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COVID-19: Family Homes Funds Sets To Deliver Affordable Low Income Housing

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By Jonathan Nda-Isaiah

Covid-19 is dealing a huge blow to the global economy, including that of Nigeria. As a result of this crisis, the demand for Nigeria’s main export – crude oil – is down, negatively affecting the prices. There are jobs losses and Nigeria’s financial profile doesn’t seem attractive any longer to prospective lenders.

With an ambitious agenda to build up to 500, 000 houses in 5 five years for low income earners, how is Nigeria’s social housing institution, Family Homes Funds (FHF) affected?

In a recent webinar organized by the Housing Development Advocacy Network (HDAN) held on the 5th of May, with theme ’Family Homes Funds: Mitigating the Impact of Covid-19 with New Homes and Jobs for Low Income Earners,” authorities from the Funds and different stakeholders spoke at length about the fate of FHF in this critical time.

Speaking during the webinar, the Managing Director of the Fund, Femi Adewole confirmed that the current circumstances, especially with regard to exchange rate has a very direct impact on the cost of building and inevitably poses a significant challenge on the Fund’s objective of achieving housing that is affordable for Nigerians on low income.

However, he comforts Nigerians, especially low income earners, with the assurance that they are up to the task of scaling through, and meeting their demands, even while acknowledging that more work needs to be done to improve the challenges facing the demand side of housing.

‘’We are working to ensure we manage this situation and we are operating a program called the four levers. The primary objective of that is essentially to localize the input into the construction sector in Nigeria, especially the projects for which the FHF is accountable and responsible for,’’ he said.

The first measure according to him is the use of locally made materials in building projects. As a result, the Fund is working with the Nigeria Institute of Architects and other partners to achieve broad but practicable goals.

‘’We are working with NMRC to develop innovative solutions to ensure that people are able to access finance and pay for these homes. We have the ‘Help to Own’ product and a rental housing plan to ease home ownership. We are working to pull down the cost of housing and the selling price. In regards to that we are working with the Nigeria Institute of Architects to bring about standardized house designs and other stakeholders in the industry to bring about a standard bill of quantity.

‘’We are also working with state governments to provide lands as their own equity to bring down the housing cost. We are doing aggressive capital mobilization, knowing that the revenues are currently low, we are looking at other means of funding affordable housing. We want the public to know we are aware of current challenges and are working to manage the situation.’’

Adewole emphasized that a large proportion of the input into the housing market can be made locally if the right things are done.

‘’We have the potential to make doors, roofing sheets, tiles, electric wiring, window frames but that hasn’t been possible because the local industry has been killed by cheap imports. As a result, we are looking to aggregate demand. If we are able to make a forward order to local manufacturing, possibly even SME door manufacturers, it is important that it provides them with scale. They are able to access financing on the back of the order from the FHF to improve their capacity to tool up and employ more people. And all of a sudden we will have a growing manufacturing sector that not only provides building inputs that are cheaper, but also provides employment for low income people. We are putting in a lot of work to achieve that,’’ he assured.

Speaking further on partnerships to achieve affordable housing for the low income earners, Adewole said they have forged a very strong relationship with institutions like the Federal Mortgage Bank (FMBN).

He said they are collaborating with them on a set of flagship projects. One of them in Gwagwalada area council of the FCT. He said these projects are in excess of 2000 units.

With the Federal Housing Authority (FHA), he said they are looking to bring forward a lot of the land that they have with financing to ensure that the land can be developed to provide homes for Nigerians who need them most.

He also said their partnership with the Nigeria Mortgage Refinancing Company (NMRC) is important because the refinancing window is an important one going forward and ‘’we are looking at opportunities in refinancing some of our own exposure so that we can re-circle our capital to provide homes,’’ he revealed.

Generally, he emphasized that Family Homes Funds is committed to working with all relevant stakeholders to achieve their objectives.

For Family Homes Funds, rental housing is a great solution they are providing both for formal and informal sectors.

Adewole stated that there is a joint committee between FHF and the Association of Housing Corporations to weave their own ideas into them.

‘’We also welcome other stakeholders in the sector to join us in developing a rental housing system that serves Nigerians particularly for majority of Nigerians who are in the informal sector.’’

‘’We are also working with the Real Estate Developers Association of Nigeria (REDAN) to support quality control. To develop the capacity of our developers’ market. Most of our developers are at best SMEs. They are possibly not able to attract significant capital. They probably do not have the skill now to develop at the scale that is needed. We hope we can work with REDAN to create a new class of super developers that can confidently handle significant scale projects; give confidence to the capital and lending markets to attract significant amount of capital that is needed.’’

Importantly, Family Homes Funds offers development funding with interest rates as low as 7 to 9%, about 100% less than the current market rate. This he said will continue to go a long way in aiding affordable housing development in the country.

Currently, the Fund has about 3,600 homes across 5 locations. They have also committed to another 13,520 in 6 locations across the country. Their aim according to Adewole, was to have 20,000 homes by the end of 2020, but they will have to look at those numbers again given the current economic situation.

‘’We hope that over the next 5 years, 200,000 homes will be built for the low income earners.’’

Responding to the experts who spoke to issues, Femi Adewole, stated that although the current situation of things seems to pose a constraint, the fund is working assiduously and going into strategic partnerships through programs that can promote the use of localized input in the housing and construction sector which will foster affordable housing delivery while also creating massive opportunities for employment.

 

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