The role of govt in the quest for affordable housing

Making housing affordable to the teeming population in the housing deficits is a tedious task that glares the government of Nigeria in the face. Government of Nigeria cannot lay claim that it is not aware of the huge housing deficits in the country. The problem has been the will to halt the spending binge in other sectors and see what could be done to salvage the housing sector. A lot of things are open to government in this direction if it really wants to curb the scourge that has remained undaunted.

For government to support the creation of affordability in the housing sector, it must unlock the lands whether in the urban or in the rural areas. Land has remained the major factor that raises the cost of building housing in Nigeria. In cities, this cost of land is more noticeable because of demand for land and various things that follow. To reduce the land cost, the best thing cities can do is to make more land available for housing, preferably land that puts poor people near opportunities. Siting affordable housing on the outskirts of town runs the risk of cementing poverty, rather than alleviating it.

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An expert who considered the challenges that face housing relating to land recommends that cities should pursue transit-oriented development (housing built around new lines and stations), open up unused public land, and have policies designed to get development started quicker (like higher taxes for land that sits idle). Inclusionary planning, meanwhile, allows developers to build more densely in return for commitments to make more affordable housing available.

Another factor that is very imperative whenever housing and building is concerned is building materials. Majority of times, when a beginner considers the cost of procuring building materials, he becomes discouraged to continue. In this regards, government needs to regulate price of building materials and liberalise importation of some that are must use but not locally produced. A new report forecasts a growing shortage of reasonably priced housing in the coming decades, based on current migration and income trends.

This is owing to the increasing wide gap between the rich and the poor and the desire for the poor to migrate to the city in search of greener pastures. Although, they run to the city, they don’t meet affordable housing instead, what they meet is unaffordable and scarcity. One expert defines affordable as 30 per cent of income, and its 440 million figure includes 200 million existing households in developing countries, 32 million households in advanced economies living in substandard housing, and 100 million households that are finding it hard to meet their costs. On top of that, it expects 106 million households to join the ranks of the stretched by 2025. That has huge implications for society. The report said, for families lacking decent affordable housing, health outcomes are poorer, children do less well in school and tend to drop out earlier, unemployment and under-employment rates are higher, and financial inclusion is lower.

Of all the building materials, cement in Nigeria is very cardinal and unless the cost of cement is crashed, two things are involved. One is the fact that more people will not be able to build their own houses. The other one is that those who managed to build will be rationing the formula and the solutions which will eventually result in building collapse. So government need to crash the price of cement and give more licenses to other local producers as a way of making it more competitive.

African Organization for Standardisation, at the recent meeting in Nairobi while discussing why so many African buildings collapse, observed that it results when materials in use are not strong enough to withhold the load. The implication is that counterfeit materials constitute more of the building materials used. It has been observed that due to real estate boom, new high-rise buildings are coming up everywhere and there is a huge competition in the sector. In order to stay competitive, the builders are hard-pressed to complete these buildings as early as possible. This has resulted in flouting of various building norms by the builders.

Many also employ unskilled workmen and use poor building materials without any proper structural design that ultimately lead to the collapse of the buildings. Unfortunately building collapse are a regular phenomenon in rapidly urbanizing cities of Nigeria. Such accidents often involve buildings in low-income, semi-formal and informal housing sectors. There are indeed gaps in the system that lead to poor construction which need to be addressed at various levels. Most of the illegally constructed buildings are more often than not, likely to be substandard and dangerous. The buildings which are constructed without professional engineering protocols and usually with untrained construction workers are most vulnerable.

Another aspect is in the improving of the productivity in the construction industry. This would also help make more housing units available. Here experts recommend standardizing more aspects of home design, and doing more construction off-site then wheeling it into place. “The off-site manufacturing process improves quality and enables the developer to shrink schedules by having parts delivered as needed, rather than waiting for them to be fabricated on site. Also the activities of land speculators help in raising price of houses. When you bought a land for N800,000 and the Omoniles force you to pay extra N300,000 totaling it to N1.1 million, then at the finishing, you calculate all that went into it and that makes the cost skyrocketing. For this to stop, government should keep real surveillance on the activities of land speculators commonly called Omoniles. Location is even more important when choosing a site as the quicker you sell the plots on the better, and the speed of sale can mean the difference between good profits and going out of business.

