Though the popular view about housing delivery in Nigeria is that government should distance itself from direct construction, the fact remains that without government’s involvement, there is so little private sector operators can do to deliver the right number of housing units Nigerians need.
Experts say there must be a handshake of the public and private sectors for more Nigerians to become landlords and reduce pressure on the rental market where activities are at fever pitch due to financial constraints to building or buying homes.
“Considering our huge funding constraints, it is certain that government alone cannot solve our housing and infrastructure problems,” Emeka Eleh, Principal Partner at Ubosi Eleh + Co, affirmed recently.
Eleh, who spoke on ‘The 2024 Budget and the Real Estate Sector: Implications’ explained how the problems in the real estate sector which have made most citizens tenants, especially in the cities, could be addressed such that more Nigerians can become landlords.
Government, he said, should do more to address the regulatory constraints affecting the sector and create a conducive environment for the private sector to operate.
He added that more emphasis should be placed on producing local manufacturing of vital building materials. This, according to him, has become necessary at a time like this when exchange rate has made importation a frustrating experience for developers who have to import over 70 percent of their finishing materials. He said that it is only through the use of local inputs that house prices will be affordable to many Nigerians.
Making revitalization of the Nigeria Building and Road Research Institute (NBRRI) a key project is another way house prices could be affordable and more Nigerians will own homes. This is because NBRRI will improve the state of the country’s infrastructure which is a major component of construction cost in the country.
“Promotion of training schools or centres for local technicians and/or return of the technical colleges is needed now more than ever before. Technical competence is dwindling even among the artisans that work on projects, including plumbers, carpenters, fitters, electricians, and tilers,” Eleh noted.
Another thing government should do to enable more Nigerians to own homes is to deepen mortgage penetration by granting mortgages to civil servants and having the private sector do the construction which is considered a more efficient process.
The private sector can deal with the supply end of the market while the government should stimulate the demand side through giving its staff mortgages. Eleh pointed out that capitalization of the Federal Mortgage Bank of Nigeria (FMBN), Federal Housing Authority (FHA) and other government housing agencies in the real estate sector is poor which is why they cannot do much.
The FHA, for instance, which is the federal government’s housing development arm, has been around for 50 years and, in this long period, the authority has been able to deliver only 50,000 housing units.
“Records show that FHA has only delivered a cumulative of 50,000 housing units. That shows an average of 1,000 houses per year in 50 years. This is clearly not acceptable, especially from Nigeria’s foremost housing agency that has so many institutional advantages that it can leverage to deliver more results,” Ahmed Dangiwa, the minister of housing and urban development, said at the Authority’s 50th anniversary celebration
The minister, who advised the housing authority to wake up, noted that a similar government housing agency in Algeria delivers between 400,000 and 1million houses annually. “In fact, in a particular year, that agency delivered 1,060,000 houses,” he said.
Eleh suggested a review of the federal ministry of housing urban development’s priorities, explaining that the ministry should work with the states to review the Tenancy and Power of Repossession Laws as a way of encouraging investments in the sector.
He advised that government should also work for the review of the Land Use Act (LUA) in order to amend the provisions that amount to constraints like the consent provisions and the process of obtaining certificate of occupancy (C of O).
“Government should work for a robust Land reform process that will provide Nigerians with title to their land,” he said,