Wednesday, August 21, 2013

Achieving Sustainable Development Through Affordable Housing

 The damning 17 million housing deficit in Nigeria obviously has had negative impact on the nation’s economy. In the years ahead, there must be deliberate and sustainable plan to bridge the yawning gap and get the citizenry composed for economic activity to thrive in the country. This can be effectively done through implementation of robust housing policies. GEORGE OKOJIE writes

For over 25 years, managers of the housing sub-sector of the Nigerian economy drawn from both the public and private sectors have tinkered with the idea of providing mass housing for the people. But the profligacy of successive government officials deployed to handle the sector and obvious failure of leadership has made many Nigerians to dismiss the new National Housing Policy as another effort in futility.

This loss of confidence arose from the fact that the government has failed to realise that housing does not only satisfy the basic human need for shelter, but it is a key component of economic growth and development and forms a substantial part of the Gross Domestic Product (GDP) of most developed countries.

LEADERSHIP Sunday investigations showed that, though Nigeria succeeded in churning out good policies in the past, its blueprints hinged on three main pillars of guaranteeing well-being and productivity of the people, provision of single digit mortgage and fostering sustainable and enabling environment for the private sector to operate optimally was never implemented.



Implementing The National Housing Policy

Interestingly, at the inauguration of a committee constituted by the Federal Government to produce a National Housing Policy for the country in 1985, the then Minister of Works and Housing had said, “Government plans to take positive steps to ensure that the less privileged members of the society, including the wandering psychotics who require confinement and rehabilitation, have access to dwelling houses.”

In developing the blueprint that was to drive that template, the technocrats were said to have paid attention to the need for the provision of mass housing in a decent, safe and healthy environment with infrastructure provided at an affordable cost. of ordinary Nigerians with shanties and slum conurbations becoming more pronounced in urban centres of the country.

In the face of UN-Habitat estimate of housing deficit of 17 million units in Nigeria, experts and stakeholders in the nation’s built environment are of the view that there is urgent need to think outside the box for a viable operational model for the National Housing Fund (NHF) scheme to succeed in Nigeria.

According to Okika Ekwem, a United States-based realtor, the federal government needs to come in, look at what is happening in other civilised world and test-run the model. He advocated the operational model of America’s Federal National Mortgage Association (FNMA) popularly known as Fannie Mae. Fannie Mae, he said is the US equivalent of Nigeria’s NHF, saying the huge success of the mortgage industry in America is traceable to its efficient operations mainly as a secondary mortgage institution.

He said “In the civilised world, there is a secondary market for real estate financing where commercial banks or individual brokerage banks lend money to people and thereafter sell the securitised certificate to the secondary market and come back again to lend to individuals”. The realtor added that the US government usually chatters bigger financial houses that buy off these securitised mortgage notes from the banks and are a bit insulated such that even where people fail to pay, they are assured.

On the way forward, the Head of Dipo Fakorede and Co., a firm of estate surveyors and valuers, Mr Dipo Fakorede noted that though the nation has one of the best housing policies in the world, it lacks the ability to implement the policies. In his words, “Government needs to play its role with the establishment of primary mortgage institutions. What they do abroad is that once you are 18 and working, you have access to mortgage, which you pay over a number of years. But here, you have to get land, pay contractors and build, that is the why property value continues to rise.

“The primary mortgage institutions must be in place for people to have access to mortgage facilities. Government must also build houses; they have good housing policy, which they never implement. Private sector operators are doing their best but we are all out to make money.

“As a businessman, when I develop houses, I will want someone who will buy, give me my money and I move on. But even in the private sector, the problem there is finance. Housing is capital intensive; you need a lot of money when developing houses. So, the government must come in to peg the interest rate and then people in the private sector will be fully involved. And the government should be sincere in terms of providing the enabling environment.



Harmonising All The Parameters

“All the parameters for developing housing must be brought down in a friendly way. Cost of land is expensive, especially in Lagos. If you want to build terrace houses, for instance, you will need a land of about 2, 000 square metres and you should automatically have about N250 million if you wish to acquire that. Then, you talk about approval and then you may be spending about N800 million at the end. So, how many years will it take you to recover your money if you are doing a mortgage arrangement?

“Government must come in, create enabling environment and give a chunk part of the budget to the housing sector so that there will be mass housing development and prices of houses will go down. Let them also make provision for workers to get mortgages for 15, 20 or 30 years depending on their ages, which is the way it is done”.



