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Capital importation into Nigeria hits $8.4 billion, rose by 216% in Q1 2019

The total value of capital importation into Nigeria in the first quarter of 2019 was estimated at a whopping $8.48 billion. This is revealed in the latest capital importation data released by the National Bureau of Statistics (NBS). 

According to the NBS data, the $8.48 billion capital importation in the first quarter represents an increase of 216.03% compared to Q4 2018 (quarter-on-quarter). Also, capital importation year-on-year into Nigeria rose by 34.61% when compared to the first quarter of 2018.

Capital Importation by type: Basically, Nigeria’s capital importation is categorized into three investment types, and these include Foreign direct investment, Portfolio investment and other investment.

The Portfolio Investment in Nigeria is made up of three items which include Equity, Bonds and Money Market instruments. During the period under review, the largest amount of capital importation by type was received through Portfolio investment, which accounted for 84.21% ($7,145.98 ) of total capital importation.

  • Money Market instruments account for 82% total portfolio investments, amounting to $5.92 billion, representing a 376.9% rise within the quarter.
  • Equity ranks second with $656.19 million or 9%, recording a 110% growth within the quarter.
  • Bonds received the lowest portfolio investment with $565.6 million or 7% of total capital. However, in terms of growth, portfolio investment into bonds rose by 173% within the quarter.

Othe Investment is broken-down into four categories which include Trade credits, Loans, Currency deposits and Other claims. However, the bureau only provided data for loans and currency deposits. In the first quarter of 2019, other investments recorded the second biggest capital importation, accounting for 12.91%  or $1.09 billion of total capital importation.

  • Loans investment was estimated at $752.2 million, rose by 2.62% within the quarter.
  • Other claims within the quarter stood at $343.8 million, indicating a 2,025% growth when compared to

Foreign Direct Investment investments in Nigeria has just two components and this includes Equity and other capital. Specifically, FDI accounted for the least of total capital importation in the first quarter with $243.36 million or 2.86% of total capital imported in 2019.

  • Equity FDI inflow in the first quarter was estimated at $242.67 million, rose by 39.97%. Equity constitutes almost 100% of the entire FDI.
  • Other Capital stood at $700,000, less than 1% of the FDI inflow.

Capital Importation by Sector: Further analysis of the capital importation shows that five of the fifteen sectors recorded a decline in capital importation. Sectors with positive growth include Banking, Financing, Production / Manufacturing, Servicing, Agriculture, Electrical, I.T Services and Consultancy. On the other hand, five sectors recorded negative growth within the quarter, the sectors include Shares, Telecomms, Oil and Gas, Construction, Brewing, Drilling and Marketing.

  • Nigerian banking sector received the biggest share of capital importation in the first quarter with $2.85 billion or 33.6% of the total capital. Also, capital importation into the banking sector grew by 141.45% within the quarter.
  • Despite negative growth in capital importation of shares, the sector record the second biggest capital inflow, with $2.40 billion or 28.32% of total capital importation.
  • Three other sectors that made the top five sectors with the biggest share of capital importation include Financing ($2.13 billion) production and manufacturing ($418 million) and Servicing ($409 million).

Capital Importation by origin: The United Kingdom emerged as the top source of capital investment in Nigeria in Q1 2019 with $4.53.22 billion. This accounted for 53.40% of the total capital inflow in Q1 2019.

Also, by the destination of Investment, Lagos state emerged as the top destination of capital investment in Nigeria in Q1 2019 with $4,773.26 million. This accounted for 56.25% of the total capital inflow in Q1 2019.

By Bank, Stanbic IBTC Bank Plc emerged at the top of capital investment in Nigeria in Q1 2019 with $3,606.09 million. This accounted for 42.50% of the total capital inflow in Q1 2019.

Nigeria’s economy is gathering growth momentum: With over 216.03% increase in the value of capital importation into the economy, it suggests Nigeria’s economy is gathering the much need momentum for sustained growth in the second half of 2019. This is a good boost for the Central Bank’s aim to achieving double-digit growth by 2020.

Basically, capital importation refers to the movement of capital into Nigeria in the form of investments in assets, bonds, shares and so on. FDI is an investment in form of a controlling ownership in a business in one country by an entity based in another country while FPI is the entry of funds into a country where foreigners deposit money in a country’s bank or make purchases in the country’s stock and bond markets, sometimes for speculative purposes.

Analysts have stressed that capital inflows into Nigeria’s economy will improve after the general election. It is evident that portfolio investment accounts for the biggest share of capital importation, this could be largely attributed to the attractive yields in the fixed income market.

