Maduka Nweke; [email protected] 08034207864, 08118879331
Infrastructure are the fundamental facilities and systems serving a country, city or other areas, including the services and facilities necessary for its economy to function. They include public and private physical improvements such as roads, bridges tunnels, water supply, sewers, electrical grids, telecommunications, including internet connectivity and broadband speeds. In general, it has also been defined as the physical components of interrelated systems providing commodities and services essential to enable, sustain or enhance societal living conditions.
A roof over one’s head is one of the basic needs of human beings yet for many, it is out of financial reach as affordable housing aimed at providing the solution has eluded the common man. Public housing has been totaly neglected by government and scant attention from investors so far. This is as a result of infrastructure deficits within and around the cities.
According to the Demographia International Housing Affordability Survey 2017, there are several unaffordable major housing markets including China (Hong Kong), Japan, the United Kingdom, Canada, Ireland, Singapore and Australia. For the purpose of understanding the real meaning in financial affordability, it can be defined as cost of housing not exceeding 30 – 40 per cent of household income. Some governments who understand this around the world have started to take action in the direction of solution. Nigeria is yet to come to terms with what affordability entails so in place of that, Nigerian government tries to emasculate the common man to be able to force their obedience.
It is estimated that 54.5 per cent of the world’s population currently live in urban areas and this number is rising. The overcrowding of cities has driven up property prices for many making housing unaffordable. According to the McKinsey Global Institute, if current trends continue, the number of households that occupy inadequate housing or are financially stretched could reach 440 million (that gives around 1.6 billion people) by 2025. To fill this gap, the investment in construction alone would amount to $9-$11 trillion. With the cost of land, the total market value estimated could be as high as $16 trillion.
Governments, particularly in Nigeria and around the world, should start taking action to launch schemes and plans which aim to develop housing infrastructure.
The UK has announced plans to spend £3.7 million on affordable housing and housing infrastructure together. However, the affordability gap is too large to be met with government subsidies and income support alone. This is why market-based approaches are also needed in Nigeria bearing in mind that left alone for government to carry out, the aim may not only be defeated but totally killed. However, for the scheme to be a workable programme, there is very strong need for collaboration between government and private sector participants. The role of government is to provide the infrastructure like roads, electricity, and other social amenities while the private sector participants will carry on with the job of property development. The moment this collaboration is oiled, and relationship sustained, not only that housing deficits will drastically reduce, it will also crash property prices both at the sub-urban cities and the metropolitan cities.
The most powerful lever to create affordable housing in Nigeria is to reduce land and construction costs. Once this is done, the property market in the country will really be opened for business. This will also go a long way in developing satellite cities outside the big centres along public transportation networks as well as help to reduce land costs by more than 50 per cent. Private companies developing land in partnership with government entities as well as manufacturers of rail-based local transport systems should benefit in this context. Majority of times, it is not that government does not know what to do, rather it is that those in high level find it difficult to connect with those in the lower cadres. This results in government doing projects that are not directly beneficial to the targeted public. Professionals believe that adoption of productivity measures could result in savings of over 30 per cent. It is their opinion that architecture, engineering and construction companies that pioneer the use of these new technologies are best positioned to capture the huge demand for affordable housing.
What most successive governments don’t know is that alternative low-cost building materials can also provide meaningful savings. Operating and maintaining property at reduced costs contributes meaningfully to affordable housing as well. But these affordability cannot be achieved if there is no collaboration between government and private persons. Both government and private persons have roles in bringing the so much talked about affordable housing. If they play their roles, the stress of leaving the whole lot on the side of the private person will be reduced and when it is reduced, it will eventually snowball into reducing the finished cost per property. Companies providing insulation, windows, efficient heating and air-conditioning systems benefit from this multi-year trend.
Finally, providing access to affordable housing loans is the third lever of making housing affordable. Take, for instance, in many developed and developing countries, financial intermediaries purchase loans from banks and issue debt securities to investors. By securitising mortgage debt, investors obtain a claim on the underlying assets at a reduced risk. For borrowers, costs are lowered as they can access broader and better funding.
There are two general types of ways to view infrastructure, hard or soft. Hard infrastructure refers to the physical networks necessary for the functioning of a modern industry. These include roads, bridges, railways, etc. Soft infrastructure refers to all the institutions that maintain the economic, health, social, and cultural standards of a country. This includes educational programs, parks and recreational facilities, law enforcement agencies, and emergency services.