A giant at 58 living without housing
Tomorrow, at different levels of government, Nigerians will be gathering in groups to celebrate their country which is attaining the age of 58 as a free and sovereign nation. For various reasons, perhaps, there is need for the country to celebrate. If anything, the country is still intact as a corporate entity despite the centripetal and centrifugal forces pulling it apart from all corners.
At 58, a country, like a human being, should have got a reasonable number of his basic needs, including a good wife, a good job or a thriving business, children already out of school and perhaps, working, and above all, a decent home he calls his own.
But this is Nigeria at 58 where over 80 percent of its citizens have no house they can call their own. This is stark reality. Whether the story is about home-ownership level or the housing deficit in the country, it is always a disappointing tale. As against 72 percent home ownership level in the US, 78 percent in UK, 60 percent in China; 54 percent in Korea and 92 percent in Singapore, homeownership level in Nigeria is, 58 years after independence, still below 10 percent.
With a growing population conservatively estimated at 170 million and high urbanisation growth rate also estimated at 4-5 percent per annum, housing stock in Nigeria is said to be between 10 and 13 million units while an unconfirmed record shows that about 25 million households comprising six members each don’t have homes of their own, leaving the country with a deficit of about 17 million units.
Even at 17 million units, the deficit is no longer tenable, according to the Nigerian building and roads research institute (NBRRI), which insists that from 2012 to date, Nigeria’s population has increased from 168,240,403 to 191,835,936, showing a significant increase of 23,595,533 people to the population. So, more people are without houses.
A report by BusinessDay Research and Intelligence Unit (BRIU) on Nigerian Real Estate says that out of 170 million Nigerians, only 8 million people qualify for the luxury property market, adding that there is more than enough for the latter while hardly any thought is spared for the remaining 162 million citizens.
According to the report, over 80 percent of Nigerians are living in ‘unplanned residences’ and those in the urban centres are living on rented accommodation that takes away almost 40 percent of their income with no adequate facilities like water or electricity.
A major tragedy in the country’s housing situation is that the deficit, which is both quantitative and qualitative, has been allowed to fester. The 1991 National Housing Policy (NHP) which was revised in 2012, remains the most recent attempt by government to define what should be done with the housing system in the country, but like most things Nigerian, its implementation ended with the pronouncement.
Though there have been some efforts at improving the housing situation like using alternative building techniques that help to mass produce housing and possibly reduce prices which, at the moment, are unaffordable to many citizens.
The industry has seen such techniques as Vitapur’s Prefab Green Homes promoted by Vita Foam which can produce a two-bedroom bungalow in just 15 days for N3.6 million; the Moladi Modular initiative; Mundoscrete Pre-stressed T Beam and Block flooring system developed by Mundostrade Limited, and Tempohousing’s new building technology which produces luxury but affordable homes from containers at prices beginning from N3 million.
There are also many others but lack of encouragement from government coupled with hostile business environment would not allow such innovations to thrive, blossom and be the solution to the housing deficit which requires about 10 times the country’s annual budget to bridge.
As it is today, Nigeria is the only country, at least, in Africa, without a housing policy and a functional mortgage system, yet it wants to develop its housing sector.
The NHP initiative which aimed to provide decent and affordable accommodation for every adult Nigerian was perhaps, a follow up to the low cost housing of the Shehu Shagari which was a colossal waste of the tax payers’ money. Most of the houses were built in bushes and forests only accessible to, and habitable by lizards, rats and rodents.
The subsisting public private partnership (PPP) which both federal and state governments flaunt as governance philosophy in housing delivery is a great fallacy in which government is paying lip-service to this all-important sector of the economy.
By simple definition, PPP is an arrangement in housing delivery in which government, in some cases, provides land and the enabling environment such as critical infrastructure and favourable policy instruments that aid the development of housing, while the private sector provides the capital and the technical know-how for affordable housing delivery.
Because government has always failed in keeping its own part of this arrangement, the private sector is having a field day, making housing development a cash-and-carry enterprise, only accessible to, and affordable by the very rich.
At 58 therefore, the driving philosophy in the Nigerian housing system is cash-and-carry, and according to Johnson Chukwuma of Systems and Designs Limited, “because we are a trading and capitalist economy, investors and housing developers are after the rich and projects that make quick returns on investment”.
“If you invest in developing 100 residential housing units, you will struggle to offload them in two years, but if you start a shopping mall of 1,000 square metres, you are likely to sell off at foundation level; and this is the story of housing in Nigeria today,” he explained.
The near-absence of a functional mortgage system in the country in 58 years is one of the major draw-backs to housing system, accounting for a situation where of the 10.7 million housing units in Nigeria, 10 percent of which is self-built, only about 5 percent is in formal mortgage.
An analyst, who did not want to be named, explained that effectively about 95 percent of home equity/savings in residential developments are ‘dead assets’, pointing out that mortgage finance requirement for the country stands at between N20-30 trillion.
The analyst noted that while huge potential exists for growth of both the housing and mortgage sectors of the economy, there are constraints that need to be overcome, listing them as regulatory, financial and operational.
“Ownership and management of land are encumbered by administrative difficulties of issuance of Governor’s Consent; apart from poor land registry practices, compensation for land is based on ‘fair compensation’ and subject to diverse interpretations, and there is absence of an overarching legal and regulatory framework for the housing industry,” the analyst noted.
The commercial segment of this sector which includes retail, hospitality and industrial developments, has been described as a goldmine following its fast-paced growth which has been halted by the just exited economic recession. That segment of the market is now struggling with varying degrees of vacancy rates.
Over all, the Nigerian housing sector has great investment potential, but the failure of government to make the environment enabling for investors is working against its growth. Government seems so apathetic that it takes, most times, foreign interests to draw its attention to the opportunities in the country.
An official of Kingdom Hotel Investments (KHI), owners of Movenpick Hotel and Ambassador Heights Residences in Accra, Ghana, once said “Nigeria is strategic and key part of our consideration for further investment in West Africa. We are definitely looking to invest in Nigeria. Nigeria is a considerable focus to us. We believe in that country and it is just an accident of timing that we are not yet there. But surely, this is something we are looking closely at”.
The retail, hospitality and industrial segments of commercial real estate have been described as goldmine following their fast-paced growth. Nigeria and, indeed, Africa are the flavour of the moment for international investors.
But it should be pointed out that KHI is not yet here, not because the market fundamentals have changed or that the opportunities have ceased to exist, but chiefly because the environment is not inviting. At 58, Nigeria should be thinking about all these and more, importantly, about how to live in a house by housing its citizens.
Chuka Uroko