Source: Nairametrics

AHCN 2019 Workshop Addresses Rental and Low Income Housing in Nigeria

The Association of Housing Corporations of Nigeria (AHCN) have held a 2-day National Workshop on Pragmatic Approach to Addressing Rental and Low Income Housing Availability and Affordability in Nigeria.

The workshop which was also the 99th Council Meeting of AHCN took place in Calabar from Tuesday 25th to Thursday 27th 2019.

Participants at the workshop bemoan the increasing housing shortage and affordability crisis without corresponding actions to match the demand and calls for urgent collaboration among stakeholders with pragmatic strategies that will directly address the housing and employment needs of the people.

The workshop identifies mass rental housing as untapped viable option of sustaining housing corporations and call on all state governments to support their state housing agencies in driving rental housing across Nigeria.

The workshop notes and commends the establishment and impact of Family Homes Funds and its efforts to make affordable housing available to low income earners through funding development, mortgage and rent to own scheme. A call was made to all State Governments to support their state housing corporations and make lands available to ensure the success of the family Homes Funds programs.

In a communique signed by AHCN President, Muhammed Baba Adamu and Secretary General, Mr. Olusola Martins, the workshop recognizes the inherent opportunities in business partnerships and calls for effective partnership models and synergies between Family Homes Funds and the Federal Mortgage Bank of Nigeria, FMBN to enhance development funding and wholesale mortgage lending and origination to reduce housing shortfall in Nigeria.

The workshop commends the recent FMBN review of the off-takers guarantee which makes it acceptable and bankable in favour of housing corporations to enable them access construction loans from commercial banks and calls on all state governments to support their housing corporations to take advantage of these opportunities for mass housing projects.

Housing cooperatives were also identified by the workshop as viable option to enhance housing availability and affordability as well as mobilizing resources and off-takers in tackling funding mechanism challenge; and therefore call for collaboration of housing cooperatives with housing agencies in addressing rental and low income housing shortage in Nigeria.

The workshop identifies the challenge and lack of adoption of foreclosure laws to safeguard investors as one of the impediments to attraction of housing finance to the housing sector and calls on governments to speed up the adoption of legal framework for judicial enforcement of mortgages and foreclosure legislations to boost investors’ confidence and streamline bureaucracies in the Nigeria’s mortgage market.

The workshop calls on all housing agencies to embrace modern technology and digital solution for development and management of real estates and rental housing and to adopt highly skilled labour for development.

The workshop resolved to address the issue of non-availability of data base for off-takers on real estate and mortgage information management which constituted major challenge to the development of mortgage system in Nigeria. The Association resolves to sustain a pilot scheme of Home Ownership Off-takers Affordability Survey Data base which commenced first quarter of 2018 with a creation of a verifiable working database of about 1,000 workers per selected state with her partner Value Chain Project Consultants, to pre-qualify them for their actual housing needs and mortgages to acquire same in all the states of the federation. The meeting therefore reiterates its call on the Federal Government and the CBN to provide revolving housing fund and inject a minimum of N500 billion loans as intervention funds into the real estate sector at a single digit to develop the housing sector.

The workshop also reiterates its commitment to Public Private Partnership (PPP) and calls on government to take appropriate steps to address, strengthen and embrace emerging partnership options for effective housing delivery of decent and affordable mass housing so as to promote effectiveness and profitability of housing agencies.

The forum observes the drop in commitment by governments towards the National Housing Fund contributions and implored them to sustain the contribution to make funds available for housing development.

The workshop calls on the FMBN to make the loans process more applicant friendly by removing all bureaucratic hurdles and demonstrate a verifiable and transparent trends of benefits to NHF contributors nationwide in order to win back the confidence of states that have withdrawn.

The meeting notes the availability of local building materials and calls on governments and all Nigerians to embrace the use of local building materials as appropriate alternative for addressing availability and affordable housing in Nigeria. With the availability of Hydraform and NBRRI technologies, state governments are encouraged to set up pilot scheme of local building materials plants in all the states of the federation to encourage development and acceptance of local building materials in Nigeria.

The meeting notes and commends various research works and development of Nigerian Building and Road Research Institute (NBRRI) over the years which culminated in the discovery and development of Interlocking Cement Stabilize Earthly Blocks (ICESEBs) and production of pozzolana cements a partial replacement of Portland Cement which are procured from locally sourced, readily available raw material with cementing properties serving as partial replacement for conventional cement with a completely built pilot plants in both NBRRI premises, Ota in Ogun State and at Bokkos in Plateau State; and call on government to embrace NBRRI technologies to set an example for its acceptance by Nigerians.

