Kunle Faleti is a US-based affordable housing and mortgage finance advocate. In this interview with DAYO AYEYEMI, he speaks on a wide range of issues affecting affordable housing provision in Nigeria. He is advises the incoming administration on strategies required to reduce shortage of accommodation and enhance home ownership among Nigerians. He also lists some hazards increasing the risk of building collapse in the country.
For eight years, the Minister of Work and Housing,MrBabatundeFashola, said his ministry has delivered less than 3,000 housing units under the National Housing Programme (NHP), which many built environment experts have described as a far-cry from what is required annually to bridge Nigeria’s housing deficit of over 17 million units in the next 20 years. What will be your advice to the incoming President or government on methods to adopt to properly make affordable housing units available to Nigerians?
There is no one housing strategy that is right for every locality, municipality or jurisdiction. And in country as diverse as Nigeria, housing strategies must be localised depending on local market conditions, resources, and political environment.
Housing unaffordability is a severe problem characterised by acute shortage of homes for both purchase and rent, across Nigeria. The incoming administration must build and legalise the construction of more rental homes (social housing). Federal and state governments must fast track approval process for affordable housing. With more states investing in infrastructure, government must endeavor to build more housing near transit. The government must also be ready to allocate public land for affordable housing.
What should be the approach for the housing for the low-income and vulnerable Nigerians, citing American example?
Each state government must define the policy objectives it hopes to achieve. A major reform of the following are required – zoning and other land use regulations: permitting processes; building and housing code standards and enforcement process; property tax incentives; housing authority resources and programs.
How can Nigeria’s government attract foreign funds for mass housing production?
Successful housing interventions need to reflect local housing market conditions as well as the resources of local governments (not federal or state) and other stakeholders. Without subsidies, which is difficult to come by, it’s virtually impossible for developers to build homes that are affordable to low and extremely low income families. Foreign funds is not the solution. It comes at a cost. Government must develop a low-income tax, housing tax credit, a federal tax credit administered by state agencies. Any affordable housing that gets built will receive an allocation of tax credits. A certain percentage of units built must be dedicated to individuals and families in low income.
The Nigerian mortgage sector has remained at the infant level. What can be done to turnaround the situation?
The mortgage banks currently operating cannot provide the necessary funding for consumers. Nigeria must go back to the era where commercial banks were actively involved in housing finance. They have the balance sheet (low cost savings accounts), the branch network, and the human capital resources to reach a lot more consumers.
Are you satisfied with the performance of the Federal Mortgage Bank of Nigeria (FMBN)?
The FMBN must be re-organised. It’s primary focus should be to provide guarantees for commercial and mortgage banks who make loans for housing. FMBN should not collect or manage the National Housing Fund (NHF) and neither should it make fund available to developers for construction. It’s impact is not being felt at all.
What are your suggestions for major turnaround?
A vibrant housing market should be the cornerstone of a strong Nigerian economy. In reality however, it continues to perform far below it’s potential. There are three main vulnerabilities in the housing finance system in Nigeria – market instability, non-bank liquidity risks and federal fiscal exposure. Previous attempts at reforming the housing finance system have failed. The Senate & House of Reps have to pass a housing finance legislation that would reform the current system and provide certainty to the market place, while maintaining an appropriate level of government support for housing in all economic and financial conditions.
Incessant building collapse is another headache in Nigeria. How do we eradicate this menace?
While no building system can be engineered and constructed to be 100 percent risk free, risk-informed assessment and decision making will reduce the risk of progressive collapse. Engineers need to consider ways to improve structural integrity and robustness to accommodate local failures. Hazards that increase the risk of collapse include design and construction errors, lack of structural support, ductility in structural materials etc. Poor workmanship, badly constructed buildings, use of deleterious materials are also contributing factors to building collapse. There must be accountability for all – developer, contractors and government agencies. There must be checks and balances. There must be severe consequences for non compliance.
What are the impacts of Nigerians in the USA property market?
The impact on Nigerians in the US housing system is quite significant. Nigerians hold senior leadership positions in both private and public sectors – real estate investment, mortgage banking (sales and operations), policy formulation, residential and commercial real estate development, academia, legal (title companies, settlement attorneys, closing agents) and realtors.
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