Affordable University Accommodation
Affordable University Accommodation
Business Model Description
Develop, construct and operate student accommodation facilities in urban areas where there is a clear need through Built Operate Transfer (BOT) Public Private Partnership (PPP) arrangements with the Government of Malawi through the National Council for Higher Education (NCHE). The private developer would be given the right to collect rentals from students for the concession period. NCHE would provide the project site to the private developer free from encumbrances and support the developer to obtain necessary approvals, clearances and permits for developing the project.
Expected Impact
Increase university student accommodation access through scale specifically close to or on campus institutional land to decrease the housing deficit and offer safe student accommodation supporting academic performance.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Malawi: Northern
- Malawi: Central
- Malawi: Southern
Sector Classification
Infrastructure
Development need
There is a growing demand for improved basic social services, housing and general urban infrastructure, including roads and digital infrastructure, due to rapid urbanization (6). The Africa SDG Index and Dashboards Report 2019, on SDG 9 regarding Industry, Innovation and Infrastructure, indicates that Malawi has “significant or major challenges” in achieving this SDG (7). The country's infrastructure performance is ranked 132 out of 141 countries in the World Economic Forum (WEF) Global Competitiveness Report 2019, with a declining trend over 2018 (8).
Policy priority
Malawi 2063 (MW2063) and it's first 10-year implementation plan (MIP-1) prioritizes infrastructure development and investment in secondary cities to provide economic opportunities, easy communication and closer connectivity to socio-economic amenities (2).
Gender inequalities and marginalization issues
Malawi 2063 (MW2063) states that Malawi shall ensure that private sector participation does not discriminate against older persons, youth, women and persons with disabilities. In particular, Government shall put in place conducive policies and legal frameworks, enforce compliance, address infrastructure gaps, address market and coordination failures; and promote innovations (2).
Investment opportunities introduction
Investment opportunities exist mainly in improving energy and digital infrastructure, housing, roads and rail connectivity (1).
Key bottlenecks introduction
Malawi needs tremendous amounts of investment to fill its infrastructure gaps. In the 20-year period through 2017, total public investment averaged just over 4% of GDP per year. Estimates suggest the country needs that much investment in the energy, water, and sanitation sectors alone. The government simply does not have the ability to finance all these needs, even less so with rising COVID-19 expenditures (15).
Real Estate
Development need
As Malawi's population continues to grow (2.65% annual population growth rate) (11), the need for housing will become increasingly more evident. Malawi is one of the fastest urbanizing countries in the world with an annual urban growth rate higher than 5% and an urban population of almost 20% of its entire population. Absolute urban growth in Malawi will exceed rural growth before 2025 with an urban population increase of 214,000 per annum during 2020-2025 compared to 193,000 in the rural areas (12). The shortage of student accommodation is constraining higher education enrolment in Malawi. It is expected that up to 15,000 beds could be provided across three universities, the University of Malawi in Zomba (UNIMA); the Malawi University of Business and Applied Sciences in Blantyre (MUBAS); and the Malawi University of Science and Technology in Thyolo (MUST) (16).
Policy Priority
Malawi 2063 (MW2063) and it's first 10-year implementation plan (MIP-1) aims to decrease the proportion of the urban population living in informal settlements or inadequate housing from 60% in 2020 to 50% by 2030 (2). In urban areas such as the capital Lilongwe, 76% residents live in substandard housing and/or informal settlements, characterized by lack of access to public services and tenure insecurity (13).
Gender Inequalities and marginalisation issues
Less than 15% of land in Malawi is registered in the name of women (14).
Investment opportunities introduction
Investment opportunities exist mainly in Student housing as there is a significant deficit in terms of what universities, especially public universities can provide, and the amount of students that need adequate lodging relatively close to campus (26).
Key bottlenecks introduction
Processes of acquiring land by private sector is a cumbersome process which may put off some investors.(14)
Real Estate
Pipeline Opportunity
Affordable University Accommodation
Develop, construct and operate student accommodation facilities in urban areas where there is a clear need through Built Operate Transfer (BOT) Public Private Partnership (PPP) arrangements with the Government of Malawi through the National Council for Higher Education (NCHE). The private developer would be given the right to collect rentals from students for the concession period. NCHE would provide the project site to the private developer free from encumbrances and support the developer to obtain necessary approvals, clearances and permits for developing the project.
