Reporter

NITP tasked on town planning regulations

 

Appalled by the planning conundrum, which has bedeviled many cities, the Nigerian Institute of Town Planners (NITP) has been asked to lead the struggle of redeeming the nation’s town planning regulations.

The call was predicated on the constant conflict between planners and policy makers, which had put the struggle of rescuing town planning at risk.

Planners were thus called upon to get more involved in the process of policy making to tackle issues like uncertain data, public and community resistance to enforcement and limited police support, federal agency-state conflict, elite impunity, migration and growth of informal settlements, limited access to land, land titling, costs and delays to applicants

They are asked to engage the relevant public institutions or by calling for public hearing at the House of Assembly in relation to any pressing urban planning issues on which they have a position.

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The call was the fall-out of the 2018 annual general meeting of the Lagos branch of NITP, themed: “Nexus of Emerging Democracy & Dynamic Status of Urban Planning $ Development in Nigeria: The Lagos Megacity Experience”.

The guest lecturer was Mr. Fola Arthur -Worrey, a former commissioner of Lands in Nigeria and solicitor –general of the state.

Arthur -Worrey, stressed that Nigeria has lost much of its institutional memory and its major procedure guide because of constant restructuring of governing units and institutions as well as abrupt changes in leadership.

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The major challenge, he said, has been how to adopt a fresh consensus about in what manner and under what circumstances often-disruptive state powers such as urban planning should be exercised.

According to him, Nigeria’s organizing principle seems to be one of crisis management, that is managing the fallout of things not properly done or fall out of the default position of the general Nigerian citizenry with significant financial, developmental and social costs attached to this attitude

He noted that Megacities like Lagos is further challenged by formulaic approaches to town planning, policy inconsistency or outright abandonment, and limited role of the private professional town planner in the process.

To manage the disruptive dynamics and demands for urban planning and physical development in Nigeria, especially with the amount of work to be done with the limited resources, the citizens, he said would have to be convinced of the general benefits of the process, thereby rejecting self –help, while government and its institutions would have to be creative consistent and vastly enhance its ability to prove the benefits and be much more vigilant, firm and efficient in its regulatory and enforcement processes.

He therefore urged planners as one of the potent weapons of ensuring the quality of life to have a rethink by redesigning the setting and not always about demolishing buildings.

On his part, the Vice-Chancellor, Lagos State University, Prof Olanrewaju Fagbohun, urged planners to be in the core of government activities as the state is gradually grinding to a halt.

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Represented by the Dean, Faculty of Transport and Environment, Prof Samuel Odewunmi, he stressed the need for the enforcement of planning laws, saying it is the only way out of the current planning puzzle.

National president of NITP, Luka Achi, in his address read by the Second National Vice -president, Toyin Ayinde noted the important of leadership in attaining sustainable environment.

He urged planners to utilize the leadership recruitment process to get responsive and responsible leaders, as ignorant leadership will ultimately spell doom for the organization.

Also a member of the Town Planners Registration Council of Nigeria (TOPREC), Moses Ogunleye tasked the practitioners on integrity and pledged to support quality service.

Bertram Nwannekanma

United Wholesale CEO: Freddie Mac just made mortgage lending a better deal for borrowers

Also, PIWs are now called Appraisal Waivers

Both Freddie Mac and Fannie Mae are leading the charge to improve mortgage lending in the wake of the rising interest rate environment, according to the latest video “3 Points with Mat Ishbia,” the CEO of United Wholesale Mortgage.

Some of the latest updates are big (Freddie Mac) and some are small (Fannie Mae). But both mean more opportunity for mortgage brokers.

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According to Ishbia, Freddie Mac made 3 major changes to its mortgage lending landscape — that is its requirements for loans its willing to bundle into the secondary market. For example, regular student loan payments can now be considered as a credit to the borrower. Plus there are ways to get more cash back for your refinance clients.

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Second, Ishbia discusses briefly the latest updates to Fannie Mae’s Desktop Underwriter and Day One Certainty. Spoiler: the website is more user friendly and PIWs are now called Appraisal Waivers.

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Third, it’s true that mortgage rates are on the rise, and are expected to keep going that way for some time. But don’t despair.

Ishbia asks and answers: “Does that mean there will be no refinance opportunities for you?… no, there’s opportunity out there for you,” he says, citing several instances where the current mortgage environment can be effectively marketed by loan brokers.

Jacob Gaffney

AUHF to Set the Stage for Affordable Housing in Africa

 

The opportunity for African countries in supporting the growth and development of their affordable housing industries is immense and transformative

The 34th African Union for Housing Finance (AUHF) conference (www.AUHFConcerence.com) and Annual General Meeting will take place for the first time in Abidjan, Cote D’Ivoire between 23 & 25 October 2018.

This year’s theme: Building Africa’s Housing Financing Chain will be unpacked by the leading figures from Africa in one of the primary economies of the continent’s fastest growing economic regions – the West Africa Monetary Union (UEMOA).

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While the conference will provide stakeholders with an opportunity to examine the unique regional context, the three-day conference and AGM is pan-African in focus with more than 61-member institutions and several key partners from across the continent coming together to address the challenges and opportunities in Africa’s housing finance chain.

 

Key Partners

This year’s partners include: The Centre for Affordable Housing Finance in Africa (CAHF), the African Development Bank (AfDB), and Caisse Regional de Refinacement Hypethecaire (CRRH).

Providing affordable housing opportunities to Africa’s rapidly urbanising population is a major policy driver for African governments and an opportunity for both local and international investors and developers. Recent estimates by the World Bank suggest that more than 1 billion people will live in African cities by 2040, more than double the current urban population on the continent. The capacity of Africa’s cities to respond to this challenge, and to turn the demand for affordable housing into an opportunity for stimulating local economic growth and development, is critically dependent on an efficient flow of finance.

African Growth

It’s against this rapidly urbanising landscape that this year’s AUHF conference will explore the key links in the housing financing chain: the finance instruments that support each link in the housing delivery chain, and the funding instruments that make these possible.

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Mortgage Lending

As the conference takes place in a leading regional economy, Cote D’Ivoire, and hub for the West Africa Monetary Union (UEMOA), one of the three-day conference’s focal points is Building UEMOA’s housing finance sector. Mortgage lending is a key issue, and Director General of the UEMOA mortgage refinance institution, the Caisse Regionale de Refinnacement Hypothécaire de l’UEMOA Christian Agossa will deliver a keynote address on this key focus area.

