Creating innovative solutions to the housing challenge in Nigeria

What influenced your choice of career?

MY course of study was ultimately influenced by God. I studied Civil Engineering at Yaba College of Technology and Federal University of Technology Akure, and all through my years in school, I was always fascinated about the possibilities Civil Engineering provided in developing functional cities and my key dream was to ultimately build ‘functional cities where everything works’ one day. I guess that naturally drew me into real estate development. I’m however a very versatile person with passion for other areas of business apart from real estate. On the side, I consult for SMEs seeking business growth and expansion amidst other business interests. I’m also working at the moment on starting a social enterprise focused on Leadership Development, Human Capital Resource Mining & Optimization.

Did you entertain any phobias when you wanted to set up CX Homes and Properties Limited? None at all as my dream was always to either start my own business or become a partner in an existing one. When the second option was not looking feasible, I decided to start mine. Right from my NYSC days where I won the inaugural CBN Venture Prize business plan competition on the state level and was second runner-up nationally, I had my business goals clearly set out. So, from day one, even before I started the company, I had my business goals and targets clearly spelt out and I was consciously training myself in advance. Starting a property development company was always a part of the business plan. I didn’t however just jump blindly into the world of entrepreneurship.

I worked for a short while in a real estate company to learn the intricacies of running a real estate firm and consciously moved across 3 different departments outside my core area of expertise which was structural design. I looked stupid to some of my senior engineering colleagues then, who thought I didn’t know what I was doing abandoning Civil Engineering for departments like Client Management, Business Development and Marketing but I knew what I was I doing. I also attended entrepreneurial training programs with Pan Atlantic University (Formerly Pan African University) under the Enterprise Development Centre and School of Media and Communications. All this was while I was still working as a staff. So, in a way I felt kind of prepared to start on my own although in reality you can never be fully prepared for an entrepreneurial journey. That leap of faith that you will make it and succeed is always still needed and required which is trusting in God to make your way prosperous and crown your efforts with results after you have done all you need to do to succeed.

What has been the most challenging experience of running the organization?

My most challenging experience has been securing funding to execute estate project development plans. Real Estate is a capital intensive industry and I started the company in every sense as a small business. While our ultimate goal was to build and develop our own estate projects, in reality I operated more as a construction company with a feel of real estate expertise to it. I executed designed and built residential housing projects for individual clients who could fund the project developments on their own. I then used money made from those small projects to chase our core dream of developing our own estate projects. There was however, a limit to how sustainable that model was giving the changing market dynamics where clients now prefer to buy houses within estate communities and were looking for staggered and long term payment structures to fund the purchase of such houses. So, we had no choice but to consciously move in that direction and that has been my biggest challenge. We have however created and still creating innovative solutions in-house towards solving that challenge. We have also entered into some key business and financing partnerships with some mortgage financial institutions to address the challenge.

What is the CX Homes Real Estate Development Cooperative all about?

CX Homes Real Estate Development Cooperative came into existence as our company’s direct response to solving the funding challenge of executing real estate projects in Nigeria while also systematically solving our housing deficit situation in Nigeria in a very profitable and rewarding manner to both CX Homes as the developing company and members of the cooperative, most of who also double as the beneficiaries of the houses to be built. The whole cooperative idea is built upon the principle of crowd funding for project financing and housing delivery simultaneously. We developed a Home Ownership Program (H.O.P) along with the cooperative idea which would see every member of the programme become a home owner over a maximum of 2 – 5 years paying between N50, 000 – N500, 000 monthly into the home ownership programme to attain a minimum of 20% equity contribution of the house type of their choiceand then move into the completed buildings. Houses would be delivered to members in batches based on the size of their monthly contribution on attaining the mandatory 20% equity. Members who are on the waiting list for houses get to share in the profits made from delivering houses to existing membersin partnership with the company through the cooperative.

Members can choose to be strictly financial members of the programme to earn their bonuses in cash or use their payments and earned cash bonuses in the programme to pay for their own houses. Strictly financial membership starts at a minimum of N50, 000 per annum. We offer between 10%-15% per annum on all contributions into the cooperative directly or the home ownership programme. All contributions and payments into the programme are received, disbursed and managed by the Home Ownership Program Fund Trustee Company, so there’s accountability and transparency to the whole process. We are at the moment further fine-tuning the programme which would afford members who join the opportunity of renting-to–own their own houses from the comfort of their monthly income or using other routes we are developing to own their houses outside monthly contributions.

The improved Home Ownership Programme will also make room for major investors to partner with us on our housing delivery programme while individual land owners can also do land swap deals to own houses under the programme. Our goal under the programme is to deliver at least 10,000 housing units per annum while using the programme as a major job creation vehicle. Interested members can visit our program website at www.hop.com.ng and submit their email addresses to get further information on how to be a part of the programme.

What can government do differently to help the industry?