When you are choosing a site, it is important that you try and anticipate every problem and deal with it before you buy the site. When you come to sell, solicitors are likely to raise the problem. You need to assume that your buyer will choose the most awkward and slowest solicitors in the country. You need to anticipate their every whim and pre-empt their questions. If your lawyer can produce a detailed pack about the property in which you have addressed every problem and found a solution, it will be tempting for the lawyer acting for your plot buyer to rely upon that. Hopefully, he/she will not be able to raise any additional questions as all problems will already have been covered.

How Improved access to affordable housing can benefit the common man

Shelter is one of the basic needs of man, and the idea of affordable housing to cater to this need is both practical and viable.

According to the The United Nations Human Settlements Programme (UN-Habitat), 30 per cent of the world’s urban population resides in slums, with deplorable conditions, where people suffer from several deficiencies, including lack of access to improved water, absence of sewage facilities, living in overcrowded conditions, and in buildings that are structurally unsound.

There are conflicting figures about Nigeria’s housing deficit, but experts often quote between 17 and 21 million.

With over 170 million people, Nigeria, the most populous country in black Africa, has a population of over 70 million low-income people.

Recently, a minimum wage of N30,000 was approved for the Nigerian workers, while the disposable income of majority of the fresh graduates (not the ones employed in blue-chip companies) is less than N60, 000 per month.

Affordable housing has remained elusive to the average Nigerian, in spite of numerous programmes to tackle affordable housing challenges in the country.

The low and middle income earners especially, are the most affected by this.

Due to affordability, they live in densely populated or informal ‘slum’ areas. The high income earners, 1% of the population, occupy a small percentage of the housing stock.

Therefore, the majority of newly built homes in city centres are left unoccupied. Thus, the problem of affordable housing remains a critical issue in the socio-economic wellbeing of Nigeria.

For example, in Lagos State, the price tags placed on the units of the Lagos HOMS Project cannot be classified as being for low-income earners, especially when considered from the United Nations standpoint, where an adult is not expected to spend more than 30 per cent of his/her income on housing (By international standards a house should not cost more than three times the occupiers’ annual income.)

Thirty per cent of the N4.3 million apartment is N1.29 million and monthly payment would be N25, 083.00, which is almost equal to the basic salary.

Since the United Nations said you should not spend more than 30 per cent of your income on housing, the 30 per cent of the basic annual income is N108, 000.

It means a Level One officer should not spend more that N108, 000 annually on housing, because it is assumed that from his earnings he would make provisions for transportation, school fees and feeding.

So, you know he cannot even afford it and it is not affordable. These prices or rents cut-off the masses who need the accommodation.

When you add the interest rate of about 9.5 per cent, the total sum goes to about N17m to N18 million to be paid over 10 years.

So, it is obvious you are not also planning for middle-income earners. So, the Lagos HOMS is still feeding the high-income earners.

A Level 14 officer should have put in an average of 10 years of service, but in spite of that, he cannot key into the state housing project.

For instance, someone is earning N150, 000 per month, minus 30 per cent present accommodation need, minus other needs, including school fees and feeding.

What would be left that would serve as disposable income that can be put into housing programme? So, first and foremost, I cannot afford the 30 per cent down payment from my salary.

It becomes a burden and one begins to wonder how long it would take to own a house in Lagos.

In view of the above, some steps to alleviating the problems of affordable housing delivery include concentrating on ways to provide the enabling environment for mass housing production.

Basic building materials should be given tax and duty relief and government could develop incentives to encourage both the public and private sectors to use indigenous building materials.

Other strategies may include granting tax holidays to developers and providing free land to them to reduce the cost of producing houses.

Sites and service plots could be provided to private sectors, housing cooperatives, Real Estate Developers Association of Nigeria (REDAN) and individuals.

The basis of allocation should strictly be one man one plot, members of (REDAN) should be encourage and motivated with tax incentives, subsidized building materials and discounted rate per square meter.

Plots allocated for affordable housing schemes must not be fraudulently used for medium or high income housing projects.

There should be sanctions and strict penalties for violation of terms and conditions stipulated on the letter of allocation.

For successful implementation of this scheme, it is imperative to study and assess the actual housing needs of the low income earners.

