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Housing Seminar

Housing Seminar

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Write -up on Housing problem and affordability.
Write -up on Housing problem and affordability.

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INTRODUCTION

While decent housing is important to every individual and nation, housing crisis remains one of the global problems and a grave and rising challenge facing both urban and rural residents, particularly in most developing countries. Thus, in spite of a number of political, social, and religious initiatives taken in the past in some of these developing countries, a great proportion of their population still live in substandard and poor houses and in deplorable, unsanitary residential environment. In Nigeria, though housing provision by the government commenced before the country got her political independence from Great Britain on October 1, 1960, the housing problem in Nigeria still remains intractable as many rural and urban populations in the country do not have access to decent, safe, and affordable housing. This paper attempts to show an overview of the affordable housing delivery strategy taken by government and private enterprises in Nigeria over the years, revealing that Nigeria’s impressive housing policies and programs are rarely implemented or haphazardly implemented. The housing delivery strategy in the country is, therefore, a classical example of politics of many words, but little action. The paper suggests that urgent steps need to be taken to bring about the much needed improvement and transformation in the Nigerian housing sector. It also advises the government to back up its many lofty initiatives and efforts with necessary political will and commitment, using cooperatives, development agents, and partnerships through Public Private Sector Participation (PPP).

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STATEMENT OF THE PROBLEM
Housing (adequate shelter) is recognized world-wide as one of the basic necessities of life and a pre-requisite to survival of man (Onibokun, 1983; United Nations, 1992; Salau, 1990). A house is a place in which it provides shelter, refuge, scomfort, security, and dignity. The housing industry can be a stimulus to national economy (Onibokun, 1983). A house also provides the physical framework in which human, social, economic, and cultural resources are realized, enriched, and integrated. In the traditional African setting, in particular, housing is, in fact, one of the greatly cherished material properties. This is because of the other functions that a house performs in the traditional society includes the protection of family cohesion and values, taking care of the aged through the extended family system, and the protection of the ancestral values, among others. Thus, the importance of providing adequate housing in any country cannot be overemphasized. However, in spite of the fundamental role of housing in the life of every individual and the nation, and in spite of the United Nations’ realization of the need to globally attain adequate shelter for all, the housing crisis remains one of the Journal of Sustainable Development in Africa (Volume 12, No.6, 2010)ISSN: 1520-5509 Clarion University of Pennsylvania, Clarion, Pennsylvania global problems and a grave and rising challenge facing both urban and rural residents, particularly in most developing countries. It is generally estimated that the world needs to house an additional 68 million to 80 million people (Awake,2005). According to the United Nations Population Fund (Wikipedia, 2003), world population passed 6.1 billion in 2001 and it is expected to reach between 7.9 and 10.9 billion by 2050. Over 90% of the growth during the next two decades is forecast to occur in the developing countries. Those estimates represent a formidable housing challenge. The situation even becomes more serious and worrisome when one realizes the fact that despite a number of political,

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social, and religious initiatives taken in the past in some of these developing countries, a large proportion of their population still lives in sub-standard and poor housing and in deplorable and unsanitary residential environments. This is particularly so in Nigeria, where housing provision by government commenced before political independence in 1960 and where, despite various government interventions and huge investments in housing provision, the housing problem in the country still remains intractable as many rural and urban populations in Nigeria do not have access to decent, safe and affordable housing. This, according to Onibokun(1990), is as a result of the inability of government to provide housing to the populace. The level of production of housing in a developing country like Nigeria is only 2 dwelling units per thousand people, compared to the required rate of about 8-10 dwelling units per 1,000 population as recommended by the United Nations(Anthonio, 2002). It is against this backdrop that this paper attempts an overview of government housing delivery strategies in Nigeria over the years with a view to identify corrective measures that are needed to better the shelter and living conditions of the generality of Nigerians. The paper is structured into four parts. Following this introduction, section two focuses on the need for affordable housing, then characteristics of the Nigerian housing scene, while section three gives a detailed review of successive government and private interventions in housing.

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Home prices and rents. This is about 4 times the annual national budget of Nigeria (FHA. 4 . Nigeria will then be the 8th most populous country in the world (Encarta. A recent study of housing situation in Nigeria put existing housing stock at 23 per 1000 inhabitant. have grown ahead of general inflation. the resulting social. 2008). 2007). As more and more Nigerians make towns and cities their homes. environmental and political challenges need to be urgently addressed (Raji. Rapid growth in population creates demand pressure towards shelter and efficient supply and distribution of basic utilities and services for the city dwellers. The effect which is manifested in overcrowding in houses. 2008). The United States Census Bureau projects that population of Nigeria will reach 264 million by 2050. 2007). Nigeria is perhaps the fastest urbanizing country in the African continent. In most of our urban centre the problem of housing is not only restricted to quantity but to the poor quality of available housing units. 2007). One of the most important challenges facing the country is the provision of affordable housing. Housing deficit is put at 15 million houses (Mabogunje 2007) while N12 trillion will be required to finance the deficit. economic. Making matters worse. and predicted that it would reach 289 million by 2050 (Encarta. on the other hand.Need for affordable Housing The United Nations estimates that Nigeria’s population in 2005 stands at 141 million. the composition of homes for sale and rent on the market has been inexorably shifting towards very expensive home (Nubi.

