What is the Nigerian dream?
‘To miss Nigeria from abroad’ is one common reply.
It is not far from the truth. Many Nigerians will jump at the opportunity—legal or not—to leave the country. Canada, Germany, United Kingdom, United States; anywhere will do.
This shedding of skilled labour to developed economies has an upside: the cash and non-cash items immigrants send home. Last year, Nigeria received $24 billion in cash remittances, equivalent to 5% of annual Gross Domestic Product. Remittances even exceeded the federal government’s oil earnings for the year ($17 billion).
Nigeria is not alone. Diaspora remittances have outpaced foreign direct investment (FDI) as the largest source of external financing in East Africa. Remittances are now much higher than commodity export earnings and aid inflows in many Sub-Saharan African countries.
As more middle-class Nigerians leave the county, these remittances will only grow: PwC expects Nigeria’s remittances to hit $35 billion in 2023. That is as much as Nigeria currently has in its foreign currency reserve account.
The data speaks for itself; remittances constitute a dominant share of foreign money flowing into African economies.
But when this money enters the country, how is it spent?
A look at Nigeria’s remittance expenses
Unsurprisingly, given the income and lifestyle patterns of the middle class, roughly 70% of remittances are spent on household & personal uses like education, large purchases, and education.
And the outstanding 30%? Building or buying a house at home.
A study conducted in Ghana as early as 2013 confirmed that up to 30% of remittances were used for investment and construction of houses. Updated estimates now put that figure between 25% and 35% across Africa, even with substantial growth in remittances over time.
It is important to understand that for diasporans, building or buying a house at home is more than an investment decision. It is a life decision. It is a sign that they have arrived. It is their opportunity to show that they have made it. It is their way of making their families at home proud.
The beauty of this home bias is that it is strongly held and resistant to the typical macroeconomic shocks that affect other investment options. Diasporans will continue to construct houses at home for as long as they live.
MyAwayHome taps into and satisfies this vital need by making it significantly easier and cheaper for diaspora homes to become a reality.
The company’s goal is to simplify the construction, buying, and financing of homes by offering a quicker and more transparent process than current alternatives. Today, Africans in the diaspora stump up the funds to construct their houses and then rely on home-based relatives or acquaintances, usually not experts, to buy or develop the property.
This approach does not work.
Once-loyal relatives often fail to deliver on their promises to use the funding for the houses, waste time in getting the process going, and rarely give regular updates. For many in the diaspora, their home-building project quickly becomes a painful, never-ending endeavour.
Sometimes, diasporans choose to go with real estate developers. However, few real estate developers have digitally transparent processes that can be monitored, making it much harder for diasporans who cannot physically drop in to assess the progress of the work.
Despite these challenges, the diasporan desire to build a home away from home remains strong. Therefore, MyAwayHome is now offering them a chance to keep the home dream alive, without the hassle that comes with trying to build anything in Nigeria.
Solving the problem: Myawayhome
MyAwayHome’s solution is a managed real estate marketplace.
Typically, when you hear ‘marketplace’, an asset-light platform where buyers and sellers trade property without any intermediaries comes to mind.
Not in this case.
MyAwayHome is not the regular marketplace that just matches you with a property. It is ‘managed’ in the sense that MyAwayHome does not leave you to close the transaction with the counterparty on your own. Instead, the company provides support by pairing you with inhouse experts who guide you through property selection, mortgage financing, repayment, and even renting. This improves the overall quality of the service.
Here is how the process works.
The first step is when a buyer searches for a property on MyAwayHome’s listing web application; people typically look for an empty plot of land or a ready-to-live property.
The team’s in-house property experts source the properties on the platform. These experts are mainly real estate agents and are charged with increasing the number of listings on the platform, as well as assisting potential homeowners with finding the right property. Myawayhome’s customer support provides the necessary human touch that buyers need to feel confident when making decisions about expensive and illiquid assets like real estate.
A buyer will get all the support he or she needs during this selection process until they narrow their choice to a single home.
Once a property is selected, the second step is financing.
For many buyers, access to finance is an important part of choosing the right property. As the average value of a home on the platform is $180,000, MyAwayHome provides easy access to mortgage financing through its lending partners.
