Tracking the National Housing Fund

IN its determination to make ‘housing for all’ a reality, the Federal Government established the Federal Mortgage Bank of Nigeria (FMBN) in 1956. It was formerly known as the Nigerian Building Society (NBS). The Federal Government, by the Indigenisation Act [1973], acquired the NBS and consequently renamed it the Federal Mortgage Bank of Nigeria (FMBN). In 1994, FMBN assumed the status of the apex mortgage institution in Nigeria, with the promulgation of the FMBN Act 82 [1993] and the Mortgage Institutions Act 53 [1989]. It also commenced the management and administration of the contributory savings scheme known as the National Housing Fund (NHF) established by Act 3 of [1992].
The fund was established to facilitate the mobilisation of funds for the provision of houses for Nigerians at affordable prices, and guarantee constant supply of loans to Nigerians for the purpose of building, purchasing and development of residential houses. It is also aimed at providing incentives for the capital market to invest in property development; encouraging the development of specific programmes that would ensure effective financing of housing development, in particular, low cost housing for low income workers. In addition, it is meant to provide proper policy control over the allocation of resources and funds between the housing sector and other sectors of the Nigerian economy, as well as provision of long-term loans to mortgage institutions for on-lending to contributors to the fund.

The Informal Sector Cooperative Housing Loan Scheme also known as “The Coop Loan Scheme” is a product of the NHF Scheme, designed to accommodate non-salaried informal sector Nigerians through co-operative societies to join the National Housing Fund and avail themselves the opportunity of becoming proud home owners. The loan cacility under the Scheme could be accessed one of two ways, namely the Cooperative Housing Development Loan (CHDL), enables a cooperative society that has acquired a plot of land to develop houses for allocation to its members. The parcel of land will have title in the name of the society which will act as the facilitator on behalf of its members in the loan transaction and which would facilitate construction of the housing unit. The root of title of the estate land would be subleased to the beneficiaries.


Also, the Cooperative National Housing Fund Loan (CNL) offers individual cooperative member’s mortgage loan to buy a housing unit develops through the Cooperative housing Development Loan or renovates an existing one. NHF registration is open to all Nigerians whether self-employed or in paid employment, as they are required by the NHF Act No.3 of 1992 to contribute 2.5 per cent of their basic salary/income to the fund. Nigerians need to take advantage of the NHF and become home owners with ease.

SOURCE: Oke Peter, Ibadan

Infrastructure finance: Expert advocates Infrastructure Fund, non-traditional funding

Following the huge financing gaps that exist in the area of infrastructure finance and traditional funding that cannot cover the long-term needs of most countries, the need for Nigeria to explore non-traditional ways of funding infrastructure has been advocated. This is coming against the fact that government revenue is limited, obligatory spending is higher than the revenues and leverage is too high.

Speaking as a guest speaker on the theme: Infrastructure Financing Options in a Challenging Economy, at the International Real Estate Federation, FIABCI-Nigeria, in Lagos at the weekend, Mr. Bode Agusto, a finance expert and an independent researcher and consultant, the new approach to infrastructure financing in the country has become imperative because the traditional way which makes the government to be the sole provider of funds for infrastructure investment and projects will be executed through Government Ministries, Departments and Agencies, MDAs, pointing out that “Under this model, in Nigeria, infrastructure projects become politicised as budgets are approved late. There is a proliferation of projects, scarce funds are spread thinly among the numerous projects and we rarely complete any major project, for instance, Lagos-Ibadan Expressway project.” Agusto who said the Federal Government could create an Infrastructure Fund that it will employ to partner with the private sector for the development of projects with strong economics and huge social impact, added that it can then pay N0.5 trillion annually (about half of what it currently spends) into this fund, set up a strong governance process for managing this fund. He said the fund will make, on average, an equity investment of 25 per cent on each project, set up a company incorporated under the Companies Act to own the project such as the National Grid Plc, while others (local businesses, foreign businesses and IDAs) will own the remaining 75 per cent equity and manage the company. This means that potentially, the Federal Government can invest N2 trillion annually from the infrastructure fund. “Each company will pursue its own project, complete it and bill the public for the use of its services. They will prepare annual report and accounts, subject these to external audits, make these accounts public, hold annual meeting of shareholders, pay tax on their profit and pay dividends out of their profit after tax. The companies can also be listed on the NSE to improve their access to capital. “A principal concern of the government is how the poor and weak in society access these services. In agreeing fares with providers of rolling stock for railway services, government will negotiate subsidies for children, senior citizens and the physically challenged. In setting electricity tariffs, government will estimate the monthly consumption of a poor household and, in agreeing tariffs, ensure that consumption up to that threshold is heavily subsidised. “Subsidies fashioned in this way will not blow a big hole in the budget like PMS subsidy currently does. There will be no need for the government to set the domestic price of gas and they will also be able to agree on electricity tariffs that will allow an efficient player cover its cost of capital. “Can this work? The NLNG is perhaps the best example of an infrastructure project that has employed this model. Nigeria sold 5 per cent of its equity stake in the Shell JV to fund its 49 per cent equity contribution to Nigeria LNG. Three international oil companies own the remaining 51 per cent. The business has thrived, building six trains of LNG largely from internally- generated profits and commercial loans. “A non-traditional way is for the government to partner for infrastructure investment. Partners are typically International Development Agencies, IDAs, local businesses and foreign businesses. All these people want their money back plus some returns.

