Why shortcuts won’t take you far in Africa
International property investors and developers who think it is easier to build in Africa because of less regulation and lower standards, should think again.
This emerged during a panel discussion at the recent Africa Property Investment Summit in Johannesburg.
“It is wrong to think that necessarily everywhere the standards are lower. The environmental legislation in places like Kenya is quite strict, quite stringent, well managed, well monitored, and supported a lot by international donors who want to see people doing business properly,” commented Graeme Reid, chief of urban planning and management at Rendeavour Ltd, a Renaissance Group company developing more than 10,000 hectares of eco-friendly residential and commercial satellite cities in countries such as Ghana and Kenya.
He said developers will struggle to find international investment finance if they don’t adhere to good corporate practices. “The International Finance Corporation (IFC) won’t touch you [and] other investors who’ve got some distant relationship with the IFC won’t want to be associated with you … You have to behave as a good corporate citizen, otherwise you are just not going to make it, and you are certainly not going to find the finance,” Reid explained.
He added that the public is also not likely to spend money on sub-standard products. “Your projects aren’t going to work in terms of the market because people are aspirational. People are looking for developers who behave in a way that increases the standards.”
James Ehlers, managing director of South African-based Atterbury Property Developments, said that it is not necessarily easier to develop properties in Africa compared to other places in the world. Atterbury Africa recently bought a 42.5% stake in the Accra Mall in Ghana, and is planning to develop further shopping centres in the West African country. It is acquiring land in the Achimota area in the northern part of Accra. It is also invested in the 26,500 m2 West Hills Mall in the Ghanaian capital. “If it was easier everyone would be there. It is very, very difficult, it is very complex. And it is also not true to think that it is just total chaos … The authorities that we’ve dealt with are competent, they know what they are doing, they know what they want, it is not just a free for all.”