Under the National Housing Fund (NHF) programme initiated in 1994. the country could at best expect 4. Between 1975 and 1980. Housing delivery in Nigeria is provided by either the Government or Private sector. Housing unit is treated as product hence the need for quality if it is to pair well and perform desirably in the market.000 per state before year 2007. 1998.000 housing units planned to be delivered between 1981 and 1985.6%) was constructed. but despite Federal Government access to factors of housing production.8 million. Research has shown that 75% of urban housing is situated in slum conditions (UNDN. 2003). the ministry of Housing and Urban Development declared that the country needs about 10 million housing units before all Nigerians can be sheltered. Agbola and Olatubara. Also.1988). In spite of a series of government policies towards housing delivery.000 housing units.The National Rolling Plan of 1990 – 92 estimated housing deficit at 4. The documents indicated that not less than 60% of the new houses are to be built in urban centre.500 units. and indeed the quality of the housing is poor and clearly an affront to human dignity (Olotuah. 1985). Agbola. one thing that is clear is that. Historically. only 47. to produce 121. 1997. it was believed that less than 5% was achieved.000 housing units to the public but only 28. Adegeye and Ditto. The 1991 housing policy estimated that 700.000 housing units are to be built each year if housing deficit is to be cancelled.200 (23. there were plans of deliver 202. there exist a gap between housing supply and demand (Olomolaiye.1% was achieved. but quality in construction industry suffers significant difficulty as it passes through extreme pressure driven by cost minimization rather than value maximization. Substantial 5 . out of 200. representing 14. 1999. In 2006.2% of the annual requirement.000 houses and at least 1. As part of effort to increasing qualitative housing for the masses in the country. the Federal Government in 2004 pledged to adequately fund research pertaining to the manufacture and the use of local materials in the sector with the aim of providing 40.

which account for 65% of urban population growth. 1983). It should be acknowledged that private sector developers account for most of urban housing (FOS. Appreciating these problems. It could be possible to solve the problem if housing were used only for shelter needs.contribution is expected from other public and private sectors. deficiency of housing finance arrangement. Unfortunately. 2000). in addition to serving as a shelter. it is important that house is a building block in its relations with its environment. housing is also a produced commodity. Due to housing demand created by rural. 2008).urban migration. means used for reproducing social relations and an investment tool protecting the value of money against inflation. it can be accepted that a large housing stock is available today as a result of new presentation forms and production processes with a high volume of housing production. stringent loan conditions from mortgage banks. approximately 90% of urban housing is produced by private developers. consumer good. government policies amongst other problems have affecting housing delivery significantly in Nigeria ( Raji. With different Policies and user solutions that are abound for the purpose of reducing quantitative housing deficiency. and inflation of rental and housing ownership cost (taylor. assurance for families. the private sector is saddled with numerous problems which make supply always fall far short of demand and lower production quality (Nubi. mutual interaction and increasing the quality of its environment when it is considered as a part of the city. The production of housing in Nigeria is primarily the function of the private market. 6 . However. However. In this context. the fixed supply of urban land. the existence of this stock shows that the housing policies are planned depending mostly on production. 2008). The problem of qualitative housing has been a concern for both the government and individuals. both public and private sector developers make effort through various activities to bridge the gap between housing supply and demand. but the cost of building materials. Moreover.

even though there are no accurate data on the nation’s housing stock. while the estimates for the year 2020 stands at 39.548. 1983. and low income groups.770. medium and low income groups. 7. In Nigeria. 1997.570. Agbola. earlier studies and observations strongly suggest quantitative and qualitative housing problems across the country (Onibokun.419.900. indicated that no fewer than 60 percent of new housing units were to be built in the urban centers (Ogu & Ogbuozobe.980. Thus. respectively. and 28. Adeagbo. Abumere. and the growing inability of the average citizen to own their own houses or procure decent accommodation of their taste in the housing market. A study by Onibokun (1990) estimated that the nation’s housing needs for 1990 to be 8. 2000). The same study projected the year 2000 needs to be 14. The document.989. 13. to the emergence and proliferation of the slums/squatter settlements.291 and 12.33. 7 .372. Egunjobi. Olatubara. in fact. 1998. the rising cost of housing rent. 1999. medium.413.8 million to 5.633 housing units for high.CHARACTERISTICS OF THE NIGERIAN HOUSING SCENE The ever mounting crisis in the housing sector of the developing world has various dimensions. Federal Office of Statistics. 2008). Mabogunje 2003. respectively (Agbola. Olateju (1990) was of the view that the increasing high rent is a pointer to the fact that there is a decrease in housing stock.9 million by 2000 The 1991 housing policy estimated that 700.286.230 units for the high. which range from absolute housing units shortages.624. 1987. 2008. 1997. 1998.. Ademiluyi& Raji.273. while Fadahunsi (1985) observed that policymakers in Nigeria are not really aware of the magnitude of the housing problems facing the low income earners in the country.068.000 housing units needed to be built each year if the housing deficit was to be cancelled.Olokesusi & Okunfulure. the national rolling plan from 1990 to 1992 estimated the housing deficit to increase between 4.900. Again.005 and 7.

