“Housing for all in the year 2000”. This was the slogan introduced by General Babangida’s government in which they professed that by the 2000 there will be adequate housing available for every Nigeria. It was indeed a laudable objective considering that Nigerians were (and are still) grossly under-housed.
It was a programme that was meant to ease the housing problems of the Nigeria population by the year 2000 that magical year that began to hold some kind of Arabian nights fascination. It was generally assumed that in the year 2000 Nigeria would be a dreamland where everything would work i.e. electricity, water supply, roads, education etc.
What really went wrong, we might be forced to ask? It will be indeed a worthwhile exercise to look back in retrospect and proffer possible reasons why this laudable plan in terms of housing was not met by the government. The answers will help in planning for the future.
The first possible reason, was the poor articulation of the goal of achieving housing for all in the year 2000? It must be said that no where in the world has the government been able to house 100% of its citizens. It is done in conjunction with the private sector with well-laid out action plans. No government in the world can house its citizens 100% because of the huge strain it will pose to its resources.
Following on the heels of improper articulation of the objection was the lack of focus. Where exactly did the government want to house? Was it to be low-income group, the middle income, the upper middle income or the high-income group? As at today nobody can be precise as to the answer to that question. The government could never have succeeded in housing everybody from the low-income group to the high-income group.
Thirdly, there were no clear policies for its achievement as well as the necessary legislation to back up same. There were legislations like the Mortgage Finance Decree No. 53, National Housing Fund, etc. They were never fully implemented and where they were, it was poorly done.
As the country moves into the new millennium, there are a number of issues that must be tackled to make the housing of the masses on easy one.
To start with and most critical of all is the need for the government to fund a proper census of the various types of accommodation currently available nationwide. Following this, a population census should also be undertaken with a proper stratification of the various age groups and their numbers. With these in hand, it will then be simple to undertake a property analysis of the housing needs of the populace. How many school leaves do we have? What kind of accommodation is needed for them? The logic there is that a fresh school leaver is out to start life and so may only need a flatlet or one bedroom flat. It also follows that when the 25 – 35 years age bracket is taken, this is the age where most people are getting married and as such at this period of their life, they would be requiring 2 – 3 bedroom flats.
With these statistics, the government and other property developers will be able to plan developments vis-à-vis what is available and what is needed. Projection even for the housing needs of the future will then be easy to forecast.
Following this, the various state governments can initiate housing developments projects in their respective local governments within their states. This option is most advisable for states where housing accommodation is most acute i.e., Lagos, Rivers, etc. In each of these local governments, 500 – 1000 units of accommodation, 2 – 3 bedroom flats, 3,4,5 bedroom detached houses will be constructed depending of course on the results of census and what is needed to satisfy the present accommodation needs. These estates will be provided with all the basic infrastructural facilities to make them habitable including security. The road upgraded or rehabilitated to ensure that access and exit is not hindered by excessive traffic hold-ups, which in itself could serve as a disincentive to the effective occupation of the estates.
To ensure that the housing developments are within the reach of the masses, pricing is very important. Housing being one of the basic needs of man, government should not see investments in this sector from the profit motive only. Governments should view the returns more from the positive social impact of the developments. Assuming that indeed housing estates comprising 1000 units of mixed developments are undertaken in a certain local government area, the impact of on the life of the precinct would be tremendous. Apart from the fact that a new catchment area would have opened up, subsidiary and support activities will be introduced. Plumbers, welders, mechanics, artisans of all trades will spring up to provide support services to the residents of the estate. In doing this, employment is generated, income taxes will be paid, tenement and ground rents will be collected resulting in increased revenue to the various authorities.
Pricing must be very realistic and competitive taking into consideration the income levels of the proposed occupiers of these development.
It must be pointed out that what helps and drives real estate development and marketing in any country is a dynamic mortgage financing industry. In Nigeria today, there is really not a mortgage finance industry. Where they exist, their effect has been minimally felt with the few remaining mortgage institutions undertaking almost purely commercial banking activities. This unfortunate situation has been aggravated by the fact that financial institutions operating in Nigeria do not have access to long term funds. Recently, statistics of the United Bank of Africa Plc one of the biggest financial institutions in the country indicated that of its loanable funds less than 5% of it was available beyond 12 months. Most of the funds were liabilities that had 30, 60 and 90 day maturity periods. Property investments have a payback period of sometimes up to 15 years and so matching these funds with real estate developments will be impossible.
Despite the collapse of the mortgage banks in the mid 90’s efforts must be to re-introduce a vibrant system no matter how crude whereby housing acquisition can be eased for prospective purchasers as obtains in the developed countries. In fact, a dynamic mortgage industry is one of the major keys for successfully housing the masses in the year 2000 and beyond.
