Housing Construction: Expert Faults Government’s Involvement, Seeks Robust Policy

155 views | Akanimo Sampson | April 19, 2021

Fellow of the Nigeria Institution of Estate Surveyors and Valuers (NIESV), Victor Alonge, says the Federal Government of Nigeria has no business with direct housing construction.

According to him, the continued failure by the agencies of government saddled with providing houses for the citizens is enough to tell the public that the government has no business building houses for the citizenry.

Before now, some of the icons of the real estate sector have been decrying the incursion of government into housing provision rather than formulating and implementing policies that will engender massive homeownership.

For them, creating an enabling environment with a robust subsidy to developers may just be the needed lift for the sector, pointing out that the government’s foray into housing development has not yielded the desired results.

However, despite the huge potential in the sector, the continued paltry housing delivery by government agencies and other extraneous factors have kept the sector‘s contribution to the gross domestic product (GDP) at an abysmal less than five per cent.

This is against over 60 per cent contribution to GDP in developed economies such as the United States and United Kingdom (U.K.).

“In the US, the housing sector contributes over 60 per cent and in the U.K., it is the same; it’s the heartbeat of their economy as growth and economic prosperity is measured through housing stock”, says Alonge.

Disturbingly, he is worried about the foray of government into housing construction rather than providing a robust environment that will enable the private sector to thrive.

One of such concerns is the government’s policy on land titling and documentation, including the challenges with the Land Use Act (LUA).

The clumsiness in the LUA has led operators to agitate for the removal of the Act from the constitution. Until this is done, the government may continue to pay lip service to issues of housing.

Another policy that has come under scrutiny is the National Housing Policy. Alonge, like others, described this policy as one in shambles.

The NIESV top player is canvassing for a housing delivery framework, including the procurement process that is not designed to fail.

‘’Direct delivery of housing by the government should be a thing of the past because it has never helped. It is a major avenue for corruption. If the government invests N10 billion into the sector, the real value will be about N5 billion.

‘’We should look at the developed economies and understudy how they did it. They make use of the subsidy system. It works by looking at the housing delivery value chain and ensuring that all the participants are incentivised by providing some kind of subsidy, which will be redeemed upon delivery and performance of their respective schedule within the framework”, he said.

On how it can work here, he said the government does not need to dole out cash to contractors and developers, but rather to provide them with the materials to build houses.

According to him, they can also be incentivised by, for instance, allowing developers to have foreign exchange at CBN rate, including tax holiday, tax relief – all of which will be claimed after the performance.

“It’s a system that would be transparent and the government will see the impact because, at the end of the day, all you want is for people to have access to decent housing.

‘’Most of the developments at Ikoyi, Lekki, Victoria island, Maitama, Garki, Asokoro or any of the choice places, are they not part of the about 20 million housing gap people are talking about? How many of those that are actually in need of housing can afford to pay rentals at those upscale places?’’

He advised the government to be more serious about housing provision, adding that its involvement in it would not solve anything and, indeed, had not solved anything.

A look at the government’s efforts paints a sorry state of housing delivery to Nigerians, without impact on reducing the housing deficit in the country.

To tackle the problem of inadequate housing, the government, over three decades ago, formed the Federal Housing Authority (FHA).

But experts said the agency had not lived up to expectation.

Experts and other stakeholders in the built environment have, at various times, insisted that the government’s efforts had remained unimpressive. For instance, they said the FHA had not built more than 50,000 housing units across the federation – a far cry from the needed 20 million units.

Dozens of states have failed to provide new homes for their citizens in the last three years amid a growing population and housing deficit in the country.

An assessment of the state of housing in Nigeria shows that some state agencies have not built any house in the past four years, while others have increased their stock through private sector intervention.

Investigations have shown that the major challenge that affected past mass housing delivery was political interference. There is no continuity of housing programmes and policies by successive governments as each regime usually jettison whatever housing programmes put in place by the preceding government.

Among the states that have failed to make an impact in the industry are Abia, Adamawa, Akwa Ibom, Bauchi, Benue, Borno, Cross River, Ebonyi, Ekiti, Enugu, Gombe, Imo, Kebbi, Ondo, Osun, Plateau, Rivers, Sokoto and Zamfara.

