CHIKA OKEKE writes on the need to restructure the real estate sector to boost investors’ confidence
The real estate sector is the mainstay of many economies due to its vast potentials in the area of job creation.
Regrettably, Nigeria’s realty sector is bedevilled with many challenges such as absence of foreclosure law to safeguard private sector investment.
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender, by forcing the sale of the asset used as the collateral for the loan.
Added to foreclosure is land and titling, that accounts for about 20 per cent of housing delivery costs in Nigeria compared to eight per cent in India and South Africa.
While building materials and labour accounted for 25 per cent of delivery costs in the country, India and South Africa have 21 per cent and 16 per cent respectively.
Regrettably, Nigeria’s land titling and registration system is almost moribund, which is why three percent of the nation’s land has been properly surveyed and registered.
Also, the flagrant abuse of town planning laws in Nigeria led to urbanisation, with its attendant consequences such as insecure land tenure, poor and inadequate infrastructure, pollution, health challenges, poverty and lack of basic urban services.
The sector is also marred by dearth of skilled workers, a situation that led to massive capital flight as most firms preferred to give out such category of jobs to expatriates.
Aside this pitfalls, the country is battling to contend with a deficit of over 17 million housing units, given that low income earners constituted over 80 per cent of Nigeria’s active workforce.
This is happening at a time that there are large number of completed and unoccupied houses across the major states in Nigeria, with many of such houses found in the Federal Capital Territory (FCT).
The interest rate on housing loans is not flexible, just as commercial banks issue loans at double digit interest rate.
To reduce the deficit of 17 million housing units and boost housing development,the minister of power, works and housing, Mr Babatunde Fashola,has commenced the pilot project of the National Housing Programme in 34 states except Lagos and Rivers States that failed to donate lands for the project.
While Federal Mortgage Bank of Nigeria (FMBN) is the only institution that provides single digit interest rate of six per cent, the loan is barely enough to go round the off-takers who are contributors to the National Housing Fund (NHF).
To this end, experts have suggested that restructuring the sector could position it for competitiveness in line with global best practice.
A board member of Chicago Association of Realtors Global Council, USA, Mr Efty Abdulfatai Garba, harped on the need to regulate and restructure Nigeria’s real estate industry for enhanced productivity.
He noted that if there were genuine laws guiding the operation of various housing organisations, Nigerians seeking for estate development jobs would first obtain certification before venturing into the business.
Aside estate development jobs, Garba pointed out that the same measure should be applied to mortgage brokers, appraisers, inspectors and all allied industry partners.
He lauded the efforts of Real Estate Developers Association of Nigeria (REDAN) and urged them not to relent in sanitising the industry.
According to him, “If we must make a difference, we must be bold and courageous to make Nigerian leaders see the importance of real estate to their political future.”
Lending his voice, the president of REDAN, Rev Ugochukwu Chime, hinted that the existing legal infrastructure and institutions cannot deliver the expected affordable housing in the country even as he called for the restructuring of the real estate sector in tandem with emerging trends and best practices.
Chime said though government has focused on making land and finance available as the only solution to affordable housing, the key challenge was the collective understanding of stakeholders involved in the value chain, their roles, responsibilities , expectations, capacity, skills and competency enhancement.
He emphasised that a typical Nigerian approach to issues would be to intentionally allow a crack on the road to develop into a crater that would cause pain to road users.
Chime said the approach would automatically lead to closure of the road, thereafter government would use the meager public funds to award inflated contract to their friends and cronies.
In his contribution, the convener of Abuja International Housing Show, Barr. Festus Adebayo, pleaded with stakeholders to assist in improving the operating environment, saying that such measures would eradicate quacks and allow genuine developers to boost their business.
He added, “If we are not careful, such desire to curb the excesses of deviant developers will lead to persecution and high compliance costs that will affect affordability”.
Also, a former president of Nigerian Institute of Town Planners (NITP), Mr Steve Onu, lamented that government was also involved in swindling Nigerians through bogus housing programmes.
He cited an example in 1996, when the federal ministry of housing under Jakande/Adisa floated a housing programme where Nigerians were made to deposit a minimum of N40,000 which was later increased to N165,000.
Onu revealed that up till date, that none of the depositors in Imo State recovered their money, land nor house saying that the monies were paid through Federal Housing Authority (FHA).
Onu said, “Will any responsible government treat its citizens this way?. Who is fooling who.Yet a minister will have the courage to boast that a nation like Nigeria is building 2,540 housing units, while in 2014, a country like Columbia built 100, 000 housing units for those in need.”
A housing expert, Mr Victor Mayowa, supported the creation of a maintenance economy but kicked against outsourcing government assets to private entities.
He noted that outsourcing often provided an opportunity for looting of Nigeria’s Commonwealth, noting that it’s the responsibility of Nigerians to unsit any incompetent government.
Mayowa maintained that the private sector cannot thrive in an environment filled with incompetent government, insisting that housing cannot grow without the presence of a competent government that recognised that housing is life, as seen in Singapore.
The federal government has reiterated its commitment in the provision of affordable housing as the construction ecosystem for mass employment and economic prosperity in the country.
The minister of power, works & housing, Babatunde Raji Fashola disclosed that one other way government would ensure that low income earners benefited in the current housing schemes is by introducing ‘rent-to-own scheme.’
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