Lagos, Nigeria’s commercial nerve centre is unarguably the largest city state in West Africa with large commercial and industrial base which, together, have made it a destination for investment and employment for various skill sets.
With a population of about 20 million, Lagos receives an estimated 3,000 immigrants daily, leaving its managers with the huge task of providing the basic needs of the people, especially adequate housing.
Lagos, currently, has the most vibrant property market in Nigeria but, sadly, home ownership is still a big challenge and it is estimated that less than 20 percent of the population lives in their own homes.
The housing supply in the state is low and has failed to keep up with rapid urbanization and population expansion, especially in the low income market. A new report on ‘The State of Lagos Housing Market’ estimates the state’s housing demand at 4.4 million units while the current supply is 1,417,588 unite, leaving a demand-supply gap of roughly 3 million units.
Though there has been increased participation in housing projects from both the government and private sector operators to close this gap, such efforts appear insignificant because the extent of the housing shortage in the city is enormous and the deficit is both quantitative and qualitative.
We are alarmed by the revelation in the report that 72 percent of Lagos residents are tenants paying rent as high as 50 percent of their monthly incomes while most of the existing accommodation is provided by private landlords.
On the qualitative side, it is common knowledge that most low income earners in the state live in congested settlements usually characterized by buildings with structural defects, bad roads, poor drainages and pollution, all of which pose health hazards to habitants.
It is on this premise that we express our reservations on the whole idea of a mega city which the state ascribes to itself at any given opportunity. Whether this is a dream or reality remains a matter of argument because, for us, the indices that make for megacity status are not there yet.
Admittedly, however, Lagos, on comparative basis, has made and is still making efforts at improving the lots of its residents in the area of housing such as the establishment of the Lagos State Home Ownership Mortgage Scheme (LagosHOMS), encouraging public private partnership (PPP) initiatives on housing delivery, and the launching of a Rent-to-Own homeownership scheme.
We commend particularly the LagosHOMS initiative, but like every other mortgage scheme in the country as a whole, it still needs to be seen to be working effectively and efficiently to impact on those on the lower rungs of the social ladder who actually need housing most.
Mortgage schemes in this part of the world are always caught in the web of poverty arising from low income of possible applicants. Here is a country where minimum wage for an employee is N18, 000 per month. When this is calculated in terms of normal mortgage structuring, 33.3 percent of N18, 000 will be N5,994 and a monthly payment of this sum over a 30-year period will amount to N2.15 million which is averagely lower than the cost of a housing unit in the country. It is pertinent we point out that a mortgage period of 30 years or a housing unit of N2.15 million are hardly available, and this amount excludes interest rate on the mortgage facility.
This is why, perhaps, LagosHOMS, calculated on the same low income for 20 years at 9.5 percent interest rate and 30 percent equity contribution remains affordable only by ‘civil servants’ within the upper and middle income bracket.
We see hope in this state based of its growth potentials, but we believe that becoming a mega city goes beyond sheer number. The residents need to be adequately housed and this requires rethinking the laudable initiative which LagosHOMs is. It is reported that this scheme has about 10,000 housing units at different stages of development/completion.
We believe also that the state can do better by building more houses and putting in place a mechanism such as the Rent-to-Own initiative which will allow low income earners own these houses without going through the rigours and processes of mortgage which disqualify many of them from the scheme.
Furthermore, some policies of government that discourage or make it difficult for private sector operators to deliver housing should be reviewed with a view to making them easy and investment friendly. It is our hope and belief that these will surely set the state on the path of realizing this mega-city status which we all yearn for.
