The Steps to African PPP Housing Financing: Incorporating CMIS Framework

Real estate (housing) investment and financing are crucial components of any economy, as they contribute to fulfilling one of the fundamental necessities of life. Within the context of this paper, the key variables include real estate, investment, finance, processes, capital layout, value-for-money, and bankability, all of which are essential for housing projects. The ability to procure investible funds at the optimal cost and return is the solution to mortgage challenges in developing countries, where the mortgage sub-sector is often in crisis.

Africa has transitioned from its long-held tradition of providing homes to adopting the Western mortgage system. While there is nothing inherently wrong with embracing foreign practices, it is important to thoroughly understand and implement them completely to avoid failures. It would appear the solutions for sustaining a sound mortgage/housing system are lacking in some African countries.

Incorporating The Critical-Mission Infrastructure and Sustainable (CMIS) Framework In Financing Housing in Africa?

The native African housing system, as practised in many African communities, differs significantly from Western practices. In my Eshan village many years ago, for instance, the system ensured every adult had a home. By evaluating and integrating the key components of this system into a newly adopted Western framework, we can anticipate different outcomes. A comprehensive but straightforward assessment of the process included the following:

a) Every adult received land from their family or kinsmen

b) The young ones and more productive members of the community provided communal labour

c) Building materials were collectively provided by village members

d) The construction process was communal in nature

e) Every community member was considered a participant

f) Each home was built on a collective "one for all, all for one" basis.

For centuries, this system effectively prevented homelessness within most African communities.

Evaluating The Housing Project System?

As I analyse the Western PPP Housing System, it becomes clear that integrating the public and private sectors can provide significant value. Public-private partnerships (PPP) are gaining acceptance in global real estate markets. To ensure the effectiveness of PPP housing finance, elements such as the efficiency of input resources, accountability system, transparent operations, fairness and equitable judicial system and public participation are crucial.

In addition, an enabling environment, comprising policy documents, legal frameworks, sound institutions, and public financial management, is essential for the success of PPP housing projects in developing countries. Without these elements, housing projects are prone to high failure rates.

Within native African communities, similar systems existed in the past but were not well-documented. For example, the construction of the Egyptian pyramids involved a coordinated system, with the elements mentioned in this paper. However, the current approach to housing projects in Africa, often borrowed from elsewhere, does not always align with African cultural values and heritage, resulting in limited success. It's important to recognise the significant influence of culture and values on how projects are conceived and executed.

Why Public-Private Partnership (PPP)?

A public-private partnership (PPP) is a systematic collaboration between the public and private sectors to deliver public goods efficiently and at the optimum cost. There are many inherent benefits of PPP, however, without meeting conditions precedent, PPP success rate will remain low in some African nations.

Essential Key Factors in Housing Projects

This work emphasises the key requirements for housing projects, including resource allocation, risk management, financing, and ensuring value for money in the mortgage industry. Additionally, it incorporates local realities that significantly impact housing projects to improve success rates.

Proper feasibility and viability studies, as well as cash-flow analysis, are crucial for securing project finance for housing projects. Factors; such as project location, environmental impact assessments, and economic viability must be considered. Integrating these variables into financing structures is vital to align them with local realities to increase the success rate of housing projects.

Housing development and PPPs both require substantial investments and involve long-term project financing. Using PPP models can be a compelling option for financing housing investments in developing countries, especially when the CMIS framework is employed to enhance success.

Conclusion

The intention of this piece is to encourage a re-evaluation of housing finance in Africa. By addressing the conditions discussed in this piece, any firm, regardless of project size or location, can enhance its ability to secure adequate finance for housing projects.

Akhator-Eneka W. (PhD, MBA, FCA, FMVA)

CEO - #Connectronics

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