67% drop in budgetary allocation seen challenging Buhari’s 1m houses promise
President Muhammadu Buhari may be facing a herculean task delivering his party’s (All Progressives Congress) campaign promise of building one million housing units yearly over the next four years, as the 2015 budgetary allocation to Federal Ministry of Lands, Housing and Urban Development is only N1.6 billion, representing 67 percent drop from that of last year.
An analysis of this development shows that the ministry’s capital expenditure has shrunk from N15. 7 billion in 2014 to N1.6 billion this year, reflecting the drop in total capital expenditure from 24 percent to 9 percent of the total budget.
This allocation can only deliver a little over 500 housing units of two-bedroom flat at N3 million per unit and it is likely to thwart the new administration’s housing dream or leave the new president scrambling for alternative source of capital to execute this promise.
Described as ‘Transition Budget’ by Ngozi Okonjo-Iweala, former finance minister, analysts say the 2015 budget is targeted at effectively managing the country’s dwindling revenue in a way that protects the most vulnerable while safely transiting to broader based non-oil sector driven economy.
“I will like to think that Buhari’s promise during the election does not translate into him literally building one million houses with government’s resources, rather he can achieve quite a lot if he creates an enabling environment for private developers to help drive his dream,” Adetokunbo Ajayi, CEO, Propertygate Development and Investment Plc, told BusinessDay in an interview.
Ajayi who described the one million housing units target as ambitious for the incoming administration urged Buhari to channel his effort towards dismantling the bureaucratic land acquisition, titling, and documentation process that have continued to throw spanner in the works of private developers.
“I believe it will be more sensible for the new administration to empower private developers to enable them drive housing rather than embarking on such massive project with its limited resources,” he said.
Nigeria’s 17 million housing deficit, according to the World Bank, will cost about N59.5 trillion to bridge. The sector’s key challenge has always been the dearth of affordable housing which is worsened by the rapid rate of population growth and urbanisation in the country.
Former finance minister was quoted in a report as saying that “Nigeria’s annual production of approximately 100,000 housing units per year as against the required 800,000 units coupled with the lack of a robust mortgage financing system has made Nigeria’s homeownership rate one of the lowest in Africa at 25 percent.”
According to the National Integrated Infrastructure Master Plan (NIIMP), eliminating the 17 million housing deficit will require sustainable provision of one million units annually until 2043, hence, the need for the investment of $300 billion in the sector over the next 30 years.
Stephen Jagun, chairman, Nigerian Institution of Estate Surveyors & Valuers (NIESV), Lagos State chapter, in response to questions from this reporter, affirmed that while the current budget casts doubt over the new president’s housing ambition, he could devise other means to finance the project, such as a supplementary budget.
Jagun noted that the country’s current land system favours the government to do massive housing project, pointing out that the new president would need to take concrete steps in achieving his target such as dismantling the monopoly in the construction-supply value chain.
The APC had at the fourth edition of the Nigeria Political Parties Discussion (NPPD) inter-party debate organised by the Centre for Democracy and Development (CDD) and Open Society Initiative for West Africa (OSIWA) promised to build one million houses yearly if elected, adding that it would review the Land Use Act and provide infrastructures to realise the plan.
ODINAKA MBONU