Business Case
Market Size and Environment
10% - 15%
30,543 accommodation deficit across tertiary institutions
Across the five tertiary institutions (LUANAR, Mzuni University, MUBAS UNIMA, MUST), Malawi faces an official accommodation deficit of 30,543 (20).
"There has been an increase in enrolment in public universities from 38,196 students in the 2020/21 academic year, to 41,500 students in the 2021/22 academic year, representing a 9% increase, a 36.7% for undergraduates from 2019/20 to the 2021/22 academic year (37). With the growing student enrolment rate adding to the existing deficit, new student accommodation is needed to fill the gap."
Indicative Return
5% - 10%
With reference to student accommodation at the Kamuzu University of Health Sciences (KUHES) Lilongwe campus, Old Mutual Malawi expects a IRR of 8% (26).
Investment Timeframe
Long Term (10+ years)
Considering that Public Private Partnership (PPP) arrangements would be most suitable, a Build Operate Transfer (BOT) would require 30 years. A concession contract is typically valid for 25–30 years so that the operator has sufficient time to recover the capital invested and earn an appropriate return over the life of the concession (29).
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Market - Volatile
Impact Case
Sustainable Development Need
The lack of student accommodation on campus of public institutions has led to a number of students with limited options to seek off campus accommodation, which in most cases is substandard and overpriced (31).
Good student accommodation is key to a students’ academic achievement and perseverance in a university (39). According to Malawi's latest Education Information Management System (EMIS), the second biggest reason for leading to drop-outs among students in public universities is academic grounds, which is roughly 28% behind school fees at approximately 59% (37).
In the 2021/2022 academic year, 21,432 male students were enrolled in public universities compared to 13,532 female students (37). Three of the country’s six public universities have missed the 60:40 gender representation requirement in the Gender Equality Act in their 2023 admissions intake (38).
Gender & Marginalisation
Off campus accommodation distances from the institutions provides a security concern particularly for female students. Female students are also vulnerable to exploitation from unsavoury landlords (26).
According to a study on the socio-economic factors contributing to female students’ dropout in community technical colleges in Malawi, key factors that affect female participation in Technical Vocational Education Training (TVET) include attitudinal or social mindset, financial constraints, lack of safe accommodation (40).
It has been established that lack of safe accommodation in TVET institutions, such as hostel facilities, greatly contribute to female students’ dropout. In the same vein, the issue of safe accommodation has been observed to be of paramount importance because girls need security in areas where sexual harassment is prevalent (40).
Expected Development Outcome
Affordable university accommodation will lead to increased tertiary completion rates and higher enrolment from female students from across the country, particularly from rural areas.
Gender & Marginalisation
Female students in particular will benefit from the access to on campus accommodation for safety reasons and indirectly increase enrolment and completion rates among female students.
Primary SDGs addressed
11.1.1 Proportion of urban population living in informal, informal settlements or inadequate housing
Malawi has about 4.8 million housing units of which 58.9% are sub-standards homes (21).
50% by 2030 according to MW2063 (2). 33.4% according to Malawi's 2023 Voluntary National Review (28).
4.5.1 Parity indices (female/male, rural/urban, bottom/top wealth quintile and others such as disability status, indigenous peoples and conflict-affected, as data become available) for all education indicators on this list that can be disaggregated
1 (18).
1 (18).
8.6.1 Proportion of youth (aged 15–24 years) not in education, employment or training
31.54% (18).
7.5% (18).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Corporates
Outcome Risks
Construction activities for affordable university accommodation could negatively impact local biodiversity through incorrect waste disposal and transport management, if environmental Impact Assessments are not adhered to (21.1).
The construction of student accommodation, which would lead to the proliferation of student populations in specific geographic locations, could lead to negative cultural impacts on existing communities within those locations. Studies have shown that a sudden student influx could create cases of moral decay amongst existing youth within those communities and increase crime rates. There is also the issue of local price inflation caused directly by an influx of students which would negatively affect the local community (42).
Impact Risks
Due to the existing economic issues, project costs might be difficult to contain and could be passed down to end users. Accommodation fees could end up being too high for students to be able to afford the accommodation on campus.
Impact Classification
What
Affordable university accommodation provision will ensure a level of equitable access to tertiary education and contribute to increased completion rates for university students and improved results overall due to accommodation security for students.
Who
The student population will benefit from additional accommodation space available on campus with student friendly facilities. This also benefits universities in attracting top students and staff, as well as contribute to academic outcomes.