Therefore, infrastructure projects that lend themselves towards public/private partnerships are those with strong economics, for instance, the national grid and rail transportation. “How can the Government partner with the private sector to fund infrastructure projects? Let us use the Federal Government as an example. The Federal Government makes a list of the key projects that she would like to undertake and divide them into two categories. Category1 will be those with strong economics and social impact e.g. the National Grid, Railway Infrastructure, Railway Rolling Stock, 2nd Niger Bridge; Category 2 will be those with weak economics but strong social impact e.g. water for rural communities, rural electrification,” the guest speaker averred.

Bitcoin is booming in Miami. But can you buy a house with it?

They gathered in downtown Miami — an estimated 4,350 Bitcoin believers — to trade pitches for apps and start-ups. They discussed and debated trends in cryptocurrency. They speculated about the volatility of Bitcoin, which shot up in value from $900 to $19,000 over the course of 2017 and is currently hovering around the $10,000 mark.

But despite the national stir created last fall when a $544,500 Edgewater condo was listed for sale in “Bitcoin only,” none of the panels or presentations at Miami’s sixth annual North American Bitcoin Conference focused on real estate. Although Bitcoin is the oldest and best-known of the nearly 1,500 kinds of cryptocurrencies currently available, real estate developers, brokers and analysts are cool on its use in an industry that is literally defined by physical assets.

In other words, if you’re hunting for a home, don’t worry that you’ll get outbid by a buyer offering cryptocurrency. At least not yet.

“I think it’s fine to buy Bitcoin, because high risks lead to high returns, and I believe in capitalism,” said Nela Richardson, chief economist for Redfin, a national real estate brokerage. “But when you come to buy my house, I’m going to need a currency that I can use to buy milk at the grocery store. I wouldn’t accept junk bonds or a lottery ticket as a payment. Any currency that drops 45 percent in value within three months, like Bitcoin has done, is not a currency that is stable enough for large transactions.”
According to Redfin, only 134 out of the site’s total 568,000 listings in December 2017 — a minuscule .03 percent — included a Bitcoin mention.

Created in 2009, Bitcoin is digital currency tracked on decentralized ledgers — called blockchains — that keep a real-time, immutable record of every transaction made around the world. Buyer and seller interact directly. Bitcoins can be purchased through a digital currency exchange or broker and are kept in a “wallet” that protects the user’s anonymity. And because the blockchain system is not centralized, security is considered to be significantly safer than current e-transaction software.

For now, at least, Bitcoin is not regulated by any bank, state or nation.
NYT: Bitcoin Believers
While regulators debate the pros and cons of bitcoins, the rising real-world value of this digital currency inspires the question: What makes money, money?
General awareness of Bitcoin and blockchains exploded in 2017 as the cryptocurrency’s value skyrocketed. Earlier this month, the stock price of Eastman-Kodak shot up 89 percent, to $10.70 a share, just a day after the company announced an Initial Coin Offering (ICO) to develop a blockchain system for photographers to secure the digital rights of their work.

Miami is one of the nation’s staunchest and most enthusiastic cryptocurrency hubs, and proponents of Bitcoin argue that cryptocurrency is a perfect fit for real estate. On Dec. 22, the first-ever Bitcoin-only real estate deal in Miami closed, with a buyer paying 17.741 bitcoin — the market equivalent of $275,000 — for a two-bedroom condo at 777 NE 62nd St. in the Upper East Side.



But some experts believe a lot of the hype around Bitcoin is just that — hype. The currency’s value fluctuates so much that the value of a Bitcoin transaction could either gain or lose thousands of dollars in value within a week’s time. In an interview with CNBC on Jan. 10, billionaire investor Warren Buffett warned that the cryptocurrency craze is destined to end badly, costing a lot of people a lot of money.

“We’re in an area of hysteria right now involving Bitcoin,” said Andrew Ittleman, a partner at the Miami law firm of Fuerst, Ittleman, David & Joseph. “There are a lot of people making claims about Bitcoin that they can’t substantiate and for the most part are not meant to be substantiated. I do see a lot of uses for cryptocurrency in real estate, but I don’t see the disruptive effect some people are promising.”

Waning favor?
Andrew Hinkes, a partner at the law firm of Berger Singerman who specializes in technology-related issues, said cryptocurrency is nearing the end of its initial wave of interest from Wall Street and investment by new ventures. Bitcoin still has a long way to go before it is widely embraced by the real estate industry.