We need better enabling laws that will allow legitimate ideas to thrive in the real estate industry without undue bottlenecks particularly for SMEs in this industry.Yes, there are companies you can call SMEs in the real estate industry even if they are running projects worth hundreds of millions. The REIT guidelines at the moment are strictly designed for the really big players in the industry and I’m of the opinion that it creates an uneven playing field in the industry. The cost of running a multi-billion naira REIT can actually build entire estates. It took me months of serious legal debates before we could agree on running our home ownership program as a cooperative. Even at that, it still has its inherent limitations which is not allowing for the full expression of the potentials of the program but it’s the best law we have in Nigeria at the moment that can fit our business model. We also need a more robust and deliberate action plan to solve the problem of affordable housing in Nigeria outside the government’s direct involvement in providing houses.

If the government’s approach to solving the housing problem is to just build houses directly, we will never achieve anything significant because they can’t afford it. To solve our deficit problem alone requires about N52.5 trillion at the minimum without even factoring infrastructure costs. As of today, the government is busy trying to raise less than N2 trillion to fund our national budget. That should give you a good picture of how impossible it is for the government alone to solve this problem. There are other areas of the economy begging for their financial attention. Just the same way there was a power sector road map; we need a very robust and aggressive housing sector road map to deliver houses in Nigeria.

I make bold to say that the in-house Home Ownership Program we have created in CX Homes if deployed on a national scale with relevant supporting laws to allow the program fully express itself can significantly solve our housing challenge while providing millions of jobs in Nigeria. Imagine how many jobs we can create designing the programme to deliver one million housing units per annum with all the necessary legal, business and operational framework in place. That’s about 2-3 new jobs conservatively for every housing unit delivered. We have no reason to be complaining about unemployment in this country if we take the right and deliberate steps as we have the population size to make it happen.

What are the critical factors for business success?

Have a clearly defined vision you believe in and one that you are willing to die for.
Learn, learn and keeping learning. Continuous improvement is a non-negotiable factor. Know your business well and how to run it.
Be creative and innovative. Money is not the only thing you need to make more money. You primarily need creative and innovative ideas.
Be absolutely determined to succeed no matter what you go through or setbacks you experience.
Be ready to share spoils and collaborate. You can’t do it alone

Have a good eye for key relationships and maintain them. Good Relationships are everything in the world of business.
Be a person of Integrity even when you are wrong. Don’t be afraid to admit you were wrong or that you made mistakes but be willing to show the required commitment to make amends
Never give up on your dream.

The Real estate is an industry that is significantly influenced by the state of the economy, with a benefit of hindsight, what is your assessment of the industry?

There’s still a lot to be done. Most developers today are focused on the high end of the market. That market segment is usually very profitable but it’s becoming overcrowded and it’s limited in market size. The real market is in the middle income and low-income sector and even in the social housing sector. The future of real estate in this country belongs to the company or companies who can accurately figure out a profitable business model to take advantage of the low to middle-income housing sectors in Nigeria. That is what we are poised to do in CX Homes. Our ultimate goal is to push and disrupt this market positively in such a manner that as long as you have a job or a business that pays you steady income that’s verifiable, you can become a home owner without having millions of naira saved or stashed up somewhere.

Amidst the challenges in the sector, people believe there are still opportunities for investors, where could these opportunities be found? The Housing Sector is still largely untapped and grossly under-served. Our housing deficit is estimated at about 15m housing units and in addition to that, we have a growing housing demand of between 2.59m – 7m housing per annum. By 2025, our population is projected to hit the 200m mark and by 2050 we will be the third most populous country just behind India and China and bigger than the United States. The market is so huge that I doubt we can even meet all the needs in my lifetime. Areas such as affordable mass housing using alternative construction technology is still very much a profitable venture, Agricultural Estates are also something investors should be looking into and it forms one of our core areas on the cooperative project. Student Hostels too is a place to invest in right now and for the future.

With the free fall of the oil price, what areas would you suggest as alternative to oil?

The Housing Industry definitely and what I mean is the whole value chain. Producing building materials locally instead of importing things like doors, tiles, sanitary wares etc can be a major income booster for our economy if pursued in a very deliberate manner supported by a very robust housing delivery plan to ensure that demand is continuous. Agricultural Estates too can provide the triple function of sustainable food production, job creation and affordable housing. Our Tourism sector can also be developed to attract tourists to the country. That would require us doing the not-so-regular developments and getting audacious in project conceptualization which will make Nigeria a tourist site. I’m talking about things like world class film villages, resorts, free trade zones etc.

Projections for the organisation:

We just developed a 10-year business road map for our growth and our projections in the next 10 years is that we would have delivered at least 100,000 houses which cuts across the entire housing sector spectrum from low income to high-end developments. We are also looking at evolving the Home Ownership Program to become a full-fledged national housing program if we can convince the government to look in that direction or alternatively, start a building society in form of a mortgage bank.

Driving force:

My driving force is my dream to succeed in life and in the process create a better Nigeria for myself and future generations. That dream/desire drives me tirelessly and it reflects in everything I do. I don’t see myself as a purely business entrepreneur. I prefer to call myself a social entrepreneur because building businesses which solve social problems like unemployment and poverty in a profitable manner is at the very core of my business DNA…I don’t do business purely just to make money. I have to be solving a problem.