NSIA fund was created to help tackle Nigeria’s infrastructure challenges –Uche Orji, MD/CEO

Uche Orji is the Managing Director/Chief Executive Officer of the Nigeria Sovereign Investment Authority (NSIA), an establishment founded in 2011 to manage the Nigeria sovereign wealth fund where the surplus income produced from Nigeria’s excess oil reserves is deposited.

He assumed duties in 2012 and has steered the establishment to the enviable position it is today.

Orji studied Chemical Engineering at the University of Port Harcourt in Nigeria’s oil capital and after graduating, he completed his mandatory year of National Youth Service at the Nigeria Industrial Development Bank (NIDB), today known as the Bank of Industry (BOI). His job here as Project Assessment Engineer was his first foray into development financing. Orji then joined Arthur Andersen (later KPMG) as an audit trainee, auditing financial services companies and working on a system implementation for Diamond Bank. He joined Diamond Bank’s Audit Group in 1993, rising to become Financial Controller.

In 1996, Orji left Nigeria for the Masters in Business Administration programme at Harvard University. In 1998, after graduating, he joined the Goldman Sachs Asset Management European Equity Team in London as an analyst, later rising to the position of portfolio manager. During this time he managed in excess of a billion pounds in assets across Europe. A move to the Goldman Sachs Technology Team saw him managing about $600 million in assets worldwide. In 2001, he joined JP Morgan in London, as a Vice President, swiftly rising to become a Managing Director at the firm. In 2006, he made his way back to New York, to the United Bank of Switzerland (UBS), where he took up a Managing Director post. Orji would spend the next six years at UBS, leading the global team of semiconductor analysts.

In this interview, he speaks about the projects being handled by NSIA.

The 2nd Niger bridge

The early work started in 2014 I believe and the main contract was signed in February by the Federal Ministry of Works. We remain the funding partner, for the main work, however, a new mechanism was introduced. It is called the Presidential Infrastructure Development Fund (PIDF), which the NSIA is managing.The PIDF alongside the NSIA are aimed at completing five major projects of importance. One of the is second Niger bridge, the second is the Abuja to Kano through Zaria highway; third one is the Lagos-Ibadan expressway, the fourth is the Mambilla power plant and then the East-West road. These five are projects covered under the PIDF.

In terms of the place we are now on the second Niger bridge, like I said the main works contract was signed and contractor was paid in advance in August, that is what is pushing us and giving us confident that from where we are, we are on track for the scheduled handover in 2022.

It is a toll bridge and a toll road, it is big project. You can already see from the size and scale of work that is on the site. The total project, the the part of it that we are responsible for, which is phase one is 11.5 km. It comprises 1.6 km water crossing, plus all these pillars you are going to see is about another 10 km and the idea as you can see it is how high the water level rises between the rainy and the dry season. When it gets to a certain point, this whole area turns into flood plain and you need to be able to elevate it for a very long stretch.

We are very comfortable with the new funding mechanism, which increases by way of support by the Federal Government but it also allow us when we get to the part of when we need private sector participation, which we are hoping fund will be raising sometime 2020 and it will not be a difficult stretch to raise that private sector portion of the funding.

So, as we see it so far, we are pleased. We have gone from early works to now main works. The commitment we have secured from the contractor is that you get to see what looks like invisible sign of the bridge; you are seeing it already, I mean a lot of work has gone on, for the slabs and the part of the bridge that is now coupling all these pillars and all tha is expected to start next year. It is a lot of progress made and it is not a cheap project, looking at it you know, so we are looking at N220 billion project for phase one. It comprises the bridge and the 11.9km road.

Economic benefits

First of all, it is an investment of the NSIA let’s start with that one. The business part of it is very simply, for us it is a toll bridge, we are going to toll it. Just from what you have seen in the traffic, and what we believe would be an additional traffic because there people want to drive but they defer. A lot of people reside here and we believe this will bring economic activities. We expect this to be tolled, we expect this to be profitable, we expect all the commercial benefits that will accrue as the bridge and road are done. It to lead to higher traffic, as a consequent, we expect that the toll revenue over 25 years of the concession will more than pay and earn the return.

Number two, you all saw the alignment. It goes round a little bit before you get to Asaba airport, it goes all the way round through the right side of the current bridge, pass the Owerri interchange heading towards Enugu interchange. It is a massive project.

Economically, the Chinese always say if you want to develop a country build good roads and they built many roads and you can see how many people it elevated out of from poverty.

With this bridge, those who found it difficult to take their goods to the market will be happy with it and transportation cost will come down.

Again, it is also a sign of physical integration. Someone was telling me a story of when there were no roads, it was so difficult back then.

So, this project will be be economically viable.

Again, from the industrial nature of this part of the country, this project is vital. I know many companies very well have moved out of here because of the inadequate infrastructure. So, the industrial concerns here will benefit from this and expect many of them to come back and restart because the skill set here is quite significant in terms of supporting those industrial concerns.

Thirdly, the preliminary traffic studies we’ve done show that the significant chunk of the traffic on this road isn’t just east and South-south, it is also from North Central, as far as people from Ogoja in Cross River north, Taraba and all that. Many of them taking their goods trying to come across here. I look at it as something that provides wide economic benefits. The initial design shows it is a project with significantly sized project, especially if you’re coming one lane coming, one lane going to three lanes going, three lanes coming.

It is massive. We are thinking about the future. When the first bridge was built, the story was that it was too much, but now it’s not enough. And that is how it ought to be with infrastructure,when you build it once you hope never need to go back to it again.

Private sector funding

There is both equity and bonds. We have the financial plan under control. There is a bond programme and we believe that by the time we go to the market to raise capital, we also raise a significant part of it alongside.

These five projects have a combination of a funding arrangement and the structure is very simple; we have the PIDF, NSIA, third party fund market, we will give you more details on that but for the moment we are very comfortable with what the plan is. PIDF first phase has injected $650 million for the five projects. We are expecting another $650m from PIDF, from here PIDF has invested N33 billion on the main project. The main works.

Politicizing the project

There is nothing like elections and whatever. I just know that we have funding and we are tracking the project. You heard us talk about plans to finish it in 2022. We are working and you can see things for yourselves. Piling is ongoing.

Those employed

This moment there are 820 people on direct jobs here.

NSIA funds

We have done most of the structuring. There is a lot of money we spent on project preparation. The sequencing of the fund is such that we started with PIDF. NSIA money will come, third party money will come. So, we want to make sure it is sequenced properly so you don’t want to burden the project with huge amount of cost. So, there is commitment of NSIA, there is an approval by NSIA to inject up to $300million for the entire projects not just only this one. It will be a remix for me to speak to you on each project, we are looking it in totality for the five projects.

There are three funds and three different mandates when people look at the NSIA mandate. Initially, we started with 20 per cent Stabilisation Fund; 40 per cent in Future Generation Fund; and 40 per cent in the Nigeria Infrastructure Fund, with different horizons. The Stabilisation Fund is actually short term and it’s not expected to generate a huge amount of return because is short term you couldn’t instrument. We are expected to liquidate within seven days and make any demand from the federal government. So, short-dated instrument, very liquid, is expected not to earn a huge amount of return. But in 2017, we did about six per cent return on that fund in dollars. The Future Generation Fund is really where we expect to see a lot of returns; that is about 10 years horizon, and it’s across the diversified private equity, public equity, global, local. Also we look at things like other devices like hedge fund asset, commodity investment, real estate investments, all in that fund. That fund returned 8.6 per cent last year in dollars. Now, we expect that fund to really be the engine of the NSIA in terms of generating returns because of the kind of assets invested in. So if you take private equity for example, we tend to double our money in every private equity business we make. So over a period of five, six years we are looking at another return of 15 to 20 per cent in private equity.

Other projects

In Mambila, we are still at the early stages, a lot of back and forth going on but we are very confident that this we be done.

For us, it is new unlike the second Niger bridge that has been on since 2014. There is a lot of catching up that we need to undertake before we start spending money. The East-West road is also new to us. We only just got involved in it. The one we have mobilized is the Abuja-Kano, Lagos-Ibadan, second Niger bridge. The East-West road, not yet but we will. But don’t forget it is from another ministry, the Ministry of Niger Delta. Unlike these three projects that are under the Ministry of Works. Look, we are finance people, in terms of negotiating this, we must make sure there is risk metrics for each of the contracts are properly mapped out.

Trust me, that takes time. We spend a lot on lawyers, on our own people, we actually sit down and make sure the projects are properly outlined, so we know what it takes. We also bring our own engineers on site in addition to the Ministry of Works officials, who also help us in certifying any payment. As you can tell, that is a good process that surpasses any form of audit. The general complain I hear is that we are slow and this why we are slow because we need to be very careful. At the end of the day, it is your money and we need to spend it judiciously.