According to Mr. Agossa, mortgage lending products need to be well-targeted to the demand side; however, adjustments to product design, including mechanisms to underwrite informal incomes, savings-linked and micro-mortgage products, and pension-backed lending will expand the potential market for mortgage lending dramatically in affordable housing.

The affordable housing challenge promise to be a significant driver of economic activity, says one of the key stakeholders of this year’s summit, the executive director for the Centre for Affordable Housing Finance’s (CAHF) Kecia Rust.

The Economic Opportunity

On an annual basis, CAHF analyses the most affordable homes which are being built on the continent. In Nigeria, Millard Fuller has developed a starter house for a total cost of $7,500. If this were available for purchase with a mortgage across the continent, the potential effective demand would translate to about 52 million houses. A simple “back of the envelope” calculation suggests that this could generate $400 Billion in economic activity just with the construction of the housing units and related infrastructure and provide more than 1.3 million jobs in the construction sector alone. The opportunity for African countries in supporting the growth and development of their affordable housing industries is immense and transformative.

Investors are clearly interested. Although still relatively small in relation to the potential opportunity, investment in residential real estate and in affordable housing in particular, is growing. Reports of targeted, local investments are increasingly finding their way into the local media, and many of these stories will be shared at the conference. Development Finance Institutions, as well as international and local investors all working towards maximising the impact investment potential that the numbers suggest. The 34th Annual AUHF conference will give them a platform for the growing number of affordable housing stakeholders to accelerate their conversation.

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Policy Drivers

This interest is encouraging to policy makers, and many are responding with supportive rhetoric and explicit programmes. President Kenyatta’s commitment to see the construction of half a million affordable homes in Kenya is one example; governments in Nigeria, Uganda, Côte d’Ivoire, Rwanda, South Africa, and others have all expressed a commitment to affordable housing in the past year. Rust makes the point “Governments have a critical role to play in land assembly and the awarding of development rights that support affordability; infrastructure investment must accommodate the expected densities and should ultimately be funded over a longer time frame than the housing itself. The capacity of developers to deliver truly affordable housing at scale is another issue that will require policy support and private sector construction financing. And then there is the question of end user financing, the cost of capital, and the trust lenders have in the underlying security. These are all policy and regulatory issues on which the government will need to focus – beyond simply visioning a magic number.”

Top Thought Leaders

With more than 200 delegates and stakeholders travelling to the summit in October, some of the confirmed regional speakers include Mr Christian Agossa, Directeur Général at Caisse Régionale de Refinancement Hypothécaire de l’UEMOA, Mr. Stefan Nallemtaby, Director Financial Sector Development Department African Development Bank, the Chief Executive of the Federal Bank of Nigeria Arc. Ahmed Musa Dangiwa, Kehinde Ogundimu, acting chief executive officer of the Nigerian Mortgage Refinancing Company – the summit is a strategic platform for the continent’s affordable housing financing thought leaders to build a more robust housing finance value chain.

As Mr. Nalletamby of the African Development bank stated, “We will have a robust discussion on the affordable housing value chain and Abidjan, as one of Africa’s high growth economies is the perfect host city for this conference and AGM”.

Proshare

Dearth Of Long Term Finance As Impediment To Affordable Housing

 

Chika Okeke writes that the highly-touted provision of affordable housing for Nigerians would be decimated without government resolving issues bothering on access to construction finance.

The construction and building sectors are crucial to the growth of any economy whether in developed or developing countries. While the housing sector in the United States contributed 36 per cent to their gross domestic product (GDP), South Africa had 30 per cent but in Nigeria, it is five per cent.

This is because, Nigeria’s built sector is confronted with enormous pitfalls such as unskilled manpower, difficulties in land acquisition, incessant building collapse due to use of substandard materials, delay in governor’s consent, absence of long term finance, bogus interest rate and among others. These problems are believed to have ignited the over 17 million housing deficit, over- bloated cost of rents, increased slum settlements, use of crude materials s in construction and building, completed and vacant buildings across the major cities in Nigeria.

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Findings revealed that there is no bank in Nigeria that loans on single digit interest rate and since most estates are being funded by commercial banks, the provision of affordable housing would remain a myth. It was also discovered that commercial banks or some Primary Mortgage Banks (PMBs) affiliated to commercial banks loans at 20 to 25 double digit interest rate to estate developers.

Added to this is that intervention funds extended to other sectors of the economy is absent in the housing sector. This is why low income earners who constitute over 80 per cent of the workforce may face severe battles owning homes in the country. Given that access to finance and flexible interest rate are key towards the sustenance of the built sector, experts have suggested that government should provide counterpart funding for the housing sector.

The Chairman, fellows’ forum of Nigeria Institute of Quantity Surveyors (NIQS), Mr. Ifeanyi Anago hinted that previous government had established the Mortgage Refinance Company of Nigeria (NMRC) whose job is to refinance mortgage to enable estate developers who have estates under construction to access funds to finance the estates. He informed that if NMRC is properly articulated and implemented that they would soon boost the mortgage market in Nigeria, stressing that active construction industry is the greatest weapon to crash poverty and create employment especially in the housing sector.

Explaining on how the built industry would boost employment, he noted that anybody building a typical house would at least employ 10 persons like the carpenters, masons, tillers, painters, welders, labourers and among others. According to him, if government decides to construct 10,000 housing units in a given time, multiply it by six which is 60,000 direct employments, you will find out that our cry concerning unemployment especially among the youths will be greatly minimized if we have articulated programmes of sustainable housing expansion.

Anago who is also the principal partner of Ifeanyi Anago & Partners regretted that the built industry contributed between 3 to 5 per cent to the countrys GDP despite its versatility stressing that the only way to capture its contributions was to integrate the industry into the formal market. He described the built industry as the ground wealth of any developed economy since it contributed higher to their GDP saying that since Nigeria is under-developed that most of the construction market is in the informal sector.

Anago pointed out that when Nigeria’s economy was rebased that we took over from South Africa because the economists captured markets that were sidelined in the informal sector adding that construction sector is the only industry that increases wealth without deprecating.

