HOUSING FOR ALL; AN OBVIOUS DELUSION

Content Page

Table of content 1

Abstract 2

1.0 Introduction 2

2.0 The Nature of Nigeria’s Housing problems 4

3.0 Review of Past Policies and Programmes 5

4.0 Current Housing Delivery Approach 10

5.0 Affordable Housing Scheme 11

6.0 A Review of Past Failures of Public Housing Programmes 12

7.0 Factors affecting public housing delivery in Nigeria 14

8.0 Addressing the Housing Problems 16

References 21

List of Figures

Figure Page

Fig. 1: Nigeria Two Tier Housing Finance Structure 8

Abstract

In a developing country like Nigeria, the housing problem basically relates to quantitative and qualitative inadequacies. On the supply side, various government policies in the past have been formulated towards overcoming the huge shortage through several Housing Reform Programmes. Despite these past efforts, housing continues to be a mirage to ordinary Nigerian. Currently, there are various mass housing delivery Programmes such as the affordable housing scheme that utilize the Public Private Partnership effort and several Private Finance Initiative models could only provide for about 3% of the required stock. While the quality of the existing stock is also under a heavy scrutiny in term design and desired functions including acceptable liveable neighbourhood, 87% of the existing stocks are backlogs which are stocks that do not meet the minimum quality requirement. This paper examines the perception that “HOUSING FOR ALL” is an obvious delusion by reviewing the past and current housing delivery Programmes in Nigeria.

This paper also examined the growth in housing development, problem and challenges of public housing delivery in Nigeria. It identifies the various housing delivery mechanisms in current practice and suggests a holistic programme to address the huge housing shortage in Nigeria.

The various government responses at solving the housing problems are identified. The achievements of government past housing governments are examined. Finally factors inhibiting public housing delivery and the challenges of housing in the future are presented.

1.0 Introduction

Housing means more than a mere shelter. The United Nations inter-regional seminar on special aspects of housing in 1975 defines housing as that which “encompasses all the ancillary and community facilities which are necessary to human well-being.”
In terms of national development objective, housing is recognized as a major investment item which could make a tremendous contribution to economic development and that any housing policy that is effectively employed could serve as a vehicle of improving social welfare and shaping the urban settlement.

Over the years various governments have devised various means and developed policies that would enhance low cost housing as well as simultaneously develop housing unit along side economy and population growth. There have however been difficulties in the implementation of these policies and therefore a huge gap has been created between housing supply and demand. The campaign by government themed “HOUSING FOR ALL” has been seen by professionals as an obvious delusion. While some in the government quarters are of the opinion that the present housing difficulty is as a result of poverty, professionals are however of the opinion that the present housing difficulty in Nigeria arises not necessarily because of poverty, but because of the absence of an effective administrative machinery to mobilize and organise the country’s natural resources, human, industrial, etc, for housing and urban development.

The provision of public infrastructure and social services has suffered neglect, and the process of urban planning and zoning has been slow or stagnant. Population growth has outpaced the rate of housing provision. Consequently there is the preponderance of a high magnitude of housing inadequacy in urban centres in Nigeria. This is manifested in quantitative and qualitative terms. Severe overcrowding and unsanitary physical environment characterize the housing in the urban centres that are clearly an affront to human dignity.

However, the problem of poor co-ordination and ineffectiveness of some public housing agencies in Nigeria is in most cases responsible for the failure of certain laudable housing policies and programmes. For instance, Abiodun J.O. asserts that some of such agencies with adequate knowledge refuse to perform their duty of seeing to it that the beneficiaries of the housing scheme fulfil their obligations and hence constitute a threat to the successful execution of the scheme. Again, some of these housing agencies evade from taking decisive action on certain beneficiaries who violate certain laws due to either political or social reasons.

Magbolugbe, in his study, 'Federal Low Cost Housing in Ilorin, Kwara state' (1985), uncovers the dynamics of urban housing policies that have on paper tended to be in support of low income group, but which have in practice largely benefited other income groups, the middle class and upper income families. This study further states that the very few low income beneficiaries of the scheme in the country are unable to hold on to the conditions attached or even do so at the risk of excessive over-crowding.

