‘Mass housing industrialisation will crash building cost ’
Nigeria mortgage industry has been identified to be underdeveloped and experts have observed that the sector needs a re-engineering. What can authorities do to make it better?
That is a big question. It involves a revolution and a renewal of the way we do things. That is the reason for the last presidential summit where we bring housing to focus.
The nation will not develop until we fix our mortgage sector. You can define developed and developing countries economy with the ratio of their mortgage in the Gross Domestic Product (GDP).
In America, Britain, Australia and Asia, mortgage contributes between 60 and 70per cent of the GDP but in Nigeria, it is less than 5per cent.
So, when you want to measure civilization, advancement and prosperity of any nation, look at the mortgage content in their GDP.
In Nigeria, mortgage is still low. Immediately, we begin to develop our mortgage system, then we are becoming civilized.
Mortgage means using house to obtain a credit facility, which must collateralized with existing building.
But unfortunately in Nigeria somebody go to the mortgage bank with a survey plan and the certificate of occupancy and they give you mortgage loan, but that is not a mortgage loan but construction loan because mortgage is between 30 and 50 years repayment.
In mortgage, there must be existing structure but we don’t have existing structure because we are just not there.
The FHA as at 2006/2007 has existed for 30 years and for those years, they built just 30,000 houses and majority of the houses are within FESTAC town.
Once you picked a mortgage, you should live in the house that week but you picked a construction loan in Nigeria and they call it mortgage for you and you are still leaving in a rented house, there is no way, you won’t default within three months because you will be paying for rent where you are living and the mortgage at the same time.
In order to have solution to the problem of mortgage, we need to start massive housing constructions of appropriate buildings that people are demanding. What is being built in the country is not what the Nigerian market wants. Basic infrastructure must be in place before mortgage can work.
Nigeria should be preoccupied with how do we do mass housing in the country because housing in Nigeria is expensive. We must crash the cost of building houses to make it affordable. When we make housing affordable, then people will also qualify for mortgage.
Recently, you advocated for enactment of Nigerian Housing Act and government’s active participation in the industry. What would Nigerians benefit from the Act/ such disposition to housing?
The truth is that if we have housing Act, which is an Act, which sees housing as a right, then you can take any government that is not doing it to court as well as any employer violating it.
Few years ago in the western region, you have free choice not to take your child to school but when Late Chief Obafemi Awolowo started Western Education, you have no choice-your child must go to school and it became compulsory that you must have minimum primary education in Nigeria and so it was legislated and once it is legislated, government has to fund it. That is the importance of that Act.
As long as it is still a policy, housing may not be seen as the right of Nigerians. If the Act is legislated and people in government violate the Act, they could be taken to court.
I kept telling people that all over the world, almost 70per cent of what is required for stakeholders in the built environment to operate must be driven by government because according to the law of the land, land is within the purvey of government, and land is a serious legal issue.
Whatever has to do with land must be documented and legislated to enable banks to do mortgages.
The issue of housing depends on government environment. The underlying thing also is that all over the world, not all citizens have access to effective demand, there is always a class of the society that don’t have a say in the market and government has to provide for them.
Fortunately in advance country, that category of people is not more than 30per cent, the 70per cent that are active can care for them because its either they are challenged, disabled or extremely low income and government is taking care of them.
Unfortunately in Nigeria that category of people are more than 70per cent with no one to care for them and that is why we came about the word ‘affordable housing’.
Anyone who is working and has regular income at whatever level, government should give them access to affordable housing.
In Nigeria co-operative housing is still at low ebb. How can authorities really use cooperative housing as a strategy for alleviating housing problems in Nigeria?
Nigeria is such a country that moves a step forward, ten steps backward.
In 2006, this nation made attempt to move one step forward when former President Olusegun Obasanjo appointed us into the board of Federal Housing Authority (FHA) with a mandate to restructure that department, use it as a structure that would reconfigure the entire housing system in the country.
So the mandate was to come up with a template called Cooperative Homeownership Incentive Scheme (CHOICE). It was based on research and creative thinking that cooperatives would drive the housing industry.
In the whole country, almost every Nigerian belongs to one cooperative, association or society.
