The Federal Government may have found an answer to the housing problem. It is considering the Public-Private Partnership (PPP) model on the provision of affordable housing. OLUGBENGA ADANIKIN reports that the government is eyeing pension funds, dormant bank assets and unclaimed dividends to fund the sector.
Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.”
The above is the acceptable minimum according Article 25 (1) of the Universal Declaration of Human Rights by the United Nations (UN).
Nigeria, being a signatory to the declaration, recognizes housing as a basic right but the country has not been able to meet the housing needs of the citizenry. Uncomfortable with the situation, the President Muhammadu Bughari administration is leaving no stone unturned and it has taken the provision of affordable housing as a challenge.
Some of the issues the government has to contend with are: access to land for sustainable and affordable housing delivery; access to capital market to finance the provision of housing units; granting of concessions and incentives as tools to galvanise the provision of affordable housing and the development of skills and technology.
The Federal Government is giving priority to the housing sector as part of ways of creating job opportunities.
Since his inauguration as Minister of Power, Works & Housing, Mr. Babatunde Fashola, has been trying to adopt a sustainable approach to tackling the nation’s housing challenges to reduce deficit.
He has at different fora, stressed the importance of planning and research. Observers say Fashola is being cautious to guard against the pitfall of the past in which the various national housing policies failed to satisfy the needs of targeted beneficiaries.
According to the minister, about N100 billion would be needed to develop a new housing strategy and that adequate attention must be paid to research and effective planning.
Fashola said: “If we can spend N10 billion in each state and the Federal Capital Territory (FCT) on housing alone every year, subject to the capacity to raise the money and the capacity to utilise the funds, having regards to our current construction methods and the time it takes to complete construction, the ministry intends to change this by research and industrialisation of housing.”
He assured Nigerians of an aggressive intervention to increase housing supply, by undertaking construction of public housing and formulating private sector participation-driven policies that will lead to and ownership of houses.
But available statistics have shown that with an increasing population of about 180 million people, Nigeria has to upscale its efforts at providing cheap and available housing. It is believed that the country has a housing deficit ranging between 17 to 20 million.
Experts, have however, disputed the figure, which they described as unreliable, demanding for an official statistics from the National Bureau of Statistics (NBS) to determine the nation’s exact housing dearth.
The minister acknowledged this fact when he disclosed that the Federal government “was mindful of some figures about the size of housing deficit. Those figures need to be verified and we will undertake a process of scientific assessment to determine the accuracy of that data as well as the actual demand. But what those figures do for us, no matter how inaccurate they are, is that they define our journey for us.”
Stakeholders wondered why the successive administrations had spurned their different proposals to offer a helping hand to actualise it vision.
But the stakeholders may have used the just-concluded summit on affordable housing to convince the government on why everyone in the built industry must be brought on board in fashioning out a people-friendly policy.
The all-inclusive plan involved engagement with German Development Cooperation (GIZ), alongside stakeholders such as Shelter Afrique, Trademore, Federal Mortgage Bank of Nigeria (FMBN), Federal Housing Authority (FHA) and Real Estate Developers Association of Nigeria (REDAN) among others in the housing sector.
The focus of the summit was on the type of housing Nigerians will prefer, taking into cognisance their cultural diversities; the definition of affordability; which cadres of Nigerians actually need government-assisted housing, the starting point and the choice housing.
In search of enduing solutions
According to the minister, solving the summit’s focus would require extensive research and surveys, which he stated had commenced, the outcome of which would fast-track a reduction in the deficit.
The expected policy would awaken the agencies under the ministry to their responsible on the provision of affordable shelter. The FMBN, which, hitherto, failed in its duty sourcing funds from insurance companies, banks into the National Housing Fund (NHF) will be alive to its role of providing affordable housing.
FMBN’ mandate among others is to ensure constant loans’ provision to Nigerians for the purpose of building housing units.
However, the performance of the mortgage banker has been anything but satisfactory. Hence, Federal Government has concluded plans recapitalise the FMBN for better efficiency.
The provision of 40,000 housing units by the Federal Housing Authority (FHA) in 40 years has not been commensurate with Nigeria’s rising population. At the suumiit, stakeholders recommended the possibility of raising a special fund for housing sector just like the Petroleum Trust Development Fund (PTDF) and the Education Trust Fund (ETF), among others.
It is believed that with a dedicated fund for the sector, developers could source finance to build affordable structures for the people.
In his opening remarks at the summit, Fashola said: “We need to maintain the single digit interest rate in mortgage loan even if it requires subsidising for the low income earners; recapitalise the FMBN and enforcement of the NHF contribution as enshrined in the enabling Act; there is need for PENCOM to invest a sizeable part of the pension funds, dormant assets of banks and unclaimed dividends in Primary Mortgage Products (PMDs).