That element of our work agnostic to politics because at the end of the day we are not elected we are appointed to do a certain piece of work and we make sure we do it properly.

NSIA fund status

In terms of asset contributed to the fund, so far we have asset to fund to the tune of $1.5 billion. We have had returns over the last past years, we have been profitable five years in a row but the returns are on top of what we have contributed to the government. So $1.5 billon is the actual size of the contributions to the fund. Now, there are also third party funds that we manage on behalf of various agencies of government and also on behalf of the government. There was $350 million that we manage for NBET, that mandate expired at the end of July 2018 and we returned the fund at the end of August 2018. Then, we also have $650 million which we manage as part of the Presidential Infrastructure Development Fund, again, funds that are not really part of the NSIA shareholder funds. If you look at the NHIS Shareholder fund, all together it’s roughly about $1.5 billion of contributions. Last year, we made profit of $95 million, a year before we made over $130 million of profit. So, it’s been quite accreting. In terms of the status today, we are roughly at about $1.8 billion.

NSIA-LUTH Cancer Center

The NSIA-LUTH Cancer Center is the culmination of a journey that started in January 2016 when the NSIA announced its investment strategy in healthcare which was to partner with teaching hospitals and federal medical centers in a public private partnership to develop areas of excellence in healthcare. After the announcement of the strategy, we engaged with 14 federal medical institutions across all six geopolitical zones. The first three projects out of these collaborations are ready with the NSIA-Luth Cancer center being the first, NSIA-AKTH and NSIA-FMCU diagnostic centers are next and will be ready for commissioning at the end of March 2019.

Foray into healthcare

The NSIA strategy in healthcare is to focus on areas of need within tertiary healthcare that have led to medical tourism to countries in Europe, East Asia and the Middle East. We identified these areas as Oncology, Nephrology, Cardiology and Orthopedics. In a 2012 study by the Ministry of Health, Nigerians’ spend on outbound medical tourism was reported to be about $1bn a year, with cancer management accounting for more than 40% of this spend.

In the course of our research, we discovered that of the eight facilities in the country that had radiotherapy machines installed, at the time, only two were functional. More so, the two functional machines were frequently broken down causing interruptions to patient treatment. My first-hand observation at LUTH, during which I saw hundreds of patients waiting for up to two weeks to be treated, as LUTH staff frantically tried to source parts to get their old radiotherapy machine repaired, convinced us that the NSIA had to start with oncology immediately.

Following months of project development, the NSIA-LUTH Cancer center was built in a record time of nine months and at a cost of approximately US$11million. Once fully operational, this will be the largest outpatient cancer treatment centre in West Africa. Of note, the Halcyon linear accelerator installed within this Centre is only the second such machine to be installed in Africa. This PPP is executed as a Build-Operate-Transfer (BOT). The NSIA owns the center 100% today and we expect that after 10 years, the period over which we anticipate the NSIA will have recouped its investment, we shall transfer the center to LUTH. In the meantime, over the BOT period, LUTH will share 15% of the profits. We have contracted a private sector hospital operator, Healthshare of South Africa to operate the centre and facilitate skills and knowledge transfer to the LUTH Oncology Team. With this PPP structure, we will ensure that the center is maintained to the highest standards and LUTH benefits both financially as well as through training of its staff.

The center is expected to treat as many as 80 and perhaps up to 100 patients a day. It is small in the context of the needs we have in Nigeria, but it’s a start. We have progressed our engagement with LUTH and have commenced discussions to potentially invest more in other areas of the oncology service such as inpatient care and surgery. We will also give serious consideration to collaborating with LUTH on other specialties in line with our healthcare strategy and we have already secured investor interests to collaborate with the NSIA in this expanded engagement.

Next phase

We have commenced the construction of a training facility next door that will serve as a resource center, supported by Varian Medical Systems, not just for staff of the NSIA-LUTH cancer center, but for other cancer centers we plan to build in the country and for oncology professionals across Nigeria.

I want to thank President Muhammadu Buhari for encouraging us to make this investment. During our meeting with him in October to discuss our investment programme, he emphasized Agriculture, Healthcare and Infrastructure as key planks of growth. NSIA has responded to these areas of need. The NSIA is the financing and operating company that continues to drive the Presidential Fertilizer Initiative. The NSIA is the manager of the Presidential Infrastructure development fund which is currently driving the construction of Lagos Ibadan expressway, Second Niger Bridge, Abuja-Kano Expressway and the Mambila Power plant.

Source: Naija247news

HDAN Condemns Lagos Building Collapse, Blames authority for negligence

The president, Housing Development Advocacy Network, Barr Festus Adebayo, has  condemned the building collapse tragedy of a primary school located on the second floor of a three-storey building in the Itafaji area of Lagos Island.

As at the time of filing this report, at least 100 young children were trapped when the building collapsed in the densely-populated area and rescuers were trying to reach them through the damaged roof.

The children were attending a nursery and primary school on the top floor of the residential building when the structure collapsed. Police said they believed scores of people were trapped under the rubble.

Adebayo, who is also the owner of Housing Television, in an interview with housing news, said those in authority should be blamed for the incident which occurred as a result of negligence.

According to him, there was no verifiable upgrade of the collapsed building which is over 30 years old, adding that the Lagos State government failed in its statutory and primary duty of care to the children as its coordinating body  ought to have been providing oversight functions on all school facilities to ensure standards, safety, and security of the pupils and students.

He therefore called on professional bodies, heads of regulatory bodies in the construction industry, , development control departments, architects, Engineers, Builders, Surveyors, Council for the Regulation of Engineering in Nigeria (COREN),  and the Council of Registered Builders of Nigeria (CORBON) to unite against building collapse by working the talk and not just criticize the incident.

Adebayo further said it was worrisome that despite the high rate of building collapse in the country, the perpetrators had never being brought to book or sanctioned.

“What exactly are our law enforcement agency in the development control doing, when is the government of this country going to have political will to punish people that are found wanting in matters like this, from the case of Akwa Ibom Redeem Church, to the case of Synagogue Church and many others, Tell me who amongst the owners of these properties has been sent to jail, Adebayo asked.

Let the government tell us how many are in prison over building collapse, Let professional bodies tell us how many of their members have been sanctioned over incidents like this, we should stop creating problem for the next generation.

“How can a school be situated on  the third floor of a building in a residential area, who approved it? , Is government aware of this or are they  hearing of  this for the first time?  Was there any political influence on the regulatory body? how many dilapidated structures like these are still standing in Lagos? We must all unite against building collapse either you are a professional in the Construction Industry or not.

Asking to know who the developers, engineers in charge of the building is a waste of time, this is not a building that was constructed three or five years ago, am sure the person who handled the bill of quantity or supervised the building may not even remember he built the building,” he said.

Source: Priscilla Anaemena

By 2050 Lagos Population will be double –Makedonov

Mr. Assen Makedonov is a property professional from Bulgaria; he assumed office in May 2018 as the World President of the International Real Estate Federation (FIABCI). He was in Nigeria for a business forum and the Real Estate Excellence Awards. In this interview,he said FIABCI has been serving the global real estate industry since it was established in 1951

Why are you in Nigeria?

I am the president of FIABCI, the world organisation for Real Estate. I came to Nigeria for the first time in my life at the invitation of our FIABCI chapter in Nigeria. We organised a business forum and tonight there will be Real Estate excellence awards for the members of FIABCI in Nigeria. The Real Estate Excellence Awards is the best project in the country. The best development and the winners of the event, they have a chance to go for the minor stage at the Indonesia event which will hold end of May during our own congress in Moscow, Russia before May 27th.

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What does FIABCI do as an organisation?

FIABCI is a Non-governmental organisation (NGO), it is the only one global organisation that covers the real estate business. We started the NGO with five countries in France in1951 and now we are represented in 70 countries around the world and 50 chapters, and one of these countries is Nigeria. We are not only for the Brokers, FIABCI include more than 40 professions that are in the business. Such as brokers, developers, property managers, appraisals amongst others that make up 40 professions that joined FIABCI. All the people that are working in the real estate business are enjoying FIABCI through the association or through the local chapter.

How long has FIABCI chapter been in existence in Nigeria?

I think we‘ve had this chapter more than 40years, because FIABCI was established in 1951, now we have few years to celebrate our 70th anniversary. Unfortunately, in Africa we don’t have many chapters. We are very well represented in Asia and all the countries in Asia we have all the chapters. In Europe we have 25 chapters, seven chapters in America, but in Africa we have only two and three in Nigeria. So our friends have to develop these regions in Africa because we have so many countries in Africa. We hope our friends in the existing chapters in Nigeria will help to contact the neighboring countries at least countries like Cote d’Ivoire, Ghana, South Africa, Namibia, Botswana or North Africa, I hope in the next five years we would get 50 chapters in Africa.

