Not yet affordable housing despite high promises

The housing sector of any country can mar or boost the economy, depending on the manner government wants to run its policies.It is instructive that there is a lot of obvious difference in the way the government accords its priorities on the different sector of the economy.But no matter how an administration looks at housing, it remains a fundamental human right, as enshrined in the United Nations Habitat Agenda and universally accepted as the second most important human need.

Besides, the housing sector has traditionally played a central role in the economic life of nations and is the bedrock of the economy in more advanced economies like the United States of America, Great Britain and Canada, where the sector contributes between 30per cent and 70per cent to the Gross Domestic Product (GDP).

Also, investments in housing account for 15 to 35 per cent of aggregate investment worldwide and employ approximately 10 per cent of labour force worldwide. Also, homeownership is an accepted measure of household wealth and GDP, while the standard of housing is an indicator of effective economic development and standard of living in a nation.

Housing, through property taxes, is a significant contributor to local government finance and thereby to the provision of essential services, such as water, sanitation, transportation and education.

The traditional property tax base is the market value of the property, as housing prices rise and property assessments rise. The tax base is further strengthened by new construction. The typical contribution of residential properties to the municipal tax base is 43 per cent.The sector also has the potential to generate employment, increase productivity and alleviate poverty. It has the capacity to reduce crime rate, insurrections, militancy, and terrorism and substantially address wealth distribution as well as security concerns.

It is able to achieve this because investment in housing affects all facets of life through its multiplier effect on economic development by forward linkages to the financial markets and backward linkages to land, building materials, tools, furniture and Labour markets.After 59 years of independence, several efforts to address the housing situation by successive governments in Nigeria have yielded limited success over the years. Today, the nation is estimated to have a total housing deficit of 17-23 million units, though the current demand is estimated at 37 million houses.

Apart from the fact that Nigerians have been disadvantaged in producing accurate, reliable figures and statistic of endeavours, the rather lukewarm attitude of government in combating the problem of housing has not been helpful.After Independence, emphasis was placed on the five-yearly development plans as the vehicle for economic growth. The housing sector however suffered complete neglect in the first two plans. With the outbreak of the Civil War in 1967, the housing situation fell into complete neglect and deteriorated further. In 1971, the National Council on Housing consisting of all State Commissioners responsible for housing was established.

This marked the first significant and direct attempt by the Federal Government to intervene positively in the area of housing. It led in 1972 to the establishment of a National Housing Programme during the second National Development Plan period. Through an enabling decree, the Federal Government intended to construct 59,000 dwelling units with 15,000 in Lagos and 4,000 units in each of the other eleven State Capitals. The Federal Housing Authority was created in 1973 to co-ordinate this nation-wide programme.

The Third National Development Plan (1975-1980) contained the most significant statement of the Government in the housing sector. The Federal Government decided to participate directly and actively in the provision of housing, rather than leaving it principally to the private sector.A total of N2.6billion was earmarked for the implementation of the various projects. During this period, a total of 202,000 dwelling units were programmed for construction, comprising 50,000 units in Lagos and 8,000 units in each of the other nineteen States. It is pertinent to note that by the end of the plan period, less than 15 per cent of the houses had been completed.

The turning point in housing happened in 1978, when land administration in Nigeria was vested on state governors through the Land Use Act of 1978. The Governor is empowered to issue statutory Certificates of Occupancy.Despite the intention of the Land Use Act of 1978 to ensure access by governments to develop land when required and curb land speculation, it has not been able to facilitate easy access to land by individuals, while the vesting of control over land in urban areas in the State Governor has effectively limited the roles played by local governments in such areas of their administration.

The increasing deficit of urban housing as well as its continuous deterioration in the rural areas dictated the high priority rating given to housing by the defunct civilian administration. An elaborate National Housing Programme was embarked upon in 1980 based on the concept of affordability and citizen participation.

The contribution of the building and construction sector to total Gross Domestic Product (GDP) in Nigeria, which was four per cent in 1981, decreased to 2.08 per cent in 2011 but was estimated at eight per cent with the redenomination of the computation of GDP in 2013. According to the National Housing policy, a major drawback in the past attempts at housing and urban development sectors and in the establishment of sustainable housing delivery systems, and efficient urban development and management in Nigeria was the absence of clear focus in the pursuit of the mandate of the ministry.

The multifaceted and multidisciplinary nature of the ministry coupled with the roles in regulation of standards, prescription codes and such other measures put the Ministry on collision path with other Federal Government agencies. Also the non-involvement of stakeholders and near exclusion of the private sector investors in housing and service delivery robbed the sector of necessary competition and efficiency needed for stability.However, the inability of governments alone to fund the provision of housing and urban development left a big vacuum and massive need which could not be met in the sector.

