Inconsistent Policy, Poor Land Administration Bane of Affordable Housing in Nigeria

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Managing Director, Wiser Estate, Nasiru Suleiman in this interview shed light on rationale why affordable housing will be a tough reality except access to land bottleneck and sincerity of purpose on the National Housing Fund (NHF) contribution is addressed. Excerpts    

Do you think we can achieve affordable housing?

Yes, we can. It all depends on the seriousness of the government and on the part of the developers; what sacrifice we are also ready to do for the public.

What are the challenges in the housing sector?

There are a lot of challenges but, some are major and some are just minor ones; that if you solve the major ones the minor will just align. For instance one of the biggest challenges of affordable housing in Nigeria and to be precise in Abuja is land acquisition, in the sense that access to land to average developer is almost impossible. Why i said this is that lands are very much available both within the city centre and the out sketch but accessing these lands are only possible to highly connected individuals; the politicians and friends of the government. What i mean is that you as a developer whose business is actually delivering houses to people, you do not even have access to land allocation. For instance if you apply for a land; it is a simple process; you get a form, fill it and when you feel it you submit and pay certain administrative fee of may be ₦100,000 or more. Then you expect your document to be processed and expect to be allocated a land based on the findings and when you are qualified. But you realised that as a genuine developer, these process will just go on forever and you may never even see the end of it.  But when these highly connected people like the politicians and the friends of the government… in some places they do not even apply, they just get the allocation and other processes will just come later. These same people will pay for the normal government fees if they even have to pay and in some cases they may not necessarily pay. Then they are allocated plots in choice areas and in my own view these are people who are not even interested in owning a house because they have more than enough houses already. So they just keep these plots of lands and leave it there and it keeps increasing in value as development goes up around it. As genuine developers who want to provide houses to the teaming population in need of homes, you are forced to go to these politicians who get these lands at almost a giveaway price and you are forced to either buy from them or go into joint partnership of development at the open market rate. For instance, land of about 10 hectares which the cost of processing maximally may not be more than ₦1million, you are forced to go to such individuals who, have these lands to either buy it at the current market value of between N3-₦5billion and depends on the location. Then you now have to design houses that will accommodate that current market value and also try to make profit. So in that case, you cannot be talking of affordable housing. Averagely, if you go to any developer that is what everybody is facing, land acquisition. Other issues are mortgage financing which is very difficult too. For the government finance institution which has a single digit interest rate, if you apply it is almost an eternity application because it will have to take you between six (6) months and 2 years to even get the loan, which is if you even get at all.

There are deliberate federal government initiatives such as Nigeria Mortgage Refinance Company (NMRC), Federal Integrated Staff Housing (FISH) don’t you think this will reduce the deficit?

All those things are policy statements as far as I am concerned. When you go to the real issues, you find out that either such policies are not backed by actual finance but the government will call the figures. Go to Federal Mortgage bank and find out, you realise FISH program is ongoing and find out if the government is disbursing any money for the program or if they have actually disbursed compared to the volume of people who need it. Sometimes these things are just policy statements and as far as we are concerned it is not actually translating into actions. I am a developer and ordinarily we should see people coming with available funds to look for houses but up till now we are forced to even create our own kind of loan for people. For instance, we are forced to spread our payment for people who are struggling to own houses. What we do in our part to help people get houses is to spread our payment and make installment payment flexible in a way that it can accommodate your income. You may pay the first 30% and within 3-6 month you pay another 30%; initially we were spreading it between 12 months but now because of difficulties, we are forced to spread between 12-24 months for individuals.

MD Wiser Estate, Nasiru Suleiman

At the concluded national housing show Wiser got best innovation award, will you say it’s deserved?

I think the award is a welcome development and we also see it as a challenge to work harder and to see how we can make housing more affordable. For instance, among the old developers, our firm will be three years this July and we are already talking of delivering 500 units of houses at various stages of completion. What informs this is that we deal with affordability both in our design and quality. First what we do is ensure the houses we are building are first, acceptable and then it must be affordable which means people can afford to own it. Those are the two things we put in our design concept. I think this award is coming because there is a new housing estate that we just launched along the airport road which we called the housing revolution. That is a place where despite the high rise in cost of construction and the difficulty in accessing land, we have partnership with an organisation despite the stringent condition of partnership, we are able to see how we can provide say a 1bedroom block of flat that will go for less than N5 million and 2-bedroom flat which averagely goes for N15-N20 million within Abuja city, we are looking at less than N10 million. The 3-bedroom flat which should be going for N25-N30 million, we are selling for less than N15 million. So, I think initiatives like this informed our innovative standards that qualified us for the award and the houses are on ground anybody can come. It is accessible.