“The need to put in place the appropriate construction financing schemes including funding sources for multilateral schemes; and for stakeholders to join the ministry in liaising with the National Assembly to fast-track the amendment of the relevant laws already submitted such as foreclosure, mortgage and insurance laws.”
Also recommended at the summit were the provision of houses for special members of the public such as People Living With HIV/Aids (PLWHA); the aged, motherless children as well as the less-privileged, who may not have the resources to own a shelter.
As a way out, the minister identified the need to review some of the conventional ways of implementing the national housing policy, informing his audience that the Federal government has collapsed the existing 100 housing models into 12.
According to the minister, the government has a plan to further streamline the 12 models to six to reflect the nation’s cultural diversity and market demand.
The rationale behind this, he said, is not far-fetched from having a coordinated building plan for all developers in the country. They include one-bedroom, two-bedroom, three-bedroom flats, bungalows and condominiums that will represent the ‘Nigerian House’ which responds to our cultural diversity.
Concerns over affordability
Like two inseparable variables ‘affordability’ and ‘housing’ drew stakeholders’ attention at the summit. Should affordability be measured based on low income earners?; How can you make shelter actually affordable?; Considering the rising cost of building materials including tiles, cement, iron among others, can houses really be affordable? Is affordability the same thing as low-cost housing? These and many more were questions that brought the best out of participants at the summit.
Key stakeholders came up with variety of definitions of affordable housing.
To Dr. Joshua Egbagbe, “affordable housing from the off taker-driven perspective, is the home ownership capacity of an average Nigerian citizen: to build, buy, or rent, a cost-effective house; based on spending a total amount, inclusive of all related costs, of not more than one-third of the individual’s take home pay, calculated on an installment (monthly or annual basis), up to the average working age limit of 60 years”.
Another participant, Prof. Layi Egunjobi, said: “Affordable housing is housing that a person or group can pay for with or without government assistance and according to the present and future socio-economic circumstances of the person or group in question.”
Brig. Gen. PMO Reis defined it as “the provision of accessible and subsidised housing solutions on a sustainable basis through end-users driven initiatives”.
Alhaji Kabiru Abdulallahi said described “affordable housing is a house with some incentives, flexibility that allows a citizen own a house without stress”.
The Centre for Affordable Housing and UN-Habitat defined affordable housing as, “housing that is accessible, appropriate, and secure, for the needs of the low and moderate income households, and is priced so that these households are also able to meet their other basic living costs like health, education and feeding. This is usually estimated at about 30 per cent (or one-third) of gross household income.”
Simon Gusah came up with a simpler definition when he stated that “affordable housing depends perhaps on if the Federal Government can provide houses for people within the income bracket of those on Level 10 to 15 and 16 in the public service and those in the private sector such as drivers, farmers, market men and women, artisans and so on.
According to the minister, foreign experts have defined to him affordable housing as, “a 47 m², two-bedroom bungalow with external toilets, to be shared with others, at $5000 in Haiti (N1.4 million at an exchange rate of N280 to the dollar). He asked the participants: “Is this what we should do?
“The other example was to prescribe a mortgage of at least 10 to 15 years, with single digit interest and to ensure that the beneficiary must not spend more than 30 per cent of his income on housing, so that he or she can meet other needs of dependents.”
Stakeholders however agreed that if affordable housing could be defined relatively to reflect the current economic situation and reduce the biting deficit, they might have gotten it right.
But aside from government’s commitment to build for the poor, it is imperative to indigenize the concept ‘affordable housing’ to really address the deficit.
“Our housing policy must be tied to our income, which must be tied to our jobs. It is the way to create the credit that our housing industry desperately needs,” Fashola emphasised.
PPP as the way to go
If the Federal Government must succeed in the area of housing, it must partner the private sector. The Public- Private Partnership (PPP) model has become imperative to attain such feat.
In developed nations, the PPP is a model that has worked and sustainable. Stakeholders were unequivocal that their active involvement will do a lot to reducing the current deficit.
Buying into the PPP idea, the minister said the 4000 workers on the ministry’s payroll would be insufficient to deliver the required homes.
At his maiden news conference, Fashola had unveiled a comprehensive housing plan that will involve the building of 12 flats per block and 480 flats per state and 17,760 flats nationwide. He promised to deliver about 40 blocks of housing units in each state and the FCT with partnership from state governors.
He said: “This will mean at a minimum of 4 doors and 2 windows very conservatively per home; a demand for 71, 040 doors and 35,520 windows nationwide in a year, which we will encourage to be made in Nigeria.
“These figures are only examples and not fixed in definition and they are subject first to budgetary approvals and availability of finance.”
The stakeholders at summit concluded that segregation, stratification, classes of people and their income bracket must be put into consideration in the delivery of affordable housing units.
