What incoming government should do in real estate sector for growth -

Chudi S. Ubosi, FNIVS, is the Managing Partner, Ubosi Eleh + Co - Estate Surveyors & Valuers - and former President, FIABCI, Africa Region

In a few days, precisely on Monday, May29, 2023, Nigeria will usher in a new administration with Bola Ahmed Tinubu as President.

There are many expectations from the incoming government in the areas of economy, security, agriculture, management of our foreign debt; foreign exchange reforms, public service reforms, real estate and housing, etc.

For the purpose this write-up, the focus is on the expectations of Nigerian masses on housing because this is one of the keys to their well-being. However, before delving into espousing the agenda, it is important to review some exciting statistics and facts pertaining to Nigerian real estate.

Nigeria has a population of 223 million (United Nations – 2022) spread over a land area of approximately 923,000 square kilometres. Less than 10 percent of this land mass has formal title.

The housing stock is estimated at 10.71m units with the housing deficit said to be between 17m – 22 million units. The estimated housing requirement annually is put at 700,000 units if there is to be any chance of beginning to address the deficit. However, the annual production of houses nationwide is less than 10,000 units.

The urban population is put at 52.75 percent of the population figures and grows at the rate of 3.39 percent annually.

Mortgage facilities are basically from minimal to non-existent, meaning that most property purchases are cash-based or through other private funding means.

Home-ownership in the country is put at 23 to every 1000 Nigerians compared to South Africa where it is 69 percent and Kenya at 75 percent.

In terms of infrastructure, out of Nigeria’s 195,000 kilometres of roads, only 35 percent is asphalted. Ghana has 109,000 kilometres with 13 percent asphalted; and in Kenya, only 8 percent of the 178,000 kilometres of their road network is asphalted.

As per electricity production, Nigeria produces 4,500mw; Ghana (2500mw) and South Africa (59,000mw). Nigeria’s population far outstrips both countries Ghana (6 times) and South Africa (3 times).

Despite these obvious challenges and shortcomings, real estate contributes 5.45 percent (2021) annually to the gross domestic product (GDP) of the country.

With these statistics in mind, it is not very difficult to begin to set agenda for the incoming government. The incoming president is well versed in private sector and public sector activities having been a governor and a senator at different times.

The belief is that the harmonizing of experiences from both sectors will place him in a pole position to deliver on the many expectations of the Nigerian people.

Review of the land use act.

If there is one major impediment to the growth and lack of performance of real estate in Nigeria, it is the Land Use Act which vests the control and management of land in the state and federal governments.

The provisions of the 44-year old Act are no longer in consonance with the realities and dictates of current times and Nigerians in general. Without getting into legalese, many sections need to be reviewed.

Section 1 of the Act which vests all land in the state needs to be reviewed. Too much power has been placed in the hands of the governors, many times leading to abuse and uncertainty of title.

We are all witnesses to executive statements where a few years ago, a governor in one of the northern states woke up and announced the cancellation of all the Certificates of Occupancy titles ever issued by his state.

That was an unfortunate declaration from every perspective being that he did not even consider, at the barest minimum, the impact and loss of confidence in the title documents that were issued by his state. Add to this the numerous commercial and financial transactions possibly backed by these same C of O’s where they have been used as collaterals and which, by his simple declaration, made them worthless paper documents.

Sections 21 and 22 of the Act provide for the need to obtain Governor’s Consent before alienation. Section 28 speaks of power of revocation while Section 29 talks of compensation. These are some of the provisions of the Act that must be reviewed.

There are many more sections that are no longer in consonance with the realities of today and have contained unfair provisions from the onset. They have been short-changing Nigerians who have had to deal with the state or federal governments on land issues.

The difficulty in achieving the amendments to the Act must be tackled head on politically and diplomatically to arrive at the desired result.

The fact that many governors see land within their states as cash cows that boost their internally generated revenue has made them come up with unfriendly and aggressive policies in this regard. This has forced many owners not to seek formal ownership for their lands, resulting in what is known as dead capital.

Land is owned but without formal title cannot be used as a factor of production or used for transactions because of fear of fraud and other limitations that come with not having formal legal title to one’s land.

Successful amendments to the Act will no doubt increase and deepen real estate transactions, increase the housing stock and, in the long run, reduce the housing deficit.

Review landlord and tenant relationships laws