Existing data shows that while 72. successive governments in Nigeria have intervened in a number of ways in the housing sector in order to bring about the much needed improvement and transformation. 2000). politicization. a very minute percentage is always met. have more pit constructions than other better and more ideal provisions. enunciated. 8 . Federal Republic Nigeria. Despite this confusion as to the number of new additions. especially those portrayed by the availability and efficiency of facilities and utilities. This could be attributed to the fact that most government housing programs have been frustrated by corruption.34% in 1995/96 (Federal Office of Statistics. Also. 1991). Housing conditions. Another estimate in 2007 by the president put the national housing deficit at between 8 and 10 million (Yar’adua. The same trend existed for most neighborhood facilities and utilities within the country. which increased from 25. etc. it has been quite obvious that a critical gap exists between the housing supply and demand. This figure had increased at the time the 1991 housing policy was being reviewed in 2002. and have made efforts to actually deliver new housing units. In response to these housing challenges. have been worsening since 1980 (Olokesusi & Okunfulure. this proportion declined to 54. 2000). Nigerian governments. 2007).2001. Toilet facilities. out of their targeted provision. since pre-independence. especially those concerning water supply road construction. sewage. insufficiency of technical staff at building sites. the Minister of Housing and Urban Development declared that the country needed about ten million housing units before all Nigerians could be sheltered. the reasons why successive governments have made policy statements. This is evident from the construction quota.3 percent in 1993/94 and 62 percent in 1995/96.6 percent in 1980/81 to 63. for instance. have shown a remarkable concern for housing.4% of urban households were connected to electricity in 1980/81. 1999). In 2006. However. and lack of infrastructure (Olokesusi & Okunfulure.

continue to place access to affordable housing at the top of their priority lists (Encarta Interactive World Atlas. in one form or another. most nations. towards solving the housing crisis in the country include: (i) The establishment. (ii) The setting up of Nigerian Building Society (NBS) in 1956 to provide housing loans to both civil servants and the Nigerian public. including FCT Abuja. 2007). of the Lagos Executive Development Board (LEDB). and electricity for housing developments in well-planned environments. and the development of residential and industrial estates.The project was embarked upon to demonstrate the feasibility of constructing functional.GOVERNMENT INTERVENTIONS IN HOUSING PROVISION Because shelter is necessary to everyone. drainage and sewage system. water supply. 9 . and affordable housing units through imaginative designs. so far. land reclamation. in 1928. effective. The Board was empowered to carry out slum clearance. the major steps taken. (iv) The establishment of the National Prototype Housing Program (NPHP) by the Federal Ministry of Works and Housing (FMWH) to complement the objectives of the National Site and Services Scheme (NSSS). judicious specification of materials. (iii) The creation of the National Site and Services Scheme (NSSS) in 1986 to provide land with essential infrastructural facilities. and efficient management of construction. such as roads. The schemes are planned to provide well laid-out and serviced plots in each of the 36 state capitals of the federation. In Nigeria. Thus. but to governments as well. the problem of providing adequate housing has long been a concern not only to individuals.

(xi) The review of the mandate given to the Federal Housing Authority (FHA) to include provisions of the National Social housing as part of the strategy towards meeting the Millennium Development Goal. (vii) The setting up of the National Housing Program (NHP) in 1991 and the National Housing Fund (NHF) scheme by Decree No 3 of 1992 to provide self loans to prospective housing developers and also monitor developments in the housing sector. (xii) Others are the formulation of the National Housing Policy (NHP) in 1984. (viii) The deconsolidation of the Federal Mortgage Bank of Nigeria (FMBN) through the establishment of the Federal Mortgage Finance Limited (FMFL) to take over retail mortgage portfolios previously handled by the bank and also to facilitate effective management of the National Housing Fund (NHF) Scheme. 10 .(v) The setting up of the State Housing Corporation (SHC) to provide housing to the populace at affordable prices. (x) The creation of the ministry of Housing and Urban Development in June 2003. and the Urban Development Bank (UDB) in 1992 (Federal Republic of Nigeria. (ix) The setting up of a Housing Policy Council (HPC) to monitor development in the housing sector and also to set up the machinery for the review of the 1978 Land Use Decree (LUD) in order to make more land available for large scale land developers. 1997). (vi) The creation of the Federal Mortgage Bank of Nigeria (FMBN) in 1977 to finance housing loans to prospective housing developers at minimal interest rates. the establishment of the Infrastructural Development Fund (IDF) in 1985. The authority also plans to facilitate the provision of two million housing units within the next four years.