The forum notes and commends the involvement of NBRRI in investigation of building collapse cases in Nigeria and posits that such involvement will promote quality delivery of housing as it will assist to determine the causes of collapse and proffer solutions to generate data bank for building collapses in the country

By Ojonugwa Felix Ugboja

Family Homes Funds Making Affordable Housing a Reality for Nigerians

Following a successful partnership between Family Homes Funds and Delta state, Vice President of Nigeria, Prof Yemi Osinbajo will in few days be commissioning 650 units affordable housing estate in Asaba, Delta state for low income earners. This and many more projects are ongoing efforts by Family Homes Funds to make affordable housing a reality for Nigerians.

Family Homes Funds is a pivotal force in driving affordable housing objectives in Nigeria since its establishment. The Federal Government housing initiative intended to support the development of up to 500,000 Homes targeted at people on low income over the next 5 years has designed innovative schemes that is helping to deliver affordable housing in Nigerian and increase the housing options in the market.

With its many social housing rental funds like Help To Own, Rent To Own among others, the impact of Family Homes Funds is already being felt by Nigerians after a take-off that hasn’t been more than 12 months.

According to the Managing Director of Family Homes Funds (FHF), Mr Femi Adewole, the most transformative thing they can do is to introduce a formal rental system into the market.

The Fund has launched a social housing rental housing fund to provide affordable housing opportunities for Nigerians on very low and medium income. The cost of monthly rentals doesn’t exceed 40% of household income and beneficiaries will have an option to buy at any time they are able to do so.

Many Nigerians on low income are unable to buy a home either because they do not have sufficient savings for a deposit or are currently unable to meet requirements for a mortgage. The Family Homes Funds’ Rental Housing Fund gives Nigerians on low income a first step on the housing ladder. Eligible beneficiaries are able to lease a decent home for a monthly cost not exceeding 40% of their household income and an option to buy the home anytime.

The Fund complements existing mortgage financing facilities by providing targeted assistance to people on low income through a Home Loans Assistance Fund – Help to Buy as part of the Governments’ Social Intervention Programme. The assistance is in form of a deferred loan for up to 40% of the cost of their home with no payments for the first 5 years.

Due to cost and low income, most Nigerians cannot own a home and are most times forced to live in slums with poor housing conditions and poor security.

This assistance from Family Homes Funds is unique because no payments will be made until the 6th year, where monthly payments will start repaying both interest and capital. To assist the purchaser, the amount paid starts low and increases each year in gradual steps (average 6.5% per annum) in order for the HTB loan to be fully repaid by year 20, the same year as the mortgage is expected to be fully repaid.

To qualify, households should have earnings between N600k to N1.2m per annum and the new home costs less than N7.5m. An exception is made in Abuja, Lagos, Port Harcourt and Kano where the cost of a new home can be as high as N9m. Households benefiting from Loan Assistance must not already own a suitable home and need to include one income earner who is under 35 years of age and does not have to be one of the people applying for the scheme or the loan but must available to help with repayments.

In addition, this July, the Vice President of Nigeria, Prof Yemi Osinbajo will commission an estate in Asaba financed by Family Homes Funds in partnership with Delta state government. The affordable estate is made up of 650 housing units for low income earners.

The affordable housing project consists of one, two and three bedroom bungalows with all necessary facilities for home functionality. The estate has adequate access to water supply, power, security and good road network.

Built with high quality and sustainable materials, the houses are structured in ways that give each owner and his or her family a decent living space and some sense of privacy.

According to the MD, Femi Adewole, the estate is built in a fast developing and serene area with a lot of greenery. It represents the Funds’ vision to not only build houses, but to build ones that are healthy to live in and affordable for the owners.

More initiatives are also ongoing in the six geopolitical zones of the country with some either completed or at near completion stages. In Borno for example, the Fund is developing 4,700 housing project for civil servants and Internally Displaced Persons (IDPs).

According to Femi Adewole, 1700 of the 4700 homes are targeted at civil servants, mostly middle and low income civil servants, while 3000 is being built for IDPs whom have been displaced by Boko Haram insurgency in the northeast.

‘’They are small houses built in the outline areas, not necessarily in Maiduguri, but those villages that had been ravaged by the insurgents. The state has already produced quite a number but what most people are not aware of is the hundreds of thousands of Nigerians who have been displaced by Boko Haram who are still living in temporary refugee camps for 3 to 5 years. So the government has a programme of returning them back to their villages which have been liberated. The idea is that we will be joining the government efforts to finance those homes,’’ he said.

