FG COMMITTED TO AFFORDABLE HOUSING POLICY — FASHOLA
On November 11th 2015, Babatunde Raji Fashola (SAN) was appointed the Minister of Power, Works and Housing. His appointment then was greeted with mixed reactions. Some claimed the weight of handling three key ministries will be too much for him to bear while others believed he is a ‘superman’ who is equal to the herculean task.
Perhaps after listening to a wide range of public opinion, President Muhammadu Buhari decided to appoint two ministers of state for the Ministry to assist him. Baba Shehuri and Suleiman Hassan were appointed to assist in ensuring the delivery of good governance to Nigerians from the Ministry.
FASHOLA’S AGENDA FOR HOUSING
Speaking for the first time in December 2015 as the new Minister for Power, Works and Housing, Babatunde Fashola outlined his plans to reform the ministry.
In his inaugural media briefing with the theme, “Setting Agenda for Delivering Change”, Fashola picked his bearing from the huge expectations of the Nigerian public who voted for the All Progressive Congress (APC) message of Change and elected President Muhammadu Buhari to office having promised to address the challenges of security, corruption and dwindling economic fortunes of the country, Fashola noted that the cooperation of Nigerians was needed in order to achieve the realization of the expectation with the Ministry playing its expected role in the process.
In analyzing the current situation, the Minister blamed the economic downturn which has led to massive loss of jobs in the country, to the anomaly in budgetary expenditures over the years. He said in order to achieve the needed change in the economy of the country; the ratio of Capital Expenditure to Recurrent Expenditure must change in the 2016 Budget adding that this had been the bane of budget implementations in the past.
“The first thing that must change is the Capital to Recurrent ratio of the budget, and our colleagues in the Ministries of Finance and Budget and Planning are working on this and they will address you at their own time on the changes they have made and what citizens must do to enable them achieve that plan. As I have had cause to say before, the budget is the article of faith of every serious nation and government and our resolve to do more capital spending with less resources must be indicative of our seriousness to reflate this economy”, the Minister said.
On the issue of housing, Fashola noted that “if we complete our ongoing projects and we get land from the governors in all states and the Federal Capital Territory (FCT) to start using the LagosHOMS model, we should begin providing 40 blocks of housing in each state and the FCT.” He also stated that “we see this leading to the potential delivery of 12 flats per block and 480 flats per state, subsequently providing 17,760 flats nationwide, for a start.”
“The Federal Government of Nigeria plan introducing mortgage schemes and we plan adopting the Lagos state model, specifically Lagos Home Ownership Mortgage Scheme (LagosHOMS), to achieve this. The LagosHOMS project, has given about 400 people keys to their apartments in Lagos, since it was introduced in March 2014. This scheme was introduced to battle increasing over-population in Lagos state and the corresponding increase in rent in Lagos state. The scheme appears to be a success, attracting more customers every day. Nigeria would also benefit from the housing scheme, with projections indicating the country will be the fourth most populated country in the world by 2050.”
According to him, “This will translate into a minimum of 4 doors and 2 windows very conservatively per home; a demand for 71,040 Doors and 35,520 Windows nationwide in year one, which we will encourage to be made in Nigeria. The demand for those who will make and fix the doors and window, the hinges, the wood polish and the paint and tiles suggest the onset of jobs and change for our artisans and workers who are the real builders of every economy”.
4 KEY POINTS OF NIGERIA’S NATIONAL HOUSING POLICY UNDER FASHOLA
The Ministry of Power, Works and Housing in 2017 unveiled a National Housing Policy that focuses on, among other things creating and expanding economic opportunity for Nigerian artisans, builders and tradesmen.
According to the minister in charge of the ministry, Babatunde Fashola, the policy is founded on the following considerations:
1. National Acceptability: A national housing program must have national acceptability in terms of diversity of design in response to cultural and climatic diversities. We have finalized and settled on 6 (six) designs, classified into 2 (two) broad sets of designs: Bungalows in the North and Blocks of flats in the South. All of these were achieved by local architects in the ministry with a voluntary contribution from outside the ministry, but with all of it totally home grown.
2. Standardization of Design and Input: The next step is to standardize these designs, windows and fittings and all of these have been done – again by local capacity.