“Nothing has really changed insofar as how virtual currencies are impacting real estate,” he said. “A lot of people saw tremendous gains in the values of their holdings in 2017. But now that the IRS has made clear how they want to treat the gains on crypto like Bitcoin, there’s uncertainty in the market as to how you sell them and find value. In South Florida, that’s traditionally in the ground. But if you want title insurance, or if there are any liens or taxes that are owed, those will have to be payed with fiat currency.”
Although the Internal Revenue Service taxes Bitcoin capital gains — if you cash out for a profit, the IRS gets a cut — there’s no procedure in place that forces people to report those transactions. (In November, the IRS ordered Coinbase, a platform for buying and selling Bitcoin, to turn over information on accounts from 2013-2015 that were worth at least $20,000.)

The current lack of regulations is one of Bitcoin’s biggest draws for its users. And despite suspicion that Miami’s real estate market is prey to money launderers, it can be a deal-breaker for real estate. For example, South Korea, the third biggest cryptocurrency market in the world (after Japan and the U.S.), has banned anonymous cryptocurrency transactions, fearful of the potential for shady business.

That uncertainty and lack of transparency, combined with cryptocurrency’s volatility, is making real estate developers and investors wary.

“Bitcoin is too new of a form of currency,” said Daniel de la Vega, president of One Sotheby’s International Realty. “Anything that operates in a gray area is not something I would want to associate with. I do believe in the future of cryptocurrency. I’m just not bullish on it short term.”

The Miami Association of Realtors reports that sales of luxury ($1 million and above) condos and single-family homes in Miami-Dade County surged 47 percent and 16 percent respectively year-over-year in December. But the market is still glutted by too much supply, which caused the average luxury sales price to fall 6.3 percent in 2017, according to Mansion Global.

Still, the need to sell expensive properties is not enough to make developers rally behind Bitcoin — at least for now. Gil Dezer, president of Dezer Development, said if a buyer made a Bitcoin offer right now on one of the multimillion dollar condos at the Porsche Design Tower in Sunny Isles Beach, he would turn them down.
“If Bitcoin is so easily transferable to cash, why do they need to pay with that?” Dezer said. “Why can’t they transfer it into cash first and pay with that? The transverse effect of that is the seller receiving the money. If he wants Bitcoin, he can take the cash and buy Bitcoin. Why would you use Bitcoin in the actual transaction?”

Peggy Fucci, CEO of One World Properties, said she has yet to come across a buyer or seller interested in using Bitcoin as a form of payment, but she understands Bitcoin’s buzzy appeal.

“I think the general consensus from the developers I work with and represent is that the whole deal with Bitcoin and real estate is a marketing thing — a way to get exposure for your property,” she said. “I don’t see it as a real thing yet. Most people don’t even know about Bitcoin and cryptocurrencies in general. Eventually, it is something that will be inevitable. But right now, it’s too early. We don’t use it. Instead, people are riding the wave of a phenomenal stock market.”

Realtors wary
Some Realtors who have had first-hand experience with Bitcoin agree that cryptocurrency isn’t yet ready for prime time in the real estate field.

Edgardo Defortuna, president and CEO of the real estate firm Fortune International Group, said his company has been involved in two listings where Bitcoin was in play: A $4.6 million home on Sunset Island where the seller accepted Bitcoin (the house eventually sold for $3.8 million via conventional loan) and a Key Biscayne condo currently on the market for $1.5 million (the seller received and turned down an offer for $1 million in Bitcoin).

“Bitcoin was talked about a lot last year because of the appreciation, but it has scared a lot of people away in the last month or two,” Defortuna said. “Cryptocurrency could be a player [in real estate transactions] in the future, but I’m not sure this Bitcoin craziness is the way to go yet.”

But Charles Penan, executive vice president of the real estate investment and merchant banking firm Aztec Group Inc., takes a more flexible approach. He currently has a property for sale at 4141 N. Miami Ave. in Miami’s Design District — a three-story, nearly 16,000 square-foot building — for $14.5 million. The seller, Remy Jacobson of J Cube Development, is accepting cryptocurrency as payment.
“Crypto is a very viable alternative to traditional financing — for the right buyer and right seller,” said Penan. “They have to be more entrepreneurial. Bitcoin does not work for institutions, because they are more transactional and want instant gratification. They don’t want to assume any risk of fluctuation.”

Others are already doing due diligence, preparing themselves for what they believe to be an inevitable and radical change in traditional real estate transactions. Beth Butler, general manager of Compass Florida, a technology-focused real estate firm, said her company isn’t accepting Bitcoin yet. But she’s currently researching the field, tapping experts to figure out the problems that need to be solved before cryptocurrency can be readily used.

“So far, people are very open to it,” Butler said. “The appeal is that blockchain could make real estate transactions more secure. You wouldn’t have the wire fraud or hacking fraud that has been plaguing our industry in the last few years. But there’s a lot more that needs to be defined on a large scale first. The concept of blockchain suggests to me that state law and regulators will have to adopt some kind of policy to accept it.”

An optimistic gathering
Bitcoin believers, however, remain undaunted. German Montoya, chief strategy officer for the Miami-based venture-building company Rokk3r Labs, said the volume and enthusiasm of attendants at the North American Bitcoin Conference — far bigger than the roughly 100 people who turned out for the inaugural edition in 2012 — is evidence that cryptocurrency is destined to take hold.

