Solving Nigeria’s Housing Challenge Through Innovative Finance and Infrastructure Solutions

This year’s occasion started with opening remark by Mallam Ibrahim Aliyu, CEO – Urban Shelter, at about 10:30 in the morning. The speaker emphasized the importance of the theme Finance, Infrastructure and Innovation to present day Nigeria’s call for change. In terms of infrastructure, there is no single city in the country that can boast of adequate water supply. An economy with over 15% inflation, mortgage finance will always be high even over 20%. Innovation is key to housing infrastructure development and professionals are to ensure 100% provision and management of the country’s infrastructure.

Different speakers and discussions were held on the main themes of the show:

  1. Finance

It is noted that housing for the poor or social housing programme needs at least One Trillion Naira through private and but mainly public sources to also stimulate economic growth for the entire country. Hence, federal government should contribute N100b and mobilizing business and private sectors to also partake in the programme. The Federal Mortgage Bank of Nigeria (FMBN) need to be recapitalized to provide decent houses for people in line with the provisions of the programme.

Housing problems in Nigeria is faced by the lower and the upper income class. The have-nots are the lower class, constituted by the workers, whose inability to have adequate housing is due to low income resulting from poor wage. The upper income class can conveniently afford what the private sector provides.

Experts’ attention is needed to address deficit issues by examining the increasing phenomenon of vacant houses in Abuja in order to be made affordable to those in need. Affordability test, for example, can determine those in need and can afford housing, because salary alone cannot fund mortgage, resulting into housing units not been affordable by the contributors because salaries could not service present mortgage arrangements.

  1. Infrastructure

As the United Nations (UN) estimated that about 8.3 billion people will be living in the world in 2030, there need to see cities as centres of hope and opportunity. Although, rapid urbanization is putting much pressure on urban environment, innovative ideas and activities can help ameliorate present and future challenges. Hence, government alone cannot solve the problem of housing, we need both public and private efforts.

The envisaged innovations can create jobs even through informal markets feeding housing construction value chain and other related sub-sectors. In instituting innovative solutions to tackle housing infrastructure problems, we need to identify our responsibilities and assign them efficiently. Our ideas should be cognisant of the issue of failure of quality particularly those leading to building collapse. Construct of houses should reflect our culture and not to destroy our traditional architecture that also relates efficiently with other areas like roads, recreational and open spaces.

  1. Innovation

Attention was drawn to the fact that there are problems of housing shortages, but, the size of the problem should not dampen our enthusiasm to find solutions. Although, adequate housing provision is a global problem, we should be optimistic and move forward, by having Nigerian brand solutions of quality and affordable housing that focuses on what we can do in terms of affordability and acceptability to the target groups.

We need to build between 700,000 and 800,000 housing units annually in order to manage present crisis, yet, less than 100,000 units are built every year. To achieve this, we need to extend the frontiers of affordability by including cooperatives, the self-employed and the unemployed that provide wide opportunities to our economy and families.

  1. Innovative mortgage finance

Government can take the lead in the needed nationwide innovative housing development. The Federal government’s effort in housing mortgage can be further enhanced through the on-going effort for upward review of the minimum wage in order for workers to earn more. The labour component of housing provision can be enhanced if workers are well paid, motivated and more productive, and, employers of labour should make their workers happy by shunning casualization.

There is no need developing houses if there are no people to occupy the houses. In order to avoid this scenario, we need efficient collection system in Nigeria to encourage mortgage banks to give loans to target groups. The market is too young for mortgage-backed security that is presently operative in other climes.

  1. Innovative housing infrastructure development

Affordability is not cheapness; it is a system that allows one to buy what he would not be able to purchase at the moment and conveniently pay later. Government can and need to intervene in critical sectors like housing because of its potentials to generate employment and curb corruption.

We need appropriateness of innovative finance and infrastructure in order to address the country’s housing deficit of over 17 million units. That, there is the need to build at least one million housing units per year in spite the problems of high cost and high interest finance, through appropriate government policies. Five approaches were put forward for innovative housing infrastructure development.

  1. Address the issues and the ratio of income to housing affordability in Nigeria.
  2. We need initiatives to deepen the mortgage market like in the ongoing efforts in underwriting, and foreclosure mechanisms.
  3. There is also the need to redefine our goals. There should be employment before shelter.
  4. Government must play a role particularly by enacting national affordable housing law.
  5. Proper planning and monitoring of programmes at all stages of housing and urban development.


The Way Forward for Innovative Finance and Infrastructure Solutions in Housing

Stakeholder particularly government and government agencies should not work in silos, rather, we need to collaborate effectively and efficiently. This can be achieved through effective guidance by government;

  1. National Housing Council

There are a lot of working groups in Nigeria, mostly in economically difficult circumstances. Bring us all together to engage in discussions and forming National housing pressure groups. Housing cannot be left to market forces alone.

  1. The National Assembly should make effective laws on housing provision and affordability.
  2. Investment of pension funds – to get a fraction for housing.
  • Land is about the most singular factor under government control. Need to create access at affordable rate. Title processing is a big task in Nigeria.
  1. Partnership with private sector operators is essential in all aspects.
  2. Infrastructure development through collaborative approach can create the needed affordable housing agencies.
  3. Strategic partnership is very important like PPP, etc.
  4. Critical Areas of Innovative Change
  5. A critical reform in the housing sector is urgent. This is due to shortage of skills, lack of artisans, and above all, the opportunities to create jobs.
  6. No marginal solution to the problem can be overlooked. We should accumulate series of small changes like bringing down interest rates, increase access, government incentives to both individual and corporate interests as it is practiced across the world.
  7. Creating trusts in the institutions of government and private enterprises.
  8. Full involvement of public sector as exemplified by Lagos and Bauchi states in funding more infrastructure resulting in housing delivery and job creation.
  9. Subsidies to reach single digit lending rates by banks and mortgage companies. Interest rates of 27-30% cannot build houses for rent or for affordable long term outright sale.
  10. Multi-finance approach to housing programmes also requires critical evaluation to enable partners, like the NMRC play their roles effectively.
  11. The contributory pension scheme was initiated in order to make available these funds for investment in stable outlets like housing.
  12. Urgent intervention

If the right attention had been given to housing, the country would not have been in regression today. Issues of equity contributions, loans to construction companies, and high interest bank guaranties, often faced by financiers can be tackled if government can fixed limits to their demand.

The government need to leverage land acquisition, titling processes and charges, in addition to providing durable infrastructure. This will bring the needed vibrancy to the sector, allow private sector to do and achieve high results.

There is the need to have uniform underwriting standards for the self-employed, non-interest, fore-closure laws, etc. Mortgage banks are to be encouraged to give out more loans. And different approaches like rent-2-own, can be used to provide affordable housing to the people.

For wider innovative solutions, we need to get other parties in in the business of housing and real estate development involved for affordability, availability, and acceptability of housing and housing infrastructure. Experts should find ways to work and cooperate together; by addressing key issues:

  1. We need to re-define objectives by thinking out of the box, and, re-assess our goals.
  2. Identify laws that need to be reviewed – building codes, regulations and guidance on applications.
  3. How to improve what is been done – standardize interphases, review mechanisms,
  4. Advocacy – for example; Shelter Afrique on funding by involving all stakeholders.

There is the urgent need to create National Housing Council to discuss and find sustainable solutions to housing where professionals in the sector can discuss and generate viable solutions.

Adequate training and skill acquisition centres need to be established for adequate acquisition of relevant skills, to be backed by specialized skill acquisition centres across the country.

As an important avenue, it was suggested that this annual international housing show should be re-christened International Housing Stakeholders Summit and not Abuja housing show!