Several Family Homes projects are currently going on in states like Kaduna, Nasarawa, Delta, Ogun, Kano etc. The major excitement for most Nigerians is the affordability of these projects which had previously been difficult for low income earners. This has definitely been a new dawn and efforts should be sustained in order to reduce Nigeria’s burdensome housing deficit.

By Ojonugbwa Felix Ugboja


As always, the Abuja International Housing Show offers amazingly awesome opportunities for the most discerning companies across the built industry value chain.

Here are 10 awesome tips to enhance your exposure and sales as an exhibiting brand at the 13th Abuja International Housing Show slated for the 23rd – 26th July, 2019.

1. Prepare Early: Preparing early is key to a most successful outing as an exhibitor in any event, much less one as noteworthy as the Abuja International Housing Show. This enables brands avoid issues such as poor logistics, unavailable props, late stand setup etc which may lead to loss of critical audiences at the most strategic moments.

2. Be Unique: Contrary to popular belief, it really doesn’t matter where you are positioned at a big show like the AIHS, what is important is how uniquely positioned you are. Are you armed with the most fascinating props that catches the attention of attendees no matter the distance? With very attractive and attention grabbing signage, you are sure to attract all classes of prospective audiences to your exhibition stand.

3. Be Marketing Ready: Being marketing ready means many things in business. For the AIHS, all of your marketing collaterals should be not just available but available in excess to avoid shortage as its a long four day event. From brochures, flyers and complementary cards, to handy proposals to facilitate business agreements and seal deals on the spot, being marketing ready is a sure fire way to boost sales at the event.

4. Come with Branded Souvenirs: Having branded Souvenirs to gift visitors that come to your exhibition stand is necessary to put your corporate image in front of the built industry consumers all year round. This includes pens, notepads, desk pads, wrist bands, mugs, T-shirts, decorative mini product samples etc. These items allow attendees think about your brand for as long as possible even if they didn’t buy or place an order on the spot, ingraining it in their consciousness until the perfect moment for a perfect sale. And of course, don’t forget that everyone loves gifts.

4. Flag Off on Social: Don’t wait until the AIHS begins before you flag off on social. With nicely designed publicity banners, posts and the right hashtags, flag off your next exhibition stop on social media with the right copy messages and hashtags to inform existing and potential customers about your stand and the benefits of dropping by at the 13th Abuja International Housing Show. The promoted discounts may tick off a long time prospect who may be ready to swoop down and pick up a deal.

5. Deals: A myriad of deals should be on display at your stand and let attendees know you are here for business. These deals can feature competitions, discounts and promotions that prospects can’t resist because they know it’s a no brainer to scoop it or miss out on it until the coming year.

6. Light Nibbles: Having light snacks, sweets and juices at your stand is an incentive to draw audiences, be they the high and mighty or emerging middle class to middle class, everyone is game as people tend to be quick to catch bites especially if they have had an early day. The buzz it may create, draw participants to know more about your service offerings.

7. Bring your Smiling Faces: The saying, ‘You’re never fully dressed without a smile’ is still true. Putting on a welcoming outlook can do wonders for your business. Hence, letting all your exhibiting teammates know this is essential for success. Informing them that the smile must never fade from their faces will keep them on high alert and attracting everyone to your corporate stand.


8. Speak to Prospects: Don’t wait for attendees to speak to you, the moment you see them milling around your stand, say hello and speak to them about your offerings. Without taking time out to think of who you are talking to, speak to them. A driver may be sent on an errand by his boss to get building materials and he will remember the company that treated him like a king even when he didn’t look like one. In essence, speak to all by treating all attendees equally.

9. Look the Part: Dress the way you wish to be addressed is another important saying. While you may not favour an entirely corporate look, sell your brand in the best way possible, establishing brand colours, image, logos and playoffs in the most dramatic ways. You need to look like you are at the AIHS show to sell, which is what you are coming to do anyway.

10. Be Creative, Bring Social On: Tweet those pictures, use insta stories, chat with Snapchat, use Facebook live videos, share your best thoughts about the program on LinkedIn. It’s a show, so become the show by showing the world what your brand is up to. This will continue to establish you as a formidable brand, increasing your success potential beyond the show with prospective audiences.

With these 10 awesome tips, it’s time to belt up for an exhilarating ride at the 2019 outing of the Abuja International Housing Show.