3. Efficiency of Construction: The third step is to build industrially and reduce construction time. We are using local capacity to leverage international capacity to achieve this.
4. Local Content: We have resolved to use only the following made in Nigeria items; Doors, Windows, Tiles, Ceilings, Plumbing accessories, Cables, Paint and Ironmongery
THE EARLY DAYS
To kick start action in the Ministry, the Federal Government in 2016 set out targeting the provision of mortgages at single digit interest rates and long tenor as it plans to unveil a new housing finance initiative. Minister of Finance, Kemi Adeosun, revealed this at the 32nd Annual Conference and General Meeting of the African Union for Housing Finance (AUHF) which was held in Abuja.
She said the initiative to finance housing projects is aimed at the construction of over 300,000 affordable houses through mortgage financing and creation of 700,000 new jobs across the housing development value chain. The minister explained that government was also contemplating putting in place foreclosure law and that would expedite legal processes for dispute resolution that is needed to support the development and growth of mortgage institutions in the country.
She emphasised the need to put in place monetary policies that would support low interest rates by finance institutions “as a means of boosting activities in the mortgage industry”, adding that federal government is committed to bringing down the current high interest rate.
Represented by Mr. Seye Senfuye, the minister said: “We are committed to fundamentally addressing historical challenges to housing. This requires innovative financial solutions that will stimulate housing development, related industries, create jobs across the nation and satisfy yearning for security through home ownership. Nigerians deserves to acquire affordable homes, built to a standard of good quality, located in well serviced estates that will create ideal environments in which they can raise their families, instead of being saddled with the challenges and risks of trying to build their homes organically. Due to the current high rates of interest, we believe that government intervention to bring down rates and enhance affordability is needed and we are committed to doing this.”
Also speaking at the event, Minister of Power, Works and Housing, Mr. Babatunde Fashola unveiled plan by the federal government to de-risk lending to property developers and provide guarantees and credit enhancement to stimulate growth in the housing sector. Fashola who was represented by Mrs. Eucharia Alozie, Director, Public Private Partnership (PPP) in the ministry, said government recognises that provision of leverage and guarantees are critical to attracting private sector funds to the industry, thereby creating thousands of affordable houses yearly and generating employment and commercial activities.
“From the inception of government’s initiative in organised housing finance system (in Nigeria) to date, only meager sum have so far been injected into the system. This accounts for less than 0.5 per cent of the GDP compared to other climes, like the United Kingdom and South Africa. This is due to the inability of financial systems to provide low cost finance that meets the need of low and medium income earners,” he stated.
FASHOLA AT AIHS 2017, LISTS MAJOR CHALLENGES IN THE HOUSING SECTOR
Everything in life comes with its own challenges and Government’s intervention in housing is not an exception. At the 2017 Abuja International Housing Show, The Minister, Mr Babatunde Fashola, said the major challenges of housing development in the country are financing, affordability and acceptability.
According to him, majority of the estates are not occupied due to inadequate infrastructure, which discourages people who are interested in owning property.
“As we discuss housing finance, let also understand that financing is not only the problem, there are many others, there is the issue of affordability and also that of acceptability.
“ We have empty houses in many states of the federation, why are they not occupied, can people afford them; if they can afford them, do they like the way they were built?
“It is a problem, we must connect and build to the taste of the home taker, I think the financing and infrastructure problem will remain with us as long as we live.’’
He said that the ministry had in the past one year designed a national housing model in response to the climatic and cultural diversities of Nigerians.
Fashola said that the size of the problem in the housing sector should not affect the enthusiasm of Nigerians to find solutions to the present housing deficit.
“Let us focus more on what we can contribute, what we can do; rather than how big the problem is.
“It is indisputable that housing is a problem globally; so let us focus less on how big it is and focus more on what we can do’’ he said.
THE LAUNCH OF THE NIGERIA HOUSING FUND PROGRAMME
Determined to make housing finance easy and affordable, the Federal Government on August 29, 2017 initiated the Nigeria Housing Fund Programme (NHFP) which is under the Social Investment Fund of the Federal Government in which N100 billion has been set aside for its take off.