There was marginal improvement at the end of that period. virtually all the introduced National Development Plans (NDPs) from 1962-1985 and the National Rolling Plans (NRPs) from 1990 to date explicitly recognize the importance of providing adequate housing in the country as a tool for stimulating the national economy (Gbolagade. A low proportion/percentage achievement was recorded. increased construction of housing quarters for government officials. on the legal and regulatory framework for enhancing housing delivery. The Insurance Act 2002 (amendment) 8. The Mortgage Institution Acts 1992 (replacement) 4. eight (8) housing related laws are now before the National Assembly. The Investment and Securities Act 1999 (amendment) 6. Highlights of the programs include: direct construction of low-cost housing units by both the federal and state governments. 11 .000 housing units (15.000 units in Lagos and 400 units in each of the remaining capitals).Furthermore. The Trustees Investment Act 1962 (amendment) 7. The Social Insurance Trust Fund Act 1993 (amendment) 5. 2005). The Federal Mortgage Bank of Nigeria Act 1977 (replacement) 2. The Land Use Act 1978 (amendment) In addition to the above. The National Housing Fund Act 1992 (replacement) 3. Efforts were intensified in the Third National Development Plan (1975-1984) to improve the condition of the housing. They are: 1. The First National Development Plan (1962-1968) accorded low priority to housing with focus on accommodating government staff in the regional capitals and Lagos. In the Second National Development Plan (1970-1974) the target was to construct 60.

474 plots of the three residential categories to the public.3% was recorded. efforts were intensified on the sites and services scheme. Lagos. while the second phase commenced in other states. state housing corporations. During the plan period.000 units for Lagos and 8. During the plan period.000 low cost housing units across the country. Ondo.5 billion was allocated to the housing sector with a target production of 202. During the Fourth National Development Plan (19841985) period. Kano.000 units (50.expansion of credit facilities to enhance private housing construction.000 units for each of the. Site and Services Schemes were also to be provided. On prototype housing schemes. The impact of FHA was also felt in Lagos and Abuja. then. and private estate development firms. At the end of the plan period. while the FHA was to construct about 143. while the construction of 218 units commenced in Lagos and Abuja. three schemes were embarked upon: the direct housing construction. a success of 13. the Federal Ministry of Housing.892 serviced plots were provided in Anambra. During the 1990-1992 rolling plan period. During the 1994-1996 rolling plan. Urban Development. 72 housing units were constructed and allocated in 1990. The Housing Policy Council was also set up to monitor development in the housing sector. Kwara. and increased investment in domestic production of cement. Imo. and Environment was created while the Federal Government bought over the shares held by the Commonwealth Development Corporation in the Nigeria Building Society and converted it to the Federal Mortgage Bank of Nigeria (FMBN) with an enlarged capital base from N21 million to N150 million to provide loans to individuals. The 1993-1995 rolling plan period witnessed allocation of about 10. At the end of the period. under which 2. a success of 20% was recorded. the national housing 12 . 3 of 1992 was promulgated and Primary Mortgage Institutions (PMIs) were licensed. About 2.000 housing units were to be built in each state annually. and Rivers states. the National Housing Fund Decree No. A sum of N2. 19 states).

due partly to the absence of the national data bank on housing. by the first quarter of 1997.000 houses with at least 1.000 housing units of various models all over the country by the end of 1996. However.000 housing units had been completed. As part of the efforts to increase houses for the masses in the country. with the aim of providing 40. Over N3. There is often a wide gap between what is on paper and what is happening on the ground. Inconsistency in government policies and programs. 2.program was launched with the target of constructing 121. These include: 1. actual achievements in terms of providing adequate housing in the country remain essentially minimal for a number of reasons. only 13.000 per state before year 2007. Federal Republic of Nigeria. 3. Problem of plan implementation. Despite these interventions and efforts by the governments. For example. little had been done to meet this target barely two months into the year 2007. Lack of efficient and sustainable credit delivery to the housing sector.0 billion on housing provisions during the 1996-1998 National Rolling Plan (NRP). The federal and the state governments were expected to spend N2. including frequent changes of policies with changes of government and without proper assessment of the existing ones. 2000). fewer than 2. the Federal Government in 2004 pledged to adequately fund research pertaining to the manufacture and the use of local materials in the sector. However.00 billion was expected to be spent by the two levels of governments during the 1999-2001 National Rolling Plan (Federal Republic of Nigeria. Lack of adequate data relating to the magnitude of the problem. 2002). 13 . 4.3% achievement was recorded in the federal government’s housing program in the Third National Development Plan (Mabogunje. 1998. as observed by Ademiluyi & Raji (2008).

