‘We need innovative ways of making low-income earners access long-term funds’

In Nigeria, lack of cheap long-term funds is a major cause of the low homeownership level among low-income earners. In this interview, EREJUWA GBADEBO, an architect and real estate consultant, canvasses an innovative way of making long-term funds accessible to low-income earners to enable them build or buy low-income housing. Gbadebo, former CEO, Broll Nigeria, also speaks on retail market in Nigeria, among other issues. He speaks with CHUKA UROKO. Excerpts:

The housing problem

One of the biggest problems we have is lack of data. People still quote 17 million housing units deficit many years after because there is no other data to prove or disprove it. Many houses have been demolished, burnt or new ones built, but no one is taking record of the new houses being built or the ones being lost.

One of the first things the housing industry should do is to start taking stock of what is available – what house-types there are, and what they change hands for. There must be a way of capturing this data so that we can have accurate number that will help us to stop fighting a battle we may have won or will never win.

Lagos State government has just started registering all residents of the state and I believe that is a good step towards getting a dependable data. Until that is finalised, nobody knows how many people that live in the state and so, people will continue to tout figures like 18 million or 22 million people.

The registration will eventually show whether the population of the state is shrinking or growing and go further to show the demographics and spread – how many people live in Ogudu as opposed to Ikeja, Ajegunle, Ikoyi, etc. It is on the basis of this that real estate developers will determine where to focus on. If, for instance, there are 20,000 housing units in Ogudu and there are over 100,000 people living there, it immediately tells developers and investors that opportunity exists for about 80,000 housing units in that location.

The retail sector

Nigeria is a country of traders. We have always had retail trading but formal and international quality retail in the country started with The Palms in Lagos in 2005. There has been a bit of a revolution in this sector. A lot really seems to be happening in this sector but it is still a guess-game. Is Festac corridor, for instance, going to prove to be better than Ikeja, Epe, Ikorodu or Surulere corridor? Because we do not know the data, it is difficult to determine which corridor is better. As far as I know, without data, we cannot move and that is why the market is stagnant.

Barriers to entry into retail market

There are barriers to entry into Nigerian market. Up until 2011, the barrier to entry was trade ban. There are additional barriers which international retailers are beginning to see to be true. These retailers are used to working in environments where you just read your metre every month and you pay your bill. They are not used to paying for diesel, water treatment and other extra costs that make their business model unsustainable.

Again, because they are coming newly into the country, they have to bring in their manager in order to manage it the way it is done outside the country to ensure the same level of service. They do this at the very high cost of expatriate service. If you want to train people here, you find out that our people are hard to train.

An average low-income earner does not understand or has not been made to see the value of, or the pride in, his job no matter the level.

Land title is also a barrier just as there is no infrastructure to move your goods from the ports. When you bring in your goods to the ports, it takes six months to clear them. So, we are not creating the enabling environment for the international retailers to come in.

Those of them like South Africans who have chosen to come by themselves are facing issues. But for having the courage to come by themselves, we need to commend them. The Europeans are coming as franchisors while the Nigerian franchisees bear all the risks and pay all the money.

Woolworths’ exit from Nigeria market

Woolworths, unfortunately, had to pull out in a market where the likes of Shoprite are succeeding, but go and take a look at what they have in stock at Shoprite and you will understand why. The meat and vegetable they sell there are from Nigeria. When they want to stock drinks, the Nigerian Bottling Company supplies to them. You find that they source 60-80 percent of their goods locally.

Now, where are our manufacturing companies for Woolworths to source their goods locally

Eleganza industries used to make flaks for us, but where is Eleganza now? Woolworths cannot compete with made-in-China goods which are a lot cheaper. They came in with the understanding of how retail is done in their home country, South Africa, but this a different business environment.

Perhaps they would have, first of all, come with really low prices so that people would begin to know their brand. Also, they were supposed to have come to a place where they would have paid $20,000 per square metre as rent as opposed to $70,000 per square metre.

They also needed to spend a lot of money marketing their brands in the media or through promos because Nigeria is a very difficult and competitive market.