Aliyu Oroji Wammako is the Chairman/CEO, Jedo Investment Company Ltd and President, Real Estate Developers Association of Nigeria (REDAN) which is the principal agency and umbrella body of the organized private sector (public and private) responsible for housing development in Nigeria. He spoke to John Osadolor and Obinna Nwachukwu in Abuja on issues affecting the housing industry in Nigeria. Excerpts:
Why is it that despite the efforts of your association and other stakeholders in the built industry including the presence of several mortgage institutions, the cost of houses in Nigeria remains far above the reach of the common man?
You made mention of the common man that is the low-income earners-those whose income are within the minimum wage range of N30,000 per month. Unfortunately, many of the houses you see in and around Abuja, Lagos, Portharcourt, Kano and other major cities are not affordable for the low income house seekers, they are not for the low-income earners, they are mostly duplexes, and the low-income earner is looking for a one or two-bedroom detached house or block of flats. That one is beyond the reach of the average person you’re talking about. Let me tell you one thing, in the aspect of mortgages, it is difficult to see a Nigerian who can qualify for mortgage, because the way and manner mortgage is structured in Nigeria cannot favour civil servants most especially civil servants that are earning below N30,000 per month. If for instance you go to the state or local government, anybody that has N60,000 as take home salary must have stayed up to 20- 25 years in service, and is left with ten years. Can he afford a house of even N7 million? He can’t.
So, the most interesting part of this issue is that we have to see the effort that is being made by the federal mortgage bank of Nigeria, because despite all odds, the bank was able to provide long term financing on mortgage issues. Do you know the capital base of the federal mortgage bank? It’s sad to know that it is N2.5 billion and we have been calling on the federal government to recapitalize this bank for them to be effective in delivering their aims and objectives, unfortunately, the federal government give deaf ears to that. They are only running around with what they were given earlier, they have over 4.5 million contributors. Presently, the federal mortgage bank, after nearly 30 years, has not benefited 5% of the contributors to the national housing fund. So the problems are there, government has its own share.
Furthermore, the availability of funds within the mortgage industry is another thing, the price of raw materials and the recession in the country is another thing, the insecurity and other things added together give you the answer you are looking for. So there must be an intervention fund on the housing industry, before we can move forward. On a personal note, I am pained that in Africa we have a Pan-African bank called shelter Africa. Her duty is to give affordable housing financing, construction finance etc to citizens of shareholder-nations of which Nigeria is one of them. Out of the 44 member countries, Nigeria is the second highest contributor to this bank, but there is nothing in Nigeria to show for the benefits, and we pay a whopping sum of $8 million every blessed year to this bank as our own contribution.
There was a time the bank invited me to their 40th anniversary and General Meeting which was held in Cameroon, and I was opportune to be there. So I told them that we cannot be contributing $8 million and they are building houses in other African countries. We have over 22 million housing deficit in Nigeria, out of the 56 million housing deficit in Africa, we have at least 40% of that. For that reason, why should we continue to meet our obligation to the bank with nothing to show for it? Three years down the line we were not paying, so they agreed to come to Nigeria and they have already come. We floated a bond at SEC because we cannot take facility in dollar denomination. So I told them that the only way is to float a bond with the SEC. I assisted them with the Minister of Finance, Central Bank, NDIC so that some of the taxes could be waived and we would be able to also have access to the funds at a lower interest rate. Now they have brought in $500 million, which is over N1.5 billion. They opened a bond and everything is okay. They have given Nigeria 12,000 housing units to be constructed under our rural-urban housing initiative programme. So we are starting with 1,000 housing units in each of the six geopolitical zones. After we complete the 6,000, we will do another 6,000. They have come with the money, they have already floated the bond, it’s even oversubscribed as I am talking to you. So we are expecting the distribution of this money to start very soon. So this is the small effort we in REDAN are trying to do, to make sure that there is affordability in the housing industry.
Quote: There’s nowhere in the world where there is no regulation for the building industry, it’s only in Nigeria, and that is what I’m trying to do
Secondly, we have family homes funds; it’s an intervention created by the federal government. The federal ministry of finance and the sovereign wealth funds are the only two directors in this. The Sovereign wealth funds is holding 49%, and the federal government under the ministry of finance is holding 51%. Their aim is to provide not less than 500,000 housing units before the end of 2023, and a whooping sum of N1.35trillion was earmarked for the purpose. There are conflicting issues here, affordable housing is different from social houses. There is a contribution from the central bank, due to the COVID-19 pandemic, they gave N200 billion for the provision of social houses to Nigerians that are low-income earners. From that time to date, that money has not been released. COVID-19 has come and gone and the houses are not there. They are playing around the corners thinking that there must be free lands, and most of the governors are not willing to give their land, because land is wealth. So they are looking for free land to showcase a house of N2 million. We told them that a house of N2 million with the present day cost of materials will not be feasible. Based on this scenario, we came in with our programme of rural-urban housing initiative , which we have signed an agreement with the family home funds and they are willing to provide affordable financing in line with our objectives. We are expected to build a house of not more than N7 to N7.5 million and as low as N2.6 to N3 million for low-income earners and in a low density area.