I understand that the World Bank has given $300 million or there about to help support mortgage institutions to provide funds for homes, Have you accessed it?

For now, we are yet to see that or feel that impact. As far as we are concerned it still remains a policy statement. It is not on ground. If you want to find out, you can go to any of the banks and pretend to be a prospective applicant for loan and you will find out that it has not changed in any form.

As an expert, what’s your take on who takes custody of the 2.5 per cent NHF? FGSHB or FMBN

In Nigeria, we have too many policies. We form policies for every situation that arises instead of strengthening existing policies and at the end of the day you start seeing clash of interest. You find one policy targeted at a particular problem, halfway into it, another one will come and also target at the same problem so you begin to see clashes, if not Nigeria has the best policy to take care of whatever situation. Wherever you put this money, if there is a will to do the work, whoever is responsible for it will work but the problem is, there are basic things that if you do not sort you can never solve housing problem and that is the issue of access to land which is very important.

I want to understand our relationship with foreign developers can’t we replicate what they have there where students can access loans in banks?

It is not the same because the conditions are very stringent here. If you want to take a loan from a commercial bank in Nigeria, apart from the almost impossible conditions, the interest rate is between 15-30%. The best interest rate you can get as far as I am concerned is between 18-22%. There is this issue of collateral; you have to provide something that is almost equal to the loan you need so I wonder. In most cases, it goes beyond the loan you want to collect. Sometimes if you want a loan of N20 million you will be asked to provide collateral of N25 million. So it is almost impossible. In places like South-Africa, I met a developer and i saw a poster which says mortgage at 6.9% and if you even go to the bank you can also negotiate according to your own strength in the bank and this loans are available.

How will you describe efforts of the government on the National Housing program currently in 34 states?

It is a good initiative but the thing is if you look at the volume of houses compared to the volumes needed in some areas, you find out that they have not started anything. For instance, you go to a state capital where you have over 3 million people and over a million people are applying for such houses and you have just less than 100 units built so what problem are you solving.

This contradiction is also of concern about the 17 million housing deficit and the countless number of available houses in Nigeria, help me make sense out of this.

The issue of countless number of available houses i can only speak for Abuja because this is where I stay. In the state capitals you don’t see empty houses per say. But in Abuja, I think what is responsible for it is corruption.  It is in the sense that most of the people that own all these houses are people who don’t need the houses but they are opportune to have excess money and they don’t know what to do with it so, the best way to keep them is to build the houses and they don’t care whether it is used or not.

Are there any measures by private developers to address this especially through REDAN

You see when somebody build a house it is his private property, so there is little you can do to force such persons to use it the way you want it. Mind you, some of the people who own these properties are some of the policy makers, so which war are you fighting. REDAN is doing its best but basically REDAN exists to regulate the construction industry so that quacks and unqualified people don’t pose as professionals and build a house that will collapse using substandard materials but basically, that is where REDAN is actually applying its strength. Other things like mortgage are secondary but primarily, it exists to sanitise the real estate industry.

How can it be fixed?

It can be fixed. The government can decide that only genuine developers have access to land. it is very easy. You don’t just say it and seat because the same elites will go and register companies again as developers to collect the land. So what you need to do is, there are construction works going on around the city. You can visit the cites directly and find out who is constructing. Find out who are the actual developers of the construction projects, get their data, create a database of genuine and actual developers and make sure such people have direct access to land. For instance if I have a 10 hectares land and go into partnership with someone and from the ten hectares, i have to provide houses that will give the land owner N5 billion before the developer think of his promise. Do you imagine that if such land was given to me as a developer directly that N5 Billion that i will give to the partner, imagine that i spread it into the houses to subsidise the prices of the houses, can you imagine how much the houses will sell.

For instance, an average 2 bedroom flat within the city cost between N15-N25 million. We sell these houses in choice areas because we have to sell to be able to give the land owners something. If I have such land, the N5 billion I will have to give to the landowner, if I spread it into the development of housing I will sell 2-bedroom flats below N10 million even within the city centre.  You will find out that people will get houses at give-away prices.

What stands your firm out?

One of the major thing that stands us out is that we are not too much profit oriented. We are developing based on passion in the real sense. Our happiness is that we are providing houses for people whether we made profit to the extent we want or not. Our happiness is that we built estates and people are happy living in it. It is hard to see a new developer that is thinking of delivering almost 500 units of houses within 3 years. It is almost impossible but it is on ground and you can see.

 

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