Housing for All Under Vision 20:2020?


Nasir Ahmad El-Rufai



In most developing economies, the construction industry not only contributes between 3-8 percent of GDP, but is usually among the top two employers of labour, and Nigeria was no exception up until the late 1980s. Building and construction accounted for just about 2.5% of our GDP in 2010, and now employs on a consistent basis, less than a million people - lower than manufacturing. Civil works account for about 30 percent of the industry's output but employs less people, more capital intensive and therefore dominated by foreign companies.

Housing construction accounts for between 50-60 percent of the sector's output and an even larger proportion of its employment. From professionals like architects and quantity surveyors from the design stage, to bricklayers, carpenters and plumbers during construction, and food vendors to real estate agents, the typical building site employs about 200 people over between six and twelve months to build the average family house. That is why many governments invest in public works to induce demand and stimulate economic activity. Indeed, in some countries, 'housing starts' - the number of new homes under construction is a surrogate for measuring both economic activity and business confidence.

A home is a typical family's most desired and prized asset. According primacy to this predisposition, Section 16(1)(d) of the 1999 Constitution of the Federal Republic of Nigeria under the Fundamental Objectives and Directive Principles of State Policy, expects the State to "provide sustainable and adequate shelter for all citizens." 


Successive Nigerian Governments have paid lip service to the foregoing constitutional provision. Consequently, Nigeria sits on a growing housing deficit estimated at 16 million housing units a few years ago, in 2006. An even higher number of Nigerians live in either substandard or sub-human accommodations. This grim social reality has spawned dysfunctional consequences in the macro economy.  


The acquisition of a home is usually the single largest investment made by most people in their lifetimes, and home ownership is what catapults people to middle class status. Owning a home also presents an opportunity to alienate it and raise money for investment in other real and financial assets, thereby leveraging societal resources and encouraging entrepreneurship. Anecdotally, it appears that there is a positive correlation between levels of home ownership and social stability. Societies with high levels of home ownership like the USA (over 70%), Sweden and Norway (over 80%) tend to have less arson, riots, burglary and similar crimes when compared to countries with low levels of home ownership such as Nigeria. It is therefore imperative that Nigeria creates an enabling environment for the growth of the housing sub-sector by encouraging widespread home ownership and realizing the attendant social and economic development benefits.

The Federal Housing Authority (FHA) was established in 1973 to build houses for Nigerians, and some of the estates in Festac, Satellite Town in Lagos and Gwarimpa in Abuja are the results of its efforts. But in all, it built just about 43,700 in 38 years, slightly above 1,000 homes annually! Other laudable efforts like that of the Shagari administration were sabotaged by politics. States governors in opposition to the NPN grudgingly allocated parcels of land that were so way out of town, without infrastructure and basic security. Many state housing corporations' interventions of building low cost houses got captured by politicians and officials, creating more landlords and tenants rather than the intended beneficiaries owning them.

Home ownership statistics in Nigeria can be misleading, because the more rural a state or settlement, the more likely it will be inhabited by indigenous populations and therefore a high rate of 'home ownership'. For instance, Jigawa and Kebbi States have "home ownership" figures of over 95%. Lagos and Rivers, the most urbanized states with a lot more migrants in search of economic opportunities than indigenous populations have "home ownership" rates in the region of 20%. Abuja which lies somewhere in between has a reported home ownership rate of 57%. But is it real ownership or just owner-occupier? This question needs to be asked because of the problem of title to land, restrictions on registration and transferability of title, and the absence of a mortgage system in Nigeria.

What is the federal government doing to boost the housing sector? What about the states and local governments? Is housing a matter for federal intervention at all, bearing in mind that land is mostly vested in State and Local Governments? What can be done to kick-start the housing sector?

The federal government budgeted N36.7 billion this year for the Federal Ministry of Lands and Housing, but not to build any houses. N3.55 billion is for salaries and overheads. The capital budget of N33.1 billion is an interesting assortment of dodgy projects - for instance a borehole in Chikun, a town hall in Damaturu, street light in Okporo and market stall in Sumaila.  Over N1.1 billion was budgeted for land acquisition. So if the federal government has little or no land, what does this ministry of "housing" exist for? When the FG builds a town hall, what will the local government chairman do? What criteria enabled the selection of these locations and exclude others? Not one naira was budgeted for the intervention agency, the FHA!