Do you work in collaboration with the government of these countries?

We do not collaborate with the government, but we are working very closely with the United Nations. And the United Nations is working with the governments. So there is a connection, but it is not direct. So we are working with the UN in two directions; one is social and affordable housing and the second is, seeking prosperity initiative. So in the social and affordable housing, since we started in 2016, every year, we issue one book. Where we are showing the best examples of social and affordable housing in our chapter country, so that everybody can see how we can make the real estate product attractive. We also show people who don’t have enough income to go to the market to buy the property they like because there is a lot of poverties all over the world. By 2050, 70 per cent of the population will be living the cities which is a huge problem. I am sure that in Lagos you will have similar problems because in Lagos, there are more than 12 million people living in the city, so the population in 2050 will be doubled.

Some of the challenges affecting local developers were raised in the course of the discussion; how does the main body intend to assist them at least in a developing country like Nigeria?

Like I said about social and affordable housing, we are showing some of the best examples that needed to be done. We published a book in 2016 and the second book in 2017 and last edition was last year. We are hoping to publish the fourth edition this year in May where these books will enlighten how different countries will try and solve some of these problems. And I think it will be very good for the people of FIABCI in Nigeria to get these books so that it can be shown to the government and the respective ministries, they may find the books very useful. The examples of some of them can be implemented in Nigeria.

The second one is seeking prosperity initiative is the measuring of the development of the cities through the eyes of the citizens in the cities because they need to know about the areas that are water logged, green places in the city, about the atmosphere, air pollution, areas there is communicable diseases. So FIABCI has developed software about the habitat, the idea is to make the software in every three or five years; and after this project, we hope it will be implemented in the cities.

Why was FIABCI established and when did Bulgaria become a chapter?

FIABCI was established in France in 1951 and Bulgaria chapter was established 15 years ago.

How many countries started FIABCI?

Five countries came together to form the Association and these countries are Belgium, United States of America, Germany, Luxemburg and Austria founded FIABCI. It is a non-governmental organisation; the five countries saw the necessity to establish Real Estate Business. So after ten years their presence was registered in more than 20 countries on the continent. In fact, they saw the need to work together as a body and they went to the United Nations so that they can be influenced in the industries around the world. The United Nations saw the Association as a necessity to provide better conditions for the place in the Real Estate industry as well as helping the local industries with their governments to make a better law that will protect the industry.

What is your major challenge so far?

In one year, there can be many challenges, but it cannot be solved in one year. The major challenge at the moment for FIABCI is that we have not been able to get the rest of the world to come in as members. In getting countries as chapters, like I said in Africa we have two chapters, it is a big challenge that I cannot solve within one year in office…. A lot of volunteers are working for FIABCI, because we are working voluntarily.We hope that we get development in the city in the future. But with the help of other past presidents and a lot of volunteers that are working for FIABCI, we are working as volunteers, it will quicken development in the cities in the nearby future. And I hope that you will see some of the developments in the city

What have you been able to put in place within one year of being in office?

The president spends one year in office, he is president direct to oversee the affairs of the organisation for the one year in office. But after one year he steps down, he joins the member of the executive board of FIABCI, for three years to ensure continuity. Every past president puts their heads together to continue the work of the previous presidents which can last to 2050. Some of the past presidents are here. After only one year in office, if you start a project you may not be able to accomplish it.

Source: Flora Onwudiwe/New Telegraph

Fuller Housing Cooperative: We Want To See Every Nigerian Own Their House – Sam Odia

Mr Sam Odia is the C.E.O.of the Millard Fuller Foundation,In this interview with Housing news, he spoke on the Fuller Housing cooperative, low cost housing and other projects the foundation is involved in.

May we meet you?

My name is Sam Odia an architect by profession, I am the C.E.O. of the Millard Fuller Foundation. The Millard Fuller Foundation is the Nigerian affiliate of the Fuller centre for housing, headquartered in Georgia, USA.

It is an organization founded by Millard Fuller, who also founded Habitat for Humanity, the world’s largest NGO, operating in over a hundred countries around the world.

In Nigeria, what does Millard Fuller do?

The Millard Fuller foundation seeks to ensure that everybody has access to simple, decent and affordable housing. Our vision is to see a nation where everybody has at least a simple, decent and affordable roof over his head.

We have been working now since 2006, which makes it 13 years in Nigeria. The organisation itself is about 14 years old around the world, Millard Fuller who founded the organisation passed on 10 years ago, and we are commemorating his death and the impact he had on housing around the world.

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Fuller Housing Cooperative, what is it all about?

Over the years, working with people of lower income, we have noticed that practically every Nigerian aspires to own their house, there’s no Nigerian who wants to die in a rented house. Everybody wishes to own their own house before the leave, and to be able to pass a house on to his children. Unfortunately, the environment that we live in does not have a very developed mortgage system. The mortgage industry is underdeveloped, house prices are way too high, far above the ability of most people to access.

One of the key things that we have been doing is to make sure that we bring down house prices, we have been trying over the years to crash the price of housing. We have houses, very simple basic units that are going for less than N1.5miilion, so we are doing all we can to ensure that access to housing is increased.

Our definition of affordable housing for instance, is that it should be affordable to the median income in any environment, so if we are talking about affordable housing here, our own belief is that 50 percent of the population should be able to afford it. And if they can’t, it isn’t truly affordable housing, are we able to achieve that right now? Perhaps not, so affordable housing is not just a definition, it is an aspiration, something that we are working towards, and we want to see every Nigerian in their own house.

Talking about housing cooperatives, a lot of Nigerians are used to different kinds of cooperatives, so housing cooperative sounds a bit new and alien to a lot of Nigerians, do you think this initiative will fly, and sort of catch on in  Nigeria?

The whole concept of housing cooperative is not new in the world, there are many countries that have been doing this for many years. In Africa,Kenya has become very advanced in housing cooperatives. They have a lot of housing cooperatives, and essentially a housing cooperative is a platform which brings people together to put aside money to make savings together, so that they are able to plug in to houses that they can afford.

We found out that one of the big challenges that people have in Nigeria, is coming up with the equity, normally when you go to a bank, they ask you for 10 or 20 percent of the total cost of the house. Most Nigerians have not put that sort of money aside, so the housing cooperative helps you to do that, it becomes a saving club of sorts, where you and other people who are also trying to plug into housing are able to put money aside, to be able to plug in and to pay for the equity required to access a mortgage. But that is not the only benefit that the housing cooperative will offer, there will also be access to small loans for personal needs from time to time.

Someone once asked me how easy it is to join, and I said, all you need to do is go on to our website, www.fullerhousingcooperative.com , download an application form for just N2, 000, and that’s it, and you need to pay your share capital of N200, 000 over a six month period, having done that, you will be able to access houses that are available on the market. There will also be opportunities for target savings and thrift savings, so that you can decide how much money you want to put aside apart from the share capital, which essentially gives you a share to that cooperative.

What other projects are you involved in?

We are working on a number of projects, the first project that we did was a very small project in this community, when we started building houses for as little as N360, 000 at the time, several years ago, people did not believe that houses could be going at this price, until they received their keys, and they were able to pay a zero interest mortgage over 5years.

This was completely funded by donor funds, and because of this, there was a limit to the number of house we could provide, the housing gap in Nigeria is huge, so obviously donor funds could not help us much if we are going to try to solve it. So we have now revised or model, we now obtain loans to be able to build, we taking on impact investments both from Nigeria and abroad, and we are building on a much larger scale.

We have a fairly large project called the Luvu Grand project in Masaka area of Nasarawa state, just 45 minutes away from Abuja city, where we are selling studio 1 bedroom and 2 bedroom apartments for as little as N1.5,N1.6million. This we expect to expand, we actually have a hope to build an entire town, housing thousands of people in the nearest future. We will also be starting projects on the Abuja-Keffi axis, we are looking at other pieces of land perhaps to start projects in other states, and our dream is to be in every state of the federation eventually.

So we are just starting in our own little Jerusalem as it were now, but we do intend to expand this work all over the country. Right now we have 600 units available for occupation, this is a partnership that we are doing with the Family Homes Funds, who have co-funded this project, together with our other partners. We work with another partner in the UK, called REA, who also co-funded the projects, together funding is coming to provide more and more houses for Nigerians.

Looking at the housing crisis generally in Nigeria, we know government alone cannot solve this housing crisis, as a private developer who has partnered with government, what advice do you have for other developers who are skeptical in partnering with government to help solve the deficit?

I don’t see why any developer will be skeptical about partnering with government, the conditions under which the Family Homes Funds is working are really quite encouraging, they will actually fund in advance projects that they have approved, I don’t which other financier in Nigeria that will do that, so I see no reason why any developer should shy away from that.

