How Budgetary Underfunding May Impede FG’s Housing Program In 2023
Hope of improved housing sector and infrastructure for Nigerians may be a mirage, following abysmally low budget allocation to the sectors in the 2023 fiscal year.
Although the N20.51 trillion proposed expenditure for 2023 is the highest in Nigeria’s history, The Guardian discovered that the expenditure in relation to Ministry of Works and Housing seems not to have shifted from that of the preceding year, as much of the spending is dedicated to uncompleted projects in roads and housing.
Specifically, the total budget for the ministry in 2022 was N515 billion out of which N441.1 billion was allocated for works, while in 2023, total of N300, 385,582.183 billion is allocated, capital projects would gulp N288.4bn, while overhead costs is allocated a sum of N667.8 million. The sum of N11, 240, 487.122 is earmarked for personnel costs.
In road construction, the Federal Government proposed expenditure of N175.4bn, out of this sum, N62 .2bn is to be spent on road rehabilitation and repairs, while another N45 billion is allocated to the housing sector.
Currently, the Federal Government owes contractors handling road and housing projects outstanding liabilities of N956 billion. Out of this, the government owes National Housing Scheme contractors N191.75 billion, while the remaining balance of N765 billion is owed to contractors handling road projects from the total contract value of N10.4 trillion.
During interaction withthe National Assembly, Minister of Works and Housing, Babatunde Fashola, said: “The National Housing Project is on course but the problems of paucity of funds through drastic budget slash and outstanding liabilities of N191.75 billion, need to be urgently looked into.”
He further said the challenge of highways development remains inadequate funding, adding that the government is committed to highway contractors to about N10.4 trillion, while about N765 billion are unpaid certificates for executed works.
The Chairman of the Senate Committee on Housing, Sam Egwu, told the minister to use the proposed N45 billion capital votes in the 2023 budget to complete the remaining 3,000 units of the 6,000 units national housing project.
Built environment experts, however, agreed that paucity of funds could threaten the provision of social housing, except government strengthens the frameworks for private sector participation.
They further said the allocation might not give professionals an avenue to showcase their competencies and emphasised that Nigeria is not spending enough to cater for the infrastructure needs of the projected 216 million population by 2023.
The President, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Johnbull Amayaevbo, said government’s allocation of a paltry sum to the two critical sectors of the economy shows the nation is yet to appreciate their contributions to socio-economic development, especially in reducing unemployment in the country.
He said: “Housing, they say, is next to food and in a country where we have a huge deficit in housing and 133 million people, who are poor according to the National Bureau of Statistics, show that there is a big problem.
“Budgeting the sum of N45 billion where inflation rate is so high shows that we have not started in the area of housing and the situation would continue to be a critical challenge.”
He said the funding challenges is a wake up call for the Federal Government to collaborate with professionals in the housing industry, especially the estate surveyors and valuers to proffer solutions and reduce the huge housing deficit in the country.
Amayaevbo said the government couldn’t do it alone; they need to partner with the private sector, create an enabling environment for citizens to trust government in terms of infrastructure provision, security and political will.
Property developers, he said, need encouragement such as tax waivers and loan facility to procure building materials, facilitation of land acquisitions and provision of infrastructure like power, water, road and public facilities.
“Government has been making promises in that regard but are they actually implementing those promises? How many stakeholders in the building industry were parts of the planning stage of the government’s programme?” he queried.
On challenges facing the road sector, he said: “Since the Federal Government passed the burden of paying compensation claims to states, they have not been able to achieve much. Government should change that policy. The Federal Government employs contractors and consultants to carry out valuation of property affected as a result of Right of Way, and then ask the states where the projects are domiciled to pay compensation, when they were not involved.
“That has brought delay in execution of projects. That is why we have abandoned projects. You cannot destroy peoples’ property without paying them.”
A professor of building at the University of Lagos, Martin Dada, said if there are projects that have not been completed, to avert the risk of abandonment, it is economical to complete such projects with available funds.
The major duty of government, he stated, should be to provide an enabling environment for the sector. However, he said, if government has the capacity, it should focus on provision of social housing.
Martin stated that a major way to fund infrastructure is through Public-Private Partnership (PPP), but warned that the process must be transparent.
“Oftentimes, PPP model is a way out but any private sector operator that wants to do PPP, will also seek an enabling environment with regards to the risks. To better the lot of Nigerians, including the professionals, local content law should be fully enforced in budget implementation, procurement of goods and services, science, technology and other projects,” he added.
The President, Association of Professional Women Engineers of Nigeria (APWEN), Dr. Elizabeth Eterigho, argued that the present budget provision for the two critical sectors don’t meet expectations of professionals in the construction sector.
Eterigho, said if the ministry removed the amount owed to contractors from the budget, the remainder will be too small to carry out other projects.
According to her, there is also need for proper justification why the government owes contractors such a huge amount of money.
“Monitoring needs to be strengthened. Has the government investigated what the contractors claimed to have done? And at what percentage of completion?
“The legislators should look at that. In Nigeria, we don’t have good roads. If you look at the amount budgeted in 2022, l don’t think the government captured all the roads. The point is, which of the roads have they started and completed or that was halfway in 2021 and was completed in 2022.
“The problem of roads has affected the economy generally. The people in the rural areas cannot come to the market because of bad roads. And when they come, there is an increase in transportation cost and where there is a hike in transportation; the sellers increase prices of goods. People in return buy something small at an expensive rate.”
She said if the 2023 budget is to be implemented correctly, the nation needs indigenous contractors/engineers for road construction, as well as proper supervision.
“We need 30 per cent female representation on board and across all sectors. We also need to improve maintenance of our roads before they go completely bad. The way roads are constructed in the North is quite different from the South. Same thing is applicable to building structures. If the government is using N45 billion to complete ongoing projects, it can mean no new provisions for housing in 2023.”
In terms of Science, Technology, Engineering and Mathematics (STEM) development, she said the ministry should lead, especially in areas of smart cities, amenities in estates using technology to bring it to reality.
“That will help in STEM development and having places to teach the young ones who are coming up on how STEM can improve the life of the people,” Eterigho said.