Reducing housing deficits requires a number of essential ingredients to be in place to ensure a well-functioning housing finance system. This means achieving macroeconomic stability, effective legal and regulatory infrastructure, and ensuring appropriate levels of government intervention and support.
In Nigeria with its underdeveloped housing finance systems or systems that only provide access to finance for high-income households, forcing low-income households to self-build over long periods of time, or to settle for inadequate housing that does not comply with planning and building regulations, the need for a change in approach becomes a task that must be seriously addressed.
Economic growth within urban cities across the country is exacerbating the problem, coupled with increased land and construction costs, which make it harder for low-income households to purchase housing via the formal market. This is then amplified by the private sector which only cater for higher income households, thus leaving low-income households to self-construct.
Nigeria is contending with a housing deficit of over between 16-18 million, the World Bank has estimated that the cost of bridging Nigeria’s housing deficit is N59.5 trillion, underlining the vast and untapped investment potential of the country’s real estate sector.
This, is however, not too far from the estimation of the Federal Mortgage Bank of Nigeria which had put it at about N56 trillion to be able to adequately meet the housing needs of Nigerians.
Managing Director of Federal Mortgage Bank of Nigeria (FMBN), Mr. Gimba Ya’u Kumo, said the figure is based on a conservative cost of construction at N3.5million per unit.
“Fundamentally, the nation needs 16 million housing units to bridge the housing deficits in the country, and providing these houses will cost N56 trillion at a conservative cost of N3.5million per unit. This is a colossal amount which cannot be funded only through the NHF, but requires urgent injection of funds from both the government and the private sector. That is why we are as well exploring offshore funding to boost financing for mass housing which the nation urgently needs,” he said.
Experts have however identified the Land Use Act of 1978 which resides ownership of land in state governors, and a cumbersome property registration process as major barriers to housing development and home-ownership, leading to the country’s huge housing deficit.
According to Fortune Ebie, former managing director of the Federal Housing Authority (FHA), until the Act is reviewed or amended, improved housing development will continue to be a pipe-dream.
Two weeks ago, while reconstituting the new executive management board of the FMBN, Mrs. Akon Eyakenyi, Minister of Lands, Housing and Urban Development, noted that the essence of reconstituting the new team of the FMBN was to reinvigorate the Bank and effectively reposition it to meet the present and future challenges.
“This is in view of the bumpy and stormy nature of the economic climate in which only the pro-active, adaptive and innovative organisations will have the absorptive capacity to survive its harsh consequences. In particular, the challenges facing the FMBN and other housing finance and mortgage institutions in Nigeria are real. Indeed, they will not be overcome easily. The good thing, however, is that they are not insurmountable. This is the whole purpose of bringing in fresh minds, hands and intellect to take the FMBN to a new height of glory as the market leader in the housing finance/mortgage sub-sector,” she said.
Eyakenyi stressed that organisations which continue to offer excuses for not delivering on their respective mandates, visions and impacting positively on the society by failing to offer diligent services to their customers have no place in the new Nigeria that is gradually evolving.
“Such organisations are like walking corpses which are actually dead while pretending to be alive. They tend to rely on past activities and achievements which are no longer relevant for the requirements of today’s forward-looking enterprises. As the market share, revenue growth and profitability of such organisations take a downward slide almost to a breaking point, with their faithful customers becoming appalled by their inefficient services, they continue to bask in self-glorification that all is well until they realise, quite unfortunately, that they are gone for good,” she said.
This item appeared originally on Daily Times Nigeria