Worried by the inability of government to provide housing for the people over the years, stakeholders and industry operators advocate social housing to stem the impending housing crisis in the country
Olumide Ajayi-Haastrup, not the real name, a middle-aged marketing executive who lives in the outskirts of Lagos and works with a relatively small public relations company in Victoria Island, Lagos, never thought he would be able to own a home until he acquired two plots of land at the Lambe area of Akute in Ogun State at the rate of N150,000 per plot more than 10 years ago. He did not have the huge resources required to build a house but had discovered that the secret to owning a home is to summon up the courage to complete the foundation of a sizable building plan for a mini-flat and cut down on other important domestic expenditure. Before he knew it, he had finished the project which now serves as his home.
Ajayi-Haastrup’s self-contained apartment, completed a couple of months ago, is a conservative one-bedroom and parlour apartment with a toilet/bathroom plus a kitchen space. However, his present dilemma is how to raise funds to build a bigger home as it has become obvious that his family size will expand when his pregnant wife is delivered of a set of twins they are expecting before the end of the year. Currently with a family size of three, he is apparently going to struggle with space in his newly finished mini-flat.
Also, Vivian Haruna, not real name, who had lived with her husband in an abandoned and unused container in Ebute-Metta, Lagos, shares the story of how she became a homeowner. Faced with daily threats by operatives of a government agency bent on evicting them from their container home, her husband became sick. As the ordeal continued, his condition worsened and he eventually collapsed and died. Left with four children and another dependent relative to cater for with her meagre earnings, Haruna became frustrated. A close friend thereafter introduced her to an innovative housing programme of a non-governmental organisation, NGO. The NGO completed a self-contained apartment with a kitchen, bathroom, internal and external courtyard at less than N250,000 with an initial deposit of N60,000. The balance was arranged to be paid over a four-year period.
Meanwhile, owing to inflation, the self-contained apartment which was completed and delivered to Haruna at a cost less than N250,000 a few years ago is now N760,000. This amount, however, is the actual cost of constructing the apartment without any profit margin. The NGO says the cost of subsidising the homes is actually the forfeited profit margin. Ajayi-Haastrup and Haruna are just two of the few fortunate Nigerians who are homeowners.
Millions of families are homeless and over 70 per cent live under subhuman condition because they cannot afford decent housing despite government promises over the years to provide “housing for all.” As the nation’s population grows at an annual rate of 3.2 per cent, with more than five million people born annually, up to 750,000 new homes, by implication, are built yearly all over the nation to meet this ever-increasing basic need. Regrettably, more than 85 per cent of the new homes do not meet the basic safety and quality standards officially recognised in other climes but they serve as shelter from the elements. Even though government continues to give blanket disapproval to several of these houses and oftentimes demonstrates this by demolishing them, an alternative is rarely provided. Deplorable as some of these houses may be, they serve the immediate purpose of offering shelter at affordable cost to the rapidly expanding rural and urban population.
While figures from the National Bureau of Statistics, NBS, reveal that Nigeria’s housing shortfall is between 12 and 14 million residential units, real estate experts and industry watchers maintain that 18 million housing units are currently required to forestall an imminent housing crisis. Despite the discrepancy in the figures, the fact remains that the housing stock in the country is highly inadequate to meet the needs of the people.
In the hierarchy of needs, housing (property) comes second after food, which explains why governments often make it their cardinal goal to provide accommodation. President Goodluck Jonathan, early this year, disclosed that government required $30 million (N4.8 billion) to provide adequate shelter and build additional 60 million housing units to meet the housing needs of the country. But Nigerians who have been inundated with such promises without witnessing their fulfilment in the past are of the view that housing is yet to get serious attention by all levels of government. This view is reinforced by the fact that since 1991 when the National Housing Policy, NHP, was promulgated, the daunting challenges facing the country’s housing sector, such as poor policy implementation, bureaucracy, political instability and corruption, are yet to be surmounted.
But this will no longer be the situation if government’s promise to tackle the problem head-on is anything to go by. The NHP is being reviewed to meet the housing needs of the country. Ama Pepple, minister of lands, housing and urban development, at a recent stakeholders’ meeting held in Abuja, the Federal Capital Territory, said government has developed NHP and National Urban Development Policy, NUDP, which will lead to a revolution in the housing sector as the implementation of the documents will make it possible for all Nigerians to own or have access to decent houses at affordable cost soon. The new policies, produced by a 24-man committee inaugurated by the ministry in August 2011, were developed to replace the 1991 NHP and NUDP of 1997. Besides, “they have been aligned with the new policy direction of government within the framework of the national Transformation Agenda, the Vision 20:2020, the financial service sector and other global initiatives such as the Millennium Development Goals, MDGs,” Pepple said. The two policies will thus serve as the umbrella framework for housing and urban development in the country.
