Expanding Access to Affordable Housing in Africa

This year’s annual show observed the following in the country’s housing sector:

There is the growing need to expand access to housing in Nigeria and Africa. The implications of the high deficit in housing stork is that tenants now pay over 60% of their disposable income on housing instead of the 20-30% advocated by the UN. The need exists for effective mortgage system with indigenous technical inputs and private participation. There are serious barriers to housing provision in Nigeria and there is the need for proper amendment of the laws and the constitution in this regards. Commercial banks’ lending is unaffordable. The Land Use Act of 1978 needs to be repealed.

There is no quick fix to Nigerian housing problems – we need to address all the challenges. Master plans have indicated development problems, and development standards and procedures are due for reform, hence, the creation of slum settlements. There is no doubt that Nigerians can and are building houses. What is needed is access to affordable housing. But, there is need to define affordable housing, knowing that a 100% home ownership is a utopia.

We must define Affordable Housing

Affordable housing can create jobs as it has a large market in millions. It is a potential growth sector. We need measures in place to prevent the rich from buying off potential low income houses. There is need to involve government at all levels of housing provision deliberations. Government should and need to be involved, because only 54% equity contributed has worked. Government can provide land cheaply to reduce cost by 25%. Government can provide infrastructure to reduce cost by another 25%. Mortgage loans can be amortized successfully when deducted from source.

Most Nigerians are living in slums with no access roads, water and light. We need urban regeneration not new built houses. For example, in 1977, roofing loan was introduced. Since it takes 15-25 years to build a house due to lack of finance and, not land, then massive urban regeneration through instruments like home completion loan can help. Cooperatives can also come in because there is no collateral but membership of a cooperative society.

There is mutual benefit in housing provision. However, the present format of housing delivery cannot work. We are not creative enough. Nature of funds in Nigeria is incompatible with current realities. We should move from building to producing houses, with clear regulatory processes. The FMBN housing contributions and NHF’s 2.5% of income, interest at 6%, worked so fine for 20 years after inception. However, contributions from beneficiaries are meager. Other constraints include the fact that institutional contributors like banks, insurance do not pay directly to the FMBN. Also, prolonged loan processing and associated charges have become problematic.

The role of Government should be limited to creating enabling environment. Take away cost of land, wave charges and focus on the full implementation of the NHF Act. There is need to enhance labour productivity through paradigm shift and building technology with job creation. Everything is not done efficiently.


One solution cannot fix the problem. Different institutional approaches are needed at different levels. Still there are many solutions that have no bearing with research and rigorous analysis. Housing experts should be recognized and consulted.  Since legislation is not the problem, there is no need to revoke the Land Use Act. We only need to enforce it and put a cap on it.

On definition:

There is a consensus that affordable housing needs to be clearly defined. Generally, affordability depends on a number of factors. A starting point hints that affordability is limited to income brackets. One view suggests that affordability should be with consideration to cultural values, while another view holds that affordable housing may not be fully dictated by culture as it may then exceed income brackets. Affordable housing has also been viewed as that housing which about 50% of the population can acquire. Practically, this means that affordable housing needs to cut across a greater number of the people, thus making it more inclusive. In line with this, there is need to rethink the philosophy of housing. Housing should be seen as shelter, offered as a right not a privilege.

We must also differentiate between Affordable Housing, Social Housing and Low-income Housing.  Affordable Housing can only be defined by each community based on its income levels, and there can not be one National definition.

Another area that needed clarification was mortgage. Mortgage has been misunderstood as loans for new builds or home completion. Recent surveys show that over 70% of sampled populations in Nigeria do not know how a mortgage works, and about 50% could not mention one mortgage bank, hence 100% of homeowners who built houses did not take out mortgages. A simple definition for mortgage is – there is a completed house that I want to buy. Meanwhile, possibilities of home completion loan to reduce housing deficit has been stressed.

Mortgage stakeholders should consider a program to renovate existing homes, as they may be of great consequence in solving the problem of land for development.  Empty existing structures may be reconfigured for mass housing instead of mansions, for highest and best use.

Among the stakeholders limited cooperation is observed. There is too much stratification of ideas. Apparently, until stakeholders work together as a team, getting it right will be difficult – hence the need for synergistic approaches that emanate from thinking outside the box, backed with the right talk and action.

Opinions about the failure of government vary. It is however clear that government lacks the required determination in providing affordable houses. To reverse this trend, the proposed meeting of the Minister of Power, works and housing with stakeholders should be all inclusive and regular. Private stakeholders need to:

  • Think global and apply local solutions to immediate housing problems, while embarking on synergistic approaches. For instance, husbands and wives can consider making mortgage contributions with legal backing. Others include shared equity scheme, Rent to own and the approach to NPF cooperative.
  • Develop resilient housing finance strategies within volatile economy.

Government on the other hand need to:

  • Link land and mass housing with social and economic development. This will solve problems of unemployment and lack of productivity.
  • Fund critical parts of the economy at minimal rates.


