‘People will always live in houses no matter the situation of the economy’

The slowdown in the Nigerian economy is further widening the gap between housing demand and supply in the country. Declining earnings of individuals has also has also narrowed housing affordability. However, Lafarge Africa Plc believes that no matter the country’s economic circumstances, the citizens will always live in houses. In this interview, LOREN ZANIN, CEO, Lafarge Aggregates and Concretes, speaks on the company’s efforts at making housing affordable as a response to the country’s growing housing deficit. He speaks with CHUKA UROKO. Excerpts

In Nigeria, we have always known Lafarge as a cement manufacturing company, but all of a sudden we started hearing about affordable housing development. What informed the decision to go into housing development?

Housing development is not a sudden decision. We have been into housing for 193 years, but now we are focusing more on what we want to deliver. It is not just in Nigeria, in Malawi too we do affordable housing; in France we also do affordable housing because, even in the developed countries, there is need for low cost housing for the citizens.

For us, affordability means building homes that are accessible to the vast majority of Nigerians. We have a team that build houses that are affordable and will last for a long time and people will be happy to live in. So, housing development, for us, is not new; we are just trying to make it more efficient and deliver more quality units to home seekers.  This year, our target is to build, at least, 3000 homes in Nigeria. Actually we want to go very far; so if we can achieve more than that, we will be very happy.

Delivering 3,000 housing units is no mean job. What measures have you put in place to make that happen?

We have gone into partnerships and a good example of this is the MoU we signed recently with Fortis Microfinace Bank. With this, we are able to reach more home seekers as well as have better spread. Other examples are our partnerships with Shelter Afrique, with Lapo Microfinance Bank which we started from the beginning; we will be able to deliver more with these partnerships.

We look at ways we can take advantage of these partnerships, relationships and in-house strength to make sure that we deliver value and also avoid some risks. Again, the whole country is waiting for the government to do something but there are also a lot going on in the business space; we see projections and try to work as much as possible within them.

The business environment in Nigeria is tough at the moment because the economy is slowing. How are you coping with the challenges?

Some of the challenges are beyond our control but we have to carry on because the future for Nigeria is very bright. There are a lot of oil, gas, agriculture and people. So, the potential is very high and we are positioned to take advantage of that. This year may not be as good but next year we are hoping that things will be much better. We can’t just stop because things are tough.

We dream big and the sky is the limit. We have 17 million housing units deficit; that’s a lot of houses to be built and the population is growing every day. This number was given two or three years ago, now there must be an increase because construction in Nigeria is very slow relative to population growth.

Which state governments in Nigeria are you in talks with for your affordable housing initiative?

We are already working with Ogun State and in talks with Lagos State which I can reveal for now. We are in talks with others too which I cannot reveal now. We are working in the North-East too; there are a lot of displaced people out there, so we are working with them.

Due to the situation of the economy, most developers are shying away from housing development, especially affordable housing. What is your take on this?

People will always live in houses no matter the situation of the economy and currently we are talking to a few developers, especially in Asaba where there are a lot of units to be built. So, I don’t think a lot of developers are running away, rather they are trying to work with the government to get land and build even in these tough times.

Some of these developers say they can’t go into affordable or low-cost housing because the margins are low, but here you are, doing it. How have you been coping?

What we bring in is speed. If you do block homes, you will have a lot of wastage but with our technology we are faster and we have less wastage. So, all that put together reduces the cost of homes and reduces the cost of housing up to 15 to 20 per cent. When you build more, it costs less.

We are not into building homes for individuals; we can, but it is going to be very expensive. There are ways for people to participate anyway. It depends on the individual and how he wants to come in. Where we achieve good cost that we are talking about is where there is economy of scale. However, the cost of mortgage has been a major setback.

Affordable housing has become a popular terminology and people often wonder how ‘affordable’  affordable houses are. What is your model for affordable housing; are you in competition with developers?

We work with some developers so they are not our competitors; they get the land and we provide the technology. That way, we industrialise construction to make it faster, neater and with minimal wastage, which is where we get the affordability. It is also much quicker than the traditional method. Another area we are looking at is making bricks that are durable and will last a long time. So, developers are not our competitors, we work with and for them.

We are targeting low income earners, those at the low end of the pyramid and our target is to build and bring the cost as low as possible. When we work for developers, they do the finishing to the taste of the market they want to sell to. We have two ways of doing that: Through the microfinance scheme and mass housing. So, if there is volume and is required to have low cost, you will find us there.

Affordability is a relative term. What is affordable to Mr A may not be affordable to Mr B. How do you, as a company, draw the line between low cost and affordable housing?

‘Affordable’ is a general term. Yes, it is relative. N50 million housing can be affordable to some people while N2 million can be affordable to others. So, it depends on the home seeker. What we are doing is making homes available; creating access to homeownership and one of the major things is cost, which is why we have gone into this affordable housing initiative to bring costs down through technology.

Even though houses are not available for the base of the pyramid, it is also not available for the middle class. So, affordability is relative.

In your partnership with state governments, what policies have you been confronted with that you would like to see changed?

One of the big issues is the mortgage interest rate for home seekers which is very high. And for certain class of the society, the government should have facility to make it lower. Some people can afford to pay 20 per cent interest rate, for instance, but for some others, it should be much lower. That will be a huge advantage if the government can reduce the cost of mortgage. It is a big factor in housing provision.

In your dealings with the government, to what extent are policy shifts affecting your projects?

Policy summersault is a natural fear in Nigeria because of the past but, in our case, we have not had any troubles. The handover was smooth and the support strong.

In developed cities such as Lagos, what kind of buildings would you recommend?

A lot of people don’t want to live in high-rise buildings; they want a bungalow with some space around them. It is a real dilemma; but people want space and land to put gardens around their houses. But that is a decision for the government to make.