Land Use Act has remained a controversial law that has been blamed largely for challenges confronting housing development in the country.Added to this is also the unfriendly housing policies put in place by the government. Victor Alonge, a former Executive Director of London-based firm, Wilmont Chartered Surveyors, blames the failure of policies and government housing agencies for social housing failure in the country. He speaks with OKWY IROEGBU CHIKEZIE.
Notwithstanding the adverse effects of Coronavirus pandemic on the global economy, some stakeholders in the real estate sector have said the pandemic has been a blessing in disguise for the sector. What is your reaction to this?
People need to understand that there are coincidences in life. COVID-19 couldn’t have resulted in improved property sale just like that; if anything, it would have depressed it. What happened was that during the lock down and the virtual hurt of the economy, the financial authority came up with robust policies to encourage and help the economy and some of those policies were responsible for what we saw in the economy. One of such policies that have aided this robust growth was the CBN policy of cutting the deposit rate and scaling down interest rate on fixed deposits to almost one percent. This policy became a disincentive to savings in bank deposits to gain high interest rate. On its part, the stock market was not attractive. People saw property as a viable option as it had an advantage of where you can store your money. The fortune investors and operators made in real estate was not directly as a result of the pandemic but rather the pandemic made the monetary authority to discourage people to save their cash with banks by cutting deposit rate and by extension high interest. People on their own saw an opportunity in real estate acquisition because property has an advantage of providing an avenue to store your money. Our firm also saw a big improvement at the peak of the pandemic but like initially stated, it wasn’t a result directly from COVID19. It was as if the Central Bank of Nigeria (CBN) by their policy said don’t put your monies in the banks, go and invest in the real sector. The pandemic was not a time to build manufacturing outfits especially because of the insecurity problem. The leap in real estate sector at this time came as a result of the underlying financial engineering and monetary policy by CBN rather than anything else.
What is the contribution of the housing sector to the nation’s GDP?
The housing sector is supposed to be a major catalyst in the development of the economy. In the United States, this sector contributes over 60 per cent and in United Kingdom the same. Indeed it is the heart beat of the economy in Nigeria but unfortunately, it contributes barely five per cent to the GDP.
What do you think is responsible for this low figure?
Here in Nigeria there are all kinds of bottlenecks that make investment in the sector unattractive. Take for instance, the issue of land documentation and titling and the challenges associated with the Land Use Act. Operators in the sector have been calling on the government to expunge the Act from the constitution. This Act, and other factors, have made the sector fail to be a major contributor to the growth and development of the economy. The single biggest investment any individual can actually undertake in his life time is building his own house but the inherent bottlenecks are making it difficult for a lot of people to actualise this. There are challenges, for instance, the national housing policy is in complete shamble. The housing delivery framework and the procurement process are designed to fail. Direct delivery of housing by government should be a thing of the past because it has never helped. It is a major avenue for corruption. If government said they invested N10billion into the housing sector, the real value will be about N5billion. Look at the Federal Housing Authority (FHA) for instance, after about four decades what has been its impact? l can assure you that they may not have built over 50,000 houses across the federation. In fact, I doubt if they are anywhere near the figure, how will they get it? Does it make good investment sense to invest the kind of money that has been put into FHA since inception with little or nothing to write home about? How many people will they claim to have they housed across the nation? If we take a cursory look at the amount that government claimed to have invested in the agency and its achievement over time, it is nothing but a complete waste of resources.
What will you suggest the government do?
I suggest that we look at the developed economies and understudy how they do it. They make use of the subsidy system. This system works by looking at the housing delivery value chain. All the participants are incentivised by providing some kind of subsidy that will be redeemed upon delivery and performance of their respective schedule within the framework. There will be no need for government to give them cash; it can come in terms of material component of their activity. If there is foreign exchange there let them have it at the Central Bank of Nigeria (CBN) rate, tax holiday, tax relief all of which will be claimed after performance. It’s a system that is transparent and government will see the impact because at the end of the day all you want is for people to have access to decent housing. Most of the development you see in Ikoyi, Lekki, Victoria lsland, all in Lagos State and Maitama, Garki, Asokoro in Abuja or any other choice places are not the houses they are talking about because how many of those that are actually in need of housing can afford to pay rentals in these upscale places. A lot of people or companies that got licences for mass housing in Abuja for instance just get the land, convert it and sell it to people. The estates are developed as luxury. We need to be more serious about housing provision in this country and government involvement in it will not solve anything. If l may ask just how many of the 17 million housing gap have we closed? We have had this number since the military regime that means we have not done anything.