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In his contribution, vice president of Real Estate Developers Association of Nigeria (REDAN), Dr. Aliyu Oroji Wamako lamented the pitfalls in accessing construction finance adding that it was impossible for developers to obtain loans from commercial banks at 28 per cent interest rate and provide affordable housing. He noted that any developer that collected loan from commercial banks would end up enslaving for the banks, saying that since federal government is interested in providing homes for low and middle income earners that the objective would be defeated if the price tag on the houses are high.

Wamako pleaded with all levels of government to provide counterpart funding in order to reposition the built industry and reduce the housing deficit, stressing the need for federal government to eliminate hitches associated with land acquisition.

He suggested that the counterpart funding should be made available to Federal Mortgage Bank of Nigeria (FMBN) that earlier provided the funds at 10 percent interest rate for onward distribution to developers.
According to him, “If 1,000 people are contributing N5,000 in one year, they will only contribute N60 million and there is no thee-bedroom house that is sold below N8m to N10m, so it is impossible for FMBN to provide mortgage for four million people when contributions from the NHF contributors are like peanuts?” This he said is one of the major reason he is appealing to the federal government to streamline the idea of housing provision, cut down bureaucracies involved in accessing mortgages and re-organise the mortgage procedures in Nigeria to avoid wasted efforts.

Wamako pointed out that the provision of infrastructure in satellite towns could also attract foreign investors in the country. He said that once a housing layout is carved out by either federal, state or local government that there should be an existing infrastructure on the layout which is supposed to be provided by government and not private developers. Wamako wondered why residents of Lugbe, Gwagwalada, Bwari or Kuje cannot enjoy the same level of infrastructure available in Asokoro, Maitama and Wuse 2.

A developer who spoke on condition of anonymous appealed to the bank to consider lifting ban on the suspension of Estate Development Loan (EDL) saying that FMBN is the only institution that issues such loans at a flexible interest rate. He noted that some developers’ excesses shouldn’t be visited on others who collected the same loan and paid back as agreed by the institution.

The Federal Mortgage Bank of Nigeria (FMBN) created the Estate Development Loan (EDL) and rent-to-own scheme to bridge the housing gap. The EDL is granted at 10 percent interest rate with a maximum repayment period of 24 months to private developers, state housing corporations and housing cooperatives even as houses produced through the EDL window is not expected to exceed N15 million in price and must be sold only to National Housing Fund (NHF) contributors.

However, the EDL was suspended since 2012 due to a backlog of loan defaults by developers and mortgage bankers, amounting to over N100 billion. Currently, the bank in partnership with Special Presidential Investigative Panel for the Recovery of Public Property (SPIPRPP) are working towards the recovery of FMBN non-performing loans. The managing director of FMBN,

Arc. Ahmed Dangiwa confirmed that the suspended Estate Development Loans (EDL) window is still opened to state- owned housing corporations that are developing houses for workers and contributors to the National Housing Fund (NHF) Scheme.

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Dangiwa maintained that FMBN has always enjoyed mutually beneficial relationship with about 29 member organisations of AHCN which led to the approval of EDLs to build 10, 000 housing units nationwide. He listed the challenges related to housing corporations as state governments failure to provide infrastructure as promised, delays in packaging NHF mortgage loans to off-takers and delays in mortgage perfection due to non-issuance of title documents and governor’s consent.

To resolve the challenges of non-performing EDLs, Dangiwa stated that Real Estate Development Association of Nigeria (REDAN) and FMBN formed a joint committee with Mortgage Bankers Association of Nigeria (MBAN) to propose exit strategies.

He solicited for greater collaboration with housing corporations to improve engagement with state governments even as he appreciated the efforts of AHCN in addressing the housing challenges in the country. Dangiwa assured that the management are making plans to reactivate the EDL by adopting a business model to guide against abuse and loopholes associated with the loan before its suspension.

Chika Okeke

Why most banks aren’t giving mortgage – Ubosi

 

High cost of money, nature of funds and short tenor of finance have been adduced, among reasons, why most commercial banks are not granting mortgage finance to enhance housing development and homeownership in Nigerian.
President, African Region of International Real Estate Federation (FIABCI), Mr. Chudi Ubosi, said this in a chat with news men in Lagos.

Specifically, he said banks were not giving mortgage due to the fact that less than 10 per cent of their funds come with less than 365 days tenor, which could not match real estate development that requires long-term capital.

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Long-term and capital intensive nature of real estate investment, he said, have made it difficult for banks to grant mortgage finance of 15 to 30 years with their short term money.

On how to unlock opportunities in housing finance, Ubosi said that banks were reluctant to give mortgage to real estate developers because 90 per cent of their funds were call (short term)monies.
“Call money is the one you just go to the bank, write a cheque and withdraw. Not less than 10 per cent of money in the bank is money that has less than 365 days tenure,” he said.

Apart from high cost of funds, he pointed out that exorbitant interest rate of 30 to 32 per cent being charged on loans by banks have made it difficult for mortgage financing.

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Ubosi said: “With this kind of set up, it is difficult for banks to give you a 30-year mortgage. They won’t even give you a 10-year mortgage because they have to be jobbing with people’s funds. So it is difficult for bank to give a 10 year mortgage.
“And because their own cost of money is high, there is no way you are going to get their money at lower than what they get it. It will come with a margin to cover their expenses, salaries and cost of running generators.”

The African FIABCI boss, who is also the principal partner, Ubosi Eleh and Company, warned that unless the government sorted out the economy, it would be difficult for banks to grant mortgage for home ownership

On the ways out of the woods, he canvassed for the restructuring of the nation’s economy and building of strong institutions to support mortgage finance.
He said: “Unless this economy is restructured and, at the same time, build strong institutions so that if I take money from the bank and refused to pay, I will not go to court and tie up the bank for the next 15 years trying to collect N1million back from you, it would be difficult for banks to finance mortgage.”

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According to him, there must be strong institutions, the legal system must be strong and the policing system must also be strong to support mortgage finance.

“If banks are even given mortgages at five per cent for 20 years, today I can tell you that people will collect that money and fix it in deposit account or on investment with 18 to 20 per cent per annum. And if we don’t have strong institutions, nothing will happen to them,” he said.
Ubosi also believes that investment of pension funds in mortgage finance would go a long way, urging the authority to work on this to reduce housing deficit of 17 million among Nigerians.

Nigeria needs to provide 740,000 houses yearly for next 20 years to bridge accommodation gap of 17 million.
For this to happen, he harped on the need to change some of the pension laws to enable pension funds and their administrators invest in real estate.