The Nigeria Housing Fund Programme was a Federal Government scheme that is being coordinated by the Central Bank of Nigeria, CBN, to ensure access to housing finance by prospective home owners. The scheme which has the World Bank and AFDB as contributors to the fund affords real estate developers who develop for social housing the opportunity to borrow 80 per cent of cost of project and source the remaining 20 per cent.
Specifically, the government has under the NHFP launched My Own Home Scheme to enlighten those seeking to own houses of theirs across the country on how to key into the scheme and become beneficiaries.
Unveiling the scheme in Lagos in 2017, stakeholders who were in attendance such as mortgage finance operators, Central Bank of Nigeria and NPF Micro Finance Bank lauded the scheme.
Mrs. Adenike Fasanya-Osilaja, Housing/Mortgage Finance consultant to the CBN on the My Own Home Scheme, said the initiative was in collaboration with the federal government, World Bank and Mortgage Banks Association of Nigeria (MBAN), with other relevant stakeholders to ensure that challenges in housing finance are tackled.
Fasanya-Osilaja explained that civil servants and prospective home owners in the private sector needed to be properly guided on the best approach to accessing mortgage loans, hence the launch, adding that the NHFP would create the enabling environment for strengthening the Nigerian housing sector by setting up sustainable framework for mortgage originators.
She said those mortgage originators range from financial institutions that provide housing finance to access long-term refinancing, pointing out that the framework will lead to setting up of mortgage guarantee/insurance as well as a housing micro finance scheme for strengthening of Nigeria’s housing micro finance sector. She noted that intending house owners are advised to shop around to compare rates before taking a mortgage or housing finance loan.
Fasanya-Osilaja further stated that the NHFP intervention would include a mass literacy campaign on consumer education, protection and responsibility with regards to housing finance in Nigeria, insisting that the campaign is aimed at educating every Nigerian on the right to own a home, the cost implications, advantages of taking loans to finance a home and to ultimately serve as a catalytic program to jumpstart the housing market in Nigeria.
Deputy Director, Other Financial Institutions Supervision (OFIS) at CBN and a Director in NHFP, Adesemoye Adedeji , disclosed that to ensure its accessibility and effectiveness, nine Micro finance banks (MFBs), would be participating in the scheme, which is funded with $300 million, adding that the arrangement would capitalise on mortgage guarantee and insurance with $15 million for the pilot housing micro finance.
According to him, the money was with the CBN for proper monitoring and execution to avoid disbursing it to wrong channels that can’t handle housing projects.
President of the Mortgage Bankers Association of Nigeria, and Managing Director, Trustbank Mortgage Ltd, Mr. Niyi Akinlusi, said the scheme was a departure from other housing schemes in Nigeria, noting that NHFP has set up a framework that would revamp the housing finance sector by making access to finance a lot easier through its four major components, which include the Nigerian Mortgage Refinance Company, whose task is to provide long-term refinancing of mortgages and standardizing mortgage procedures,
Mortgage Guarantee/Insurance Scheme, which is responsible for providing borrowers with initial down payment with mortgage for home ownership.
“The Housing Micro finance Scheme is meant to stimulate increased lending to low-income earners in the formal and informal sectors in Nigeria through Micro finance banks for incremental housing construction or housing improvement, while the technical assistance for the scheme shall ensure the protection of all the parties involved in the scheme”, Akinlusi said.
MORE PROMISES AS AT END OF 2017
With two years gone in the life span of the administration, it was more promises galore. Babatunde Raji Fashola, the Minister of Power, Works and Housing disclosed that the Federal Government is committed to growing the housing sector and harnessing its vast potentials for sustainable national development, stating that housing has been a driver of economic growth throughout the world and that there is no reason why Nigeria cannot achieve same.
In his keynote address delivered at the 2017 World Habitat and World Cities Day commemoration in Abuja, the Minister, represented by the Minister of State II in the Ministry, Surv. Suleiman Hassan Zarma, said that the dual theme of the 2017 celebration : ‘ Housing Policies: Affordable Homes’ and ‘Innovative Governance, Open Cities, is a “reflection of a strong attempt to follow up on Agenda 2030 and the New Urban Agenda adopted in Quito, Ecuador in 2016”.
He added that it will afford policy makers in Nigeria the opportunity to review and evaluate past housing policies and assess their impact as well as strategize for the future. He said that government has put in place the necessary machinery to jump- start a housing revolution through the innovative nationwide National Housing Programme.
