How investments in housing sector can drive economic vitality, create jobs—El Rufai

At a time in Nigeria when economic activities are slowing and job opportunities for the country’s teeming youth population are shrinking, investments in housing sector can drive economic vitality and create the needed jobs, Nasir El Rufai, Kaduna State governor, has said.

Besides being a public sector operator, El Rufai is a built environment professional with a degree in Quantity Surveying. He is currently a fellow of the Nigerian Institution of Quantity Surveyors (FNJQS) and also a fellow of the Royal Institution of Chartered Surveyors (FRICS).

The governor, who spoke at a one-day conference hosted in Lagos by the Royal Institution of Chartered Surveyors (RICS) Nigeria Group, said the real estate sector could play a much bigger role in the Nigerian economy than it is thought or even imagined.

“In many developed nations, the property sector in general, and the housing segment in particular, is a bedrock of the economy and an important tool for stimulating growth,” he said, adding, “housing construction indices are some of the most common measures used by analysts to gauge economic trends in Organisation for Economic Co-operation and Development (OECD) countries.

In most economies of the world, real estate, especially housing, contributes significantly to their GDP. El Rufai cited USA, Britain and Canada where the housing sector contributes between 30-70 percent of their GDP. Investment in housing accounts for 15-35 percent of aggregate investment worldwide and the sector employs approximately 10 percent of the global labour force.

Conversely, the housing and construction sector in Nigeria accounts for only 3 percent of the country’s GDP. This means that the country has an extremely low ratio of credit to GDP and, “of the little credit provided by commercial banks, only a fraction of it is for mortgages. Mortgage finance is where much of the economic opportunity in housing can be unleashed,” the governor said.

This implies that Nigeria has to invest more in the housing sector and particularly in the mortgage sector whose contribution to the country’s GDP at the moment is less than 1 percent.

But, according to the governor, it is open to question if the federal government should be directly involved in housing provision, as a builder or giver of contracts. He however has no doubt that the government can do a lot through its agencies, especially in promoting long-term mortgages at single-digit interest rates.

The governor, who was represented at the event by Hausat Adebola Ibikunle, the Kaduna State commissioner for housing and urban development, believes too that the government social housing is required, and this must be led by government because the market (private sector) alone cannot solve the issue of housing for all.

Because of its multiplier effect, the housing sector has the potential to generate employment, increase productivity, raise standards of living and alleviate poverty.

“Investment in housing affects all facets of life through its multiplier effect on economic development through forward linkages to the financial markets and backward linkages to land owners and the markets for building materials, tools, furniture and labour,” the governor said.

Besides the Nigerian Mortgage Refinance Company (NMRC), a secondary mortgage institution, another government’s intervention in the housing sector that is already driving economic vitality and creating jobs across the country is the Family Home Fund (FHF).

“Family Homes Fund Limited is a partnership between the Federal Ministry of Finance and the Nigerian Sovereign Investment Authority (NSIA) as founding shareholders,” El Rufai explained.

According to him, the fund is the largest affordable housing-focused fund in Sub-Sahara Africa, leveraging its significant capital (in excess of N1 trillion by 2023) to facilitate access to affordable housing for millions of Nigerians on low to medium income.

Through the strategic partnership with various players in the sector and some of the world’s main Development Finance Institutions, he said, the fund has an ambitious commitment to facilitate and supply 500,000 homes and 1.5million jobs for the low income earners by 2023.

The good news is that, “so far, the fund has constructed some homes and still constructing across the country from Lagos, Ogun, Kano, Adamawa, Borno and Kaduna, of course, with over 13000 jobs created and about 360,000 to be created.”

 

 CHUKA UROKO