“For a long time, the only thing you could do with Bitcoin was buy and sell it,” Montoya said. “There are only a few coffee shops in the world that take Bitcoin, for example. The more Bitcoin is used for real things, the more this coin will become a real alternative to others.”

At the conference, the main exhibition hall was crammed with start-ups hoping to use blockchain technology for everything from Bitcoin ATMs to virtual reality. Dr. Gor Van Ek, a respected figure in the blockchain field, flew in from Australia to promote his latest endeavor, Bitcar, a platform that will allow users to purchase an interest in exotic, rare and classic cars — a way of investment that has been traditionally exclusive to the wealthy.

“This is the third or fourth year that I’ve gone to that conference, and I had never seen this sheer scale and number of people who attended,” said Hinkes, the attorney. “That signals a certain threshold of consumers have been reached. Bitcoin is starting to make an impact and insinuate itself into the mainstream.”

Many of the panels at the conference delved into upcoming regulation that would stabilize Bitcoin and other cryptocurrencies for both consumers and government entities. That kind of regulation, if successful, could presumably offset Bitcoin’s volatility and make it a more viable and dependable medium for large-value transactions.

“Once there are enough things to spend Bitcoin on directly, the real estate market could never be a reason to go back to the dollar,” Montoya said. “You could have a whole economy where you use Bitcoin to buy and sell and spend.”

The questions, for now, are how long that wait will be and whether Bitcoin’s seesawing value can stabilize. Six weeks after all the hubbub, that Bitcoin-only condo in Edgewater still hasn’t sold. On Jan. 24, the price on the listing was quietly raised to 37 Bitcoin.

Despite the apparent increase, though, the adjustment actually brought the value of the condo down in dollars — from $525,000 to $410,000.

Informal sector as critical growth factor

Like the Biblical rejected stone, the informal sector of the Nigerian economy has become the head of the corner for economic growth. This is a sector that, before now, was not reckoned with as a growth index.

But all in a jiffy, both the housing sector and the mortgage system have woken from sleep discovered that this sector could be leveraged for growth. The pension fund is also in this league, though in relation to both mortgage and housing.

There is an on-going debate on the possibility of including the informal sector with its estimated N81.048 trillion annual income in a new housing fund that could be created and added to the existing Pension Commission’s (PenCom) multi-fund structure with the aim of narrowing down housing affordability gap.

This however has to happen alongside lowering of mortgage interest rate to single digit of 8- 9 percent, down from the current 22 – 25 percent commercial rate which operators charge on mortgage loans. The argument flows on the assumption that the inclusion of the informal sector operators who constitute 67.54 million of Nigeria’s 81.15 million workforce in the contributory pension scheme will lead to increased housing affordability.

In the same vein, as economic activities continue to shrink leading to loss of jobs, salary cuts and significant drop in personal income, most of the primary mortgage banks (PMBs), which are struggling with hash operating environment and rising non-performing loans (NPL), are looking to the informal sector to sustain their operations and also stimulate growth in that sector.

Low capital base coupled with the prevailing economic conditions have so impacted the operations of these banks that a good number of them are unable to meet their contractual and statutory obligations to their clients and regulators respectively.

The Nigeria Deposit Insurance Commission (NDIC), one of the regulators of the sector, was quoted as saying that the inability of as many as 15 PMBs to pay their insurance premium as at December 2016 was an unfortunate situation that put the customers at risk. “The loans and advances extended by these PMBs declined significantly by 31.87 percent to N168.96 billion in 2015”, the commission added, pointing out that 14 out of 42 PMBs failed to render returns to it while unpaid premium from nine PMBs amounted to N238.30 million the same year.

The Central Bank of Nigeria (CBN) says that notwithstanding PMBs’ improved performance in the past couple of years, their loans and advances, deposit liabilities and other liabilities decreased by 6.85 percent, 5.25 per cent and 5.89 per cent to N154.46 billion, N115.77 billion and N68.06 billion, respectively, at end-December 2016 from N165.83 billion, N122.18 billion and N72.32 billion at end-June 2016.

But the operators are not resting on their oars. They are building blocks and putting measures in place to engender growth of this fledgling sector in order to increase access and affordability, and by extension, enlarge the clan of homeowners in the country.

Unbundling of mortgage origination process, further reduction in loan origination period, introduction of computerised land titling registration, land title insurance, introduction of uniform underwriting standards (UUS) for informal sector, enactment of foreclosure law, and wider public awareness for the sector are part of the push by the operators for the growth of the sector.

Mortgage is a sub-sector of the economy and the operators are saying that since the larger economy is not doing well and the mortgage sector is not insulated from what is happening in the larger economy, what is happening to them is not unexpected.

“We know what happened to oil price and the foreign exchange market. These have affected everything in the economy. In the case of oil, both the volume and the price went down. All these affected consumer purchasing power. Don’t forget that the balance sheet of the mortgage banks were not strong ab initio”, said, Ayodele Olowookere, CEO, Omoluabi Mortgage Bank Plc.

