Kunle Faleti, former World Bank Consultant to the Nigerian Housing Finance Program, is currently the Assistant Vice President (Mortgage Operations) TRUIST Bank USA. In this interview with DAYO AYEYEMI, the international housing finance expert and mortgage banker, spoke on many issues, ranging from lack of policy implementations, increasing costs of building materials and low disposable income of people, among others militating against housing affordability in Nigeria. He also made some useful suggestions to the government and others stakeholders on how to address the identified challenges.
Why is it that the prevalent prices of available housing units are beyond the low-income earners, who are in dire need of accommodation?
Houses are beyond the reach of low-income families due to the ever-increasing costs of building materials as well as the cost of infrastructure. To build for the poor and to make rental housing affordable for the low income, the government at all levels must initiate and implement a social housing policy that will be subsidized. Let us not forget that Nigerians are poorly paid and salaries are not increasing at the same rate as the cost of building materials and forex are increasing.
Over 20 million Nigerians do not have roofs over their heads despite the plethora of housing policies in the last six decades. What is happening?
Well-functioning housing markets are critical to Nigeria’s economic success. The high cost of housing makes it difficult for employers to attract and retain good workers. While housing has typically been left up to federal and state governments, four key challenges would benefit from local government level attention: monitoring local housing supply, providing income support for poor households, investments to upgrade housing quality, and climate resilience efforts.
Nigeria has had very good housing policies as far back as two decades ago. The problem had been and still is with the implementation of the policies. A good housing policy must incorporate the following: housing should not harm the health and safety of families or communities; mitigate environmental impacts; supplement income for low-income individuals and families; encourage supply to meet demand.
How can the issues affecting housing affordability be resolved?
Even in places adding enough new housing to keep up with job growth, lower-income households have difficulty paying for market-rate housing. The incomes of many lower-paid workers have not kept pace with increases in rent. Globally, housing experts recommend that households spend no more than 30 per cent of their income on housing. Among Nigeria’s poorest households, both renters and homeowners spend around 90 per cent of their income on housing costs. High housing cost burdens lead many households to cut back on food, health care, transportation, and other necessities while impeding their ability to save for a rainy day. The gap between income and housing costs exists in all parts of the country: urban, suburban, and rural. Strategic housing policy choices by Nigeria’s next president can strengthen the country’s economy, reduce financial stress on households, and improve climate resilience. Government must invest in building subsidized rental units and apartments. Government should enable better policies through better information. Collecting and disseminating regular information on housing market conditions and unmet needs would be beneficial to state and local governments, as well as housing advocates and the real estate industry.
What should be the roles of government in the provision of housing for the low-income group?
Build a housing roadmap. Government should start by outlining a housing roadmap that articulates clear housing objectives. These roadmaps should outline measurable benchmarks to ensure accountability, address any potential barriers to development and focus on market-based needs. Government should focus on educating the public on the positive aspects of bringing stable, high-quality affordable housing options and how they can be critical to the community and economy. This includes highlighting the devastating impact that housing instability can have on workers’ ability to secure and maintain employment. With affordable housing options, local communities can expect fewer evictions, a healthier economy and more job opportunities.
Housing roadmaps should also incorporate pathways for engaging with local agencies—such as public housing agencies, zoning commissions, economic development and planning departments— and targets for different legislative priorities. As the cost of housing continues to rise, these legislative priorities can be the difference makers that close that final gap to bringing affordable housing to communities.
What should be the roles of private developers in all of these?
State governments in particular must work collaboratively with real estate developers. Real estate development can be a complex process that takes time. That’s why it’s essential to work with experienced developers who have a vast amount of experience in the affordable housing space. Their level of expertise should be extensive, with clear examples of successfully delivering high-quality and budget-friendly housing options from conception to completion. The local government should determine a developer’s willingness to make meaningful contributions to a community or municipality’s well-being before considering a partnership.
It’s imperative to work hand-in-glove with developers and other involved parties during the entire process. A state and local government’s willingness to collaboratively work with developers can help streamline the affordable housing process, identify any potential zoning challenges and help ensure all parties are aligned on project goals and priorities.
Developers want to invest in places where the local municipalities are open to working with them to make these projects a reality. The difficult process of developing affordable housing is made nearly impossible when a state government continually implements roadblocks along the way, whether those are intentional or unintentional. Push back from the local government without opening doors for productive collaboration can destroy a potential housing opportunity that would have been prosperous for the community.
Both the federal and Lagos State Governments are planning to mandate a monthly collection of rents. What are your opinions.? What is the global best standards?
It is insane that Nigerians are paying rent annually, and even more so, for two or more years. As mentioned earlier, the workforce is poorly paid and not making the rent a monthly obligation is making the burden even worse. It drives and encourages people to steal and embezzle money. International best practices adopt and implement monthly rent payments. I strongly identify with both the Federal and Lagos State Governments on this. In fact, it should be on the 2023 presidential and gubernatorial election campaign manifestos.
Prices of cement and other building materials have doubled in less than one year. What are the implications of this on affordable housing provision?
The market demand for construction materials is tremendous in developing countries such as Nigeria due to a growing population. Making housing more affordable starts with understanding the costs of building them. One of the major barriers to building more and more affordable housing is the increasing costs of construction labour and materials
The building, construction and housing finance industry stakeholders must invest in research and technology to develop alternative building materials that do not rely on cement. There must be focused, deliberate and sustained advocacy promoting non-cement building options.
We need to seriously start considering developing a new kind of cementless compressed earth block for housing. These innovative blocks only require local resources and no cement, thus lowering the environmental footprint and at the same time achieving the required price point and performances required by the local market.
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