How to Make Low Cost and Affordable Housing Viable in Nigeria: By Housing Development Advocacy Network

As a matter of understanding providing housing for a teeming population of over 200 million individuals that consist largely of low-income earners can be quite daunting but none the less it is still achievable to a certain degree. One of the challenges we must come to terms with is the inability and inefficiency of government to address the problem and the capacity of the private sector’s competence and how to create a balance. The need for critical stakeholders in government and the private sector to collaborate for the development of affordable housing has gone beyond necessary to mandatory. The realisation of this fact is what has led the introduction of Public Private Partnerships where the government focuses on the creation of an enabling environment while the private sector’s cost and risk for venturing into affordable housing is mitigated by government subsidy and support to ensure successful delivery and continued replication.

In terms of policy and market development it is also important that the housing demand market is segmented to cater for the various spectrum of housing needs as the saying goes every needs a home but not everyone can afford to own a home. If the assertion is true then it is important to make that distinction policy wise, finance wise and supply wise.

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Note: The successful segmentation of our housing needs and application of the necessary support to identified segments will form the necessary and underlying framework for the successful delivery of viable affordable housing. The private sector and public sector stakeholders need to be focused in addressing the issues across both divides to successfully execute on the delivery of Affordable housing. This can start with a focus on lowering cost or promoting cost effectiveness across the housing value chain with aim of attaining effective demand and improve housing access for low and medium income earners to own or rent decent and sustainable homes.

According to housing economists at the world Bank in their reports of successful emerging market examples who have succeeded, they note that  there are some critical facts that policy makers, regulators and housing finance providers have to consider to be able to successfully tackle the challenge of providing viable affordable housing. According to Luis Triveno (2016) from the World Bank archives on affordable housing provision, the following critical facts are important for consideration and adoption as part of an effective delivery strategy;

1. Poor families want livable neighborhoods, not slums. No family ends up in a shanty or barebones concrete structure by choice.
2. Substandard housing is not just a legal issue; it is a matter of life and death. Inadequate housing exacerbates a multitude of physical and mental health risks : from asthma, allergies, and other respiratory problems to low self-esteem and other psychological issues
3. The formal housing market is not able to provide decent housing for everyone: government intervention is needed. In most countries, mortgage loans are usually limited to a maximum of 15 years and a 30% debt to income ratio. Therefore, an “affordable” house should cost between 3 and 5 times the mean annual income. In Sub-Saharan Africa, however, the average house costs 17 times the mean annual income.
4. The menu of policy options should be varied. Governments can provide assistance through direct subsidies or tax incentives. They can use their regulatory powers to influence private sector decisions regarding the availability of mortgages; the type, the quantity and the legal tenure of housing (ownership vs. rental); the cost of building vs. renovating.
5. Financing must be combined with territorial planning. To be successful, government housing policies must achieve balanced and inclusive urban growth by promoting diversity , and by helping families work and build wealth.
6. Substandard housing is not just a legal issue; it is a matter of life and death. Inadequate housing exacerbates a multitude of physical and mental health risks : from asthma, allergies, and other respiratory problems to low self-esteem and other psychological issues.
7. Property formalization is not a substitute for a comprehensive housing policy. The typical government response to rapid urbanization has been reflexive.
8. Future generations will have to live with today’s housing policies. Decisions over densities and mixed uses will affect the availability of land and determine how livable and prosperous our neighborhoods and cities will be. Demographic trends will reshape future housing demand. We need to keep an eye on them .
9. Investing in housing serves the needs of the people – and boosts economic growth. New housing interventions generate employment, income and tax revenue, during construction and after , while creating opportunities for the introduction of efficient and environmentally friendly technologies.

In making the above stated facts practicable as a recommendation to Nigeria’s Housing Ministry, Regulators  and Housing Finance practitioners in their ongoing bid towards making affordable or low cost housing viable without compromising quality and standards, there is need to drive Housing focused Public Private Partnership Policies that centres and addresses on the following;

1. Minimize overall building costs,
2. Provide land at no cost or subsidized prices,
3. Use locally produced building materials,
4. Provide adequate housing finance at affordable interest rates,
5. Enhance time value of money through disciplined project schedules and approvals,
6. Secure special and bulk discount arrangements with manufacturers of building materials,
7. Deploy cost and time saving building technologies,
8. Unbundle cost of utilities and infrastructure from cost of affordable housing,
9. Seek support of socially responsible organizations, philanthropists, and entities,
10. Minimize or eliminate Tax charges and regulatory costs,
11. Use low or non-profit developers with finance, technology, expertise, and proven track record for large scale affordable housing,
12. Structure Naira denominated financing arrangements for seamless end to end funding of affordable housing

The viability of low cost and affordable housing can and should be tackled as a short and long term solution  that, if combined with other policies, can cause effectively address the array of long-term