Anchoring welfare on housing for all (2)
FOR these reasons, deferring to the private sector for affordable housing for the low and middle income is untidy. It is only a way of government abdicating its duty of providing decent accommodation for its citizens as recommended by the constitution.
There are three monsters the President-elect must confront in the area of housing. These are: i. High cost of acquisition of land ii. High cost of building materials and iii. High cost of finance.
First, he must start the war against high cost of land (WAHCOL) by proposing a bill to remove the Land Use Act from the constitution to make it amenable to necessary amendments as and when due. The issue of governor’s consent on transfer and perfection of title to land should be immediately addressed, among others.
Easy access to land is the first step on the way to affordable housing for the masses. The second is the war against high cost of building materials (WAHCOBM). With the current price regime of major building materials, there is no way affordable housing can be packaged.
Cement, which is a major component in our building system, is about N2,000 per 50kg bag or more depending on your location! Government must look for ways on how to bring down the cost of cement and all other building materials.
The following can be helpful: i. Give grants or very low interest loan to cement manufacturers to expand their production capacities. ii. Removing import duties on cement manufacturing equipment.
This was done for GSM equipment! iii. Remove excise duties on cement manufactured in the country. iv. As an interim measure, allow the importation of cement for the next two years at no import duty – to crash the price.
This should stop as soon as the local manufacturers have completed their expansion projects. v. All the above should be applicable to all other building materials, not cement alone.
The third war is the war against high cost of finance (WAHCOF). This war is on two fronts. Government must find a way to make finance available at affordable interest rates as it obtains in developed countries to both property developers and individuals who want mortgage to buy a house.
Interest rates on mortgage are between three and five per cent in most civilized countries, but here in Nigeria, it is between 18% and 24%! By the time property developers add this to their cost of production, the houses cannot be affordable at all.
For people who want to buy these houses, it is difficult to meet the monthly or yearly repayment even on a long-term basis. For example, the monthly interest alone for a loan of five million naira (N5,000,000) at 18% per annum is N75,000.
This does not include capital repayment yet. How many people can afford this in a country where the minimum wage is N18,000 per month? A review of the National Housing Fund (NHF) is necessary.
The NHF is a veritable vehicle for collection of money for mortgage, but government has always lacked the political will to implement it. Experts must be assembled to re-examine the law and remove areas of conflict as well as recommend how it could be implemented for the benefit of all.
For instance, if government is asking workers to contribute 2½% of their monthly income to the Fund, why can’t government at all levels set good example by contributing 2½% of its revenue to the Fund? It can then compel all companies to contribute 2½% of their yearly profits before tax to the Fund.
This way, the Fund would grow from year to year and provide sufficient resources for mortgage institutions to lend to both developers and individuals who want mortgage.
Finally, the Federal Government must accept housing as its social responsibility, especially to the middle and low income cadres and therefore, make budgetary allocations to the sector as in education, health, agriculture, works, aviation, sports, etc. The expected change should start with provision of housing for all as a key item on the agenda. •Concluded. •Chief Akomolede is Vice President, International Real Estate Federation (FIABCI), Africa Chapter.