Resolving the housing challenge?

It is a fundamental truth that housing is one of biggest investments made by a majority of the world’s population in a lifetime. It is also an investment that the majority of Nigerians will make once in their lifetime and to a great extent, determines the quality of life, whether to be lived in dignity or in overwhelming squalour. The state and adequacy of housing are a pointer to the development and civilisation of any nation. It is stated that Nigeria faces a housing deficit of not less than 17 million houses. And the available houses seem not be adequate when considered against the background of the seven cardinal parametres of adequate housing. For clarity of this discourse, the seven functional parameters are legal security of tenure; availability of services, materials, facilities and infrastructure; affordability; habitability; accessibility; location; and cultural adequacy.

Who says that we cannot resolve our housing challenges? Who says that providing a roof over the head of a majority of Nigerians is rocket science? Why do we accept defeat when we are very close to roaring success? Must we fail when we can succeed? These are questions with available answers but we continue pretending that they cannot be solved. This discourse reviews the beauty of pooled funds and the solidarity of great numbers available for housing development in Nigeria. It takes off from the assumption that there is strength in numbers. It further assumes that governance which is the human element is the most important consideration in the quest for economic growth and development especially, in the housing sector.

Enter the National Housing Fund established since 1992. The aims and objectives of the Fund are to facilitate its mobilisation for the provision of houses for Nigerians at affordable prices; ensure the constant supply of loans to Nigerians for the purpose of building, purchasing and improvement of residential houses; provide incentives for the capital market to invest in property development; encourage the development of specific programmes that would ensure effective financing of housing development, in particular low cost housing for low income workers; provide proper policy control over the allocation of resources and funds between the housing sector and other sectors of the Nigerian economy; and provide long term loans to mortgage institutions for on-lending to contributors to the Fund.

Every Nigerian earning an annual income of N3,000 and above is placed under obligation to contribute to the Fund. This minimum floor looks like the minimum wage for 12 months in the period the law was enacted. Contributions attract an interest rate of four per cent per annum. The Fund places an obligation on the Federal Government to make adequate financial contributions to it for the purpose of granting long term loans and advances for housing development in Nigeria. The Federal Government may also make available such other sums either in naira or foreign currency to the Fund as it may deem necessary. Beyond contributors and the Federal Government, obligations are also placed on insurance companies and some category of banks to make contributions to the Fund. The Fund is managed by the Federal Mortgage Bank which is duty bound to ensure that funds are utilised to finance the housing sector of the economy through wholesale mortgage lending to primary mortgage institutions. Loans are to be made available to contributors at single digit interest rates. The Federal Mortgage Bank shall charge the mortgage institution not more than one percentage point above its borrowing point. Mortgage institutions shall be allowed a minimum spread of four percentage point above the rate charged by the FMB.

Fast forward to the end of 2015 and 23 years after the establishment of the Fund, the housing crisis has deepened and worsened. Twenty three years is long enough for an organisation to get through its learning curve, learn from its experience and benchmark its activities with those of comparable institutions and the best in class. What went wrong and why did the Fund not realise the objectives set out for it at the beginning? The first is that the human element in terms of governance did not allow the Fund to grow. Clearly, those who have managed the Fund over the years did not have the vision of the founding fathers. They simply occupied space because it was their turn to take a seat on the table – not necessarily to add value. The questions to be posed to the management of the Fund are legion. How many Nigerians are contributors in accordance with the spirit and letter of the enabling law? What have they done to get more Nigerians into the net of contributors? How have they built confidence in terms of ensuring that contributors benefit from their contributions?

If the Fund had been well-managed, it would have been managing contributors’ funds of more than N20tn. Imagine about 50 million Nigerians contributing 2.5 per cent of their income to the Fund. This will include those on the minimum wage and Nigerians in the middle class and those who earn higher income. We could think of no fewer than N3tn accruing to the Fund on a yearly basis. Every reasonable person cannot fail to come to this conclusion if you review the success of much newer funds such as the Pension Fund and the National Health Insurance Scheme. Can anyone imagine the cushion of investible funds that will be available in the Nigerian economy if the National Housing Fund and all these funds were operating at optimum capacity? Income from investments of the resources available to the Fund would have also provided more resources to the Fund. And it could have attracted investments from funds available to private and sovereign investors around the world.

There are three ways of getting more people into the contributors’ net of the Fund. The first would have been through sensitisation and moral suasion. The second would be the power of example and success. When the average worker sees his colleagues benefitting from a loan that eventually facilitates a personal home, no one will need to preach to him to ensure he contributes and eventually benefits. For those who fail to move with reason, the law as the command of a sovereign backed by sanctions will rein such fellows in. There may be challenges with the Land Use Act, the mortgage and foreclosure laws and all imaginable obstacles that we conjure when we discuss the housing crisis. They are a part of the governance crisis and challenge. They are not products of any natural irreversible cataclysmic process that is pre-ordained by powers and forces we cannot confront.

It took my organisation, the Centre for Social Justice, over three months of begging the officials of the FMB to enroll our staff into the Fund. It was like we were disturbing the officials and they were doing us a big favour to do exactly the basis for their employment. The reprehensible idea that the few thousands of contributors find it extremely difficult to get loans from the Fund is not only unacceptable but a betrayal of trust. Even persons who want to exit the Fund after the statutory age find it difficult to get refunds. Thus, who is fooling who? Since we know what is wrong and refuse to take steps to right the wrongs, do we expect God to send His angels to do the light lifting for us? We can start a housing revolution which will spur economic growth and improve livelihoods. It is not beyond our capacity.


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