The new housing policy, which emphasises the central role of the private sector in housing delivery, targets one million houses per year. It also seeks to introduce mass housing to Nigerians irrespective of their financial status, provide social housing scheme that will make funds available not only for those in the public sector but for informal sector operators as well. The NUDP also makes provision for proper planning of the environment, urban renewal and upgrading of slums, among others. Labaran Maku, minister of information, disclosed that the new policies, approved by the Federal Executive Council, FEC, last month, will boost infrastructural development in the housing sector, generate employment and wealth, and boost local building materials development, as well as enhance capacity development in the sector, stressing that they will deliver real mass housing to the people.
If effectively implemented, industry analysts say the policies would help to reinvigorate the national economy. With a population of over 160 million people, Nigeria has been identified as the largest market in Africa for everything and this includes the housing sector. Unfortunately, the sector’s contribution to the gross domestic product, GDP, is far below its potential. In the first quarter of this year, the building and construction sector contributed three per cent to the GDP. According to the Social Housing Advocacy Group, SHAG, an NGO, the housing sector contributes between 30 and 70 per cent of the GDP in other developed economies and the case of Nigeria cannot be different if the country is to achieve the objectives set in the MDGs for housing. Jonathan recently affirmed his government’s commitment to ensure the sector’s contribution to the country’s GDP is increased to 20 per cent. This, no doubt, will require innovative ways of providing housing.
Some industry players and regulators at the just concluded sixth Abuja Housing Show say that the simple social housing initiative that tackled Haruna’s housing challenge can be proliferated among Nigerians who are desirous of owning a home to reduce the housing deficit in the country considerably.
Ezekiel Nya-Etok, a social housing crusader and chairman, SHAG, argues that unless government demonstrates concerted effort in providing social housing as distinct from mass housing, most Nigerians will be incapable of owning their own homes or living in standard accommodation, stressing that most hardworking Nigerians cannot afford to get housing through the mortgage system even if they commit all their income to the repayment plan. Nya-Etok told the magazine that a sustained investment in social housing will facilitate the realisation of the Vision 20:2020 objectives of the Jonathan administration. The group, as part of efforts to boost housing stock in the country, has promised to continue to champion the realisation of strategic national objective of mass housing delivery where the low or no income groups will be specific targets.
Redefining social housing as not just for the poor and less privileged but for non-income, low and medium-income earners of the nation’s workforce, Nya-Etok said the concept of the public-private partnership, PPP, in the provision of mass housing delivery is elitist and cannot meet the yearnings of the average civil servant or the low paid in the society. Corroborating his views, Debo Adejana, managing director and chief executive officer, Realty Point Limited, a property development firm, also made a case for social housing scheme. “When you talk about social housing, the words that come to mind are cheap, affordable, non-profit driven, mass-produced houses that could be occupied by low-income earners, who may wish to save towards eventually buying such houses with time. Considering the fact that Nigeria has a housing deficit of about 16 million, any information and initiative that will help in providing cheap, affordable and non-profit driven social housing scheme for the general masses should be embraced. No wonder Pepple was forced to challenge the Federal Mortgage Bank of Nigeria to explore ways of providing houses for the generality of Nigerians as a social scheme,” Adejana noted.
Describing social housing as an umbrella term referring to rental housing which may be owned and managed by the state, by NGOs, or by a combination of the two usually with the aim of providing affordable housing, Adejana said social housing can be seen as a potential remedy to housing inequality in the country. “It is a popular stance in some countries like Brazil and Spain, among others that qualifying families may own a social housing property rather than renting it. In China, governments provide public houses called Lian Zu Fang, which means low-rent houses, to the citizens. These houses are built either by the government or private developers who are given free lands to build upon. Some other countries like Finland, Hong Kong, Austria, Singapore and others have their own unique blueprints for building social or public houses. Back here in Nigeria, Lateef Jakande, former civilian governor of Lagos State, built a number of housing estates for the people of the state when he was in government. The estates, scattered all over Lagos, really helped to alleviate the sufferings of a section of the populace in the state as far as accommodation was concerned. Today, most residents of the Jakande Housing Estate Scheme are grateful for the vision the former governor had in building those houses,” Adejana argued. Indeed the 1983 social housing scheme of Jakande is reputed to be the boldest by any state government till date. Most housing schemes at the state and federal level are beneficial only to the privileged rich people and remain unaffordable to the average or low-income earner.
