Real Estate & Construction

Somewhere To Live

Mass Housing

With an annual population growth rate of 3.5%, pressure on Nigeria to provide affordable housing to its 180 million citizens shows no sign of slowing.

The Federal government has promised to deliver 250,000 housing units per annum; however, this falls short of the 17 million units that are estimated to be needed by 2020.

Nigeria is not a novice in terms of kickstarting mass housing initiatives. Previous projects have passed without much glory, marked by inconsistency and unsustainable procedures. This is set to change, with “sustainability” being the new watchword for Buhari’s administration. According to Hon. Babatunde Fashola, Minister of Power, Works and Housing, the government has allocated NGN40 billion of this year’s capital budget to a comprehensive housing program targeting the mass housing market.

The government has acknowledged that housing Nigeria’s growing population is a feat that can not be achieved by the public sector alone, and that the involvement and investment of the private sector will prove essential to realize not only the successful completion of the project, but also keep the units up to standard. With this in mind, Nigeria plans to adopt design and construction standardization models that have proven successful in countries like the UK and Singapore, whose homogenization of working-class housing allowed governments to fast track the construction process by standardizing the size of doors and windows, as well as electrical and mechanical fittings and accessories. This design regulation will allow providers to standardize their products and manufacture them quickly. This model also facilitates a steady supply of building materials until completion of the units, as well as providing jobs across different towns and states across the country.
For many years a recurrent impediment for the proper development of these units in Nigeria has been the lack of financing mechanisms available to realize these projects, and mortgages continue to make up just a single-digit percentage of banks’ loan books. The federal government has directed the Federal Mortgage Bank of Nigeria (FMBN) and the Federal Housing Authority (FHA) to partner and employ their expertise in supporting the development of sustainable housing in the country. The two institutions have arranged the establishment of a Memorandum of Understanding (MoU), where FMBN will be in charge of providing financing through its mortgage scheme, while the FHA’s task is to provide adequate land for construction to take place in 34 of Nigeria’s 36 states.

Nigeria’s 17 million housing deficit presents not just a test of logistics and resources for Buhari, but also illustrates the need and subsequent adoption of a comprehensive approach that includes education and deep analysis of future trends. The lack of mortgage professionals in Nigeria needs to be addressed by promoting and improving the preparation of mortgage brokerage, financing and lending students. Charles Inyangete, CEO of Nigeria Mortgage Refinance Company (NMRC), explained, “In five years, we want have 400,000 mortgages accounting for 3% of GDP.” Targets are being raised; the NMRC, for example, is targeting a portfolio of at least NGN50 billion, close to 50,000 mortgages.

Following Buhari’s springtime trip to China, as well as Nigeria’s competitive construction industry, his administration’s call for support from the private sector is expected to attract some willing partners. If Nigeria is to house its population for the years to come, such alliances will be key. The challenge is to get the private sector to follow his administration into the business of mass housing, with an emphasis on affordability, rather than profitability.

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