Ghanaian startup Cofundie has developed a platform for crowdsourcing funds for developing affordable housing using alternative materials and techniques, allowing crowdfunders to share in the profits after these homes are sold or rented out.
Formed in August 2019 at the Meltwater Entrepreneurial School of Technology (MEST) in Accra, Cofundie aims to solve Africa’s housing crisis by increasing investment in affordable housing built using cost-effective and time-saving techniques and materials such as earth bricks, rammed earth, used shipping containers and polystyrene panels.
“Our team came together based on a shared interest in using tech to solve problems in the property sector on the continent and making it work for people who live here,” Chukwuemeka Ndukwe, co-founder and chief executive officer (CEO) of Cofundie, told Disrupt Africa.
“The bulk of real estate financing in Africa is directed towards luxury and commercial developments, and at the same time the barrier to entry for investing in real estate is too high for small scale investors. These dynamics have caused a housing deficit in Africa of close to 56 million units. In West Africa the deficit is at 25 million units alone.”
Cofundie is attempting to address this issue, armed with US$100,000 in pre-seed funding from MEST.
“To make sure only the highest quality deals make it to the platform, what we do is perform extensive due diligence on both the developers and the deals they are sending our way. Developers and deals who pass this stage are sent to our investment committee for a final decision. We have less than a five per cent acceptance rate,” said Ndukwe.
“We have seen what I regard as an interesting adoption curve. Ghanaians in the diaspora are extremely interested and the uptake has been highest with them. Ghanaians who are resident here are also interested but the trust barrier for them has been understandably higher since crowdfunding is a fairly new concept here.”
“When these homes are done, they will be the most affordable two beds in Accra,” Ndukwe said, adding that more than 20 per cent of the required amount had been raised already.
“We are also working with one of our developers to bring 100 units of one, two and three beds to market built using polystyrene panels. These homes cost between US$21,000 and US$45,000, 20 per cent less than comparable units built using traditional materials.”
Cofundie, which is in the process of raising a seed round, is planning to launch in Nigeria by mid-2021.
“There has been demand from developers in Nigeria, as well as potential investors,” Ndukwe said.
The startup, which takes five per cent of all funds raised and 10 per cent of the profits from buildings funded through the platform as revenues, has faced some difficulties around the lack of clear regulations around crowdfunding in Africa as a whole, and in Ghana in particular.
“The Securities and Exchange Commission (SEC) has been very receptive to us and is currently working on regulations that they will be publishing this year, in the meantime however it is difficult to innovate in the current environment,” said Ndukwe.
Cofundie continues to try nonetheless, with affordable housing funded by the power of the crowd its admirable goal.