As part of strategies to save Nigeria’s oil-dependent economy from slipping into recession post pandemic, the Economic Sustainability Committee (ESC) has recommended some proactive measures, including mass housing and roads construction, where it says there is hope for economic recovery.
ESC, headed by Vice President Yemi Osinbajo, is an inter-ministerial committee to be responsible for general oversight of implementation of its recommendations and will be reporting to the president.
The inclusion of mass housing and roads construction among the proposed key projects is instructive. The committee believes, and rightly too, that these two key areas have the capacity to generate economic activities that will lead to creation of jobs needed now to revitalise the economy.
Besides an extensive public works and road construction programme that will be focusing on both major and rural roads, the committee also sees hope in mass housing programme expected to deliver up to 300,000 homes annually.
The programme is expected to engage young professionals and artisans who form themselves into small and medium scale businesses within the construction industry. Such enterprises will use indigenous labour and materials working on dedicated housing sites.
Though building 300,000 housing units in a country that has a housing demand-supply gap estimated at 20 million units seems a single drop of water in an ocean, experts and stakeholders in the country’s housing sector welcome the idea as a good starting point. They also see investment opportunity coming. The experts converge on the capacity of both housing and roads construction to create jobs for different income classes in the real estate value chain.
“With the quantum of buildings and roads to be provided, more money will be in circulation and people will be gainfully employed. With more money in circulation and a slight reduction in the unemployment rate, this initiative will contribute its quota to rejuvenating the economy,” Gbenga Olaniyan, CEO, Estate Links Limited, said.
“Real estate plays an integral role in the economy as it provides shelter for people to rest and for businesses to operate from. Increase in construction activity will definitely have a multiplier effect on economic growth with its linkages to various industries and sectors such as cement, steel plants, furniture, sanitary ware, etc,” he said.
Building more houses and constructing more roads can provide a boost in the economy and for that to make a great change in the economy, Paul Onwuanibe, CEO, Landmark Africa Group, is of the view that detailed strategic plan will need to be put together regarding roads that need to be fixed and built.
He noted that for a country with a large population, a higher target should be set regarding housing creation, adding that building and fixing more roads along with housing will lead to more job creation.
Onwuanibe said the approach to economic revival through roads construction was good, explaining that the economy needed reliable infrastructure to connect supply chains and efficiently move people, goods, and services across the country.
“This infrastructure will connect people to opportunities for employment along with healthcare and education, etc,” he said.
Olaniyan had raised concern over Nigeria’s history with unfinished projects, suggesting that firm contracts need to be drawn giving specific time-lines for delivery before funds are committed. But the ESC seemed to have envisaged that as it assured of continuity of construction.
“For the construction of houses to continue uninterrupted across the country, the Federal Ministry of Works and Housing, CBN and the Family Homes Fund (under the Ministry of Finance) are making arrangements for purchase through cooperatives and for warehousing of completed houses which will then be mortgaged or let out on rent-to-own basis,” the committee assured.
In spite of that, stakeholders would rather the government allows the private sector to handle the aspect of mass housing, citing government’s lack of expertise, poor locations, inability to deliver projects in time and on budget, and shady deals by people they called political contractors.
“To hasten the delivery of mass housing, the Ministry of Works and Housing should re-imagine its current approach to housing, engage more with professionals who have experience and expertise,” Festus Adebayo, president, Housing Development Advocacy Network (HDAN), advised, saying that government should provide enabling environment, particularly easing of property registration.
Femi Akintunde, GMD, Alpha Mead Group, has his fears too, even though he welcomes the move as a good development that will serve as a reflationary measure aimed to stimulate economic output through increased spending in housing and infrastructure development.
“My biggest concern is that there are certain structural dislocations in the financing structure for the housing sector that need to be corrected for this new recommendation to be effective and to be able to have the desired positive impact on the sector and the economy as a whole,” Akintunde said.
“Any available fund to be provided by the government must be designed in such a way that will be targeted to impact the primary mortgage banks (PMBs) directly on the demand side and the real estate developers on the supply side,” he said.
He reasoned that unless the developers have access to reasonably priced funding, they would lack the capacity to create sufficient stock of quality mortgageable housing stock that the PMBs can finance.
“Where the developers continue to struggle to produce houses under the current harsh economic condition without any form of support from the government, they will produce and sell at the most economically viable price that will not be affordable to an average Nigerian,” he said.