Perhaps the most successful state programme of mass housing is the one initiated in the FCT by my predecessor, Mohammed Abba Gana, and built upon by our administration. The programme entailed provision of conditional titles to land to estate developers, with FCT undertaking primary infrastructure, and development of homes for sale to citizens. Title is then given to each individual buyer. That was how most of Nbora, Galadimawa, Dutse and Lokogoma districts were planned and allocated. More than 20,000 housing units were completed in 5 years - nearly half of what FHA did in nearly 40 years. More could have been achieved if we had provided more primary infrastructure and given similar allocations in the satellite towns.

In 2010, the CBN reported that only 8.7 percent of credit to the private sector went to the real estate subsector, down from 8.9 percent  in 2009. The total loans and advances by all the mortgage banks in Nigeria was just N124 billion! Housing finance is up to 90% of a typical bank's balance sheet in developed countries. But this ratio in the consolidated balance sheet of Nigerian banks is perhaps no more than 1%. These dismal statistics draw attention to a serious macroeconomic under performance in a sector with proven capacity and global antecedents to sustain high GDP,  job creation and double-digit growth rates for many decades to come.   


The inability of tens of millions of Nigerians to become home owners despite the phenomenal expansion of credit in our banking system is directly linked to their corresponding inability to meet lenders' main condition precedent to disbursement in the form of a collateral that meets lenders' legal and regulatory obligations.


Consequently, this incapacitation translates into poverty forced down on one generation of Nigerians, which it passes to the next, ad infinitum.  To break this cycle of poverty, government intervention is required to sponsor an agency that will issue first time home borrowers with mortgage insurance, which would serve as their collateral for obtaining mortgage loans from loan originators.


To increase the affordable home ownership rate against the recent progress made by Nigeria in issuing Sub-Saharan Africa's first Mortgage-Backed Bond to part finance the sale of Federal Government Houses in Abuja in April 2007, the following gaps will need to be closed urgently to meet the constitutional provisions requiring government to provide shelter for all Nigerian citizens:

 First is the completion of the National Identification Project  to accurately identify every Nigerian citizen. This was started in 2007 and was to cost about N5 billion and fully-funded by the private sector. This week, the government announced that it will cost N30 billion and funded from our lean treasury!


Second is the renaming of the FHA as the Federal Mortgage Insurance Corporation, with its statutory charter and legislation changed from housing construction or supply, to provision of mortgage insurance for affordable housing. Thirdly, the urgent passage, by the National Assembly, of the Foreclosure and Securitization Bills  submitted 4 years ago, and finally the enactment of Constitutional Amendments affecting the Land Use Act (1978) to remove the Governors' dual statutory consent to assign and to mortgage, once the underlying root title has been issued ab-initio. The National Assembly has had this request before it for over 4 years.


With these steps, every Nigerian citizen with a job should be eligible to borrow and buy a home, or build one and pay at single digit interest rates over 15 to 25 years. And critically, states and local governments must provide Social Housing since not everyone can afford a home regardless of whatever mortgage system we have in place.

We must address the high cost of building materials. The global average for the price of a 50kg bag of cement is about 35 dollars, or about 450 to 750 naira, but in Nigeria, it ranges between N2,600 and N3,000 each. Beyond prices of materials, we must try to ensure that a larger percentage of building materials are sourced locally and competitively. This is imperative in view of the fact that building materials constitute about 55-65 percent of total cost of construction of houses.  

Meanwhile, whatever happened to the National Housing Fund (NHF) to which Nigerian workers earning N3,000 per annum or more contribute 2.5% of their basic income? Out of the N72 billion fund, Estate Development Loans equal N42 billion had been disbursed. This money should have built at least 8 million homes at about N5 million each, so the simple question is: where are the houses or estates?

It may be true that Jonathan had no shoes, but at least he had a home. Mr. President, can we at least trust you to deliver housing to the millions of our homeless countrymen?