According to him, “the pilot implementation stage has already created opportunities for 634 contractors, created 13,689 direct jobs and 41,000 indirect jobs’’. He noted that if the Programme could be replicated on a yearly basis and also successfully implement the housing cooperatives, leverage private sector capacity, strengthen FHA and FMBN to play their roles, we will be creating an affordable housing economy that will fortify and transform our nation in the nearest future.
The Minister stated that, “to complement these efforts, we have activated the Road map for Nigeria’s Housing and Urban development Sector, and are in the process of producing a strategic National Physical Development Plan to integrate physical planning with economic development,” adding that the National Building Code was also being revised to curb incessant building collapse in the county and to ensure proper alignment with the International Building Code.
In his welcome remarks, the Minister of State I for Power, Works and Housing, Hon Mustapha Baba Shehuri, reminded stakeholders in the housing sector of their duties to develop policies capable of providing basic infrastructures and social services that could be lacking due to rapid urbanization of cities.
He said, “We are therefore duty bound to generate responsive policies which are capable of turning around the current poor state of our cities and guarantee efficient delivery of infrastructure and basic social services.”
WE ARE COMMITTED TO AFFORDABLE HOUSING POLICY- FASHOLA
Earlier this year, the Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola, warned government agencies in the housing sector that the provision of affordable housing policy of the Muhammadu Buhari administration must be delivered to the people.
Mr. Fashola gave the charge at the inauguration of the Governing Boards of the Federal Housing Authority, FHA, and the Federal Mortgage Bank of Nigeria, FMBN, in Abuja. He said the agencies must be repositioned in order to deliver service to Nigerians.
The minister recalled that “Since the FHA and FMBN were set up, they have experienced their fair share of challenges while they have also become well-known brands within the country.”
According to him, “This is now your responsibility to reposition these brands and utilise them, by providing the guidance for the managing directors and management teams of FHA and FMBN to enable them deliver service to Nigerians. “For the avoidance of doubt, let me state that the policy of government is to deliver affordable housing, acceptable to Nigerians and these agencies, whose brands you will now administer are the implementing arms of government for housing delivery (FHA) and housing financing (FMBN).
“The managing directors and their management teams have the executive responsibility for carrying these out, subject to your Boards’ oversight, approvals and advice, while the ministry plays a supervisory role. “Therefore, we expect to see harmony, respect, teamwork and a healthy working co-operation between boards and management. On the part of the ministry, I assure you that we will supervise but we will not interfere. For your information, we are piloting a housing programme and currently constructing in 33 states of Nigeria.
“We do this to validate and test what type of housing design responds to Nigeria’s diverse cultural, climatic and religious needs, so as to ascertain what is acceptable and affordable. “We are at different stages of construction in different states, and we have recommended these designs to FHA, without imposing them. Our decision is informed by the evidence of previous housing initiatives that people did not take up and empty houses that still abound in almost every state of Nigeria.
“These houses that are not taken and the deficit of housing, suggests to us that the houses not taken are either unacceptable or unaffordable or both. We see housing as a product, and we take the view that before they can be delivered to market, we must know what the people want and what they can afford. When our pilot is fully completed, these answers will become self-evident and this is when we can mass produce.
“There is certainly nothing that stops FHA from undertaking other designs of housing if it can find a market for them, and it can deploy the income to cross-subsidize and make mass housing more affordable. As for the financing side, this is critical to affordability and it is as much the function of FHA in cost management and delivery as it is that of FMBN in delivering mortgages of affordable tenures and costs.
“Since May 2015 to date, FMBN has issued 2,724 mortgages worth N20.237 billion to assist Nigerians buy their own homes under the National Housing Fund NHF”
THE ACHIEVEMENTS SO FAR
The effort of the Federal Government in the housing sector through the implementation of the National Housing Programme has so far yielded about 64,000 jobs. The government apart from addressing housing deficit in the country by injecting over 2000 housing units, the present administration has succeeded to some extent in reducing unemployment across the nation. This has become possible because of the multiplier effect that housing construction has on the economy. For instance, all categories of workers in the construction industry has benefitted from the Programme.
