Since the Economic Sustainability Committee (ESC) recommended that Nigeria should embark on mass housing targeting 300,000 housing units annually and also construct more public and rural roads as part of strategies to revive the nation’s economy post-Covid-19 pandemic, housing sector stakeholders have been talking. In this interview, GBENGA OLANIYAN, CEO, Estate Links Limited, examines the viability and dependability of this approachas a catalyst to economic recovery. He speaks with CHUKA UROKO. Excerpts
Federal government seems set to implement mass housing that targets 300,000 units annually alongside roads construction as recommended by the Economic Sustainability Committee. How feasible and viable is this approach to reviving the economy?
It is feasible as long as the government has the will and is able to provide the funding. With the quantum of buildings and roads to be provided, more money will be in circulation and people will be gainfully employed. With more money in circulation and a slight reduction in the unemployment rate, this initiative will contribute its quota to rejuvenating the economy. Of course, provision of more housing will ultimately reduce the housing deficit of about 17 million, albeit by a small margin.
Also, if it is to be embarked upon, bordering on our history with unfinished projects, firm contracts need to be drawn giving specific time-lines for delivery, before funds are committed.
How far can this go to really make impact on the economy?
One question to ask is, what is the direct impact of real estate/infrastructure on a nation’s economy? Real estate plays an integral role in the economy as it provides shelter for people to rest and for businesses to operate from. Increase in construction activity will definitely have a multiplier effect on economic growth with its linkages to various industries and sectors such as cement, steel plants, furniture, sanitary ware etc.
On reviving the economy, road construction projects might help as it bolsters transport and reduces economic hours spent on the road. There will be a spiral effect on other sectors of the economy such as the agric sector as cost of transporting goods ultimately means cheaper food.
In specific terms, what are the advantages of these projects as economic growth catalysts?
Talking about roads construction, this has great job creation potential. It is an immediate fix for the unemployed/underemployed populations which have increased, especially during this pandemic period. It would also create jobs for different businesses connected to the construction sector.
Good roads network reduces travel time. The poor state of most of Nigerian roads leads to un-quantifiable man-hour lost daily on the roads. Raw materials get damaged or lost, etc. This equates to loss of resources which will be greatly reduced if roads are worked upon and finished on time.
On its part, mass housing will mitigate the demand-supply gap we have currently. Supply of affordable housing as a large portion of resources for an average Nigerian goes to housing. Mass housing also creates jobs for individuals and businesses.
From experience and in our circumstance, housing is not always been a quick-fix solution to economic problems. What, in your view, could be a more viable alternative to this approach?
A more viable alternative would be to look into reviewing policies surrounding and affecting businesses in the country to support growth of businesses. A lot of businesses have been negatively hit by the coronavirus pandemic. This cuts across the SMEs to large corporations.
Particularly, developers in the private sector can be incentivised towards a more robust housing delivery. Tax holidays can be granted to the housing sector as well as duty waivers on non-luxury building materials.
With favourable policies in place, businesses can be resuscitated and investors would be encouraged to come into the country. Some of the policies in place in the country have so far stifled businesses. Also loans should be given with favourable payback conditions for both parties.
When the commerce of a nation is worked upon, it affects almost every sector, because firms can then begin to regain grounds, pay employees, expand, etc. There would be more money in circulation and is a win-win for all.
What insights can you share on infrastructure generally as an economic growth enabler?
An article on economicsdiscussion.net spelt it out this way: “It is worthwhile to mention some distinctive features of infrastructure – First, the building of infrastructure requires large and lumpy investment and they contribute to output, after a long time, that is, their gestation period is quite long.
Second, due to large overhead capital and lumpy investment, the significant economies of scale are found in most of them Due to the significant economies of scale found in many infrastructure services, they have the characteristics of natural money. The third important feature of infrastructure facilities is they create externalities.”
Source: Business Day NG