He stressed that the problems of the mortgage banks revolve around their small capital base and so there isn’t much they can do. “For all the money that I have, unless I raise additional capital, I don’t think I can do 1,000 mortgages. To do mortgages, you need long term funds and that is the only way you can do long term mortgages”, he said.

Udo Okonjo, vice chair/CEO, Fine and Country West Africa, agrees, emphasizing that the real core factor responsible for the slow growth in this sector is that the banks and the mortgage institutions don’t have long term funds; all they have are short term deposits. “The underlying fundamental for mortgage growth is that we have to have saving culture and large financial base because mortgages are long term funds. In an ideal world, you will be talking about 20-25 years mortgages at very low interest rate”, Okonjo added.

Technically speaking, Nigeria has no mortgage system and Okonjo reasons that the country doesn’t really have a real estate sector. “What we are doing is just scratching the surface. If we really want to create wealth through real estate which is one of the major ways the developed world creates wealth, then we have to develop and grow the mortgage sector”, she emphasised.

But the operators are not deterred. “We are here to stay and grow this sector”, Olowookere assures, revealing, “at Moluabi, we are looking at the best way to do things, especially in credit management and evaluation. We are looking at the informal sector. People in this sector are not collecting salaries, but earn huge and regular income. So, we are finding creative ways of bringing them into the net. We are also looking at new ways to raise capital by bringing in more shareholders”.

MBAN, operators plan non-interest mortgages, lobby for intervention fund

Gearing up for a veritable funding source for the sub-sector, mortgage operators have moved to explore the suitability, applicability and the possibility of adopting the non-interest mortgages to unlock the potentials of the Sukuk model.
The operators, under the aegis of the Mortgage Banking Association of Nigeria (MBAN), agreed in a seven-page communiqué after its chief executive officers retreat in Abuja, to finalize its Uniform Mortgage Underwriting Standards for non-interest mortgages and create platforms for better education of the employees and mortgage brokerage companies on the proposed model.

Mortgage banks agreed to un-bundle the sub­sector in the main areas of mortgage guarantee and insurance as well as collaborate with the mortgage brokerage companies to deepen mortgage financing, thereby devolving some of their functions to the mortgage brokerage firms to ensure more vibrancy.
They advocated that MBAN should explore collaboration with building materials manufacturers to reduce the cost of houses and make housing affordable as well as resolved to explore viable options for cheaper sources of funds with a view to reducing the interest rate on mortgages to single digit.

Consequently, they plan a tripartite advocacy for intervention fund for the sub-sector in partnership with Central Bank of Nigeria (CBN), National Pension Commission (PENCOM) through the proposed interest rate matching fund scheme and a home grown initiative for tying mortgage to pensions, which will encourage homeownership and lower interest rate on mortgage.

The document, signed by MBAN president, Adeniyi Akinlusi and the Executive Secretary, Mr. Kayode Omotoso, noted that since infrastructure constitutes over 30 per cent of the cost of housing delivery; Federal, State and local governments should strive to provide support to estate developers by stepping up provision of infrastructure to enhance delivery of affordable housing in the country.

The association plans to embark on constructive engagement/advocacy with the governments for improved infrastructural development to drive down the cost of housing delivery, especially for the low and middle-income earners.

They further recommended that Federal Mortgage Bank of Nigeria (FMBN) and MBAN should take necessary steps to fast track the evolution of new business models that would include strategies to streamline on-line processes for access to the NHF scheme to mitigate the challenges of response time to secure approval from FMBN on National Housing Fund (NHF) loan applications. It was also agreed that both FMBN and MBAN should collaborate to create public awareness on the NHF scheme, and its critical imperative to mortgage for home ownership in Nigeria.


The mortgage firms prescribed that MBAN and other stakeholders should explore how data gathering and extraction strategies can be incorporated in the operational strategies of each mortgage bank, to make mortgage process quick, smart and efficient and to enhance decision making and efficiency in the sub-sector.

They agreed that MBAN should collaborate with other stakeholders such as the CBN, Nigeria Mortgage Refinance Company (NMRC), FMBN and Real Estate Developers Association of Nigeria (REDAN) for the purpose of approaching the National Assembly for expedited action on amendments to the various laws affecting the mortgage/housing sub-sector; especially those related to foreclosure and improving the operations of the NHF scheme viz collection, enhanced coverage and reducing the housing deficit.

Realtors, expert urge FG to create infrastructure fund

After an initial effort by Buhari administration that eventually turned out to be a ‘false start’, a fresh call has been made for the creation of an infrastructure fund, which will lead to significant private sector investments and economic growth.
Figures obtained show that Nigeria is under investing in infrastructure. For instance, during the five years ended 2016, Ghana, Ivory Coast and Kenya invested 5.3 per cent, 6.5per cent and 7.5per cent of national income in infrastructure respective; Nigeria invested only 2.1per cent, despite its huge population, estimated to reach 550 million by 2070.

