Author ~ Ebuka Onunaiwu
As a social scientist, numbers mean a lot to me, whether these numbers are used to explain trends in the health sector, financial or economic performance, surplus or deficit in infrastructure, sporting analysis, or perhaps behavioral patterns of a specific population, I take numbers seriously and I know that the leaders of our country Nigeria pay similar, if not more attention to numbers, when it relates to oil and politics. However, I strongly believe that it is high time Nigeria paid the needed attention to the troubling numbers in the housing sector. In this article my aim is to quickly shed light on some key figures in Nigeria’s housing sector.
“They say numbers are beautiful, but those of Nigeria’s housing sector are not”, what then does the numbers say about housing in Nigeria?
Nigeria, a country with a population of about 180 million people, has a housing deficit of 17million, and according to the World Bank, at least 59.50 trillion naira will be needed to bridge this deficit. For the records the needed amount is over 7 times the total national budget of Nigeria. If you over-exaggerate the provision housing units at about 500,000 per year, it would take 34 years to bridge the gap created by the deficit and this is without considering the population growth rate.
Mortgage financing has been an effective tool used in tackling the housing problem in many countries, but Nigeria has not been able to utilise this tool. According to the National Bureau of Statistics, the Real Estate contribution to the Gross Domestic Product was about 7.73 percent in 2012. Of this figure, the mortgage loans and advances contributed 0.5 percent. This minimal contribution by mortgage loans is as a result of the high interest rate between 11 – 29 percent demanded by Mortgage Banks and commercial banks. Even at this high interest rate, many commercial banks demand a down payment of 25 percent of the mortgage value and the repayment period for the mortgage is usually between 10 – 20 years. Also, the housing units built for the poor in Nigeria cost between 5 -20 million naira, which is not affordable to poor people in Nigeria. The case is the same with rented apartments in Nigeria. Families pay through their noses to live in decent apartments in urban areas. Anything lesser than the usual high end rents will mean living in suburbs or city outskirts.
There is also a problem of high cost of land registration and titling. There are about 21 procedures to register and process land titling in Nigeria and the entire process of transfer could last 274 days. This speaks volume of the nature of Nigeria’s land tenure system as well as the ease of doing business in the country.
Political stability is another limiting factor in the housing sector. In 33 years, that is between 1981 – 2014, the country had 5 different National Housing Policy documents. Administration after administration, the National Housing Policy has been reviewed or reproduced, and this has not been to the advantage of the sector. On the contrary it has inhibited growth in the sector and has scared away investors.
However, the case is not all gloomy, there seems to be some light at the end of the tunnel. In 2017, the Federal Government of Nigeria revealed that the sum of N1 trillion would be committed to construction of housing accommodation in the country. The allocated sum will be used to provide 2.5 million housing units. Also, the Society of Real Estate Developers of Nigeria, has committed to assisting the Federal Government in tackling the housing deficit in the country by constructing and delivering 10,000 housing units for each of the 37 states in Nigeria including the FCT. These promises to be somewhat far-reaching if indeed they are actioned. But until the project kicks off they remain mere promises.
Indeed, the numbers predict a bleak future but like I earlier said, there seems to be some light at the end of the tunnel. In about two weeks from now, I will release the second part of this article which will focus of how other countries have gotten it right with regards to housing, this would then be followed by a third edition that would detail possible sustainable solution to the housing problem in Nigeria. See you in two weeks’ time.