In Abraham Maslow’s hierarchy of needs, shelter is an important requirement to be met for a man’s self-actualisation to be met. This is why the place of housing cannot be overemphasised in a society.
With the country’s housing requirement put at 21 million, the need to bridge the gap becomes imperative. Sadly, it is becoming a challenge to provide housing yearly on sustainable level, thus making the deficit gap to widen regularly.
Stakeholders have blamed the rising cost of building materials for the failure of developers foraying into housing development. For instance, they are quick to point at the cost of cement – a commodity that accounts for about 35 percent cost in a building project. Last week, a bag of cement rose from N3,200 to N4, 000.
Experts are, however, worried about this development, especially when it is considered that the country’s cement production capacity is more than double that of its demand.This translates that the nation should satisfy its needs and then export the surplus and still have some left in reserve. Yet, somehow this isn’t happening.
Besides, with Nigeria an import dependent nation, the crashing local currency against international currencies have not helped matters in the building sector as most of the materials needed are mainly imported and paid for in foreign exchange.
Experts in economics and finance, however blamed the government for its lack of deliberate policies that would stimulate the building sector. For instance, they mulled the idea of a price control mechanism that would keep in check the galloping cost of building materials. Also, they canvassed special waivers on customs duty on building materials, for operators in the sector.
In an interview, the Chief Executive Officer (CEO) of an estate development firm, Sterling Homes, Dr Kunle Adeyemi, lamented the rising price of cement, which he put at N3,800 from a previous N3,450.
According to him, at the current price, it means that the price of cement within the first quarter of this year has moved over 70 percent. According to him, there are dealers who are hoarding because they are sure that the price will still go up before the end of the week, as one of them predicted a rise to N5, 000 per bag.
He frowned that the dream of an average Nigerian to own a home is very slim. He said: “For us as developers, it is a huge challenge because we already have the prices of houses that are still being built, but we cannot deliver at the old price as cement alone is N4,000. The price of rod and steel has gone up also. This is a major challenge as these are important building components you cannot do without.”
Similarly, the President, Nigeria Institute of Building (NIOB), Kunle Awobodu, decried the increase and added that it had a lot of consequences. He recalled that his company had to discontinue a particular project in Port Harcourt, the Rivers State capital, when the price rose to N4, 000, from a little over N2, 000 two days earlier.
Awobodu said the rise in cost of building materials affects the sector, which he noted, to include compromise in the use of the materials where some people disregard the original cement, sand and water mix ratio.
Canvassing the need for the government to intervene on this, he said in the long run, it might lead to building failure. “The construction sector is a huge employer and anything that will upset it should be avoided. This rise in price can lead to building failure as some may compromise on the cement ratio in order to complete a particular project as a result of cost. When the youth are not engaged, they become a willing tool for violence and the construction sector is a good sector that absorbs youths.” According to him, the rise in cost is unexplainable as nothing supports the wide margin of increase.
To check unbridled price increases, Adeyemi advised government to come up with price control policy on essential materials in the construction industry such as cement and reinforcement. Furthermore, he advised that if all the raw materials needed in the manufacture of important components in the building and construction industry are not available locally, the manufacturers should be allowed to import them to make the final products cheaper.
He said: “I know that there is some bureaucracy around the mining industry making it difficult for those extracting those materials to do their work easily. The government should relax it or totally eliminate these bureaucracies to make it easy for these miners to do their business. It is a lot cheaper to source the limestone locally than importing them because of the exchange rate and import duty problems. I believe that if the materials are sourced locally and government comes up with price control policy, reduction in the price of cement can be achieved.”
But how can price control possibly work in a free enterprise economy? Adeyemi explained: ‘’The country has no choice but to look at price control and regulation to ensure that people are adequately housed.”
Addressing the issue of monopoly in the cement sector, he regretted that the government failed in its duty by allowing monopoly in the sector. He canvassed the need for the government to be deliberate about breaking this monopoly.
‘’The price of this important commodity should not be dictated by just a few individuals. The government succeeded in doing this in the textile industry. That success story should be replicated in the cement industry,’’ he stated.
On the challenges ahead in the midst of incessant price increases, Adeyemi commended the government, who he said, to a large extent, succeeded in regulating the quality of building materials. However, he stressed that all things being equal, it might lead to doom as some developers may be forced to compromise on quality and standards of housing they put on the market.
“They may go for sub-standard materials in a bid to meet up with supply. This is because inflation and rising costs have eaten up the profit margin. So, they will think that the only way they can hedge inflation is to subscribe to substandard materials,” he said.
He argued that in construction, one thing that is not subject of debate is safety that is guaranteed by the quality materials and adherence to standard practice. According to him, if these two are compromised, it can lead to loss of lives. If the government does not move into action swiftly and begins to regulate price of essential materials like cement and rods, some developers may be forced to compromise on quality. This will lead to building collapse and construction failures. Because of the drive for profit maximisation which is essential for business survival, developers may be tempted to go for substandard materials, he added.
He continued: “I foresee doom, more so when the agency that is responsible for regulation is docile. The Standards Organisation of Nigeria (SON) is not living up to its name as a result compromise by its officials, corruption and bureaucracy. There are several materials in the market that are not of standard quality, the quality of rods, for instance, has been compromised.This is why we recommend that such materials should be subjected to laboratory test.You will be shocked that some of these materials with SON certification seal cannot pass this test. These are the materials that have flooded the market and there is a body set up by the government to check the influx of substandard materials into the country.”
On the way out, he said it is for developers to be creative, innovative, play with designs and also reconsider their construction methodology while building to suit their target audience.
“My advice is that if we are to address the issue of housing deficit, which is about 20 million units, developers have to be deliberate about their designs. You cannot deliver mass housing with imported foreign components and design.Just as one can build a three-bedroom house with N10 million, the same number of rooms can be built with N500 million. The difference is in the design and the finishing. So, the developer has to be deliberate about design. Again, our construction method has to change because it encourages waste. We need to curb waste in our construction through a deliberate design. On the part of the government, it has to liaise with developers because housing for all will remain a day dream until some of the problems in the housing industry are addressed. And the deficit is on the increase in the country,” he said.