As a bold step towards addressing the monumental infrastructure deficit in the country, the Federal Executive Council (FEC) late last year approved the National Integrated Infrastructure Master-Plan (NIIMP) produced in 2013 under the leadership of the National Planning Commission. The document constitutes a compendium of the country’s infrastructure burden, problems and suggested solutions.
The plan is to be implemented over 30 years starting from 2013. It commits to an ambitious proposition for the housing sector, which in itself is an embodiment of a deficit conservatively put at 17 million housing units.
This deficit, according to NIIMP, requires a US$300 billion investment over the next 30 years to close. It also estimates that Nigeria requires delivering one million housing units every year for the same number of years.
The master plan says 60 per cent of the required investment is expected from the private sector while the remaining 40 per cent is to come from development partners and public sector spending. This raises a lot of questions.
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It is common knowledge that major challenges in housing demand and supply centre around issues of affordability on the part of buyers and enabling environment for developers and investors who supply the houses, hence our worry.
The reason the opportunities in housing remain untapped is that the structures needed to do that are not in place. The size of the housing deficit in the country means demand is strong because many people want largely unaffordable housing.
We believe that what would have made housing affordable is a mortgage instrument but, unfortunately, to date, the country does not have up to 50,000 mortgages for a country of about 170 million people, making whatever is available very expensive and unaffordable by a large proportion of the population.
The Nigerian housing sector presents compelling opportunities but we are pained to note that people are not investing in residential housing because what will open up in that sector has not materialised in concrete terms. The launch of the Nigerian Mortgage Refinance Company (NMRC) is, to us, a good initiative, but its promoters need to get it right if it is going to have any impact to make the NIIMP targets happen.
The challenges on the supply side are, perhaps, more serious than government appreciates. How else can one explain the persistent failure of successive administrations in the country to provide the enabling environment for private sector investment in the housing sector?
Basic infrastructure – such as water, good road network, electricity, etc – which is a statutory responsibility of government, has remained in the realm of luxury in this country and investors find this a sad story to tell, more so when they also have issues of land charges, import duties and so on to contend with.
It is on the basis of based on this that we see 60 per cent of private sector investment to close the housing deficit as a tall dream, and it remains to be seen how this is going to happen in an environment considered one of the most difficult and expensive for doing business.
We consider it the trite assumption that the value of an investment for the housing sector was based on 17 million units, a figure the World Bank predicts would rise to 25 million by 2020. At the moment, the figure may have increased or decreased because this is not a stagnant world.
One of the major problems in the Nigerian housing sector is the lack of data, and we share experts’ view that people still quote a 17a million housing units deficit many years after the World Bank came up with it because there are no other estimates to prove or disprove it. Many houses have been demolished, burnt or new ones built, but no one is taking record of these, especially in the northern part of the country where many homes have been lost to activities of insurgents. On the other hand, in the big cities of Abuja, Lagos and Port Harcourt, many new houses have been delivered by both public and private sector operators.
We advise that during the periodic review of the master-plan, which is to be done every five years, the government should address the infrastructure problem and also the housing deficit figure which seems to be static. We consider this very important because working with the current figure could be misleading.
