CITIC Construction uses team approach to develop housing projects
Hong Bo, assistant president of CITIC Group and chairwoman of CITIC Construction Co Ltd, has found a way to combine profitability with public welfare. In Angola, her company has built a new city while leaving the country with a whole operational industry chain and a skilled labor team for future development.
While Hong's firm sets an example for many Chinese companies, it is also trying to replicate its experience in more African countries. On May 29 in Nairobi, CITIC Construction, a Chinese multinational construction and engineering company, announced the launch of a $300 million investment with the International Finance Corp, a member of the World Bank Group, to develop affordable housing in sub-Saharan Africa. It will start by developing homes in Kenya, Rwanda and Nigeria, and then expand to other countries.
"Africa is a very important strategic market for CITIC Construction," Hong said. "In the past 10 years, 70 percent of our revenue has come from Africa. We call our strategy in Africa depth development'."
She added: "Most of our projects overseas are related to improving living standards, including housing, agriculture and infrastructure. We have shared the cost of helping developing countries to eradicate poverty and promote economic growth, working with the IFC."
Hong said Africa has great potential as a housing market because new homes are needed and existing ones need to be improved. But she said it is a market full of challenges: ill-defined land registration, a flawed mortgage system and the shortage of quality construction materials in many African countries.
According to Oumar Seydi, IFC director for eastern and southern Africa, more than 40,000 people migrate into cities every day in Africa. However, there are few local developers with the technical or financial strength to build large-scale housing projects. Kenya's housing shortage, for example, is estimated at 2 million units. Nigeria needs 17 million units.
"Only after overcoming these obstacles can we realize our desire to build affordable houses," said Hong.
In Angola, Hong's company has demonstrated how to make houses affordable while making a profit.
It started a $4 billion project in 2008, when the country was still experiencing a shortage of daily necessities, including construction materials and machinery. A single cucumber sold for more than 40 yuan ($6.5) when she visited the country in 2005 because of shortages, Hong said.
Through planning, financing, construction and post-construction operation, the company completed a 200,000-unit housing program in Kilamba Kiaxi and also built up infrastructure and utilities over four years.