Curbing home-ownership costs through co-operatives
The story of home-ownership in Nigeria is never cheering, no matter who tells it and in whatever context. Nigeria is a country where housing demand-supply gap is in excess of 16 million units and housing stock is a little above 10 million units for a population of over 160 million people. Remarkably, 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.
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 four decades, successive governments have made several feeble attempts at enabling homeownership either through buying or building, but for so long such efforts have remained fruitless and ineffective in helping people become home owners.
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 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.
Empirical evidence has shown that it is a lot cost effective and more convenient to build as a co-operator than as an individual, and according to experts co-operators enjoy better 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 equally at lesser costs, because the design, building approvals, building materials procurement and even securing loan for the project come at lesser costs and easier through collective bargaining.
Many mortgage institutions are eager to finance co-operative 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-operatives 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.
To properly activate this cost effective home ownership model, 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 cooperative societies.
FMBN should equally provide support for the nationwide campaign for cooperatives formation, embark upon aggressive campaign to bring all workers under the NHF program and monitor the repayment performance of cooperatives.
We believe that co-operative societies themselves should serve as custodians of funds accessed by coops from FMBN; collect loan repayment from coops members, and provide information on the financial status of individual Cooperative members to FHA and the coops governing council.
If these emerging synergies and processes take root, no doubt, the goal of achieving home ownership for the majority of Nigerians will no longer remain a mere dream.