18 November 2012

Nigeria: Boosting Nigeria's Economy Through Coordinated Housing Development Scheme


As the federal government stepped up efforts at realising its tranformation agenda, analysts are of the opinion that a well-coordinated housing scheme can help to drive the programme through. Writes george okojie.

At a time investors are becoming increasingly global in terms of seeking the most profitable returns on their investments and risk returns, the need to use the housing sector to revamp the economy and guarantee the productivity of the citizenry should be one of the strategic national economic development imperatives.

Housing as an investors' haven even in times of steep economic downturn should be strategically positioned to get the attention of corporations who are desirous for maximizing shareholders' value, while producing world-class returns on its investment with both local and offshore components in their operations.

Over the years, the sector has remained the bedrock of the economy of developed nations. In more advanced economies like Britain , United States of America, Canada, it contributes between 30 to 70 percent of the Gross Domestic Product(GDP).

Informed sources say Phdholders are presently scrambling for truck drivers' jobs in Blue-chip organizations like Dangote Group of Companies because the enormous potentials inherent in the housing sector have been neglected.

This is because the sector has the potential to generate employment opportunity, increase productivity, raise standards of living and alleviate poverty thereby reducing the increasing level of crime rates, insurrection, militancy, terrorism among other sundry social maladies rocking the country.

This is because construction of housing units requires the services of architects, engineers, draughtsmen, bricklayers, tillers, plumbers, iron benders, painters, carpenters , block moulders and other vendors.

More so, empirical evidence has shown that the construction of a one-bedroom bungalow requires the services of 50 persons, and for a two- bedroom bungalow 76 different professionals.

To this end, observers conclude that 1000 housing units of two - bedroom bungalow would create 76,000 jobs. If this is replicated annually in each of the 36 states of the federation and the FCT, a total of 2,812,000 jobs would be created on annual basis.

It is based on these postulations that analysts believe that the housing sector has as much, or even greater potential than the oil sector in promoting the rapid growth and development of the economy.

Obviously aware of the pivotal role housing development play in the development of a nation's economy, the Minister of Housing, Ms. Amal Pepple said under the transformation agenda and Vision 20: 2020, the provision of accessible and affordable housing have been carefully tailored by the government to ensure the well-being of the citizenry and ultimatelyrevamp the economy.

The minister, whose policy impact is gradually manifesting said emphasis was currently on the development of enabling sector policies to achieve the desired objectives.

According to her, the goal of the National Urban Development Policy, NUPD, is to promote a dynamic system of urban settlements, which foster sustainable economic growth, promote efficient urban and regional planning and development as well as ensures improved standard of living and well being of Nigerians.

To realize these fully in the sector, she explained that the ministry was partnering with Messrs Cyrus Project Nigeria Limited, consortium of Nigerians in the Diaspora to build unity villages in the country, adding that they are expected to build 10,000 of such in each of the six geo-political zones.

According to her," Under this agreement, the ministry is funding the pilot scheme for the provision of infrastructure in Lafia, Nassarawa State. In this Phase, 1000 units of socials housing schemes are to be provided in 2012".

She stated further that, " Moreover, extensive discussions have been held with various development partners for the delivery of 20,000 housing units before the end of 2013, using donor funds that is between US$200-950 Million".

Addressing the key business principles covered in the new rapprochement by the Federal Housing Ministry, Chief Kola Akomolede harped on what he called, "Three monsters that Housing Minister must confront" to achieve the objective of repositioning the sector.

Akomolede a renowned Estate Surveyor and Valuer said though the minister has passion to propel the ministry towards the provision of social housing for Nigerians, the feat will not be easily achieved if the government would not go into direct construction of houses but rather create enabling environment and work with the private sectors to produce affordable housing.

According to him, the stand of the minister that the government would not be involved in direct construction of houses for low income earners was not progressive. According to him, it was the same policy of the FG in the past 12 years that had not yielded any result as far as affordable housing WAS concerned.

The failure of the policy, he said, was obvious on the basis of the fact that the private sector was only interested in making profit while housing for the low income earner is not a profitable venture.

