Affordable housing: private initiative to the rescue
With growing population, a lingering housing deficit and government’s continued inability to provide affordable housing in practical sense, a multinational has seized the initiative to provide technical support, materials, and connect mortgage providers with prospective house owners, among others. MUYIWA LUCAS reports that the initiative is part of the firm’s global plan, which will benefit 25 million households, with Nigeria benefitting substantially.
It is not a new piece of information that Nigeria’s population is increasing geometrically. But several studies conducted by the United Nations on Nigeria’s population showed that come 2050, there will be 400 million people in Nigeria, is frightening. This projection means that the country would have overtaken the United States (US) in another 32 years from now, as the 3rd most populous country in the world.
In similar vein, the World Bank projected that Nigeria’s population is growing at 2.8 per cent rate yearly, while her per urban population grows at 4.7 per cent as a result of the rise in rural-urban migration. This growth rate is, however, disproportional with staggered attempts at bridging the housing deficit by both the public and private sector in the country.
To experts and other stakeholders in the real estate and construction industry, these studies represent a timely warning for the country’s built environment, especially with regards to providing affordable housing in a country where a deficit of 17 million housing exists. This fear may not be unfounded given that population explosion comes with an attendant need for housing. Stakeholders and policy makers have put Nigeria’s financial requirement to tackle the deficit at N59.5 trillion.
A 2010 report commissioned by EFInA and Finmark Trust, titled: “Overview of Housing Finance Sector in Nigeria”, submitted that 85 per cent of the urban population live in rented accommodation, spending more than 40 per cent of their income on rent. Of these rented houses, 90 per cent are built through self financing by the owner, mainly due to lack of mortgage financing while less than five per cent of these houses have formal title registration.
The lack of an efficient and effective mortgage financing has remained a huge albatross on the country, irrespective of the various government efforts in this direction. This is why only a tenth of the one million homes built yearly, has helped to tackle the deficit over a period of 10 years. Most of these, findings revealed, are by persons who contend with deficient financing, shoddy workmanship and poor building materials, among others.
The low income category seem to be the most hit in Nigeria’s housing debacle. For a Nigerian aspiring to build an affordable home with about N3 million, there are enough challenges to induce headaches, which either frustrate the ambition or force the project to be abandoned. These include access to finance, which is the major source of worry; others are delays in project completion, taking between two to five years; lack of access to qualified building professionals without cut-throat charges as professional fee; mortgages focusing on the high end market; inconsistent quality of building materials; bureaucratic building approval process and the high cost of acquiring land and its tenure issues.
A former Minister of Lands, Housing and Urban Development, Mrs. Akon Eyakenyi, acknowledged that affordable housing delivery for the low and middle income earners cannot be achieved without the provision of incentives to encourage private sector participation.
“To build a house in Nigeria is a very expensive task due to the high cost of building materials. Affordable housing cannot, therefore, be achieved without a drastic reduction in the cost of housing construction and other associated costs, which invariably determine the selling price. Consequently, for affordability to thrive, emphasis must shift to reducing the cost of housing construction to promote access to affordable homes to the vulnerable segment of our national population,” Mrs Eyakenyihad said at a pre-summit meeting on the Nigeria housing and construction summit/expo, in 2014.
She then called on the organised private sector, manufacturing outfits, finance houses and multilateral agencies to support the drive for affordable housing delivery.
Eyakenyi’s call has not fallen on deaf ears, as the private sector has taken up the challenge of housing in the country. This has again made for a silver lining to appear on the horizon for Nigerians desirous of owning their affordable houses.
For instance, Lafarge Africa has put in place an initiative, which it calls “Easy Home”, an innovative affordable housing initiative, which is already providing innovative solutions for the construction, renovation and extension of houses. The scheme is tailored to the local challenges and needs of individual home builders, including Nigerians, who already own their land and want to build. Through the initiative, LafargeHolcim Group, hopes to impact about 25 million people by 2020 and Nigeria is expected to benefit from a significant chunk of the scheme.