It should be known that before low-income earners can afford to buy or rent houses the price or rent must be low or subsidized by the government.

“Until we are able to provide housing that artisans can afford, that is when the people would say that there is affordable housing for the common man. With that, low-income earners would have some housing units targeted at them.


Affordable Housing Advocates Hope to Use the Democratic Majority in the House to Press for More Funding

The insufficient funding for public housing is leading to a decay of affordable housing stock.

Much of the focus at the event was on Washington, D.C.,where the results of the November 2018 election will give Democrats like Jeffries a new opportunity to fight for their legislative priorities. Affordable housing is near the top of the list—and Jeffries had a particular promise to make for public housing.

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The congressman also pledged to fight to strengthen the federal low-income housing tax credits offerings, Sec. 202 and Sec. 8 voucher program.

Federal action to come

The pledge by Rep. Jeffries comes after a surprisingly good year for the affordable housing industry. Twelve months ago, lawmakers in Congress considered proposals to curtail or shut down some of the most important federal programs to build and renovate affordable housing. That included the massive reform of the federal tax code. The administration of President Donald Trump also proposed to eliminate federal programs like HOME and the Community Development Block Grants and cut the funding for capital repairs at public housing down to zero.

“Who would have thought that was possible?” said David Dworkin, president and CEO of the National Housing Conference, speaking at a morning panel at the event. “We had never gotten that size of increase to the HUD budget in that time period.”

That success has given advocates for affordable housing new confidence, though the Trump Administration is likely to once again propose an austere federal budget to Congress, full of ideas like its proposals last year to give zero dollars in capital repair funding to public housing.

“Advocacy works,” said Diane Yentel, president and CEO of the National Low Income Housing Coalition. Advocates like Yentel hope to use the new Democratic majority in the House of Representatives to press for new funding for affordable housing—though any new spending will have be paid for with some new income.

“Under the Budget Control Act, they have minimal ability to propose new ideas,” said Yentel. “We are back under the really tight spending caps that we were under previously.”

Advocates vow to fight the decay of public housing

Rep. Jeffries promise to fight for public housing reflects a top priority for housing advocates.

That’s especially true in New York, where public housing is once again in the news. Heating systems failed for thousands of public housing residents over Thanksgiving weekend. That led to another series of humiliating headlines for the troubled New York City Housing Authority.

“Now stories start coming about water not running in public housing here in New York City… that’s what $50 billion in unmet public housing capital repair needs looks like,” according to Yentel.

For decades, federal budgets written by Congress have given local housing authorities less cash than federal officials said would be enough to maintain public housing. In the last 10 years, Congress cut that already insufficient amount of federal money in half, according to Dworkin. Public housing across the country now has $50 billion in unmet capital needs, such as roofs and heating systems that need to be replaced.

Source: Bendix Anderson

Family Homes Funds invest N20 billion in 5 housing projects for low income earners

Mr Femi Adewole, Managing Director, Family Homes Funds says that it has invested over N20 billion into five ongoing projects to enable the medium and low income earners in the society own their houses.

Adewole was speaking at the Fund Raising of the Real Estate Developers’ Association of Nigeria (REDAN) and Advocacy Lecture Series with the theme ” FHF Construction Finance-A New Hope of Financing Affordable Housing.

He said a lot of money is needed to target about 500,000 housing units for low-income earners.

He said thecurrent locations for the project are – the millinium city in Kaduna which is housing about 650 homes, the royal city in Kano of about 757 homes, in Asaba, Delta state of about 620 homes, Ogun state about1,074 homes and FCT about 580 homes.

He added that support had been received from the African Development Bank (AFDB) and the World Bank among others to address housing deficit in Nigeria.

“We have a strong commitment. We have invested over N20 billion to five housing projects to support Nigerians who are earning below N100,000. We are also providing financing for developers who will build homes ranging between N2.5 million to N5 million.

“In addition, we are providing some assistance to the buyers of those houses and we are given them a deferred loan for up to 40 per cent cost of the houses.

“We need a lot of money to house and achieve the target of 500,000 homes and that money is not going to come from the Federal Government alone.

“So, we are developing partnership with a whole range of development institutions, the African Development Bank, the World Bank are just two of the many institutions we are talking to who are providing support for us.

“We have invested over N20 billion into five housing projects which are ongoing. Those projects have about 3600 homes in them.”

