COMMUNIQUE ISSUED AT THE END OF THE 16TH AFRICA INTERNATIONAL HOUSING SHOW (AIHS) HELD FROM THE 25TH – 28TH JULY, 2022 AT THE INTERNATIONAL CONFERENCE CENTRE ABUJA, NIGERIA
Introduction
The 16th edition of the Africa International Housing Show (AIHS) was held between 25th and 28th July 2022. The event, however, provides a platform for stakeholders in the industry to dissect every topic within the theme and proffer solutions to the housing challenges currently facing the continent. It also aims to synergize the efforts of both the government and the private sector. The conference is also structured to bring an end to the rivalry between professionals within the housing sector by promoting collaboration among key players in the industry, which AIHS stands for. It aims to facilitate large-scale and alternative funding for housing, including non-interest finance options such as SUKUK and Infracredit. Today, technology drives everything with housing not an exemption. Taking a closer look at the digital ecosphere, the event also focuses on PropTech to measure the impact of technology such as realtech and PropTech on housing development in Africa. The conference seeks to address the issue of environmental sustainability in recognition of the fact that green housing and funding have become very prevalent in the world amidst a global call to tackle climate change. It aims to create a very strong platform for networking to drive housing development in Africa and the world at large. The event has over the years brought about solutions for the development of the housing sector and this year, it’s looking at ensuring that government and the private sector unite to fulfill the housing dream for all.
Summary
With an understanding that housing in itself can be the solution to many societal problems including security, the 16th Africa International Housing Show (AIHS) focuses on the theme: “HOUSING FOR ALL: The Role of Government in Creating an Effective Enabling Environment”. This underscores the importance of housing as a fundamental human right that must be recognised in every nation of the world.
Research has shown that the private sector has outperformed the Government in the provision of housing in Africa. Statistics reveal that less than 10 percent of workers both public and private earn more than N60, 000 a month. It is necessary for the government to create an enabling environment by increasing the wages of workers in order for them to have a decent living. If you build a house that is not affordable, you are not building for the masses. Though there is no shortage of policies and programmes enacted by various governments to tackle housing problems in Africa, effective implementation remains a persistent dilemma. Giving serious attention to the housing sector can stimulate economic growth and in the process, generate employment (skilled and unskilled); improve urban productivity and environmental sustainability; improve household productivity and social, community health and educational outcomes.
Resolutions/Recommendations
The Government and the private sector must work together and not as cross purposes. Planning is the bedrock for the provision of housing. With the inherent challenges in the housing sector, environment and economy, it is hoped that through the AIHS conference, the government will do more in not just making laws but follow up the implementation of relevant policies and actions that will drive the growth of the sector.
Solving the challenge of a severe housing deficit requires creating linkages between the provision of land to property developers, through increased availability of housing finance, to a reduction in property transaction costs.
Housing sector offers enormous economic opportunities in times of downturn and the best way to reach sustainable debt levels and fiscal balance is economic growth through consumption and investment.
The potential of the housing sector can be achieved during this period of uncertainty in three core areas for action:
- Urgently expand financial sector for housing to deal with new financial risks: primary lending and capital markets
- Scale up housing supply through targeted private + public sector actions using innovative methods without adding fiscal stress
- Create common housing platform for public and private decisionmakers to achieve speedy actions
Unleashing the Housing Sectors Potential –Policy Actions
- Macro policies + public/private policies to expand housing finance
Loan level – lending in times of uncertainty
- New mortgage instruments to deal with inflation (indexation)
- Credit guarantees for developer lending and mortgages
- Ease regulatory requirements for mortgage lending (cap requirements, etc.)
- Reform/close poorly structured + expensive mortgage subsidies
Investors- Capital market expansion to reduce risks
- Expand capital markets for housing instrument to alleviate interest rate risk/+ALM
- New cap market debt instruments backed by residential property; attract new investors (domestic/foreign)
- New ESG compliant bonds to attract new foreign investors
Africa has several Refinancing Facilities — Nigeria, West African Monetary Union, Kenya, Tanzania, Egypt that can take the lead to implement these policies urgently.
Unleashing the Housing Sectors Potential –Policy Actions (2)
Scale up supply! Urgently
- Finish ongoing projects (access to debt finance; subsidies)
- Expand access to titled land (reforms) – new land surveying/registration technologies
- Use land value capture mechanisms to pay for infrastructure and cross subsidies
- Facilitate permitting; use realistic sustainable and affordable standards
- Increase domestic production of building materials. Etc.
Bring Policy-makers from Public, Private, Non-Governmental Sector together around a common housing platform to:
- Create urgency around housing sector in current downturn
- Build coalition among top decisionmakers at national, state/local level
- Include private/NGO/DFI players – lenders, investors, developers
- Focus discussions on top priorities for housing sector to reach scale
- Understand what went wrong in past approaches to activate the housing sector – lessons?
- Create understanding and political will at highest political level to make housing sector a national priority
Governments at various levels, having recognized the importance of housing, must embark on various reforms and interventions in this sector to bridge the existing deficit. This should include setting up policies to actualize some brick-and-mortar projects.
