In an exclusive Interview with Godwin Arah, FNIQS, a Chartered Quantity Surveyor and Managing Director of Godwin Arah and Partners, he speaks on the important of mortgage and mortgage facilities, the needs for government, investors and corporate organizations to build commercial houses and infrastructures. By Festus Oseji
In his words “…our firm has the credit facilities to deliver housing projects anywhere in Nigeria without depending on government or investors funds, provided all necessary documentation, terms and conditions are met”
Speak on your professional background and why you choose to study quantity surveying?
Thank you for the opportunity to speak to your esteemed journal CED Magazine. I was trained in London at the Glasgow College of Building and Printing, where I got my Bachelor of Science Degree in Quantity Surveying in 1982 and from there I went to teach at Auchi Polytechnic as a lecturer for four years (1982 – 1986). In 1986, I won a UNESCO Fellowship to University College, London to read Master Degree in Architecture with specialization in building economics and project management. And also did my industrial experience training with the firm of Henry Cooper & Son and later qualified as a Chartered Quantity Surveyor in 1989. During my period in London I also sat for the professional interview examination for the Chartered Institute of Building in the area of project management and I qualified as a Chartered Builder in United Kingdom (UK). I also did other construction related programmes, and equally a member of British Institute of Management.
Before my second journey to UK, I was qualified as a registered member of Quantity Surveyor in 1984, while I was a lecturer at the Auchi Polytechnic. So my background is varied professionally and in terms of experience too.
It is varied in the sense that I have had experience as a quantity surveyor and have worked in a bank as head of construction subsidiary of the bank. I have also written products for banks and insurance companies. My special area of interest at the moment is housing, finance and production.
In 1992, when I returned to Nigeria from London, I was the founding managing director of a Mortgage Institution that did so well at that time and won so many awards in this country. From there I went into consultancy and private practice.
Studying quantity surveying at the university was divinely ordained. Reason is because at that time pupils were not counseled or guided on what course to study at the University. Then we just choose courses, so I happened to chose quantity surveying not because I knew anything about it or that it is a lucrative profession or that those practicing it know much about it. But because I saw it as something that is appealing me and I went in for it and found out that I have the flair for the course. Nobody advised me to study the course, it was just a choice I made by myself and I am proud to be a qualified quantity surveyor. It was truly and divinely ordained course for me, because it has brought me fame, fortune and favour in every areas of life.
Give us an overview of your company activities as a quantity surveying and consultancy firm in Nigeria.
Even though my company was registered in 1991, from my profile above you will found out that I have been working mostly in the corporate organization, especially with those with special interest in construction, finance and the mortgage finance. I could say it would be more appropriate for me to speak about my activity as a qualified quantity surveyor. This is because of my varied background and varied sectors of industries I have worked in over the years.
For instance, in England I worked with the firm Henry Cooper & Son, a firm of chartered quantity surveyor, it is actually one of the oldest quantity surveying practice firm in the world. It was founded way back in 1756. While I was there I worked on a project which is as dear to me as a professional in the built environment, the Euro tunnel project that links England with France.
I was involved in the cost planning of the exhibition and visitor centre, which was the first project that took off for the Euro tunnel. I learnt quite a lot in that project and apart from that, there are other schemes of projects that I worked on as well. Other reputable firm I worked with includes Owete Osemena Nwosisi & Partnership, when they broke up I continued with Owete Partnership. During that period I was one of the key people with the kind of projects I handled. We did the Nigerian Union of Teachers (NUT) Secretariat in Benin, Edo State, Abraka College of Education, University of Benin Teaching Hospital (UTH), International Conference Centre, Abuja and Auchi Polytechnic hostels among other notable projects. From Owete Partnership I went into academics and today it gives me joy when I see some of my students doing great things in the profession, when we meet at seminars and conferences.
Some of these varied backgrounds of mine have really equipped me to practice the quantity surveying profession and also for my contributions to the mortgage and the housing finance sector.
What are the major challenges facing the quantity surveying profession in particular and the construction industry in general in Nigeria?
Starting with the quantity surveying profession, some of the challenges facing the profession are enormous. Recently, we have find out that the curriculum that is being used today in universities and polytechnics are not different from what we put together way back when I was a lecturer at Auchi Polytechnic in the 80s.
Secondly, we have also observed that the skills of quantity surveying is not been put into proper use as it ought to be.
And all these, is as a result of the deficit in the lecturers that are training the students in our Universities and Polytechnics across the nation. There is a lot of short fall in terms of the curriculum and the staffing in the schools of higher learning in the country.
For the construction industry, the quantity surveyors are very vast in construction cost management, procurement systems, and cost control value for the client. The role of the quantity surveyors in the construction chain is not well known. The profession should be appreciated by other profession in the construction team. This is partly because there is ignorance in terms of the role of a quantity surveyor by the clients. Most clients really ought to see the quantity surveyor before any other member of the construction team. In the sense that if you want to build a house, it is wise to know how much it will cost, than to start a project and later find out it cannot be completed. So it is the quantity surveyor that should be contacted first by the client before any other built environment professional.