Dayo Ayeyemi

Using Land-swap approach to bridge housing demand-supply gap

 

Unlike other social problems in Nigeria including insecurity, militant activities, kidnapping, youth unemployment and others, housing deficit seems not to bother government, hence the poor attention given to the problem.

But, increasingly, professionals and other stakeholders in the housing sector are showing keen interest in how to resolve the deficit which has left about 25 million households, comprising 4-6members each, without their own homes.

In any given opportunity at conferences, summits, seminars and even at private levels, discussions are always extensive on ways and means of bridging this deficit which is not only deepening the socio-economic inequality, but also affecting productivity level in offices and industries.

New building technologies which have the capacity to mass-produce houses, use of alternative building materials, especially locally sourced materials, which will cut off import duties, have always been canvassed and even deployed without much result because the cost implications are huge.

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But there is another approach which experts consider viable and more cost-effective is land-swap. This model is being explored in many developing countries and it involves government and a real estate developer signing off a deal that the former will offer a defined parcel of high valued land to the latter at no cost, while the recipient or developer will, in return, build an agreed number of units of social housing for the government to be given out to low-income earners who cannot afford to buy or build.

The housing deficit which, in 2014, the World Bank estimated at 17million units is high because of this class of people whose demand for housing is ineffective. Expert say the deficit is not so much the problem as the low level of effective demand for what is on offer on the housing market.

The level of effective demand for housing in Nigeria, Africa’s largest economy, according to the experts, is very low, not more than 10 percent of the deficit. The implication of this is that even if, by any stroke of chance or magic,  the country offsets the deficit by building 200,000 units annually, only about 2million units will be bought at any given time by those who have the capacity to buy.

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Besides poverty, however, there are also reasons for low level of effective demand. Basically, not everyone who desires housing can afford it while most of those who can afford it do not have easy access and this is the main reason for the mismatch of demand and supply for different levels of buyers—low, middle and high income earners.

If demand for housing is not effective on account of poverty, it means there are other factors that are constraining not only demand, but also supply. “Economic conditions leading to low purchasing power, and constrained access to land with valid title such as government bureaucracy and  the ‘omo-onile’ factor can make demand ineffective,” explained Femi Akintunde, GMD, Alpha Mead Group, at  Africa Real Estate Conference and Awards (AFRECA) 2018 in Lagos recently.

Despite all the arguments to the contrary, Akintunde believes that government has a role to play in housing delivery, especially in finding solution to the nagging issue of housing deficit. In his contribution to the  theme of the conference, ‘Sustainable & Equitable Housing: The Role of Government & Private Sector’, he reasoned that, given the many challenges militating against the provision of sustainable and equitable housing in Nigeria, “land-swap  is the catalyst needed for resolving housing deficit”.

Akintunde emphasized  that, though government might be constrained by lack of requisite data to determine citizens with little or no purchasing power to own homes, it should explore a pre-qualification process to ensure that the social housing units are given out to citizens in dire need of them.

He pointed out that the success of the land swap model would depend on government’s ability to come up with a holistic plan, practical execution strategy and a measurement tracker that must ensure housing supply in both urban and rural settlements meets effective demand at all times.

GbolahanLawal, Lagos State Commissioner for Housing, assured that despite the prevailing economic challenges, the state government remained committed to providing affordable homes to its populace. Lagos at the moment is grappling with a housing deficit estimated at 3 million units.

But the commissioner assured , “as a forward-thinking government, this administration has a strong interest in the many ways we can make housing provision more efficient and affordable with projects such as our partnership with Echostone which seeks to push housing development frontiers by deploying the use of technology to build homes within record time.”

He disclosed that the state has set a target to build about 14,187 affordable homes by 2020, revealing that the state government bought into several innovative ideas towards the last quarter of 2017 that were capable of changing the real estate landscape in the state.

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At private sector level, however, it was noted that major issues impeding housing supply ranged from state ownership of land which creates insecurity and crisis of confidence in mortgage lenders, low viability of housing projects due to high cost of building materials, to forfeiture laws which discourage banks from lending to developers, and multiple taxation.

 Part of the highlight of the conference (AFRECA) was that Alpha Mead Facilities, a strategic business unit of the Alpha Mead Group, was recognized and awarded the ‘Best Facilities Management Company of the Year’. “The award is a testament of our innovative approach to facilities management in the last 12 months”, Akintunde enthused.

 

Chika Uroko

Need for active insurance industry in mortgage economy

 

Like action and reaction, insurance and mortgage are equal and opposite and this is why, in advanced economies of the world, an active insurance industry is highly needed for the mortgage economy. While mortgage lending is a risk, insurance, by its function, acts as a hedge against risk. It is a cover.

To develop a healthy mortgage industry, therefore, there is need for a mortgage insurance functioning as  a policy that protects a mortgage lender or title holder in the event that the borrower defaults on payments, dies, or is otherwise unable to meet the contractual obligations of the mortgage.

This is why the new the Mortgage Guarantee programme, a new initiative by the Central Bank of Nigeria (CBN), is quite instructive. This is a kind of mortgage given to a borrower by a lender, where an identified third party will take responsibility for the loan if the borrower defaults. The programme is structured in such a way that once the borrower defaults, the third party receives a claim from the lender, pays the lender off, and assumes responsibility for the mortgage.

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Besides incentivizing mortgage lenders, a quality mortgage guarantee programme is also used to provide credit loss protection to lenders in case of borrower’s default and, according to CBN officials,  a robust primary mortgage market is a synergy of several components, all working together to effect affordability and access for intending buyers.

Investopedia, an encyclopedia of investment initiatives, identifies three aspects of mortgage insurance. These are private mortgage insurance (PMI), mortgage life insurance, or mortgage title insurance. What these have in common is an obligation to make the lender or property holder whole in the event of specific cases of loss. Private mortgage insurance may be called ‘lender’s mortgage insurance’ (LMI) if the premium on a PMI policy is paid by the lender and not the borrower.

For these reasons and more, an active insurance industry is needed for the growth and development of a functional mortgage industry. The mortgage industry in Nigeria is still a fledgling and fingers are frequently pointed to an insurance industry that is not as active participant as it should be.

For some reasons, in this country,  in spite of  everything the people have learnt, policy is still shaping the industry whereas, in advanced economies, it is the other way round—industry shapes policy because people in the industry are the ones implementing the policy every day.