Adewole noted that by the end of December, the organisation should have committed to another 20,000 homes which he said would commence construction in 2018.

Also, Mr Ugochukwu Chime, President, Real Estate Developers’ Association of Nigeria (REDAN) advocated for increased funding of the housing sector to enable the medium and low income earners own their houses.

Chime said the theme was coming at a time when housing in Nigeria required significant quantum of funds to provide housing for the low income earners in the society.

According to him, our concentration over the years on demand induced supply based on market forces has not yielded the desired dividends.

“This is because the value chain and transaction dynamics that will produce such effective linkage is non existent.

“While we note that there is housing gap in the economy and realise that income level is low, the social intervention initiative of the Federal Government via the instrumentality of the family homes funds need to be clearly understood.”

Chime added that REDAN was working hard towards ensuring that members acquire requisite knowledge in respect of the business of real estate development.

He further said that the association had went into partnership with Centre for Housing Studies of the University of Lagos to serve as a hub for training of members.

He, therefore, promised to work with stakeholders in the sector to ensure it move away from the learning curve to a higher pedestal of project feasibility, execution and closure.

CBN calls for the reform of real estate regulating laws, stakeholders plan to abridge 17 million housing deficit

The Central Bank of Nigeria, CBN, and stakeholders in the housing sector of the economy have agreed to develop mass and affording housing with a view to abridge the 17 million housing deficit confronting the nation.

The stakeholders, who reached the agreement during the 2018 Mandatory Continuing Professional Development, MCPD, in Abuja, pledged to work together towards ensuring development and growth of housing sector in order to grow the economy and prevent the nation from relapsing into recession. Recall, a former Deputy Governor of CBN, Mr Godwin Emefiele, recently warned that the weak economic fundamentals currently being shown by the economy were putting the nation’s exit from recession under fresh threat. Speaking at the MCPD seminar organized by the Abuja chapter of Nigerian Institution of Estate Surveyors and Valuers, NIESV, with the theme “Post economic recession in Nigeria-harnessing the potentials of real estate sector for a sustainable economic development”,  the stakeholders collectively resolved that housing sector has important role to play to strengthen the country’s economy.

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In his remarks, the Deputy Governor, Corporate Services, Central Bank of Nigeria, Edward Adamu explained that the bank as part of effort to increase access to affordable housing and address the 17 million housing deficit has in the recent past set up a National Housing and Mortgage intervention fund. Adamu noted that “In addition to its core mandate, CBN has taken up a developmental role in the economy.

All the intervention institutions and programmes are aimed at channelling resources to sectors that are vital to the strategic economic development of the country but are either not served at all or are under-served at a prohibitive cost by financial institutions because of perceived high risk or long gestation period. He said, “There is a huge housing deficit of 17 million units. The demography tilts towards the youths – 42% of population is 14 years and below. 75.2% are less than 35 years of age and high rate of urban migration – 50% and growing. He said the reason for the intervention is because of the present low contribution of Mortgage to GDP (less than 1%), against the Ghana’s 10%, and South Africa 40%. Adamu while enumerating potential to unlock the housing production value chain, said the process would guarantee employment, wealth creation and social stability.

In his presentation, the Chairman Premium Pension Limited, Arc. Yunusa Yakubu, said the Nigeria’s real estate sector is evolving at a remarkable pace and there is a growing awareness at all levels of the role of real estate development in the growth of the economy.

According to him, “As at the second quarter 2018, the Nigerian real estate sector accounted for 6.83 percent of the country’s gross domestic product. “Available statistics reveal that Nigerian housing deficit is estimated at between 17 to 20 million units, increasing annually by 900 000 units, with a potential cost of N6 trillion (US$16 billion). With a population of almost 190 million, annual population growth rate of 2.8 per cent, annual urban population growth rate of 4.7 per cent according to data from the United Nations, we need to stop talking and start building. “Nigeria’s abysmal ranking on the mortgage finance scale shows that the several mortgage financing initiatives by successive governments in the country have not really produced the desired results. “Clearly, the government needs to buckle up in order to meet it stated annual production of one million standardized affordable housing units. Nigeria has a low home ownership rate of 25 percent, lower than that of Indonesia (84 percent), Kenya (73 percent), and South Africa (56 percent).