My own advice to them, is that they should look to much lower priced housing, we have discovered over the years that Nigerians are not asking for too much, all they want is basic shelter, in a decent environment which they can call their own. So the grandiose ideas, and visions of estates that we have had in the past, we need to take off those caps, and shift our paradigm completely in the direction of what Nigerians are able to afford, and that isn’t very much.

So we should be moving from the N15million, N20million, N25million or N30million,N40million house types, to the N1million,N2million or N3 million house types, this is more like the sort of thing we should be providing for Nigerians now.

Source: Affa Dickson Acho

Why affordable housing will continue to drive demand in real estate sector

In the last couple of years, affordable housing is the only segment where transactions have happened in real estate,according to Pradeep Aggarwal,Chairman of the National Council on Affordable Housing, ASSOCHAM. In this interview first published by livemint.com ,he talks about why the segment is getting traction and its prospects.

Overall, the real estate market is witnessing subdued demand since the last few years, but the affordable housing segment is getting some traction. Why is that?

There are various reasons why the real estate market is in such a situation since the last 5-6 years, but the most important factors that affected the real estate sector was absence of a regulator and mismatch in demand and supply. In any unregulated industry, it is easier to take things for granted and this has backfired in real estate. Besides, mismatch between demand and supply and decline in speculation-driven demand impacted sales. Now there are no speculators because those unrealistic price escalations are not possible anymore.

As far as affordable housing is concerned, you need to understand that 95% of the country’s population consists of the lower middle class or economically weaker section. These sections are driving demand in affordable housing. Moreover, in the past few years, the government’s focus and incentives to developers as well as homebuyers was why demand in the segment went up. I look at affordable housing from a different perspective; it is not just real estate, it is the need of the masses.

In the true sense, the real estate market is now emerging in a different manner and in the next 10 years, it will see a turnaround. The premium segment will also see demand, but affordable housing will drive the sector.

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If I talk about numbers, as per the industry report, affordable housing witnessed a growth of 22% in sales during 2018. Even this number is not big because there are few developers in this segment at present. Demand is huge and supply is limited. Once more developers start offering projects in this segment, it will witness tremendous growth.

If there is such robust demand, why are more developers not venturing into this segment?

Let me try to explain it through an example. Ten years ago, many people—even the industry—was reluctant to adopt digital banking or online shopping. But things changed over a period of time. Now the business depends on volume rather than margin and everyone is now convinced that to enhance business, digitisation is important in the retail industry. Similarly, in the real estate sector, developers in the mid or premier housing segment were used to a profit margin upwards of 25-30%, whereas affordable housing segment can offer a margin of around 10% only. It is very difficult for them to do business at a lower margin. But they need to understand that here we have volume; margin is low but volume is high.

Besides, most established developers already have many under-construction or completed projects which they sold at a higher rate of ₹5,000 or ₹6,000 and above per sq. ft, now they don’t want to get into a segment where price points are around ₹3,000 per sq. ft. It would be difficult for them to justify the same.

Who are the real buyers of affordable housing? Are they only end-users or investors too?

It is difficult to segregate the buyers. But about 70% of the buyers in this segment are salaried individuals. This salaried class, I suppose, is buying it either for own use or may opt to rent it out later. I don’t think there are any speculators in this segment, because if I talk about Haryana government’s affordable housing policy, there are restrictions on transfer of property till the buyer gets possession and even a year after that. I consider them as end users or serious investors, and not someone buying for speculation.

The other category of buyers is self employed (10%) and a mix of senior citizens and millennials and others having a low budget (20%).

However, many people are considering affordable housing as an investment opportunity because of various reasons such as price difference—there is a cap fixed by the government on the per sq. ft rate that a developer can charge under the affordable housing scheme, other projects in the same vicinity will cost you at least 25-30% more. So someone buying an apartment in affordable housing projects will simply save 30% or in other words make a return of 30% straightforward while buying the property. Price appreciation over the years will be additional. Other factors that buyers consider are quality, size of apartments and specification of projects that are defined and monitored by the government, developers can’t manipulate them. There is strict deadline to complete and provide possession. Besides, the small ticket size makes it more marketable. So all the mentioned factors makes affordable housing more promising compared to any other real estate segments. It’s a win-win situation for both home buyers as well as investors.

What is your overall perception on the real estate market?

New launches have almost stopped in the premier housing segment in the last few years because there is already a lot of inventory in this segment and demand is less. So I believe given low demand, developers will focus only on clearing the inventory in 2019 and even in 2020. So, the next two years will continue to remain tough for developers in the premier segment. However, as I mentioned earlier, affordable housing will do well for a long period as there is very less supply and high demand.

NBFC crisis can impact affordable housing

How has the recent liquidity crunch owing to the NBFC (non-banking financial companies) crisis impacted or will impact the affordable housing segment?

No doubt both developers and home-buyers got impacted because of the NBFC crisis. While home-buyers have other options to avail loans, for a developer, in the present scenario, it is difficult to obtain loans from sources other than NBFC. The government should step in and strengthen the NBFC model otherwise it will be a major setback for the affordable housing segment.

The government should also consider putting affordable housing in the list of priority sector lending for banks as well as other financial institutions. Easy availability of loan will boost the sector and make it more feasible for developers to enter it.

The government should also work on the approval process for affordable housing. There should be a separate department and procedure for approvals and clearances, and we should get approvals in a time-bound manner. Margins are very thin in this segment and any delay can impact the financial feasibility of projects.

How Eko Atlantic City will save Nigeria’s economy and future-Chagoury

In this interview, first published by Business Insider, Ronald Chagoury Jr, the Vice Chairman of Eko Atlantic city, bares his mind on the vision and purpose of Eko Atlantic City, the challenges faced building it so far, and what the future looks like, for the city and for Nigeria.

 What is the grand vision of Eko Atlantic City?

Ronald Chagoury Jr: First of all, Eko Atlantic was initially built as a defence against coastal erosion for Victoria Island and parts of Lekki. The idea behind it was how we could reclaim all the land lost to coastal erosion in the past 100 years, create long-term protection, and then become a business centre for West Africa and eventually Africa.

We believe that Lagos needs to have a financial centre and Eko Atlantic will become the platform for that to happen.

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What are some of the biggest challenges you’ve faced with the project so far?

Ronald: Initially, when we were fighting the ocean, it took us a few years to master the technique. But now we understand it very well. Technically, in the beginning, there was a steep learning curve, but today, whether it’s building the state of the art infrastructure or seashore protection, we know how to do it very well.

The second step is a question of what’s really happening in Eko Atlantic. How do we get the message out to the world? As you noticed, as much as we can show you videos, it’s very different when you actually come on site and appreciate how much work has been done.

How do you think you can convince Nigerians that a project as expensive as this is good for them when most of the people in the country can’t even afford it?

Ronald: Our core business is selling land to developers. We then invite them to build. Now, we’ve been seeing a lot of demand for all sorts of products, from high-end residential apartments to efficient smaller apartment units, whether it’s one bedroom, studio apartments, two-bedrooms and there’s going to be a very much bigger market for that.

At the same time, in terms of affordability, we invite innovation. For example, the shared office spaces allow for a low entry point for startups or any company to come into Eko Atlantic. So, it comes down to innovation. Eko Atlantic is the future. We have the infrastructure, it’s state of the art, and the more people come in, the more they understand this. That’s why we see a lot of interest, especially now, for movement into Eko Atlantic.

Something that I think about a lot is, what will be the city’s contribution to Nigeria’s economy? How do you see Eko Atlantic impacting Nigeria’s economy in the next 5, 10, and even 100 years?

Ronald: First of all, on its own, the building of Eko Atlantic is a massive job creation process. During the construction phase, there’s are a lots of jobs created.

Can you estimate how many jobs have been created already?

Ronald: I mean, there have been thousands of jobs already. Then we can get to the tens of thousands if we add (jobs created) indirectly because of the supply of material, the know-how, the consultancy, it goes on.

The more we advance, the more construction comes up, and more jobs are going to be created. This is direct construction jobs and as we know, Nigeria has a huge shortage of homes. Just the construction industry can transform the employment landscape of Nigeria, directly and indirectly with all the supply of materials, consultancy, et cetera. And Nigeria is a very fast-growing country, we’re 200 million people today.

So, if Nigeria’s population is going to grow by 500% over the next 100 years, every 10 million people or 50 million people that are born will have huge requirements of infrastructure and housing, and Eko Atlantic is an example of what needs to be done.

Is there a deliberate effort to bring in Nigerians into the fold by allocating a percentage of the jobs to them?

Ronald: So far, Eko Atlantic has been probably 95% Nigerian workers, maybe more — whether it is job creation, investors or developers, our core market has been Nigeria. 90% of the work is done by companies in Nigeria or ourselves internally, the teams that we built for Eko Atlantic.

