Why cooperative housing is failing to reduce deficits in Nigeria

Despite enormous potential to cushion the effect of the nation’s housing shortfall, critical issues associated with cooperative housing have limited the growth in the country.

The concept of cooperative housing enables people to collectively pool their limited resources together and provide their housing needs that they probably cannot afford on their own.

It also ensures that people become investors in housing projects due to their contributions even though they may or may not live in such houses. Additionally, housing may be provided solely for investment purposes, thus a kind of crowd funding from which returns can be achieved.

Findings show that many cooperatives in government’s parastatals like Nigeria Telecommunication Limited (NITEL), NEPA now PHCN, educational institutions and some private organizations had in time past acquired land for housing development purposes, but could not go beyond such stage due to peculiar difficulties associated with the process.

Investigation revealed that the effectiveness of cooperative housing is hampered by the difficulties in accessing land, and lack of professional coordination among operators.

Experts, who spoke with The Guardian, explained that the absence of enabling legislation for the formation as well as operation of housing cooperatives has limited its influence in reducing housing deficits put at over 22 million.

The Managing Director, Nigeria Integrated Social Housing (NISH) Affordable Housing Limited, Dr. Yemi Adelakun, said the most elusive factor inhibiting delivery of housing as a whole in Nigeria is finance.

He noted that housing cooperatives in other countries such as Kenya play the role of developers, financiers, guarantors, bankers, asset aggregators and managers who are able to attract domestic and international donor and equity funds due to the volume of savings from members. If the model is well designed, he stated, the benefits will include social capital formation, collective bargaining, financial inclusiveness, cost-effectiveness, affordability and security of tenure.

According to him, for sustainability of cooperative housing, off-takers, financing must be at a single digit interest rate, “if we are to achieve sustainable delivery of affordable cooperative housing,”  he said.

He stated that there is need for off-takers guarantees to eliminate the sad experience of some off-takers who made payments to developers and were unable to either get their houses or retrieve their payments.

Adelakun observed that cooperative housing, if well designed, would facilitate procurement of bankable off-takers that are required to attract to Nigeria global construction companies with proprietary technologies and finance for large scale, speedy and cost effective delivery of affordable housing.

He said: “We need finance to buy land, technologies, building materials, infrastructure and pay workers and professionals. We also need finance to buy or rent completed houses. In Nigeria, finance is in short supply and very costly. We need both mortgage finance.

“The approach so far is to provide construction finance without making adequate provision for off-takers’ finance for buying or renting the completed houses from developers. This is why there are so many houses in locations nobody wants to live and at prices nobody can afford.”

In their submissions on the issue, housing finance and urban regeneration expert, Prof. Timothy Gbenga Nubi, and the Coordinator, University of Lagos Centre for Housing and Sustainable Development (CHSD), Dr. Basirat Oyalowo said lack of institutional support from government and other development agencies as well as the limitations of internal governance hamper cooperative housing development.

The experts, said “The housing market is very complex and cooperative societies have no special support systems to facilitate their participation. There is lack of capacity within the cooperatives in handling housing development process, as most of them are not specialists. Cooperative societies can only be effective if there is involvement and readiness of members to support housing projects’ uptake, contributions, payback of loans and so on. Lack of uptake by members remains a significant reason why cooperatives acquire land, but are unable to move to housing construction.

“Cooperative housing offers an attractive pool of off-takers for housing development, but only if they are ready to participate. This works well for external real estate developers seeking buyers for their projects. There is also the advantage of members having a say in how their housing projects are managed.”

Essentially, they noted that except for cooperative societies domiciled in blue-chip companies, and large private sector organisations, cooperatives do not have the financial strength to dabble into housing projects of any significant size.

On measures to make cooperative housing more attractive, they advised government to support registered cooperatives dedicated to housing provision, by putting in place institutional support systems such as reduction in transaction costs, access to special loans, amongst others for efficient delivery.

The experts further said that there is need to identify cooperatives that have lands and provide support for the construction of housing units. They also sought for more commitments in declaring cooperatives as housing suppliers, rather than paying lip-service to their participation.

The Managing Director of Realty Point Limited, Mr. Debo Adejana, explained that the challenge of housing cooperatives isn’t different from the difficulties faced by operators in the housing provision business.

Adejana observed that issues of sustainability of people’s income have been worsened by a situation whereby people are in and out of jobs, which doesn’t help most cooperatives’ housing approach.

He also stressed that access to land documentation, titles, high cost of materials hinder the growth of cooperative housing.

However, he stated that the culture of cooperative needs a lot of enhancement in the country, especially in developing the orientation around it.

According to Adejana, majority of the people in cooperative housing are not professionals and think that because they are in a cooperative, they automatically have all wisdom and resources to deal on professional matters.

Adejana who is also the Registrar, School of Estate, Lagos, declared that housing cooperatives require some expertise, hence, operators need to synergise and collaborate with experts in the built industry to achieve better result.

He noted that government is pushing housing through cooperatives, but the imperfections in the system need to be put into consideration for it to properly grow.

“They need to engage developers, estate surveyors and valuers, architects when they need to do their design and above all, a team of professionals to be able to deliver more effectively on housing for their members,” he added.