After Nigeria’s Gross Domestic Product (GDP) was recently rebased by measuring GDP estimates with a current base year price structure, Nigeria took over from South Africa as the largest economy in the African continent. This can be attributed to significant contribution by various sectors such as the real estate industry, which is estimated to be 8.01 percent and pegged at N6.43 trillion ($40.9 billion) to the country’s GDP.
Although impressive, this figure is still lower than what is obtainable in other countries of the world. After the rebasing process, Dubai, Austria and South Africa are found to be within the same GDP range as Nigeria and statistics show that while the real estate industry contributes 9.10 percent, 6.90 percent and 2.50 percent respectively to these countries, only 2.20 percent is contributed by the real estate sector to the Nigerian economy.
This can be attributed to various factors such as lack of proper housing infrastructure, poor land policy and administration, absence of a well-structured mortgage system, inability to transfer title deeds as a result of the difficulty associated with obtaining a certificate of occupancy, delays in obtaining building permits and the constraints associated with registering properties, all of which have hindered the growth of the sector.
Having a rebased GDP figure is therefore not enough but proffering a comprehensive plan to address these issues is what will promote development. Structuring the real estate sector properly, nullifying the numerous difficulties that currently inflict the industry and ensuring that a flexible, accessible, secure and easy mortgage system is available to meet the huge housing deficit currently experienced in the country is important.
For these issues to be addressed, the private sector and the government must combine their efforts if they are to see the desired results. Beyond just figures, the masses must be beneficiaries of these changes and testify of the impact, and the introduction of the Rent-to-Own Scheme and establishment of the Mortgage Refinance Company (MRC) some time last year might well be a step in the right direction.
To address the huge housing deficit, which is estimated at 17 million units, the MRC plans to sell bonds with the goal of providing lenders with long term financing that will enable them give more mortgage loans to home buyers with as much as 20 years maturities on such loans. This will ensure that 75000 homes are built yearly creating a ripple effect of about 300, 000 jobs thus boosting economic growth.
75, 000 homes in a deficit of 17 million however is like a drop in the ocean. For the sector to realize its full potentials, the private sector must be maximized. Organizations and individuals must be given a reasonable allowance to operate without the many crippling policies and reforms that hinder investment or returns within the industry. Potential investors must also be encouraged through the right incentives.
In conclusion, having a rebased GDP will not just be a mirage or an abstract, existing only in figure and on paper if these issues are looked into and systems and plans are put in place with proper and effective implementation, but it will become tangible and real, improving the lives of ordinary citizens.