8. according to UNDP and World Bank estimates. For example. The rapid annual growth rate of the Nigerian population.6%) were constructed. the situation in the Nigerian housing sector remains like that of a child to whom much is promised but little is delivered.000 housing units to the public. between 1974 and 1980. initiated in 1994 to produce 121. 200 today. including government involvement in what Onibokun (1983) referred to as the ‘game of number’. 14 . Also.500 units representing 14.1% were delivered. People’s incomes are relatively low in comparison with house market prices. Coupled with the rapid population growth/urbanization is the problem of an increasing poverty level among the citizenry.000. which has risen from 65% in 1996 to about 70% in 2007.000 housing units. out of 200. High cost of building materials. For instance. 7. Politicization of housing issues. While all the three tiers of the government are involved in one way or the other in housing matters. one thing that is clear is that successive governments in Nigeria have not been able to match their words with action.200 (23. Under the National Housing Fund (NHF) program. 6.3% on the basis of annual birth rate of 49. their activities are hardly coordinated.000 housing units planned to be delivered between 1981 and 1985 only 47.5. 9. but only 28. there the plan to deliver 202. In spite of a series of government policies towards improved housing delivery. resulting in an affordability problem. that there exists a gap between housing supply and demand. therefore. it was reported that less than 5% was achieved. Lack of effective coordination among Housing Agencies. which was estimated at 3. In fact. a recent survey has shown that a 50kg bag of cement has risen from N650 in 2000 to about N2.3 per 1. It is no surprise.

and for which must be institutional capacity. Commercial/Merchant Banks. since housing provides benefits over many years. structure and mechanism that will allow a convenient and effective linkage between the savers/investors and the consumers of such funds. no housing policy can be effectively implemented. Insurance Companies. and money lenders who have contributed and are still contributing substantially to the finance of housing construction also persists.PRIVATE INTERVENTIONS IN HOUSING PROVISION Housing Finance Requirements Housing finance by its very nature is a capital intensive venture which if it is to be financed through personal financial resources will require slow and tedious accumulation of savings. The impact of these informal institutions however cannot be properly quantified because they are largely uncoordinated. the emphasis in this review will be on relevant institutions and their activities. scattered and varied in scope and operational depth. But this requires the availability of long-term funding. Informal institutions such as thrift and credit societies. However. 15 . long-term credit financing is a more logical option as it will spread the repayment burden. Without an effective finance system. Indeed the framework must effectively reconcile the affordability limitation of households with viability requirement of financial institutions. However. In Nigeria. housing is typically financed through a number of institutional sources: Budgetary appropriations. State Housing Corporations and the Federal Mortgage Bank of Nigeria (FMBN): and now the newly established Mortgage Institutions all these constitute the formal institutions. A financing framework which facilitates financial intermediation for housing finance consists of institutions as well as their relationship and the processes involved.

0 billion Naira from the capital market just to be able to fulfill part of their promise of housing. 16 . It is on record that the State is seeking to obtain 4. major housing projects were financed directly from budgetary appropriations. cost of housing construction oscillated. With resources allocated by the various development plans especially the Third and Fourth National Development Plans. (b) Apart from its regulatory role. Given the import dependence on building materials. A major reason has been.000 housing unit per year for the next four years of mix development for the people of the state. But definitely it all boils down to finance.Budgetary Appropriations For various reasons. For example the new government of Lagos State is currently embarking on the provision of 10. the nature of Government intervention. (a) Fiscal policy alternated between stringent and liberal control on imports. government at the Federal and State level was also engaged in direct housing construction. until very recently. How realizable this scheme is only time will tell. depending on the buoyancy of hard currency earnings. The results were insignificant impact on housing need and attendant cost inefficiencies. Little or no role was allowed the Private sector in Housing Finance. the public sector embarked on the direct construction of mass housing. This emphasis on budgetary appropriation was mainly during the oil boom periods of 1973/76 and 1980/81. the expansion in the external sector of the economy as well as the consequent expansion in the financial system did not translate into any significant improvement in the level of financial intermediation for housing finance. There were few peculiar features of implementation in the respective periods of the plans which have had a direct bearing on Housing finance activities.

with the deregulation of the financial system since 1986. 16.5% in 1988 (see table 2). In consequence. The situation was compounded by the strict regulation of credit expansion which.(c) Although the Third and Fourth plans placed emphasis on a housing sector. while for Commercial Banks it declined from 20.5% in 1985 to 12.5% in 1987 (see table 3). In the event. the operational dependency and Sophistication which a greater presence from the private sector could have induced in the Housing finance system did not take place. the commercial and Merchant Banks have not gone beyond allocating 20% of their loans and advance into building construction for many years. Indeed. there was little evidence of financial presence from the private sector in public Sector housing finance activities. Inspite of their importance in financing the construction of housing.5% in 1987 and 15.5% in 1985 to 18. (d) The institutional structure for mortgage finance did not evolve beyond rudimentary stage. has compelled the financial institutions to remain largely in the short-term end of the credit market. 17 . the percentage share of real estate and construction in total loans and advances has declined for Merchant Banks from 16.3% in 1986 and 7. until the recent deregulation. This is because of the relative slow rate of returns and the interest rate and inflation risks inherent in long-term lending.1% in 1986. there was no adequate allocation of funds.

