Housing players worry over FG’s proposed reforms

Real estate operators are worried that poor implementation may hamper the Federal Government’s planned housing reforms to reduce the number of homeless persons in the country, DAMILOLA AINA writes
the housing sector is critical to any economy. Its ability to create jobs without an incubation period makes it one of the easiest and safest means to secure long-term investments. But multi-faceted challenges- poor mortgage, land tenure systems, urban planning, high interest rates, etc.- plaguing the sector in Nigeria have prevented it from harnessing its potential.
The protracted economic crunch has made it difficult for many Nigerians to have a roof over their heads. This is compounded by a lack of finance, a dearth of long-term loans, and the high interest rates that lenders demand. Many depend on personal savings to build a house.
Operators in the built sector have revealed that Nigeria has a 20 per cent homeownership rate despite having a population of 223 million, placing it significantly below its peer nations. For example, South Africa, with a population of 56 million, boasts of a 67.7 per cent homeownership rate.
Smaller countries like the Benin Republic, with a population of 11.8 million (about half of Lagos State’s population), have a homeownership rate of 61 per cent. Libya, with a population of 6.8 million as of 2019, has a rate of 41 per cent. Meanwhile, larger nations like Brazil, the USA, Kenya, and Singapore enjoy substantially higher homeownership rates of 63 per cent, 70 per cent, 73 per cent, and 90 per cent, respectively.
The recent surge in building material prices has also dealt a blow to the dreams of many prospective homeowners, triggering rising abandoned projects and job losses.
Between January 2022 and August 2023, building material prices rose by over 70 per cent, attributed to the country’s soaring inflation.
Data from the National Bureau of Statistics showed that the cost of housing was the second-highest contributor to the country’s inflation rate of 26.72 as of September.
Planned reforms
When Ahmed Dangiwa assumed office as the Minister for Housing and Urban Development On Monday, August 21, 2023, he pledged to implement a bold vision for housing and urban renewal.
The minister, who is well acquainted with the housing ecosystem, vowed to embrace innovative financing solutions for housing construction and to collaborate with relevant institutions to secure funding for large-scale affordable housing projects nationwide.
To carry out the reforms, Dangiwa said he would prioritise creating an enabling environment to encourage increased private sector participation and investment, along with formulating policies that empower agencies supervised by the ministry to optimise their performance according to their designated functions.
“I believe that the responsibility of this ministry is to create an enabling environment and formulate policies that empower agencies under its supervision to perform their functions optimally. This will be a central focus of my leadership.
“As the drivers of His Excellency’s vision at the ministry, we are establishing a Solid and Comprehensive Framework for the reform of the housing and urban sector in the country,” he declared.
Unveiling his six-point agenda, Dangiwa stated that his action plan would include strengthening the institutional capacity of federal housing agencies, as well as the Federal Mortgage Bank of Nigeria and Federal Housing Authority; increasing the supply of decent and affordable housing stock; and establishing the National Social Housing Fund.
According to the minister, other plans include implementing land reforms to streamline land administration and ensure easy access to land for Nigerians and private sector players, setting up building materials manufacturing hubs, implementing urban renewal and slum upgrading programs and developing new cities that are integrated, inclusive using a demand-driven approach.
Housing for all
A few months after assuming office, the minister, at several meetings with stakeholders, governors, international agencies and professional bodies, had outlined critical steps to reduce the nation’s housing deficit and bolster housing stock.
First, he announced the construction of 34,500 homes nationwide to boost access to decent, quality, and affordable housing for the housing needs of 80 per cent of low- and medium-income earners in the country.
He said the project code-named “Renewed Hope Cities” would comprise one to three-bedroom bungalows and multi-level flats.
“With this project alone, we aim to create over 240,000 jobs at seven per housing unit. This is in line with Mr President’s goal to create jobs, lift 100 million Nigerians out of poverty and grow the economy,” he stated when the Taraba State governor, Agbu Kefas paid a courtesy visit to the ministry’s headquarters in Abuja.
The PRIMANEWS reports that the cities upon completion would gulp 1,800 hectares of land across the country.
Dangiwa also promised to redefine housing accessibility by integrating a mix of low, medium, and high-end housing projects, ensuring inclusivity for Nigerians of all income brackets through a cross-subsidies method.
