How budget delay hinders housing delivery, by stakeholders
Seek N500b intervention funds for real estate
Stakholders in the built sector say the delay in passing the 2017 budget which is making uncertain the amount of money to be spent in the industry may impact negatively on housing delivery this year.
The country has between 17million and 18 million housing deficit and will need one million houses yearly to fill the gap. The delay is resulting in the loss of billions of naira in investments as there is no template for planning.
Access to finance remains a major constraint to real estate development, and housing is typically financed through budgetary appropriations.
As a quantitative expression of a financial plan for a defined period of time, the budget, according to the experts, is required to stimulate the economy by pushing money into the system and should not be delayed.
Last year, the Federal Government’s inability to pass the 2016 appropriation bill on time created fiscal uncertainties in the economy, and private sector operators, who are still groaning under huge losses due to the delay, are afraid of suffering again this year
According to the Project Director, Artic Infrastructure, Lookman Oshodi, in a developing economy like Nigeria, where government is the largest spender, the moment there is no official spending on project implementation, it results in cash squeeze which will affect different components of the housing sector.
Oshodi said the delay was also affecting mortgage refinancing which depends largely on government spending and when it is not coming as at when due, will slow down investments in different components of the real estate.
He said the delay was creating price fluctuation because of the uncertainty on the budget implementation since manufacturers depend on government benchmark on oil price and other rates to work out their own budgets. The situation is also causing instability in the prices of building materials and reduction in mortgage flows.
Among the resultant effects, according to Oshodi, is that government’s intention of building 40 blocks of houses through direct construction in each of the 27 states that have made land available may fail since the execution of the programme depends on the availability of funds which is tied to the release of the budget.
For mortgage banker, Arinze Adigwe, determining the impact of the delay in the passage of the budget will require a quantitative analysis which will be a guide for stakeholders as much of what has been known is merely qualitative.
To a private developer and Managing Director of Realty Point, Mr. Debo Adejana, a budget normally stimulates an economy by pushing money into the system, and thereby creating activities in the housing sector as people crave to satisfy their needs.
The delay in the passage of the budget, he said, would cause inactivity as businesses would be waiting for the release of funds that will stimulate the economy.
The Chief Executive Officer of Northcourt Real Estate, Dayo Odunsi, cautioned against further delay in passing the appropriation bill to avoid the devastating effect caused by the last year’s experience.
“Government is clearly the biggest capital spender and investor in infrastructure and real estate; each project it commences provides jobs in the construction, manufacturing, professional services and the built sector. Further delay beyond Q1 2017 would mean a stall in disbursements for capital projects.”
Meanwhile, to ensure the property market contributes to the Gross Domestic Product (GDP), housing corporations have called on the Federal Government and the Central Bank of Nigeria (CBN) to inject a minimum of N500 billion loans as intervention funds into the real estate sector.
If the demand of the Association of Housing Corporations of Nigeria (AHCN) is met, the group expects the sector to contribute about 15 per cent to GDP, customise and cumulate mortgages products as well as affordable housing designs to create and prequalify a minimum of 200 off-takers in each state to pilot affordable housing provision at a single digit to develop the housing sector.
AHCN made the call at a meeting in Kano, where the delegates also identified “inappropriate housing production strategies and affordability consideration” as major reasons for unoccupied housing units in major cities like Abuja and Lagos. They canvassed putting off-takers at the centre of housing delivery.
The meeting bemoaned the dearth of skilled and unskilled labour in the housing sector and resolved to embark on the retraining of personnel, especially those that supervise projects on sites, to drive production of quality houses and mitigate shortage in Nigeria.
The forum observed the lackadaisical attitude of governments to the National Housing Fund (NHF) as opposed to what obtained when the policy was newly introduced and admonished that all outstanding contributions to the fund should be remitted while the statutory provisions of the National Housing Policy should be strictly enforced.
In the statement by AHCN President, Muhammed Baba Adamu and Secretary General, Mr. Olusola Martins, the association identified the non-availability of data bank on real estate and mortgage information management as major challenges affecting the development of mortgage system in Nigeria. Participants resolved to partner Value Chain Project Consultants to create data base for potential home owners.