“The real estate sector is full of opportunities and access to finance remains a significant challenge. Page 3 of 5 Prospect of Pension Funds as a New Vista in Real Estate Finance Experts in the real estate sector have argued that to bridge the gap in the housing sector, investors need to move beyond focusing on short term drivers to long term funding.” In his presentation,  Abubakar Abdulkadir, an estate surveyor and valuer, noted that there is need for reform of laws regulating real estate or property cannot be over emphasised. He explained that, “This must be done if we want the real estate sector of Nigeria’s economy to develop and contribute positively to the nation’s GDP which will ultimately improve the quality of lives of the citizens of this country.”

Source: Chris Ochayi

6 ways to increase affordable housing in Nigeria

Shelter is recognised as a basic human right, however due to the high cost of building materials constructing affordable housing is proving to be difficult for developers.

Over 40% of Nigeria’s population live in urban areas, which include Lagos, Ibadan and Jos. Factors responsible for this urban population growth includes a high fertility rate of about 2.8%, and rural-urban migration which directly stimulates the urbanization process. The resultant effects of this trend is the emergence of new growth centres and the increase in size of existing ones. The urban population has been growing rapidly  at an annual rate of 4.2%.

The immediate and extremely visible consequence of urban population growth is the housing crisis.

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Despite the efforts made by the government to tackle the issue of housing availability, the cost of building in Nigeria keeps rising. This is as a result of several factors, especially the high cost of building materials.

The majority of Nigerians believe that expensive materials are quality materials. In an effort to keep up with the latest design techniques, expensive materials and other furnishing components are used in constructing homes, which upon completion, are rarely affordable.

Materials which can be produced or manufactured locally are imported at a higher price, either as a result of high taste, or because there’s no confidence in some of the locally produced materials, These materials include marble, granite, stainless steel, exotic ceiling and roofing materials, massive columns with ornaments and cornices, bullet proof windows and doors.

Another issue that prevents the use of locally manufactured building materials in the construction of mass low cost housing is the limited durability of locally produced materials leading to either high maintenance costs or short lived structures. Mud or wooden houses are prone to attacks by termites, are susceptible to catching fire and rain degradation, and suffer excessive dryness during the harmattan.

The low and middle income earners, are the most affected by the high cost of construction in Nigeria. Due to affordability they live in densely populated or informal ‘slum’ areas.

The high income earners, 1% of the population, occupy a small percentage of the housing stock. Therefore, the majority of newly built homes in city centres are left unoccupied.

These are some of my recommended solutions to achieving affordable housing in Nigeria:

  1. The construction of future housing projects should be based on locally manufactured and quality construction materials.
  2. Promote local manufacturing of materials that are of a high quality, low cost, energy efficient and environmentally friendly.
  3. The Federal Government with State Governments should embark on more large scale housing programmes and encourage the use tested local materials.
  4. Intensive research should be carried out in schools and research institutes on more ways to improve the quality of our local building materials.
  5. There are existing cement factories in places like Calabar, Sokoto and Shagamu, as well as clay factories in Minna, Maraguta and Okigwe. They should be given support to ensure continued quality material production.
  6. Vacant houses in central urban areas can be converted to multi-residential flats, for rent.

The high cost of building has negative implications on the building industry, for example project abandonment, a drop in building construction and quality materials, and the inability to secure finance for projects. However, an application of the proffered solutions would reduce investment risks for contractors, obtain clear and effective strategies on how to reduce prices of building cost and generally, boost the viability and development of the industry.

This article was written by Olamide Udoma. A researcher, writer and filmmaker holding degrees in BSc Architecture, MA Design and MPhil Infrastructure Management.

Looking to rent a house? Don’t take this budgeting tips for granted

To rent an apartment or a house, you need a budget and this is precisely why there are some budgeting tips renters should never take for granted. The reason for this is simple – To rent an apartment, you need a plan and that is called budgeting.

Paying your rent does not happen once in a life, which is why you need to understand that paying your first rent should be considered the beginning of your financial plan and not the ultimate goal. To make it easier for you plan the payment of your rent, we will highlight several budgeting tips renters need to take into cognizance. Below are a few ways you can go about it:

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Keep Things Realistic

The golden rule when renting an apartment is to ensure that no more than 30% of your monthly salary is dedicated to paying rent. What this does is that it allows you to make financial plans for other crucial aspects of your life; especially necessities. For instance, the fact that you are renting an apartment doesn’t mean you’re no longer going to eat, commute to work, pay for your internet subscription or save for other emergencies that might come up.

