Overview
Housing in Africa is a huge problem.
Every year millions more people arrive in cities and are forced to stay in informal settlements.
Developers struggles to keep up, and walking around Nairobi at least, you’ll rarely be far from a construction site building another high rise.
What I didn’t realise though, was how the current approach of building with bricks and mortar is actually quite inefficient.
There’s a limit on how much you can build each day (four stones high) and a whole series of other considerations which means that the supply of housing is actually constrained by the bricks and mortar approach.
In this episode I speak with Mburu who runs Cemex Holdings, a company that produces a new form of building material, essentially panels of reinforced steel mesh.
Before conducting the interview in Mburu’s office upstairs I had a tour of the factory and a the show home they made next door. Maybe I was missing something, but the argument to switch seemed pretty compelling.
On most fronts it seemed to be a superior offering to stone building, the main barrier being people’s willingness to go with something outside of the status quo.
I won’t spoil things too much, but I found this a fascinating business for showing how to introduce a new technology into a market, as well as learning more about the dynamics of the construction industry which I know next to nothing about.
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Mburu is a biochemist by training from University of Texas, passionate about building Kenya.
The vision is how to offer dignified housing to all Kenyans.
The technology they are using for the panels (EPS: expanded polystyrene) is over 40 years old. There are 60 plants around the world, and 17 in Africa.
It allows for rapid installation of housing materials, cutting construction time by 50%.
The core business as a materials supplier. But also need to vertically integrate, with this being a new market. The big thing is to train contractors in using the Cemex system.
There are various trade offs involved. The major consideration is the time taken to build a structure. With stone you can only do 1 metre per day. By using a whole panel you do 3 metres per day.
Being a new technology in Kenya they are going through the diffusion of innovation.
There is a unique housing problem in Africa. There are not enough houses in Africa.
A big thing is to try and move people away from the idea that stone is the only route they can do.
Kenyans are price sensitive, so the numbers have to work. Which they do. There are cost savings in: less materials (reinforcing foundations), time, finances
Interest rates are high in Kenya (13.5% base) and so being able to realise revenue quicker cuts the overall costs.
In going to the market, they’ve never had a rejection once engaging with a developer.
The vision of the company fits the government’s Big Four agenda (ensuring food security, affordable housing, manufacturing and affordable healthcare).
Several other companies have begun using this technology in Kenya. Though they are the only one with a partnership from the Italian originators Emmedue.
It’s a certified green building technology. Reduced environmental impact compared to quarrying stone. Transportation is much lighter too: 1 lorry of EPS is the same size of finished product as 7 lorries of stone.
For production, there’s a quick turnaround of 48 hours to make the panels.
The company has 20 front office (sales, marketing, technical department, admin, finance), 40 in the factory.
The idea is to become a household name: the Intel of building systems. Associate a premium to quality of materials that have gone into the construction.
Lessons and Insights
Biggest lesson: introducing a new technology requires teaching stakeholders
Biggest insight: training stakeholders builds confidence and grows the market
Links etc.
Visit: the factory site in Ruiru (Google Maps link)
Website: http://ww.cmax.co.ke