For many Nigerians, access to decent and affordable housing remains a critical challenge. The housing challenge is made worse by the rise in rural-urban migration, which continues to stretch the limited public infrastructure in urban centres.
Currently, more than 28 million Nigerians lack access to decent and affordable housing. Recently, the Vice President Kashim Shettima lamented that despite efforts being made by governments at different levels to address the nation’s housing deficit, a lot needs to be done more.
According to Shettima, the country’s housing deficit requires N21 trillion to be effectively bridged. Shettima spoke in Sokoto at the groundbreaking ceremony of the construction of a 500-unit housing estate to be constructed by the Governor Ahmed Aliyu-led administration.
“Nigeria has a deficit of 28 million houses and we will need N21 trn to meet our housing needs,” he said. “This step taken by the Governor is highly commendable and worthy of emulation by other states’ governments.”
Of course, Nigeria’s housing problems are not new. The housing deficit has grown progressively from seven million housing units in 1991 to 12 million in 2007, 14 million in 2010 and subsequently 28 million housing units in 2022.
The combination of a growing urban population, lack of an efficient mortgage system, poverty, increasing construction costs, high inflation and declining household income, have made access to decent and affordable housing difficult for many Nigerians.
In 2019, the Central Bank of Nigeria, said only 10% of Nigerians who desire to own a home can afford it. When compared to 72% in the United States and 78% in the United Kingdom, the estimate is largely inadequate for the size of our economy.
Despite the enormity of the housing challenge, there is a lot that suggests Nigeria can turn the tide around, close the housing deficit and steadily provide for the country’s needs. The Federal Mortgage Bank of Nigeria (FMBN) estimates that N21 trillion will be required to close the housing gap.
This suggests that the government cannot address the challenge alone and, therefore, collaboration between the government and private sector players is needed.
More than at any other time in the country’s history, federal and state governments must collaborate and enable the private sector to invest in the housing sector.
At least, two factors justify the need for private sector participation at this time; the first one is that only the private sector can mobilise the level of funding that isc required to meet the deficit, the other one is that only the private sector can commit the capital required over a long term.
In addition to the private sector-led investment, the government can also collaborate with the private sector to provide low-cost housing schemes that can accommodate a larger segment of the economy, especially those in the formal sector.
To boost private sector participation, the Tinubu-led administration should provide an enabling environment through incentives such as tax concessions and eliminate bureaucratic bottlenecks in the land administration system.
Mortgage reform and an efficient credit system are equally required to maximise investment in the sector. The dwindling household incomes and low purchasing power of families as a result of inflation means not many Nigerians can afford a house.
It is noteworthy that in other climes, homeownership is often acquired under a mortgage system that does exert a strain on the finances of individuals.
Thankfully, Governor Ahmed Aliyu said that the 500-unit housing estate would be allocated to civil servants, who are mostly affected by harsh economic conditions based on an owner-occupier basis.
“This is a project that was initiated by the former governor of the state, Aliyu Magatakarda Wamakko, but it was later abandoned by the immediate past administration,” the governor said. “But we are determined to complete it for the benefit of our workers and the general public.”
The governor said the project, located at Wamakko Local Government Area, would cost the state government N7.3 billion to complete.
In the short run, the government should address the high level of inflation, which has led to a proportionate increase in the cost of construction materials. After all, there is no doubt that the housing sector is also affected by the general health of the economy. These, among other vital reforms, the Tinubu-led administration should undertake with a view to closing the housing gap in Nigeria.