The Federal Government had two years ago, mooted plans to set up a $25 billion infrastructure fund to bridge the funding gap in infrastructure development and deepen the nation’s capital market. But till date, nothing has been heard of the arrangement.
However, experts in real estate sector and economy who met last week at the International Real Estate Federation (FIABCI) Prix de Excellence/ Dinner in Lagos believe that the government should explore non-traditional model of funding infrastructure that involves partners such as International Development Institutions (IDAs), local and foreign businesses.


The purpose of this move is to identify important improvements and repairs to Nigeria’s infrastructure that will not only enhance the overall quality of life but will also create business opportunities for construction companies and jobs for construction workers.

In his submission at the annual forum, a former Director General/Adviser (Budget Matters) to President Olusegun Obasanjo, Mr. Bode Agusto advised that the Federal Government should create the fund, partner with the private sector for the development of projects with strong economics and huge social impact.

Under the proposed model, he wants the government to pay N0.5 trillion annually (about half of what is currently spends) into this fund, set up a strong governance process for managing this fund.

“The Fund will make, on average, an equity investment of 25per cent on each project, set up a company incorporated under the Companies Act to own the project – e.g. National Grid Plc. Others (local businesses, foreign businesses and IDAs) will own the remaining 75per cent equity and manage the company. This means that potentially, the government can invest N2 trillion annually from the infrastructure fund.

“Each company will pursue its own project, complete it and bill the public for the use of its services. They will prepare annual report and accounts, subject these to external audits, make these accounts public, hold annual meeting of shareholders, pay tax on their profit and pay dividends out of their profit after tax. The companies can also be listed on the NSE to improve their access to capital,” he said.

Speaking on theme: ‘Infrastructure Financing Options in a Challenging Economy’, Agusto said the plan will increase infrastructure spending by 250 per cent, as the World Bank estimates that a sustained 20 per cent growth in infrastructure, spending leads to a 1.8 per cent growth in the economy.

According to him, the NLNG is perhaps the best example of an infrastructure project that has employed this model. Nigeria sold 5per cent of its equity stake in the Shell JV to fund its 49 per cent equity contribution to Nigeria LNG. Three international oil companies own the remaining 51per cent. The business has thrived building six trains of LNG largely from internally generated profits and commercial loans.

“Even though this model has worked successfully in telecom and NLNG it is unlikely that we shall see it practiced on a large scale unless we provide incentives for the executive and legislature to give up some control,” he said.

Earlier, FIABCI Nigeria President, Mr. Joseph Akhigbe noted the development of infrastructure is one of the major drivers of sustainable economic development, and lack of its financing has been a major setback.

He explained that FIABCI serves as a melting pot for all professionals within the built industry; create a platform for them and provides a basis for business opportunities between real estate professionals across borders.

FIABCI Nigeria Vice President, Adele Adeniji posited that the main hindrance of infrastructure investment in Nigeria is the low rate of long-term interest from the users, even if there is adequate supply of long-term finance.

The programme chaired by Goodie Ibru attracted cream of the society.

23,000 civil servants jostle for government’s staff housing scheme

No fewer than 23,000 applications have been received from civil servants and being processed through the Federal housing Loans Board under the Federal Integrated Staff Housing Scheme (FISH).

Similarly, more than 20 developers have been selected and their 1,500 housing units of two, three and four bedrooms have been uploaded into the scheme for immediate purchase by civil servants.
This was made known by the Head of Service (HOS), Mrs. Winifred Ekanem Oyo-Ita, who also confirmed that the Federal Capital Territory has provided the land for the project in Abuja, said a home Renovation Scheme to provide funds for public servants to renovate their homes has been initiated.

Oyo-Ita disclosed that the programme has not been abandoned because it is part of government’s improved and benefit carefully put in place for workers. ‘’Yes it suffered a set back for some time, there was economic stress, government agencies fails to provide the needed infrastructure we expected, developers were now bringing their equipment at a high cost rates, we remember that the initial cost was at commercial rates, there was also friction between developers, officers and the Office of the Head of Service, but in all, we have been able to address all these challenges’’.

The FISH programme was launched in 2016 under the Public Private Partnership (PPP) initiative so allow relevant bodies namely, Ministry of Finance, Federal Capital Territory and Ministry of Power, Works and Housing assist and provide required inputs to reduce the cost of housing, thereby making then affordable .

However, a few months into the scheme, disappointments and challenges crept in, which somehow stalled continuity.


Oyo-Ita gave the assurances in Abuja while listing her achievements in the last one year, said: “The government is totally buying-into the Public Civil Service for full implementation of the executive orders recently outlined by Mr. president stressing that the executive orders are all geared towards enhancing the ease of doing business in the country.”

The Permanent Secretary, CSO in the Office of the The Head of Service, Mr Afolayan Ayodele said that the year 2017 was an eventful one as the HOS programmes were hinged on efficient, productive, innovative and citizen-centred civil servants.