By Felix Ojonugwa Ugboja

Banks to tighten criteria on corporate loans—CBN

TheCentral Bank of Nigeria, CBN, has said banks will tighten criteria for corporate loans in the third quarter of the year. The apex bank said the criteria include more collateral, stronger loan covenants and higher fees/commissions for corporate loans. CBN disclosed this in its Credit Condition Survey, CCS, report for the second quarter. Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele The report also indicated that though there was a decline in the availability of corporate loans  in the second quarter of the year, banks intend to reverse this trend in the third quarter. Banks to jerk up lending rate for corporates in Q1’19(Opens in a new browser tab) The report stated:

“The overall availability of credit to the corporate sector decreased in the second quarter, but was expected to increase in third. “This was driven by favourable economic conditions, changing sector-specific risks, changing appetite for risk, market share objectives and changing liquidity positions.

“Lenders reported that the prevailing commercial property prices positively influenced credit availability of the commercial real estate sector in the current quarter.

“Lenders expect the prevailing commercial property prices to positively influence secured lending to public non-financial corpora-tions in the current quarter.” “Availability of credit increased for all business sizes in Q2 2019.

Lenders expect the same trend in the next quarter. Spreads between bank rates and MPR on approved new loan applications narrowed for all business, except for small business, in Q2 2019, but were expected to widen for all business sizes in Q3 2019. “The proportion of loan applications approved for all business sizes increased in the current quarter, and are expected to further increase in Q3 2019.

“Lenders required stronger loan covenants from all firm sized businesses in the current quarter. Similarly, they reported that they would require stronger loan covenants for all firm sized businesses except for small business, which they plan to leave unchanged, in the next quarter “For the current quarter, fees/commissions on approved new loan applications fell for all firm sized businesses except for large PNFCs, while for Q3 2019 lenders expect fees/commissions on approved new loan applications to rise for all firm sized businesses except for large PNFCs.

“More collateral requirements were demanded from all firm sizes on approved new loan application in Q2 2019, except for large PNFCs. However, lenders will demand for more collateral from all firm sizes in the next quarter.”

Source: Vanguard

Just in: Fire guts Bayelsa Radio

The Bayelsa State-owned radio station, Bayelsa Radio, has been gutted by fire.

It was gathered that the fire destroyed a critical section of the station, which is located along Azikoro Road, Yenagoa, the state capital.

A source said though no life was lost, the inferno inflicted monumental damage on the station razing the whole studio.

Details shortly….

Cheap houses selling fast in Sunshine Coast’s ‘northern suburb’

Droves of Sunshine Coast home owners – attracted by homes often half the price – are pulling up stumps and buying in Gympie, local agents say.

The latest Domain data shows that in the Wide Bay-Burnett district town housing values are up 14 per cent since 2014.

Moreover, its cheapest 25 per cent of house sales have risen in value by 13 per cent in the past five years.

While it’s hardly bad news, what it means is that Gympie’s median house price is a budget-friendly $330,000 – almost 46 per cent less than the Greater Sunshine Coast region’s median house price of $610,000.

Data puts the coast’s median unit price at $430,000 in March this year.

These stark price gaps are not lost on coastal residents who, fed up with increasing traffic and booming population sizes, are “finally discovering us”, said Clancy Adams of LJ Hooker Gympie.

Mr Adams reports he has been selling three-bedroom “character” houses in the 20,000-strong town, in need of full renovation, for around $200,000 in under three weeks since the May federal election, and similarly sized houses in better condition for the mid-$200,000s.

“It [Gympie] has always been here and people are getting tired of the congestion on the Sunshine Coast and searching for affordability,” Mr Adams said.

Gympie’s housing is more affordable but it is still a commutable distance from Brisbane and the Sunshine Coast, agents say. Photo: Tom Grady Real Estate

“They are saying, it [the coast] has changed, that it is not the lifestyle they bought into 20 years ago, and with the [Bruce Highway] bypass meaning 45 minutes to Noosa Heads, two hours to Brisbane, it is only 20 minutes extra for people commuting these days.

“[Gympie] is pretty much being seen today as a northern suburb of the Sunshine Coast.”

Mr Adams reports “there are still a few cheapies around” and investor yields remain unaffected: still 5 to 6 per cent on average.

About $500,000 will buy one to two hectares with four beds, two baths, a double garage and a possibly pool in Gympie municipality, about 40 kilometres northeast of Noosa Heads, he says.

“They [Sunshine Coast buyers] are selling their four-bedrooms on 400 square metres for about $400,000 and reinvesting here for not much more than half that price,” he said.

“Even if they buy and know they have some updating ahead, they are still well in front.”

