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Housing: 60 years of advertisement

development defined by slow

growth
Chuka Uroko - October 1, 2020

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Perhaps, it will take great energy and effort to sustain an
argument that Nigeria’s housing sector has not seen any
change and growth in the past 60 years of the country’s
independence. If anything, many of the houses that were
built in the country at independence have given way to
modern, architecturally sophisticated structures, especially in
the cities.

But, given the tremendous change in demographics and the

startling housing and homeownership situations in the
country today, it could be safely said that housing
development in this part of the world has remained very slow,
even as demand continues to grow in multiples, outstripping
supply.

Though there were great strides in housing development

within the first three decades after independence, the slack
that followed the period is amply reflected in the home
ownership level in the country today with all the sounds and
fury from private initiatives.

As against 72 percent home ownership level in the US, 78

percent in UK, 60 percent in China; 54 percent in South
Korea and 92 percent in Singapore, homeownership level in
Nigeria, 60 years after independence, is estimated at 25
percent.

Arguably, Nigeria started out well after independence with

forward-looking national development plans that had
ambitious housing development components. A few samplers
may suffice here.

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The first National Development Plan of 1962 – 1968 saw
‘young’ Nigeria establishing state-owned housing corporation
which was for the provision of urban infrastructure and
industrial estates in three key areas— Lagos in South West,
Port-Harcourt in South East and Kaduna in the North.

The second National Development Plan from 1970 to 1974

saw the establishment of National Council on Housing and
the creation of Federal Housing Authority (FHA) in charge of
housing Nigerians and the establishment of National
Housing Programme (NHP) to construct about 59,000
housing projects. That was when the Staff Housing Loans
Board was established.

The third National Development Plan from 1975 to 1980 saw

activities of federal government’s direct intervention in
housing when about 220,000 dwelling units were proposed.
50,000 units in Lagos, then 8,000 units in each of the then
19 states. At the end, only 15 percent of the projection was
achieved.

There were other housing programmes such as the

establishment of committee on standardization on housing
types and policies in 1975. There was also an anti-inflation
task force in 1976. There was also a Rental Panel in 1976, and
then the Land Use Panel in 1977. The Nigeria building society
was also converted to Federal Mortgage Bank of Nigeria
(FMBN) in 1976 with a special capital base of about
N20million, then increased to about N150million later on in
1979.

The last of these government housing programmes seemingly

ended with the second civilian administration from 1979 to
1983 during which period there was an elaborate national
housing programme based on the concept of affordability and
citizens’ participation. This was the period of low cost
housing by the President Shehu Shagari at the federal level
and Lateef Jakande in Lagos.

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The return of the military junta to governance (led by the

present President Muhammadu Buhari) marked the
beginning of where Nigeria finds itself today in the housing
sector. Things have gone so bad that the statistics send
chilling waves down the spine.

With a growing population of 200 million and high

urbanization growth rate estimated at 4-5 percent per
annum, housing stock in Nigeria is said to be between 12
million and 15 million units while an unconfirmed record
shows that about 25 million households with six members
each don’t have homes of their own.

A report by BusinessDay Research and Intelligence Unit

(BRIU) on Nigerian Real Estate says that out of 200 million
Nigerians, only 8 million people qualify for the luxury
property market, adding that while there is more than
enough for the latter, hardly any thought is spared for the
remaining 192 million citizens.

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According to the report, over 80 percent of Nigerians are

living in ‘unplanned residences’ and those in the urban
centres are living in rented accommodation that takes away
almost 40 percent of their income with no adequate facilities
for water or electricity.

Even though the federal government is in denial of this fact,

housing deficit in the country today is over 20 million units.
This deficit, according to experts, requires building over
700,000 housing units yearly for the next 20 years and
spending about N56 trillion to close, meaning that, to
effectively house its citizens, Nigeria needs to spend its
annual budgets for over five years on housing development
alone.

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Views are mixed on why Nigeria’s housing sector is in this

sorry state. While Terver Gemade, former managing director
of Federal Housing Authority (FHA), blames it on policy
summersault, and Femi Akintunde, GMD of Alpha Mead
Group, blames it on infrastructure, others say it is about the
country’s undeveloped mortgage industry.
Experts worry that, six decades after independence, Nigeria’s
mortgage industry has remained underdeveloped owing to
the same challenges that have stunted the sector’s growth
since the Nigerian Building Society, the first mortgage
institution that was set up pre-independence.

According to Omozokpia, Nigeria would have to learn from

how the US, UK and some Africa countries were able to grow
their mortgage industry because “the sector is huge and has a
lot of potential for Nigeria’s economy.”

Nigeria’s mortgage to Gross Domestic Product (GDP) rate at

about 0.6 percent is one of the lowest in not just Africa but in
the world. While neighbouring Ghana has 2 percent mortgage
to GDP rate, South Africa with 30 percent is coming behind
the US and UK with 60 percent and 70 percent respectively.

“The underdevelopment of Nigeria Mortgage sector in driving

homeownership is worrisome as more than 90 percent of new
homes utilise funds from personal savings,” the Association
of Housing Corporation of Nigeria (AHCN), a real estate body
said.

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“In Nigeria, the housing finance market has not fared any
better,” a report titled ‘Housing Market Dynamics in Africa’
said.

According to the report, mortgage loans account for less than

1 percent of the loan portfolio of commercial banks, and only
about 5 percent, or 685,000 of the housing units in Nigeria
are financed using mortgages, “because Nigeria’s Federal
Mortgage Bank (FMBN) has failed to meet expectations.”

For these and more reasons, despite its large population size,
Nigeria is crawling behind its peers in terms of
homeownership level. While the level is 84 percent in
Indonesia, 75 percent in Kenya and 56 percent in South
Africa, Nigeria, Africa’s most populous nation, has only 25
percent.

Funke Okubadejo, Director, real estate at Actis, advises that

to address its housing challenges, Nigeria needs to have a
functional mortgage industry that has to be at an affordable
interest rate.

On his part, Deji Alli of Mixta Africa, says the country needs
clearly articulated targets, need-based resource allocation,
reviewing of existing development guidelines, development of
integrated infrastructure and encouragement of PPP as a
viable development initiative.

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CHUKA UROKO & ENDURANCE OKAFOR

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