2.0 The Nature of Nigeria’s Housing problems

Many renowned scholars of urban science as well as distinguished regional and international organization concerned with urbanisation and housing at global levels, have long expressed immense anxieties over the alarming nature and dimensions of the housing problems in the nations of the developing world. Highly recognised among the most crucial corollaries of unplanned and dependant urbanisation is the urban housing crisis pervading the primary and large regional secondary cities of the fast and medium developing categories of the third world nations (Lagos, Rio de Janeiro, Sao Paolo, Mexico City, Cairo, New Delhi, Karachi etc.). This crisis situation in its integrated form has surpassed the terrains of the social sphere, reproducing itself in the economic, political and environmental processes of these nations of the third world, Nigeria not an exemption.

Housing problem has been generally accepted as being diverse and complex. Within the spectrum of this problem, one can identify both quantitative and qualitative deficiencies. Identified major housing problems in Nigeria as that of instability of human needs for housing. This problem is world wide and it is of a recurring nature. In fact it is doubtful if any nation of the world can satisfactorily meet its housing requirements.

In Nigeria, the problem of inadequate housing has been compounded by the rapid rates of urbanization and economic growth. Housing difficulties is more serious for the low income groups where problems have been complicated by rapid growth, inflated real estate values, speculative activity, influx of poor immigrants and lack of planning. One can also site the increasingly significant shifts in the form and design of housing from the rooming form to flat and single family house forms as a factor responsible for acute shortage of housing for the low income groups.

The problem of inadequate housing is experienced in both urban and rural areas in Nigeria. For example NISER in a study of rural housing in the nine Southern States of Nigeria found that, “the projected demand of housing units on an average of six persons per dwelling unit for the nine states are 5.2 million in 1990, 7.0m in 2000, 9.5m in 2010 and 12.7m in the year 2020. Other manifests of the housing problem are: high rent in the housing market, inadequate mortgage finance and in accessibility to mortgage loans. These problems have resulted in overcrowding, poor and inadequate social amenities, unsatisfactory and unwholesome environmental conditions and urban squalor, the absence of open space, the over development of land area leading to the overcrowding of buildings, in-accessibility within residential areas, and in the scarcity and high cost of building materials.

3.0 Review of Past Policies and Programmes

Pre- 1928: Before the advent of the colonial rule at the dawn of the 20th Century, a communal system of housing delivery was practice in most Nigerian communities. Houses are built through communal efforts by peer groups, members of age group would turn out en masse on appointed day to assist the builder in whatever task of the project. In return, the builder would provide sumptuous meals while the project lasted and vice versa.

The Colonial period (1928- 1960): Government starts to intervene in the housing sector in 1928, during the Bubonic Plague of 1928 – 1929 (NHP, 1991), by the then government of the defunct Lagos Colony, wading into the housing sector brought into existence by law the Lagos Executive Development Board (LEDB) which was charged with the responsibility of planning and Development of the capital city of Lagos, produced layout of Ebute Metta. But that housing scheme had only civil servants as its beneficiaries. It was only possible to sell the units of houses in that estate to civil servants through payroll deduction system.

Nigerian Building Society (NBS): Established after the World War II, by colonial government with the aim of to extending housing opportunities to more Nigerians including those in the private sector. This was a carryover from the British system where mortgage bankers are called building societies. The effect of the NBS was mainly felt in the Lagos area.

Urban Redevelopment or Renewal

Two of the hallmarks of the colonial approach to African urban housing in the fifties were the Redevelopment of decaying ‘core’ areas combined with the renewal of ‘slums’ or squatter Areas, and the construction of large rental (sometimes tenant purchase) public housing estates. The first attempt in the country was in 1951. The then minister of Lagos Affairs appointed the Lagos Executive Development Board (LEDB) now known, as the Lagos State Development and Property Corporation (LSDPC) to clear a slum area of about 28.34 hectares (70acres) in Central Lagos within a triangle in the vicinity of Broad Street, Balogun and Martins Streets together with Nnamdi Azikwe Street and the area east of it. The property structures in this area range from residential to market stalls erected in the area without planning and due regard for accessibility, drainage, sewers, open spaces, parking facilities and density. Finance and problem of rehousing displaced persons occasioning tenure insecurity confronted the project.