Abuja’s design was by an international planning consortium, but the planning aspect of its implementation is wholly by Nigerian professionals. This is enough testimony that planning in Nigeria has come of age. The success story in the development of Abuja will never be complete without mentioning the contribution of Town Planners, by extension the Nigerian Institute of Town Planners, most especially the pioneer Town Planners at the helm of affairs during the planning and the initial stages of the FCT development.

The Nigerian Institute of Town Planners (NITP) was established by its founding fathers on the 6th of September 1966, hence the celebration of its Golden Jubilee anniversary in Abuja this year, 2016. Ten years after the Institute’s establishment, in 1976, the Decree heralding the creation of a new capital city for Nigeria was signed by the Murtala Mohammed Administration. That was the first time a complete whole city of such caliber would emerge out of modern planning in Nigeria, and in the whole of Africa in the recent years. The then ten years old Town and Country planning profession in the country was thus put to task.

Today, the Nigerian Institute of Town Planners is 50, and Abuja’s creation is 40. It is on record that the pioneer Director of Land, Planning and Survey in person of Tpl. Alhaji Usman Sabo Ago, was at the same time the National President of the Nigerian Institute of Town Planners during his tenure in the Federal Capital Development Authority. While one of his sub-ordinates Town Planner Saka A Olajide was for a long time, if not the longest serving Chairman of the Abuja Chapter of the NITP.

The FCT Minister Malam Muhammad Musa Bello at the opening ceremony of the Golden Anniversary ceremony in Abuja last week stated that, the Institute is part and parcel of the Federal Capital City, whatever is done in Abuja is based on planning, and that he will be the last person to go against professional advice from the Planners. At the same occasion, while delivering his key note address, the Minister of State Solid Minerals Alhaji Abubakar Bawa Bwari who himself is a veteran Town Planner stated that, The Town Planners are the first line of defence as protectors of orderly developments in our urban areas. If they fell our plans also fail. As such, the most hazardous aspect of Town Planning as a profession is the threat to the Professionals, by Chief executives that wants to engage in the development of our cities contrary to the approved land use plans.

Planning as a profession requires operational tools, and these tools must be backed by legislation. The NITP struggled to ensure that the relevant laws were provided, in order to protect and empower the profession and the professionals while discharging their duties for the benefits of the general public. The enabling law that kick stated the production of the Abuja Master Plan and the Development Standard Regulations was the FCT Act. Legislation is again required to control the developments, in order to adhere to the approved standards. This was provided, by the signing into law the Nigerian Urban and Regional Planning Law in 1992.

There are numerous instances which led to Town Planners losing their jobs over the years, while trying to protect cities’ plans against desecration. Facility like the War College which should be outside the City is now at the City Center contrary to planning advice. Many Town Planners in Abuja and other States across the country are victims of similar circumstances. For this reason, Town Planners are considered as the endangered species.

Read more: 13 Reasons Why you Should Exhibit at the 12th Abuja International Housing & Construction Show 2018

The change agenda of this administration should support those Town Planners that are committed to the protection of our plans. The above statement by the FCT Minister is one of the most encouraging on the protection of planner’s professional ethics and practice in recent years. What remains now is for the Town Planners to play the game strictly according to the rule and never to initiate, assist or be part of any dishonourable act of the desecration of plans, even if it means losing their jobs. The opportunities outside is more than what is inside according to the statement by the FCT Minister.

It is most honourable to die while rendering service to humanity by defending our plans, than to stand while committing destruction by desecrating our beautiful plans designed for the benefits of our community for some filthy pecuniary benefits.

By  Umar Shuaibu

Landlords feel the pinch as Nigeria’s economic slump deepens

There is still no respite for property owners in Nigeria. The sluggish economic growth for the last few months does not bode well for rental market.

The West African largest economy, slipped into recession, with the latest growth figures showing the economy contracted 2.06% between April and June.

The country has been hammered after a plunge in oil revenues, which make up 70% of national income, eroded public finances and currency reserves needed to fund imports.

Perhaps the two most important risks facing Nigeria’s property market sector, this year are an inflationary environment, forex shortages and currency depreciation, said Ortneil Kutama, Africa Property News Media Director.

Nigeria has been trying for months to borrow abroad to fund a record budget to get the economy back on track.

The country had agreed on several reforms, such as increasing its value-added and corporation taxes to offset a loss of oil revenues, he said, adding that the tax-to-GDP ratio was 4% -5 %, less than other countries in the region at around 15 %.

Nigeria abandoned its currency peg in June hoping to attract more inflows. But with hard currency curbs still in place, few foreign investors are willing to put their money to work there, and those who need hard currency have to pay a 40 % premium on the black market.

“There is evidence that tables have turned, and the rental market has decidedly in the tenant’s favour,” says Kutama.

Retail landlords have been offering rental concessions like rent free periods, fit out allowances and pegged exchange rates in order to retain tenants, according to Bolaji Edu, Broll Nigeria CEO.

“Local developers are taking more flexible approaches such as accepting naira based rentals as opposed to dollar,” said Edu.

