In the last three decades, the housing deficit in Nigeria has risen to an extremely disturbing level. Available data shows that in 1991, Nigeria’s housing deficit was seven million. It rose to 12 million in 2007, 14 million in 2010, and 20 million units in 2018, and in 2023, Nigeria now has an estimated 28 million housing deficit.
There are real estate experts who say the housing deficit in Nigeria is well over 50million depending on the indices of data collection. Though, these data has not been supported with facts, and the proposed national housing census is expected to lay bare the facts on the actual deficit in the country.
Despite the shortfall, the Federal Government plans to assist vulnerable Nigerians to own houses to bridge the housing gap in Nigeria. The Permanent Secretary, Federal Ministry of Works and Housing, Mahmuda Mamman, said National Housing Scheme Programme by the ministry would assist the vulnerable population of the country in affording a roof over their heads and this would in turn bridge the gaps in the housing sector.
He further explained that the housing ministry intended to go for social housing schemes to provide decent and affordable houses to cater to the housing needs of Nigerians. Like past initiatives of the government, these ideas sound good and the outlook should easily excite Nigerians.
However, professionals in the mortar and bricks business would argue that until real issues in the real estate sector are addressed, the initiative of the government to bridge the housing deficit will fail woefully like other plans in the past. To practically reduce the housing gap in Nigeria, the government must immediately address some fundamental issues such as review of existing land laws.
The Land Use Act, 1978 was enacted originally to energise economic development in Nigeria by ensuring effective and equitable utilisation of land and land resources. It was also to reduce the high cost of land required for industrial estates and mechanised agriculture. However, land management in Nigeria since the enactment of the Act has become more cumbersome and regressive to the process of homeownership for Nigerians.
What the Act has created instead, is a lack of uniformity in the laws governing land-use and ownership in Nigeria. It has also led to uncontrolled speculation in urban land, problems of access to land rights by Nigerians on equal legal basis and fragmentation of rural lands arising from the application of traditional principles of inheritance and social resistance from local non-state actors. Another major problem in the housing sector which can be linked to the Act is inadequate information/data for land use planning and management in Nigeria.
A number of field investigation by experts reveal lack of data on land use and no comprehensive and up to-date plan or map showing land use pattern and structure of ownership in most areas of Nigeria. These are fundamental issues with land laws in Nigeria that must be fixed immediately.
In many states in Nigeria today, getting approved government title for real estate investment has become extremely difficult and frustrating. More troubling is the bureaucracy and bottlenecks around the processes.
Recently, the Lagos State Governor, Mr Babajide Sanwo-Olu, assured the leadership of the Lagos Chamber of Commerce and Industry that his administration will fast-track the approval for the Certificate of Occupancy of the land allocated to the organisation for the construction of trade fair and exhibition centre. Many real estate investors in Lagos will be happy if the Lagos State Governor can fast track their own title applications too.
Real estate investment without proper title documents gets practically stalled. In Lagos and other parts of the country, real estate investors especially those operating in the private sector are sometimes left frustrated from an extremely cumbersome and expensive land title processes.
This must be resolved for any meaningful progress to be achieved in the area of Nigeria’s housing deficit. It is simple: the property registration process in Nigeria needs to be simplified, and digitalised, thereby reducing human participation to the barest minimum so as to eliminate corrupt practices, enhance the government’s credibility, and make it easier for investors and property owners to do the right thing without cutting corners.
The review of the property registration process and introduction of simplified means of registration would make the acquisition of land titles, deeds, and approvals less cumbersome, and contribute to the growth of the housing sector in Nigeria.
Similarly, the number of abandoned real estate projects has continued to rise across the country. It is now a common thing to see developers stop their construction project halfway due to the high cost of building materials. The cost of the average building material has risen by over 100 per cent or more in the last twelve months. Something must be done about this immediately.
The production of building materials locally should be encouraged under the supervision of expert engineers who will ensure that only high-quality materials are used alongside the latest building techniques, to ensure the safety, longevity and quality of the finished product. Mass production of locally manufactured building materials under expert guidance would reduce construction costs, housing costs, and ultimately ease the operation of building and construction companies in building more homes thereby contributing to bridging the housing deficit in Nigeria.
Cement should be the number one target. Promises by local cement manufactures to reduce the price of the product have not materialised. On the flip side, the forex crisis should be looked into. More than 60 per cent of materials used for building construction are imported into the country. The free fall of the Naira to the Dollar has made things worse. It should be fixed.
In many advance societies, real estate financing and homeownership is driven by a vibrant and functional mortgage system. Mortgage is made available and accessible to all irrespective of the income levels. It also ensures that prospective lenders get good repayment tenure and interest rates.
The current interest rate for mortgage loan in Nigeria is between 18 per cent and 25 per cent. That cannot help to bridge the housing gap as most Nigerians cannot access it. The mortgage system in Nigeria needs to be restructured to really meet the needs of those who cannot afford a home, that is, low-income earners. Many Nigerians who are low-salary earners cannot afford the short-term financing provided by mortgage banks, hence the housing deficit in the country.
The National Housing Fund Scheme (NHF) should be reviewed to help low-income salary earners get onto the property ladder. The government should look into proper mortgage refinancing. In June 2013, the Nigeria Mortgage Refinancing Company (NMRC) was established. NMRC is a wholesale secondtier financial institution which refinances portfolios of mortgage and commercial banks rather than originating individual mortgages and will cater for financial institutions rather than individual borrowers. The idea was to activate a vibrant mortgage culture in Nigeria and ensure continuous liquidity for mortgage banks. Much success has not been recorded in this regard and it must be looked into.
Ultimately, the government must see provision of housing for vulnerable Nigerians as a form of social investment and not a means to make money or generate revenue. The models used by the Late Alhaji Lateef Jakande can be reviewed to fit into our current realities. It is unacceptable to see many working class Nigerians finding it difficult to get on the property ladder.
Currently, the average low income earner does not have a space on the property ladder in Nigeria. A middle income earner can only squeeze in. A guaranteed place on the property ladder for low and middle income earners can only come when and if government goes into mass housing initiates driven with the orientation that it is a form of social investment.
Currently, more than 90 per cent of housing units produced in Nigeria are facilitated by the Private Sector. A lot still needs to be done to ensure and support the private sector to do more. Governments at all levels in Nigeria must look for credible private real estate developers to work with. Partnerships that make land and finance available to them at heavily subsidised rates will help them deliver more affordable homes to Nigerians.
Oshundairo is the Chief Executive Officer, Arc-View Investments Limited.