6 (N313.2m) 12.6m) 63.8 (N335.7m) 7.5 (N297.5 (N311.Table 1: Merchant Banks – Real Estate % Share and Maturities Real Estate/Construction as a Year percentage of loans & advances (A) Call money to 3 years maturity as percentage of all deposits (B) 1984 1985 1986 1987 1988 18.6 60.1 (N335.1 Sources: CBN Economic & Financial Review 18 .7m) 16.9 59.8m) 7.4 60.1 63.

7m) 18.4m) 15.840. The Commercial rate of interest offered.7 90.5 (N2.1% in 1988.4 Source: As in Table 1 An examination of the maturity profiles of deposits with commercial and Merchant Banks shows the dominance of call money to 3 years maturities which are mismatched to the longterm nature of housing finance. the average remains 88. although the percentage of call money to 3 years maturities to all deposits for Merchant Banks declined from 63. the shortage repayment period.4m) 16.1 (N2. Year A B 1984 1985 1986 1987 1988 20.0 88.8m) 20.5 88.9 90.9m) 86. 19 .5 (N2.493.7% in 1987 and whopping 90.007. the average remains a high 61.6 (N2.373. Within the period analyzed.Table 2.8% and indeed the percentage increased steadily from 88% in 1986 to 88.9% in 1987 to 59.892.5 (N3.4%.40% in 1988. For the Commercial Banks. as well as the level of collateralisation resulted in the allocation to real estate being focused on properties in prime locations where the prospects for high sale/rents may accelerate loan repayment.

9%) 69.9m (7.6% in 1987 (see table 3).7m (4.1%) 59. that allocated to mortgage loans declined steadily since 1984 from 7.6%) Source: Insurance Year Book.8%) 63. under the current insurance decree.7%) 149.2m (3. Life premiums are not only long-term but relatively cheaper than deposits.1% to 7.1% to 4.2m (7. only up-to 25% of life and 10% of non-life policies can be invested in real estate.2m (12. 3. the investment emphasis of these institutions has been short-term due to the preferences of these companies and to a lesser extent the legal restriction imposed.5m (11. Indeed.8% in 1985.2%) 144.Insurance Companies Insurance companies have funds appropriate for financing housing construction. while percentage allocated to real estate declined since 1985 from 12.9% in 1986. and 3.1%) 116.3m (7.0m (3.2% in 1986. 20 . However. However.5%) 57. Table 3: Insurance Companies: Real Estate/Mortgage Year Type of Invesment (N) Real Estates Mortgage Loans 1984 1985 1986 1987 93.

to create a new housing finance system.Housing Corporations The State Housing Corporations operate largely as property developers and they depend mainly on Government budgetary allocations. The housing units are usually sold outright as they usually do not provide mortgage finance to buyers. Their role would have been effectively implemented if they were operating as financial intermediaries. The policy attempts inter alia. It has been noted elsewhere that for reasons such as availability of Government funding. establish a National Housing Fund. Consequently the new National Housing Policy was established. that the previous Governments decided to facilitate construction by the Private Sector institutions. New National Housing Policy Realizing that the enormous public sector efforts have not effectively addressed an expanding housing deficit and escalating construction costs. The number of housing units produced has not been significant relative to demand. 21 . This was articulated in the National Housing Policy in 1988. and that such effort must be substantially collaborative with the Private Sector. housing corporations do not operate savings schemes. It was in realization of the enormity of the housing problem relative to declining resources capacity available to the Public sector. and those that have such schemes have marginalised them. encourage the linkage of the housing sector to the capital market. and expand Private Sector role in the housing delivery system. Government decided to establish a framework within which such collaboration can effectively address the housing problem.

the policy has identified the fact that different household both within and between income groups tend to have different demand for housing. with FMBN as an apex institution and a decentralized network of Primary Mortgage Market institutions such as building societies. and home savings and loans associations. private sector and individuals) in the housing delivery system.The most significant differences between the new policy and the previous ones are firstly. that housing is now seen in context of the overall national development. This structure aims to streamline processes and organizational relationships within the housing finance system and encourage expansion in private initiative. 22 . the focus of the policy seems to be to remove all barriers to the supply of housing and to provide incentives to all parties involved (governments. the legal framework for the organization and implementation of the apex role of FMBN has been defined by the Mortgage Institutions Decree No. New Structure for Housing Finance The new housing policy has established a two-tier housing finance structure. housing co-operatives. This is evident from the ultimate goal of the policy which is. Secondly. Previous policies had tended to regard housing as a social service and a natural fall-out of the national economic development. In this regard.53 of 1989. “to ensure that all Nigerians own or have access to decent housing accommodation at affordable cost by the 2000 AD” Thirdly.