The concept of cooperative is a group of people coming together to achieve what they couldn’t achieve as an individual and we went round the country and find out that there are thousands of cooperatives across the country that had embarked on the journey of homeownership.
The cooperatives struggled to get land and after about five years, they begin to build.
We were to intervene under the platform of FHA and we did a pilot in Port Harcourt (50 plots), Abuja (280 plots) and linked them to Federal Mortgage Bank of Nigeria.
We did underwriting, valuation, design and layouts and pushed them to FMBN to give them loans as the bank was giving developers loans.
It is cooperative all the way; it has its own advantage, benefit and opportunities, which we saw then.
What led to the initiative is that past cooperative housing schemes like that of Shehu Shagari and Gowon were built without having the people in mind and so the rich ones bought them and it didn’t get to the targeted people.
Like everything in government, there is no sustainability, government come and goes. What a former government started, the new one is not always interested in previous administration’s programme.
Overtime, the Nigerian housing market has been shifting towards very expensive home as a result of high cost of construction. How can Nigeria address its housing crisis?
The only way we can crash cost of building is through industrialization of mass housing. It is simple economics, once you scale up production, industrialize, the price will go down.
Building one units is expensive, once you begin to produce en-mass, create bulk purchasing like Governor Jakande did. Our mothers understand that, they price products in dozens and it goes back to cooperative housing.
Technology should also come in; architects, town planners, artisans, food sellers and others would have work to do.
If you want to build en-masse today, buy tonnes of cements or buy in silos and you mass-produce and price comes down. Use competent people and housing collapse will disappear.
You are the founder of ideal habitat, an organization with a vision to re-orientate Nigerians on the way to live, what do you think are the critical challenges to eliminating slums in nations’ cities?
Slum dwellers are ingenious and smarter than the government. Slum is an ingenious way of a poor man solving urban housing problem.
What makes a place a slum is the absence of government in terms of infrastructure and so the people hasn’t failed, it is the government that has failed because all over the world, it is the government that builds homes.
Anywhere you see slums, you are seeing government of the day getting their report sheets.
Instead of slum dwellers been tortured, they should be commended. Cities reflect the way its houses were financed.
The solution to slum is to put in place a well-structured finance system whereby people and developers could have access to loan, build a first world class communities and people can have access to mortgage to buy.
The housing market is inundated by dearth of data that could aid investors’ decisions. How do you think stakeholders could find a lasting solution to this?
It’s so easy to get data but data is expensive and information is very expensive.
To collect data on the state of housing in Somolu local government of Lagos alone will require putting hundreds of data collectors on a field and somebody has to pay for it.
This is a nation that kept on playing lip service to the issue of data but we can’t move forward without data.
It has done a lot of havoc to the market in the sense that today, investors both local and foreign don’t have information on what to invest in and so it is always trial and error.
For every industrialist, they need market research and so they spend on it but for players in the industry, they don’t do that because they can’t sponsor such research. Government must support us by financing research and researchers.
At this stage of our nation building, government must still lead the way in research; it is research that brings about data.
What investors need is information, as food is to the stomach, so is information is to the brain.
We need research on the numbers of hostels we need to build for students in Lagos, what types of houses are needed in Lekki, Ikoyi, Abuja and others. The nation needs data that is university researcher driven.
Developers and construction experts have expressed dismays on the existence of huge tax regime. What is your position on this and how can government improve the industry?
In 1986, there was a policy for banks that out of N100 for instance that you give as loan, give certain high percentage to some preferred sectors.
It’s not everything that the market should determine; government should push money to some preferred sectors.
There so many things that the government should subsidy, there are basic infrastructure that government still has to put money into which it will reap later.
If any government can get housing right, create jobs and get the over 40per cent of unemployed into the labour market, give them skills, then government can get tax from them.
What are your expectations from the housing industry this year?
Nigeria will come out of the election as a great nation. We want whoever that is coming to power, to get it right and the foundation of it is to get housing right.
Building houses for the country is the solution to social unrest and the problem of the Niger/Delta.
When you look at the origin of Boko Haram, it is homelessness and poverty that are the underlying factors. Your house is your castle and housing is the beginning of citizenship.
Housing is the basis of civilization and it is your land document that qualifies you as citizens in some countries.
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