FSD Kenya’s Affordable Housing team hosted a workshop to stimulate knowledge transfer and collaboration between Tanzania and Kenya on the use of ‘cross laminated timber’ (‘CLT’) in housing delivery on February 8th 2022. The workshop presenter Sebastian Dietzold of CPS drew from the journey of delivering a masterplanned development Fumba Town in Zanzibar, Tanzania.
The FSD workshop participants were a selected group of players promoting the circular economy and sustainable housing construction in Kenya. Representatives from government including State Department of Housing and Urban Development, Civil Servants Housing Scheme, Kenya Building Research Centre – State Department for Public Works and National Construction Authority; private sector businesses promoting sustainable construction BuildX, Greenpot Industries, Ecoclassrooms; consulting companies (McKinsey and Dalberg) and industry bodies (Kenya Green Building Society, Africa Green Building Council and Centre for Affordable Housing Finance) and funders (Manufacturing for Africa arm of FCDO, Reall, Catapult) provided lively discussion and committed to collaborating to promote the development of sustainable construction in Kenya.
The building and construction sector contributes 39% of greenhouse gas emissions globally, and hence finding greener alternatives for construction is key.
The benefits of CLT are numerous – if properly developed with adequate knowledge and competency are:
However, there are several challenges for the adoption of CLT:
CPS, Green Resources and the Gatsby Foundation have been key players to promote the development and uptake of CLT in Tanzania. Kenya’s forest cover is much less (<10%), and hence Kenya is well poised to import timber and CLT products from Tanzania.
The government of Tanzania has supported the development of Fumba Town Development in Zanzibar by amending critical laws and implementing smooth title deed issuing processes as well as incentives for property buyers. CPS are to deliver on a master planned community housing for 20,000 people in 5,000 homes and supporting markets, shops, medical and educational uses. The town has underground fibre and electrical reticulation, central waste water treatment and central fresh water supply, urban farming and is designed on permaculture principles. The government also provided tax incentives to allow materials to be imported without duties and VAT to support the affordability of the residential units produced. (as CPS is currently importing CLT from Europe while Tanzania develops its own CLT industry). The government of Zanzibar now also allows foreign ownership of residential units with 99 year title deeds which are issued within 14 days. This has contributed to Fumba Town having attracted investors from 52 countries. Fumba Town has a range of residential product from very premium ($345,000 for 290 sqm standalone 2 storey beachfront houses with pool), to more affordable ($15,000 for 17 sqm studios). These are off plan prices and delivery is typically within 14 months or less of investing in a unit.
Sebastian also touched on the strong management principles incorporated in Fumba – each service is provided by a separate SPV with transparent accounting and governance. Residents are required to pay the service charge, failing which services are with-held.
Sebastian shared that the phased delivery of this master planned development has resulted in land value appreciation from $0.50 per sqm to $6 per sqm in 5 years (an appreciation of 120 times). Capturing this land value increase is integral unlocking delivery on large land parcels which need significant upfront investment in infrastructure and design. This model is being used by CPS to unlock student housing on government land in Dodoma, with strict division in the SPV between the government that will sit on the board, and the day to day management of the project.
The financing angles that need to be pursued for uptake of CLT products include supporting the importation of CLT from Tanzania under the favourable duty regime of the East African Community and promoting licensing of this product for use in Kenya by Kenya Bureau of Standards; and supporting banks to link projects using CLT with green funding sources which may attract concessional financing.