did a lot of capital projects across 45 countries, including the US and some other countries and the Asian continent where Chevron had been operating. I’m a Mechanical Engineering graduate with an M.Sc in Mechanical Engineering from U.I and an MBA from the University of Benin with lots of Project Management Trainings.
I am a very experienced individual in Capital Projects, with special skills in Complex Project management, Value Engineering, Cost Engineering, Technology selection specialist etc. My minimum project value is over 200 million dollars, of course, that is for Oil and Gas projects with a great experience in Project Peer Review Consultancy and that’s the reason why when people have difficulties in their projects, they engage people like us to help them conduct a Peer Assist and sometimes manage their projects to ensure it is delivered on schedule, within budget and maintain a high standard.
Why Rwanda, why didn’t you stay back in Nigeria?
The first reason is that I have worked in Nigeria for so many years while working in Shell and Chevron. So there was a need to go start something in a new place and face new challenges. The choice of where to go was based on the fact that I didn’t want to wait many more years understudying informal procedures but rather a place where there is already black and white written procedures and guidelines to start implementation immediately. So I needed a place where they already had the guidelines to start with what they have, which most are not readily available in Nigeria. Such guidelines and procedures are written, published and readily available in South Africa, Rwanda, Kenya and Tanzania. They have the necessary guidelines, procedures and policies for various types of projects in different sectors.
What year was this sir.?
My last date with Chevron Limited was Dec 31, 2017, and by January 1st, 2018, I was already in Rwanda and by end of January, we had already formed our company in Rwanda and started the Affordable Housing Project concept there.
Sir, please tell us more about your company there?
As we speak today, We are recognized and consulted by the Government institutions and the private sector for the Affordable Housing project and talking about our company, Workers Affordable Property Limited (WAP), our goal is to help low and medium-income earners to own a house. So when most government institutions and agencies (local and regional level) need help and guidance about Affordable Housing and how it is achieved, WAP Ltd is always one of the preferred companies to be invited for such engagements or meetings/workshops.
How can you compare affordable housing in Rwanda with the one in Nigeria?
Well, Affordable Housing is Affordable Housing anywhere in the world. It is meant for those in the middle and low-income class. There is a difference between Affordable housing, Low-cost housing and Luxury homes. To achieve affordable housing, you have to have the necessary technical and project management experience to be able to deliver the houses. Not all builders or developers or Real Estate companies are into affordable housing projects. For example, we can draw an analogy from the medical field. In the medical field, there are many departments or specializations, from Dentist to gynecologist, pediatrician, etc. You call a dentist when you are having a tooth issue and not a gynecologist although they are in the same medical field. In the same way, there are Builders who specialize in building luxury houses (mostly common), high-rise commercial facilities, few (2 to 40) houses, Low-cost houses (social houses- Govt driven), and affordable houses (not common). So, in the discussion of affordable housing projects, experts in affordable housing projects should be consulted and not people focusing on high-rise and luxury houses targeting huge profits.
We have a lot of people building houses and estates but when it comes to affordable housing, you need experts. For example, there are organizations that fund Affordable housing projects at a very low-interest rate from 3% to 5% which you cannot get In any commercial banks. However, as part of securing the funding from such organizations, you must have about 1000 housing units on your project. So an individual or company that is only building an estate of about 20 to 30 buildings does not qualify for affordable housing funds.
Another critical factor that Affordable Housing project expert consider is the profit margin, the profit target does not exceed 15%, unlike other building developers that target between 40-80% on building depending on market demand. Our major goal in affordable housing scheme is to make it affordable for purchase by low income and medium-income earners. We strategically push the excessive profit margin of the buyers to other commercial ventures for example, within the estate, we may have other facilities like Banking halls, laundry services, supermarket, nursery schools, game center, etc. that are mostly owned by the company or sell at commercial value for business profitable growth.
Generally, in Affordable housing projects, you have to consider and assess 10 factors that may not be the same in two different locations. Such factors include nearness to local raw materials, technology selections (about 9 different potential technology to reduce cost, maintain the standard and on schedule), off-takers capacity and accessibility to mortgage, qualification for affordable project funding requirements, etc. I can’t really point to 5 companies in Nigeria who are really into Affordable housing Projects but there are over 5,000 Real Estate Developers across the country. Very few are into Low-cost housing in collaboration with the government.
What have you done in Rwanda that has made you become so recognized in Rwanda in the past 3 years?
Coming from this big background from my previous companies where I worked and the volume of projects I have done, it wasn’t difficult to just start and focus on what is required to move the projects to the next level. We are currently at the construction stage of one of our projects. However, we have four major projects and you can find them on our website. One is at the conceptual stage-3,000 Affordable Houses for Low-income earners (100%), the second is at late Phase 3 (10000 affordable housing for Rwanda), the third is 1,735 affordable housing units (ready for construction awaiting funding approval) and the fourth is the current project under construction with about 300 units to be completed by August, 2021.
