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Buy Now Pay Later: Why is everyone doing this business?

As at my last count, I realized we have over 50 development companies, trying to market over hundred projects within the Lagos, Ogun and Abuja axis. I stopped counting a long while ago, so you can imagine how much more we would have now.

Until recently, when publication houses increased their advert rates, you would always see different advert publications where you are asked to buy a land then spread the payment over a course of months. Invariably, they are asking you to buy now and pay later.

I am not trying to cast aspersions on this line of business, of course, it is a popular type of business these days, and we are also involved in it. We have a number of projects where people buy and pay in installments. Where my interest lies is to answer vital questions that may arise in the minds of potential investors, customers, or even companies who are considering doing this kind of business. In all sincerity, it is not a business you can term as a ‘Walk in the Park’. This business requires a lot of knowledge and understanding of certain things.

I have stemmed down my thoughts into just five questions which will be answered, and should cater for every confusion arising in this business. This article will be dedicated to answering these questions carefully in series.

The first question is:


Most people are in this business because people usually try to get into a new business that is lucrative. I remember when someone first came up with the idea of sachet water, it suddenly became what every Nigerian longed to go into. Different types of packaged water arose from every nook and cranny of the country, until NAFDAC came to our rescue. Suffice it to say that it was the introduction of pure water that made me realize that there was an organization called NAFDAC in this country.

This packaged water, called ‘Pure Water’ became so much in circulation that at some point we were forced to call it ‘Impure Water’ because we had lost faith in it. At that time, it was possible to buy what is supposedly ‘Pure Water’ and find all sorts of substances that are impure in it, and that greatly endangered the lives of the masses.

Why did this situation arise?

It’s just the simple fact that when a new idea comes in, which is lucrative, everyone wants to be involved. You can easily find a parallel to what we now face in this nation, in terms of statistics in the housing sector.

This is a country with a housing deficit of over 17 million units – meaning that we need over 17 million houses in this country for us to be considered adequately sheltered! This is a country where we have housing ownership prevailing ratio of about 25%. When we talk of housing ownership, we mean those who truly own houses in this country – it is only one out of every four Nigerians who own a house. I dare say that if we look at the United Nations definition of appropriate shelter, the percentage of home owners in Nigeria may drop further below 10%.

In this country, we have lots of individuals who have several houses in different places, and yet there are a lot others who do not have a single room or even a cubicle they can proudly call theirs. Looking at the houses available in this country against the population, we cannot confidently say that even 25% represents the true statistics of those who really own houses in this country. It explains why we have a shortfall of 17 million.

To produce a decent accommodation in this country, it can be said that you will need an average of 3.5million naira. This means that, at 17 million deficit, we will need approximately about 56 trillion naira to deliver proper housing in this country. In other words, apart from what should be delivered yearly which is within seven hundred to a million annually to avoid deficit, this is an industry of 56 trillion naira waiting to be grabbed. A gold mine waiting to be explored.

During the regime of Dr. Goodluck Jonathan, Nigerian Mortgage refinance scheme got about 66,000 applications for homes. They had expected just 10,000 applications. In those applications, statistics showed that about 51% of the applicants wanted to live in Abuja, while 18% chose to live in Lagos. This means that 69% of citizens desire to live in Lagos and Abuja, and it shows why most of these “Buy Now Pay Later” deals are centered on these areas; where the market is for home seekers. Abuja is said to account for 10% of Nigeria’s over 17 million housing deficit.

This situation almost explains why we may end up having the pure water situation, where we will need a regulatory body like NAFDAC to use the hammer. Otherwise, people will soon start buying just anything.

Unfortunately for the real estate sector, there is no regulatory body that can exert the kind of authority NAFDAC has in the food and drugs sector. Beyond government ministries, nothing is being done to regulate actions in the real estate sector. Though we have Real Estate Developers Association of Nigeria (REDAN) of which I am a proud member, it is really not powerful as membership is voluntary. There are figuratively one thousand and one developers out there who aren’t members, and there is no law compelling them to be. So it means that despite what REDAN is doing for its members, some other developers will still be out there independently conducting their business, and putting those who deal with them at risk. This is why most people are in the “Buy Now Pay Later” business.

The good thing is that this situation puts the customer in the driving seat. You have the opportunity to take decisions of your own, and it helps you lay hold of relevant adequate information, just as you are doing right now reading this article. It is also good that the supplier should have adequate information of the business they are into.

The next question will be answered in the next publication of this series. I will be looking in the aspect of TRUST as it affects this business.

Debo Adejana

MD/CEO, Realty Point Limited



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