"The private sector will, therefore, not be interested in such ventures. Or can somebody tell me how many of the private developers of estates in Lagos and Abuja are meant for the low and middle income earners? The government cannot afford to leave affordable housing entirely in the hands of the private sector. Whoever is advising the government to do so is laying the foundation for a housing crisis", he said.

He argued that for the minister to win the battle against high cost of land, she must propose a bill to remove the Land Use Act from the constitution to make it amenable to necessary adjustments as and when due.

"The issue of governor's consent which had been an albatross against the transfer and perfection of title to lands should be immediately addressed among others. Easy access to land is the first step on the way to affordable housing for the masses," he added.

Akomolede pointed out that there was a need for the minister to wage war against high cost of building materials if she must provide affordable houses to teeming low-income Nigerians in need of accommodation.

The erudite scholar posited that, "I have discussed this in one of my earlier articles on the subject. The government can do the followings: Give grants or very low interest loan to cement manufacturers to expand their production capacities; remove import duties on cement manufacturing equipment, and remove excise duties on cement manufactured in the country".

Speaking further, he said, "As an interim measure, allow the importation of cement for the next 12 months at no import duty. This should stop as soon as the local manufacturers have completed their expansion projects. This country can produce enough cement for our consumption and even export to other West African countries. We have the limestone in abundance. All the above should be applicable to all other building materials and not cement alone."

On the high cost of finance, Akomolede urged the minister to propose to the government a way to make finance available at affordable interest rates as obtained in developed countries to both property developers and individuals who want mortgage to buy a house.

According to him, "Interest rates on mortgage is between 3 per cent and 5 per cent in most civilized countries but here in Nigeria, it is between 18 and 24 per cent. By the time property developers add this to their cost of building the houses, the houses cannot be affordable at all. For people who want to buy these houses, it is difficult to meet the monthly or yearly repayment even on a long time basis.

For example, the monthly interest alone for a loan of N5 million is N75,000.00 This does not include capital repayment yet. How many people can afford this in a country where the minimum wage is N18,000 per month? And you can hardly get a house that will cost less than N5m", he queried.

He urged Pepple to set in motion the necessary machinery to re-examine the National Housing Fund (NHF).

"The NHF is a veritable vehicle for the collection of money for mortgage but government lacked the political will to implement it to the letters. Experts must be assembled to re-examine the law and remove areas of conflict in it and recommend how it can be implemented for the benefit of all.

He opined that if the government is asking workers to contribute 2per cent of their monthly incomes to the fund, the government at all levels must be prepared to show good example by contributing 2per cent of its revenue to the fund.

" It can then compel all companies to contribute 2 per cent of their annual profits before tax to the fund. In this way, the fund will grow from year to year and will provide sufficient fund for the mortgage institutions for on-lending to both property developers and individuals who want mortgage to build or buy a house. Over 90 per cent of human activities take place under a roof. After food and clothing, shelter is next in the human scale of needs! Why then does our government treat housing as a non-important sector? This must change." Akomolede said.

The Lagos-based estate surveyor enjoined the minister to let the Federal Government accept housing as its social responsibility to the middle and low income earners and as well make budgetary allocations to the sector the way it does for education, health, agriculture, works, aviation and sports among others.

"After all, housing is as important as all these sectors where the government budgets huge allocations every year with nothing to the housing sector. Over 90 per cent of human activities take place under a roof. After food and clothing, shelter is next in the human scale of needs! Why then does our government treat housing as a non-important sector", he queried?

According to the president of the Nigeria Institute of Building (NIOB), Chucks Omeife, one area that remained untapped in the quest for the nation's economic development in the sector is the area of building materials needed to make a home.

He charged the government to put in place workable policy which will endorse usage of particular alternative building materials.

"I know that Nigerians are men and women of high quality and taste and this has been a bane too. Until the government takes pragmatic action on mass housing as regards alternative building materials, the issue of mass and affordable housing will be difficult to come by".

This is because, according to him, "Some of the materials are available and economically viable, yet because of lack of government's backing, such materials are not patronised. Almost all Nigerians still go for conventional structure".

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