Building Africa’s New Cities – Q&A with Rendeavour’s Stephen Jennings
Rendeavour CEO Stephen Jennings discusses the vast opportunities in Africa and his organization’s role in building new urban landscapes across the continent in a Q&A with NewCities Chairman John Rossant.
John Rossant: You have worked across several geographies – in Africa, Kenya, Nigeria, Zambia, Democratic Republic of Congo and Ghana. Our network, our community would like to know what are the real challenges and the stakes. How is Africa different and how are the challenges there different?
Stephen Jennings: If we start with the challenges, the institutions are clearly weak by international standards; they are developing, but they are still weak. What we have found is that you need to build a local platform that is broad enough and engaged personally in the local community, to help you manage risks, because they will most certainly happen. You have to weather attacks, almost without blinking or compromising and in a way that ends up adding value to your asset. You have to go through that process.
JR: You talk about developing this broad-based support for your projects in whichever geography. Is that with local businesses?
SJ: What we learnt in investing in Eastern Europe, and what we have re-learnt since with this business, is that you can’t dip your toe in the water, you can’t manage these assets from outside the country, you can’t go with very light local management teams. You need to fully integrate into the local business community and regulatory environment and you need to be part of shaping it and managing it. You also need to have a reputation for executing and being prepared to fight your corner.
JR: Rendeavour projects are satellite cities, and you build organic relationships with pre-existing cities, capital cities?
SJ: Yes, they are satellite cities. But we have learnt a lot and changed our approach a lot in the last ten years. They are satellite cities, but they are not islands. We have learnt that it is much more sensible and cost-effective to work with the urban planners and the utility providers when building up our bulk infrastructure, for example. This is normally a win-win for the local community and for us. So in one sense they are satellite cities but in another sense they are an extension of the existing urban landscape.
JR: Right. Which of the projects is going to come first?
SJ: Roma Park, which is our smallest project, is about 90 per cent complete, and we are very soon going to run out of land. Larger-scale developments like Tatu City, in Kenya, and Appolonia, in Ghana, are being built in phases over 20 years. Currently, we have residential developments and social amenities like schools and petrol stations under construction. On the industrial side, companies like Unilever and Kim-Fay, which makes Kimberly Clark brands in Africa, are building manufacturing facilities.
JR: How do you protect yourself from currency risk?
SJ: First, we don’t borrow. We essentially have no leverage in these projects. Against the land and the infrastructure, we have no debt. Second, when we are doing land sales – large land sales with any kind of maturity – whenever possible we do the transactions in dollars. We don’t want to do a transaction where we will be paid in local currency installments over two years.
JR: Okay, in terms of access to local capital, is that an important factor for you?
SJ: Currently, no. Our projects are very big scale with very long timeframes. It is very unusual at the moment to find financing that can match that scale and that timeframe. Once you get through the basic infrastructure build out and you are doing a logistics or housing development, then you can get into more conventional financing.