Read More: 13 Reasons Why you Should Exhibit at the 12th Abuja International Housing & Construction Show 2018

He points out that local retail brands are starting to take-up space at shopping centres outside prime locations in Lagos. These retailers require smaller spaces and often struggle to pay the high rents being charged in malls located within prime nodes.

Despite economic challenges, a total of 19,000m2 of retail space was added to the core and secondary markets during the second quarter with the opening of centres including Onitsha Mall and Maryland Mall.

Other investors continue to see opportunities in the Nigerian retail sector with South African retailer Pick n Pay announcing their entry into the market through a joint venture with Lagos-based AG Leventis, an established local retailer.

Although risks are still abundant with barriers to entry remaining high, Edu says it is fair to say that Nigeria still has specific political and economic risks and outside of Lagos it is difficult to develop without the support of the State Government.

The economy needs to gain momentum in order to help a struggling retailers and return the sector to its former glory days, concluded Kutama.

Renewed confidence in investment market seen attracting FDI into real estate

Renewed investor-confidence in Nigeria’s investment market will be attracting foreign direct investment (FDI) into the country’s real estate sector, particularly in the commercial segment, a Q3 2017 report by EMC-Real Estate on market research has shown.

This is expected to inject more life and create more opportunities for developers in a sector that is still smarting from the crippling impact of the country’s worst economic recession so far.

According to the report, Nigeria’s non-oil tax revenue in 2017-2018 is expected to increase in step with the recovering non-oil sectors represented chiefly by the agriculture and manufacturing. This expectation is also buoyed by government’s efforts at widening the tax base, though it will be from a relatively low base, as oil will continue to be the dominant revenue source for the government.

The report notes that, as a result of this positive development in the non-oil sector of the economy, the flow of FDI  into the country has increased marginally through 2017 above the low levels seen throughout 2015 and 2016.

“Interest in commercial real estate is growing once more with the domestic and international equity investors, once again, considering the development commercial property in the Lagos region”, says Edward Osammor, director at EMC Real Estate.

The hope of a consolidated, single foreign exchange system being in place once again by 2019-2020, according to him, supports the realistic belief that considerable volume of FDI will flow into the real estate sector once again.

In spite of the slow down which the economy has passed through in recent time, there remains significant interest in Nigeria from foreign investors, especially those from European, South African and Middle East countries.

This renewed confidence in the country’s investment market, Osammor says, is underscored by the International Finance Corporation’s (IFC’s) decision to acquire 1,500 square metres office space within the African Capital Alliance’s (ACA’s) flagship Alliance Place office building expected to be completed and delivered by the first quarter of this year on Kingsway Road, Ikoyi, Lagos.

“This deal is believed to be the first ‘condominium’ purchases structure of office space in the Nigerian market and was brokered by EMC-RE”, he enthused.

Read More: 13 Reasons Why you Should Exhibit at the 12th Abuja International Housing & Construction Show 2018

An innovative Grade A office building located in the prime commercial centre of Ikoyi, Alliance Place is a project promoted by Edimara Properties Limited—a joint venture between ACA Holdings Limited and Samges Investment Limited.

 The 12-floor office complex had already recorded 50 percent occupancy rate and Obi Nwogugu, a Principal at ACA, who confirmed the IFC deal to BusinessDay, had assured that they were working hard on the remaining 50 percent.  “A good number of people are coming to us about the building and we are excited about that”, he said.

On completion, the building will boast eight floors of flexible office space and meeting rooms; four floors of multi-level parking, a light and airy reception area and a ground floor café. Expectation is that contemporary and international elements along with select African accents will be incorporated into the style of the complex.

The acquisition of space in this building shows that there is always market for a good product, no matter the slowdown in the economy and the challenge in the real estate market. The commercial office segment of this has, in the past 18 months, seen some downsides reflected in oversupply and high vacancy rate.

But with the exit from recession, rising oil price, stability in the foreign exchange market, increased liquidity in the economy, among other factors, analysts say the real estate sector as a whole presents a bright outlook in the new year. 

Increase in foreign reserve on the back of a stable foreign exchange rate and increased oil production are supporting the naira and leading to naira appreciation at the import and export (I&E) window. It is expected that an appreciating naira will be attractive for international investors as it will give them the comfort that their dollar denominated investments will not be negatively impacted by falling assets values denominated in naira

The analysts also predict that in 2018, a stable foreign exchange rate and a gradual exit from recession will lead to an improvement in real estate growth. They expect this improvement to cut across the local market where stable and increased consumer income will lead to greater support for the market while stable foreign exchange and exit from recession will bring international investors back to the market.

Damola Akindolire, ED, Real Estate Development at Alpha Mead Group, says that, among other factors, increased government spending will also support growth of the real estate sector.

He explains that the  FG intends to borrow additional $5 billion to finance the budget deficit which would be a positive sign for the economy, leading to increase in economic activities and disposable income. “Hopefully they should have the budget approved for implementation by Q1 2018, otherwise this will put the fragile recovery in jeopardy”, he posits.


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