The housing deficit in Nigeria has grown significantly over the past eight years, mainly due to the forex crisis and the rapid increase in inflation rates, Josephine Ogundeji writes
The President, Maj. Gen. Muhammadu Buhari (retd.), made categorical promises concerning housing ahead of the 2015 presidential elections.
His manifesto read in part, “Amend the Constitution and the Land Use Act to create freehold/leasehold interests in land along with matching grants for states to create a nationwide electronic land title register on a state-by-state basis.
“Create additional middle-class of at least 2 million new homeowners in our first year in government and 1 million annually thereafter; by enacting a national mortgage system that will lend at single digit interest rates for the purchase of owner-occupier houses.”
Those were his pledges to Nigerians in terms of housing. He was subsequently elected the president on March 29, 2015. And as he rounds off his 8-year administration, the experts in the real estate sector have reviewed how the sector fared under his leadership.
It took the President six months to announce his cabinet. When he eventually did and named a former Governor of Lagos State, Babatunde Fashola as the Minister of Power, Works and Housing, it elicited some excitement among real estate stakeholders due impressive performance when he was at the helm of affairs of the country’s commercial capital.
The real estate sector contributed 7.54 per cent to the country’s economy in 2015. This was a reflection of the boom in the sector when Buhari took over the reins of power.
Barely a year that Buhari was in charge, the country plunged into recession in June 2016. Despite the economic contraction, the real estate sector contributed 7.14 per cent to the Gross Domestic Product at the end of 2016.
In 2022, which was the last full year that Buhari managed the Nigerian economy, the sector’s contribution to the GDP shrunk to 5.56 per cent.
According to the National Bureau of Statistics, Nigeria had a 17 million housing deficit as of 2015. This was one of the challenges Buhari pledged to address during his 2015 campaign. However, in the eight years of his presidency, the country’s homelessness challenge has worsened. The Federal Mortgage Bank of Nigeria puts the country’s housing gap at 28 million units as of January 2023.
Meanwhile, Fashola had disputed the figures of the country’s housing deficit, arguing there was no data to back the claim.
While presenting the scorecard of his stewardship in the last eight years, he disclosed that
Buhari’s regime had delivered 8,938 housing units across 35 states and the Federal Capital Territory.
However, the Federal Mortgage Bank of Nigeria stated that the country required about N21trn, at an average of 1 million housing units annually to close its housing gap. But it only currently adds 100,000 housing units annually, which is majority driven by the private sector.
Stakeholders lament lack of data
Lack of access to data also poses a major to the country’s sector. Experts have argued that the unavailability of housing data has made planning difficult in the real estate sector.
The country last had a population census in 2006. It was supposed to conduct the exercise every decade, but it has failed to do so in the last 17 years. This has created a data gap in the real estate sector. The government planned a population and housing census for March but due to the general elections, it has been put forward indefinitely.
Speaking during the ministerial roundtable held during the event, Fashola said that Africa had little or no information on deficits or housing needs of its population and called for more investments in data harvesting.
The minister, however, noted that the reliability of data sources must be unimpeachable as it can be dangerously interpreted if in the hands of the unskilled.
He said, “There is a need to address a very important subject and that is the subject of data. The first point to make is to acknowledge the critical role that data plays in development and planning because that can then allow you to make decisions based on precision.”
The Governor of Anambra State, Prof. Charles Soludo, recently raised concern about the insufficient information on housing in the state.
The governor bemoaned Nigeria’s millions of housing deficit, noting that Anambra lacked adequate housing data.
Land Use Act
There have been several calls for the review of the Land Use Act of 1978, as experts argued that it has been inimical to the growth of the real estate sector. The Act puts the control of land to the government.
While this legislation strives to harmonise the land ownership system and facilitate developmental endeavours, there has been a rising demand for its amendment or complete annulment.
Speaking on Act, a surveyor, Damola Isaacs, says the Land Use Act like every other law, is not perfect and should be reviewed regularly to accommodate the growing urbanisation of the country and allow for proper land administration in the states.
In an interview with The PUNCH, he said, “The Land Use Act was written with a military mindset, whereas input from land administrators and other stakeholders is important to have a law that is encompassing.
“Absolute power, they say, corrupts absolutely. I want to agree with those who are of the opinion that governors have been arrogated so much power under the Act. However, let us not forget that the number one person in any state is the state, so who else should administer land matters in the state if not the governor of that state.“
A Senior Advocate of Nigeria, Isiaka Olagunju, recalled that the Act was enacted to ease land administration in Nigeria, ensure equitable access to land, streamline and simplify the management and ownership of land, make land available to government at all levels for development, and improve tenure security.