Similarly, he expressed commitment to create an enabling environment for increased private sector investment in housing and urban development to leverage the ministry’s Public-Private Partnership arrangement to mobilise financing for affordable housing and urban development in the country.
The ministry had also deepened collaboration with the International Finance Corporation as part of strategies to enable private developers to access funding through IFC mechanisms and increase access to affordable housing for Nigerians.
As part of its legacy reforms, the minister also promised to drive reforms to unlock the estimated over $300bn ‘dead’ capital in the housing sector through a series of reforms in land administration and collaborations with stakeholders.
Dead capital refers to property that lacks legal recognition and, as a result, cannot be effectively leveraged for economic purposes.
The country’s real estate sector has been plagued by a poor land tenure system and a tedious process obtaining of titles for land, which has made many landed property to have little or no value, contributing to the issue of dead capital.
Experts have argued that Nigeria’s 1978 Land Use Act, which regulates landownership in the country, was obsolete.  They said the government needed to review it to address the challenge of dead capital and the torturous process of obtaining land titles.
Dangiwa said his ministry was ready to break all institutional, legal, and bureaucratic barriers that had hindered sector growth over the years.
“This includes collaborating with key stakeholders to review and amend the Land Use Act to streamline land administration and make access to land easy and fast. We all recognise that the most significant challenge in affordable housing is the cost of finance. Interest rates on bonds are in the double digits, and rising international funding for housing projects remains challenging due to fluctuations in our foreign exchange rates. Moreover, budgetary financing for housing development is inadequate to meet the demand.
He also solicited the support of state governors to make access to land easy, fast and affordable with the passage and adoption of the model mortgage foreclosure law establishing mortgage registries.
Fears over implementation
Meanwhile, housing experts have expressed reservations over the implementation of housing reforms planned by the government.
The experts who spoke in separate telephone interviews with The PRIMANEWS commended the initiatives rolled out but warned that external government forces posed a threat to their implementation.
The Chief Executive Officer of Fame Oyster and Co., Olufemi Oyedele, said the experience of the minister in other leadership roles may help him navigate the intricacies of helping Nigerians have access to shelter.
Oyedele said, “The Minister of Works and Housing, Arc. Ahmed Musa Dangiwa, has stated that he would adopt an urban renewal system, build 7,000 houses in each of the local governments and many others. I think they are implementable.
“Dangiwa is an experienced man in the housing sector as a former Managing Director of the Federal Mortgage Bank of Nigeria (FMBN).
“The current minister has professional housing professionals who are ready to collaborate and work for the progress of the housing sector in Nigeria.”
According to Fame Oyster and Co boss, Dangiwa’s promise to be receptive to professionals’ contributions would enable him to succeed with the planned reforms.
“So far, the minister has taken the right steps in housing development in Nigeria and he is poised to achieve more than his predecessors. All the plans he has mentioned so far are implementable.”
However, the Managing Partner, Ubosi Eleh and Co, Chudi Ubosi, noted that effective implementation of these policies lay in the hands of other ministers, governors, ministers, and the National Assembly
He added, “I think the minister has shown a fair grasp of the issues ailing our housing industry.
“Land administration reforms, private sector funding, etc., are germane to a more dynamic industry in terms of availability of cheap housing, funds for development, a vibrant mortgage industry, etc.
“The point is that none of these things are really within his purview to implement. He can only advise. The effective implementation of these policies lies in the hands of other ministers, governors, ministries, the National Assembly, etc.
“So, whilst the Hon. Minister has these ideas and plans, he will need to hope that these other arms of government are on the same page with him.
“Failing on this, he will be engaging purely in semantics.”
Another expert, who asked not to be named said, “In my view, this is a show of ambition on the part of the Federal Government. The devil is in the details of the implementation structure.
“To overcome the delays so rightly identified, the implementation model needs to be changed, the partnerships should flow right through to the states and the local governments identified to limit the process of land transfer.
“Working in partnership at all levels with the private sector in tow, much can be achieved. In my view, our role should extend to proposing new and innovative implementation strategies that overcome the barriers we know are embedded in the systems.”
“Let’s put our thinking and implementation caps on and propose new solutions and approaches.”
There is no doubt that Nigeria must aspire to close its housing gap within the shortest time possible. While the government has a major role to play, only private sector-led investment can provide the capital that can guarantee the level of investment that is required to close the gap and clear the deficit.