What government can do to make developers build for the poor

In a country where homeownership is about cash and carry as it is in Nigeria, the poor is always a perpetual tenant, sometimes homeless, which shouldn’t be given that shelter is a necessity ranking second in the hierarchy of human needs.

The dream of every adult human being is to have a place they can call their home, but this dream is hardly realised by the poor who cannot afford what estate developers put out to the market.

The answer to the problem of homeownership for the poor is mass housing which, unfortunately, is avoided by investors due to inherent challenges and risks in building for low-income earners.

Apart from high cost of funds relative to return on investment, investors say access to land and non-availability of infrastructure are major disincentives to mass housing.

Jide Awosode, president/CEO, Grant Properties Limited, explains that he does not do mass housing because he is neither a philanthropist nor a government, stressing that the business of mass housing belongs to government.

He adds, however: “If anybody wants me to do mass housing, I will do it on the condition that I must get land free of charge, or at least it must be given to me at a huge concession. Also, I must get title for the land just by asking; that is, once I apply, I am given. Even at that, it must be given to me almost free of charge or at a huge concession.”

From the foregoing, it is clear that mass housing is not attractive to investors and developers alike and, according to analysts, elsewhere what government does in this circumstance is to look out for those things that are unattractive to investors and give incentives for people to do what is ordinarily unattractive.

“The error we make here is that people always think that developers should build low-income houses for people to buy. Not everybody can buy houses but they need shelter; so there should also be consideration for people who can just rent,” Johnson Chukwuma, a structural engineer, told BusinessDay in Lagos.

“Part of what government can do, as it is done in Europe, is to design a programme to attract developers to build certain kind of homes. Government can come up with incentives in the form of tax waivers. When these homes are done, they are rented out to those who cannot buy but can rent, like teachers, the police, etc,” he added.

Chukwuma pointed out that government doesn’t have to build, but should come up with programmes and schemes that will encourage private developers to do so and sell or rent same to low-income earners, advising that these developments could be done in the best part of town, like Ikoyi, as it is done successfully in other economies like New York City.

He affirmed that there are obvious reasons why investors avoid residential developments generally, stressing that there is a risk one has to take because one can hardly achieve reasonable sales in residential buildings.

“To do well in residential development, you actually have to have an aggressive marketing machine. If I, for instance, have to do anything in residential that is going to be of any interest, I will have to do about 200-300 units and the challenge there is that I have to sell all of these units for the project to make sense. And to be able to sell them means I have to work with someone who has a good selling machine and we don’t have anybody like that here,” he said.

By: Chuka Uroko