…‘Without establishing National Land Commission, Land Use Act will never work properly’
Affordable housing delivery in Nigeria remains a major problem for both public and private estate developers. At the core of this problem is land whose administration and ownership structure have been a long-standing challenge for government and native land owners. In this interview monitored on Channels TV programme, AHMED DANGIWA, Nigeria’s Minister for Housing and Urban Development, highlights the challenges that constrain affordable housing delivery. He also speaks on the activities of his ministry aimed at making land accessible and affordable to developers. CHUKA UROKO, Property Editor, brings excerpts:
How has the journey been so far considering that you just left the federal mortgage bank to become the housing minister. It’s like you graduated to this position?
Well, as you rightly said, I’ve been promoted, I can say, from being the managing director of federal mortgage bank of Nigeria (FMBN), which is an institution mandated to provide affordable mortgages for Nigerians, into the federal ministry of housing and urban development that makes policies for the whole housing sector in Nigeria.
This is a good promotion that God has given to me by the president. When I came on board, I found the place home. I thank God for bringing me to where I know I can deliver my expertise as housing finance expert who has been in the industry for some time.
You came into a ministry where we hear of 17 million housing units deficit, some say it’s 28 million. You came into this space where there is also so much to do. There are no houses; the ones that are available are empty or overpriced. What is going on in the housing sector?
Well, establishing the real data of housing deficit has become a problem for Nigeria. It has been a very embarrassing situation sometimes, especially when you go to any forum where the housing experts are having some conferences. Every nation will state its on number of houses they are having, the affordable they are having, and even the deficit they are having.
But as a nation, we can’t even establish that. This is one problem that we met, to which we are now trying to see that we fix. First of all, we have to establish the data showing the reliable housing deficit or the land housing data. But we have started to collaborate with the national population commission, because we realize that this is an agency that is tasked to do a national population of houses.
If they can do a population census on one hand and do the houses census on the other hand, they can even tell you the number households by units. That will help you to know that the houses that the country needs.
Secondly, as you said, there are a lot of issues that has to do with the affordable housing in the country. You can have a lot of houses that are empty, it shows you that, since there are people who need those houses, the houses are not affordable to a certain category of people, and we need to know that 80 percent of the population are in the low and middle-income earners. The high-income earners are just 20 percent.
If we don’t build for that lower- and middle-income earners, the housing deficit will continue to follow us and if you don’t build affordable housing, then you can never overcome the housing deficit that we are having.
You’re working with the National Population Commission to sort out the housing data problem but the construction of the housing itself is a problem. Besides inadequate funding, land is also a problem. In our constitution, land is held in trust by state governments, not the federal. So, how is that going to work out for you in order to begin to build?
What is required is to know that land is in the custody of the state governments and without access to land, we won’t have access to affordable housing. If land is costly, that means houses too will be costly and if the land is not accessible or easy to get, then you will not be able to deliver the number of housing units that you need to have.
So that’s one thing which we have to address and we have started addressing it in the sense that the housing that the federal government is going to construct, they must ensure that they reach out to the state governors to ensure they have access to land and enough to build the number of housing units that you need.
Not only on the government side, even the private sector. They too must acquire the kind of land that they need in other to build houses. State governments need to realize that giving affordable land to estate developers, especially those in the private sector, is going to favour their own citizens, and that’s why we have been encouraging them to do that.
We organized the National Council on Lands in Kaduna in November last year where we invited all the commissioners of lands and the permanent secretaries and they were told to make sure that land becomes more accessible and affordable to all the private developers and even to all the government institutions in order for us to have affordable houses to deliver to the nation.
Even the National Housing Programme or the Renewed Hope Estates and Cities were going to develop or have started developing.
We just did that, we sent letters to all the state governors nationwide to give us a particular number of hectares that could be available for us and it should be very accessible because, in most cases state governments will go to an obscure location and give you that land, thinking that since you are taking development there, you’ll also do the access road or the infrastructure side to those locations.
These state governments do not know that any access road that a private developer builds is going to be factored into the cost of the houses and the houses will no longer be affordable to the people. We have to ensure that they come to terms with all the commissioners and the permanent secretaries, even directors of land nationwide.
This is what we are able to relate to them and they have taken that, I think, because currently we have started getting land in over 10 states of the federation; we are going to embark on the housing development in a couple of weeks.
You’re talking about the federal government’s plans to build houses. You should be talking about a thousand houses or more per year. But let’s step back a bit. Growing up, we heard about federal and the state housing estates, meaning that the federal government built some and the state government built some. What has changed?
Well, there haven’t been any change so far because various state governments have their own housing programmes. I heard one state say that they have added over 6,000 houses for their own state, just last week in Jigawa State.
So, this state has its own housing programme, reflecting the peculiarity of their citizens. The federal government has that mandate also to deliver most segments of the houses—the lower, medium and high-income earners.
Under the federal government, we have other institutions from the federal ministry of housing; the federal housing authority (FHA), and the federal mortgage bank of Nigeria (FMBN) that are given construction finance. We have the family homes funds that are also into social housing. The activities of all these combined will reduce the housing deficit that we are talking about.
You have talked about how to get data. You have mentioned working with the state governments for land. But what about financing?
Well, as you well know, the housing is capital intensive sector that needs a lot of funding, and the funding starts from the cost of the land. If the land is made affordable, the cost of the housing will be affordable.
The second one is access to construction finance. Most of the developers go to private sector if they want to build houses who are majorly into housing construction. You’ll find that apart from the cost of land, they go into construction finance.
They approach mostly mortgage banks and get the funding at a very high interest rate, also on a short term which is paid within a maximum of five years. No commercial bank can give you a loan for more than five to 10 years. So, these are some of the issues that you have to look at.
What the government did was to create the federal mortgage bank, which offers estate development loans to cooperatives, whereby construction finance can be given at single digit interest rate. At the same time, it could be given over a long-term period. What the FMBN does is to give developers a structural loan at 9.5 percent to build houses and pay after construction.
How do they pay? They get the off-takers and create mortgages through the FMBN and take over the mortgages and pay over a period of maximum of 30 years. But the FMBN has its own problem which is low capitalization. The bank is under N5 billion capitalization currently.
They are struggling to build capital to which, as a ministry, under our own reformed initiatives, we are looking at establishing an act to recapitalize the bank to a minimum of N500 billion for it to perform optimally and give more mortgages—both housing mortgages and construction finance to developers and upscale the protection of houses in the country.
These are some of the issues that we are dealing with and that is the essence of establishing the reform task team which was just inaugurated on January 16 this year, and they have started working with it.
You talked about the National Land Commission. Would that be a federal government commission or one that involves all the states? And at what point do we know this is a democracy where every state is more or less independent of the federal? Where do you draw the lines?
That commission is responsible for telling us how to live in established National Land Commission. Of course, the state governments must be in that committee. It could just be like the asset sharing committee where all the other state governments have to send representatives so as to discuss issues.
However, land use and allocation committees must be established. Without establishing National Land Commission, Land Use Act will never work properly because that is what will normalize the use of the National Land Use Act.
Will that resolve the issues of land grabbing?
Quite well, it would be resolved because land grabbing is a matter of what brings a little conflict in land administration in most of the localities. We find that to the land use and allocation committee in local governments, all land belongs to the state government, wherever you see land, it belongs to a particular local government. Every local government has a land use and allocation committee that is answerable to the state land commission; that is also answerable to the National Land Commission where representatives of the states are also represented.