Accessing adequate and affordable housing remains a challenge for low income households across the globe, Kenya being no exception. Similar to most developing economies, Kenya is also experiencing rapid urbanisation, with an urban population growth rate of 4 percent.  These high rates of urbanisation imply a continued and rising demand for affordable housing, particularly in the main cities and urban areas. Housing is recognised in the country’s constitution as a basic human right, however the extension of this right to all citizens remains a challenge. It is estimated that over half of the country’s residents live in temporary shelter or low-quality housing.
There are a wide range of challenges facing Kenya’s affordable housing sector, including low levels of housing production—with a deficit of nearly 200 000 housing units per annum against private sector delivery of only 50 000 units per annum. These challenges touch on various points along the housing value chain, including:
- land and tenure challenges;
- neglect of the low-income households in the market;
- lack of expertise in low income housing construction because of the high cost of construction materials and products and the challenge of uptake in alternative construction materials;
- inadequate financing for both developers and end-users
- rigid building laws and regulations which limit innovation in low-cost housing sector.
The Kenyan government has undertaken considerable action in the past few years to address this challenge. Affordable housing is one of the four pillars driving President Uhuru Kenyatta’s ‘Big Four’ strategy for the country’s economic development. The government intends to build 1 million units over the next five years, including social housing and affordable housing. To implement this, a series of legislative, administrative, and budgetary interventions have been implemented, including policy changes, the release of public land to leverage development, and the introduction of public-private partnerships to accelerate approvals, enhance access to well-located land, and improve inter-governmental coordination.
A wider range of interventions are however necessary to address the country’s housing challenge, and these have emerged from both the public and private sectors. Startups have successfully offered positively disruptive solutions to many global challenges in healthcare, agriculture, clean energy, transportation and finance. The value addition offered by startups includes their ability to develop and test innovative and flexible solutions to familiar problems, and to offer new and creative ideas that can then be effectively scaled up. The ShelterTech Accelerator Kenya Programme was implemented to identify and support startups in the country who are attending to the challenges in the housing sector.
The ShelterTech Kenya Accelerator program is the first of its kind in Africa, and was created with a mission to find, train and support the most promising entrepreneurs addressing challenges in housing; construction materials and products; water and sanitation; and renewable energy for Kenyan populations, specifically low income earners. This six-month, milestone-based program was supported by Habitat for Humanity International’s Terwilliger Centre for Innovation in Shelter and implemented by BDO East Africa in collaboration with Pangea Accelerator, a Norwegian accelerator and investment platform that matches African startups with investors. The programme was based at iBiz Africa in Strathmore University, Nairobi. The program was also supported by the IKEA Foundation and Hilti Foundation.
The ShelterTech Kenya Accelerator is aimed at identifying, nurturing and accelerating both early stage and growth companies in Kenya that can bring shelter solutions for low income households to the market. Habitat for Humanity’s experience in promoting low income housing solutions demonstrated that many Kenyan companies lack the capacity to attract/raise capital to grow their business and meet the growing demand of the low income housing segment sustainably, and this was also true of Kenya’s startups in the housing and construction sector. Therefore the intention of the ShelterTech Kenya Accelerator programme is to identify and support these entrepreneurs offering innovative solutions aimed at disrupting Kenya’s housing value chain.
Key Milestones: ShelterTech Accelerator in Kenya
The ShelterTech Kenya Accelerator has been supporting 30 early-stage businesses and scale-ups in the affordable housing sector. These companies are offering solutions to a range of issues, including housing and construction products and technologies, renewable energy in homes, waste management, water and sanitation, among others.
Thirty businesses were selected from a pool of 94 applications and sourced through two hackathons. They were then taken through weekly training sessions and lectures, group and one-on-one mentor sessions and received access to industry experts such as financial institutions, government agencies and other key stakeholders in the property and housing market. This offered the entrepreneurs a chance to validate their business models, establish their minimum viable product (MVP) and progress towards investor readiness. Following a pre-selection in March 2019, the final businesses began intensive one-on-one workshops with strategic business consultants as they initiated investment conversations. Below is a roadmap of the programme:
- Hackathon 1 – To find a solution for co-living spaces for women and corporate co-living spaces for low income earners. Also, create an Aggregator Model for Housing Finance and other such services.
- Hackathon 2 – Find a solution to provision of training to construction workers on responsible material use and efficacy. Further, develop solutions around the concept of Walls and Roofs and a smart city design for Nairobi.
- Customer & Product Validation Session was also held in December.
- Product Market Fit Session and Sales & Marketing Sessions were held.
- Pitch Training Session
- Customer Satisfaction Session
- Meet the Corporates 1 – The objective of the event was to create a platform where ShelterTech supported businesses connect, interact and initiate or deepen meaningful engagement with industry players that leads to business growth through much needed linkages. The event featured pertinent discussion areas including how to leverage corporate collaborations followed by one-on-one networking with an opportunity for the businesses to meet, engage and share.
- Financial & Business Stability Session
- Mentor’s Circle – The objective of the event was to create a platform for intimate, close and candid conversations between early stage businesses and scale-ups and the program mentors and trainers. From which, we expect it will lead to business growth and provide much linkages and further collaborations for the ShelterTech cohort.
- Pitch Training Session
- Selection & Pitching Event – The objective of the event was to identify investable businesses and intensively support them to ensure they would be investment ready by Demo Day in May 2019. 10 businesses were selected to continue with the program. The accelerator saw the need to incorporate 6 additional scale-ups due to their diverse solution offering addressing affordable housing for low-income households.
