Recognising that mass housing is a growth enabler in a struggling economy ravaged by Covid-19 pandemic, the federal government of Nigeria is setting out to construct mass housing, targeting 300,000 housing units that will be ready for occupation, all things being equal, in 12 months.
In order to avoid the pitfalls of similar initiatives in the past, and to ensure the success of the present project which is part of recommendations by the Economic Sustainability Committee (ESC) for economic recovery, post-Covid-19, government has set aside funding and put modalities in place for implementation.
“Government will be building the 300,000 houses over 12 months at a total cost of N317.29 billion, using existing institutions. Implementation is expected to be carried out by the Federal Ministry of Works and Housing, the Federal Housing Authority (FHA) and the Federal Mortgage Bank of Nigeria (FMBN),” Ayo Ibaru, Director, Real Estate at Northcourt, confirmed to BusinessDay.
Ibaru noted that mass housing projects tended to work best when public expenditure meets rigorous oversight, adding, “we seem to need more of the latter.”
As part of modalities to make this project successful, office of the Vice President is to provide the leadership and this, Ibaru explained, is based on the understanding that most initiatives chaired by the VP’s office tend to achieve some level of success.
“Few offices have a higher performance record, and if we’re going by unhindered past performance, we’re likely to see progress. This means funding and oversight will have a head start,” he said, pointing out that the implementation committee is to be chaired by Federal Ministers to drive execution.
Project monitors have also been constituted by combined public and private sector teams and according to the Imperial Mortgage Bank boss, this is the deciding factor on execution, because he believes that, funding out of the question, project monitors, duly empowered, can make or break this programme.
A project of this magnitude needs credible contractors with good track records. But government is yet to declare any. Ibaru, however, reasons that to achieve the target time frame, there are only a handful of dominant companies that can deliver to acceptable standards of quality, hoping that due process will be followed in contractor selection.
In terms of pricing for the housing, he said “it’s still too early to say, but utilising a model that considers, among other things, the state of the economy, current construction materials prices and its overall impact on the average income earner is a good place to start, pointing that the Lagos Home Ownership Mortgage Scheme (LagosHOMS) project might be useful in that regard.
According to him, prospective buyers of the houses will have to engage with the government through federal ministry of works and housing (FMW&H) which, acting with the FHA and the FMBN, would have to come up with a thorough and transparent framework. “This will work best early in the process, involving the private sector,” he said
The Economic Sustainability Committee selected mass housing and public roads construction among key projects for the government to undertake in order to revive the Covid-19 ravaged economy in the believe that housing and roads construction have the capacity to generate economic activities and create jobs.
Experts and sundry stakeholders in the housing and construction industry have welcomed this idea, describing the industry as a catalyst for economic growth through massive employment creation.
“Many countries have embarked on construction activities as a means of stimulating economic activities because they have dual impacts on the economy,” Frank Okosun, MD/CEO, Knight Frank Nigeria, told BusinessDay in an interview.
He explained that during the actual construction period, construction provides jobs, thereby putting cash into the hands of citizens who distribute it onward as they purchase other goods and services they require for living.
He added the final products which may be houses, roads, bridges etc. will further improve the lives of the people who use it. Hence, this is a welcome plan, which needs to be meticulously implemented.
Damola Akinolire, the managing director of Alpha Mead Construction Company, affirms, estimating that 300,000 housing units will provide, at least, six million direct and indirect jobs. “Although far from making any major dent to the high unemployment figures, it will certainly make an impact, he said.
The residential housing market, he noted, is one of the most labour-intensive sub-sectors and will generate a lot of economic activity and reduce unemployment.
Though to her the size of the project appears small in comparison to the stated housing deficit, Oluwakemi Adeyemo, CEO, Future Perfect Properties, notes that setting up this economic recovery project with as little bias and bottlenecks as possible will add its own quota to reviving the economy.
“To determine the economic recovery output, a set of critical questions needs formulating. These questions must also get answers. This is important for the sake of clarity and measurable output.
“One of such questions should be, which of the housing problems will the projects be solving? Nigeria’s housing challenge is three-pronged, namely, supply, demand and the macroeconomics. Housing and road projects should seek to solve the macroeconomics challenge,” she posited.
