‘Why Building Insurance Shouldn’t Worsen Housing Deficit, Hurt Investment’

A construction professional, Mr Ayotunde Bally, has urged the Lagos State Government to implement its building insurance scheme in a manner that it will not worsen Nigeria’s housing deficit.

Bally, the Chief Executive Director of Dembally Ltd., a real estate development company, gave the advice in an interview with the News Agency of Nigeria (NAN) on Sunday in Lagos.

He also advised the government to ensure that the newly introduced scheme would not discourage private investment in the real estate sector.

Bally said that while the scheme’s objective of improving safety in the built environment was commendable, the policy must be implemented in a way that would promote housing delivery, job creation and economic growth.

He noted that Nigeria was already grappling with a huge housing deficit, rising construction costs, expensive financing and inflation, with many developers operating on very slim margins.

According to him, the construction sector remains one of the country’s largest employers of labour, supporting architects, engineers, builders, artisans, electricians and plumbers.

Bally said that the sector also supported welders, carpenters, surveyors, suppliers, transporters and other workers.

“Every new compliance requirement should, therefore, be assessed not only for its safety benefits but also for its impact on housing affordability, job creation, private investment and new business formation,” he said.

Bally advised the government to retain compulsory building insurance but ensure that insurance premiums would be affordable for developers.

He also recommended  digitisation of approval processes to make compliance faster and more transparent, while introducing reduced fees or tax incentives for developers who would comply with regulatory requirements.

The real estate expert also urged the government to apply stricter insurance requirements to high-risk and large commercial developments, while adopting proportionate obligations for smaller residential projects.

He said that enforcement should focus on unsafe construction practices rather than treating every developer as a compliance risk.

Bally also called for improved access to affordable development finance, saying that it would have a positive impact on housing supply.

“Safety and development should never be presented as opposing goals.

“Lagos is right to pursue safer buildings, but policymakers must also recognise that every new regulation has an economic cost.

“The objective should not simply be to increase government revenue or create additional compliance requirements.

“It should be to create an environment where responsible developers can build safely, profitably and at scale,” he said.

He said that high regulatory costs and cumbersome compliance procedures could force smaller developers out of the market, discourage new investment and ultimately reduce housing supply.

“If regulations become so expensive or cumbersome that they drive smaller developers out of the market or discourage new investment, Nigeria may end up with safer rules but fewer homes, fewer jobs and even less affordable housing.

“The challenge for government is to protect lives while ensuring that regulation remains an enabler of growth, not a barrier to it,” Bally said.

NAN reports that Lagos State Government on Friday launched its Building Insurance Scheme to strengthen building safety, enforce compulsory insurance and protect lives and property against construction-related risks.

The government said Lagos had continued to record rapid physical development, with new residential estates, commercial developments and other infrastructure reflecting investors’ confidence in it as Africa’s leading economic and commercial hub.