Challenges to Nigerian Housing Policies

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Challenges to Providing Affordable Housing in Nigeria
By Akeju, Ajibola Andrew
Economic Specialist
US Embassy, Abuja
Being a Paper Presented at the 2nd Emerging Urban Africa
International Conference on Housing Finance in Nigeria,
Held at Sehu Yar'adua Center Abuja, October 17-19, 2007
Introduction
Housing is one of the most basic of human needs. Provision of houses through the creation of mortgages is taken for granted in developed countries; however, it remains a major challenge in developing countries, especially in sub-Saharan Africa.

All governments in Nigeria since independence highlighted housing as a major priority. Unfortunately for over 47 years of its independence, Nigeria is yet to develop a vibrant mortgage market and houses continue to be provided through the tortuous traditional method of buying land and building over some years, which could be an individual's entire life time. In many cases such buildings are left uncompleted or individuals have to deplete their entire life savings in order to build a home.

One of the major housing policy initiatives was the Policy on Affordable Housing that was initiated in 1979 by the Shehu Shagari Administration. The policy though laudable was unable to meet the nation’s housing needs because it was based on the unsustainable tenet that houses will be provided by government (this remains the anomaly that we must resolve). The implementation of the 2002 housing policy reforms was a promising beginning, but a lot remains to be done. In a recent news report on the Nigerian Housing Sector aired on African Independent Television (AIT), it was stated that between 1973 and 2006, the Federal Housing Authority (FHA) built only 30,000 housing units nationwide. According to Mr. Tunde Ipinmosho of the Federal Housing Authority (FHA), the current housing deficit is about 12 million homes. If we take the current population of 140 million Nigerians as reported by the National Population Commission after last year's census exercise and assume 30 percent of the population as working adults we have 42 million estimated working adults; assuming about 45 percent or 18.9 million of the working adults qualify for mortgage loans, and assume an average house final selling price at about Naira 2.8 million for a 2-bedroom flat, the possible size of the mortgage market is close to Naira 53 trillion. Looking at the statistics we see that there are tremendous opportunities in the Nigerian housing sector waiting to be tapped. We should note that the government alone cannot fill the housing gap. In order to fill the gap we would have to leverage on the resources available in the private sector, while also encouraging foreign investment (in short government has no business building houses). Government (federal and the sub-national governments) should focus on providing a favourable investment climate, infrastructure, and mortgage insurance to first time home buyers and low-to middle income families. We must however, note that there are challenges to harnessing the huge potentials inherent in Nigeria’s housing sector, and invariably providing affordable housing in Nigeria.

1. Legislation
The Land Use Act of 1978 which vests all land in the government is an obstacle to making land available for housing development. It is heart warming to note that His Excellency President Umar Yar’adua stated during the first few days of his administration that the Land Use Act will be amended to make land transactions easier and make land available for all who want to genuinely invest in the country. I urge the National Assembly and the 36 state governors including their various state legislatures to support the President in the planned land reforms. Nine (9) housing related reform bills were presented to the last legislature unfortunately, the bills were not passed before the end of their tenure. Two additional bills on Securitization and Foreclosure are expected to be added to the initial nine (9) bills. I...
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