in view of the fact that there were not many affordable houses in Nigeria. CURRENT HOUSING DELIVERY APPROACH In 2003. Quite a number of them had been in operation for the last 12 months. The promulgation of the National Housing Fund Decree heralded the emergence and establishment of a battery of mortgage finance institutions in Nigeria. the technicalities and modalities of releasing the loan to the mortgage institutions to unlend to the members of the public have not been worked out and as such most potential clients have been frustrated by the high interest rate and cost of funding. The period 2003 – 2004 witness a Housing policy that recognized the private sector on the driving seat of housing 23 . Most customers on the other hand are prepared to wait for the National Housing Fund than take loans at high interest rate which is presently being dictated by the money market condition. Most of the mortgage institutions on their own have been mobilizing funds by accepting deposits and savings at very high interest rate in a highly competitive marketing environment. the federal government also established the Federal Ministry of Housing and Urban Development.National Housing Fund (NHF) – was established in 1992 The concept of the National Housing Fund as proposed in the National Housing Policy is to ensure a continuous flow of long-term funding for housing development and to provide affordable loans for low income housing. and Proposed a Housing Reform. Mabogunje (2004) opined that a number of other legislation needs to be amended substantially to bring their provisions in line with the new housing regime. But most of them were high-priced. The touchstone in such reviews is to reduce red-tape and ensure that various legislations are compatible with demands of a free and robust market economy. There was an illusion that houses were available. Good as the intention of the scheme appear.

2009). and review and amendment of the Land Use Act to ensure better access to land and speedier registration and assignment of title to developers. under the NHF. on a sustainable basis.delivery in the country. 24 . AFFORDABLE HOUSING SCHEME There are several affordable housing schemes that are either fully funded by government or or in partnership with the government under the Public Private Partnership (PPP) scheme. involving the FMBN and the establishment of a new mortgage regime. Such efforts were further complemented with the Private Finance Initiative (PFI). and a five-year tax holiday for developers (Thisdayonline. assignment to government of the responsibility for the development of primary infrastructure for new estate development. Others are the development of a secondary mortgage market. to facilitate more favourable mortgage terms. Jibrin (2009) further argued that while the quality of the existing stock is also under a heavy scrutiny in term design and desired functions including acceptable livable neighborhood. for the delivery of affordable houses. in the Federal Capital Territory. the key features of this policy include the placement of the private sector in a pivotal position. In some cases selected developers were given some kind of concession by government with the aim of providing affordable housing for instance. 87% of the existing stocks are backlogs which are stocks that do not meet the minimum quality requirement.

real estate. policies are rarely implemented or haphazardly implemented. in the face of tight planning control. in cities all over the third world. In other words.Site and Services Scheme The pressure for this came from the international lending community and in particular the World Bank. and to improve their dwellings. it would positively rub on other sectors of the economy. The government can accomplish a lot in the housing sector through concerted effort and adequate funding. the programme is capital-intensive in nature and the initial target population. While the record of government interventions in the housing sector in Nigeria looks quite impressive. Aluko (2002) opined that the cost attached to each plot is usually beyond the reach of the urban poor. and high-cost construction programmes. Many of these sites exist all over the country essentially provided by the government. low-income. employment. Given the rising figures of ‘spontaneous or squatter settlements’. the second approach helped house-owners in existing squatter areas obtains tenure to their land. and upgrading schemes. Once the housing sector is buoyant. And. Essentially. inspite of the fact that they may help to improve tenure security. and land transactions. building materials. THE WAY FORWARD Housing is an economic activity with an inherent multiplier effects. among others. 25 . 1972) the two ‘packages’ which received the most support were sites and services scheme. regular demolitions. usually do not benefit from them. the World Bank argued for a new approach to urban development which incorporated various forms of aided self-help (World Bank. the first provided low-income beneficiaries with serviced plots including tenure security and help to build their own houses. be it finance.

In conclusion. Also. since most housing delivery projects are long-term investments and capital intensive. for the majority of its citizens. To achieve sustainable housing delivery in Nigeria. especially in a country like Nigeria where there is a high level of corruption. roofing. Furthermore. development agents. the need for the government to master the necessary political will and make more concerted efforts to address and solve. Individuals and private agencies are known to be more efficient to be in housing construction. Thus. rapid 26 . cooperative housing should be encouraged because most individuals are able to achieve/perform through cooperative societies. and floor materials that are affordable and durable. the government should shift focus from full direct housing construction to that of providing enabling environment for the sector. beyond an individual’s control. housing developers should shift from over-dependency on imported materials to the use of local materials. financial institutions should be encouraged to finance some of these projects. Thus. such as walls. individuals and private agencies are likely to build more and better houses than the government or quasi-government agencies. therefore. population growth. no doubt. given the same amount of money. there are at least five powerful factors involved in the housing crisis and which are. Similarly. but very short on implementation. the twin problem of shelter and better living conditions. namely.Nigeria seems to be long on policy. Building materials are believed to constitute about 55% to 65% of total cost of construction input. one can easily argue that there have been many lofty initiatives and efforts by successive governments in Nigeria capable of arresting the worsening housing situation in the country and that lack of ‘political will’ has been a major barrier to progress. and Public Private sector Participation (PPP). The government should adopt and vigorously pursue a housing delivery strategy that is ‘end-users driven’ and through the use of cooperatives. There is.

