Dr. Olajumoke Akiode
With housing production estimated at 100, 000 housing units per year, experts in housing industry have called for adequate housing finance for the low-income group, which constitutes larger part of the population.
According to them, the lowest recorded interest rate on a mortgage in Nigeria is 19 per cent, as of September 2016, while mortgage access requires at least a 25 per cent down payment and mortgage penetration is at 0.58 per cent of Gross Domestic Product (GDP).
However to change this narrative, the Heinrich Boll Stiftung Nigeria (hbs) and Arctic Infrastructure (AI) last week convened a training programme in Lagos on “Public Private Partnership for Affordable Housing and Housing Finance”.
At the training attended by representatives from the relevant government establishments, private sector housing developers, civil society organizations, community groups, academia and professional associations, stakeholders noted the acute challenge in fundraising for housing projects.
They said, there is need to enthrone sustainable housing finance models in order to meet the housing needs of the low-income groups.
While noting the continuous increase in population and the impact of cities like Lagos, which has been dubbed the “mega-city of slums”, they called for more innovative ways to get funding through public private partnership for housing projects.
Leading discussions on Public Private Partnership (PPP) for Housing Projects, Executive Director at the Center for Ethics and Sustainable Development, Dr. Olajumoke Akiode, said Nigeria is one of the many countries that have adopted PPP in the provision of housing at various levels of government across the country.
According to her, the PPP in housing provision started in Nigeria in the early 90s, after the 1991 National Housing Policy, which supported and promoted private sector participation in housing provision.
However, in practice these, she noted, have not always been achieved due to inadequate risk assessment and management as one of the major reasons for failures of PPP in housing.
“Like any other construction business, PPP arrangement is prone to risk. In fact PPP projects are perceived to have more inherent risks due to the involvement of many stakeholders with varied interests in addition to the economic, political, social and cultural conditions where the projects are to be undertaken.
“This, therefore underscores the importance of risk management in PPP projects which have been adjudged to be riskier than the traditionally procured projects”, she added.
Dr. Akiode however mentioned transparency, respect to the contracts’ specifications, value benefits to stakeholders, thorough risk analysis and stakeholder’s engagement as some of the factors for ensuring success of PPP.
Also, the Country Director of Cromwell Professional Services International, Mr. Sola Enitan, who facilitated the housing finance session, said over time, housing in Nigeria’s urban centres has been a subject of concern to every government as there always seem to be a shortfall.
This, he said, is especially true for Lagos as a state leading to several reforms and policy measures, which have addressed the housing needs to an extent.
He however, listed lack of strong political will, economic limits, ideological limits, lack of provision of construction materials, administration of construction process, nature of labour process, system financing as some of the limitations.
“Of all these limitations, it has been agreed that the one that stalls the effectiveness of most housing schemes is lack of a political will. When this is addressed, then financing a housing scheme will not become as tedious as it is in recent times”, he added.
Enitan outlined innovative building technology, tax holiday, off-taker mandates and removal of negative equity syndrome among others as, some of the strategies to be considered in enthroning sustainable housing finance models for Lagos and Nigeria in general.
Earlier, the Project Director of Arctic Infrastructure, Mr. Lookman Oshodi said the training becomes necessary in view of the acute challenge being faced by stakeholders in fundraising for housing projects.
He emphasized that the training programme exposed the participants to innovative and creative approaches of financing projects rather than full focus on conventional system.
On her parts, Mrs. Monika Umunna of Heinrich Boll Stiftung, Nigeria said the training was convened to strengthen the understanding of participants on PPP structuring, approaches, potentials and challenges now that many housing projects in Nigeria are being packaged using the PPP model.
Some of the participants at the programme expressed satisfaction with the new knowledge obtained including crowd funding for housing project, need for compensation fee or rejection fee for the bidders that are not successful in the bidding process and layers of housing acquisition loans and support mechanism that could be available in an organized but diverse housing market such as Lagos.