1952- 1972

Nigeria in 1952 - 1960 was carved up into three regions namely: Eastern Region, Western Region and Northern Region. The regions established respective housing corporations in 1964. With a function of developing estates and at the same time providing mortgage for the people to build houses and pay back over many years. Like the NBS, the housing corporations had impacts only in the capital cities of the respective regions. In 1971 National Council on Housing was established which marked the first significant and direct attempt by the Federal Government intervention in the area of Housing.

Establishment of the Federal Housing Authority (FHA) – 1973

The Federal Housing Authority, was established under Decree No. 40 of 1973, and amended by CAP 136 LFN of 1990. It began operation, however, in 1976. Its functions and roles include making proposals to government for housing and ancillary infrastructural services and implementing those approved by government. Under the National Housing Policy of 1991, FHA was mandated to develop and manage real estate’s on commercial and profitable basis in all states of the federation, provide site and services scheme for all income groups, with special emphasis on low-income groups in the major cities of the country; and provide low income houses in all states of the Federation.

Towards the first all African Festival of Arts and Culture (FESTAC), the Federal Military Government begun mass housing development, it embarked on the development of the Festival Town in Lagos, and in different state capitals (NHP, 2006).

Learning from past failure, FHA’s housing delivery is made to be end-user driven through cooperatives, Housing Associations, Key workers’ Scheme, and House improvement (Nubi, 2008). As a source of strength, the agency (Federal Housing Authority), has well over 53,000 housing units in about 77 estates and a land asset holding of over 10,000 hectares nationwide to its credit, the FHA has spent over N30 billion on housing development and ancillary infrastructure. It also has an asset base of approximately N5 billion (Thisdayonline, 2009). The agency is placed in a pivotal position to contribute so much to provision of residential accommodations to a large section of the population. Its activities can also boost manufacturing and distribution of building materials such as cement, iron rods, roofing sheets, ceiling sheets, timber product, nails, paints, etc. through new housing development or housing renewal.

National Housing Programme

The development of the Festival Town and Ipaja Town in Lagos was done under the 1975 - 1980 National Housing Programme, by the FHA. Under this programme, the federal government developed the Amuwo Odofin Phase 1 Estate in Lagos and the first ever federal low cost housing estates in other 11 state capitals. The estates were in 1978 transferred to the various state governments for purposes of control and management. This housing programme was the first significant Federal government effort at providing affordable housing to Nigerian citizens on long-term mortgage repayment terms. And it was the time when Nigerian Building Society was transformed into the Federal Mortgage Bank of Nigeria. In 1979, the Federal government embarked upon low cost housing development (Shagari Low cost) in all the then 19 states of the federation. The 1981 - 1982 National Housing Programme was designed to provide 350 medium/high income housing units in each of the then 19 states in the country, to complement the Shagari administration's Low -Income Housing Programme which was handled by the then Federal Ministry of Housing and Environment (NHP, 2006). 1986 – 1993 tagged "A period of consolidation". Then, the Nigerian urban landscape was littered with many suspended/abandoned housing projects, resulting from the past failed programmes, Shagari's Low-income schemes and FHA's schemes. Emphasis during the period was therefore shifted from new programmes to completion of viable suspended schemes (Thisdayonline, 2009).

National Housing Policy (NHP 1991)

The Nigerian National Housing Policy was formulated in 1991 with the goal of ensuring adequate access to decent and affordable housing by all Nigerians. The housing situation in Nigeria since its formulation has shown quite glaringly that the implementation of the policy and the operational strategies adopted for it have been deficient. The policy was revised in 2004 to take care of the problems encountered in the implementation. A Presidential Technical Committee on Housing and Urban Development was set up by government to address the new housing reforms. It recommended amongst other things the restructuring of the Federal Mortgage Bank of Nigeria (FMBN) and the creation of Real Estate Developers Association of Nigeria (REDAN), and Building Materials Producers Association of Nigeria (BUMPAN). The new housing reforms created financial mechanisms and institutions that will make available to the private sector (developers) funds for the production of mass houses, and allow purchasers (mortgagors) to have easy access to borrowed money through the Primary Mortgage Institutions (Ebie, 2004). It also acknowledged, finance as constituting the centre piece, among other major pillars, of housing delivery (Abiodun, 1999). The poor performance of Federal Mortgage Bank of Nigeria (FMBN), which gave loan to 8,874 out of over 1,000,000 applications between 1977 and 1990, was very worrisome. It was very obvious that the FMBN should undergo serious re-engineering to be able to cope with the enormous task of housing finance. This re-engineering resulted into a framework of two – tier financial structure (see fig. 1)