The only major element that is outsourced is the sea reclamation because that’s very specialised. Other than that, we produce our own concrete blocks, we even produce our concrete poles, most of our underground pipes are produced here in Nigeria.

Let’s talk about the housing deficit. In Nigeria, that deficit is about 17 million, according to the last research data, and Lagos has a significant portion of it. Do you see this figure falling anytime soon?

Ronald: I don’t. The figure was a few years ago, 17 to 20 million and it’s 5 million in Lagos alone. That was when the population was less than 200 million and Lagos’ population was less than 20 million people. We were, I think, at 15 million people back then and the supply is nowhere near the growing demand.

Something that can help, for example, is if at some point there’s a solution that comes up for the mortgage industry (currently, less than 3% of Nigerians own a mortgage), that would completely revolutionise the market. The amount of mortgages in Nigeria as the percentage per GDP is tiny compared to South Africa and much smaller compared to the US.

So, we have a long way to go. If that industry kicks in, it would ease home ownership which would then create a huge amount of construction projects throughout the country, that’s for the housing deficit, and it would also create more jobs. There’s a whole positive cycle that comes out from that.

So far, what have been the most exciting aspects of the project for you?

Ronald: It’s really a learning experience. Today, Eko Atlantic is an internationally recognised project, due to the size, location and quality of it. It forces us to think ahead of the curve. Transportation is changing very fast with ride-sharing, this is my favourite example. Ten or fifteen years down the line, if autonomous cars kick in, are we going to all want our own cars? That changes the way we have to design our city, our roads, our parking spaces.

If we are looking at technologies like 5G that will be coming in the near future, that opens the door for the Internet of Things. How’s that going to play a role in the city? So we have to keep these things in mind and have the base infrastructure that allows for them in the future.

It goes on. Simple things like how we are going to be living. Are we going to be living in big apartments? Do we have to start thinking about micro-apartments, like in New York or Hong Kong? Are we looking at shared living as well? That is a new concept coming out of Europe. Still early days, but are start-ups going to create Nigerian versions of it? And that could have a huge impact on the housing industry.

Most of the amenities in the home are not used 90% of the time. So, what if those were shared amenities? A kitchen, for example — a centralised kitchen versus every apartment having its own fully-equipped kitchen. That becomes efficient. If we start thinking a bit in that direction, we have a lot of talent in the country that can start finding innovative solutions for these challenges.

Final question – what do you love most about your job?

Ronald: Just that there’s a lot of innovation. As I often say, we’re coming in at a later stage of city development, which means we get to learn from a lot of the cities built in the last 30 to 50 years, we get to stay ahead of the curve and leapfrog most of the technology applied in cities.

The first buildings straight of the construction are energy-efficient because that’s the standard today. Ten years ago, it would have been a lot more difficult. Today, that’s the basic requirement so we end up having an energy-efficient city from day one. Also, we get to benefit from all the new technology coming in,that makes it exciting.

Source: Ronald Chagoury is the Vice Chairman of Eko Atlantic city, a new state-of-the-art-city set to become the new financial center in Lagos, Nigeria.

Foreclosure Law:Kaduna Is The Next Best Thing In The Mortgage Market -Sani Abbas

Mohammed Sani Abbas is the Chairman, of Kaduna State Mortgage and Foreclosure Authority, In this interview with Housing news, he spoke on the Foreclosure and Mortgage law, investing in Kaduna real estate sector, security and other issues.

Can we know you?

My name is Mohammed Sani Abbas, I’m a lawyer, a banker I’ am also into mortgage business, I’m a law graduate from Ahmadu Bello University Zaria, this year is my 38th year at the bar, and I am among the first set of Nigerians that got mortgage license in the early nineties. I’ am currently the chairman of Kaduna State Mortgage and Foreclosure Authority.

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Kaduna state has scored a big mark in the country for establishing this unique agency to solve the problem of foreclosure on mortgage matters in Kaduna,what is the status of your activity in Kaduna State Mortgage and Foreclosure Authority?

Kaduna state is the 1st to domesticate the mortgage foreclosure law in Nigeria, and established  an agency, I’m pleased to announce to you that we are the fore bearers of the mortgage and foreclosure law, what we have been able to achieve since we assumed office is that we have a timeline of things that we want to do.

This is entirely new in the country, one of the key things we are trying to do now is to establish offices in all the Local governments in the state, and secondly we are convening a national mortgage and foreclosure seminar. It’s going to be the first of its kind in Nigeria.

It’s going to be hosted in Kaduna, we intend to invite all, the property development companies in the country, all primary mortgage institutions, and all stakeholders In mortgage.There we hope the law will be put to test, and we will be able to sensitise Nigerians about the need for other states to adopt the mortgage and foreclosure law.

With this law now in Kaduna state, what is your message to investors?

The message is that Kaduna state is open for business, we are lucky to have a government in Kaduna state that is forward looking, that is why we are able to be the first state to establish the law, secondly we are looking at how to invite investors in real estate, Kaduna is the biggest city that is closest to Abuja, a lot of prominent people from the north-east have moved their families to Kaduna state, primarily because of the unrest in the North-East. So Kaduna state is growing, that is why there is a need for us to attract investment in real estate.

One of the things that we have done now, is that there is a system that has been established whereby genuine investors in real estate are invited to come to Kaduna, engage with us, apply for land and within the shortest period of time you will be given a land.

Provided you satisfy the requirements that have been set up

What is the government doing in the area of security to ensure investors’ confidence in the state?

The government is doing everything possible to secure the state especially with the establishment of the Kaduna state vigilante service to complement the efforts of the police and other security agencies.

On a final note what is your message for stakeholders as we move into 2019?

My message is very simple, Kaduna is open for business, it is the nearest big city to Abuja, it is linked by fantastic road network, and a functional train service, we have enabling laws that protects investors, we will like to call on the major stakeholders, FMBN ,CBN, commercial banks and other Primary Mortgage Institutions to come to Kaduna. We are also calling on the NMRC ,the NHF and Family Homes Funds to come to Kaduna. Kaduna is the future for real estate in Nigeria, outside Lagos and Abuja, we think Kaduna is the next best thing that can happen to mortgage institutions in Nigeria.

Affa Dickson Acho

How A Gabonese Journalist Built A Multi-Million Dollar Media Relations Company

Franco-Gabonese entrepreneur Nicolas Pompigne-Mognard is the founder of the APO Group, a  leading media consulting firm and press release distribution service in Africa and the Middle East. The company, which Pompigne-Mognard founded in 2007, employs close to 80 employees across its offices in Switzerland, Dubai, Senegal and Hong Kong, and has an annual turnover of  several million dollars. APO’s bluechip clients include GE Africa, Dangote Group and DHL among others.

Nicolas Pompigne-Mognard recently stepped down as CEO of APO Group, and will now assume the position of  Chairman, focusing on delivering high-level counsel for APO Group clients and developing his own investment fund dedicated to Africa.

He recently recounted the story of APO’s early beginnings and mused on the evolution of the media relations business in Africa.

You founded APO Group 11 years ago while you were working as a journalist for Gabonews, an online publication. Relive that period for us and walk us through the series of events that led you to establishing the company.

I was a European correspondent for Gabonews, and I soon realised how difficult it was to get hold of Africa-related press releases, press briefings and official statements issued by European-based institutions, NGOs, diplomacies and governments.

As a journalist, I needed to receive all this information in order to stay on top of everything that was happening between Europe and Africa at a diplomatic, economic – even a cultural level. To access press releases, I had to subscribe to all the mailing lists and RSS feeds. Most organizations were only publishing their press releases on their websites, naively hoping that journalists would be constantly monitoring them all to see if anything new had been published. I was spending hours and days trying to reach the relevant people so they could send me their press releases.

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And as the European correspondent at an African media organization, I was also supposed to monitor all content issued by African governments and institutions about any European matter. Receiving press releases issued by these organizations was even more difficult. As I struggled, I realized that it was extremely problematic for any journalist to get all this Africa-related press release content – and that had some very bad consequences:

First, the inability of African journalists to access this information was reinforcing their dependence on Western media and press agencies. Second, most of the press releases issued by African governments and African institutions never reached the international media community at all. Many even failed to reach the African media community.

We have to remember that, back then, international institutions like the African Development Bank, the World Bank and the International Monetary Fund were having serious discussions about the role of African media in the promotion of good governance, and we were starting to hear about the concept of “communication for development” – that is the part media has to play in the transparency and accountability of organizations involved in public investment in the region.

But what really triggered my decision to act was a series of discussions I had with the President of the African Development Bank at the time, Donald Kaberuka, who explained to me how crucial the dissemination of news about Africa’s economy was to the development of the continent. We needed to reverse the tide and make sure the international media community and all African media had access to news releases announcing new investments in Africa, new CEO appointments, new startups, new international events, new awards and so on.