How did the country arrive at its 17 million housing deficit figure? Are there available data to prove this?
Statutorily, housing data should be prepared by the government with the support of international agencies because it is used for developmental planning. On a yearly basis, government is supposed to accommodate and budget large sums for housing.
What is your take on housing delivery and subsidy?
We are supposed to have a National Development Plan for housing in the short to medium term. Housing growth should be monitored through allocation to the citizenry by measuring its impact in terms of physical delivery. We need to provide houses for teachers, social workers, civil servants. If we have a proper housing policy it does not mean that teachers or journalists cannot live in Ikoyi. The point actually is that if we have a national housing policy that is geared towards incentivising and subsidising the housing delivery process anybody can live anywhere especially if you have identifiable means of income . Now, part of accessing the housing delivery subsidy incentive will be for instance if you are developing in Ikoyi or Maitama, Abuja for instance about 15 housing units, the developer will be made to sell some with huge discount, say five units because the government have already given them subsidy while developing the houses covering the numbers that he will not at a premium. In advanced economies, government do this because they will be need for nurses, teachers, social workers and civil servants to live within the community. In England it is called “Section 106 agreement” which stipulates that if you are building houses, one of the conditions for development and planning approval is that a percentage of it will be reserved for social housing for these category of people such as civil servants, nurses , health and social workers. The local authority or government will take it and let it out, the people will pay but not at a premium. I don’t know how many teachers, health and social workers live in Ikeja GRA for instance and are paying the rentals?
How will you describe the country’s national housing policy?
We need a national housing policy that is encompassing; that will look at the country and her challenges in the housing provision to address the needs. All these direct construction of houses by government is not productive. Government will do more by deploying the resources they are using for direct construction of houses into subsidy and looking at the value chain in the housing delivery chain and targeting them for subsidy. The current idea of government building houses and directly allocating to the public is good for politics but we should ask ourselves what they are building and advertising, what is it compared to the 20 million housing gap. Private developers are just looking at government do their thing and any little opportunity they get they go into high income premium housing for the return on investment. Government does not have the moral compass to decide for commercial developers how much to sell or let their houses.
Since the government seems to have failed as far as housing provision is concerned why are professionals who know what to do refusing to join politics to change the tide?
Some professionals are in politics, after all the Senate president is a Land Surveyor. We have accountants, quantity surveyors, estate surveyors, lawyers etc. The Speaker of the House of Representatives is a lawyer. But I think we have them more in the accounting sector. The housing sector is under represented; the estate surveyors and valuers are grossly missing that is why the housing sector is suffering. Land surveying impact in the housing industry is minimal; they can function in policy and the finance sector of housing delivery. In terms of tailoring policy to meet need, understanding demand, processing it, we are better as estate surveyors. Unfortunately we don’t have the number and have not been able to present argument in the highest level. In terms of syncronising finance, brick and mortar and understanding the sociological needs of the people,we Estate Surveyors & Valuers are better trained and qualified.
It is believed that government has no business in housing provision. But the late Alhaji Lateef Jakande, during his tenure as Executive Governor of Lagos State, was said to have implemented a good social housing policy. Why can’t such be replicated?
Alhaji Jakande was a major success no doubt. The approach in those days is that contractors funded those projects before they are paid. If you look at that approach, it was more of individual contractors acting as developers because government will allocate land and ask the contractor to go and build like 500 units here and there. They will agree and you get paid after. It was successful because it addressed the low income earners which were good and then the population then is different from what we have now.
Can there be affordable housing in Nigeria?
If there is no affordable housing, the deficit and gaps would never be addressed. Government has to have a conscious decision and policy to provide affordable housing and also social housing which is at the bottom of the ladder. Housing need of critical strata whose income will not allow them to compete favourably must be accommodated by government policies. Developers should be encouraged and the cost structure agreed upon. Government does not have the right to put a price on rentals when they didn’t have significant input in its coming into being.
Source : The Nation