Fig. 1: Nigeria Two Tier Housing Finance Structure Source: (From NHP)

Arilesere 1998, summarised the major strategies and guidelines of the National Housing Policy (NHP, 1991) on Housing finance as follows:

• Mobilisation of savings into Mortgage Institution
• Provision of incentives for the capital market to invest in property development
• Provision of policy controls over the allocation of resources between the housing sector and other sectors of the economy.
• Facilitation of flow of domestic and international resources into the priority housing areas, such as low income housing.
• Need for government to establish voluntary schemes, mandatory schemes and provide substantial budgetary allocations and financial transfer to the housing finance system.
• Establishment of National Housing Fund (NHF) to be administered by the Federal Mortgage Bank.
• Ensuring that Commercial Banks, Merchant Banks and Insurance Companies are given reasonable conditions to encourage them to invest in mortgage business.

Apart from the above, The policy spelt out other functions of the FMBN – These are:

v To develop a secondary mortgage market for housing finance to improve the liquidity of the system

v To act as guarantor for loan stock floated by the primary mortgage institutions

v To manage the National Housing Fund.

The Federal Mortgage Bank (FMBN)

Nigerian Building Society was converted to Federal Mortgage Bank in 1977, with a capital base of Twenty Million Naira (N20m) and increased to One hundred and fifty Million Naira (N150m) in 1979. The impact of Federal Mortgage Bank then was insignificant as only few loans were given principally to few middle and high income groups in the country (NHP, 1991). As pressure due to increase in housing deficit continue to rise, an inclusive Housing policy was started in 1980, targeting low income group whose annual income did not exceed five thousand Naira (N5,000). The Federal Mortgage Bank (FMBN) as a vehicle for Housing delivery in Nigeria, was combining the functions of primary and secondary mortgage institutions. The Federal government separates the two functions by creating the Federal Mortgage Finance of Nigeria (which is now phased out). The FMBN was therefore left to operate exclusively as a secondary mortgage market and open the primary mortgage market to the private sector. Many leveraged that opportunity to go into mortgage banking. But their impact on the built environment has been short of expectation. With the FMBN operating as the secondary mortgage market, the next problem was where to source the money to lend to the Primary Mortgage Institutions (PMIs). In 1992, the Federal government enact a policy which made it mandatory for every Nigerian earning up to N3,000 monthly to contribute 2.5 per cent of his monthly salary to a National Housing Fund (NHF) (Thisdayonline, 2009). This fund was to be managed by the FMBN, from which it could lend to the PMIs. The contributors to the fund were also entitled to borrow money from the fund, through the PMIs, after six months, to develop houses.

With the NHF policy, and subsequent decree, in place, the NHF had about N12 billion, out of which only about N3.4 billion has been disbursed. Contrary to expectations, however, this strategy did not solve the problem of scarcity of housing in the country. The national development planners had then targeted the year 2000 as the year by which Nigeria would achieve the objective of having provided shelter to all citizens.

National Housing Programme (NHP 1994–1995)

1994-5 National Housing Programme was designed to provide 121,000 housing units nationwide, for all income groups. The cardinal objectives of the programme included the following: to increase the housing stock in the country; provide easy access to home ownership; translate the national housing policy objectives into reality; and enhance resource mobilization. Others were: to establish permanent housing delivery system which will be self-sustaining and enduring, without reliance on the government treasury, after an initial take-off grant; strengthen institutions within the system to render their operations more responsive to demand; and encourage greater private sector participation in housing development.

