Housing and falling budgetary allocation

Over the years, it has not been cheering news for the Ministry of Lands, Housing and Urban Development any time budgets are announced because the ministry always finds itself in the league of other ministries that close the rear in terms of allocation.

The ministry has always had it so poor, but the 2015 budget which allocated it just N1.6 billion, representing about 67 percent drop from last year’s N15.7 billion, seems to have sent the last message on the fate of the ministry in government’s fiscal calculations.

For the new Muhammadu Buhari administration, this is a big challenge, especially in view of the moral burden on its shoulder arising from the ruling party’s campaign promise of delivering to Nigerians one million housing units annually for the next four years.

If the administration is to live up to expectation by fulfilling this promise, it would be compelled to source money to fund the development of these houses because, at N3 million per unit, the N1.6 billion allocation can only deliver a little over 500 units of two-bedroom flats.

In any case, we consider the one million housing units promise quite ambitious but largely ill-conceived because, in our thinking, government should not, in the first place, get involved in direct housing development. Nigerians would rather have the government create enabling environment to drive the one million housing units dream for private developers by channelling its efforts towards dismantling the bureaucratic land acquisition, titling and documentation process that has continued to throw spanner in the works for private developers.

We believe that it would be more sensible for the Buhari administration to empower private developers to enable them drive housing rather than embark on such massive project with dwindling government revenue.

It also beats the imagination that the immediate past administration which prepared the 2015 budget could give housing such low attention considering its pronouncement, at the onset of oil price shocks at the international market, that it had identified housing as one of the growth areas that would serve as buffers for the economy. Nigerians had expected that the government would follow this pronouncement through with sufficient provision in the budget that would enable it not to go into direct housing development but to build the necessary infrastructure that would enable private-sector operators to deliver housing at reduced cost.

Over $10 billion investment from both local and foreign investors has gone into the real estate sector in Nigeria and industry watchers say it would have been much more if the environment was enabling and regulatory policies had been right.

We share analysts’ view that if the one million housing units was the new administration’s only election promise, it remains largely unattainable because of the intricacies involved in providing housing.

If the Buhari administration must make good its promise, our advice is that it has to identify the areas where it wants to build the houses, acquire the land and ensure it is trouble-free, pay compensation to the land owners, lay out the land into plots, begin the process of providing infrastructure and services, and design the different types of houses to be built and cost them. Where to build these houses should not be a matter of political patronage, else it would be another Shagari low-cost housing that only succeeded in providing shelter for rats and rodents in faraway bushes all over the country.

We advise further that areas of need, such as Lagos and Port Harcourt, which have the greater share of the nation’s housing deficit should be identified, the house-types determined and, thereafter, the delivery method decided to ensure affordability of the units.