Despite the collapse of the mortgage banks in the mid 90’s efforts must be made to re-introduce a vibrant system no matter how crude whereby housing acquisition can be eased for prospective purchasers as obtains in the developed countries. In fact, a dynamic mortgage industry is one of the major keys for successfully housing the masses in the year 2000 and beyond.
There is no where in the world where housing of the citizenry is the sole responsibility of the government. Private developers are always involved and this being the case in Nigeria, they should be encouraged. There are many ways to achieve this by removing impediments and bottlenecks to the entrance of these investors into this sector.
The Land Use Decree should be reviewed to make it in consonance with the times. Unless this decree is reviewed the access to land by both government and private developers would continue to be highly hampered.
For example Section 29 states that when land is acquired compensation is paid only for cash crops n the land and if there is a structure(s) then the compensation to be paid is calculated based on the depreciated replacement cost of such a structure. No compensation is paid for the land because Section 1 of the decree has ostensibly vested all the land nationwide in the governments. This in itself is unfair because most communities whose lands are acquired have owned those lands for decades and the land itself has become of their greatest assets. It therefore follows that any attempt to divest them of this land without adequate compensation can only spell trouble.
Coupled with this is the bureaucratic bottleneck and untimely delay in paying compensation for acquired lands, which can take anything from one year to forever.
The lopsided nature of these legislation in favour of the tenants and mortgagors has become a serious disincentive to investment in real estate by private developers. A large number of Nigerians own properties in Europe and the United States, and we are very aware that it is unlikely that a tenant can live in any property without meeting his rental obligation without being evicted from such a property. In Nigeria it is indeed possible for periods upwards of 5 years, and unfortunately this will be done with the full cover of the law. Landlords are not properly protected by this legislation.
In the case of mortgages, we are also all familiar with the endless litigation which mortgagors engage mortgagees in when the latter forecloses on a real estate that has been used to secure a facility which goes bad or becomes non-performing. This is despite the fact that the mortgagee will have a registered and legal interest (mortgage) over the asset. With the connivance of the law, injunctions, endless motions are brought to the courts of law all in a bid to frustrate the financial institutions from realizing its money.
The result of all this is that the banks are not willing to finance real estate transactions nor use real estate to collaterise facilities. They would rather settle for more easily realizable securities i.e. stocks, fixed deposits etc. All these invariable end up acting as a disincentive to private developers, who pay a laudable role in housing the citizens.
Encouragement to private developers by governments could also come by way of tax breaks. or concessions for example the State could come up with legislation that if a developer can show that he has spent W200.000.000.00 within a certain period then certain tax concessions are available to him as an incentive.
Again, the government should ease the access to land for private developers. Theoretically. the process to acquire land for development is by way of an application to the Governor. who will then process same and allocate a plot of land where it is desired or where available. On paper. it is a straightforward easy process but in reality it is a nightmare that could last ad infinitum.
The procedure for land allocation by the government to private developers and individuals should be seriously reviewed with a view to easing land acquisition.
Also to be eased are the huge cost fees and levies, which the government charges developers on real estate transactions. For example in Lagos State where a transaction is concluded, to obtain the governors consent to the sale an individual has to undergo a long process of inspections etc. where all kinds of levies and fees are paid; consent fees, capital gains tax development levies, stamp duties etc. These governments have indeed discovered that this is a money yielding venture and have hung on tenaciously to this process especially in states where land values are quite high, despite the disservice this plays to property development.
What currently obtains in most developments is that the focus is on luxury developments to be completed and sold at high prices far out of the reach of the greater proportion of the masses. Subsequently, these same properties are let out by the owners at exorbitant rents to enable them recover the purchase prices.
It is an opinion that government should focus intensely on the provision of housing for the low and middle income groups. The impact of government would be felt greater at this level, whilst the luxury developments could be left to the private developers, or government acting jointly with them.
Finally it must be agreed that the economic base of the nation is still very narrow. Housing provision is capital intensive and the governments with several other priority projects in view can only allocate so much of its resources to housing development. This implies that foreign investment into this sector must be encouraged. The only way that foreign investment can come in is by providing the enabling environment. This enabling environment will include a stable polity, provision of infrastructural facilities i.e. electricity, water, road etc, safe and secure environment, as well as stable and consistent government policies.
With these in place investors would have no fears about bringing their hard earned income into our economy for good returns.
In conclusion it can be very easily discerned that the challenges of housing the citizens in the new millennium is indeed a huge one. The process should not be one that lip services is paid to. It must be a planned process that will survive from administration to administration if any level of success will be achieved. The foregoing issues raised though not exhaustive will help a great deal if well implemented towards achieving these laudable objectives and making our society an easier on in which to live.