Housing Deficit: Call for intervention fund | Independent Newspapers Limited
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Housing Deficit: Call for intervention fund

Posted: Apr 16, 2015 at 5:11 am   /   by   /   comments (0)


Nigeria has been grappling with huge housing deficit for the better part of the last century. The turn of the new century, however, has been a story from bad to worst. The country’s housing shortfall has been put between 16 million units and 17 million units. Today, it is ironic that Nigeria with a population of about 170 million people is currently facing a national housing deficit of about 17 million units, and requires a minimum of additional one million housing units per annum to reduce the national deficit in order to avert a housing crisis in the country. In this special report, Sylvester Enoghase, Andrew Airahuobhor, oladunjoye phillip , Emmanuel Okwuke, Abel Orukpe, Bamidele Ogunwusi and Saheed Bakare examines the issues and reactions of Nigerians to the housing deficit.

Many stakeholders have called for the creation of an intervention fund to boost the housing sector. This is because of the grim housing finance situation in the country, as a result of paucity of mortgage market, as well as bureaucratic bottlenecks of government agencies.

The Central Bank of Nigeria (CBN) noted that the statistics obtained from 77 active primary mortgage institutions (PMIs) as at June 30, 2010 showed an aggregate shareholders fund of N54.8 billion, which it said represented less than 0.2 percent of the N30 trillion required to finance the housing deficit at the time.

Given the funding challenges, it was evidently clear that the lack of long term deposits, coupled with low level of capitalization of the primary mortgage banks (PMBs) are key militating factors in the drive to consistently finance long term loans on a sustainable basis, making the need for a liquidity/re-financing facility imperative and paramount.

The Mortgage Banking Association of Nigeria (MBAN), umbrella body mortgage banks in Nigeria, had in a memorandum submitted to the Committee on Finance of the Lagos State House of Assembly, preparatory to the passage of the Lagos mortgage bill, noted that the bill will be ineffective unless the state government creates an Intervention Fund to drive long term mortgage financing.

“Owing to the high population growth, Lagos State needs well over 250,000 new housing units per annum for the next 20 years in order to reduce the current deficit. However, going by the average income of the Lagos State middle-class citizens, this feat cannot be achieved without infusion of Intervention Fund to drive long term mortgage financing. MBAN welcomes the idea of the state government aimed at regulating mortgage and related matters, through the Mortgage and Property Bill 2009.

“However, in the absence of Clear Intervention Funding for Housing Development from the Lagos State government, through the Lagos State House of Assembly (LSHA), perhaps in partnership with the private sector, the bill becomes of no effect,” it stated.

The CBN also disclosed plans to set up a National Housing/Mortgage Intervention Fund, expected to be in the region of N200 billion, as part of efforts to increase access to affordable housing in the country. Deputy Director, Other Financial Institutions Department (OFID), in the apex bank, Mr. Kola Durojaiye, said the proposed housing/mortgage intervention fund would come into effect only after the reforms of the sub-sector.

Also, former Managing Director of Nairobi, Kenya-based Shelter Afrique, Mr. Fortune Ebie, said there is no country in the world which is doing well in housing where the interest rate in housing is not subsidized for a particular group. “You don’t need to ask the capital market to reduce the interest rate; that is not the issue. The prevailing rate of interest in the market, let’s say for borrowing from primary mortgage institutions (PMIs) is 19 percent. What is done elsewhere, and what should be done here is that the state government or the federal government should decide that it wants its citizens to have this money at 9 percent.

“So, the government pays the difference between 9 percent and 19 percent as subsidy. If you want your citizens to be housed, you must develop mechanism which will not affect the operations of the capital market and the open market. So, you must have methodologies that can enable you subsidize the loans for the people,” he said.

Ebie, who was also a former General Manager of Federal Housing Authority (FHA), said the other way the state governments can handle housing challenge is to build them and give them out on owner-occupier basis, saying that was the way the FHA handled the FESTAC Town project. “And the occupier continues to pay ‘rent.’ When you have paid rent, for say 25 years, the house becomes your own. That is another form of mortgage,” he advised.

Most governments both in developed and developing countries adopt a system of affordable housing such that the segments of the income strata classified as low-income groups are protected from the vagaries of the housing market, which often preclude these individuals to have decent housing in wholesome environment due to insufficient finance.

It is with these people in mind that the concept of social housing interchangeably referred to as public housing in other countries was put in place through the provision of housing subsidies by government in order to provide affordable housing for purchase or rental.

For instance, the various social housing subsidies in many countries include: housing investment subsidy (Poland); public aid granted to institutions which build accommodation for low-income (Germany), home improvement grants (Belgium), home ownership loan with concessionary interest rate (Spain), housing benefits (U.K.), zero per cent loan (France), household housing aid (Finland), housing voucher (U.S.A.) tax credits (Kenya), block grants for neighbourhood improvement (Sweden), mortgage-backed securities (Austria) and many other sundry methods of subsidy as applicable in other countries.


Renewed efforts 

The present administration seems also to be committed to bridging the 17 million housing deficit in the country.

Observers noted that President Goodluck Jonathan, through the Ministry of Lands, Housing and Urban Development, under the leadership of Mrs. Akon Eyakenyi, who is currently the minister, have achieved a remarkable feat in housing delivery within the past few years.

The commitment was also reaffirmed at the flag-off of the nationwide mass housing programme for Nigerian workers at the Apo Tafiya Project Site in the Federal Capital Territory (FCT), Abuja.

The project, which is the first phase of the scheme being undertaken in collaboration with the Nigeria Labour Congress (NLC), Trade Union Congress (TUC) and private developers, will ensure that at least 100, 000 housing units are provided in all the states of the federation while 22, 000 will be built in Abuja for Nigerian workers.

