Why developers cannot provide affordable housing for Nigerians

It is becoming increasingly difficult for Nigeria’s middle and lower income earners to own a home as developers are unable to provide affordable housing owing to the huge infrastructural gaps across the country, experts say.

The experts who spoke during the fourth West Africa Property Investment Summit and Expo held recently in Lagos, said that developers often factor in the cost of infrastructure into the total cost of building a house, making it expensive, as it accounts for 25 percent on the average of total production cost.

“The infrastructural deficit we have is the main reason developers are unable to make housing affordable and easily accessible to a greater size of the population,” said Chii Akporji, executive director, Strategy and Planning, Nigeria Mortgage Refinance Company (NMRC).

“The cost of infrastructure adds approximately 20 to 30 per cent to the total cost of a house in Nigeria. Given the macro-economic environment which they operate and the high cost of interest rates, providing affordable housing becomes very difficult for developers,” Chii said.

She urged the Federal Government to adopt transparent approach in addressing the issue through Public Private Partnerships (PPP).

“There must be a political will to ensure that the PPP works in looking at issues militating against the provision of affordable housing in the country,” she adds.

Also speaking, Andrew Nevin, partner and chief economist, PWC Nigeria said that the lack of structural framework in the country has prevented developers form providing affordable housing to the middle and lower income class.

He stated that the country has a deficit of about 17 million dwellings, noting that developers are willing to provide the housing if the structural framework is provided.

“In Nigeria, there is no additional infrastructure put in place for the rising population growth and lack of maintenance of existing infrastructures puts pressure on the city growth,” Nevin said.

He called for the adoption of technology such as blockchain to address issues of land titles.

“We believe that technology is going to help. With blockchain technology we would be able to address disputes on land ownership and then investments will come in and the mortgage will be reduced,” he said.

Bolaji Edu, chief executive officer, Broll Property Group Nigeria would not make much of a progress in attracting investors into the sector if there is no clear perspective on providing the frameworks.

“Unless there is a clear perspective on frameworks, Nigeria would not really make progress attracting investment in the sector,” Edu said.

“Provision and maintenance of infrastructures is a significant drain on the resources developers put into the market,” he added.

Josephine Okojie