The mortgage industry in United States, for instance, has been robust for decades and it is with continued activity. One is not however, saying that Nigeria should replicate what happens in the US here, because Nigeria has its own unique characteristics which must be recognized and respected.

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What the mortgage players in Nigeria should do however, is to make the US system a base-line because that system represents the global standard.  Adenike Fasanya-Osilaja, a mortgage and finance consultant advises that “we have to start learning that system and adapt it to meet our own unique cultural system and unique needs”.

Nigeria needs to lay a very good foundation for mortgage industry growth to ensure that what happened in America in 2006 with sub-prime mortgage crisis does not repeat itself here. The Nigerian Mortgage Refinance Company (NMRC) is a big possibility that can change and shape the mortgage system in this country and could also be an umbrella for the industry.

One of the high points of NMRC, as a secondary mortgage institution, is its long term, low rate global funds and, because the mortgage industry here is not yet buoyant, NMRC, whether it is succeeding now or not, can be a significant tool for achieving these attributes of a working mortgage industry.

Fasanya-Osilaja believes that the mortgage industry should be shaping NMRC and not NMRC shaping the industry, advising that the Central Bank of Nigeria (CBN), through the NMRC, should be listening to the voice of the industry.  “Experience has proved to me that the CBN is quite ready to listen and learn. The problem here, however, is that the industry has been rather passive”, she noted.

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This industry has to be standardized so that global players, from global perspectives, could view the local industry from the perspective of NMRC and mortgage banking association of Nigeria (MBAN) and see something to hold on to in their investment decisions. Despite the current challenges, the Nigerian economy could conveniently support the growth of the mortgage industry as the country is one of the fastest growing economies in the world where talent resource is amazing.

The mortgage consultant advises further that Nigeria needs to understand there is time for competition and also time for association and each is as critical as the other. “The only thing that will stop this industry from growing is over-regulation by people who are not in the industry and therefore will not understand the effect of their policy on the actual market”, she said, emphasizing the urgency of an active insurance industry to drive the needed growth in the mortgage industry.

As a step forward, mortgage insurance could come with a typical ‘pay-as-you-go’ premium payment, or may be capitalized into a lump sum payment at the time the mortgage is originated. For homeowners who are required to have PMI because of the 80 percent loan-to-value ratio rule, they can request that the insurance policy be canceled once 20 percent of the principal balance has been paid off.

Chuka Uroko 

Facility managers to maintain govt infrastructure –FHA

 

Apparently determined to make government infrastructure live out their life span, the Federal Housing Authority, (FHA) has finalized plans set up a facility management agency that will be charged with the maintenance of roads and other social infrastructure in federal housing estates nationwide.

Speaking with news men, the Managing Director of FHA, Prof. Mohammed Al-Amin, recently in Abuja said that another arm of the FHA is being created, just like the mortgage bank that is marketing the houses and creating mortgages.

“It will be responsible for the maintenance of all facilities, utilities and services in federal housing estates nationwide.

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“This is one of the important points that the current FHA Board of Directors looked into immediately after it was inaugurated, and approval was given to use the facility management company,’’ Al-Amin said.

He was responding to complaints by residents of Nyanya and Lugbe Federal Housing Estates in the Federal Capital Territory (FCT) over the “deplorable state of roads’’ in the areas. The FHA boss, who acknowledged the plight of the residents, blamed the situation on lack of maintenance plan by the agency before now.

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He said, “before now, our estates did not have maintenance plan; FHA was just building houses and leaving them for the residents to take care of. “If you allow individual residents to dig their boreholes, raise their electric poles, take care of their drains, security, and to maintain the roads, you are not being fair to them.

“So, we have earmarked some resources for immediate intervention before the take-off of the facility management company. In the next two weeks, work will begin in earnest in Karu and Lugbe FHA estates; we have money earmarked in the budget for infrastructure project to commence in Lugbe,’’ Al-Amin said.

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The agency was told by residents of Nyanya that the government had virtually abandoned the estate since the houses were sold to private individuals several years ago. One of them, Mr Isaac Ighure, a retired civil servant, said all the roads in the estate had been taken over by craters, making them not passable.

Ighure, who is a landlord in the estate, said residents were also grappling with erosion problem during the rainy season due to lack of drainage, and dust during the dry season.

Ajiri Daniels

“We need to return to 1963 Constitution to get Nigeria right”—Femi Okunnu

 

Federal Commissioner for Works and Housing in the first republic and former pro-chancellor and chairman governing council of the University of Agriculture, Makurdi , Alhaji Lateef Olufemi Okunnu, SAN, in this interview, x-rays the Nigerian state 58 years after independence and says only a return to the 1963 constitution will revive Nigeria. Excerpts:

How do you see the state of affairs in Nigeria 58 years after independence?

The state of affairs today, coming from the year of independence in 1960 is very, very grim. I cannot find a better word for it. Very grim because as a young man in 1960, and as a young political activist in 1960, after my political activities as a general secretary and president of the Nigerian Union of Great Britain and Ireland. The hope which we had about Nigeria was a country free and strong; free, yes we were free; strong, we were not strong, economically, morally, mention it.

Our picture of Nigeria, our hope for Nigeria that time was a country very strong economically, the leader of Africa in world affairs and a leading economic power in the world. Nigeria is neither today. It is not in either of the two positions, any position of leadership today. It is very far from it.

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So what went wrong?

What went wrong? Leadership. We don’t have leadership with patriotism. We don’t have patriots at the helm of our affairs. We don’t have those who are Nigerian patriots. We lack that sort of leadership. There are good ones among them but very few. We don’t have people who are patriotic enough, who have the love of the country and who have a mission to create a strong, economically strong country to lead this nation. We need a country or leadership which will have the feel of the people of this country, a leader who will understand the people of this country, who will understand what the people want for their daily life and to provide what the people want. We don’t have them. We have people interested in how much they can steal from the public pockets or exchequer. They are more interested in how much money they can rake out, legitimately and illegitimately. That’s our biggest problem.

What went wrong? Well, where do we start? True enough, we have a coup, a military coup but that was not really the beginning of our trouble or the main cause of the present travail Nigeria is experiencing today.

Not the military?

Not the military. The military has left governance in the past, almost 20 years, 19 years now. What has changed between 1999 and 2018? Nothing, if anything, it is worse. So, it is not the military. It is not the coups we had, bad as they were.

