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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. 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. - PowerPoint PPT Presentation
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“Repositioning Housing Sector As A Tool For Economic Recovery And Development In
Nigeria”
PROFESSOR T.G NUBIDepartment of Estate ManagementUniversity of Lagos, Akoka, Lagos.
KEYNOTE ADDRESS FOR A 2-DAY NATIONAL WORKSHOP ORGANISED BY THE ASSOCIATION OF HOUSING CORPORATIONS OF NIGERIA, 19 – 21
MAY, 2015, UNDER THE AUSPICES OF ONDO STATE DEVELOPMENT AND PROPERTY CORPORATION
1. Introduction: The importance of housing …Housing and The Economy
Housing is an important contributor to economic growth 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
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
Source: Centre for Affordable Housing Finance in Africa (2014) - http://www.housingfinanceafrica.org/document/housing-finance-in-africa-2014-yearbook/
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 SituationThe 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.
Nigeria’s housing deficit is estimated at over 17 million units It is estimated to be growing at 780,000 units annually It is estimated that N56-60 million is needed to curb the deficit
Millions in the informal sectorOver 200,000 military personnelOver 200,000 teachersOver 250,000 police personnel and civil defence personnelOver 500,000 public servants at state and federal levelsOver 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
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
instruments
5.5% 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
Low Capacity of Real Estate Developers
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
Inability to Tap into Latent
Suppliers 36 State Housing
Corporations Over 700 Local
Governments Thousands of Co-
operative Societies Pension Fund Wealth
Income Low income as major
obstacle 70% of Nigerians earn
below $1 per day Less 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 Markets
High interest rates reflecting risk and source of funds
Absence of long term mortgage finance
Housing delivery models not replicable – projects carried out in silos
Foreclosure laws Lack of institutional depth Affordability 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
Land Assembly Absence of clear property
and security rights
Mandatory Governor’s consent for all land transactions
Inefficient land management system
High cost of land transactions
Qualitative
17 million housing deficit
Quantitative
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
The Federal Government’s Role Affordable Gap finance. Land acquisition at low cost Government intermediation, equity participation, for risk
mitigation Credit support by making credit cheaper and / or more easily
available. Tax concessions Lower transaction cost Quality warranty for houses Cheaper and faster title documents Mortgage related legislation
Housing Corporation’s Role Re-orientation : Living up to the ideals on which they were created
over 50 years ago Restructuring: Internal restructuring to address modern challenges Advocacy: Ensuring government listens and acts on their needs Modern Methods of Construction: Ijora-Badia Case-study Partnerships for Infrastructure Development Land Accounting: How much land was acquired, How much is left? Changes in internal planning policies and standards: Mass housing
construction at higher density., rather than promoting low density standards
Partnerships in construction, maintenance etc. Transparent allocation policy
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