Also, in moving forward the narrative needs to change. A good example is hinged on the fact that it is possible and profitable to provide housing to the low-income group. It is indeed a welcome development that that people at the bottom of the pyramid are more responsible to loan repayments and financial obligations.

  1. Attention should be given to cooperative societies. Financial and investment risks should be minimized as way to support cooperative societies
  2. Through recognized government agencies, enforce periodic payment of outstanding equities/royalties by defaulting organizations.
  3. Reduce bureaucratic bottlenecks in the mortgaging sector.
  4. Reduce cost of housing delivery significantly, by providing basic infrastructure – water, light and roads.
  5. Recapitalize FMBN. The current plans by government to build houses over the country should be given as loans to the FMBN to administer.

On the solutions to mortgages

Bring in the low-income and the informal segments to own houses – a happy home owner is a happy citizen. As inclusion is the key word of the NMRC, there is need to:

  1. All over the world mortgages are done on single digit.
  2. Empower the NMRC and create more access for it to discharge its function
  3. Reduce contributor’s equity mortgage insurance to 5% of total cost of housing. Also establish uniform interest rate regime at single digit.
  4. Create and drive Rent to own Programme as obtained in Lagos State.
  5. There should be shared equity scheme where cooperatives manage, meet counterpart payment, then continue to pay, like the case of Nigeria Police Force Cooperative.
  6. Housing should be keyed into mass literacy programmes. It can build long term resilience within the economy.
  7. Employ husbands and wives model in mortgaging as one person cannot pay for the home.
  8. Mortgage stakeholders should work hard to creative visionary programs for the informal sector, and to continue to work hard to make themselves relevant to the industry.


On practical solutions:

There are lessons from the 600 social housing units tagged Abuja at 30

  1. Convince government to make land available
  2. Explore funding opportunities through corporate social responsibility.
  3. Reduce contributor’s equities between 10 -15%.
  4. Off takers should be targeted at low income earners

More lessons from Bauchi state:

  1. Produce designs based on the user’s needs
  2. In the design production process, employ cheap labour (eg NYSC), with registered professionals as supervisors
  3. Identify and employ corresponding affordable building technologies.
  4. Involve Government in the provision of revolving funds in order to scale up housing production. Globally, insurance and pension funds are the bedrock of development.

On the payment of mortgage:

It is found that the NLC does not mind paying more than the statutory 2.5% equity, but the question arises if genuine contributors should pay for what is not beneficial to them? The NPF cooperative has been deemed successful. However, generalization of the NPF cooperative should be handled carefully since most cooperative societies are voluntary and not mandatory.

On infrastructure provision:

There is need for infrastructure since ‘new builds’ without infrastructure is an addition to slums. Hence, the concept: Urban development + Housing = affordable housing. This places the responsibility of providing land and infrastructure at the doorsteps of government.

By identifying components of housing affordability, more practical solutions can be employed:

  1. Land – make available to those who deserve it and not speculators.
  2. Building plan approval – approval fees for low income groups should be relaxed.
  3. Consider registering housing cooperatives for Low income groups.
  4. Are the buyers of government/low-cost houses living in them?
  5. Encourage philanthropist to involve in housing and redirect cooperate social responsibility to focus on housing, where up to 30% equity can be offset for low income group

On exploring products available in the housing market

The Rent-To-Own operates on the philosophy that your rent becomes an investment – in which case rent serves as equity.

Mass housing policing is needed to ensure that occupation is done by target population.


On housing financing:

New paradigms are emerging

There is consensus that the17 million housing deficit is a fallacy. What is needed is identification of housing problem in connection with current demographic realities. Rather, various products are introduced into the housing markets with various and potential buyers appreciate these products on their strengths. The NMRC is a product that government should fund.

Government needs to revisit home completion loan schemes as it supports the new paradigm for unlocking Housing Microfinance and leverages on incremental development that most Nigerians use in acquiring new homes as well as renovate and upgrade existing structures. If this is done, it will catalyze the demand side of the equation. Furthermore, government funding agencies should collaborate with supply side where REDAN members would play great role.

State governments should create more access for partnership with the NMRC in order to develop a more enabling environment for housing delivery.  State governments should restructure relevant ministries in order to minimize bottlenecks that hinder:

  • maximum of 5 steps to register, in 30 days at 5% of property value
  • maximum of 6months to foreclose on a property at 10% of property value in total cost
  • large scale production of housing for Nigerians at N 3million and less.

Mortgage institutions should leverage on the fact that cooperatives can provide off takers, bearing in mind that cooperatives have a pedigree of organized funds collection with assured recovery. Therefore, partnership between cooperatives and REDAN should be facilitated.

Nigerian Builders should take advantage of robust and potent market in the Diaspora. Indigenous companies can strengthen their profiles through strategic World Bank grants targeted at developing companies in the building industry.

Other contributions

Difficulties in development control arises when too much un-earned money is thrown around. To avoid middlemen causing delays and Development Control department gets the blame; there is need for automation, insist on seeing the receipt, cut-off roles of middlemen, publish indicted professionals.

11th Abuja housing show should have competition for young entrepreneurs.

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