Lafarge Africa Head of Affordable Housing initiative, Mr. Aurelien Boyer, explained that if the associated challenges to affordable house ownership are addressed, Nigerians could build more houses faster. This, he said, was what the firm set out to do with the Easy Home scheme. “The whole idea is to provide individuals with free technical expertise and demystify the idea of owning a home. Lafarge Africa provides free cost estimate i.e. Bill of Quantity and designs for prospective builders. We also connect them with sources of finance as well as artisans that will build at the least possible cost without compromising quality,” Boyer explained.
The Easy Home initiative, which began three years ago, has impacted positively on over 30,000 persons across 14 states of Lagos, Ogun, Oyo, Kwara, Ondo, Benin, Osun, Nasarawa, Niger, Cross River, Abia, Akwa Ibom, Rivers and Abuja. Beneficiaries of the scheme include Business people, civil servants and salary earners, who have used “Easy Home’s” menu of free services to build bungalows, duplexes, self-contained apartments, shops, schools, clinics etc.
“The demand for housing outstrips supply in the low-income segment where most live in rented houses. Presently, 5,000 households in mainly urban and peri-urban households earning N20,000 to N300,000 monthly have keyed into the Easy Home scheme. We, as Lafarge, estimates that nine million households can afford to build their property incrementally. Through Easy Home, Lafarge Africa is contributing to the reduction of the national housing deficit and helping to accommodate a large chunk of Nigeria’s population,” Boyer explained.
A consultant architect with a leading construction firm, Mr. Richard Ibilola, has praised the initiative. Easy Home, he said, will have a very significant and positive impact on the spread of good construction practices and the deepen building and construction supervision skills in Nigeria. For him, EasyHome will make it easier for Nigerians to step on the home acquisition ladder because it is designed to take significant initial costs burden away from house owners, and at the same time boosts the development of skills in the ecosystem.
A financial analyst with vast experience in mortgage matters, Mr. Kayode Oyedele, who explained that given the format of the initiative and having had a first hand experience of the scheme as a financial advisor to some beneficiaries, praised the initiators of the scheme. According to him, it is a delight that the Easy Home scheme is changing the perception of mortgage financing and affordable housing schemes in the country.
“This should be encouraged. More programmes like this will happen in Nigeria only when there’s a mortgage system, which allows for the repayment of loans to acquire houses spread over 15-25 years. Such will give developers and banks an incentive to develop massive residential projects. Regulators will also find it much easier to monitor and punish builders responsible for defects,”Oyedele said.
To many of its beneficiaries, Easy Home is a huge relief. A pharmacist, Mrs.Ejiro Foyinbo, extolled the concept. She said the provision of free technical assistance, links to trusted builders, reliable retailers and qualified artisans, which the scheme afforded her, has helped to maximise her budget.
But this is not Lafarge Africa’sfirst intervention in affordable housing programmes. The firm, in collaboration with the French Development Agency (AFD) and LAPO microfinance, have long invested N1.3 billion to provide affordable housing in the country under its “Ile Irorun” affordable housing initiative, which started in October 2013. It was the firm’s first operation launched in the frame of AFD and Lafarge partnership to improve housing conditions through microfinance in Africa.
The “Ile Irorun”, was intended to enable low-income families to finance the construction, extension or the renovation of their houses and thereby help them improve their living conditions. In all, an estimated 3,500 Nigerians are expected to have benefitted from the programme by end of this year.
In 2015, Lafarge Holcim also unveiled a self-contained studio-flat at its Oregun, Ikeja, Lagos office, as a model for affordable housing for the low and middle income earners. The feat served as the bedrock for the firm’s planned delivery of a 500-unit of low cost housing in Gwagwalada, Abuja. The types being provided in this scheme include two and three-bedroom flats and studio types. Its prices range from N1.5million for studio model, while others are between N4million and N6million.
Stakeholders are convinced that the initiative is capable of bringing succour to the numerous Nigerians, who are daily losing hope of owning houses.
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