And it wasn’t the civil war?

It wasn’t the civil war. That’s not the cause of our problem. It is unfortunate that the civil war erupted in the country because of greed in certain quarters and intolerance in some other quarters, all merged together, all colliding. It wasn’t the civil war but the unfortunate thing is that we have politicians today who are political prostitutes. They move from one party to another, they move to one party and back to their former party. That’s what we see in the political scene, whether APC or PDP. Today, you’re APC and you move to PDP; tomorrow you are back to APC or the other way round. There’s no ideology which will provide or let us know what you want to do for the people of the country if you get into power.

What are your goals, your ideological goals? No manifestos to say when I’m in power, this is what I will do for education, this is what I will do for health, in housing, in agriculture, in works, nothing! They provide us with nothing. In those days before independence, there were three major political parties. There was the National Council of Nigeria and the Cameroons, NCNC, the oldest of the three, when Cameroons, the trust territory was being governed as part of Nigeria on behalf of the United Nations with the Nigerian National Democratic Party founded by Herbert Macaulay in 1922. There was the Action Group.

Free education and free health

The NCNC was led by Dr. Nnamdi Azikiwe and the Action Group was led by Chief Obafemi Awolowo. There was the NPC, Northern People’s Congress led by the Sardauna of Sokoto. Both the Action Group and NCNC had manifestos promising to provide free education for the people and they kept their promise. The Action Group did it, provided free education and free health. Awolowo started it as Premier of Western Region and Azikiwe followed suit with similar plans and manifesto and they achieved their purpose before the military coup. Sardauna of Sokoto had his own plans for the northern people. They wanted the north to be together, Muslim and Christian. NPC welded them together although, again, like you find even in western and eastern region, minority and ethnic groups wanted some measure of self government. But back to the point, the major parties had manifestos of what they will achieve or wanted to achieve in government. Today, we don’t have manifesto’s. No party has any manifesto today, none. Well some of them do make promises but at the end of the day…

What the public wants is written manifesto, a pamphlet saying that when I’m in government, if I form a government at the state level, this is what the state government will do for the next four years in areas like health, education; pre university education, primary school, secondary school, agriculture, housing. No party to my knowledge since 1999 has published a manifesto. None of them have said ‘if I form a federal government, this is what I will do for the country in terms of transportation, whether by rail or by road or by sea or water and other fields. So, that is one thing which we lack. Everybody says what comes to his mind and we don’t even know their minds, so their promises are unfulfilled. We can’t know what the performance of a particular governor or a particular party in a state or in the federal government after four years is.

Political parties measurement

So we don’t have any manifesto to show us or persuade us to vote for them, that when they are in government, this will be the performance so we can gauge at the end of four years whether they measured up to their promises.

Is this not a function of the constitution, the military constitution that we’re operating in Nigeria?

No, not exactly. It is not the function of the constitution. Whatever the constitution you have, any party which promises to govern and govern well should provide three meals per day for the people, provide employment for the people, provide education, better education than the available one, provide good health, build hospitals and look after the people’s welfare. These are things you measure political parties with, not the constitution. That has little to do with the constitution. When I say it has little to do with the constitution, the only relationship between the constitution and these functions is this: that the parties will tell us what they want to do within the powers vested in the state government for example or federal government in the constitution. But today, we have a huge confusion about who has what functions. So, it has nothing to do with the military rule as such but let me say this, people talk of the constitution, constitutional changes, they want to change the constitution and the major parties promise structural change, isn’t it? They only occasionally mouth this vital issues. They haven’t told us what they want to change. They have not even committed themselves to any change. Neither the APC or the PDP or APGA in the eastern part of the country has come out clearly to say it is in favour of structural change, constitutional change. All of them have just been dancing around the need for change but no commitment so far.

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Currently, many people are agitating for restructuring. How do we restructure?

Well, the issue of restructuring has been with us for quite some time and the whole issue boils down to what constitution is best suited for Nigeria. Nigeria has gone through several constitutions in the past 100 years. Clifford’s constitution of 1922 was limited only to the colony of Lagos and the protectorate of Southern Nigeria. The north was being ruled under indirect rule by the British until 1946 when we had Sir Arthur Richard as the Governor-General of Nigeria. Later, we had Lord Milverton and under Milverton’s constitution, for the first time, the people of the Northern protectorate and the people of the Southern protectorate and the third colony of the British, Lagos Colony were brought together under the same umbrella in a legislative council.

That was the first time the whole of Nigeria came under one constitution but there was the Macpherson constitution in 1951 followed by Littleton constitution in 1954 which established the federal system of government for the country and the constituent parts of Nigeria at that time were Northern region, formally Northern protectorate; the Western region, the Eastern region, both carved out of the Southern protectorate, the fourth unit forming the confederation was Southern Cameroons and the fifth unit was the Federal Territory of Lagos. Now, the structure remained the same in 1960 when Nigeria gained independence from Britain and when Nigeria ceased to be a dominion with the Queen as the head and became a republic in 1963, the constitution was changed; not in depth but just changed from dominion to republic, otherwise more or less word for word.

Now, before independence, as I said in relation to Northern region earlier on, the minority ethnic groups within each region agitated for self government. They wanted their own regions. There was a civil war, many people don’t remember this, in the Northern region waged by the Tivs and the Idomas. They went to war and the Nigerian army crushed that rebellion. It was an armed conflict. It was just before independence and after independence, before 1966. They wanted their own Middle Belt region, that is middle belt movement. Not only Tivs and Idomas but also the Yorubas in what we now call Kwara state agitated. There was also a huge agitation in the Eastern region by the Calabar, Ogoja and Rivers people. The Ijaws, the Ibibios, the Efiks wanted their own separate region. These are now the areas called the South-South. It has no constitutional significance. In the west, the non-Yoruba parts of the region also wanted their own independence. They got theirs in 1963, that’s the mid-west now, the mid-western region.

Constitutional conference

So between 1958 and 1960, the British colonial governments told our leaders clearly, “if you want structural changes, that is, new regions, it will delay your independence” because the new regions must be able to stand on their own and that will take time. So, the leaders and not only the leading politicians but the minority leaders, the COR states, the middle belt movements, even the non-Yoruba part of Western region opted to leave things as they were, to leave the structure as it was until after independence. It was on that call that the changes made by Gowon became very relevant. So, up to independence, we had three regions. In 1963, we had four regions, mid-west, and Gowon after the second coup set up the constitution review committee, ad hoc constitutional conference to debate at a time when the civil war was on the uprising.