The capital market could be a good engine for driving economic growth and development because fixing the housing problem cannot be left to the government alone. Hence, the capital market is needed in pooling the much-needed capital to drive the housing sector.
It is important to take into consideration the urgent need to promote the use of existing and new instruments in the market that can be used by developers, private sector participants, governments, and other stakeholders to raise and deploy capital into the housing sector.
The call to housing agencies owned by the government and the government itself to improve on their performances cannot be overemphasized.
Investment in exchange platforms, market infrastructures and technology can aid developing innovative solutions to bridge the housing gap.
The impact of the inflationary environment on the housing sector must be addressed to ensure affordable mortgages.
Equity market capitalization can help expand the reach of projects that could be undertaken, hence helping to solve the financing challenges.
Adopting the following governments’ supporting roles in housing that has worked in other jurisdictions:
- Establishment of strong and transparent institutions and agencies.
- Formulating and enforcing housing friendly policies and regulations.
- Fostering macro-economic stability and a healthy financial system.
- Provision of excellent infrastructures, including seamless security architecture
- Incentives for stakeholders and partners in community model housing development
- Enabling functional housing development and systems
- Special incentives for First Home Buyers through tax incentives etc.
- Instituting functional legal systems, title transfer and property foreclosure processes
- Supporting R & D in Housing Development & Financing
- Championing Green Homes and Energy Efficient Technology and Interventions
Housing is a safe-haven asset. As such, efforts must be made towards commercializing housing like every other good. Meanwhile, The sustainable and affordable housing framework should not only cover economic aspects but also border on social issues, which include social amenities and housing quality, social status, and lifestyle, while the government also focuses on good title lands.
The ‘trust chain’ between key players in the housing industry must be enhanced to increase capacity and efficiency.
Application of smart technology like BIM, big data, artificial intelligence must be embraced to help in enhancing design precision and professional collaboration in managing human, capital, and material resources throughout the life cycle of a building, and hence promote effective construction project management and maintenance cost reduction.
Additionally, housing provision should fulfill the provision of social amenities for the disadvantaged in society. To achieve this, good governance and citizen participation are sacrosanct for any reasonable government embarking on a successful sustainable and affordable housing program. To succeed in initiating and implementing sustainable and affordable housing for low-income households, stakeholder participation in the decision-making process must be ensured.
Government should create an enabling environment to stimulate ideas on affordable housing as well as creating a decent atmosphere for housing investment to thrive.
Land assembly and ownership is highly dependent on the government. As a result, the government must be proactive in ensuring ease of access to land, while also promoting the private sector collaboration in affordable housing schemes.
Housing financing bodies should be allowed to operate with full autonomy with efforts made to not only finance new homes but also ensure allocation of money for renovation of existing structures to meet global standards.
Alternative funding for housing, including non-interest finance options such as SUKUK and Infra Credit must be adopted to produce housing on a large scale.
The impact of the inflationary environment on the housing sector must be addressed to ensure affordable mortgages.
The Government must boost support for the Nigeria Mortgage Refinance Company to enable it access the capital market competitively to refinance Mortgages. This is critical in deepening and increasing access for Nigerians on low-income to housing, particularly home finance.
The Real Estate industry has largely recovered from the slippage caused by the covid-19 epidemic. However, the deficits in urban areas can be addressed with proper linkage between landowners and Real Estate managers. Capital instruments can also be used to drive Real Estate in Nigeria.
Long-term financing should be encouraged by mortgage financing bodies. Housing cannot be affordable when everything in the chain is not affordable. Invariably, investors will only bring money when there is value in the chain of production.
In giving out mortgages, income must be verified and accepted by banks and loan amortization terms must be predetermined while an interest subsidy is provided to encourage lenders to participate and also reduce the rate of risk.
The culture of Green Buildings must be propagated as it’s proven to be cheaper over time. A great deal of awareness is, however, important in promoting green housing.
More efforts into research and design will help to look away from Brick and Mortar.
Government must put necessary infrastructures in place like good roads, electricity, etc to make housing investment thrive in the country.
The Pension Funds Administrators also have a part to play using the capital markets to ease the challenges in the housing sector. They can increase their exposure to the housing value chain by allocating more resources to this sector in the form of equities, bonds, REITs, etc.
Strong mortgage insurance facility must be put in place to safeguard investments and ensure citizens below the poverty line have access to affordable mortgages.
The Federal Government needs to promote best practices and combat inertia and resistance to change, which is endemic in the construction sector especially in some parts of the private sector.
Rental housing are still very relevant and should be incorporated into the housing policy especially based on the demographic and resource pattern of each state either in form of subsidized housing or incorporating social housing into the policy.
Conclusion
String of economic shocks have battered our economies with negative effects on economic growth. Housing has the potential to drive economic recovery with a targeted approach on priority policy areas including derisking developer and mortgage finance; scaling up supply through regulation, innovation, etc. All these requires buy-in from high level public and private policy-makers. The Africa International Housing Show brings all players together for this purpose.
What a GREAT opportunity to start the action now!