States listed for increasing stock, according to the assessment by the Association of Housing Corporation of Nigeria (AHCN), are Anambra, Bayelsa, Delta, Edo, Jigawa, Kaduna, Kano, Katsina, Lagos, Nasarawa, Niger, Ogun, Oyo, Taraba and Yobe. The report further shows that in most states, there has been derailment of policies for selfish reasons such as settling political cronies.

AHCN President, Dr Victor Onukwugha, said the governments, both at the federal and state levels, had done very little over the years to respond to social housing and address the increasing housing deficit.

He said: “There is urgent need to deviate from this political sentiment and quagmire with departure from the usual practice of discrediting viable policies of past regimes.

“Our leaders are implored to embrace the progressive ideology whether instituted by their government or not, irrespective of political affiliation in implementation and execution of viable housing policies and programmes and seek to pursue sustainable delivery of affordable housing on a large scale to reduce in the country.

“Although there is no accurate statistics of the housing shortage in Nigeria, the usual quoted estimated figure has been in the range of about 20 million housing shortages. It is, however, worrisome that efforts put in place over the years to address these deficits have not really yielded notable and anticipated results.”

According to him, the poor implementation and non-execution of public housing programmes both at the federal and state levels based on the overall framework of the housing policy have continued to create a problem for the sector.

“Social housing is virtually unattractive to our governments as there are no profound commitments to affordable housing, especially at the federal level. Land accessibility and availability are cumbersome with the high cost of titling and documentation coupled with a slow processing timeline, which discourages investment into the sector. Slum settlements are springing up in our major cities without a notable government’s plan of resettlement or redevelopment.

“Local building materials manufacturers are, therefore, struggling to exist amidst notable apathy of the general public to make use of their end products. Few building materials manufacturers that defy all odds are not supported with enabling environment and incentives to embark on mass production as poor infrastructure discourages sustenance of vibrant local building materials production, which, in effect, result in the high cost of materials.

“Our mortgage market is crawling when we have a vibrant platform that can create unhindered access to affordable mortgage as well as an exit point for developers who invested in housing. The prevailing mortgage rate outside six per cent National Housing Fund (NHF) mortgage range between 15 per cent and 25 per cent, which is not assisting the affordability and accessibility of housing.”

Onukwugha called for the creation of a Special Development Fund under the Central Bank of Nigeria (CBN) intervention fund for state housing corporations and FHA for rental and affordable mass housing provision to ensure the continued flow of finance for the sector.

The affordable housing development fund, according to him, should be managed by a special project vehicle in collaboration with the CBN, while state housing corporations and FHA should be responsible for the construction.

Under the proposal, the landed properties of FHA and abandoned estates buildings in the states should be converted to rental housing and funding from the proposed fund.

“For those land and estates at the outskirt of cities, arrangements should be made for the development of all the infrastructure, especially roads to open up such estates to attract patronage and such development should be funded from the intervention fund.

“Alternatively, some of those commercially oriented estates in major cities could be traded as equity contribution by the FHA for the immediate development of housing estates for outright sale for middle and high-income earners,” he added.

He said: “There is urgent need to deviate from this political sentiment and quagmire with departure from the usual practice of discrediting viable policies of past regimes.

“Our leaders are implored to embrace the progressive ideology whether instituted by their government or not, irrespective of political affiliation in implementation of viable housing policies and programmes and seek to pursue sustainable delivery of affordable housing on a large scale to reduce in the country.”

Although there is no accurate statistics of the housing shortage in Nigeria, the usual quoted estimated figure has been in the range of about 20 million housing shortages. It is however worrisome that efforts put in place over the years to address these deficits have not really yielded notable and anticipated results.”

According to him, the poor implementation and non-execution of public housing programmes both at the federal and state levels based on the overall framework of the housing policy have continued to create a problem for the sector.

“Social housing is virtually unattractive to our governments as there are no profound commitments to affordable housing, especially at the federal level. Land accessibility and availability are cumbersome with the high cost of titling and documentation coupled with a slow processing timeline, which discourages investment into the sector. Slum settlements are springing up in our major cities without a notable government’s plan of resettlement or redevelopment.

“Local building materials manufacturers are therefore struggling to exist amidst notable apathy of the general public to make use of their end products. Few building materials manufacturers that defy all odds are not supported with enabling environment and incentives to embark on mass production as poor infrastructure discourages sustenance of vibrant local building materials production which in effect result in the high cost of materials”, he said.

 

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