DFIs out to assist developers bridge Nigeria’s housing deficit

Encouraged by  Nigeria’s  fat  Gross Domestic Product (GDP) size,  growing population, rising urbanization  and a stable demand for mid-income housing, Development Finance Institutions (DFIs) such as Shelter Afrique and Agence Francaise De Development (AFD), are showing  interest in Nigeria’s  real estate market with a view to assisting developers to bridge the country’s  housing deficit.

DFIs are alternative financial institution that play crucial role in providing credit in the form of higher risk loans, equity positions and risk guarantee instruments to private sector investments in developing countries.

The aid by the DFIs which would range from long term loans to equity contribution for project execution, is expected to give succor to real estate providers who are financially constrained in delivering medium and low income housing schemes.

Delivering his address at a recent roundtable discussion hosted by Shelter Afrique, Hassan Usman, chief executive officer, ASO Savings and Loans Plc, highlighted the numerous crucial roles DFIs can play in subduing the current financial challenges faced by real estate developers.

“The active participation of DFIs in real estate funding can significantly infuse standardization into the real estate market and also deepen the financial market more by providing long term funding to institutions,” Usman said, adding that DFIs can also champion engagement with the government  towards formulating real estate finance friendly policies that would consequently help introduce best practice into the market.

According to him, the slow adoption of sophisticated real estate financing instrument has continued to hinder the housing sector from growing, adding that the absence of non-government long term debt market inhibits developers from raising capital from such market.

Hugo Pierrel, deputy country director, Agence Francaise de Development (AFD), in his remarks submitted that one of the effective ways for developers to contribute to the Nigerian housing sector is by working with relevant partners such as Shelter Afrique on designing mass affordable housing projects.

Pierrel also noted that considering the encouraging progress and the ongoing initiatives at federal  and state levels, there is a need to promote urban planning, finance basic infrastructure and land servicing in order to develop balanced  Public Private Partnership (PPP) approach for affordable housing.

Oumar Diop, Shelter Afrique’s resident regional representative, recalled that the Pan-African company with specialty for habitat and housing in Africa has an equivalent of $200 million put aside just to support the real estate market in Nigeria.

According to him, the international housing finance and development intuition will also be floating a bond in the market by the second quarter of 2015, saying, “we believe that with the local currency in hand, we are really going to impact on Nigeria’s real estate market as we have always wanted to do.”

ODINAKA MBONU