It is on record that in the few places where the NHP projects are being executed presently, artisans, farmers and suppliers in the country are getting more empowered through the National Housing Programme aimed at providing affordable houses in Nigeria.
Under the National Housing Programme, each State Government provides land while the Federal Government through the Ministry of Power, Works and Housing provides physical housing units in the 36 states.
As at today, the Federal Government is carrying out construction of housing units in 33 states of the Federation where land has been made available for workers under its National Housing Programme. Under the programme, 653 contractors were engaged in the pilot scheme to deliver 2,736 units, while a total of 54,680 people were employed in the process.
EXPERTS ASSESSMENT OF THE HOUSING SECTOR IN THREE YEARS
On May 29th this year, some experts in the industry had their say on the three years of the Administration so far in terms of providing affordable housing for Nigerians. According to Abioye Oke, the CEO of Lifestyle Asset Hub Ltd “as we reflect over the past 3 years of this Administration and how it affects the housing sector…. As you might all agree, the current traditional real estate acquisition options in Nigeria are not working for the majority…. Hence, the over 17m units housing deficit… I classify these options into 4. How many Nigerians can afford to buy a small 2 bedroom flat with 15m-20m? Not to talk of a Terrace Duplex Apartment. How many Nigerians benefit from our Mortgage System? Those that have access how many can afford the 30% equity funding? Most go to the bank to borrow their 30% and end up having shelter without Lifestyle.
He added that “how many Nigerians can boast of receiving a house as a gift from their late parents? Then talk of selling properties and saving up your commission. Or Sell 20 properties and get 1 free. Very smart options I will say. But how many people achieve this? Very few. Currently, Nigeria has over 17 Million housing deficit and it could take over 20 year to cure this”
Another expert, Joshua Egbagbe said “Manifestos are laudable, but are quickly forgotten when the realities of their implementation are realized. Unless there is a grassroots advocacy by the various associations, more of the same will continue. I would have thought that a deficit of 17 million housing units would be a catalyst for the political class, whether they be APC or PDP, to act. Put in perspective, 17 million units roughly equates to the populations of the 17 African counties with the smallest population. Is this not a clear example for Nigeria to grow its GDP?. If the political class doesn’t act as the catalyst, then someone like Julius Malema will”
For Mr Raymond Lebona “if the load is too big for Your Head, Shouldn’t your good neighbour offer you help”? Jokes apart, it’s truly our common responsibility to enforce accountability! Where have we all been, with our various “powerful” Associations and Professional Bodies in the built environment; without holding up for scrutinizing the Government’s self-arranged load, without stepping forward from Day 1 to hold serious, self-less and pragmatic “Load-Related” conversations with our friends and leaders in this matter?
REDAN’S POSITION ON THE SECTOR: Undefined Operating Environment Hurting Housing Sector
Taking a position on the happenings in the housing sector for the last three years, the Real Estate Developers Association of Nigeria (REDAN) expressed concern that the current undefined operating environment in housing sector has yielded too many casualties for the association to ignore.
The President of the association, Rev. Ugochukwu Chime noted that the challenges hindering a seamless interface of and smooth transaction on the housing value chain had been identified and would be dealt with progressively.
He said: “Issues of data, finance, land administration, monitoring and compliance with the extant laws and best practices e top of our priority list.
“In doing so, we call on government arms- the executive and legislature to give us support in our course to bring succour to the Nigeria’s real estate sphere. The structure and enabling environment that will govern the interface and relationships among players must be clearly defined.
“The current undefined and uncharted leap of faith operating environment has yielded too many casualties for us to ignore,” Chime said.
“We shall further the work we initiated with Federal Mortgage Bank of Nigeria (FMBN), Nigerian Mortgage Refinance Corporation (NMRC) and other stakeholders to ensure ease of doing real estate business and make home ownership accessible and affordable, while expecting cooperation from policy makers and other agencies,” Chime said.
IMPACT OF FMBN AND NMRC IN THE LAST THREE YEARS
Among the numerous impacts of the Federal Mortgage Bank of Nigeria (FMBN) in the last three years is its boosting of housing in seven states with 1,500 units. This was done amid concerns that a yearly rural-urban migration of over 5 per cent requires 720,000 housing units annually to fill the nation’s housing deficit.