4.0 Current Housing Delivery Approach

In 2003, the federal government also established the Federal Ministry of Housing and Urban Development, and Proposed a Housing Reform, in view of the fact that there were not many affordable houses in Nigeria. There was an illusion that houses were available. But most of them were high-priced. Mabogunje (2004) opined that a number of other legislation needs to be amended substantially to bring their provisions in line with the new housing regime. The touchstone in such reviews is to reduce red-tape and ensure that various legislations are compatible with demands of a free and robust market economy. The period 2003 – 2004 witness a Housing policy that recognized the private sector on the driving seat of housing delivery in the country, the key features of this policy include the placement of the private sector in a pivotal position, for the delivery of affordable houses, on a sustainable basis; assignment to government of the responsibility for the development of primary infrastructure for new estate development; and review and amendment of the Land Use Act to ensure better access to land and speedier registration and assignment of title to developers. Others are the development of a secondary mortgage market, involving the FMBN and the establishment of a new mortgage regime, under the NHF, to facilitate more favourable mortgage terms; and a five-year tax holiday for developers (Thisdayonline, 2009).

5.0 Affordable Housing Scheme

Affordable housing is that housing which can be acquired from household income without sacrificing any of the other essential needs of the household. According to Struyk (2005) “housing affordability is the ability to purchase a dwelling of the appropriate size and minimum physical and sanitary standards and still have sufficient income to enjoy at least the minimum consumption of other essential goods and services”. In Australia, Canada, New Zealand and the United States of America, a commonly accepted guideline for housing affordability is a housing cost that does not exceed 30% of a household’s gross income (Struyk, 2005; WIKIPEDIA, 2007). A recent study based on the salary structure of public servants in Nigeria showed that no public servant in Nigeria below salary grade level 13 in the Federal Civil Service and salary grade level 16 in the Imo State civil service can afford a property costing N4.75million on a 25 year mortgage at 6%, if he devotes 50% of his salary per annum to housing (Onyike, 2007). At 18% mortgage rate, only a Federal Permanent Secretary or his equivalent on grade level 17 can afford the same house. This shows that in the absence of some assistance, adequate housing is unaffordable to most law-abiding Nigerians.

Factors which influence or contribute to housing affordability include current and lifetime household income, house prices and rents, nominal and real interest rates, labour market conditions which determine security of employment and income, mortgage and rent payments, and the housing supply constraints which may affect the ability of the market to respond to excess demand for housing (Onyike, 2007; The Treasury New Zealand, 2008).

There are several affordable housing schemes that are either fully funded by government or in partnership with the government under the Public Private Partnership (PPP) scheme. In some cases selected developers were given some kind of concession by government with the aim of providing affordable housing for instance, in the Federal Capital Territory. Such efforts were further complemented wit the Private Finance Initiative (PFI). Jibrin (2009) further argued that while the quality of the existing stock is also under a heavy scrutiny in term design and desired functions including acceptable liveable neighbourhood, 87% of the existing stocks are backlogs which are stocks that do not meet the minimum quality requirement.

Having considered the above, we can now look at the efforts made by Government in the past to house Nigerians.

6.0 A Review of Past Failures of Public Housing Programmes

As mentioned earlier, there was little effort made in the field of housing during the pre-independent era and in fact up to the time of the second National Development Plan Period; except for the central Lagos slum clearance programme and the establishment of government reservation areas housing programmes was low in the priority list of the government in the pre-independence era.

The central Lagos slum clearance programme displaced about 30,000people despite the 66.6% subsidy on the housing provided for the displaced, very few if any of the displaced people went to live in the houses because of high cost.

During the first National Development Plan period only N39.2 million representing 47% of the N84 million allocated to Urban and Regional Planning was disbursed.

Furthermore, the public sector was only able to produce 1.06% of the 24,000 housing units planned for this period. Perhaps, it needs be mentioned too that the former regional governments could not undertake housing scheme on a large scale, even with the establishment of regional housing corporations, because of inadequacy of technical personnel.

The actual achievement of the second National Development Plan in relation to housing was rather low. The plan was only successful in providing.

(a) Ninety Staff Quarters of various sizes in Lagos area.

(b) Four Blocks of flats as transit residence for official of the Ministry of external affairs.

(c) The establishment of the Federal Housing Authority in 1973 charged with the provision of low cost housing across the country and

(d) The reduction of the interest rate of the Nigerian Building Society from 81/2 to 61/2 %

Essentially, it needs be stated that government effort in the provision of low cost housing in the second National Development Plan Period just like in the first was concentrated in Lagos area. The houses themselves were prestigious housing which would not be tagged public or low income housing as such.