Houses like 51 Clematis Street, Gympie, are being snapped up by out-of-town buyers. This property is listed for sale for only $249,000. Photo: Century 21 Platinum Agents

According to Domain sales figures, houses in Gympie’s lowest percentile (house sale prices in the bottom 25 per cent of total sales) sold for a median price of just $260,000 between October 31, 2018 and April 30 this year.

Properties under $250,000, which includes houses and units, currently make up a third of all sales.

Total listings dropped by 5.4 per cent in the past six months, with house listings decreasing by 10.6 per cent and house sales falling by 23.5 per cent.

Greg “Bert” Gilmore of Tom Grady Real Estate in Gympie agrees the cheaper stuff ($180,000 to $200,000) doesn’t last too long, although housing in the early $300,000s had not seen any change.

“People from the Sunshine Coast love buying up here right now because they cannot get anything near the coast any more,” Mr Gilmore said.

“I had a nice open house just recently for a three [bedroom] by three [bathroom] and three groups, all from the Sunshine Coast, came through.

“In terms of motivation, it is a bit of buy to live in and a bit of rent out. But it is still a buyers’ market overall.”

Greg ‘Bert’ Gilmore says houses at the lower end of the market in Gympie do not stay on the market for very long. Photo: Tom Grady Real Estate

Local sources tip construction on the fourth and final stage of the four-lane 62-kilometre bypass – which will link Curra with Woondum – will start in early 2020.

“This four-lane bypass has and is going to make a bit of a difference,” Mr Gilmore says.

Billy Mitchell, principal of Century 21 Gympie, told Domain it had been a fantastic year and “surprisingly” upbeat since the election.

“Anything in that low $200s market will be sold in under 45 days; even 30 days,” Mr Mitchell said.

Asked why lowest-priced houses were moving so fast – and who was buying – he also credited the region’s four-lane highway, and affordability.

The Mary River town also claims a virtually non-existent rental home vacancy rate.

“The [buyer] drive is coming from the Sunshine Coast plus we are less than an hour to Tin Can Bay, to Hervey Bay, and under two hours to the Brisbane Airport,” Mr Mitchell said.

“I really think it is all about affordability in the past two years, when you consider the Sunshine Coast market and ours.

“Of course it depends on where you work, but if you are travelling for 40 minutes to get to work and can buy a nice family house, three or four-bedrooms on a quarter-acre block, sell up your Sunshine Coast home and have $200,000 left over to stash in your kitty – look, it is a pretty compelling reason to do so.”

The Next Housing Bubble Could Come From Technology

(Bloomberg Opinion) — A decade after the housing crash, it is now possible to buy or sell a house with the click of a mouse. If the practice catches on, it could lead to a far more efficient and affordable housing market — or another devastating bubble.

So-called iBuying (for instant buying) involves firms using algorithms to provide sellers with fixed-price offers on their homes. While housing is a good long-term investment, it is bedeviled by multiple instances of market failure. The most fundamental is that the seller has a lot more information about the condition of the property than the potential buyer. Buyers and investors are therefore cautious. Disclosure requirements help, but they are often lengthy and confusing.

This is where the algorithms come in: They read disclosures, do market comparisons, evaluate timing, assess nearby rental vacancies and consider a host of other factors to arrive at an estimate of the house’s value. That allows the iBuying firms to comfortably offer an instant price. Last year in Phoenix, Arizona, approximately 5% of the homes were sold through instant buying, and investors own as many as 22,000 houses in the area.

But the real potential of iBuying is during the next real estate downturn. As the real estate market slows, the opportunity to sell instantly will become more attractive, and more properties could end up in the hands of big investors.

This ability to sell properties instantly also encourages the adoption of a second technology: click-to-buy. For many of the same reasons big investors have been reluctant to move into the home market, small-time real estate investors have traditionally taken their time and stayed in neighborhoods they know well.

But now online real-estate firms such as Redfin are offering better technology, such as 3D maps, which allows potential homebuyers to purchase sight unseen. A large inventory of homes owned by respected firms would add liquidity to this market, allowing small investors to get in and out more easily.

Together, these two technologies could serve as a kind of market-maker: A platform that allows buyers and sellers to find each other. As an asset that can be easily bought and sold at known prices, real estate would be coveted by investors, who are willing to accept a lower return on their investment in exchange for the convenience of easy trading.

The yield on an asset is its price divided by the yearly cash flow it generates. For stocks, the cash flow is dividends. For houses, it is rental income. Housing investors have generally considered a price-to-rent ratio of 12 to 15 as a good investment. That corresponds to a yield of  7% to 9%. On the other hand, the average dividend yield on stocks is about 2%, corresponding to a price-to-dividend ratio of just over 50.

