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Property Watch : Social housing shouldn’t be profit-driven –Okoro

Demography of investors in real estate sector

Talking about demography of investors in the sector, we mean the population of various investors in real estate sector in the past decades. I would say for the past 10 years those who actually invest in real estate are those who have access to fund and they are largely core business people and range between 40 and 70 years. They would have finished from school, done some work or didn’t perhaps work at all. May be after leaving the university, and having made some money, decided to go into real estate investment. The other segment comprises those who have worked for some time and had risen to the position of Managing Directors or Executive Directors in the banks and when they retire, with exposure to structuring and access to fund, they decided to go into real estate development; such people do well. We also have the other demography that is between 30 and 40 years. Those are the fresh graduates who apparently are working and either through a cooperative society of where they work or through special mortgage arrangement, they gain access to fund and decide to invest in real estate. The last segments are basically not investing for commercial purposes but to support their income. But those who are real heavyweight investors are between 40 and 60 years; they form property development companies, which they use to trade for the development of the sector and selling to interested public. On how that helps supply of housing, we have to realise that in Nigeria major property owners or housing developers who increase housing supply are mainly the government. And those who develop essentially for business purposes are not there to satisfy the need of all segments of the population. They go for areas that would give them best return for their investment and they fall under the auspice of Real Estate Developers Association of Nigeria (REDAN). They churn out houses and try to supply to the public, especially in Abuja.

The impact of these classes of real estate developers generally is that it has increased housing supply in the real estate sub-sector. I cannot say they have not made the desired impact because the achievement so far is much appreciated because there are better housing supply calls now than it was 30-40 years ago. People are becoming more aware of the need to invest in housing but the challenge is, they lack the needed capital to invest. Housing is capital intensive and not many people can boast of the capital needed to invest and those who have access to fund, particularly government, have been able to facilitate bodies such as REDAN, which they help by asking the Federal Mortgage Bank (FMB) to give money. But I don’t know how far government still intervenes now but if you look at the area of housing supply need, which is the area I’m interested in – social housing – you discover that no matter how big the supply of housing is by private investors, they can never satisfy the yawning need of a greater population of Nigerians looking for housing because social housing is not supposed to be profit driven, otherwise the common man would not have access to housing. So, government is supposed to empower social housing through local governments, churches, excess profit on oil dealing, encouraging oil companies operating in the country to embark on social housing not necessarily for profit. It is called social housing because they are those houses the private sector would not ordinarily be interested to invest in; so government would bridge the gap by making sure they do direct supply of houses for the common man to have access to housing.

Public Private Partnership (PPP) to housing supply 

The 3Ps is still profit driven. It can only increase the supply of housing but may not address the problems because it is still being done for profit motives. But if we are looking at housing that would address the need of the masses, it is actually the social housing. But in a 3Ps situation where government brings land, and investors bring the money, it will assist housing supply but would not reduce the price. Nonetheless, the Land Use Act is a serious militating factor against housing development in the country. The essence of the March 28, 1978 Act was to make land available for the federal government to have access to land. When the Federal Government was doing direct housing development in various states of the federation, lands were in the hands of traditional rulers and native ownership. They found it difficult to gain access to land, so government decided to enact the Land Use Act, making state governors the landlords and trustees on behalf of every person within the state. For instance, in Lagos State, anybody who wants to transact on land must pass through the governor. Even if one has a land, which one wants to transfer to any of his children, the person still needs to obtain the consent of the governor with payment of a fee. It is difficult for an individual to get a land from government. Meanwhile, the intension of the Federal Government in enacting the Act was to encourage housing development so that they can have access to land but that is not what we are seeing. The governors became so powerful now with the trustee position that even the Federal Government that created the Act cannot have access to land anyhow. If the Federal Government of Nigeria wants to come to Lagos to invest now, it would have to go through the governor to be able to get land. The state government on its part has not been able to assist the reflection of the Act for its intended public good. What they do is give land to whoever they want; sometimes to their political supporters. It has become a tool to punish those who are not loyal to their government and the political party. If the governor wants to disturb the property development of the opposition, he can do that because he is the overall landlord and this is why every effort being made in the National Assembly to review the Act has failed.

We must not forget that it is easy for governors to penetrate the National Assembly to make sure that they don’t review it or try to amend it, hence, every effort aimed at reviewing the Act, particularly as it is part of the constitution, has been to no avail. The amendment of the Act cannot be done without passing through the constitution and as long as there is not enough support to its amendment, it cannot work.

Overview of govt’s housing policy 

The truth is that looking at our budget from the military to date, one would notice that housing attracts one of the least provisions. It shows that our government is not interested in housing. One wonders if those in leadership understand the importance of housing to the Nigerian populace. It seems they don’t know that if a man who has been working for say 35 years is sure he is going to retire to his own house, he probably would not steal government money. During Obasanjo regime, government had what it called monetisation policy, where it stopped housing schemes for workers; this created pressure on government workers who are not sure of having their own houses. What it meant was that they became desperate such that it increased corruption. So, government has never planned or done anything concrete to ensure mass housing particularly through social housing. All the campaigns about ‘Housing for All by the Year 2000,’ and other plans were political, deceitful and a mirage that never took place and would never happen because of insincerity of government. It is not only a lip service, government lacks knowledge and awareness about the imperatives of housing in the lives of Nigerian people, otherwise, they wouldn’t be playing politics with it.

Reforming prevailing urban poor habitat

I have always been an interested advocate of social housing, which is an arrangement where government deliberately injects huge sums of money to create houses that are not meant for profit purposes. This can happen through the involvement of local governments as well as encouraging churches to also be part of it. When this happens, those people living under bridges and shanties would be housed. It is possible through special government investment policy, which would not necessarily aim at profit. But there are fears about government’s political will to embark on it especially now officials of government had tasted stealing money and stashing it to private accounts in oversea banks. The policy needs government with interest of the masses to get it done.

For any government that is interested, such needs to create a special agency to articulate investment in social housing without any motivation for profit. Government can also concede the responsibility to local governments. Churches ought to support their members to build their own houses.

I believe it is only government at the grassroots that can address the need of the rural masses because they are closer to them. Besides, it is easier for every commoner to have access to local government but the challenge is, government at the states’ level don’t encourage local governments to embark on their own projects. In most cases, state governments go upfront to take monies that accrue to them and hijack it from source thus incapacitating them financially. Yet, the responsibility still falls on the Federal Government to carry it out and where the state government cannot, perhaps because they are not empowered financially, the Federal Government can create other agencies to handle it.

However, I see that it will continue to remain a mirage because most governments are corrupt such that they are not thinking of the masses that voted them in their policies let alone arranging to embark on social housing. And this has deterred the achievement of sustainable economic robustness in housing development. Corruption is the bane of low-income earners’ home ownership. But if there is a good government with the political will to embark on social housing, which one of the ways could be by acquiring many acres of land, preparing it, sand filling and earmarking it, constructing roads and boreholes and alloting it to the people who actually need it and can show financial capability to a tune of N1 million. In fact, the person must have a job while those without job can be assisted through certain agencies like churches and local governments. And oil companies within the locality can also fund it as part of their social responsibility initiatives. They can build up the place to increase housing for the poor.

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