In the third National Development Plan Period, the following minor achievements were

Recorded

(a) The promulgation of the Rent Control edict and the subsequent establishment of the rent control panel charged with the fixing of minimum rent payable on different types of houses.

(b) In 1975, the anti- Inflationary task force was established to examine the causes, and consequences of inflation as it pertains to housing

(c) The promulgation of the land use decree to allow for ease of implementing the public housing programme.

(d) The promulgation of the Rent Control edict and the subsequent establishment of the rent control panel charged with the fixing of minimum rent payable on different types of houses.

(e) In 1975, the anti- Inflationary task force was established to examine the causes, and consequences of inflation as it pertains to housing

(f) The promulgation of the land use decree to allow for ease of implementing the public housing programme.

Nevertheless, at the publication of the National Development Plan in 1980, only 26,950 housing units, representing 23.3% of the intended housing for the third National Development Plan Period could be constructed.

Not much was achieve in the fourth National Development Plan either. The available data shows that 26,334 one-bedroom units and 3,449 three bedrooms units had virtually been completed. The same survey shows that 3,924 and 443 units of the two categories respectively were in progress.

In terms of physical manifestation of the entire numbers of houses that were delivered during the plan periods, from 1973 – 1979 only ten thousand housing units were constructed in the Lagos area. About twenty-four thousand units were constructed in the rest of the states. The Federal Housing Authority admitted in 1980 that 19% of the programme was completed in Lagos and 13% in the rest of the Nation. The civilian administration before the 1983 military coup claimed its executed 20% of its housing programme (about 30,000 housing units). The Lagos State civilian government constructed 10,428 units out of the planned 50 000 units, were as it completed 70% of the housing units meant for the high income groups (Alaka, Opebi, Alapere estates). Some of the reasons given for the low level of housing provision include: poor output of contractors; financial problem arising from current economic situation unresolved problems of compensation for land structure and corps uncooperative attitude of some state governors; abandonment of site by contractors; late or non-availability of land, consultancy problems. These factors, the federal Ministry of Housing and Environment remarked, were reasons why the housing target were not met.

7.0 Factors affecting public housing delivery in Nigeria

The provision of housing has for long been seen as a government concern and the Federal Government has tried in different ways to tackle the nation’s housing problems. The synthesis of government activities reveals that during the past few years, a series of constructive programme and far reaching actions were taken by the government to combat the housing problem. However, it is a fact that the housing problem is far from being solved, and this can be attributed to flaws in the strategies adopted by the government. Such flaws include:

First, Government’s intervention through direct housing construction. Even though the government possesses the resources and executive capacity to embark on direct home construction, it should not have done so given the past experiences of the high cost and slow pace of construction of government projects. Apart from the fact that the Ministry of Housing and Environment was faced by many constraints which affected its performance level, the houses built were usually very expensive which put them beyond the reach of the low income group, and the houses did not meet the requirements of the people e.g. providing one bedroom houses for low group when the average family size is put at 6 persons.

Secondly, the adopted practice and system of granting loans makes it difficult for the really low income people to benefit. The bulk of the mortgage loans went to family in the upper class, making it necessary to re-examine the loan policy of the country.

Thirdly, other means of encouraging housing construction were not given adequate attention. For example the government agreed to lay emphasis on the provision of basic infrastructure in various layouts on which individual could build their own houses, but this was not done. Also, cooperative societies were not given much encouragement as planned.

Fourthly, many government housing projects were embarked upon without effective programme of action and appropriate institutional arrangement for their execution. This means that the project lacked adequate and sound planning which led to their failure

Fifthly, there was too much corruption in high quarters. For example, Chief Awolowo alerted the nation to the fraud in the Ministry of Housing and Environment in one of his Campaigns in 1982. He said about N5.4 million was missing, a figure later reduced to N4million by the minister when he confirmed the said fraud.

In summary, it may be concluded that lack of financial prudence, public probity and accountability, inefficient and ineffective administrative machinery, mass importation of foreign technology, material, personnel and inflation, as well as incomprehensive analysis of the nation’s housing requirement caused the low performance of the public housing programmes.

