Building cheap through co-operatives
The story of home-ownership 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 17 million units; housing stock is a little above 10 million units for a population of 170 million 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 co-operative 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 co-operator than as individuals, and according to Timothy Nubi, a professor of Housing and Urban Regeneration at the University of Lagos, co-operators enjoy economy of scale through collective bargaining.
For us, it is important to point out that as a co-operative, 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 co-operating housing estates because they are sure of capital inflow for mortgage repayment, and it is on the basis of this that we commend the Federal Mortgage Bank of Nigeria’s (FMB) informal sector National Housing Fund (NHF) initiative.
At the launching of the initiative in Lagos not too long ago, the apex mortgage bank assured co-operators of adequate and prompt funding for their projects, and we urge all tradesmen to join their trade associations in order to benefit from this initiative to own homes.
Much as we do not advocate government’s direct involvement in housing delivery, we nonetheless want it to make the co-operative society option for housing delivery succeed through its agencies.
The FMBN should be made to appraise applications submitted by Federal Housing Authority (FHA) on behalf of the Cooperative Societies for Home Ownership Loan Scheme, and provide finance from NHF at an interest rate of 4 percent for 30 years maximum to members of co-operative societies.
We also want the bank to provide support for the nationwide campaign for co-operatives formation; embark upon aggressive campaign to bring all workers under NHF programme and monitor the repayment performance of co-operatives.
In our opinion, the co-operative societies themselves should serve as custodians of funds accessed by coops from FMBN; collect loan repayment from members, and provide information on the financial status of individual co-operative members to FHA and the coops governing council.