So what would happen if houses became as easy to trade as stocks? At first, the price of homes would soar. That happened during the last housing bubble, when lower lending standards added liquidity to the housing market by making it easier for investors to sell quickly to less qualified borrowers.

At the peak of the housing bubble, the average price-to-rent ratio in the U.S. rose to about 21, well outside the range housing investors consider safe. The existence of a market-maker in housing, however, could drive yields down to the level of stocks, creating a potential bubble twice as big as the one that occurred in the early 2000s.

A lot depends on how the home construction market responds if this new technology catches on. With homes selling at 50 times yearly rent, the incentive to build more homes would be huge. Investment would flock to home construction, expanding supply and pushing down both prices and rents. The price-to-rent ratio would remain high, but because rents were falling, home prices would eventually come down to affordable levels.

On the other hand, if the supply of houses did not expand, then housing prices would remain elevated — and investors would eventually crowd out owner-occupiers in the housing market. The U.S. would become a nation of (mostly) renters.

A rigid supply of housing would also make prices more volatile. During good times housing prices would soar, just as they do in the stock market. In bad times prices would crash. That volatility could add permanent instability to the U.S. economy.

Nigeria’s shadow economy is becoming too big to ignore

Nigeria’s informal economy is becoming too big to ignore for a country struggling with economic growth and job creation.

The informal economy encompasses the broad range of economic activities not captured in a country’s official statistics.

Informality in Africa is highest in Nigeria, according to the World Bank, which values the activities of the sector at $302 billion.

That means the sector accounts for 80 percent of the country’s Gross Domestic Product and is as big as Qatar and Angola combined.

If viewed as a standalone economy, Nigeria’s informal sector would also be the second fastest growing in Africa behind Ethiopia, going by estimates from consulting firm FDC Ltd, which shows the informal economy has expanded by an average of 8.5 percent over the last three years.

The impact of sucking in the informal economy could be telling for a country that has been struggling for growth since the 2016 recession. While the formal economy grew a paltry 1 percent between 2016 and 2018, the informal sector has expanded eight times faster.

Merging the informal economy with its formal counterpart would value the economy at $678 billion, almost double the official size of GDP which was $376 billion in 2017.

“There are certainly benefits to bringing more people into formal structures, but people can’t be forced into formal structures,” said Andrew S. Nevin, chief economist at consulting firm PricewaterhouseCoopers (PwC).

“The formal structure has to be better than the informal or self-organised structure,” Nevin told BusinessDay.

Other factors that contribute to keeping the informal sector away are regulatory bottlenecks in setting up formal enterprises, multiple taxation, and rigorous business registration processes.

Though the ease of doing business has somewhat improved, analysts say more work needs to be done by the government to incentivise informal sector players to be officially captured.

Giving tax breaks and providing infrastructure have worked magic in other climes where the government sought to draw informal activities into the formal fold.

Businesses in the informal sector, as do their formal counterparts, suffer limited growth, constraining income generation and ability to hire more people. This takes a toll on the economy and even public revenue.


“It would be a win-win for all parties if government recognises existing corporatives in informal sector, support them to have skills required to transit to formal economy,” Ayo Teriba, CEO Economic Associates, said.

The high incidence of informality, whilst a major challenge, presents opportunity for achieving “decent work for all and sustainable and inclusive development”, Rafael Diez de Medina, director, International Labour Organisation (ILO) Department of Statistics, said.

Nigeria’s government is struggling to generate more revenue to finance its growing budget amid unreliable oil revenue. The country’s debt has grown more than 160 percent to N24 trillion in the last five years. Tax to GDP remains low at 6 percent, one of the lowest globally.

Integrating more people into the formal sector would translate to higher tax revenues for the government and harnessing the potentials inherent would boost the economy

The gains might not be realisable in the near term, said Boniface Chizea, MD BIC Consultancy Services.

“The government has to move closer and understand the operations of the informal sector, then mobilise them through corporative, create business hubs and improve business environment,” Chizea said.

The dilemma is that while the government has become more intent on improving its tax revenue, the informal sector is shying away from the extra costs that come with that.

“Most SMEs won’t participate in the formal sector unless it can significantly improve their business. Most of them are tax averse,” he added.

Improving business registration process, credit to businesses, restructuring tax policy to be supportive of business growths as well as broader economic reforms remain essential.