- Investor Readiness Sessions
- Innovation in Shelter: Affordable Housing Solutions through Innovation at Nairobi Tech Week 2019
- ASSEK Discussion Forum: A discussion forum with other startup and SME Enabler’s in Kenya to understand the landscape and scope following the establishment of Association for Startup and SME Enablers in Kenya (ASSEK).
- R & D Clinic
- Investor Readiness Sessions
- Pitch Training Sessions
- Demo Day – A culmination of the program where 7 businesses from the cohort were selected to receive investment.
On Demo Day, seven out of the fifteen businesses that pitched were selected for investment, these are listed below:
- AHomes provides trained artisans labour with certification to work in the construction industry for both placement and organised construction jobs. The ShelterTech Accelerator in Kenya has enabled AHomes gain a better understanding of their customers and ascertain their value proposition. They have so far signed 3 clients to supply certified construction workers attached to construction companies for the next 6 months.
- Gjenge Makers Ltd. This is a social enterprise recycling waste plastic into strong and artistic construction products including paving bricks, paving tiles, hatch and manhole covers. Currently, they have set up their own production plant in Industrial area, Nairobi and have a product in the market. Moreover, they have received $15,000 in private funding. Through linkage from the ShelterTech Accelerator program, Gjenge were connected to Eco-blocks CEO, which had been a sought after linkage for Gjenge.
- ManPro Ltd is providing a Construction Management System (ManPro CMS) and a Tracking and Monitoring System (ManPro TMS). Selected as one of the final 8 businesses, they have gained a better understanding of the customer-product market validation and been generating revenue for the past 3 months. Additionally, they are looking to scale even further through addressing customer pain points.
- MycoTile provides an alternative building material made from mushroom and thus providing greater value for commercial buildings service areas particularly ceiling panels. They have so far received 100+ positive market validation and through the program’s support, have accessed space to prototype at Kenya Industrial Research And Development Institute (KIRDI) who are instrumental in their research and development process. Moreover, they were selected as one of the final eight businesses.
- The Vlage. The VLage provides co-living spaces for corporate employees in urban areas through their digital platform. As one of the ShelterTech Hackathon cases, The Vlage have been working towards getting buy-in from corporates and viable employed individuals from urban settings. They were among the selected final eight businesses.
- Malikodi. is an easy to use cloud based system that makes it easy for landlords to manage their rental properties. They are automating payment reconciliation, property and tenant statements, lease expiry, with the added ability to provide tenant with credit facilities for rent and utilities. Users can collect pay and collect rent online, reconcile offline payments, communicate, upload move in/move out pictures, manage maintenance requests.
- Continental Renewable Energy Co. Limited (Corec). COREC produces high quality and durable resin bonded roofing tiles, manhole covers, plastic lumber lanks, fencing posts etc. It targets individual homeowners, county contractors and private real estate developers with a 2000 customer base and a working product in the market.
Programme Outcomes and Learnings
The programme has produced a number of valuable outcomes such as investment opportunities for the sector, starting with seven businesses from the cohort receiving investment of various ticket sizes.
The programme has also produced a number of key learnings:
- Start-ups have opportunities to access investment but need to have a clearer understanding of investor perspective, that is, understanding what investors are looking for and why they are investing as well as being familiar with the investment language. This fundamentally supports effective communication between startups and investors and hence, a necessary skill for entrepreneurs.
- On the flipside, international investors, particularly in high-income countries, have biases related to investment opportunities in Africa and thus use a different metric including excessive due diligence based on country of origin models when approaching ventures within the continent. Evidence shows that ventures both in emerging economies and high-income economies work relatively with the same output and in some cases, emerging market ventures outperform.
- Within the sector, there is need to capacity build. Engagement with different stakeholders brought to light that service providers in the sector are not well equipped to manage largescale projects as well as large ticket size funds. The need for capacity to expand not only builds project owners’ confidence but provides a pathway to manage and run largescale projects.
- There are plenty of innovative solutions to tackle affordable housing challenges, however, there is little uptake even within the startup ecosystem. Accelerators and incubators supporting construction-led startups are few and programs not as extensive. Additionally, there is a need to further bring these solutions to the Pan African market.
- Financial institutions and corporate organizations still do not have a clear understanding of how innovation and the startup ecosystem operates. From our experience, hosting Meet the Corporates, financing by banks to startups is near impossible, based on their internal processes. These businesses are usually advised to try cooperative societies and SACCOS instead. Additionally, startups build but do not have a wider scope of knowledge on market needs compared to corporate organizations. Thus, there is a need to facilitate these linkages to encourage collaboration and thus, build further with relative ease.
- A second ShelterTech Accelerator program is currently under development.
- For more information regarding the ShelterTech Accelerator Program in Kenya, click here.
References and Weblinks
Roberts & Randall (2017). Startup Accelerators Have Become More Popular in Emerging Markets — and They’re Working. Harvard Business Review. Available at https://hbr.org/2017/10/startup-accelerators-have-become-more-popular-in-emerging-marketsand-theyre-working
To learn more about Pangea Accelerator, The ShelterTech Kenya Accelerator programme and latest news:
 United Nations Population Division (2018). World Urbanization Prospects: 2018 Revision. Data available on the World Bank Data platform. https://data.worldbank.org/indicator/SP.URB.GROW?locations=KE Accessed 10 October 2019