Sticking to the plan might be quite challenging but it is rewarding if you can achieve it. For instance, it won’t make much sense if you are repaying a car loan and you begin to default on payment because you have to use a major portion of your salary to pay your rent. A conscious effort has to go into budgeting for your rent. If you save 30% of your salary for a year and it is not enough to renew your rent, then you need to ask yourself if you are being realistic with your plans.

In a situation where your options are really limited and you have to rent an apartment that gulps about 50% of your salary monthly, there’s a way out. What you need to do is to make a budget cut on some other things in order to achieve financial equilibrium. For instance, instead of driving and paying for parking space at work, consider using public transportation.

Make Adjustments in Your Spending Habits

Cutting back on your spending might not come across as a fun thing to do but it comes with loads of benefits. The truth is that if you find a way to separate the things you need from the things you want, what you’ll end up with is a growing list of things that you can do without.

Budgeting tips renters need to prioritize usually revolve around being able to make financial adjustments where necessary. For instance, instead of constantly renewing your membership at the gym, you can cancel it and adopt morning/evening runs into your workout regimen. You can also cut down on the frequency of your shopping and attend fewer parties where you are coerced into buying expensive fabrics.

Your goal here should be finding ways to save more of your salary after payday. Budgeting for your rent requires some level of sacrifice and discipline.

Set Up a Monthly Budget

It is not enough to simply draw up a monthly budget. The actual work lays in sticking with your plans and not getting distracted to the point of losing sight of your financial goals. This helps you cut down on impulsive spending. You should be disciplined enough to a point where you know precisely where your money is going because you can account for it.

You can set up a monthly budget based on what works for you but an example of what you can have is the 50/20/30 rule. If you go with this model, you are expected to spend 50% of your monthly salary on living essentials and save 20% of your income. The 30% left is what you can spend on whatever you like.

The idea of having 30% of your salary to yourself is really cool but there’s a little snag and this is the fact that keeping your living essentials within 50% of your salary is not an easy thing to do. In other words, It’s not easy keeping your rent, feeding, transportation and other essentials within 50% of your monthly earning.

When you are hunting for an apartment, you should put a conscious effort into getting an apartment that fits into the 50/20/30 monthly budget or any other formula you have come up with, which works for you.

Get a Roommate

Having a roommate helps you cut back on a lot of money you would have spent on paying your rent. However, if you have to get a roommate, you need to do it the right way, which is to ensure that the landlord is aware of your plan to add someone to the existing lease.

If you try to play a smart one on the landlord by bringing the roommate in through the back door, this could get you evicted especially if this negates the rental agreement. You should remember that your landlord has to screen your potential roommate the same way you were screened.

In a situation where the landlord decides to add something extra to the rent, the fraction would not hurt your plan to save more because your roommate would naturally take a large chunk of the financial burden of the rent off you. For instance, would you rather pay N500,000 for a 2-bedroom apartment or split this with a roommate by paying N300,000 or N250,000; depending on what both of you agree on.

Remember to spell out some ground rules to ensure both of you agree on how to coexist in peace. You can’t just assume that this person should know what to do and what not to do.

Cook at Home

When it comes to practical budgeting tips renters appreciate in relation to food, there are two kinds of people – Those who cook at home and those who eat out. It really doesn’t matter what you’re buying; whether it’s noodles and fried eggs from the Aboki across the road or dinner at a Chinese restaurant every other night, eating out is a more expensive option compared to cooking at home.

If you’re serious about drawing up a budgeting plan for your rent, then, it’s time you learnt how to cook. If you already know how to cook, better for you. The goal here is to spend less on food outside the house.

Final Thoughts on Budgeting Tips Renters Should Adopt

Drawing up a budget is one thing and adhering to it is a different ball game entirely. You need to avoid distractions and conduct your financial affairs with this goal in mind.

If you clearly define your goal, it is easier to work towards it. For instance, your goal for the year can be to save up N800,000 for your next rent as well as paying N30,000 monthly towards repaying your car loan. If you have a family, your other goal might be to save N100,000 quarterly to pay your child’s tuition.

