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FG to build one million homes, pushes for 8.38% real estate GDP growth

By Chinedum Uwaegbulam
27 December 2021   |   4:28 am
With an estimated 1.6 billion people (one third of the world’s urban population) expected to face affordable housing challenge by 2025, the Federal Government has launched a five-year National Development Plan...

• Reintroduces site, services scheme with 50,000 plots in each state
• Targets N3.53trn public investment in five years

With an estimated 1.6 billion people (one third of the world’s urban population) expected to face affordable housing challenge by 2025, the Federal Government has launched a five-year National Development Plan (NDP) medium-term blueprint designed to unlock the country’s potential in housing sector of the economy.

To achieve the goals outlined in the housing sector, the estimated public investment is N3.53trn from 2021-2025. This includes an estimated public investment in the urban road development of about N1.68trn.

The plan was formulated against the backdrop of several subsisting development challenges in the country and the need to tackle them within the framework of medium- and long-term plans. These challenges include, low and fragile economic growth, insecurity, weak institutions, insufficient public service delivery, notable infrastructure deficits, climate change and weak social indicators.

Hence, the plan seeks to invest massively in infrastructure, ensure macroeconomic stability, enhance the investment environment, improve on social indicators and living conditions, implement climate change mitigation, adaptation and resilience strategies and others.

It aims to generate 21 million full-time jobs and lift 35 million people out of poverty by 2025; thus, setting the stage for achieving the government’s commitment of lifting 100 million Nigerians out of poverty in 10 years.

According to the NDP blueprint, the government will stimulate construction by building affordable houses and overcoming critical constraints in the housing sector. Between 2017-2020, a substantial number of housing units have been completed while several other units are at various stages of completion.

Specifically, under the five year plan, the government target is to improve access to affordable housing by increasing supply rate from 500,000 to 1,000,000 homes per year; improve linkages between the housing sector and the real estate contribution from 5.7 per cent to 8.38 per cent economy to Gross Domestic Product (GDP); decrease urbanisation rate from 52 per cent to 40 per cent as well as rural-urban migration from 6.5 per cent 5.0 per cent.

In the 195 page document, the Federal Government will establish Urban and Regional Development Boards (URDB) charged with the responsibility for the overall supervision, including monitoring and management of urban development as well as planning across states.

Also, there are plans to develop and implement a national urban development policy that focuses on urban renewal, provision of low/medium income housing, while checking rural to urban migration.

“This will reduce the percentage of the urban residents who live in slums from 69 per cent to 55.2 per cent to make cities and human settlements inclusive, safe, resilient and sustainable by keying into the SDGs.”

It will also ensure an increase of the government’s social housing budget for highly vulnerable persons, including people living with disabilities (PLWDs), low-income earners, among others, with a target of at least 10 per cent reduction in housing deficit within the next five years.

“This will help to phase out slums, substandard housing, and providing comfortable shelter for the homeless through social and affordable housing that meets international standard and aligns with the SDG of creating sustainable cities and communities by working with stakeholders in both the public and private sectors, utilising local capacity and materials.

“The government intends to bridge the gap between housing demand and supply constraints; create rental housing opportunities for at least 500,000 citizens; reduce the demand for multiple years’ rent payment; bring unused and empty houses into use, especially in urban areas; make housing payment affordable by matching it with income receipts; deliver site and service schemes that engender at least 50,000 plots of land in each state of the federation including the FCT for housing development.”

It will also facilitate real estate specific capital formation and funding mechanisms for growing the mortgage finance sector: The government, in partnership with the private sector, will create a market that has multiple long-term funding sources, including full integration with the Nigerian capital market where the value of listed mortgage-backed securities would be at least 20 per cent of the market capitalisation of equities; establish a robust mortgage market that provides access to housing finance to a minimum of 20 per cent of Nigerians in all social classes in urban centres for the purpose of owning their own houses; integrate housing financial products into the Nigerian capital market to facilitate access to homeownership for millions of Nigerians and build up demand for housing; create long term mortgage financing by developing financial tools for buyers and put in place financial instruments to boost the supply of housing; and expand financing options from commercial banks, insurance companies and pension funds through incentives, tax breaks and guarantees.

There will be proper coordination and collaboration of the Federal Mortgage Bank, the Primary Mortgage Banks of Nigeria, Family Homes Funds and other private real estate firms through a well thought out framework focussing on the peculiar case of Nigeria.

Similarly, the plan include to develop local content and know-how for building construction and technology and materials sub-sector: “The government will promote and increase the use of local building materials to achieve a target of 75 per cent of building components through the creation of an investment climate that engenders building manufacturing investment; promote and increase the use of alternative building materials and new technologies in housing delivery through incisive research and development and execution of pilot projects in each state of the federation and the FCT; apply building materials focused research and development by way of pilot housing schemes built majorly from alternative locally produced materials and new technology; Incentivise and adopt low-cost housing construction technologies and innovative affordable housing delivery methods.

There will be an introduction of a data-driven system to map and digitalise land registries to improve accountability and transparency across the sector. Moreover, the government will incentivise housing start-up development through innovation hubs and accelerator programmes.

The government plans to develop an effective land management system to provide transparency and ease the administrative burden of the land administration process: “The comprehensive system will include policies and implement legislation that will reform land administration, title acquisition, registration, and transferability to establish clear property rights.

“The government will foster collaboration across the manufacturing and construction sectors in partnership with private sector institutions to identify skill gaps and competencies needed to support the housing sector. The government will develop and upgrade existing vocational centres under its control to support workmanship and artisanal skills needed in construction. These initiatives will ensure the availability of the human resources needed to deliver on ambitious mass housing construction targets.”