He said, “With the powers inherent in the Act, the governor is more or less a totalitarian when it comes to the administration of land in his territory.
“The constitution and mode of operation of the committee are at the pleasure and exclusive discretion of the governor. Hence, there are no checks and balances in the powers of the governor to administer land in his territory.”
Digitisation of land title registers
Land titling remains a pressing concern in the country, as the digitisation of land titling registers has not been implemented uniformly across all states.
There is a need for governments at both federal and state levels to be transparent in order to end the controversy in the property titling process, a Senior Advocate of Nigeria, Ebun-Olu Adegboruwa, said.
He said, “70 per cent of cases in the court have to do with issues of property acquisition and taking over of land, and unless we get to a stage where the government can be transparent, the process of titling on properties will continue to be controversial.”
In the same vein, the Co-founder of Cuddle Realty, Escort Realty, Fabian George, noted that land documentation in Nigeria was a major issue that had hampered the country’s economic development for decades.
He said, “Only about 20 per cent of houses have their Certificate of Occupancy. The current system is plagued by bureaucratic bottlenecks and time-consuming processes, which have made it difficult for many Nigerians to obtain legal ownership of their land. The implications of this situation are dire, as it hinders economic growth, investment, and the proper functioning of the real estate market.
“Simplification of land documentation can help in revenue generation for the government in several ways. Firstly, it can help to increase the number of properties that are registered and, thereby, broaden the tax base. Also, simplification can help to reduce the time and costs associated with land registration, which can encourage more people to register their properties.”
Single-digit mortgage rates
Buhari’s administration pledged to create 2 million new homeowners in its first year and thereafter 1 million annually.
To achieve this, it proposed the establishment of a national mortgage system that would provide loans at single-digit interest rates for the acquisition of owner-occupied houses.
However, it was only able to build 8,938 housing units in eight years.
The Federal Mortgage Bank of Nigeria recently announced an increase in the National Housing Fund mortgage loan limit from the initial N15m to N50m per applicant. And despite the establishment of the Nigeria Mortgage Refinance Company, the mortgage rate is still double-digit.
A real estate expert, Timothy Gbadeyan, said the high-interest rate and low wages were among the major factors making it difficult for most Nigerians to access a mortgage to own a house.
He said, “Accessing a mortgage in Nigeria is at an interest rate of around 17 per cent or in some rare cases 16 per cent. If the bank wants to give you N14m and your salary is N120,000 in a state capital like Osogbo for instance. From that N120,000, your mortgage payment should not exceed N40,000. What kind of property will you be buying that N40,000 will be able to service your principal plus interest within a period of 10 years? So, when you look at a commercial mortgage, it is outside the reach of the masses.”
High inflation pushes building material prices up
The recent surge in building material prices has dealt a blow to the dreams of many prospective homeowners, dashing their hopes for lower construction costs.
Between January 2022 and May 2023, the prices witnessed a staggering increase of over 70 per cent, making it increasingly challenging for individuals to afford their desired homes.
This has been attributed to soaring inflation in the country.
The Consumer Price Index report, which measures the rate of change in prices of goods and services from the National Bureau of Statistics showed a slight increase in the inflation rate, soaring to 22.04 per cent in March 2023, from 21.91 per cent in the previous month.
A past President of the Nigerian Institute of Building, Kenneth Nduka, attributed soaring material costs to demand-supply forces, limited production capacity, and an insatiable desire for foreign goods.
Nduka expressed his concern regarding the absence of standards and price regulation in Nigeria, which had created opportunities for individuals to take advantage of the system’s weaknesses, leading to uncontrolled price hikes in materials.
Experts rate Buhari low
An analyst, Timi Olagunju said the Buhari administration achieved notable achievements in the housing sector, citing the completion of numerous housing projects and the construction of thousands of housing units across Nigeria.
He said, “Buhari’s regime failed on housing, although efforts were made to restructure the Federal Housing Authority to enhance its responsiveness and accountability. Babatunde Fashola, the Federal Minister of Works and Housing, claims that President Buhari delivered on his housing promises, resulting in the creation of 29,300 jobs.”
In the same vein, the Executive Secretary, Association of Housing Corporation of Nigeria, Toye Eniola, said “Mortgage market is still stagnated. Outside the NHF mortgage from FMBN which is limited, there is no single-digit interest rate anywhere in the sector both for homeownership and for development. Low and middle-income classes have been eroded as most houses in the market today are for outright sales which are unaffordable to these classes of people.”