The Sharing Economy before The Sharing Economy

July 13, 2017

A lot is being made out of the idea that we now share key assets like our home and cars. Or that we pay tax dollars to support the sharing of bikes. What should be kept in mind is that while I might share my space (or more likely share the space of others through my use of Lyft and VRBO), there is a distinct middle person making money off of this—namely Air BnB, the owners of Lyft, and the charming dudes at Uber (which I have appropriately deleted from my phone.)  They created apps, but not the asset.

 

Sharing certainly has apparent advantages—one less car on the road for instance.  (Sorry Detroit!) Better, more efficient use of assets that might otherwise lie around un- or underutilized. (Although the Washington Post has an article that some things don’t lend themselves to sharing, namely umbrellas.  See:  https://www.washingtonpost.com/news/worldviews/wp/2017/07/12/a-chinese-umbrella-sharing-start-up-just-lost-nearly-all-of-its-300000-umbrellas/?utm_term=.1f4ac3732d65 )

 

We need to be aware in our laudatory view of sharing that for many sharing isn’t just a nice, potentially mutually advantageous arrangement—for many sharing is necessity.  This is very apparent in some research that I’ve just been working on with colleagues at the World Bank and the University at Buffalo.  (Nee SUNY Buffalo.)  In looking at the Kenyan housing market using data collected in 15 Kenyan cities in 2012-13 which surveyed almost 15,000 households, we find that Kenyan cities are rental—a remarkable 86 percent of city dwellers are rent-paying tenants.  Rents are low out of necessity as incomes are low.  Space consumption is also low as almost 70% of respondents live in a single room. 

 

 

 

In the research, we identified four main structural categories for housing in Kenyan cities:  single family homes, self-contained apartments, compounds and dormitories.  The latter two categories of housing are expressly designed for sharing of facilities—namely toilets and kitchens—with neighbors.

 

In terms of how they look compound houses are usually single-story structures that have multiple rooms and look a bit like a barracks.  In this setting, open space is shared, as are water taps, toilets and bathrooms and families live (and cook) within a room or two at most. Dorms look like our old-fashioned tenements—they are multiple story buildings in which residents live in a single room (alone or with families) and share sanitary facilities.  Sometimes the toilets and baths are on the same floor; other times they are just on the ground floor, but sometimes they do not exist.  (I’m living in a dorm at UW-Seattle as I write this—I have my own self-contained room; no US undergrad experiences “real” dorm life anymore.  My first grumpy, old person reference as yet in a blog post.)  This type of housing has been created by the private sector and Kenyan commercial property developers have been investing in these rooms with shared or no facilities at a very large scale.  Marie Huchzermeyer has a book Tenement Cities that looks at tenements in Nairobi and pre-war Berlin.

 

Why do this?  To save money—rents are cheaper for those who share. Rents for compounds average around 2500 KSH; tenement housing is more but around 4000 KSH.  (At the time of the survey one US dollar was 85 KSH.)  The main issue with these two forms of shared housing is that the building quality is often very poor.  Our research found that residents living in compounds have the lowest access to basic (and necessary) services like sewage disposal and potable water. Tenements are better, but they are poorly built and often structurally unsound.  Another tenement collapsed in Nairobi in June, the latest in a wave of collapses.  (See: https://www.nytimes.com/2017/06/13/world/africa/kenya-nairobi-building-collapse.html?_r=0).  These houses have been built without government sanction so the developers are cutting corners with fatal effect.  The Governor of Nairobi estimates that there are 30 to 40,000 unauthorized structures in the city of Nairobi alone.  Who knows what it might be like when we add in all the other urban areas.

 

 

Our research has implications for the country’s housing policy.  We argue that we need to appreciate that the shared facilities approach does help with housing affordability.  But the issues of safety and sufficient facilities need to be addressed.  (Cooking in rooms, for instance, is problematic both in terms of indoor air quality and fire risk.)  The government could look at retrofitting existing structures (e.g., more toilets); it certainly needs to do something about structural safety.  Given the ability and willingness of many urban Kenyans to live densely, it might make sense to look at these models, particularly the compound, as a way of providing low cost access to ownership.  We could structure loans to support compounds as condominiums.  Likewise, we could formulate a “better compound” that might enable incremental (upward) extension of housing as families consolidate resources to invest in assets.

 

Enlarged houses might even create the excess rooms necessary to the other form of sharing.  More living space might be let so that future visitors to Kenya, like those who went to Rio during the Olympics, can experience a different form of urban life, albeit temporarily. And that could be an economic boon to the wide swathe of Kenyan society that benefits very little from its status as an international tourist destination.

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Last Updated:  18 May 2020