The units developed by the bank in seven states; namely, Taraba, Kwara, Enugu, Ebonyi, Imo, Nassarawa and Niger were commissioned in 2017. For instance, in Jalingo, 202 housing units, made up of 88 three-bedroom semi-detached bungalows, 90 two-bedroom semi-detached bungalows and 24 one-bedroom terrace flats were completed.
FMBN has also funded a number of estates in Taraba State with a total investment of about N1.4 billion in the development of a total of 378 housing units.
The housing Estates being developed by FMBN across the country are financed from the resources of the National Housing Fund (NHF) Scheme. The NHF is a contributory scheme into which Nigerian workers in both the public and private sectors earning a minimum of N3, 000 per annum contribute 2.5per cent of their monthly income.
On the basis of their consistent and continuous contributions to the NHF scheme, Nigerian workers become eligible for mortgage loans at a concessionary interest rate of 6 per cent yearly and repayable over a maximum period of 30 years to ensure affordable home ownership among Nigerians.
The effect of these concessions reduces upfront homeownership costs by at least 20 per cent. By making homeownership more inclusive, FMBN is refocusing its business to make mortgages more affordable to a wider segment of the market, which now includes the mass and middle income segments of the population. The targeted average price per unit of a house to meet these customers is estimated at between five million to seven million naira per unit.
With these developments, FMBN is achieving its mandate in terms of cost management, resource optimization and waste reduction. For the 2016 financial year, the Bank posted an Operating Surplus (profit) of N2.7 billion – the first such impressive performance in two decades which is 50 per cent above the budgeted N1.8 billion for 2016.
Within the time period, the FMBN also delivered 72 housing units to the Ebonyi State Government for the use of its civil servants. The houses are located at Ezzambgo, Ohaukwu Council area of Ebonyi State. The housing units consist of 5 units of 3-bedroom fully detached bungalows, 30 units of 3-bedroom semi-detached bungalows and 12 units of 2-bedroom terrace. It also consists of 20 units of 2-bedroom semi-detached bungalows and 5 units of 1-bedroom terrace,” he said.
The Nigeria Mortgage Refinance Company (NMRC) has equally been active in the last three years. In 2017, in an historic move to deepen mortgage penetration and widen access to affordable housing, the NMRC in conjunction with the Central Bank of Nigeria (CBN), the Mortgage Banking Association of Nigeria (MBAN), the Federal Mortgage Bank of Nigeria (FMBN) and the Nigeria Deposit Insurance Corporation (NDIC) launched Uniform Mortgage Underwriting Standards for the informal sector.
The new standards will for the first time attempt to bring the operators in this sector, which constitute about 67.54 million of Nigeria’s 81.15 million workforces into the mortgage and housing net. The informal sector is estimated to account for over 60% of the country’s GDP.
The NMRC also signed a landmark partnership deal with Kohath Housing Corporation to provide over 15,000 housing nationwide to low income earners. The partnership would help bridge housing gap in Africa, especially in Nigeria.
Another deal was also struck with Modern Shelter Systems and Services Limited. In line with its market development mandate, NMRC signed a memorandum of Understanding with Modern Shelter Systems and Services Limited as part of efforts to remove systemic barriers to home ownership for off takers.
Key areas of focus for the partnership include resolving equity contribution constraints, improving access to mortgage loans and enhancing delivery of quality and affordable housing.
The partnership aims to facilitate access to alternative finance investors and improve Modern Shelter’s ongoing engagement with Sterling Bank and Jaiz Bank using non-interest mortgage banking structures. It will support Modern Shelter’s plans to deliver over 5000 housing units over a 5 year period across key states in Nigeria.
HOUSING DEVELOPMENT ADVOCACY NETWORK EFFORTS IN THE HOUSING SECTOR
A housing expert, Mr Festus Adebayo, who has been at the forefront of advocating for affordable housing in the last 15 years appealed to the Federal Government to show more commitment and exercise strong political will in ensuring speedy growth in the housing sector.
Adebayo who is also the convener of the annual Abuja International Housing Show said “For the betterment of the housing sector, the Federal Government should show strong commitment by exercising the political will to make the housing sector grow.”
The expert commended the efforts of Fashola but said the present government can do better.
Adeleke Samuel, Housing TV