When a buyer chooses a property, he is automatically pre-approved for a loan, and a mortgage expert is assigned to help secure full approval. This mortgage expert assists with due diligence documentation and any other banking requirements needed to secure the required financing.
The entire exchange of information during this process, such as uploading, reviewing and execution of the property or financing documents, is managed via the platform so that progress can be transparently tracked.
When financing is secured, the third stage is loan disbursement.
There are two possibilities here. If the property has already been built, the mortgage funds are handed to the seller once commercial terms are agreed. In this case, the process typically takes 2-3 months from selection of the property to disbursement of funds.
When the homeowner opts to construct their own property (2 out of the 26 active deals for MyAwayHome), financing from the lenders is not disbursed at closing. Instead, as the property is chosen, MyAwayHome arranges a contract with one of its real estate development partners to construct the home according to the customer’s specifications.
Within 3-12 months, the diasporan has their dream home away from home.
At this point, MyAwayHome also offers post-transaction services. All customers have the option of managing the entire mortgage repayment process using the MyAwayHome platform, meaning they can make their monthly repayments through MyAwayHome and track their mortgage debt.
Customers who prefer to offset mortgage repayments by renting out their homes can also earn rental income using MyAwayHome. The company offers property management solutions where it finds, closes, and collects rent from tenants on behalf of the homeowner.
As can be seen, MyAwayHome is in the business of convenience for diasporans. The company handles the entire process from property selection to renting, depending on the needs of the customer. This end-to-end model is key for removing the inconvenience in the property process.
For the company’s founders, the transparency and collaboration that forms part of its digitised process are more than just a feature on the platform; it reflects the values at the centre of the company’s approach to serving customers.
As MyAwayHome manages a real estate marketplace, its lending partners also join its marketplace. These lenders are mainly Nigerian banks that struggle to find attractive retail customers for mortgage loans.
The Business Model
MyAwayHome is a B2B2C marketplace, in that it connects businesses like banks and property developers with diasporans who are looking to acquire homes.
A simple way to view the model is to think about two key parts of the property technology (proptech) industry. The first is information exchange; the second is payments and transactions.
On the one hand, the company provides access to listings on well-curated properties, both ready-to-live in and empty plots. At the same time, it smoothly integrates financing and remittance payment features into its property information platform. By doing this, MyAwayHome has transformed its platform from a typical information website to an end-to-end property platform for capital raising.
Its platform includes features that allow users to acquire and repay loans as conveniently as they would using any other online banking solution. This business integration is innovative as it creates a fintech business within the broader proptech offering.
Combining both a fintech and proptech model into one, MyAwayHome’s business model is commission-based and accrues recurring and non-recurring revenues.
Today, the company has gained significant traction.
It has partnered with 3 local Nigerian banks and 1 UK bank to arrange over [$30] million in mortgages for customers introduced through its platform.
While it is currently working on dozens of transactions, it has a waiting list of over hundreds of people eager to join the platform. It has also signed up a number of Nigerian developers and secured exclusive partnerships with over as many diaspora real estate agents in the US to help source customers in the diaspora.
The growth potential of this company is very attractive. With the digital infrastructure and market experience it has built, the company has the option of building out an Africa-first solution to the global immigrant community.
What excites us about Myawayhome
MyAwayHome reflects how digital innovation will continue to change the way we do business around the world. The opportunity to combine robust real estate information platforms with seamless transactional and payment experiences is irresistible.
The diaspora market is a profitable market to begin this journey; remember, these investments are more than just commercial transactions; they are home investments, and will not get cut at first sight of trouble. The team understands that this beachhead market is a winner.
Kelechi Nwokocha, the CEO, previously worked on Wall Street, and since moving back to Nigeria, has worked in some of the fastest-growing companies like IrokoTV, advised on some of Nigeria’s most strategic markets, and invested in Nigeria’s most promising companies. He understands innovation.
The other co-founders, Sam Haruna and Abdulrahman Atta bring a wealth of technology experience which they are leveraging to drive the technology infrastructure and digital assets on which the company is built. They deeply understand technology.
We welcome Kelechi, Sam and Abdulrahman to the Future Africa community.