How technology is connecting people and property, disrupting market

Nigerians are getting smarter; thanks to technology, which is shaping the way people live, communicate, work, play, interact and transact business in Nigeria.
Although there are still some sectors that are yet to catch up with technological advancements, many have however evolved with technology resulting in ease of operations and better customer service.

The real estate industry is one of such sectors that have grown at an exceptional rate. The birth of online property platforms in Africa’s most populous nation is making transactions among developers, property owners, prospective buyers, and potential tenants easier, compared to the cumbersome processes witnessed a few years ago.

At one of the West Africa Property Investment Summits (WAPI), industry players were of the opinion that the deployment of technology would make Nigeria’s real estate sector more investable, increase liquidity and drive greater home ownership.

“Think back to the 80s and 90s, if you were going to purchase a property, you would spend many days trying to find a decent agent who will charge you high fees to take you from property to property in only a few locations -meaning he was limited,” Yemi Johnson, the Chief Operating Office of, said.

Statistics have shown that 7 out of 10 Nigerians feel that house hunting is painful, as it usually starts with calling friends or walking long distances with a road side agent who, more often than not, does have direct access to landlord, thereby making one pay multiple ‘agent’ fees.

“With my mobile phone, I was able to connect with a landlord online and in few days I got an apartment without having to meet up with any agent and paying for any extra charges,” Arua Nnamdi told BusinessDay.

According to Nnamdi Chineme, CEO of Nigeria Property Centre, an online platform that advertises real estate properties, his experience in renting a flat in Nigeria in 2008 and the UK in 2009 was the reason he decided to set up his company. He said it took about six months to find a flat in Lagos while in the UK he found one in just a week. The difference, he added, was down to the use of technology.

“Historically, in Nigeria, the speed of finding a property to rent or buy was mostly dependent on the estate agents the person knew and the network of those estate agents. Today, with the use of technology in the form of Property Portals, people can find a property as much as ten times faster,” Chineme explained.

Technology based (online) property platforms like (formerly,,, Nigeria Property Centre, Lamudi which has now rebranded to Jumia Houses, Real Estate Market, estate intel, etc have brought technology to bear on real estate transactions, making listing, leases and sales a lot easier

“The adoption of Proptech is increasingly becoming a boon for the real estate sector in Nigeria,” Abdulhakeem Sadiq, chief executive officer of ZAMA, said in a statement.

“Now, a student could seamlessly find and rent an accommodation in no time whenever and wherever he/she may be as we provide critical information such as photographs, reviews & ratings, pricing, etc about available spaces for rent,” Joel Amawhe ,CEO of said.

As it happens in other sectors of the economy, technology has penetrated the real estate sector and has disrupted the status quo, contracting jobs and creating new opportunities, especially for the millennial.

Checks by BusinessDay revealed that even though technology has positively impacted the property industry in Nigeria, it has also caused disruption for traditional players in the industry. Going forward, real estate agents, developers, landlords and investors who are not open to embrace technology or become innovative over time will lag in the growth of the sector, industry experts have said.

“I have registered with three different online platforms, two of which I paid money for subscription, and since the time I uploaded my vacant properties on the sites, I get more than 10 calls a day from people who want to rent apartments. My fellow agents have been begging me to link them to the online platforms so they can be getting clients like myself , but I am still thinking about it whether or not I will link them,” jerry Adenekan, a real estate agent in Unilag axis told BusinessDay by phone.

BusinessDay findings revealed that the online market place in Nigeria is growing at a pace higher than even the country’s economy, and the real estate sector is among other industries who are directly impacted by the revolution.

The recent development has given room for the existence of new tech start-ups in a country where housing deficit is above 17 million units fuelled by the ever growing population.

A recent report by Global System for Mobile Communications Association (GSMA) revealed that Nigeria was second African country with highest technology hub after South Africa with Lagos taking the first position among the cities with highest tech hub in the continent.

The Protech industry in Nigeria is however constrained by the not too favourable network service (in terms of connectivity), power failure (energy to power the system) and cost (of obtaining data). These challenges influence and determine the effective use of the internet for real estate transactions in Nigeria, as compiled from BusinessDay survey.

Analysts familiar with the sector said the government does not in any way regulate the Protech industry- different medium and the online platforms where Nigerians search for properties, as such poses may be used by some fraudulent individuals.

“The internet and technology generally no doubt remains a major tool to change narratives of real estate players but there exist challenges hindering a wider use mostly due to scepticism of using online platforms, low internet penetration in remote areas and more,” Amawhe said.

Going forward, analysts expect to see more use of technology in the real estate space especially with virtual reality and drones for property viewings.

By Endurance Okafor

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