8.0 Addressing the Housing Problems

There has been realization by the Government that the earlier efforts have failed to provide adequate and affordable housing for the vast majority of Nigerians. A Ministry of Housing and Urban Development was created to facilitate the realization of the objective of housing for all Nigerians. In 2004, a draft new National Housing Policy was produced. This draft is still making the rounds and has not yet been signed into law. Given that home ownership in Nigeria is currently put at 10% compared to 72% USA, 78% UK, 60% China, 54% Korea and 92% Singapore and outstanding mortgage loans at just 0.5% (2005) of GDP compared to 77% USA, 80% UK, 50% Hong Kong, 33% Malaysia and 61% Singapore (Financial System Strategy 2020, 2008), a lot of work needs to be done for Nigeria to approach the standards achieved in the developed world. The Yar’adua Government appears serious about leading Nigeria to the Promised Land. A number of committees and think tanks are working to fashion out the best ways and strategies for achieving the objective. The following suggestions/recommendations will help significantly in solving the urban housing problems of Nigeria in the 21^st century.

a. Land Reform/Review of the Land Use Act

It is generally believed that the Government has abused the trust of the people as far as the Land Use Act cap 202 LFN 1990 was concerned. The Act has become an obstacle rather than an enablement to development and therefore needs to be reviewed to improve the availability of land for housing development. Nationalization of land should be reversed. The Land Use Act or any future land reform legislation should not form part of the Nigerian constitution; this will make any necessary amendment of the law easier to achieve thereby making the law responsive to the needs of the times. Apart from the problem of corruption and abuse of trust which has bedevilled the application of the Act, there is the ownership issue which rendered the use of bare land as security for loans very unattractive and risky to the financial institutions. The Act provides for compensation for unexhausted improvements. Revocation of the right of occupancy over undeveloped land, technically, does not attract any compensation except for the ground rent paid in the year of the revocation; the Government which graciously permitted you to occupy her land will not pay compensation when she takes back what was hers in the first place. This, therefore, rendered bare land an unsafe and unacceptable security for a mortgage loan, thereby reducing the potential for raising funds for additional housing development. The requirement of governor’s consent should be expunged from the Land Use Act to facilitate easy transfer, assignment and foreclosure of mortgages which are essential for the efficiency of the mortgage market. A new land reform which guarantees private ownership of property without compromising government’s right of eminent domain is hereby proposed, to increase land availability and improve accessibility of funds for housing development.

b. Review of fiscal and monetary policies to reduce inflation and interest rate.

High inflation and high interest rates constitute a disincentive to property development and investment. With inflation rate at 14% and maximum lending rate at 17.92% in July 2008 (allAfrica.com, 2008) new housing would be unaffordable to most Nigerians. Inflation and interest rates must be reduced to single digits. The Government should work hard to achieve low inflation and low interest rates.

c. Creation of a viable secondary mortgage market

It is impossible to provide adequate and affordable housing for the overwhelming majority of Nigerians, namely the low and middle income earners, without viable long-term lending arrangements, which can only be achievable if there is a viable secondary mortgage market. The secondary mortgage market is therefore a sine qua non for mass improvement in the availability of housing. True and sustainable secondary market development cannot proceed unless and until the primary market is able to produce a sufficient volume of high quality mortgages to meet the servicing and performance requirements of investors (Lea, 2000). There should be a large scale securitization of mortgage portfolios to create mortgage-backed securities for the secondary market. The recent floatation of a 100 billion mortgage bond for the purchase of Federal Government houses is a step in the right direction. The Federal Mortgage Bank of Nigeria should become a major operator in the capital and secondary mortgage markets to ensure access to adequate funding and create investor confidence in the Nigerian mortgage industry. There is need however to firstly amend all laws critical to housing investment to facilitate the issuance of housing-related instruments such as mortgage-backed securities(MBS) and real estate investment trusts(REIT) which will be traded on the secondary mortgage market. A new FMBN law should give legal backing to the bank to operate as a secondary mortgage institution with right to issue mortgage securities. Pension and insurance companies should be mandated to release much of their long term funds to the mortgage market.

