Minister urges new finance strategy for housing
As part of efforts to resolve massive rural-urban drift, the Minister of State, Federal Ministry of Power, Works & Housing; Alhaji Suleiman Hassan Zarma has charged housing stakeholders to adopt new-financing strategies to move the sector forward.
He said budgetary provision; public-private partnership and offshore financing among other approaches, will provide the desired result. In addition, Zarma said recapitalisation of existing housing financing agencies for better performance and blending it with new approaches as well as consideration to affordability and acceptability of the houses being built will go a long way.
The minister stated this at the first session of the 8th global housing finance conference organized by The World Bank Group – IFC. at the World Bank headquarters, Washington, United States of America with the theme; “Breaking the Mold-New Ideas for Financing Affordable Housing”. He said overtime, such finance strategies, have been tested and seen as workable solutions to the adequate housing for the people.
“Private sector funding requires the financing of affordable housing by private institutions such as Banks, Insurance Companies, Pension institutions, housing development companies, philanthropic organizations and off-shore financing and the recapitalisation of existing housing financing agencies for better performance. The personal income of the off-taker is the determinant factor of affordability for him/her. As a Government, we have factored this reality alongside cultural/religious peculiarities in our housing design to ensure acceptability”, he said.
He told the gathering that there are bountiful opportunities for housing development in Nigeria, especially, in the areas of raw materials, manpower, sufficient landmass, a huge and active population that is growing exponentially.
“I therefore invite you to come and invest as our returns on investment are quite alluring. Although, our economy slowed down recently, however, according to the World Bank estimates, our GDP is expected to grow by about 2.5per cent this year and 2.8per cent in 2019 and 2020”.
He lamented that the biggest challenge with investors in the housing sector, especially, those from abroad is their insistence on being granted Sovereign Guarantee for investment stressing that it is not an easy task obtaining Sovereign Guarantee.
According to him, the demand always stalls project negotiations, as government fears it could worsen the nation’s debt profile with its attendant economic and political implications.
“If the housing finance challenge is to be addressed, investors must look beyond sovereign guarantees from developing nations and concentrate on the larger picture using variables such as general investment climate, political stability, ready market, industrial trends and others to gauge the security of their investment”, he stated.
Speaking on efforts to enhance the industry, he disclosed that the government is developing new towns and settlements across the six geopolitical zones of the country while the government with active collaboration of the private sector, would promote finance. He added that there are a lot of ongoing housing programmes aside the National Housing Programme.
“I would like to stress the need to develop mortgage guarantees capable of supporting access to finance for lower income earners as well as development of a housing micro-finance sector that addresses the needs of those still lower down the housing ladder. As a Government, we are looking in the direction of a market-based approach that reaches the poor. Experience has nevertheless shown that if housing developers pool resources together and float a special purpose vehicle (SPV) for the purpose of developing housing estates, the results are always “win-win” for all parties especially the end-users. The disposal cost for such houses are usually more attractive to the low-income earners in view of the effects of economy of scale”.
Hassan said federal government have been able to construct over 50,000 houses across the 36 States of the Federation and the Federal Capital Territory (FCT) through the combine effort of the Ministry, Public Private Partnerships (PPP) initiatives, Federal Mortgage Bank of Nigeria (FMBN), Federal Housing Authority, Federal Government Staff Housing Loan’s Board and Federal Integrated Staff Housing-Program.
On rental housing scheme, he explained to participants that it was discovered that there are several unoccupied houses in the country owing to various reasons including affordability. While the government is considering subsidising the houses for the low and middle-income earners in an agreeable term, which is currently being, worked out. The Real Estate Developers Association of Nigeria (REDAN), he said has embarked on identifying and collating data on such unoccupied houses across major cities in the country, which would be utilized for the rental scheme.
Niche PR facilitated the inclusion of the Minister to speak at this conference. Over 50 Nigerians will attend this programme including the Managing Director Federal Mortgage Bank of Nigeria, the team from Federal Ministry of Power, Works and Housing, Federal Staff Housing Loans Board, Office of the Head of Civil Service of Nigeria among other relevant governmental and non-governmental agencies and the private sector.
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