Meeting Nigeria's 17 Million Housing Deficit
25
MEETING NIGERIA’S 17MILLION HOUSING DEFICIT: AN AGENDA FOR CHANGE PRESENTED BY PROFESSOR. T. G. NUBI Department of Estate Management University of Lagos, Akoka, Lagos. AT THE HOUSING RESEARCHERS/LECTURERS WORKSHOP CENTRE FOR HOUSING STUDIES UNIVERSITY OF LAGOS, AKOKA, LAGOS 20 TH – 21 ST MAY, 2015.
description
The housing deficit in Nigeria is estimated at over 17million and previous approaches to tackling this problem has been anchored on construction of new builds. The limited success achieved with this approach is evidenced by the estimated 70% of Nigeria’s over 173 million people who continue to live in substandard housing. This is a challenge and an opportunity for (changes in) the country’s housing policy. As Nigeria prepares for a change in government and hand-over in its Federal and 36 State governments, it is imperative that a change in approach to housing provision and financing is adopted; which recognizes the realities of the social, economic and demographic structure of the country (such as a predominantly subprime employment sector, prevalence of informal and incremental housing construction mechanism, prevalence of informal land holding practices and lack of credit history records amongst others). This paper makes the case for urban regeneration as a strategy of improving housing supply with limited emphasis on direct new build construction. This could be achieved by creating decent homes from the substandard stock and the release of stocks of uncompleted housing into local markets. - PowerPoint PPT Presentation
Transcript of Meeting Nigeria's 17 Million Housing Deficit
MEETING NIGERIA’S 17MILLION HOUSING DEFICIT: AN AGENDA
FOR CHANGE
PRESENTED BY
PROFESSOR. T. G. NUBIDepartment of Estate ManagementUniversity of Lagos, Akoka, Lagos.
AT THE HOUSING RESEARCHERS/LECTURERS WORKSHOP
CENTRE FOR HOUSING STUDIESUNIVERSITY OF LAGOS, AKOKA, LAGOS
20TH – 21ST MAY, 2015.
1. Introduction: The importance of housing…
Housing and The Economy• Housing is an important contributor to economic growth• a. Construction of new homes (private residential investments)• consumption spending on housing services (13% of USA’s GDP)
– Consumption spending on housing upgrades • Housing finance and related services (mortgage finance, insurance finance, e.t.c)• Housing and construction: a source of mass employment across professional , skilled
and semi-skilled workforce:– India each new housing unit =2 direct and 8 indirect jobs.– South Africa each housing unit =5 direct jobs and 3 indirect jobs
• Housing wealth is synonymous with private wealth • Increase in home-ownership increases investment in homes and the need for housing
related facilities and services• Increase in home-ownership increases demand for public infrastructure like roads,
schools, healthcare, hence greater investment and employment generating opportunities
• Increase in taxes (land use charge, ground rent, tenement rates
2. Qualitative housing problems in developing countries like Nigeria?
3. What are the factors responsible for this state of Affairs in Developing
Countries, Nigeria inclusive?
Low ratio of Mortgages as % of GDP across Africa.
Source: Centre for Affordable Housing Finance in Africa (2014) - http://www.housingfinanceafrica.org/document/housing-finance-in-africa-2014-yearbook/
Problems across the housing development value chain
Cost of registering property across Africa
Source: Centre for Affordable Housing Finance in Africa (2014) - http://www.housingfinanceafrica.org/document/housing-finance-in-africa-2014-yearbook/
4. The Nigerian Situation
The Housing Need The problem of housing has become an every day discussion in all quarters of
the public and private services of the developing countries of Africa. It has become increasingly glaring that most of the urban population live in dehumanising housing environment while those that haveaccess to average housing do so at abnormal cost.
Rent in major cities of Nigeria is about 60% of an average workers disposable income. This is far higher than the 20-30% recommended by United Nations.
With an estimated population of 170 million as quoted,Nigeria needs to produce 720,000 housing units per annum based on an estimate of 10 dwelling units a year per 1,000 of population. This is a very big challenge to the building industry.
Despite Federal Government access to factors of housing production, the country could at best expect 4.2% of the annual requirement from her. Substantial contribution is expected from other public and private sectors.