To further improve liquidity, the National Housing Fund (NHF) contributions should be raised to 5% of monthly income and deducted at source: a new FMBN law should give the bank the authority to prosecute any defaulters, for non-payment, non-remittance, under-payment or under-remittance of NHF contributions. As observed by Sanusi (2003), the NHF contributions can be integrated into the personal income taxation system such that “a defined proportion of taxes paid are allocated to the housing fund pool, as is done in Singapore”. This, I believe, will significantly reduce the degree of default.

The absence of a clear-cut foreclosure law scares some investors and funding institutions from the housing sector. The very long delays in the disposal of cases in our law courts make property investment a nightmare to many investors. The adoption of non-judicial foreclosure process in cases of mortgage contracts, as practised in some countries, is essential for proper functioning of a secondary mortgage market in Nigeria (Akeju, 2007). The use of lands tribunals for such matters is hereby recommended.

It is necessary to sound a note of warning that secondary mortgage market in Nigeria must be strictly regulated to avoid catastrophic consequences.

d. Creating a National Credit Database

A nationwide credit database that can provide credit information of all individuals that enjoy financial services in Nigeria is not available (Akeju, 2007). As a result, the financial institutions in trying to establish the financial background and credit worthiness of the loan applicants, take several days or weeks to process most loan applications. A development of a nationwide credit database which will make credit scoring of prospective loan applicants possible has the potential to reduce the loan processing period to a matter of hours. It will also encourage the financial institutions to extend their loan facilities beyond the few well-known rich people. Going by the USA experience, however, the success of this system depends very much on the integrity of the credit scoring agencies. Two major credit scoring agencies in the USA are the Equifax and the Trans Union. The most widely-used credit scoring system in the United States is the FICO system which attach scores to various aspects of the loan applicant’s credit profile, namely: previous credit performance, current level of indebtedness, time credit has been in use and types of credit available to the applicant in the past, and pursuit of new credit (number of enquiries) by the loan applicant.

The building up of the required databank and the associated networking in Nigeria will take some time. In the interim and until the national credit database is in place, the government should provide guarantees in form of mortgage insurance to lenders to encourage lending to the lower income people. The USA government, an avowed advocate of the free market, is precisely providing similar guarantees today in response to the “financial meltdown”.

e. Improving Land Registration

Land registration is still a very frustrating experience in most States of Nigeria. It is expensive, inefficient and time-consuming. The process is very prone to corruption. The introduction of the Geographic Information System (GIS) in land registration will solve most of the afore-mentioned problems. The initial cost of establishing the system is quite high but the enormous benefits make the system very cost-effective. The experiences in both Abuja and Lagos where the GIS has been implemented are very encouraging. Other States should quickly follow their example.

f. Compassionate Urban Renewal

Slum areas are the breeding grounds for diseases, crimes and other socially-deviant behaviour. Slum clearance is necessary to improve the quality of life in such areas. Slum clearance, however, must have a human face. Driving away the slum dwellers without providing an alternative and better accommodation for them elsewhere is a sin against the people’s fundamental human rights. The ugly experience of Maroko is still fresh in the minds of many Nigerians.

g. Cost-saving house designs

A cost-to-design approach is necessary for low-cost housing to be achieved. Affordability must guide the designing of houses. According to Alao (2008) the starting point for the design of affordable housing unit is to establish the affordable rent for the area in which the project is to be located. Affordability through design also entails the determination of the best property development methods available to achieve cost reduction without compromising quality. The design must also be sympathetic to both the physical and cultural environment. A good design should aim at achieving affordability, marketability and durability of the finished product.

h. Strict development control

The inability of the Government to enforce development control is one of the major reasons for the deterioration of housing and housing infrastructure in most urban areas in Nigeria. Development control should be implemented devoid of adverse vested interest, to ensure that good housing quality is maintained.

i. Taxation

The hoarding of available residential land by monopolist land owners increases the cost of land and hence the cost of housing. Residential land banks should be taxed to make it unattractive to delay land development unnecessarily.

Essential building materials should enjoy tax subsidies to achieve reductions in their market prices thereby reducing the cost of housing development.

The Presidential Committee on Affordable Housing has suggested that developers who construct more than 150 housing units a year should enjoy tax holidays while companies who invest in housing should enjoy 50% tax relief (Onwuemenyi, 2008). This is a welcome idea at this early stage, to attract more investment into housing.

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