You know that the location matters when it comes to construction, and that’s why we fixed N2.6 to N3 million as the lowest, then N7 to N7.5 million as the highest. And based on the situations, we can even do these houses on carcass forms ; that means we may not put tiles, because it will increase the cost, we may not also do the PoP, so that the beneficiary will be able to add some things to his own taste. So this is what we are doing with family homes funds, just as an intervention to the housing programme in Nigeria. We also have a working arrangement with the Federal mortgage bank of Nigeria, which we are calling for its recapitalization. Without recapitalizing federal mortgage bank of Nigeria, the mortgage sector in Nigeria will be a doom, because that is the only outlet to get mortgage at 6 to 9 percent. There is no other place you can get this kind of mortgage rate. So all these are problems in housing industry and they are all militating against the provision of affordable housing or lower income houses. If we consider housing as an important phenomena in human life, I believe it’s now obvious and paramount for the federal government to give an intervention fund for the housing sector.
From the picture you painted above are you saying the MDG goal in respect to housing for all by the year 2030 will not be realised?
Well, I am not the driver of the MDG goals, but when was the family homes funds created? It was created in 2015 but till date where are the 500,000 housing units? What about the N1.3 trillion that was given to them? What about the N200 billion that was earmarked by CBN because of COVID-19 intervention on housing delivery for social housing, where are all these ones? So if I cannot give you answers to these, I may not give you answers on the MDGs housing for all goal.
What is your organisation doing to interrogate the authorities especially in these areas you itemised so as to ensure that these funds are used for the purpose they were meant for?
We cannot interrogate the authorities, we are an association of corporate funds managers that came together with like minds to change the fortune of Nigerians with respect to offering them affordable housing. We create employment, we provide house, and we reduce housing deficit. We are self-serving individuals, we are private sector, there is no way we can checkmate government, we are only complementing government’s efforts.
But you will agree with me that if these funds are released, the association will be a beneficiary one way or the other?
REDAN is the umbrella body of the organised real estate operators both in the public and private sectors, and we are recognised by the federal government since 2002, as part of the housing policy programmes of the federal government. But the issue is that, that does not give us the right to checkmate them, we are still investors. We can’t interrogate them, are we the police?
Sir, you alluded to the increasing price of building materials and over the time, cement has become unpredictable, you may buy at a price today and it will jump up tomorrow as well as other materials. How is your association coping in the face of these challenges?
For the avoidance of doubt, we go to the same market everybody goes to, but we devise a means to get it cheaper. We go on bulk purchase, people will reason with you and they can bring their prices down. So the programme we have on providing 100 housing units in each of the 774 LGAs is visible and viable. We were able to reach out to so many producers of building materials. I reached out to Dangote and he promised to give us same prices all over the country with delivery. I have reached out to the cable factories, they have promised to give us a reasonable discount of about 25%. My quest is to build a made-in-Nigeria house, not for us to import anything outside. I equally reached out to the aluminium industry, and they were able to give us 10% discount. So I have met many of the building material producers and we have a working pact with them, we have made an arrangement on the cost of production and supply. I don’t know what the federal government is doing about that, but this is my own effort.
With the existence of several housing estates across the country why is housing deficit gap still so wide? Secondly, can you talk us through the JEDO mass housing project?
I have a general manager who can talk to you about JEDO, I am talking on behalf of my association. The government recognises that there is a gap, and our ministers know about it. The issue of housing deficit in Nigeria is no longer news, but the issue is that there is no statistics that indicated but we are currently tackling the matter. REDAN have initiated a programme in conjunction with about 15 agencies such as GIZ, federal ministry of works and housing, CBN, to have a data collection that will indicate the level of housing deficit in Nigeria. We tried to do that, but unfortunately the government may not be interested in so many issues, most especially the present government, from what we are seeing. So the gap will keep existing unless government understands that it is their responsibility to come to terms and aid of civil servants and Nigerians that are left behind or leaving in slums. Today, slums are springing up everywhere including in Abuja, Lagos, Port-Harcourt, and Kano. People are no longer staying in their villages because of fears of insurgency and banditry, so they run to IDP camps and slums to stay and its increasing. So government needs to realise this and come up with a formidable policy that will tackle it.