Of course, all this positive news is typically spread via press releases.

A few months later, APO started signing strategic agreements with Bloomberg, Reuters, LexisNexis, Dow Jones Factiva and other major international players to guarantee the worldwide distribution of thousands of Africa-related press releases in a standardised, internationally-recognized NewsML format for the first time.

That’s how it all started.

APO Group is currently the leading media relations consulting firm and press release distribution service in Africa and the Middle East. What else does the company do apart from these flagship services?

APO Group manages an extensive variety of services, ranging from TV and photo production, distribution and monitoring, to Online Press Conferences, government relations and more. But what really makes us unique is our ability to not only advise clients, but also to implement their plans using our own proprietary tools across all 54 markets of the continent.

And this is what our clients really need: a single interlocutor with deep knowledge of Africa, the tools to deliver the right results and an ability to stand alongside them in whatever challenges they face in their communications strategies.

The company’s turnover grew by 50% last year and is forecasted to grow by 60% in 2018. Much of this growth is because of the amazing success of our Advisory division.

Most of our clients understand that the most effective way to use APO Group is not as an ad hoc press release distribution function, but as a holistic consultative partner.

57 of the biggest PR agencies in the world worked with us in 2017 because they truly understood the value of what we provide. We have over a decade of experience so we can benchmark their strategies at a local level and throughout the continent as a whole. Not only do we immerse ourselves in their clients’ communications plans, we implement them and provide monitoring data to evaluate their success and return on investment.

What were some of the challenges you encountered in the beginning, and what were some milestone moments for APO Group?

It’s actually quite difficult for me to mention milestone moments for APO Group. When a company is growing fast, you are living milestone moments quarter-by-quarter.

But I certainly encountered plenty of challenges in the beginning!

I was a journalist. I studied law. I really was not prepared to create, much less develop a multinational company.

I built APO Group from my living room – literally – and during the first years I had to be the IT manager, the sales consultant, the PA, HR, Finance, Marketing – everything. I had to learn it all from scratch.

Not to mention, my English was very poor.

I remember one day, I was calling the head of communications at Boeing. I had noticed they just made an announcement related to Africa and I was hoping I could convince them to try my press release distribution service. The problem was my English was terrible.

During the discussion, and most probably to get rid of me, my contact says, “you know what, why don’t you just send me a quotation.”

“Quotation?” I had never heard that word before. I didn’t know what it meant. But with my tiny amount of English I said “Yes, of course, I will send you a ‘quotation’. Thank you, bye!”

And the first thing I did was to search Google for ‘quotation’. I wasn’t even sure about the spelling. When I realised that the guy just asked me for an estimated cost, I started doing somersaults. I called my wife in to tell her the good news: “Boeing just asked me for a ‘quotation’!” And of course, I’d never done a quotation before so we had to find a template on the internet to create the very first one.

Since then I’ve never stopped learning. The past 11 years have been a constant education. And many mistakes have been made along the way. My most rookie errors in the beginning were hiring misjudgments. I made poor choices with the first three people I brought on board.

This is not a criticism of those three individuals. They were my mistakes. I had wrongly assessed the profiles and skills the company needed at the time. I realize that now. When turnover is starting to take off, and the company is still very small and fragile, you really have to make the right choices or the dream can be over within just a few months.

In my experience, creating and developing a company is one of the most difficult things a human being can do. It requires a huge amount of time and energy, a lot of sacrifice, a healthy lifestyle and a lot of others ingredients too, which – even if they are all put together with love and care – do not always guarantee success.

It goes without saying, you will also need a little bit of luck. The right encounters, the right timing, not to mention (and in my view, most important of all) the unconditional support of a loved one or family.

How has the media relations business in Africa evolved over the last decade, and how has APO Group evolved along with it?

What I think what has changed the most is perception.

Ten years ago, I was in the European headquarters of PR Newswire, in London. At the time, they were considered the leading global press release distribution service and there I was explaining to several of their senior executives how Africa will soon represent a huge market for press releases – and why it was time for them to invest in the continent. It was 2008, remember, and they basically laughed at me.

Ten years later, APO Group is receiving purchase offers, strategic partnership offers and M&A transaction offers from some of the leading players in the industry.

They are seeing unprecedented demand from their clients for press release distribution in Africa – and they simply don’t know how to serve them. And this is just the beginning. According to the World Bank, the African population will double by 2050, reaching 2.4 billion. The latest United Nations population report, published in 2017, says that by 2100 Africa will be home to 40% of all humanity!

A recent McKinsey study said “Africa is poised for economic acceleration akin to the Asian boom”. There are around 440 US companies and 480 German companies who have been operating in South Africa for several years now. Today, most of them are planning their expansion across the continent to get their chunk of this huge untapped market.

This will obviously translate into more media relations spending, especially if you consider a growing trend where communicators are re-evaluating their mix of advertising versus PR.

African consumers are becoming savvier. They are starting to value news and information above blatant advertising – and that creates opportunities for the media relations business.

In your experience, what are the biggest problems that news agencies are facing today?

It’s partly to do with this idea of African evolution: More savvy Africans means a better educated, more demanding audience. Their expectations are higher, so they require more diverse, better quality content.

And as the audience develops, so too the media must follow – and that means better technology, better innovation, better content and – crucially – better journalists.

I’ve been in touch with a lot of African journalists, and when you ask them what they need most desperately above everything else, they all say: training.

That tells you everything you need to know about the evolution of African audiences: They are moving too fast for the talent to keep up. So, finance plays a big part. If you want to attract the best talent to produce the highest quality content, you have to invest in their development.

Talent will always mean the difference between success and failure – so the greatest challenge facing African media houses is making sure their journalists are meeting the expectations of their audience.

How do you see the future of news agencies, particularly regarding technology and its changing role in the news industry?

Clearly, continuous digital transformation is key. Media houses must keep evolving if they are to survive.

The days where they could rely on advertising as a sole revenue stream are long gone. Consumers are not browsing for advertisements – they are browsing for content – so that’s where the focus of these outlets needs to be. The challenge is to find new ways to monetize content and invent new models.

One area we’ve been focusing on at APO Group is media monitoring.

Right now, in Africa, it’s very poor.

That is partly because a lot of African media are offline, and print, TV and radio monitoring across 54 countries is impossible to do cheaply and painlessly. As the digitalisation of media continues and technology improves, monitoring becomes a critical part of the content value proposition. It produces metrics, data and insights that, in turn, encourage spending.

In the last few years, big international media players have started to come to Africa. CNBC, Euronews, Forbes, CNN and BBC have all increased their presence on the continent. The Washington Post announced this week they will be opening a new office in West Africa, explaining that they want to extend their reach in Africa – “because the continent is projected to account for more than half the world’s population growth over the next three decades”.

If the international media can see the potential, the African media needs to make sure it keeps up.

What are your greatest accomplishments at APO Group? Could you share a ballpark figure of APO Group’s annual revenues?

A lot of the work we are doing – around 70% in fact – is providing strategic advisory services for leading multinational companies, therefore many of our biggest accomplishments are covered by non-disclosure agreements. Let me just say that in 2017, we organized 250+ interviews, including off-the-record interviews, placed dozens of opinion pieces, organized tens of journalists round tables, press conferences and press trips, and actively participated in helping to shape some of the most important business stories in Africa.

Our project managers are in constant contact with some of the most influential media in the world, from CNN to CNBC, BBC to Al Jazeera, The Financial Times to The Wall Street Journal. We are organising interviews and media events in the US, in London, in Oman – but also in very complex African markets such as Eritrea and Somaliland. That’s something we are extremely proud of.

While I’m not allowed to disclose our exact turnover, I can give you some figures. Our turnover grew by 50% in 2017 and is projected to grow by 60% in 2018. Our press release distribution activity grew by 44% in volume in 2017 and is projected to maintain that growth in 2018, while our advisory division is projected to grow by 50% in 2018. Our five-year-plan consists of multiplying our profit margin 4.5 times.

But I would say my greatest accomplishment is to have turned my 10,000 euros of savings – which I invested to create APO in 2007 – into a multi million-euro business without the aid of any loans or investors. That means that, 11 years later, I’m still the 100% owner of my company.

Why did you decide to step down from APO, and what’s next for you and the company?

Being able to create a company does not necessarily mean that you are the right person to develop it and allow it to reach its full potential.

I built a race car. I did it on my own and I’m very proud that the car can reach 300 km per hour. But just because I built it doesn’t mean I’m the best driver to take it to 300 km per hour. That requires another set of skills.

Often, by sticking to the helm, the founder of a company can become the main obstacle to its development.

I’m not that person.

APO Group has huge potential. As we’ve seen, the situation in Africa is such that, in many ways, we are the right company at the right time with the right services on the right market. Our performance in the last three years is proof of that – and if you factor in the projected growth of the continent as a whole, the figures will back you up.