Mabogunje. natural disasters. in accessibility to credit facilities. The establishment of the Construction Industry own bank where lending is a lot easier and interest rates are far less than commercial rate and the Minimum Rediscount Rate (MRR). These factors. 2005. Olotuah. it would help jump start up and coming young players in the industry. political upheaval. 27 . (i) Establishment of Construction Bank: Part of the problem of the industry is the liquidity i. The Commercial Banks are not setup to loan money on long term bases. 2002). My Proposal Three issues that merit consideration in this context are the escalating prices of building materials. 2005. This situation must be reversed quickly if the housing pressure is not to assume a crisis proportion during this new millennium. Part of fund that could be made available for this Bank could be pension funds from government agencies and parastals which are currently being wasted through wrong usage .e. housing finance can only become effective when a substantial proportion of the population can be served. the constraints in the land delivery system and the high physical standard which militate against the affordability of these housing. must be adequately addressed by the government if appreciable progress is to be made in its quest for providing good housing for all.urbanization. would not only boost construction activity. among others. and persistent poverty (Awake.It is important to note that regardless of the availability of long-term lending and the appropriate institutions to render the required services.

roads. The nation needs about 8. live ability and attractiveness of low-cost housing. Presently houses are built and rely solely on cement. It shall be a private sector led-bank with government just having an equity interest. This short fall has always accounted for the galloping cost of cement every year as shown in the table below. electricity supply and other social amenities especially to improve the quality.5% dependence on importation. While our cement companies are only able to produce about 2-3million metric tonnes. The chances of the local industry rising to the task remain very slim as only four (4No) out of the seven (7No) of the cement companies in the country are still limping along at various levels of capacity utilisation. According to recent survey.5million metric tonnes yearly. Nigeria is the world largest importer of cement with about 70.The problem is to appropriately finance the housing needs of middle and low income groups that constitute the majority through this medium. Over half of Nigeria’s cement need is imported. (ii) The Use of Local Building Materials: The use of local building materials and intermediate technology must be followed with the provision of other basic infrastructures like safe drinking water. 28 .

29 . 1 There is also the campaign to use less of cement blocks in housing construction especially the low-income housing.700/m2 while a similar solid brick wall plastered and painted on one side with emulsion paint cost N1080/m2. A further savings has been observed could be made with the use of bamboo shoots.Table 3. Cost of Cement Per 50Kg Bag (WAPCO) Price Years Amount 1990 1991 32 40 1992 85 1993 85 1994 180 1995 410 1996 430 1997 500 1998 550 1999 600 2000 2001 650 850 Fig. The research has shown that a 225mm block wall plastered and painted on both sides with emulsion paint cost N1. A savings of N520/m2 . Thus financing the construction of housing for all income groups require creative framework through – localized design and packaging as opposed to imported design.

Whereby all lands in government ownership is freed in order to enhance intense private sector participation in the industry by making access to land very easy. This would help in the empowerment of the real sector and thus an active and vibrant industry. A more cost effective design is highly desirable at this point in time if mass and cheap housing is to be assured.(iii) Evolution of Simpler Form of Design: A need to do away with over – designing and concentrate more on functional design. (iv) Review of land use Decree of 1976:. 30 . A situation such as witnessed in the 2000 Budget of a paltry sum of N1. The local Architects have to take the lead in this regard.8 Billion for social housing would become a child’s play if more land is freed or ceded to the private sector.

sex. It is also expected that to avoid the takeover of these houses by the high income group. affordable housing and environmentally sound and serviced human settlements. reinforced concrete in beams and lintels and combining this with corrugated roofing sheet would reduce construction cost by about 60%. With the restructuring of the domestic economy. This must be done without discrimination as to status. it is my belief that there is a bright prospect for housing financing large scale in Nigeria in this near future. Housing finance policies must be made to integrate the lower income classes. The use of sample walls using stabilized blocks.CONCLUSION In conclusion. national or state monitoring groups made up of NGOs. government institutions and other public and private stakeholders be established to monitor progress and make sure that target populations benefit. It is recommended that more emphasis be placed on providing low and medium income housing units in Nigeria using earth blocks and intermediate technology. what Nigerians need to survive the wounds of near-homelessness include good governance. tribe and without fear of favour. It should be noted that reduction in unit cost would produce more units so as to meet up the 8 million units required to adequately house the Nigerian population. credit. communal and self build practices must be encouraged by the appropriate 31 . It is indeed hoped that the above framework which is indicative of bright prospects for financing housing construction will rapidly expand the quantum of finance available and dampen the high cost of funding and construction. Government should therefore undertake steps by all appropriate means and to the fullest of funds at his disposal to achieve progressively the tenets of adequate shelter for Nigerians especially the vulnerable group. Cooperative. This can be possibly done by giving long term loans with sustainable interest rates and no collateral. increased access to land.

Thank you for your patience. The national Road and Building Research Institute must be empowered to do a lot of research into cheap and effective materials for both housing and road constructions. Establishment of the construction Bank is a sine-quo-non in this regard. Thank you for this opportunity. 32 . Efficient land markets and sustainable land use policies are indispensable and there is need to change the Land Use Decree to a more housing friendly legislation.ministries and NGO’s to further help increase self reliance and help. Thank you for listening.

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