Speaking at the occasion, President Jonathan, who called on the labour leaders to work and partner with government for the interest of the workers, assured that his government is committed to bridging the 17 million housing deficit with the aim of giving all Nigerians opportunity to live in decent houses.

He said the present administration, under his leadership, meant well for all Nigerians as it is the belief of his government that “the country belongs to all of us.”

“We all have equal stake in Nigeria. And that is the spirit and that is our belief. So what is painful to the workers is also painful to us,” he said.

The president stressed that within the Marxist of national development, the potential of the housing sector to change lives and engender economic development is too critical for any government to ignore, giving the multiplying effects that the sector can engender and the creation of so many jobs as well as playing a significant role in the country’s GDP.

He commended the NLC and TUC, assuring that the project would be delivered in good time.

“We will continue to build affordable houses for all Nigerians so that within a reasonable period of time, cost of houses will come down and Nigerians will live in decent homes,” President Jonathan stated.

The Minister of Lands, Housing and Urban Development, Mrs. Akon Eyakenyi, enjoined state governments to key into the project, saying that through her ministry and its two parastatals, Federal Mortgage Bank of Nigeria (FMBN) and the Federal Housing Authority (FHA)’s interventions, a total of 43,125 housing units have been added to the national stock from July 2010 to date.

She reaffirmed that the Federal Government would not rest on its oars until it significantly reduce the housing deficit in the country and ensured that all Nigerians are properly housed in properly functioning communities with access to essential infrastructure and services.

“It is in this regard that in early January 2015, Mr. President performed another official ground breaking ceremony of the first batch of 10,000 affordable homes to be provided under a public-private partnership (PPP) housing delivery scheme of the Federal Ministry of Lands, Housing and Urban Development, with support of the Federal Ministry of Finance and other key stakeholders.

“Today’s event is therefore to underscore the fact that Mr. President cares for the welfare and well-being of all Nigerians, particularly the Nigerian workers who are the backbone and the intellectual capital of the nation’s economy,” the minister said.

The FCT Minister, Senator Bala Mohammed, said the right to shelter is an economic, social and cultural right as recognised in many national constitutions and in the Universal Declaration of Human Rights, noting that it is in recognition of this right that the Jonathan-led administration placed high premium on provision of housing for all in its Transformation Agenda.

Mohammed stated that over a period of time, FCT has been dynamic in providing initiatives such as Accelerated Development, Affordable Housing and District Development to address prevailing housing deficit.

On the nationwide workers’ housing scheme, the minister said that FCT administration gave a waiver of about N28 billion on the land premium and about N550 million waiver on building plan approval, noting that his administration gave these waivers to make the houses even more affordable to the workers who are the end beneficiaries.

The Supervising Minister of Labour and Productivity, Barrister Kabir T. Turaki, stressed that the project would significantly reduce the housing deficit in the country and also help to trim down the gap between the rich and the poor.

“The present administration has shown its commitment to the course of workers. The houses will be of high quality, decent and at affordable rent. It will enhance better living condition for Nigerians workers. I congratulate NLC and TUC in partnering with the Federal Government,” Turaki said.

Furthermore, the passion with which the Minister of Lands, Housing and Urban Development, Mrs. Akon Eyakenyi, has talked about her plans to house Nigerians and reduce the country’s 17 million housing deficit is infectious.

She is always quick to flaunt her milestones in the sector, which she claims included reduction in housing deficit, improvement in the quality of houses delivered and increased affordability.

These feats, according to her, have been achieved through the construction of 61, 000 units of houses in the four years of the present administration; the flag off of 100, 000 housing units across the country, including the creation of 23, 000 new housing mortgages; projected four million houses in three years; foreign direct investment and energising the biggest housing development by the private sector in Nigeria.

In trying to reduce the deficit in housing, Mrs. Eyakenyi explained that her ministry encouraged direct funding through the Federal Mortgage Bank of Nigeria (FMBN) and the Federal Housing Authority (FHA). This aspect, it is believed, is where the establishment of the Nigerian Mortgage Refinance Company (NMRC) has a role to play. The NMRC has the responsibility to take charge of refinancing the mortgage institutions to provide affordable housing to Nigerians. The NMRC is said to have offered 23, 000 new mortgages and 10,000 new housing units so far.

Mrs. Eyakenyi said the flag-off of the first 20,000 units out of the 100,000 housing units, which according to her are specifically for workers, was carried out in Apo, Abuja, the Federal Capital Territory (FCT), last year.


PPP to the rescue

Mrs. Eyakenyi said the 10,000 housing units project took off in Abuja at Gwagwalada, and was undertaken by a Signature Company from Dubai. Aside this, she said there are private developers who also come up with housing projects.

She explained that there has been cordial relationship with the World Bank through the Ministry of Finance, noting that the NMRC has received $300million from the World Bank to be repaid in 30 years at zero interest rate. This, she said, was to help the re-inauguration of the mortgage institutions in the country to support the housing sector.

Developers, she said, will be investing about N300 million in the 20, 000 housing units in Apo for the initial take-off of the project, while the ones in Gwagwalada being handled by Signature homes from Dubai, is going to put up about 4,000 housing units with a budget of about $80 million for one developer. The Minister explained that other developers, numbering about 10, will also be contributing 200 housing units.

“We also have other developers about to be mobilised to site and we are processing their documentation; the signing of MoU before they are taken to the site of about 200 hectares of land to ensure we give each developer, depending on their financial strength and what each is interested in delivering, to ensure timely delivery,” she said.