The urge to spend that extra money will always come but it’s up to you to look away and focus on the things that really matter to you.

Source: Samod Biobaku/ Private Property

Why Nigeria should revert to low-cost housing

The state manages social housing and because it is accessible to low-income earners, it is sometimes called low-cost housing.

Events of the recent past have shown that Nigerians prefer low-cost housing to the conventional housing estates now in vogue. A lot of reasons have been adduced to support the idea of low-cost housing against the conventional or the modern housing estates. One of the reasons is the fact that the houses have the same structure and features, yet, as the name implies, the cost of owning or renting such houses are relatively cheaper compared to what we have now days.

The challenge of housing in terms of quality and quantity appear to be the same all over the world, but in Nigeria, it is more of a complex case. It is the primacy of the housing question that spurred the United Nations to promote the programme of housing for all by the year 2000.

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Good quality housing, as a basic need, is lacking for a sizeable number of Nigerians and so the medium and low income segments of the population, most of who live in urban centres, suffer severe housing crisis. The World Bank, (TWB) had estimated the cost of bridging Nigeria’s then 17 million housing deficit is N59.5 trillion, even though that number is far below the living deficits. This therefore is underlining the vast and untapped investment potential of the country’s real estate sector. One of the continuing challenges posed by unprecedented urbanization in the developing countries is the provision of adequate housing. Over the last three decades, Nigeria, like several developing countries, has emphasised public housing schemes, but with little success. This little success stemmed from the fact that the policy was merely paper tiger that has not been given the serious bite to make impact. This coincides with global paradigm shift from direct public provision of housing to the enablement of private shelter initiatives and housing production.

An enabling environment, including support of housing initiatives and investments by householders, small-scale providers, and entrepreneurial private firms may suffice if we are to look for ways of developing what we may call social housing in Nigeria. The implications of enabling strategy for housing includes; finance, access to land, residential infrastructure, institutional regulations and building materials and related industry particularly in the light of the need for the private sector to play greater roles in housing. The above draw from the aspects of empirical study by various experts that reviewed of housing policy-related issues.

Most empirical studies on poverty, bypass the messy idea that poverty is not just a result of material deficiency, but also of a host of interconnected societal factors that include but not limited to, systemic lack of access to opportunities and decision-making power structures, physical isolation, discrimination, and entrenched cycle of vulnerabilities. Poverty exists because policymakers often address this social pathology with a quick-fix mindset, driven by cold-hearted empirical research. It is not that empirical knowledge of the poor is unnecessary, rather, without compassion as public policy, big data keeps on classifying the poor as a lowly category. Without any real agency of its own, this category is on perpetual life support. However, the fact that more of the estates built these days are for the rich has increased the number housing deficits even with a great number of houses lying unoccupied. This is because some unnecessary features are included in the houses of the rich just because they have access to free funds. These unnecessary features help to add to the finishing costs of the house thereby making it out of reach to the middle or low income earners.

Some houses are finished, mostly in branded areas, and are not occupied due to outrageous rents being demanded by the landlords and/or their agents. There is no law in place to tax vacant properties more than the occupied to encourage occupation and market dynamics. A lot of people have more than one house at no extra cost to them. Nigeria has more than her share of abandoned housing projects due to problematic cash flow. In a country with over 911,000 kilometre square of land mass, oceans, rivers and lagoons are being sand-filled to create housing estates. These and many more cause capital sink. The first house of any man is basic and should be assisted or subsidised. Any other one is investment and should be heavily discouraged through taxation. There must be register of property owners in Nigeria to know each person’s holding capacity.

A house is a basic need that shelters people and gives them comfort. It is a place where people strategise, plan their future, and train their children. It also serves as working and resting place. A house is a status booster and the notion of owning a house bestows confidence on its owners irrespective of class. A house is a common good that every adult who is working, either as a businessman or in paid employment should have. Proper housing can reduce health problems and crime. Since health is wealth, effective property taxation and housing development can be used to redistribute wealth and reduce poverty. This was why the gesture of former Governor of Lagos State, Mr. Lateef Kayode Jakande has continued to be a model for successive governments in Nigeria to emulate. It was on this premises that the Nigeria MortgageRefinance Company (NMRC) was set up as a refinancing vehicle to provide mortgage lending institutions with increased access to liquidity and long-term funds. This is because the ability of banks to deliver mortgage services is limited by the fact that 80 per cent of all bank deposits are for 30 days only. But it seems that housing has a longer gestation period than commercial loans can accommodate. The NMRC therefore, in ensuring greater access to finance for tenure of up to 20 years, was given to accelerate the growth of the mortgage market for all income levels.