For instance the architects should appreciate the quantity surveyors first; because it will not make sense after designing a project then you find out later that the client cannot afford to build the project because of lack of finance for the project. It is appropriate for all the built environment professionals to always work like a team, because we all need each other to achieve that desired value for the clients’ money. So there is need for synergy and also there is greater needs for the quantity surveyors to position and market themselves like every other professional are doing.
Yes! The ethics of the profession says we should not advertise, but at least from the corporate level we should project the profession, the professional body should also do more in this perspective, most especially to those that require our services. Inform them of what our services can do for them and how it can be of benefit to their plans and purposes for their projects.
Another challenge for the industry is that, it is not been led by the professionals themselves. Most construction related ministries and corporate organizations are not led by those with construction background, and that has affected the entire chain in negative way such as in policy making and decision making for the industry.
You will be amazed that if you go to any bank today you will not find a quantity surveyor in the management team, and yet they have credit facilities for the mortgage, construction and infrastructure financing. So there are lots of expertises that are supposed to be engaged to man those positions for effective analysis of cost for the housing project financing. All these bottle necks have made it impossible for investors to access funds for construction financing in this country. Because the people cannot create credit and due to the limited credit, there will not be funds available for the investors that want to invest in the housing sector.
But it is possible for construction activities to take place using third party resources. You don’t necessarily have to have the funds yourself, but as long as the project you are promoting sell the finance credit in readily available. At times I wonder why the government includes cost for commercial housing project in the budget.
Mortgage: Why is its operation not effective in Nigeria?
Mortgage finance is like a combination of construction and construction skills. In project financing it is always important to advice investor to start with the project re-financing before the project financing. This is to ensure that every capital invested in a project can be recovered. The essence of mortgage financing is do assist those who want to own their own houses to have their finances tailored to suit their part and of their income receipt. This is meant to encourage citizens to own houses rather than paying rent.
Because the rent one pays in a month is expenses, but when you pay money for the purpose of mortgage you are indirectly saving money to own your own house in future. Mortgage finance is always designed in such a way to suite the payee’s income, which comes in monthly.
Our systems in this country is structured for effective mortgage plans, but we fail to operate the systems as it is structured, instead we prefer to operate on cash and carry method, which is not good for a salary earner. The cash and carry method is even more discriminately against the non salary earners.
I have always in my paper presentation propagated that the non salary earners are better risk for mortgage finance than the salary earners, in the sense that they do not fail to pay their rent every month, six month or every year depending on their payment plan. So if mortgage financing is introduced to these set of people they will honour and respect the mortgage payment more, knowing that at the end they will own their houses and stop paying rent. If they can honour their landlord by paying their rent without failing, how much more contributing to own a house of their own in future or within a period of time. And for fear of failure there are insurance products that can actually take of those unexpected eventualities.
This is a major mortgage business that has been neglected in the past. But I strongly believe it will still work if properly looked into with affirmative interest, because with this in place, it will move a lot of people from tenancy to home ownership in this country.
The mortgage sector needs professionals who understand how it works to handle the operations and with the insurance companies every party involved will be well protected. The mortgage sector is a big sector and it should be properly managed and harnessed to deliver the needed goals and dividend there in for the benefit of the entire citizenry.
Lack of finance has been identified as one of the factors militating against housing delivery in Nigeria. What is your take on this and the way forward for the sector?
This is a specialized area we are known for in my organization; housing financing. For instance, while I was with the bank, I introduced to them that instead of paying huge amount of money for rent and at the expiring date of the rent the property returns to the owner. But without the bank spending its own money it can actually build the branches, and the huge amount been paid for rent could be converted into equity.
At the initial stage the management of the bank kicked against it, but I insisted and when they eventually assent to it and I was given the mandate to deliver the projects. So many branches of the bank were built in Enugu, Onitsha, Aba, Awka, Owerri etc.
It is the same principles that I am advocating to the government, developers and investors as well, that it is possible and that we can help to build your housing projects without you spending a kobo provided all the necessary documentations, terms and conditions are agreed on and assented to. Give us a trial and you will be amazed on what we will do within a shortest time.
So housing can be developed for Nigerians without using government funds, all government could do is to provide the land and we will take care of the rest from designing stage to completion and commission of the project, provided there are people ready to acquire these properties either through mortgage plan or otherwise.
The challenges in the sector remains that the developers wants to be provided with money before embarking on project delivery, reason is because they do not have the credit facilities to deliver the projects, and because some of the developers do not have the collateral to offer, so accessing loan from the bank becomes a challenge.
Our package is a wonderful package because over the years it has crystallized which is as a result of my experience in the mortgage industry. We have the credit facilities to deliver projects for the federal, state and local government, institutions, investors, developers etc, without them having to cracking their brain for finances.
Construction and engineering sector is the highest employer of labour all over the world, how do you think it can be developed in Nigeria?