“Nowhere is the paradox of Nigeria more glaring than in the housing sector. Nigeria is implementing its second National Housing and Urban Development Policies, since 2012. The two Policies are adjudged to be among the best in the international community, in terms of their contents and coherence. “Yet the country, especially its 36 states, is yet to develop and effective and sustainable delivery system for affordable housing, of low carbon footprint, to Nigerians, especially the poor and low-income families,” Prof. Mustapha Zubairu, Project Manager, Niger State Urban Support Programme said.He added, “The seeming endemic weakness in the housing sector manifest themselves much more glaringly in each of the five components of housing – land, finance, infrastructure, building materials and labour.”

In Nigeria, the rapid urbanization rate has also been characterized by the significant proportion of the urban population living in slums, which was estimated at 69 per cent of total urban population in 2009.This also reflects the global increase in estimated slum population from 725 million in 2000, which is considered a reflection of the chronic lack of adequate and affordable housing resulting from inadequate public urban and land delivery policies, despite significant efforts, the net growth of slums continues to outpace the improvements being made.

The setback for effective housing has been urbanization. Rapid population growth experienced in Nigeria (3.2 per cent) has been characterised by an even higher urban population growth rate of 3.97 per cent, which has seen the proportion of urban dwellers rising from 10.6 per cent of total population in 1953 to 19.1 per cent in 1963, 35.7 per cent in 1991 and 48.2 per cent in 2006.The 2006 National Population Census has projected the urban population in Nigeria at 50 per cent of total population by 2015, and is expected to rise to 60per cent by 2025.

In responding to this huge challenge, UN-Habitat advocates a twin-track approach that focuses on improving the supply and affordability of new housing through the supply of serviced land and housing opportunities at scale, which can curb the growth of new slums, alongside implementing citywide and national slum upgrading programmes that can improve housing conditions and quality of life in existing slums. By widening housing choices and enabling the provision of housing opportunities at appropriate scale, prices and diversity, housing will directly impact the future of cities and its ecological and economic footprint, thereby contributing to reducing social inequalities and improving urban safety through their social and spatial impacts.
Key players fingered unstable ministry as a factor for non-performance.

For instance, what started as Ministry of Works, Survey and Housing, as an institution, suffered several changes and reduction in status from 1976 to the present period. The Housing Ministry received serious name and activity changes necessitating change in name for over 10 times.“This political action is nothing short of policy failure and has seriously undermined development of the sector. For instance, from 2015 – 2019, housing featured under the Ministry of Power, Work and Housing. Under this arrangement, “Housing’’ was lost in terms of name and also in priority,” according to Prince Oluseyi Lufadeju, Chairman, Board of Trustees, Real Estate Developers Association of Nigeria (REDAN).

Another issue that has often resonated is lack of accurate data in the industry. Lufadeju said: “Apart from the fact that we have been disadvantaged in producing accurate and reliable figures and statistic of our endeavours, the rather lukewarm attitude of the government in combating the problem of housing has not been helpful.”

However, the establishment of the National Real Estate Data Collation and Management Program (NRE-DCMP) by a joint committee of institutions championed by the REDAN, the Central Bank of Nigeria (CBN) and other stakeholders in housing is a defining beginning of reality and actualization of preparation of correct statistics and figures for planning purposes.

The objectives of the programme include: Identification of types of housing in the country, average cost of land and housing per square meter by location and state, information on demand side of housing, standardization, linkages with other sectors and capacity building.The NRE-DCMP was thus initiated to collate credible and reliable data for planning, preconstruction, construction and post-construction activities in the real estate sector with the aim of providing credible information for policy and investment decisions towards addressing the housing deficit in the country.

Expectations
It is no longer news that in the recent past, housing challenges in Nigeria seem to have defied all solutions. It is also not a controversy that various housing policies put in place to address these challenges have virtually failed to resolve the myriad of problems facing the sector. These problems ranges from lack of holistic approach to housing matter, lack of finance, high cost of building materials, high infrastructural development cost, appropriate implementation of policy direction and affordability challenge among others.

In spite of the silent issues, there is the need for the stakeholders in the public and private sectors, led by government policies to provide homes to the teaming un-housed, low income or no-income citizenry who are the most vulnerable in the society. Home ownership still remains the priority of the people and constitutes major need of the populace and it will continue to constantly require government attention. The problem could only be resolved with appropriate strategies that would make affordable housing available for the masses with government playing leading roles in creating conducive atmosphere for mass housing provision that would help to engage greater number of people. President, Association of Housing Corporations of Nigeria (AHCN), Mohammed Adamu also noted “housing sector has potentials that can be tapped for driving the economic recovery, if only we choose to get our acts together to tackle housing deficit and affordability challenge.”

“It is time to deviate from just talking without matching it with actions. Stakeholders in the sector must embrace partnership options to help one another with strong advocacy group to influence decisions at all level of policy formulation and implementation,” he said. REDAN chairman said: “The market for housing is there with an estimated population of over 180 million people (and counting) and estimated housing deficit hovering around 17 million.”

To achieve a holistic turnaround of the housing developments in the country, submission by REDAN is that the Federal Government through the instrumentality of the Federal Ministry of Works and Housing should focus on policy formulation that will provide mass and affordable housing.For Lufadeju, “the government should be an enabler of the policy decision to propel and accentuate guided developments in the real estate sector. The three tier (Federal, State and Local Government) are supposed to be providers of land for mass and affordable housing.