Social housing is an umbrella term used to refer to rental housing which may be owned and managed by the state, by non-profit organisations, or by a combination of the two, usually with the aim of making it affordable. Social housing may also be referred to as a public housing which may be a form of housing tenure in which the property is owned by a government authority, be it the Federal, State or Local Government Authority. The state manages it and because it is accessible to low income earners, it is sometimes called low-cost housing. When you talk about social housing for the masses, the words that come to mind are cheap, affordable, non-profit driven, mass produced houses that could be occupied by low income earners, who may wish to save towards eventually buying such houses over time.

Generally, social housing deals with housing solutions that are priced and financed in a way that ensures low-income occupants could satisfy their other basic needs. Even though the scarcity of affordable housing affects all segments of society, it is notably low-income earners who are most affected.

Source: Maduka Nweke


Why “affordable housing” in Africa is rarely affordable

Ethiopia’s flagship social-housing programme is probably the most ambitious in Africa. But for most locals the houses are still barely affordable. The poor cannot afford the down payment for even the most subsidised units. And those who can often struggle to meet repayments, opting instead to rent out the houses and move elsewhere.

In this respect, though, Ethiopia is hardly alone in Africa. Take Angola, where a recent $3.5bn social-housing project on the outskirts of Luanda, the capital, offered apartments from $84,000, in a country where incomes per person are just over $4,000. Or Cameroon, where the government’s social-housing scheme is out of reach to 80% of the population, according to the World Bank.

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In Ethiopia the state has spent over a decade building cheap homes on an almost unprecedented scale, but supply still fails to match demand. Why? High costs and expanding populations mostly put an end to the kind of government housing provision that was common in much of Africa during the early post-colonial years. With its state provision, Ethiopia is an outlier. The majority of countries rely instead on a subsidised private sector to deliver cheap homes. But across the continent governments and builders are hobbled by the wider construction industry.

This is often underdeveloped and uncompetitive, constrained by poor infrastructure and a lack of both skilled labour and cheap materials. Cement in Africa is typically around three times the world price. Construction can be painfully slow. The largest house-building firm in Ghana claims to have finished a mere 3,500 units in the past decade. Inappropriate regulations drive up costs further.

Local materials are often prohibited in favour of more expensive imports. In some countries strict minimum-lot sizes—many dating back to the pre-independence era, when urban populations were smaller and the average inhabitant wealthier—price all but the richest out of the formal market. Most urban Africans simply build for themselves, which means the vast majority languish in informal slums. In Malawi, the least expensive formal house is almost 60 times more expensive than the typical informal alternative.

Look more closely, though, and the problem is a more fundamental one: land. Urban land markets in Africa are thin—only 10% of the continent’s land is registered and marketable—and prices are often wildly inflated. For example, in Addis Ababa, the Ethiopian capital, a 99-year lease in the commercial centre can now cost as much as $15,000 per square metre.

Private developers thus cater almost exclusively to the rich. So do banks. The lack of secure and enforceable land rights crimps the market for cheap housing finance, hurting both firms and households. “Affordable” mortgages in Africa typically have interest rates of more than 20%, which puts formal housing even further out of reach for the average city-dweller.

Source:The Economist


Johannesburg partners private firm to complete affordable housing project

The city of Johannesburg said the first phase of a development in Bramley, in which its planning department had an imput, was now complete. It said Mayor Herman Mashaba would on Monday join Africrest Properties in opening the Village and Spark School Development in the suburb.

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“The derelict and run down 30 000 square metre property in Bramley was developed with eager input from the city’s development planning department,” it said.

“The city saw a great opportunity to have input on the layout and design of the development to ensure a more responsible and responsive end product that strikes a balance between the pressure of the area-based transformation and existing communities.”

Phase 1 of the project includes a school and 200 affordable apartments.

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