17
Housing in Nigeria
estimated to be 2.3 per 1000
inhabitants
Absence of
significant social housing initiative
sAbsence of new town
development
initiatives for several decades
More than
seven cities with
populations above 1 million
Absence of real
estate backed capital market
instruments5.5% rate
of urban population
growth, twice the national
population growth rate of 2.9%.
Estimated
housing deficit of
16 -20 million houses
Over 70% of the
population lacks decent quality/ urban
life
N12-20 trillion required to
finance housing deficit
Mass Housing in Nigeria…Challenges
Millions in the informal sector
Over 200,000 military personnel
Over 200,000 teachers
Over 250,000 police personnel and civil defence personnel
Over 500,000 public servants at state and federal levels
Over 500,000 students
The National Housing Policy of 1991, the Federal Government set a target to deliver 8 million houses by the year 2000 and to deliver at least 700,000 houses per annum
Government White Paper of 2002 recommended “the implementation of a program of constructing 40,000 housing units per annum nation-wide with at least 1,000 units in each state”
The imperative is how to deliver AFFORDABLE HOUSING on a sustainable and UNPRECEDENTED SCALE.
The Mass Housing Need Indicators
Low financial capacity to carry out mass development : no real estate developer has capacity to produce more than 1000 houses per annum
Weak Corporate Capacity: Most are registered as sole proprietorship and partnerships
Experiencing deep macro-economic induced challenges
Enduring significant challenges across the real estate development value chain
Low Capacity of Real Estate Developers
36 State Housing CorporationsOver 700 Local Governments Thousands of Co-operative SocietiesPension Fund Wealth
Inability to Tap into Latent Suppliers
Income
Low income as major obstacle70% of Nigerians earn below $1 per dayLess than 10% are gainfully employed.About 70% of Government workers between
Grade level 1-7 with earning less than N50,000 per month
Price of a simple 2 bedroom flat with minimum finishing is about N2.5.
Depth of Financial MarketsHigh interest rates reflecting risk and source of fundsAbsence of long term mortgage financeHousing delivery models not replicable – projects
carried out in silosForeclosure lawsLack of institutional depthAffordability gap between cost of houses and income
of end users
Housing Delivery Technique
• Acute shortage of housing stock• Inadequate scale of delivery• Over 80% of houses built by individuals• Absence of quality assurance framework• Fragmented industry• Artisanal construction• Absence of community management to preserve asset
value
Absence of clear property and security rights
Mandatory Governor’s consent for all land transactions
Inefficient land management system
High cost of land transactions
Land Assembly
5. A model for effective housing delivery in the next dispensation of our governance using housing sector as tool of economic recovery and development.
A Policy Proposal…..• A multiple approach to housing provision in Nigeria• Mass housing supply could be on regeneration rather than
new build• Recognizes the various stakeholders needed to deliver this
mandate• Recognizes that housing delivery at this scale must be
tailored towards the effective demand of the Country’s various income classes and economic groups
• Current activities of housing delivery agencies in the Country need to be integrated into a holistic delivery framework.
“Regeneration Programmes, home completion loan services shall be the fulcrum of government’s policy for releasing uncompleted housing Stock to the market, while the private sector would be enabled to provide accessible housing solutions to the general populace.”
Slum improvement programs
Home Completion loans
New Builds
Strategies Key workers Defense sector Public sector
employees Private sector
workers Informal sector Special
groups: students, widows&rural dwellers
Internally displaced people
Target Groups Cooperative
housing development scheme
State Housing Corporations
Local Government Housing
Social Housing Programme
PPPs
Delivery Models
National Housing Fund
Cooperative Home Loans
Prime Property development
Microfinance Industry
Government Revolving Fund
Concessionary Funding
Private Sector
Funding
FUNDING MODEL
End Users e.g.
Cooperatives
FMBN, PMI & AHFC
Development Agent
Housing Stock
Securitisation
• Capital markets• Revenue from sale of Federal
Government landed property• Redevelopment of Federal
Government prime property revenue
• N25 billion Government seed fund investment
Housing Development Fund
Wh
ole
sale
R
ep
aym
en
ts
Loan Repayment
Mortgage Loan
Construction Finance
Construction Finance
Flow of FundsFlow of Houses
Legend
Funding Instrument
Affordability Gap Finance
ANNEX H TOFHA/EC/HMDATED AUGUST 2007
H-1
