Building cheap: The cooperative option

The story of homeownership in Nigeria is never cheering, no matter who tells it and in whatever context. This is a country where housing demand-supply gap is in excess of 16 million units; housing stock is a little above 10 million units for a population of 160 people; over 80 percent of the existing housing stock is self-built, and over 60 percent of the urban dwellers live in rented accommodation, spending about 50 percent of their monthly income on house rent.

Prospective homeowners, especially those in the mid-low income bracket, are always caught in a web of confusion and indecision because with their low income and lack of a functional mortgage system, they cannot buy. High cost of land resulting from land charges, high interest rate and high cost of building materials make it pretty difficult for them to build.

In the last three to four decades, government has made several feeble attempts at enabling homeownership either through buying or building, but for so long have such efforts remained fruitless and unable to help individual efforts at homeownership.

The establishment of the National Housing Programme in 1972 as a component of the second National Development Plan; the creation of the Federal Housing Authority (FHA) as an implementing agency of Federal Government National Housing Programme; Federal Low-cost Housing Programme of the Shehu Shagari government; promulgation of Federal Mortgage Bank of Nigeria (FMBN) Act (Decree No. 82 of 1993); National Housing Policies of 1991 and 2001, among others, are just a few examples of such attempts that have remained still-birth till today.

Recognising the place of housing as the second in the hierarchy of man’s needs, we align with experts who see much gain and  economic sense in pooling resources as members of  cooperative societies to bring down the cost of building and owning homes in this country.

Empirical evidence has shown that it is a lot cheaper and more convenient to build as a cooperator than as individuals, and according to Timothy Nubi, a professor of Housing and Urban Regeneration at the University of Lagos, cooperators enjoy economy of scale through collective bargaining.

For us, it is important to point out that as a cooperative, buying land is cheaper; building the house proper is also cheaper because the design, building approvals, building materials procurement and even securing loan for the project come cheaper and easier through collective bargaining.

Not a few mortgage institutions are ready to finance cooperating housing estates because they are sure of capital inflow for mortgage repayment. For instance, the Federal Mortgage Bank of Nigeria (FMBN) in 2011 launched the informal sector National Housing Fund (NHF) initiative, which assures cooperators of adequate and prompt funding for their projects.

Interestingly, many informal sector operators have since signed up with this initiative through their various cooperative societies, according to the FMBN management, which, for us, is a most welcome development.

We urge tradesmen who have not done so to come together and form cooperative societies so that they can key into the initiative because we believe this is one of the ways through which we can build cheap and bridge the housing deficit plaguing the country.

We agree with Gimba Kumo, FMBN managing director, who said recently that “the Informal Sector Cooperative Society Loan Scheme, as a mortgage product, would enable operators in the informal sector like farmers, traders, artisans, etc to benefit from the National Housing Scheme like those in the formal sector”. We, however, urge that the initiative be given all it deserves so that the cooperators’ confidence in the process will be a major driver to the desired growth of the fledgling mortgage sector.