The growing reliance on joint ventures (JVs) between governments and private developers has undoubtedly helped expand Nigeria’s housing stock, but the model has largely failed to serve low- and middle-income earners. Experts stress that such schemes cannot deliver truly affordable housing unless governments go beyond providing land to offer targeted interventions, including infrastructure subsidies, concessional financing, cheaper land and tax incentives, VICTOR GBONEGUN reports.

Despite the growing number of joint ventures (JVs) between governments and private developers aimed at addressing Nigeria’s housing deficit, concerns are mounting that many of the schemes are failing to meet the needs of low-income earners.

Under such partnerships, governments typically provide land and, in some cases, basic infrastructure, while private developers contribute financing, construction expertise and project management. However, the commercial structures of many joint ventures have made the resulting houses unaffordable for a large proportion of Nigerians.

The major challenge, according to housing stakeholders, is that private developers must recover construction costs and make profits, while governments also seek financial returns from the use of public land. Consequently, houses produced under such arrangements are often priced beyond the reach of low-income households.

The high cost of building materials, infrastructure and financing has further compounded the problem. With cement, steel, fittings and other construction inputs becoming increasingly expensive, developers have limited room to produce houses at prices affordable to low-income workers.

Mortgage access remains another major obstacle. Many low-income earners work in the informal sector or have irregular incomes, making it difficult to meet the requirements of formal mortgage institutions.

Even where mortgages are available, high interest rates and relatively short repayment periods often put homeownership beyond their reach.

Industry experts also expressed concern that houses originally described as affordable are frequently purchased by middle- and high-income earners, investors and speculators, leaving the intended beneficiaries priced out of the market.

Experts argue that government-private joint ventures cannot deliver truly affordable housing unless governments provide more than land. They said public intervention should include infrastructure subsidies, concessional finance, cheaper land, tax incentives and other measures capable of reducing the final cost of housing.

They also called for a clearer definition of affordability and stronger mechanisms for targeting beneficiaries. According to them, housing should be designed around what low-income households can realistically afford rather than what developers can profitably sell. With Nigeria’s housing deficit running into millions of units, the experts said the country must rethink the structure of its public-private housing partnerships.

They maintained that while joint ventures could increase housing supply, the model would continue to favour middle- and upper-income buyers unless affordability is deliberately built into project financing, land allocation, construction and mortgage arrangements.

The Guardian learnt that governments at the federal and state levels, including housing corporations, are increasingly deploying joint venture partnerships for housing provision, raising concerns that the approach could be allowing them to shift away from their social responsibility of providing affordable housing for low-income households.

In many cases, when the projects are completed, the costs are ultimately transferred to buyers through high selling prices. As a result, some JVs appear to be addressing housing supply for those who can afford the products rather than the deeper problem of access to affordable homes for low-income Nigerians.

Findings also show that while some JV schemes have produced positive outcomes in high-end locations such as Lekki and Ikoyi in Lagos, as well as Abuja and Port Harcourt, several other projects have struggled to take off or have stalled because of disagreements among the partners.

Experts said successful JVs require clearly defined agreements that specify the roles and obligations of each partner, project timelines, funding arrangements, risk-sharing mechanisms and profit-distribution formulas. They noted that successful joint venture projects are generally built on transparency, clearly defined responsibilities and aligned objectives among all parties.

For JVs to become a genuine tool for closing Nigeria’s affordability gap, experts said governments must ensure that public land and other incentives are tied to clear affordability targets. Without such safeguards, they warned, the model could continue to expand housing supply without significantly improving access for the Nigerians who need affordable homes most.

The Executive Secretary, Association of Housing Corporations of Nigeria (AHCN), Mr Toye Eniola, said government’s dependence on JVs had weakened affordable housing provision because private developers were primarily focused on recovering investments and maximising profits.

“In most cases, the private developers or companies want to maximise their profits, and the only people who can buy the finished products of the JVs are the high-income earners. The truth is that our government, both at the federal and state levels, is not committed to housing. Housing is a long-term project. It doesn’t bring money on time and serves as a means of hiding some illegally obtained assets,” he alleged.