Read also: How real estate investment can help diversify asset portfolio, mitigate risk – Arc Homes CEO
Each time a building collapses in Nigeria, the operators would blame each other with none willing to accept responsibility. With your experience, what is the cause of frequent collapse of buildings in who should be blamed?
Let us understand why a building collapses. A building can collapse due to use of substandard materials or the professionals are not being engaged or there are some cutting-corners alongside with the professionals and owners of the construction industry. If you look at the last one that happened in Lagos, there was a warning from the consultant who is supposed to be the engineer, that the materials being used was substandard and not enough. So the issue here is that, if the professionals in the building industry are not being engaged in any building, we all expect that kind of situation. We the developers keep record of every person that is going to work on our site. I advise our members to engage professionals anywhere and in anything we are doing, be it a bungalow or a high rise structure, the professionals must be used because that is the only answer. There is no profession better than ours in Nigeria, we have the requisite education to tackle this issue. But the issue is that, once you are employed as a professional, and the owner says he wants to do it in this way, if he doesn’t frown at him cutting corners, he will go ahead and cut corners, and the blame will go to him, so there is no way the professional will be exonerated from the blame of building collapse. They are supposed to see that before somebody builds, he must have somebody who does the drawing , the architect must also be involved when you are trying to do the foundation.
Quote
If we consider housing as an important phenomena in human life, I believe it’s now obvious and paramount for the federal government to give an intervention fund for the housing sector.
There should be a structural engineer, there must be an electrical engineer who will tell you how to do all these things. So all these professionals must come to terms before a building is being completed, and if you decide to do it without the use of the professionals, that’s where we have an issue as far as building is concerned. We have what we call estate endorsement committee, which involves all the professionals in the building industry who go round the estate to make sure that you adhere to the terms, rules and regulations of the national building code.
What can you highlight as key achievement of the association since you assumed office?
We have made so many achievements. Even yesterday, I paid the EFCC chairman a courtesy visit. We have a longstanding relationship so with him and my effort is to make sure that I sanitise the real estate from money laundering. Most civil servants that steal money go into the real estate to launder their money, so I want to make sure that I differentiate between the quacks and the real developers.
I introduced an official membership seal, every REDAN member must have a seal, and that seal is to differentiate between a quack and a real developer. Wherever you go, that seal has a mercury and some features inside that can differentiate and serve as a security for a REDAN member. So whatever you are writing, you must affix the seal so that it will assist you. Every REDAN member must have the seal and anything you write must carry this seal. Because once there is any controversy, we will go through the seal and tell who the developer is because we have a record of every person including those behind your company, the directors in your company , where you are operating, your head office and what you have done.
We have digitalised REDAN. I met it as analogue. With digitalization, you can now find out information of every company that is a member of REDAN. We have now differentiated between quack developers and real developers. We have also done a magazine to foster and enlighten the general public about the activities of REDAN. This magazine goes to all the state governors , permanent Secretaries, ministers, all the embassies in Nigeria and our members . It is not for sale , we did it as a complimentary copy, and I’m only trying to get people to understand the activities of REDAN. I also initiated a project which is rural-urban housing initiative to build a 100 housing unit in each of the 774 LGA of the country where feasible and viable; where there are no volatile issues, where there are no land issues and where there are also off-takers, because we are investors, we don’t have to come and make investment if we know that we are not going to get the return on our investment. So, there must be off-takers before we indulge into doing this. So these are some of the things we are doing, and its making a difference.
We are recognised, I have signed several MoUs in so many financial institutions that are willing to give money to my members for construction. I have signed so many pact with NBRRI ( Nigerian Building and Roads Research institute) for building materials . We even bridged the gap between NBRRI and NMRC. NMRC has money lying fallow and they can give this money for research, so we asked them to give the money for research, and we buy the programme as REDAN, so the money won’t get lost. So these are the kind of things I am doing to see that we are able to reduce the housing deficit in Nigeria. Our association has over 3,000 registered corporate firms as members. We have state chapters, zonal chapters and national headquarters here in Abuja.
If I get you right, REDAN is a self regulator, does this self regulation and control also trickle down?
Yes REDAN is self regulatory. Apart from initiating this self regulation, I was able to present a bill in the national assembly, and this bill has already passed the Senate, it has been approved by this 9th Senate. So, it’s now at the House of representatives for concurrence and we are calling on meaningful Nigerians to let the people understand that without a regulation in the building industry, there is no way the building collapse phenomena will stop, there is no way cheating will stop. There’s nowhere in the world where there is no regulation for the building industry, it’s only in Nigeria, and that is what I’m trying to do. God being so kind, we are already at an exit situation because once it has been concurred by the House of Representatives and assented to by the president, it becomes a law, and we will be able to operate under a very good atmosphere.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
