… housing, construction sector accounts for only 3% of country’s GDP
Despite its large-size population and self-acclaimed biggest economy in Africa, Nigeria is literally crawling behind its peers in terms of homeownership level in the country.
Whereas home ownership level is 84 percent in Indonesia, 75 percent in Kenya and 56 percent in South Africa, it is only 25 percent in Nigeria whose population is estimated at 200 million. Going by United Nations projection, the country’s population will be as high as 400 million in 2050.
This implies that the country’s current housing deficit estimated officially at 17 million units will be worse unless there are concerted efforts by all housing sector stakeholders to address identified obstacles to development and delivery.
“The major issues that continue to affect housing delivery in Nigeria, which also account for the wide demand-supply gap, include constraints related to high cost of securing and registering secure land title,” said Nasir El Rufai, Kaduna State governor.
El Rufai who was keynote speaker at a one-day conference organized in Lagos by the Royal Institution of Chartered Surveyors (RICS) Nigeria Group, also listed inadequate access to finance, slow administrative procedures and high cost of land as other major issues affecting housing in Nigeria.
Kola Ashiru-Balogun, managing director, Mixta Nigeria, had in an earlier interview, told BusinessDay that several intervention attempts have been made by private sector operators and agencies of government to improve housing in the country, but such efforts were not succeeding because they are not harmonized.
This, he said, explained why the contribution of the housing sector to GDP is so small and the impact so minimal when it is supposed to be more. El Rufai agreed, saying that in economies like the USA, Britain and Canada, the housing sector contributes between 30-70 percent of their GDP.
“Investment in housing accounts for 15-35 percent of aggregate investment worldwide and the sector employs approximately 10 percent of the labour force worldwide,” he said.
The governor said that the real estate sector could play a much bigger role in the Nigerian economy. He explained that, carefully done, investments in the housing sector could drive economic vitality and create jobs.
“In many developed nations, the property sector in general, and the housing segment in particular, is a bedrock of the economy and an important tool for stimulating growth. Housing construction indices are some of the most common measures used by analysts to gauge economic trends in Organisation for Economic Co-operation and Development (OECD) countries,“ he said.
In addition to growing mortgage finance where much of the economic opportunity in housing can be unleashed, El Rufai also canvassed the development of social housing that must be led by government.
According to him, the federal housing budget was declining as only N30 billion was budgeted in 2019, from N35.4 billion and N141 billion in 2018, and 2017 respectively. “The World Bank estimated in 2016 that Nigeria will need over N59 trillion to close the housing deficit of over 23million.
“The Centre for Affordable Housing Finance in Africa reports that housing production in Nigeria is at approximately 100,000 units per year, while what is needed to bridge the deficit is a minimum of 1,000,000 units per annum,” he said.
Panel discussants at the conference with the theme, ‘Unravelling the Real Estate Sector Challenges in Nigeria’ said regulation as it relates to titling and documentation was also part of the major problems of housing as it places too much burden on developers.
“To acquire land for development, an investor is faced with two critical issues which include the certainty of land title and the process of obtaining the title,” said Hakeem Oguniran, CEO, Eximia Realty.
Oguniran advised that state governments should do something around governor’s consent. He stated further that the states should also reduce their charges on land titles to make it business-friendly and also attract more people who are presently scared by high charges.
Source: Businessdayng
