The Federal Government says it intends to invest N1tn in providing about 500,000 homes through the FHFL by 2023. How much of this fund has been spent so far and how many homes have been provided since you began operation?
First, we have to correct the impression about the financial commitment. The commitment is for N500bn and not N1tn. The N500bn fund translates to N100bn each year. So far, the government has disbursed N20bn. But the process for the disbursement of N45bn has been completed and that money will be disbursed within the next week or so. The reason for the shortfall is basically because there is no need to disburse ahead of the programme. So, the fund is just taking off and therefore the disbursement is in line with the progress of the fund.
I think the disbursement will accelerate as the fund accelerates too, and I think by the end of this year, we will start seeing that acceleration. As of today, we have just over 3600 homes that are either completed or under construction. About 1,025 of them are fully completed and are in the market for sale.
In addition, we have what we call commitments. So these are projects where we have agreements but it has not started on site maybe because the legal agreements are not completed. If done, this will lead to another 2024 units.
There have been several initiatives by the government in the last few years targeted at addressing housing problems within the low income group. But some stakeholders have said the initiatives have not been very effective. What’s your take on this?
My take is that in Nigeria, we have an approach of impatience towards addressing important social issues. For housing, like many important social issues, it takes time for new initiatives to get up to speed. But sometimes because we are impatient, we want results tomorrow; we tend to act like a gardener who plants a seed and becomes impatient when he doesn’t see any plant after three days. Housing is a very complex project. It takes a while for any initiative relating to it to gain ground.
And it is important for it to happen that way because it builds the bases that will sustain it for a long time. So, I wouldn’t accept that many of the initiatives haven’t been successful; I think they have made contributions. Initiatives like the Federal Mortgage Bank of Nigeria, the National Housing Fund, Infracredit bonds, Nigeria Mortgage Refinance Company, Federal Government Staff Housing Loans Board, Federal Integrated Staff Housing and Federal Housing Authority have made a lot of contributions to housing in Nigeria. We can’t abandon them; rather, we need to support them. They are all playing critical roles. Our challenges are significant and one initiative alone can’t solve them. All of these initiatives need to be empowered and enabled to give us a chance of addressing the problem.
But there seems to be so many initiatives in recent times. Would there not be overlapping duties?
Yes there are many initiatives, but let me give an example: the United States has about 187 or so housing initiatives at federal level and at states level to address housing; and that is common in many countries because you can’t just have one.
Of course, when you have many initiatives, there are potential for overlapping, but that is a problem to be solved rather than one to be ignored. As those agencies and initiatives mature, you will find that those areas of overlap would be cleaned out. This is just a normal thing when you have different activities going on. It is just a build-up problem; it is not unusual.
If these initiatives are sustained, what’s your projection on how long it will take for the country’s housing deficit to be addressed completely?
Assuming we go by our famous housing deficit figure of 17 million, which is largely disputed, we have not really started. If you take the numbers, Family Homes Funds wants to do 500,000 homes over five years, which is about 100,000 homes every year. I believe the Federal Mortgage Bank of Nigeria is doing about 20,000 to 25,000 new mortgages per year. If you put all of us together, perhaps we are doing 200,000 homes per year. How long will it take to cover a backlog of 17 million? You can figure that out. But we can’t just set our target on the 17 million.
We should also know that Nigeria is one of the fastest urbanising countries in the world. By 2050, our population will be just under 400 million. By 2030, we are likely to be about 250 to 270 million. Bearing that in mind, our planning should not be for today; it should be incremental to whatever figures we currently have because our cities are growing.
So, this is why I do not agree that there are too many agencies. In fact, we have too few of them. If we are going to have any chance of reducing the deficit, I think we even need to have about four times more initiatives than we have now. We probably need about four different Federal Housing Authorities, four Federal Mortgage Banks, and 10 Family Homes Funds if we are really serious about biting into this shortage.
What is the level of awareness among the people these initiatives are designed for?
As you are aware, we have just started. One of the things we are currently doing in that regard is to hold town hall meetings with our target audience. We have just held one in Mararaba, Nasarawa State, and I was glad to see the people who were there. They are the people we are actually targeting; mostly low to medium income earners. I think we need to do a lot more to improve awareness.
Stakeholders in the industry are of the opinion that affordability is relative when it comes to housing. How affordable is the “affordable housing fund” being provided through the FHFL and are those in the informal sector captured?
Everybody has access to the housing that we support, whether they are in the formal or informal sector. We make no distinctions. For affordability, I think it is a very difficult situation because we are currently banging on the door to improve affordability on a day-to-day basis.
One of the key measures we have taken is to establish what we call target cost indicators. So for example, we want to ensure that one bedroom unit should not be more than N3m; two bedroom unit should not be more than N4.5m, and three bedroom should not be more than N6.5m.
We think that this will significantly help in making the houses that we support affordable to people on low to medium income. I think we will not always achieve it, but our target is that at least 70 to 80 per cent of the homes that we finance are within that range.
How significant has the FHFL been in addressing some of these problems since its establishment?
We have only been here for eight to nine months now. But if I have to reflect, I will say that we have so far made about three significant interventions. The first one is the establishment of collaborative working.
The thing with housing is that it can never be a one-man show or one organisation show. So for example, our collaboration with the NMRC will see a significant increase in the mortgages to be issued in 2019, particularly through our Help-to-Own product. Without that collaboration, it is unlikely that the project will be successful. And I think that is what needs to happen.
We all need to come together. I think the initiative by Family Homes Funds to aggregate some of these agencies is a significant one. People may not see it, but it is a significant intervention.
The second intervention is that we are probably the only agency today in the country that is providing financing for affordable housing outside of the commercial banks where the interest rates, requirements, affordability and development costs are usually high.
The fact that we are able to provide financing at no more than 10 per cent per annum which is about one third of the market rate is also a significant intervention. The third intervention is awareness for states that are actually working with us and our partners that they can provide housing for their staff through the fund. That is a major achievement.
We currently have a very strong relationship with a number of states who have actually given land into the project. Borno State is the latest example, where we are expected to provide about 4,700 homes; 3,000 of those homes will be very low cost homes for Internally Displaced Persons. That is something we are going to achieve over the next couple of months. The sites have been identified; the drawings have been done, and we shall get on to that very quickly. I think those are very significant achievements.
Part of the FHFL’s policy is to support on-going dialogue on local content in building construction. What are the efforts towards implementing this?
Our target is that by 2021, we will make sure that 70 to 75 per cent of the inputs into the process of what we call the white input must be procured locally. Currently, I think we are just under about 50 per cent.
There are still a lot of white inputs (which are things like doors, wiring, light fittings etc.) being imported from countries like China. But we have now put in place in all of the contracts that where it is available, they must procure those materials locally. It takes time for that to pick up because you can’t make it automatic. The industry has to be there. But that is something that we have enabled in all of our development agreements.