Legislating Lending Rates

The views of Mr Adeniji Adele, a frontline estate surveyor and valuer is not different from that previously expressed, except that he  told LEADERSHIP Sunday that  there is need to do something about the country’s faulty legislation which is one of the things frustrating effective funding of housing projects. Adeniji pointed out that the way out is for the legislative arm of the government to put in place an Act to reduce lending rate by mortgage and banking institutions.

“This will further reduce the risks associated with lending funds on the basis of real estate “Mortgages”. In addition to the above, the legislatures should legislate to ensure the following:  Single digit rate for mortgage for a term of between 15 to 25 years; Use of property pledged as security for loan should be well appraised; and due diligence should be carried out on the borrowers.

“Title to the property should be checked. Bureaucracy in getting government approval or consent on land matters should be reduced; if government could embark on provision of infrastructures and facilities, it will spur the development of even more remote areas even if only for use of tourists.

“As incentive to private developers, Government should negotiate with them on the provision of infrastructures so private developers will not be speculative on the provision of infrastructure and uncertainty over the conditions of infrastructure by both parties”. The lack of a robust mortgage financing system in Nigeria has made the rate of home ownership in Nigeria one of the lowest in Africa.



Nigeria’s Poor Home Ownership

Apparently disappointed about the housing provision in the country, the Managing Director, Federal Mortgage Bank of Nigeria (FMBN), Mr. GimbaYa’uKumo, said recently at a public forum that the country’s homeownership rate of about 25 percent is much lower than contemporary countries.

He juxtaposed the nation’s abysmal homeownership rate with countries such as Singapore 90 percent, Indonesia 84 percent, Kenya 73 percent, Benin Republic 63 percent, South Africa 56 percent and Libya 41 percent while that of the United States is put at 70 percent. He explained that mortgage credits account for less than five percent of total lending portfolio of Nigerian banks and just about 13.5 percent of mortgage lending by primary mortgage banks (PMBs).

The mortgage finance expert said, the Central Bank of Nigeria (CBN) supervision report 2008 reveals that 90 percent of housing developments in Nigeria are self-financed through personal savings for periods upwards of 10 years. He pointed out that housing not only satisfies the basic human need for shelter, but it is a key component of economic growth and development.

“The supply gap for low and middle income groups is huge, reaching a crisis level in some cities in the country, which is heightened by the rapid urbanisation of the population.” He noted that the World Bank has predicted that the housing problem in Nigeria will become even more acute, resulting in a housing crisis by 2020 if adequate measures are not taken,” he added.



World Bank’s N48bn Facility

Ya’uKumo said in line with its mandate, the bank has been mobilising domestic and foreign funds into the housing finance sub-sector, while also collecting and managing the NHF in accordance with the NHF Act for the purpose of providing affordable homes to Nigerians. He said the $300 million, about (N48 billion) liquidity facility from World Bank for the overhauling of the nation’s mortgage sector will soon be ready to enhance sustainable housing finance in the country.

President Goodluck Jonathan has continually said his government is taking steps to address the housing needs of Nigerians, saying the on-going restructuring of the Federal Mortgage Bank is geared towards making home ownership easy in the country.

According to him, “The Federal Mortgage Bank is being restructured to meet the demands of the sector, especially mass housing.  In addition, the Nigerian Mortgage Refinancing Institute is being set up with the aim of revitalising the nation’s mortgage financing institution with a $300 million liquidity support from the Word Bank. “It is expected that this programme, which will be launched this year, will enhance the level of financing available for mortgages across the country”.



Way forward

President Jonathan has emphasized that government places high premium on provision of affordable housing for Nigerians adding that accommodation is one of the strategic imperative for guaranteeing the wellbeing and productivity of every person. It is believed that for Nigeria to achieve sustainable housing for all, a new thinking cap need to be put on by those saddled with the responsibility of implementing the national housing policy.

Also, the legislature, banks, private developers, primary mortgage institutions, civil society organisations, private sector players and concerned Nigerians need to rise to the occasion to ensure that every Nigeria can afford as well as well find the modalities for accessing loans to build their homes easy and palatable. If all Nigerians find it easy to secure housing loans and own their homes, experts believe the country will be in a better stead to achieve the United Nations Million Development Goals (MDGs) as well as the Vision 20-2020 much faster.
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