People were talking that there has been mass killings of Nigerians of Igbo origin, Igbo speaking Nigerians in parts of the Northern Nigeria. There had been disturbances here and there. The country was on the brink of a breakup and he summoned this ad hoc constitutional conference to debate the future of the country. I was a member of that conference. I took part fully in that conference in 1966 after the July 1966 coup by Gowon which enthroned Gowon as the head of state. Now, the issue of states came up very strongly during the conference. The Eastern region led by Colonel Ojukwu as the military governor wanted to pull out of the federation and it was a very difficult time indeed for Nigeria.

Now what came out after that? In 1967 about the time Ojukwu declared the breakup of the country, the federation and the establishment of Biafra as a sovereign country was some sort of surgical operation to satisfy the yearnings of minority people in the Northern region for their own self government within the federal Nigeria. So, the creation of twelve states structure was the answer to that yearning. The COR states movement, the Calabar, Ogoja, Rivers movement, the non-Igbo speaking part of Eastern region had not just one state, they had three states, Rivers state; largely Ijaws, Kalabaris and so on and also South-Eastern states, now Cross-River and Akwa Ibom, that is, the Efiks and Ibibios.

Remember Lagos state had been a colony of Britain since 1861 before Nigeria came into being in 1960, the Lagos colony as it was in 1861 became a state. It was never part of Western Nigeria when it was created in 1946, except for a part of it: Epe, Badagry, Ikeja, being moved to Western Region for some period. The biggest agitation had been that the North was too big, big in size, big in population and it was double the size of the rest of the country and the population was greater than the rest of the country and if they wanted federalism, the north had to be broken up into states and that led to the north being broken into six states. Six states were made out of the Northern region and six from the west and the east and of course Lagos. To me, that was the ideal federal system in terms of state creation. Unfortunately, those military leaders who wanted to create favour for themselves wanted the favour of the people who wanted more states. They broke up the country and were even in the process of creating more states as shown in 2014 constitutional conference of Jonathan. So, to me, the ideal constitution was the 1963 constitution with 12 states structure which was the constitution which governed Nigeria from 1966.

Wasn’t it a military constitution?

Gowon followed the 1963 constitution throughout. The only significant change was the creation of states out of the Northern region, East Central states, Rivers state, South-East of out Eastern region. The mid-west was left almost intact. The rest of the west was left intact as Western states and Lagos state, also making up the 12 states. To me, that was the best Nigeria ever had and can ever have in terms of state creation. But let me emphasise this; that the constitution which prevailed throughout Gowon’s military regime and for part of Muritala-Obasanjo’s military regime was the 1963 constitution. It was the 1963 constitution which still prevailed largely until the 1979 constitution. To me, that was the ideal constitution. Now the problem was created in 1979 constitution. It killed federalism in Nigeria, fiscal federalism. That is the problem Nigeria has today. That is the 1979 constitution and its successor, the 1999 constitution.

You see, a federation is a group of willing state or states which agree to cede part of sovereign powers to a federal government on top with defined powers and the remaining powers, either concurrent, shared with the federal government or other powers not stated in the constitution to be welded by the state government. That is one element of federalism. Local governments have nothing to do with the federal system of government. They’re a hundred percent part and parcel of state government. Federal government should not interfere with local government. Unfortunately, the 1979 constitution created an avenue to bring in and cause confusion about the meaning of federalism. The major harm created by the 1979 constitution was on finance, the state of origin, revenue allocation.

The revenue allocation established before independence, that is in the 1960 constitution took account of functions exclusive to the federal government and they all agreed before 1960 that this formula was best suited to cater for the needs of federal government and what was that formula? You take what became dominant, an economic factor, oil. Element of federalism: Any profit from oil was shared under this formula. Fifty percent of the revenue will go to the region of origin, twenty percent to cater for the needs of the federal government and the needs of the federal government were largely foreign affairs, defence: that is the armed forces, the police, immigration, citizenship. It is all listed there. Just twenty percent of the revenue from oil and the remaining thirty percent should be in the distributive poll, to be shared by the regions. The emphasis I am putting here is that the federal government is just twenty percent. In 1979, it was part of the recommendation which the constitution drafting committee made and I was a member of that constitution drafting committee. It was part of our recommendation to retain that formula in the 1960 constitution.

In the 1979 constitution, General Obasanjo, who was the head of state at the time, changed it and put zero instead of the fifty percent for state of origin. In fact, the whole hundred percent went to the federal and the federal legislature, that the national assembly had to know what pittance to give to state of origin. That was the death knell of federalism. The 1999 constitution just made little adjustments; state of origin, thirteen percent, federal government being 52 or 54 percent with more or less the same functions in 1960 constitution. The functions have not increased. The functions on the exclusive legislative list more or less are the same as in 1960 but the federal government has garnered the bulk of the revenue on oil.

The federal government has other sources of revenue like company tax, like customs, so what difference has it made? It has made the states impoverished. They have no money to cater for education, primary and secondary. They have no money for health. They have no money for housing. The federal government has garnered the whole money and that is why you have governors queuing up at Abuja. That is why we need restructuring to go back to the 1963 constitution with this amendment. And let me add this. All the parties when they are in opposition, they say they want restructuring; when they’re in government, they don’t want restructuring.

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Pledge to carry out restructuring

Jonathan was forced into restructuring which made him set up a constitutional conference in 2014 because of the trouble created by Boko Haram which will reduce the voting power of his opponent, Buhari and because Jonathan’s government believed that it could now move into South-West, waving restructuring for those who wanted restructuring as against the non-view of the majority political party dominant in South-West at that time. So, they want restructuring when they are not in power but when they get there, no restructuring. I will like to challenge all the political parties to make a pledge that the presidential candidates after they have gone through their primaries and what have you, should make a pledge to the Nigerian people, for the candidate of APC who is Buhari, to pledge that when he gets back to power, he will carry out restructuring in the line I suggested which is going back to the 1963 Constitution.

I will want the candidate of PDP to publicly pledge that his party, if he wins the election, will carry out this same restructuring. I will want the candidate of any other political party contesting election next May to make a similar public pledge. That is the only way that Nigeria can find out those who are honest with themselves and with the public and those who are not honest with the Nigerian public as far as restructuring is concerned. They should make a pledge.