Risk
Student accommodation would need to be affordable for students otherwise there won't be enough uptake for the investment to be economically viable and create positive impact.
Contribution
Besides affordable university accommodation, access to higher education and enhanced education outcomes can be achieved through increased public investment into the delivery of quality education across the country.
How Much
Affordable university accommodation contributes to reducing the existing accommodation deficit of 30,543 (20), and thereby help to decrease the proportion of youth not in education, employment or training towards the objective of 7.5% (18).
Impact Thesis
Increase university student accommodation access through scale specifically close to or on campus institutional land to decrease the housing deficit and offer safe student accommodation supporting academic performance.
Enabling Environment
Policy Environment
The Malawi National Housing Policy (Revised in 2019) seeks to address gaps in the housing delivery sector influenced by rapid urbanisation and current status of some houses in both urban and rural areas (5).
The Public Private Partnership (PPP) Policy (2011) was approved by Cabinet and sets out the policy framework for initiating, designing and implementation of Public Private Partnerships in Malawi, including for construction of student accommodation (34).
National Education Sector Investment Plan 2020 - 2030 (NESIP) sets out the Government of Malawi education sector goals, objectives and strategies; and how these will be realized. The goals and objectives focus on expansion of equitable access to education, improvement of quality and relevance of education and better governance and management (36).
Financial Environment
Other incentives: Through the Public Private Partnership Commission of Malawi (PPPC), the National Council for Higher Education (NCHE) provides the project site to private developers and provides support to the developer to obtain necessary approvals, clearances and permits for developing the project. The Export Development Fund in Malawi's Project Preparation Facility (PPF) is a facility that aims at developing and growing the country’s pipeline of bankable projects and deliver sizeable projects with significant economic and developmental impact. Investors can access this facility if they meet the following criteria: It is a legally registered business entity; there is an ability to contribute at least 30% of the project preparation costs; there is an existence of a Pre-feasibility study; there is adequate collateral (43).
Financial incentives: The Multilateral Investment Guarantee Agency (MIGA) is a member of the World Bank and aims to promote cross-border investment in developing countries by providing guarantees (political risk insurance and credit enhancement) to investors and lenders (17). For university accommodations, investors can apply for MIGA guarantees to the value of the investment. Companies must be incorporated in a member country or majority-owned by nationals of a member country to be eligible.
Fiscal incentives: Malawi offers duty and VAT free importation of crane lorries, concrete mixer lorries, mobile drilling derricks and track laying tractors, which support the construction industry (35).
Other incentives: Malawi also offers general tax incentives for i) 100% investment allowance, which allows capital costs to be deducted from taxable income, on qualifying expenditures for new buildings and machinery, and ii) investment allowance of up to 40% for used buildings and machinery (35).
Regulatory Environment
The Government of Malawi Safe House Construction guidelines promotes local practices and low-cost technologies, and identified strategies for multi-hazard risk reduction by proposing both affordable and appropriate solutions trough a user-friendly manual (23).
The National Construction Industry Council (NCIC) Act of 1996 (No. 19 of 1996) is mandated to regulate, develop and promote the construction industry in Malawi (20).
Marketplace Participants
Private Sector
Old Mutual Investment Group (OMIG), PBM Construction Co. Ltd, Liberty Construction Ltd.
Government
Public Private Partnership Commission (PPPC), National Council for Higher Education (NCHE), Ministry of Education.
Multilaterals
International Finance Corporation (IFC), World Bank Group.
Public-Private Partnership
An arrangement between Old Mutual Investment Group (OMIG) and the Malawi Government through the Ministry of Education and the Public Private Partnership Commission (PPPC) unveiled the Kamuzu University of Health Sciences 154 bed student accommodation facility at a total cost of MWK 2.6 billion (USD 1,543,982) in in 2021 (41).
Target Locations
Malawi: Northern
Malawi: Central
Malawi: Southern
References
- (1) National Planning Commission, 2021. Malawi's Vision 2063 (MW2063), https://npc.mw/wp-content/uploads/2021/02/MW2063-VISION-FINAL.pdf
- (2) National Planning Commission, 2021. MW2063 MIP-1, First 10-year Implementation Plan, https://npc.mw/wp-content/uploads/2021/11/MIP-1-WEb-Version-8-November-2021-Fast-view.pdf
- (3) National Planning Commission, 2021. Annual Report 2020, https://npc.mw/wp-content/uploads/2020/10/NPC-2020-ANNUAL-REPORT.pdf
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