Eniola said government-backed JV projects were also prone to delays because of disagreements and demands among the parties. Despite the challenges, he acknowledged that JVs remained attractive to developers because access to secure land was critical to housing development.

“The developer who is coming wants to satisfy the government because without the land, they can’t do anything. Even if you have money, where are you going to build? Partnership with the government seems to be the best route because land is a critical issue.

“That is why doing a JV with the government seems attractive. But it is supposed to be the solution for affordable housing for the low- and middle-income groups,” he said.

On why state housing corporations are increasingly turning to JVs instead of social housing, Eniola blamed inadequate government support and limited access to affordable finance. “When you talk about social housing, there must be government involvement to subsidise some of the costs of the housing. In terms of land and infrastructure, government backing is also required before they can secure funds.

“For instance, one of the rules says that before any housing corporation can secure funding, the House of Assembly has to approve. By the time the corporations go through all these processes, there are issues.

“But it is easier for them to discuss with a JV partner. At the end of the day, they pass all those costs on to the buyers, and some of those buyers have the money. They have to recover the costs before they start talking about profit sharing. So, it is a win-win for both JV partners,” he said.

Eniola said the growing reliance on JVs had weakened social housing because affordable housing was no longer commercially attractive. He said Nigeria, with its huge housing deficit, should be producing homes on a much larger scale but was still delivering units too slowly.

He added that developers without access to affordable funding were forced to rely on commercial banks, where credit came at high interest rates. “Going through government avenues like the Federal Mortgage Bank, Family Homes Fund and even the Ministry of Finance Incorporated Real Estate Investment Fund (MREIF), it takes centuries before the funds are released.

“Our mortgage system is not even working. Building social housing can only work when we have a vibrant mortgage system. So, it is a whole lot of challenges in the sector,” he said.

A property developer and Managing Director, Noble Grounds Limited, Mr Olajide Dosunmu, described JVs as a good approach to property development but said the high cost of construction remained a major constraint. He pointed out that several construction stages were heavily dependent on cement, particularly during the carcass stage.

Dosunmu said the high cost of construction had made it difficult for low-income earners to commit enough of their income to mortgage repayments and qualify for JV housing. “A JV partner would rather look for a higher or middle-income environment because of the propensity to sell quickly, recover the cost of construction and make more money in that environment,” he said.

He warned that where JVs were undertaken in low-income communities, some developers could resort to substandard construction to reduce costs. “Due to the cost of construction, the parties involved would try to make their construction affordable in that environment by reducing the standard of housing. But they start to compromise the structural integrity of what they are building, and it becomes a challenge,” he said.

Dosunmu called for stronger government intervention to reduce construction costs, particularly cement prices, and maintain exchange rate stability. He said the rate had become more predictable than in previous years but expressed concern about the rising cost of cement.

“The cost of cement in the last six months has increased from around N9,500 or N10,000 to an average of N13,000 to N14,000 now, even though most of the raw materials used for cement are found locally,” he said.

He noted that although JVs were contributing to housing development, most beneficiaries were high-income earners and Nigerians in the diaspora. “For instance, some people doing JV partnerships will offer opportunities only to people in the diaspora and those in the higher-income class because they don’t want to make a loss. So, it is tougher for people in the low-income class to have access to such opportunities,” he said.

Beyond subsidising land, Dosunmu urged governments to provide infrastructure in areas earmarked for JV housing projects to reduce development costs. “Knowing that when an area is being developed, income taxes are still going to be earned by the government over time from those people, governments can subsidise infrastructure,” he said. “That way, the cost of housing will start getting more affordable to the average person.”

Former Chairman, Lagos branch, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr Rogba Orimalade, said JVs were not limited to residential developments but could also be used for commercial projects.

He argued that without JVs and similar arrangements, Nigeria’s housing situation could have been worse.

“Before, we had a situation where you had a plot of land and were restricted in terms of building or even creating multiple homes. But with JVs, the entry point is such that developers can partner with people that have the land and, based on that, create value,” he said.

However, Orimalade said low-income earners remained largely excluded from the JV housing market because of high land and development costs.

Orimalade urged governments to reduce development charges and regulatory costs to encourage more housing supply. He added that governments should reduce approval and consent charges to the barest minimum and focus more on increasing the volume of housing development.