Nigeria’s housing problem and the Singaporean model
A major contentious issue in Nigeria today is whether the country has housing deficit or not. Over the years, experts have estimated that Nigeria has 17 million housing units deficit. Following an unconfirmed increase in the number of households from 35 million in 2017 to 45 million at the moment, the deficit estimate has moved to 22 million units.
But the minister of Works and Housing, Babatunde Fashola, thinks otherwise. He says Nigeria has no housing deficit and has, since becoming minister six years ago, been defending this position with the last ounce of strength in him and the best logic he can muster.
“It is illogical to say we have housing deficit when you have empty houses in the country. No such deficit exists anywhere in the world,” the minister says, revealing that he has consulted the World Bank, African Development Bank (AfDP) and the National Bureau of Statistics (NBS) and none of them confirmed that there exists 17 million housing deficit.
Though the minister does not believe Nigeria is in a housing crisis, he nonetheless admits that the country has housing problems which, according to him, are direct result of rural-urban migration that has created a system of demand and supply problem.
In summary, Fashola believes that housing problem in Nigeria, by whatever name called, is urban-based which, in our view, presupposes that the country has housing demand-supply imbalance.
Though we don’t agree with the minister that there is no housing deficit in the country simply because there is no dependable or verifiable data to back up the assumptions, we are in agreement that the country has housing problems, especially in the cities.
Widespread urban slums and squatter-settlements in the country’s cities, especially in Abuja and Lagos, are strong indicators that all is not well with the country’s housing sector. Furthermore, the absence of a functional and affordable mortgage says it all that the sector is sick in the neck.
Nigeria has one of the most active rental markets in the world with about 80 percent of its 200 million population living in rented accommodation, according to a report conducted by the Psion Housing Company on the state of the Nigerian real estate market.
It follows therefore that something needs to be done to solve these identified problems and more. We believe that it is not enough for the government to say that housing problem is a product of urbanization. It should go beyond that. For us it is trite argument for the housing minister to say that the country should wait till the next national census before the deficit is determined and tackled.
It is our candid advice that the country should look around and see what is succeeding in other parts of the world and adopt for the housing sector. We are not advocates of government’s direct involvement in housing construction, but we would urge its involvement as a catalyzing agent.
On this score, we recommend the Singaporean funding model to be adopted for the housing sector in Nigeria. We see it as a sure solution whatever the challenge is—a deficit or an urban problem.
Singapore was once a poor island in Southeast Asia. It evolved from a third to first world economy between 1965 and 2000. Under Lee Kuan Yew, the country’s first Prime Minister, the government transformed huge swathes of urban sprawls and slums into well-planned cities that spurred economic dynamism and growth.
Homeownership level in Nigeria is about 25 percent for 200million population. In Singapore, it is estimated at 92 percent for a population that is just above 5million. The reason for this is that the country has a successful public housing scheme under a Housing Development Board (HDB).
The HDB scheme is driven by a funding model that ensures that, in retirement, every citizen must have a home and the worth of such homes is not less than $200,000 to $300,000, meaning that, as a working citizen, there is already a central provident fund created for you.
The funding model is structured in such a way that every employer contributes to it. The employee also contributes and the government, through the HBD, builds the houses, usually flats, for every citizen. This way, homeownership is made easy and achievable in a record time.
There are a lot more ways the government can address the housing problem in the country. We agree with the minster that there are many vacant houses in the country, but there are reasons for that. High vacancy rate in the cities is a function of affordability. Those who need housing can’t afford what is on offer. Vacancies in the rural areas are a result of lack of economic activities to generate income.
Governments at federal, state and local levels have the duty to address these problems which is why we commend federal government’s plan to work on the states Houses of Assembly to legislate against advance rent payment.
Deficit or an urban-based problem, we believe that Nigeria’s housing sector is not sitting well and to live in denial that all is not well with the sector is to deepen the problem. So, time to rise and confront the monster is now. Otherwise, it will get out of hand, sooner than later.