I always knew that someday I would have to hand the reins to a “professional CEO” so he or she could make sure the company realises its potential.

The new CEO I have appointed, Lionel Reina, has a fantastic track record in helping companies scale up quickly and break new ground. Lionel is the former Vice President and General Manager for Eastern Europe, the Middle East and Africa at Orange Business Services, the B2B division of French telecoms giant Orange. He has also served as Middle East Director in the Gulf region for Accenture.

Lionel and I met in Africa and we have known each other for years. I couldn’t have dreamed of a better CEO.

I am now officially the chairman of the company and I remain its 100% owner. My focus will be on delivering high-level counsel for APO Group clients and continuing to contribute to the growth of the continent by developing my own investment fund dedicated to Africa. I will also continue to oversee our relationship with the World Rugby’s African association, Rugby Africa, of whom we are the main Official Sponsor. Today, Rugby is the fast-growing sport in Africa. In 2002, only six African countries were playing the game, and now the Rugby Africa boasts 38 countries! APO Group is also helping its clients to enjoy the unique sponsorship opportunities offered by World Rugby’s African association, Rugby Africa.

Any advice for budding, young African entrepreneurs?

It would be a very long list! And it would really depend on which stage of the company’s development you are in. But if there are two things common to most self-made entrepreneurs, it’s hard work and resilience. If it was easy, everybody would have already done it. If it was easy, it wouldn’t have any value. You need be ready to work 12 hours a day – and don’t make any plans for the weekend, because you’ll be working then too.

As for everything else I’ve learned? That would take an entire book to cover.


Fss2020 to make Nigeria the fastest growing financial system in the world-Suleyman

In 2007, the Central Bank of Nigeria (CBN) launched the Financial System Strategy (FSS2020) aimed at calibrating the financial system as a means of ensuring economic growth and development in order to grow the Nigerian economy to be one of the 20 largest economies in the world by 2020. In this interview, the Executive Director of FSS2020, M.D Suleyman, speaks on the impact of the strategy and what to expect in the coming year.

What is FSS2020 about?

The FSS2020 is an initiative of the CBN and other regulatory institutions in the financial system that was launched in 2008, but its implementation was in 2009. The initiative came about since 2006 as a result of the prediction of Goldman Sac that come 2025 Nigeria is going to be among the net 11 developing nations in the world. So when that happened, the CBN governor felt that we needed to start a project to actualise that prediction to make Nigeria one of the top 20 economies, not by 2025, but by 2020. So that target was set in 2006.

The regulatory institutions in the financial system came together with some critical stakeholder ministries to craft the strategy document, and the vision of that strategy is to make Nigeria the safest and fastest growing financial system in the world by 2020, supporting the real sector, but after a 2013 review, the vision changed to becoming the safest and most diversified financial system among emerging nations supporting the real sector for economic development.

The strategy is to focus on the emerging economies in the Africa and Nigeria itself. So, basically that is what the strategy is about.

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What is the focus of the strategy?

The strategy is anchored on three pillars: to deepen the Nigerian domestic financial market, to integrate the Nigerian financial market and the international market, and then the third pillar is to support real sector in promoting economic growth.

That was how we came about bringing in the Micro, Small and Medium Scale Enterprises (MSMEs) sub-sector into the strategy document so as to support the real sector in our bid to develop and deepen our economy. That’s how the strategy was crafted.

What sectors are you looking at in the implementation?

We are looking at five sectors in the implementation of the strategy: insurance, pension, mortgage, financial market (comprising of the money and capital market) and the MSME sub-sector.

These are the constituents of the strategy document. We are as well working in collaboration with the regulatory agencies and market players in all these sectors to make it happen.

What is the impact of the financial system strategy adopted in the last 10 years?

So far so good, though 2020 is just around the corner, but we have been able to achieve some milestones in some of the sectors, particularly the money market, because our focus in the money market is enhancing the payment system in the country; that’s how we came about innovations in the payment system space.

Today the payment system space in Nigeria is among one of the best in the world to the extent that other countries are coming to learn from us to see how we got to where we are today. You know in pre-2006 we couldn’t transact any business in any branch other than the branch which your account is, but today, even in the comfort of your bedroom, you can do your transactions: bank transfers, pay your bills and you can do so much using other channels of financial services to transact your business. And that I think is a great deal and I will say we have done much in that respect.

And for the capital market, gone are the days when you wait for your dividend warrants or share certificates from entities that you subscribe for their shares. Now with the coming up of the CSCS shares are registered online and people can manage and monitor their shares and their dividends can be paid into their accounts. All these came about from the innovations of the FSS2020 strategy.

Financial inclusion is part of the strategy we are trying to achieve. Just recently, last year December, the Governor of CBN, who is the chairman of the programme’s supervisory board of FSS2020, at an executive retreat in Lagos, gave a marching order that we needed to upscale the inclusiveness of Nigerians into the financial system to 80 per cent by 2020. So we are working with the national financial inclusion strategy secretariat, and to achieve that and to do that in the pension sector to have this micro pension that everybody is talking about, we have come up with an initiative that SMEs that want to patronise government for contracts must come up with certificate of compliance in participating in the pension scheme, at least to have three staff in their companies registered in the pension scheme. And that is working. The next level we want to get to on that is to encourage the banking sector, particularly the CBN, to make it a condition that any SME that wants to access intervention funds from the developmental funds in the CBN, either agric or the SME funds, that the provision of the certificate of compliance should be part of the requirement. That will go further in deepening the involvement of the SMEs in the pension funds thereby achieving the micro pension scheme that we are bringing in. Likewise in the insurance industry, more products are coming in. Before now,

people had this apathy about going into the insurance industry because of either cultural or religious beliefs. But now we are beginning to introduce into the space the non-interest insurance services like the Takaful so that will take care of the large segment of the society that has not been captured in the micro insurance industry.

For the mortgage, a lot of initiatives are coming up on board for the provision of affordable housing at a very reasonable costs. Though we are faced with the challenge of funding, but we are making effort to see how we can pluck from the low hanging fruits of the direct foreign investors who are interested in the housing industry.

So far so good we are talking to about two groups now: the African-Diaspora Chamber of Commerce who are coming in with billions of dollars for that purpose, we are still discussing with them on that in collaboration with the Federal Mortgage Bank, the Nigerian Mortgage Refinancing Company and the Mortgage Bankers Association.

By and large, we have made some good strides in the FSS2020 strategy. There is still work to be done and we are leaving no stone unturned to see to the achievement of our objectives.

With just one year remaining, is there going to be an extension of the strategy?

Usually, no strategy is cast in stone, the beauty is that part of the requirement of the strategy is that you apply some agility and flexibility to it. Where you find out that you are experiencing some issues or challenges; by that agility you can make it suit your purpose, so for that reason, if we are unable to meet our target by 2020; of course we are already embarking on a review of where we were before the strategy and where we are after the implementation of the strategy has commenced, and I think that document will be a referral document for research and records.

By 2020 we intend to do a final review of the progress of the strategy and then we will be able to decide whether we have been able to achieve our objectives or not and whether there will be need for us to extend that date or not.

What should Nigerians expect from FSS2020 in the coming months?

If what we are working on now works out and we get the support of our principals, I think Nigerians should begin to see a complete revolution in the areas of mortgage market development in the country and a lot of infrastructure; both financial and physical infrastructure, coming to the country.

We have succeeded in getting PenCom to agree to the increase of the level of pension funds that would be deployed to infrastructural development. And once that happens, Nigerians would see a lot of activities going on in the issuance of corporate bonds, green bonds, infrastructural development, in the spirit of sustainable banking principles to meet all these climate change challenges where we will start to encourage healthy environment.

So pretty soon we are going to have affordable housing, long-term housing projects and mortgage financial transactions in the country.

We have an initiative of coming up with the Green Smart City development, we have opened conversation on that and all that is in the spirit of climate change. The Green Smart City is going to come on stream, we have written to the Minister of the FCT, we have written to some of the states, because we want to have the pilot run in five states: FCT, Lagos, Kaduna, Enugu and Rivers.

The city is all about climate change, low emission, encourage green environment and reduce environmental pollution. The city will use alternative sources of energy and no generators, and environment where we can have automated surveillance security system for the city.

Ogunniran calls on government to create platform for affordable housing

HAKEEM OGUNNIRAN is the immediate past Managing Director, UACN Property Development Company (UPDC). He is also the founder/Chief Executive Officer, Eximia Realty Company Limited. In this interview that was published by Guardian,he spoke on the challenges of affordability and social housing in Nigeria as well as the real estate’s potential in boosting the economy.