Industry operatives, who insist that a state of emergency should have been declared in the housing sector, want government to provide a special and transparent subsidy regime or intervention funding for the housing sector as well as encourage the citizens to either rent or build houses strictly in accordance with their monthly income backed by the subsidy. To them, this is the only way of making people to cut their coat according to their sizes and a good blueprint for the provision of social housing to the masses. Recommending a social housing stimulus plan for the purpose of delivering new and affordable homes in the country, the industry operatives want government to set effective plans in motion with a view to delivering both cost-effective and quality social housing programme, which will significantly increase the supply of social housing across the country and provide accommodation to many disadvantaged Nigerians, particularly those who are homeless or at risk of becoming homeless.
While advocating that shelter is made simple, decent and affordable for Nigerians, Sam Odia, national director, Fuller Centre for Housing Nigeria, an NGO, which spearheaded a project in Garki, Abuja, with close semblance to the one that provided Haruna succour, said about 90 per cent of the housing development across the country is initiated by individuals while government with all its financial resources and human capacity contributes less to the housing stock. Odia said despite the difficulties of accessing land and obtaining quality building materials, ordinary people still find a way to build their own modest houses in the rural areas as well as in many suburban precincts, where the cost of land is relatively affordable. “There is no point supplying into the market so-called ‘affordable houses’ that are unaffordable to more than 90 per cent of the population. What the people are also asking for are simple functional homes, without frills or fancy. But we tend to give undue attention to the aesthetics of a development, thereby sending costs spiralling out of the affordability bracket,” he noted. Odia explained that construction quality can be carefully balanced if affordability is to be achieved, while also stressing that the unrealistic costs and high urban standards imposed on the house-building process have resulted in the slums springing up in most Nigerian cities today.
Some have also expressed views that government should have no business in the direct supply of houses into the market, but should rather shift its focus to the creation of a conducive operating environment for those whose primary business it is to provide housing. However, the pathetic scenario at the moment is that government is neither creating this environment nor is it producing the houses itself, at least not on the required scale.
Even then, operators in the real estate sector have added their voice to calls for social housing initiative, which they say is the pathway to achieving sustainable and affordable housing in the country. Their submission is premised on the fact that the average Nigerian household, according to the Centre for Global Development, earns less than N8,000 a month. Nigeria’s urban average earning is estimated to be less than the national minimum wage of N18,000 a month. Realistically therefore, the “affordable housing” being proposed is that which will ensure Nigerians who fall in this bracket are properly given a minimal shelter through a social mortgage costing less than N6,000 a month.
Kayode Omotosho, executive secretary, Mortgage Banking Association of Nigeria, MBAN, decried the situation where only Nigerians in the middle class are able to afford mortgages based on their income brackets. “Outside the middle class that are able to afford mortgages, we need to take a closer look at social housing which encompasses the no-income and low-income brackets. This will take into cognisance the fact that there will be some elements of subsidy from the government and it will also incorporate “no-income” housing for those who do not have visible income and the aged or people with disabilities in the society. From the affordable housing and social housing point of view, the real estate sector must clearly work out clear strategies to take care of the affordability group as well as the social housing groups. Industry operatives must continue to engage the government on the level of targeted subsidies that will be very strategic to accommodate the social housing group,” Omotosho said.
But attempts by the industry operatives to increase investments in the real estate sector of the Nigerian economy have remained unsuccessful as a result of expensive, cumbersome and complicated land tenure and transfer of legal titles in land procedures. Also, expensive cost of funds with high interest rates for construction and mortgages in comparison to the long-term rentals expected by an investor in the real estate market is also a major bottleneck. This perhaps explains the low contribution of the mortgage sector to the national economy. Kingsley Moghalu, deputy governor, financial system stability, Central Bank of Nigeria, recently said mortgage finance contributes less than one per cent to the country’s GDP as against Malaysia’s with 24.7 per cent, South Africa’s with 29 per cent, and New Zealand’s with 85 per cent.
Moghalu identified the challenges of the housing finance sector as dearth of long-term financial instruments, absence of mortgage liquidity, weak capital base, inadequate primary mortgage institution, weak corporate governance, inadequate skilled labour, and high cost of building materials, among others. The challenges in the sector also explain why foreign investors are not taking advantage of the country’s huge endowment in land resources to invest in the sector. The old housing policy failed woefully in terms of implementation while housing crisis continues to threaten the socio-economic landscape of the nation.
It is hoped that the two new policies will facilitate growth of the housing sector and by implication the national economy by truly delivering housing to the masses.