Our very first project was the 10,000 affordable houses which on late phase 3 and once project funding is secured, we will move to phase 4 and start a 5 years construction to deliver the 10,000-housing project. Like I said, we arrived in Jan 2018 with some of my team and joined with some other members already in Rwanda, and by April 2018, we have started the 10,000 affordable project, knowing that Kigali had over 600,000 housing deficit and needed about 30,000 per year to catch up. As at 2018 less than 1,500 houses was built per year. By August that same year, we had gotten all the conceptual design approval required for the 10,000 housing units. The waiting for the affordable housing projects usually takes a while and is worth waiting compared with securing loans from local banks at 20-30% interest rate that may kill the project or increase the cost of project. International Organizations like IFC of World Bank, CDC of UK, Shelter Afrik and many more globally fund affordable housing projects better at a lower interest rate. Once we get that alignment with the funding organization and agreements signed, we will make a Final investment Decision FID. Upon that decision we can now go into phase 4 and that 10000 would be done in 5 years, in parallel with some other housing projects of smaller numbers.
How long does it take in Nigeria?
May take up to 2 years. Even in Rwanda, there are people who have spent the longer time to secure related approvals or permits required but ours was different because of the background we had. Generally, the government system work so well that you can secure approvals and permit less than 2 weeks if you met the requirements. Most people that have their approvals or permits delayed may have assumed the requirements without going through the documented requirement/checklist and collate them one by one. What my previous experience taught me to do was to always review the applicable regulations and compliance requirement standards, then check for the requirements for the specific projects you want to do and follow the guidelines so no need to confuse yourself by asking people. So we did that and got the permits we needed within a short time. Some of the key requirements for housing project in Rwanda is to secure an approved EIA report, Architectural design etc. We had a lot of people with good experience working on the various scope of the list of requirements to tell you how it was serious priority for us with target dates of completion.
What is your advice for our government in this sector?
What I would advise the government is to sit back, understand the housing program completely, understand the demand and the supply gaps with a well-managed database to track what is being pushed out and if developers are meeting the demand and opportunity to address housing projects challenges including those on hold etc.
The second aspect is that the government should not be directly responsible in construction activities but should be involved in a sustainable environment and providing an enabling environment. It is true that there is nowhere globally that affordable housing is a success without the government giving some applicable incentive to assist in the affordability of the housing units. For example, if I need to bring anything from abroad into Ghana for affordable housing, once the project is approved and stamped as an affordable housing project, everything will be done with zero custom duty. In Rwanda for example, affordable housing project attract a 50% discount in corporate tax, Government support in providing road, portable water and electricity to the site of the project at Govt cost to encourage affordability of the housing units. That would help to Improve in the deficit that they have.
Those in applicable government institution for housing projects should understand and apply the 10 assessment factors that is applied to achieving affordable housing project to aid their monitoring and evaluations.
Appointment of a very experienced profession as a Project Director or Advisor on Affordable Housing will go a long way to set the required standard and start closing the housing deficit gaps and develop the required Human capital in the relevant government institution(s) and private organization who are into Housing projects.
Can we say the government is behind the shortfall of affordable housing in Nigeria?
Yes, but is it’s not only in Nigeria, its common among several countries in the world. They tend to confuse affordable housing with social housing. Social housing in Rwanda are Supervised and built by the Rwanda Reserved Forces i.e. the Army. In almost all the different sectors or districts they have many social housing projects ongoing or completed. At Muhanga in one of the Province, over 1500 social housing units were developed given to the less privileged people to live and start up something for themselves. They coordinate and supervise the project from start to finish. The president commissions the place and the people have long moved in and living a better life. The project are on schedule and everything put in place to achieve that. In parallel private sectors are developing affordable housing projects to close the deficit gaps, which is still a long way but activities to increase the supply of houses in seen and delivered.
In recent time in Nigeria, there has been some aggressive rise in low-cost housing scheme development powered by the government with large fund made available through the central bank in collaboration with NSHP (National Social Housing Program) and Family Homes Funds.
Affordable housing is a Privately owned enterprise but the government just creates some enabling opportunity for the citizens to afford those houses by creating incentives.
What happened to the land given to you by the government?
That’s a good question. Like I mentioned earlier. In Rwanda, the Rwanda Housing Authority will expropriate land for the purpose of making it available for developers who are into affordable housing to be able to use them for that purpose. So when the government acquires the land and we who want to set up affordable housing will go to them and discuss the number of units of Houses to be built and the land that would be required. Payment of the land is set aside in a separate account from the sales of each house and that can be managed by the mortgage bank on behalf of the Government (landowner) and the affordable housing company. All those monies accumulate into the government account till it’s completely paid for at the end of the project.