The affordability gap in housing delivery in Nigeria has been attributed to the near-absence of housing finance and high cost of funds in the country, leading to low homeownership level.
Alternative funding model for affordable housing therefore, dominated discussions at a day African Union for Housing Finance (AUHF) Regional Seminar hosted by Abbey Building Society plc (mortgage banker) in Lagos, recently.
Tunde Reiz, president of First Communities Limited, estate developer, noted at the seminar that “Nigeria’s estimated 15 million housing deficit affects over 200,000 teachers; 250,000 police , 500,000 public servants at state and federal levels; 500,000 students; 200,000 military personnel and millions of people in the informal sector.”
Reiz, a brigadier general and former director of Post Service Scheme for the army, delivered a paper titled ‘State of Housing Finance in Nigeria: A developers Perspective.’
To close the housing demand-supply gap, he said there was need for mass housing, recommending that funding focus for financing the mass housing should be on fund faith or money from the church, corporate or community based organisations, housing associations and insurance companies.
Other sources of funds, he added, include Federal Inland Revenue Service; agencies like CBN to release dormant accounts and give incentives for banks to invest in fund,
“Multilateral funds and donor agencies; companies enforcement of employees housing decree No 54 of 1979; unclaimed dividends in Securities and Exchange Commission;
mass housing development fund; pension Linked Funds are also other sources.”
He recalled that in the National Housing Policy of 1991, the Federal Government set a target to deliver 8 million houses by the year 2000 and to deliver at least 700,000 houses per annum, adding that government White Paper of 2002 recommended “the implementation of a programme of constructing 40,000 housing units per annum nation- wide with at least 1,000 units in each state.”
According to him, over 20 years after, not even 1 million houses have been built in the country, blaming the failure on policy inconsistency and some impediments to housing delivery.
He listed some of these impediments as absence of clear property and security rights;
mandatory Governor’s consent for all land transactions; inefficient land management system, and high cost of land transactions, high interest rates reflecting risk and source of funds, absence of long-term mortgage finance and affordability gap.
In what he called vicious cycle of affordable housing delivery, Reiz noted that “high cost of housing relative to income leads to reduction in demand, reduction in demand for housing is caused by affordability; reduction in supply of housing leads to high cost because of reduced investment in housing to match demand.”
In his opening remarks, Collins Chimutsa, the AUHF chairman and executive director, CBZ Banks Ltd, Zimbabwe, had informed that “AUHF is an association of mortgage banks, building societies, housing corporations and other organisations involved in the mobilisation of funds for shelter and housing in Africa.”
The organisation is committed to the development of sustainable housing finance markets that address the needs in member countries throughout Africa.