By Segun Oshundairo
In the last three decades, the housing deficit in Nigeria has risen to an extremely disturbing level. Available data shows that in 1991, Nigeria’s housing deficit was 7 million.
It rose to 12 million units in 2007; 14 million in 2010; 20 million in 2018, and in 2023, Nigeria now has an estimated 28 million housing deficit.
There are real estate experts who say the housing deficit in Nigeria is well over 50 million, depending on the indices of data collection.
Recently, the Permanent Secretary, Federal Ministry of Works and Housing, Mahmuda Mamman said the Federal Government plans to assist vulnerable Nigerians to own houses to bridge the housing gap in Nigeria.
He made this disclosure while speaking with journalists on the first day of the 12th meeting of the National Council on Housing and Urban Development, which took place in Kaduna State.
The theme for the council meeting was ‘Harnessing local and international credit schemes as a panacea for affordable housing infrastructure development under the Renewed Hope Agenda.” The Permanent Secretary was quoted to have said, “The National Housing Scheme Programme by the ministry would assist the vulnerable population of the country in affording a roof over their heads and this would in turn bridge the gaps in the housing sector.”
He further explained that the housing ministry intended to go for social housing schemes to provide decent and affordable houses to cater to the housing needs of Nigerians.
Like past initiatives of the government, these ideas sound good and the outlook should easily excite Nigerians.
However, professionals in the mortar and brick business like myself would argue that until real issues in the real estate sector are addressed, this renewed hope initiative of the government to bridge the housing deficit will fail woefully like other plans in the past.
To practically reduce the housing gap in Nigeria, the government must immediately address some fundamental issues.
Review Existing Land Laws
The Land Use Act of 1978 was enacted originally to energise economic development in Nigeria by ensuring effective and equitable utilization of land and land resources.
It was also meant to reduce the high cost of land required for industrial estates and mechanised agriculture.
However, land management in Nigeria since the enactment of the Act has become more cumbersome and regressive to the process of homeownership for Nigerians.
What the Act has created instead, is a lack of uniformity in the laws governing land use and ownership in Nigeria. It also led to uncontrolled speculation in urban land, problems of access to land rights by Nigerians on an equal legal basis and fragmentation of rural lands arising from the application of traditional principles of inheritance and social resistance from local non-state actors.
Another major problem in the housing sector, which can be linked to the Act, is inadequate information/data for land use planning and management in Nigeria.
A number of field investigations carried out by experts reveal a lack of data on land use and no comprehensive and up-to-date plan or map showing land use patterns and structure of ownership in most areas in Nigeria. These are fundamental issues with land laws in Nigeria that must be fixed immediately.
Ease Land Title Processing
In many states in Nigeria today, getting approved government title for real estate investment has become extremely difficult and frustrating. More troubling is the bureaucracy and bottlenecks around the processes.
Recently, the Lagos State Governor, Mr Babajide Sanwo-Olu, assured the leadership of the Lagos Chamber of Commerce and Industry that his administration will fast-track the approval for the Certificate of Occupancy of the land allocated to the organisation for the construction of the trade fair and exhibition centre.
Many real estate investors in Lagos will be happy if the state governor can fast-track their own title applications too.
Real estate investment without proper tile documents gets practically stalled.
In Lagos and other parts of the country, real estate investors especially those operating in the private sector are sometimes left frustrated by extremely cumbersome and expensive land title processes.
This must be resolved for any meaningful progress to be achieved in the area of Nigeria’s housing deficit.
It is simple; the property registration process in Nigeria needs to be simplified, and digitalised, thereby, reducing human participation to the barest minimum, so as to eliminate corrupt practices, enhance the government’s credibility, and make it easier for investors and property owners to do the right thing without cutting corners.
The review of the property registration process and introduction of simplified means of registration would make the acquisition of land titles, deeds, and approvals less cumbersome, and contribute to the growth of the housing sector in Nigeria.
Address Rising Prices of Building Material
The number of abandoned real estate projects has continued to rise across the country.
It is now a common thing to see developers stop their construction projects halfway due to the high cost of building materials.
The cost of the average building material has risen by over 100% or more in the last twelve months. Something must be done about this immediately.
The production of building materials locally should be encouraged under the supervision of expert engineers who will ensure that only high-quality materials are used alongside the latest building techniques, to ensure the safety, longevity, and quality of the finished product.
Mass production of locally manufactured building materials under expert guidance would reduce construction and housing costs, and ultimately, ease the operation of building and construction companies in building more homes, thereby, contributing to bridging the housing deficit in Nigeria.
Cement should be the number one target. Promises by local cement manufacturers to reduce the price of the product have not materialised.
On the flip side, the forex crisis should be looked into. More than 60% of materials used for building construction are imported into the country. The free fall of the Naira to the Dollar has made things worse. It should be fixed.
Activate Vibrant, Functional Mortgage Culture
In many advanced societies, real estate financing and homeownership are driven by a vibrant and functional mortgage system.
Mortgage is made available and accessible to all irrespective of income level. It also ensures that prospective lenders get good repayment tenure and interest rates.
The current interest rate for mortgage loans in Nigeria is between 18% and 25%. That cannot help to bridge the housing gap, as most Nigerians cannot access it.
The mortgage system in Nigeria needs to be restructured to really meet the needs of those who cannot afford a home, that is, low-income earners.
Many Nigerians who are low-salary earners cannot afford the short-term financing provided by mortgage banks, hence the housing deficit in the country.
The National Housing Fund Scheme should be reviewed to help low-income salary earners get onto the property ladder.
The government should look into proper mortgage refinancing. In June 2013, the Nigeria Mortgage Refinancing Company was established.
NMRC is a wholesale second-tier financial institution, which refinances portfolios of mortgage and commercial banks, rather than originating individual mortgages and will cater for financial institutions rather than individual borrowers. The idea was to activate a vibrant mortgage culture in Nigeria and ensure continuous liquidity for mortgage banks. Much success has not been recorded in this regard and it must be looked into.
See Housing as Social Investment
Ultimately, the government must see the provision of housing for vulnerable Nigerians as a form of social investment and not a means to make money or generate revenue.
The models used by the Late Alhaji Lateef Jakande can be reviewed to fit into our current realities. It is unacceptable to see many working-class Nigerians finding it difficult to get on the property ladder.
Currently, the average low-income earner does not have a space on the property ladder in Nigeria, while a middle-income earner can only squeeze in.
A guaranteed place on the property ladder for low and middle-income earners can only come when and if the government goes into mass housing initiatives driven by the orientation that it is a form of social investment.
Create Robust Private Sector Partnerships
Currently, more than 90% of housing units produced in Nigeria are facilitated by the Private Sector.
A lot still needs to be done to ensure and support the private sector to do more. Governments at all levels in Nigeria must look for credible private real estate developers to work with. Partnerships that make land and finance available to them at heavily subsidized rates will help them deliver more affordable homes to Nigerians.
Oshundairo is the CEO of Arc-View Investments Limited.
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