You are a lawyer but cut your fame in real estate sector, what drives the passion?
People don’t know that I used to teach real estate law in the university. I have a unique understanding of real estate because my foray into academics gave me significant insight into the underpinnings and workings of real estate transactions. I was working in UAC and had the opportunity of moving from what I was doing to UPDC, I grabbed the opportunity with both arms and that gave me a unique platform to manifest what hitherto has been innate in me.

As a former Chief Executive Officer of UACN Property Development Company, the company over the years added rich property investments/portfolios. How were you able to achieve the feat? What are the critical loopholes you noticed in the Nigerian real estate transactions? 
I worked in UAC for 23 years and had varied experiences from legal to sales and marketing, running two significant businesses. UAC is a great company; it gave me opportunity and training. I spent eight years in UPDC and in those years, I had a rare privileges of working at the centre of real estate transactions in Nigeria executing projects, raising funds, selling to customers, creating platforms in the real estate industry.

The sector is challenged; there are significant problems that we grapple with in the industry. People always talk about funding, but for me, funding is not the main problem in the sector. The major problem is the availability and affordability of good titled land. We have instances, where you acquired title to a land and several years after, somebody else comes and then it becomes a problem. For me, uncertainty of title is a major problem.

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Another is the issue of funding at both construction and retail end because of the structure of the economy. At the retail end, there are a little above 20,000 mortgages in Nigeria, the mortgages are unaffordable, the rate is too high, the tenures are too short. Currently, mortgages go as high as 20 or 25per cent. What that means is that in four years, you would have paid for the price of the house twice and it doesn’t make any sense. Infrastructure is also a key problem because a lot of developers today, are like local government. They provide power, road, sewage and water treatment yet; you would pay other charges like neighbourhood charge, land use charges and others.
These issues are serious problems, which affects the growth of the sector. I always take a value chain approach to real estate, look at the critical players and issues that matter to them. The environment is such a risk factor against real estate and it is very difficult.

Talking about planning approval, I was in a conference recently where one of the speakers narrated how he had to wait for 36 months before getting approval for a project, which they completed, in 14months. There are other challenges of inflation, high interest rate, challenges at the ports and all the usual problems of businesses in the country because you can’t isolate real estate from the economy.About 60 million Nigerians are said to be living in indecent homes coupled with wide housing gap. The country hasn’t been able to meet the need of the people too, how can we solve the problem?
Solving the housing deficit will require a whole lot of multi-level approaches. I don’t believe that government should build homes. I struggled to understand why government should be building houses; it should create the right environment for the private sector, to drive construction and delivery of homes with special assistance. I know that in the past, government has said that some people abuse the process but I think that government should partner with the right set of people.

I also call to questions the pre-qualification criteria that government had used before they put money in the hands of those people. Government needs to create the platform for delivery of affordable and social housing. Government should put in place deliberate programmes for funding the affordability gap for those who acquire houses and provide social housing for those who are unable to build homes. That requires a deliberate process and wholistic approach through policies that would bring together all the stakeholders.

Despite huge demand, driver for real estate investment in the country especially in cities with increasing populations, there has been lull in the sector, particularly this year. What is responsible for current situation?
The truth is, real estate typically mirrors the economy. Whatever happens to the economy also happen to the real estate sector. We are just coming out of recession, real estate suffered because when an economy enters recession, real estate is the first to suffer and the last to come out. In a recessionary period, your asset recovery circle is a little bit longer and that puts a lot of pressure on you as a participant in that sector. The reality of the matter is, the economy itself is suffering from declining demand, purchasing power, so much uncertainty around.

People don’t make real estate decision during uncertainty because that could be their largest real investment they would make in their life. They would want to make such decision when the atmosphere is a bit certain. Today, the lull is not only in the real estate sector, it is in food and beverages, and permeates the entire economy. The sector feel the pinch a lot more because all the enablers that are needed to drive the real estate segment are largely absent in the country.

Enablers such as financing options, incentives, low mortgages to drive the sector are lacking. Fortunately, we have seen interventions for other sectors like bank, textile but government has not provided any intervention for real estate, so the lull persists. I am not an advocate for handouts, but when you have a segment, which has come under such a heavy burden, the government could do well by putting in place programmes that would help to re-catalyse the sector.

You recently launched a real estate company, what was the motivation for the initiative and how would it impact the real estate industry?
I have worked for 33 years in all my life, worked for people, government and other organisations. So after I retired from UAC, I was convinced that I could do a lot more than I have ever done in the area of real estate. I also understood that we needed to do things differently and change the narratives.

With a lot of experiences, gathered over the years, I have to put everything together. I also consulted with people, potential investors, partners, funders of our initiative and that is how we launched Eximia, which is from a Latin word meaning extraordinary, outstanding and unusual. That speaks to what we set out to do in the market. We want to address specific problem that we have seen in the market. We understood that we needed to mobilise capital in a different way. The first thing we did was to launch a real estate cooperative last September to create an avenue for people to have access to long-term targets.

The idea behind the cooperative is to create an avenue for people to have medium to long-term real estate ownership target and to start saving towards it, which will helps us to mobilise capital in a very unique way. We taking a look at a model in Kenya called SACCOS, a cooperative, which account for over 35per cent of national savings and over 90per cent of housing finance.

Venturing into the sector now, are you not bothered about the downturns in the real estate market?
We are bothered but you just have to understand the market and the customers. I have spent a better part of the past five months to really work on our designs and engineer efficient service delivery to customers. We are coming to the market with our studio as low as N18million, one bedroom; N25/N27million and none of our products is prized above N30million for now.

Beyond that, we are also creating different mechanisms because a lot of people in that category have different cash flow and no bulk fund. We have to create a finance mechanism that assists them to take over their units after a particular period like flexible payment plans and others.

What do you think is the best approach to addressing the need for social housing in the country?
We need to do so many things if we must deliver social housing. We need to start through strong reorientation because what is called social housing or affordable housing is not social housing. Social housing starts with the designs. Social housing is supposed to serve and meet the needs of certain category of people so that they can migrate to higher level of housing in the future.

After China, the country that has done a lot of affordable housing, is South Africa. In South Africa, the country started from 40square metres houses and they move up to 80square metres gradually. But here, everybody wants to live in two bedroom flats with all rooms’ ensuite and boys-quarters. The first thing is that we need to revisit our understanding of social housing and once we have done that, come out with efficient designs properly done by value engineers. Then we have to talk about the construction methodology. I always say that we are still building houses but we have to start to industrialise the process of delivery houses. This already happening in some parts of the country, by so doing, we would be able to turn out large volume of houses within a short period.

By industrialising, it means we have to mechanise the process either through prefabrication and other processes which are cheaper, faster and more efficient. It is only happening in the United States of America, but it already happening in Maiduguri where you have a young engineer who has designed a particular type of block, which is being used on large scale. Once we have done that, government has to put the right incentives in place, to help us deliver the houses at affordable price.

High cost of housing and building construction has brought a substantial increase in disinvestment in the construction industry as well as added investment risks. What could be done?
It is not just housing sector that suffers from high cost in Nigeria, it permeates several sectors of the economy. Housing suffers an added problem because the main input, which is land, the cost of land is high. I think pricing is very artificial. In Nigeria, land cost as part of development could be as high as 20/25per cent.

Ideally, the cost of land shouldn’t be more than 10per cent. The infrastructure cost is also there. I did a project where the overall infrastructure cost was about 10/15 per cent, you also have the high cost of perfecting your title, permitting and approvals and all the materials, which you use are imported beyond land and cement, every other things are imported. So you suffer from all importation problems, including exchange rate volatility, which add to the total cost of construction.

By the time you do that, it is difficult to deliver prices at a cheaper rate. However, a lot of reforms are happening in Nigeria which we must commend the government to some extent. For example, at the national level under the housing finance programme, recently the Family Home Funds was established. I believed that the scheme would be a critical driver for solving housing deficits.

There is also NMRC which has recently been reorganised to drive mortgage refinancing and in mortages new underwriting standards are taking place, standard foreclosure laws and model mortgage foreclosure law has also been put into place. Recently, the mortgage warehouse was also launched and I believe that these initiatives would help to solve some of these problems and create a springboard for bridging the housing deficits.

As a high-profile player in the real estate business, which innovations/technology do you think Nigeria needs to adopt in improving the industry?
This is the era of prop-tech, where a lot of things are happening. Technology is driving everything, in our company for instance, one of our core goal is techno-savviness because we understand that would drive our business at both construction and the management end of the market. We need to allow technology to drive business, deplore technology that would provide standardisation, efficiency, and delivery.

What are your projections for the industry in 2019?
This is election years and we are going to lose about five to six months into the New Year. Another Central Bank of Nigeria (CBN) Governor would emerge. We are going to wait and see the policy thrust of the new government and CBN. A lot of things are still hazy but some things are constant. Housing deficits are still there and people will need houses, shortage of infrastructure is still there and there is the need for investment in those areas.


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