BUKOLA ILUTYOMADE is the chief executive officer of Aimart International Limited, a real estate investment and development firm. In this interview with CHUKA UROKO, she gives insights into how her firm navigates inflation in an import-dependent economy to deliver on their affordable housing scheme. She also lends her voice to the Housing Minister’s controversial views on housing deficit, among other aspects of real estate sector in Nigeria. Excerpts:
A major discourse in the housing sector in Nigeria today is the argument by the Housing Minister that there is no housing deficit in Nigeria. What is your position on this?
As a company, we believe that there’s no housing deficit in Nigeria for the aristocrats and the upper class in the society. The upper class can afford to buy or build any property of their choice in high-brow areas or, at the very least, lease a property.
The minister’s argument was directed at the upper class in society. The minister noted, and rightly so, that there are a lot of empty houses in Ikoyi, Banana Island, Maitama etc. The issue is that these houses are simply beyond the reach of the middle class who interestingly makes up to 40 percent of our population as a country.
The middle class is the engine room of any economy and, if they cannot afford houses built, is it the lower class that will afford them? In a sense, there is no housing deficit but with a caveat for the upper class. Our position is that there’s a housing deficit for the middle and low-income class which constitutes more than 70 percent of the population.
The huge deficit in the housing sector translates into opportunities for investors, yet the sector is not among the top three performers in the economy. What would be your suggestions to make the sector contribute significantly to GDP and, by extension, economic growth?
By this question, I am happy you agree with me that there is a huge housing deficit in Nigeria contrary to the claims by the housing minister. There are myriads of factors contributing to the underdevelopment of the housing sector.
Rule of Law is one of such factors. Investors don’t want to put their money where the rule of law is weak. If there are business disputes, how fast can it be resolved and what is the probability of getting justice? This is fundamental and germane to taking business decisions. Does the law protect investments? The answer is no. The housing sector is capital intensive and so every investor seeks how to protect his investment.
The ease of doing business is another factor. The ease of doing business in the housing sector is very low. There are plenty documentation hurdles to cross. This ranges from land titles to building permits. To obtain C of O and finish all other documentation prior to construction takes nothing less than a year if you will finally get it. For investors, this is a serious disincentive.
The cost of funds in Nigeria is one of the highest in the world. Our financial institutions do not give out long term loans of about 25 years with single-digit interest to investors in the housing sector.
If these factors can be sorted out, the housing sector can contribute significantly to the GDP of this economy as well as reduce the debilitating unemployment rate in the country.
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The big elephant in a China shop for real estate developers today is the spike in building materials prices. What are the issues? Where does this leave you as a developer? What are the ways out?
The post-Covid economic challenges in Nigeria today are affecting every sector of the economy. The devaluation of the Naira in an import-dependent economy like ours causes the price of goods and services to go very high. This has a major impact on project delivery timelines and cost. Since this is a general problem, we are doing our utmost best to hedge inflation and still be able to deliver on our affordable housing scheme with reasonable adjustments.
Over the years, the housing sector has faced policy inconsistencies that have not only slowed growth but also impeded homeownership opportunities and compounded the deficit. What do you expect the government to do in the sector to change this narrative?
The national housing policy of the federal government should be adopted in states, taking note of each state’s peculiarity. A housing development master plan that addresses all the challenges facing the housing sector should be put in place from the local to the federal government level. Stakeholders in the housing sector should be carried along for holistic view and input.
Tell us; what is Aimart doing at the moment with reference to your Affordable Housing Scheme which aims to complement the government’s efforts at housing Nigerians?
Despite the challenges highlighted above, Aimart is still going on with the different development projects we started before the Covid-19 pandemic and they’re in different stages of work in progress.
You have an ambitious target of providing 10,000 housing units and creating about 13,000 jobs over a 10-year-period. Tell us how these are going to happen in the light of prevailing economic realities?
When the going gets tough, the tough keeps going. We have gone to the drawing board and put in some parameters that will enable us to deliver on our promise.
