Cost of renting apartments in major cities of Nigeria has continued to be on the high side. Prior to the Muhammad Buhari administration, those touted to have made money in questionable ways usually look at the real estate as where to dispense the money.
That helped to increase the number of housing inhabited and thereby reduce the deficits in the sector. Many experts, when they want to solve economic or sectoral problems, often take cue from how such problems are solved in other climes and try to match them with local situations.
Nonetheless, Nigeria’s case is not like that, rather the body movement of Mr. President has frightened the potential investors in real estate. The EFCC has been beaming its searchlight in their direction. This results in the unprecedented housing deficits that live with Nigerians in major cities.
This unprecedented rate of urbanization has led to increased demand for good and affordable housing. It has not only made house scarce in the cities of Nigeria but also added to the unaffordable apartments that litter the cities without occupants.
A recent survey revealed that of 200 cities polled around the world, 90 per cent of them were considered unaffordable when applying the widely-used standard of average house prices being more than three-times median income.
Addressing the housing affordability challenge in Nigeria, requires systematic changes. City governments must streamline their regulatory landscapes and enable transparent land acquisition, emphasize property rights over title, develop a rental regulatory framework to protect tenants as well as landlords, encourage mixed-income and mixed-use housing developments, enable more innovative financing models in developing new homes or upgrading existing homes and encourage skill-building in the construction industry.
The private sector must embrace innovative mechanisms to finance development and help establish the creditworthiness of those looking to improve their housing situation. Employers need to work with communities to provide affordable housing for employees, or help with housing costs through loans, subsidies or mortgage deals. Private developers need to invest in sustainable design concepts to create energy-efficient housing to improve productivity, prefabricating components and using alternative materials and advanced automated equipment.
The non-profit sector also has a key role to play in working with housing providers to implement alternative tenure models, while supporting advocacy efforts of government in formulating policy and providing technical support, information and know-how to developers and homeowners.
Affordability is not just about the ability to buy or rent a home, but also about being able to afford to live in it. This definition of affordability goes beyond meeting expenses related to operations and maintenance, taking into consideration transport, infrastructure and services.
If a home is economical enough to buy and maintain but located too far from work or school, it cannot be said to be affordable. In Nigeria for instance taking Lagos as a sample survey, there could be houses littering the environment of Lekki and Ajah but because those working in Alausa cannot live comfortably and meet going to and fro Alausa every day, it means the houses are not affordable.
The factors contributing to a lack of affordability vary from city-to-city, but broadly include housing costs rising faster than incomes, the supply of houses not keeping up with demand, scarcity of land, and demographic changes such as population growth, ageing and shifts in household composition.
To understand the challenge more holistically, the World Economic Forum (WEF) recently launched a new report it termed, Making affordable housing a reality for cities. The report provides a comprehensive overview of affordable housing challenges across the housing value chain.
It identifies factors that affect housing affordability beyond the direct costs of purchase and maintenance to include but not limited to location, housing type, access to social infrastructure, the legal and regulatory environment and the state of financial markets. It also recommends a systematic approach to addressing the affordable housing crisis, while highlighting how a range of cities are finding solutions.
For the government of Nigeria to address the housing challenges in the country, it must be able to tackle land acquisition that has to do with tradeable quotes, a situation through which developers are permitted to construct new housing on the periphery of a city in return for opening up additional land for cultivation beyond city boundaries.
There is the Land Use Act which if pioneered well could give government the privilege to partner with the private sector and non-governmental and community housing groups to develop some social housing units in neighborhoods that need renewal. Proceeds could be re-invested in social housing, community facilities and public space. Housing assistance is linked to participation in education, training or local employment.
There is this another system which is called repurposing of vacant property which is prevalent in Los Angeles. Los Angeles recently passed a law allowing motels to be converted into “permanent supportive housing” for the homeless, regardless of current zoning requirements.
This is typically quicker and cheaper than new construction, as it involves only adding small kitchens to the motel rooms. The idea of improving housing supply by pooling publicly owned assets into an “Urban Wealth Fund” is also creeping into the country. This means government partnering with the private sector to deliver projects. Sharing risks and benefits aligns the interests of these stakeholders and can streamline infrastructure development, planning and land-use regulations.
Also if government can regulate construction productivity in the country and make labour cheaper through inflation control, then the few constructed housing will be affordable to people. Shortage of professionals and building materials to give construction sector the most necessary skill is also one of the factors that challenge the provision of affordable housing in Nigeria.
Government of Nigeria should review the activities of technical schools and accredit other training providers, strengthen coordination between training providers and construction employers, and provide funding to upgrade training equipment and premises.
By making the country’s skills training more useful to the construction industry, and more attractive for young people, they would have addressed some percentages of affordable housing problems. Government’s inability to use Polytechnics, Schools of technology for research into manufacture of building materials is one of the problems.
The Nigerian Building and Road Research Institute (NBRRI), has done a lot of things in the direction of providing some raw and some finished building materials in the recent past but it seems government did not latch on that to progress.