All over the world construction industry is a leading industry and if it is implied in our country, it could turn the economy of this country around. From my experience as a construction economist, the construction industry will always remain the highest employer of labour because construction is virtually found in all other sectors output, such as in power plant installation, housing construction, road construction, airport construction, seaport construction among others requires construction output for it to be in existence. Another typical example is that if you want to build a house cement, paints, roofing sheet, steel bar, tiles, sand, granites, woods among others allied products will be used. So once a major housing construction is going on anywhere, it means many sectors of the economy will be benefited.
Therefore, all the government needs to do in order to curb the unemployment challenge is that they should award more construction projects, most especially in the housing sector. There should be effective demand for housing and in so doing there will be effective demand for aluminum window, doors, tiles, roofing sheet etc, and because of the increase in demand of these products, there is tendencies that the producers of these product will increase production and will also need more hands that is employ more people to work in the factory, so as to meet the products demand in the market.
Even at the construction site, because more houses is being build, more contractors will be engaged and more artisans such as tillers, carpenters, bricklayers etc will be engaged. Even food seller will be busy at the site because those artisans and contractors at the site will eat.
There is no doubt, the construction activities will reduce the menace of unemployment in this country to a barest minimum, if only the government will have the political will to deliver housing to the masses that are willing to own a house of their own.
The increase in construction activity will also lead to increase in capacity utilization in the country, which invariably will increase the gross domestic product GDP of the country at the long run.
It is only in social housing that the government will have to do on its own, because there are people who cannot afford to own their own houses and it’s the sole responsibility of the government to ensure this category of people in the society are taking care of by delivering social houses for them.
Are you comfortable with the government policy in this sector such as procurement, contract concessioning and local content initiative?
Well, nothing can be described as being perfect, but looking at the different policies that have emanated in the construction industry such as the Public Private Partnership (PPP), Local Content Initiative and the Contract Concession etc, the question is are they well structured to deliver the goods as it was meant to deliver?
As far back as 1996, when I was engaged by the mortgage, we had a package which we send to Abia State government at that time with a document to show for what we can do. During one of our land acquisition visit for the housing development in the state during discussion with the commissioner then he asked if it was possible for them to upgrade, repair and rehabilitate Aba road in the state. We responded that it is possible to do the road without the government spending their money.
It sounded like a joke to him, but when he got the package and presented it to the state executive council, it was passed and we are now embarking on the enumeration stage of the houses within the area. The scheme is a viable one because even those the scheme will affect financially embraced it. So the same scheme is still available today for any state government to catch up with and use in their various towns and cities development plans.
The principles still holds and will still work anywhere in the country. So what we are saying is that urban roads within cities and towns can still be upgraded, repaired and rehabilitated using this same approach whereby funds will be created in forms of credit without government bordering itself searching for funds to execute projects. The housing and road projects within state and local government should be given to local contractors to handle. This will help to build their capacity and professionalism in the sector and also create jobs among our people.
But for the highway projects, there is nothing wrong inviting international firms that have the capacity and the financial strength for the concessioning. There are many pension funds, locally and abroad that can be used for such purposes, if the proper structure is put in place.
Road project could be given for 25, 30 or 40 years concessioning period, provided the road is well built to meet international standard and be maintained as well by the company within the period of the concession. There should also be control over time to make sure the pricing is not unreasonably increased for the masses to bear. There is no reason whatsoever why concessioning of our major federal and state roads should not be embraced.
But our major problem in this country is that we keep waiting for government money, if budget is not passed every sector will be grounded as it is being experienced now in the country. Projects can be delivered without government funding it. If we keep waiting for government to fund all the roads network construction in the country, then it will take many generations to come before our roads could be built, which will not be good enough for the development of the country.
The government should as a matter of urgency invite stakeholders from various sectors of the economy to think out of the box to proffer solutions to the enormous challenges facing the country. Politics should be put aside at this time that the country is facing challenges virtually in all sectors of the economy.
The solution to most of the challenges we are facing as a nation can be solved by the private sector, if only the government realize that most of the thriving economy of the world today is as a result of the input of the private sectors. So, the concessioning and contracting policy is important for effective growth of our economy.
Concessioning of some of our major roads will improve the network of roads in the country, as good road design and construction will be delivered on time for the people and motorist will not spend man hours on the road. So the government needs to be consistence in its policies for the built environment.
There is need for the government to also set up a specialist bank for the construction industry at this time so as to assist the industry to grow, through creation of credits for the investors. The bank as well could be made to manage most of the funds coming from abroad for the purpose of concessioning contracts for construction.
For procurement policy, it is good, because the bureau of public procurement acts is meant to ensure that qualified professionals and companies that have the capacity and capability to handle projects in the country are engaged without fear or favour.
While the local content policy as good as it is being applied in the oil and gas industry should be duplicated and applied in the construction industry as well. The policy has really helped the local professionals and companies operating in the oil and gas industry a great deal. This will help the indigenous professionals and their firms to grow and also be in tune with the trends internationally.