You said what many people are saying

No, that is not people are saying. Restructuring means different things to different people. In the line I have outlined, go back to the 1963 constitution with twelve states structure. That is my own idea and that’s why I have opposed JIRAD conferences, constitutional conferences; we had one in 2005 called by Obasanjo. I led Lagos to the delegation there. I refused to go to Abuja in 2014 because I thought it was going to be a waste of time but having given the issue some deep thoughts in the past two or three years, I am now convinced that we need a JIRAD conference which will now decide the future of this country.

What of the national conference of 2014?

Nothing came out of it. But there was a paper on it? Nothing came out of it. Nothing came out of the paper. It was just an ordinary paper. No action. Nothing! Jonathan had the power to get the national assembly under him to do the restructuring but nothing happened. I will not even have accepted that one because Jonathan’s conference advocated in total, about 59 states for Nigeria when ninety percent of the existing states cannot pay salaries for their staff.

So you believe going back to the 1963 constitution is the solution to the problem.

That is my own belief with the section on finance to remain as it was. We enabled regional governments at that time and state governments to finance their governments and let me just add this rider.

Financing their governments

Throughout Gowon’s rule, the mid-west had fifty percent allocation, just as Rivers state received fifty percent from its oil profit. The governor of the South-East then also received fifty percent as was under the 1963 constitution. The fifty percent revenue state of origin continued until 1979. But that will make the federal government weak and not unattractive if we go back to that system

What does the federal government do with the huge money when it has no additional constitutional functions to discharge?

Most of the functions discharged by the federal government today are stolen from the states, health being an example. The federal government has no business to do with health. It is a function of the state. Primary and secondary education is not the business of the federal government. It is the business of the state, with the regions in those days. So, federal government meanwhile has stolen some state powers or functions.

So it has no business going about feeding school children?

It is not its business. Give the states the money. Let the states have the money. Leave the school children to the states. You don’t control the schools. You don’t own the schools. That is how they caused confusion about the functions of government. The federal government has intervened in areas which does not concern it. Housing for example is not their business. I was the federal commissioner for works and housing for almost eight years. It is not their business to provide housing for the people. Leave that for the states. The function of the federal government in housing is to make provision for an atmosphere for mortgage banks or mortgage institutions to thrive, not actual construction of housing. It is unconstitutional. They have too much money illegally acquired but let that money go back to the states as it used to be.

Chioma Gabriel

Flood dampens property markets in eight states

Property owners trying to sell their properties in flood-hit parts of the country are yielding to pressure to drop prices as demands for homes in some of the affected locations have reduced drastically, The Guardian investigation has revealed.After weeks of flooding in major cities, especially in eight states, some houses have been submerged in water, forcing the occupiers and tenants to vacate the areas.

The flood affected residential /commercial properties and the residents in general. The situation also made investors in the low-income side of the market to shy away from areas classified as major risks zones.

While some tenants left their houses, some property owners have lowered rents to woo new tenants while properties earlier offered for sale have began to appear on the market, with values reduced.

While flood events in low-risk corridors had no impact on property prices and residents, those in high-risk locations like; Victoria Island, Lekki and Ikoyi in Lagos and states like, Kogi, Niger and Anambra, among others, were negatively affected.

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This is evidenced in low property investment as a result weakened investors’ confidence in the affected locations according to operators.

In Niger state for instance about 100-houses were submerged by flood about two weeks ago in Zungeru area with about 7,000 residents displaced as a result of the incident.

The Nigerian Meteorological Agency had earlier in the year urged state governments to take pro-active action against floods disaster but nothing could be done to mitigate the challenge.

The agency predicted floods in; Kogi, Niger, Cross-River, Benue, Anambra, Delta, Anambra, Ogun-Osun, and Yobe states with high risks of river flooding.

It also indicated that Lagos, Bayelsa, Rivers, Delta, Ondo states among others, may likely experience coastal flooding as well as contributes significantly to incidences of collapse buildings.

The Kogi State Chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) Ramatu Omale said the situation has impacted on real estate transaction, especially in locations where the commoners live.

She explained that because of floods, they had to park out of their place of residence to areas, which they didn’t expect.

“This has caused a drop in affected flood location and a rise in rents in new communities where people are moving into because of the pressure on the available properties. People had to move from their original places to new places. Some people were capitalizing on that to increase rents in new location”.

According to her, in locations where a one-bedroom flat used to be N80, 000 before the flood, rents were reduced by 20 per cent.

She said, “Two-bedroom flat that used to be about N240, 000 was reduced to N200, 000 andwhich is about 40per cent decrease.

There was no pressure on the luxury side of the real estate in the state because most of the people that were affected are the low income earning Nigerians and so they don’t have the choice of going to highbrow areas like the Government Reserved Area (GRA)”.

Omale stated that the flood also weakened investors’ confidence in locations such as, Kabawa, Adankolo and Ganaja among others, which were specifically riverine areas of Kogi State.

“Sometimes, investors unknowingly preferred having their properties facing the river side to overview the river especially for hoteliers and some other commercial concerns but when the flood came up, everybody began to have another thought about development along those corridors because they don’t pray for a situation whereby their investment would end up in ruins and wastes.

Those who were developing properties for the low-income earners in the axis had to stop on their decision and relocate their investment to other weather friendly locations”.

She said that there are few areas where the state government has started building embankment and the locations were originally high flood prone locations despite building the embankments, she disclosed that the locations were so flooded this year.

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His Niger State counterpart, Dr. Kemiki Adebowale told The Guardian that this year was the first in about 10years when the state witnessed such high level of floods where people’s houses were destroyed.

He said people that have been displaced are now looking for accommodation elsewhere stressing that this has opened way for housing development in nearby communities.

Adebowale said; “Housing prices in affected communities were going down while in other communities where people are moving into, prices were going up as
vacant accommodations that were not going for rent before is been redeveloped by the owners just to look good for rent.

“In those communities particularly in Zungeru, nobody wants to live there because the entire place has been submerged and the location currently has zero property value as at today”.

According to him, floods event have served, as an indication that would be investors in property market should be careful on the kinds of terrains they build properties.

“Now the eyes of housing investors have been opened to the need to identify flood prone locations when considering investing especially with about 100 houses destroyed by flood in Kogi state.

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