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FG needs workable plan on housing – Punch

By The Citizen
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In a country witnessing rapid population growth, estimated at 2.8 per cent by the World Bank, and a gaping need for residential homes, the fresh initiative between the Federal Government and a private organisation to construct 15,000 houses appears like a good deal. To a distant observer, the N300 billion deal inked recently by Abuja and BASAP Limited, a firm touted as 'a mass housing developer,' is a bold move. But it is not.

This is a mere ersatz attempt in the face of the excruciating pains an average Nigerian is experiencing in a bid to have a roof over his head. Shelter is one of the three basic needs of man, and studious efforts - not the current scattergun approach on display - are needed to redress the unpalatable housing conundrum in the country.

Signing the deal, Akon Eyakenyi, the Lands, Housing and Urban Development Minister, hailed the project, which is to be completed within 12 months across all the states of the federation. Indeed, there is nothing new here. And, going by the antecedents of government, it will be a feat for the project to be achieved.

A telling instance is the Federal Government's housing estates scheme, which the Shehu Shagari administration (1979-1983) initiated. More than 30 years after, the project is still uncompleted in several parts of the country. So, how is the minister going to pull off this feat, knowing that severe bottlenecks like access to land at the state level and insecurity might conspire to delay the take-off?

In concrete terms, Nigeria has a deficit of 17 million residential homes. President Goodluck Jonathan enunciated the challenge facing Nigeria at the 53rd meeting of the Nigerian Institute of Architects last year when he said that the country needed N56 trillion to fill this gap. He put the cost of each unit at N3.5 million. Of course, without an efficient mortgage system, this sum is out of reach of the Nigerian worker, whose basic pay is N18,000 per month.

Worse, we are experiencing economic turmoil: real income has declined, the finance industry is showing signs of distress, and high interest rates and inflation are hampering the best of well-intentioned efforts. Policy somersaults have made many international investors to flee our rudimentary housing sector.

According to a research conducted by the African Development Bank, 68 per cent of mid-income earners in Nigeria live in rented apartments principally because 'of prohibitive mortgages and building costs.' The average mortgage in Nigeria comes with an interest rate of between 22 and 24 per cent.

The Federal Mortgage Bank of Nigeria, which was established by the Federal Government in 1956, has a short tenor. This is a gross disincentive to prospective homeowners. Many of them who want to build don't have access to land, or are usually driven away by intimidating land speculators. Yet, this class is reckoned to be 23 per cent of the population. The National Housing Fund Act needs to be amended to make it a private sector operation regulated by the government, much like the successful pension sector that was transformed by the 2004 reform.

What to do? Since state governments are vested with the control of land, the Federal Government should not hesitate to have a comprehensive programme that will factor in the 36 component entities and the Federal Capital Territory. The current practice, where applicants wait for 10 years or more to get land to build, needs to be overhauled for a faster, efficient system. Most importantly, all the tiers of government have to shun partisanship and give the country a new, workable housing policy.

A transparent effort should be made by the two tiers of government to enlist the private sector in the construction of affordable housing for Nigerians. The government will play a key part in guaranteeing the loans, as this is critical to bridging the gulf. This is a measured way to drastically reduce the growing prohibitive rates, and make our rates to fall in line with other economies, like the United States, where the government intervenes to help the masses, and tenors can last for up to 15 and 30 years, and as low as 2.5 per cent per annum, sometimes lower.

In addition, the US federal government created some entities - Ginnie Mae, Fanny Mae and Freddie Mac - to promote mortgage lending, construction and home ownership. It is the same in Canada, which has the CMHC, a national housing agency that provides loan insurance, mortgage-backed securities, housing policy and programmes and housing research.

Nigeria's real estate sector is estimated by some experts to be worth N6.43 trillion or 8.01 per cent of the rebased economy, but with affordable mortgages, the value of the sector can climb rapidly to double digits, as obtainable in several economies.

The current price of building materials is unnerving, probably because most of the items like iron rods, roofing sheets, doors, windows and tiles are imported. The government needs to build capacity of industries to produce building materials locally in order to reduce the cost elements that go into building a house.