Access to housing is one of the key commitments agreed to by world leaders in the UN’s New Urban Agenda (NUA), which sets a new global standard for sustainable urban development, and which is expected to help governments and peoples rethink how they plan, manage and live in cities.
The NUA was endorsed by the 68th Plenary Meeting of the 71st Session of the UN General Assembly held on December 2016 with affordable housing as a key part of the Sustainable Development Goal (SDG) 11 of building sustainable cities and communities.
However, the Nigerian Government is struggling with the challenge of providing, at a meaningful scale, high quality affordable housing to the people as a result of insufficient funds. But Nigerians, just as everyone else across Africa and the world, have an inalienable right to affordable housing as a panacea to the challenges of secure, habitable and affordable habitat.
As housing backlogs continue to increase exponentially across the continent of Africa, the need for investment in this area has become one of urgency. Given that Nigerian (and African) cities continue to grow as the level of urbanization increase at near-exponential levels driven by high rate of rural-urban migration (from 39.94 per cent in 2006 to 49.4 per cent in 2017), there is a heightened the need for affordable housing. This has drawn the interest of investors, financiers and developers towards the housing sector.
Because the perception of what is affordable varies significantly from one city to another, from one state to another, and from one income group to another, the only feasible attempt at explaining affordable housing is broadly defining it. Analysts have defined affordable housing generally to include housing solutions that are priced and financed in a way that ensures low-income occupants can also satisfy their other basic needs.
Even though the scarcity of affordable housing affects all segments of the society, it is usually the low-income earners that are most affected. Given that the Nigerian urban housing market primarily targets high-income earners, this significant part of the Nigerian population excluded from formal housing provision. Furthermore, low-income households in the country face a number of obstacles in their quest for decent housing. These barriers include weak individual purchasing power, poor access to housing finance, unavailability of complementary goods such as land and infrastructure, and inadequate housing supply to meet the actual needs of the urban poor.
BENEFITS OF AFFORDABLE HOUSING INVESTING
Affordable housing offers double rewards of economic growth and poverty alleviation, and no matter the impact financiers or investors seek to create, they can reach a consensus on issues bordering on returns and impact.
Investors can reap substantial benefits from Nigeria’s growing housing finance sector. With the burgeoning spate of urbanisation in the country, the demand for affordable housing will remain strong, both for rental and purchase. Moreover, As the mortgage market does not yet meet the breadth of the population who might afford a mortgage, and as most households still find it difficult to finance their housing independently from savings or non-mortgage credit, investors can look for a mechanism that will allow them to provide the needed housing to the people at friendly prices while they make acceptable returns on their investments.
Nigeria in 2016, faced significant economic crises arising from depressed oil prices, foreign exchange fluctuations and GDP contraction. This further dealt a shrinking blow to the prospects of realising the affordable housing dreams. The Nigerian real estate sector accounts for 7.52% of the Nigerian economy; housing budget stands at N41 billion with meagre progress in the FGN’s envisioned production of one million standardised affordable houses.As stated by the Managing Director of the Federal Mortgage Bank of Nigeria, Nigeria has a housing deficit estimated at between 17 to 20 million housing units and a 900,000 annual unit deficit increase, with a potential cost of about N6 trillion.
In order to meet this supply gap of 23 million units by 2020, 2.6 million homes needed annually. Bullish estimates suggest that only 200,000 units are currently built annually. This gap should be sufficient to trigger investors’ interest in this sector.The FGN launched a National Housing Fund Programme under the Social Investment Fund which was set up to increase the access of Nigerians to affordable housing and home ownership.
INVESTORS IN AFFORDABLE HOUSING SECTOR
International Housing Solutions (IHS)
International Housing Solutions (IHS) is a global private equity investor leading investment into the affordable housing sector in sub-Saharan Africa, has created a fund, HIS Fund II, which will target affordable and energy-efficient housing opportunities in sub-Saharan Africa. IHS has built an enviable reputation of providing 27,000 new homes and also focuses on adding value by providing easy access to opportunities previously unavailable to the middle class such as security, transport cost reduction and access to quality education through strategic positioning. The first fund is South Africa Workforce Housing Fund, a $230 million fund and the second fund(HIS Fund II) has already attracted approximately $180 million in capital majorly targeted to South Africa and Sub-Saharan countries.
Lafarge Africa, through LafargeHolcim, focuses on providing a range of affordable housing solutions tailored to the local challenges and needs of the populace. They offer microfinance program for affordable housing which included access to microcredits via partnership with the International Finance Corporation (IFC) amongst others, construction solutions like roofing solutions and modular housing templates for bit-by-bit construction and technical assistance through the assistance of LafargeHolcim advisors.
CALL TO ACTION
Affordable housing – sometimes also called social housing or mass housing – is both a social and an economic issue that has featuredprominently in most discourses bordering on mass housing. Affordable housing should not be a top priority policy of the government alone, but should also be made a focus area by private investors, such that the essential needs of all stakeholders will be significantly addressed and aid UN’s vision and efforts to make cities and human settlements inclusive, safe, resilient and sustainable. A number of investors have noted the need for housing for critical mass of the Nigerian people and have already made some level of investment in the real estate sector.
INNOCENT UNAH & ABISINUOLA DAVID-OLUSA