“Government is supposed to create conducive enabling environment for the business of housing development. Policy formulation should be integrative such that the States and local governments are involved in housing provisions.”Zubairu said: “This will enable it focus on policy implementation, monitoring and evaluation and impact assessment. This will facilitate the elimination of the current situation where all the three tiers of government are involved in direct construction. The FMPWH has currently institutionalized the construction of Prototype housing, nearly always in competition with the Federal Housing Authority.”

President, Nigerian Institute of Building (NIOB), Mr. Kunle Awobodu agrees with them on this. “Government should review its participation on construction and provision of houses,” he said.Awobodu stated, “Government should strike a balance between the cost of constructing buildings and the purchasing power of Nigerians to eliminate the high vacancy rates in major cities.”REDAN chairman posited, “while we know that land is held by the state governments as common wealth, in partnership with the local governments, provisions of serviced land for mass housing at subsidized rates, should be made accessible to estate developers to crash the cost of housing.

“The procedure of allocating land should be to those who will develop them and impact positively to the development of the state / area councils, and not to land speculators.” A critical factor inhibiting housing development is lack of affordable housing or construction finance. What was obtainable in the past was the disbursement of Estate Development Loan (EDL) from the Federal Mortgage of Nigeria (FMBN) at 10 per cent.

Since August 2012 when the loan was suspended, real estate developers have resorted to taking loans from the commercial banks at market determined rates, which often hovers around 24 -28 per cent. “This definitely will impact negatively on the cost of housing. The need for FMBN to lift the suspension of EDL has become imperative, and we hereby request the board and management of the bank to do the needful.

The coming into being of the Family Home Fund is a big relief, though it has its focus on affordable housing for the low income. This is determined by it credit guidelines. “We are enthused by their performances and our members are working with the institution,” Lufadeju said. As part of the policy suggestion to the government, is the need to look at funding of homes for the Nigerian. The supply side of housing, which is neglected by government needs to be addressed.

“We observe skewed focus on the demand side (mortgage) without corresponding attention on housing supply. Mortgages can only be created if there are houses, else, the available / limited ones will attract higher prices.“Also, government needs to introduce incentives and subsidies to make housing affordable such as: deferred payments for development plan approvals by real estate developers. Payment for other ancillary cost due to government could also be deferred. These are efforts that could lower the cost of housing to the generality of Nigerians,” REDAN said.Against the background that primary infrastructure forms about 30per cent of construction cost in housing estates, the road to affordability begins when the government, as part of its social responsibility to citizens, provides housing estates with basic amenities.

Adamu stressed, “It is in the interest of the government and the people that government continues to play a critical role in providing the enabling environment for housing development all across Nigeria. This, it would do by ensuring that it takes responsibility for primary infrastructure like roads, main water supply, electricity, sewage and drainage. With the primary infrastructure in place, housing corporations could easily collaborate with the private sector to take care of secondary infrastructure of estate roads, drains, water, and electricity connections,

Estate developers reiterated that “to make for affordable housing, government must collaborate effectively with developers, who are entrepreneurs doing the needful to avail the masses with the third basic need of life. Government definitely has a responsibility to provide basic infrastructure to citizens who are also tax payers.

“In working around to avail citizens with homes, there is the need for reorientation towards taste and design. Our people need to imbibe the dictum of aspiring to own what they can afford. Overtime, they can graduate to higher levels. Most people crave for homes that are expansive, well furnished, well located, with many rooms.

“There are technologically advanced building techniques and materials that are cheaper and can make homes cheaper. There is the need to embrace such innovations. This is a call for change in taste, and mindset.”According to United Nations statistics, there are over two million Nigerians living and working in North America today; of this, 115,000 are medical professionals, 174,000 are IT professionals, 87,000 are pharmacists, 49,500 are engineers and 250,000 are legal, financial, real estate and business related professionals.

In 2018, these folks contributed $23.63 billion to the Nigerian Economy by way of remittances or 6.1per cent of Nigeria’s GDP in 2018, according to PWC data.Lufadeju said, the revelation indicates the need for developers to relate with Nigerians in Diaspora so that we leverage on their resources and ideas in our bid to further the course of affordable housing in Nigeria.

“The recent FBI reports on some of the diaspora should not allow us to take-off our focus from the huge potential resources for housing. Though there is current restriction of sending money through Western Union to Nigeria, we could work with the CBN and other Financial Institutions that have branches abroad to tap on these huge opportunities,” REDAN said.

AHCN argues that usurpation of the statutory responsibilities of housing agencies in housing construction and development for the state by the ministries is purely an unnecessary duplication of duty which will in the long run cause distraction, unnecessary rivalry, unfair competition and sheer wastages and duplication of efforts and resources.

The housing ministries should strictly reduce its activities to policy formulation and monitor their statutory parastatals to ensure policy compliance and accomplishment. “The Ministry of Housing in the states should concentrate on providing the enabling environment and supervision for the housing agency to fulfill its statutory mandates,” Adamu added.