Hot startup of the month: Nigeria's HouseAfrica

Drive around any African capital city and you will see "not for sale" signs on properties and land everywhere.

The need for such signs – which contrasts with the "for sale" signs you would expect to see – traces back to a lack of land rights documentation on the continent, which often means fraudulent sales of property by people who do not actually own the land.

According to the World Bank, 90% of land in Africa is undocumented, yet it is relied upon by millions of people for their housing and livelihoods.

The economic term for this is dead capital – property which is informally held, not legally recognized, and cannot be exchanged for financial capital. In Nigeria alone, according to PwC Nigeria, as much as US$900 billion of dead capital is locked up in residential real estate and agricultural land, including properties abandoned by the federal government.

PwC estimates that around 95% of household dwellings in Nigeria have no title or a contestable title. Contrast this with the West, where every parcel of land, building or real estate is represented in a property document.

In Africa, however, many houses are built on land where ownership rights are not adequately recorded, resulting in endless litigation, disputes among families, an underdeveloped mortgage market, and a lopsided property tax regime.

Blockchain to the rescue

Blockchain technology may hold the answer. For all the excitement around blockchain as the rails of cryptocurrencies such as Bitcoin, at its very heart it is simply a ledger, albeit a digital one, distributed across the entire network of computer systems on the blockchain. Perfect, then, for registering who owns what land.

Nigerian startup HouseAfrica was formed in May 2018 to tackle problems around land ownership. The startup provides an immutable ledger alongside a visual map reference, ensuring the integrity of land titles and increasing access to credit.

It has two products: PropVat, which helps homeowners and buyers to store and verify properties, while Sytemap helps estate developers record and digitize their project layouts into shareable links that make them easier to sell.

HouseAfrica's PropVat product (Source: HouseAfrica)

Uba Nnamdi, the startup's CEO and co-founder, said HouseAfrica is on a mission to unlock dead capital in Africa's land and real estate space. "We are using blockchain to record property data in such a way it can easily be allocated, or transferred from one owner to another, and then have all the audit trails which can help the future owner access loan from our partner banks," he said.

"Our blockchain-based property record system is helping land and home buyers and financial companies to access, verify and value properties. Sytemap removes geographic limitations for projects and allows property buyers to interact with project layouts from anywhere in the world without the need to visit a developer's office to view a static layout," he added.

Building trust

All of this enables fast decisions, sales growth and quick project turnaround for developers. HouseAfrica is addressing issues around both trust and speed of transactions in the land and property space. The startup is currently onboarding 8,200 new properties onto its platform, which once completed will mean it has recorded the details of more than 20,000.

"Before now there was no way for estate developers to display their property status in real time. It is usually a back and forth with clients needing to visit their office to view layouts. Sytemap is solving this. There are several indirect competitions, but our product is so unique that we are exploring collaboration in the space because, at the end of the day, the impact is more important. Our people need to be able unlock inherent values in their land assets. This should create prosperity and lift many more out of poverty," Nnamdi said.

For its part, HouseAfrica makes money from monthly subscriptions from estate developers and commissions from mortgage banks using PropVat in order to authenticate, validate or confirm the value of any property or land across Nigeria in advance of offering loans.

Nnamdi reports strong revenue growth, and says the startup is in the process of closing a pre-seed funding round to help it scale further. HouseAfrica is focused primarily on Nigeria for now, though it has already onboarded some estate developers from the Eastern Africa.

"The real estate sector, especially in Nigeria, is one of the most difficult sectors to digitize, because despite heavy activity in the space, there's a data and trust deficiency owing to the huge transaction ticket per deal. This also makes online payment difficult. We've had to pivot many times to accommodate these deficiencies," said Nnamdi.

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The startup retains belief, however, that once product-market fit is established, a process it believes is happening now, blockchain technology can overcome those challenges. The potential of the tech cuts across sectors.

"The benefits depend on the sector it is being applied to. Some of these benefits are ease of transaction monitoring, enhanced security, and increased credibility. Because it removes intermediaries, it also saves time and money in the business operations... We want to return confidence and trust to property transactions and then make properties and lands bankable," added Nnamdi.

"Not for sale" signs have been given their notice.

*Top image is of HouseAfrica CEO Uba Nnamdi and COO Ndifreke Ikokpu (Source: HouseAfrica).

— Tom Jackson, co-founder of Disrupt Africa, special to Connecting Africa