Although the data on the deficit in Nigeria’s housing sector is unknown, there can be no gainsaying the fact that millions of Nigerians need befitting shelter.
In the face of deficit and incessant building collapse, the managing director of UACN Property Development Company (UPDC), in this interview told Nairametrics that Nigeria needs foreign investors in its housing sector to bridge the gap and ensure standards.
Question: How can foreign investments benefit the local housing market?
Odunayo Ojo: The participation of foreign investors in Nigeria’s housing sector will be beneficial not only because they would bring capital, but also because they bring expertise.
Foreign investors don’t only bring the right kind of capital in terms of cost and tenure, but they also bring best practices.
They ensure that they help the parties they are dealing with to structure those transactions in line with best practices, and they often strengthen governance because a lot of the donors insist on a certain level of governance.
Foreign investors also bring sustainability as a core requirement. All around the world, people want to attract foreign investors because they bring more than just capital.
Nairametrics: How can we attract those investors?
Odunayo Ojo: There was a time when those investors were here doing different things; but how can we bring them back? The first solution is to ensure that there is a stable political environment.
There has to be a stable political and economic environment where businesses can thrive, and it’s our collective responsibility as players in the economy to ensure that whatever we do in our own little sphere of influence we encourage stability.
We don’t want to overheat the system and we want to ensure that there is long-term stability in this economy. Stability goes beyond political affiliation.
We’re talking about security, consistency of our laws, strengthening of our institutions. As a country, we need to improve the ease of business.
Question: How do we improve the ease of doing business?
Odunayo Ojo: Nigeria needs to be inching up every year on the ‘Ease of Doing Business’ Index. How long does it take you to start a business?
How long does it take you to get land? How long does it take you to transfer land ownership?
If we address the fundamental structure and improve stability, it will make Nigeria a more attractive destination for foreign investment.
People say capital goes to where it is more desired. Some countries in the world with lower populations, with lower opportunities than Nigeria are getting a lot of foreign investments because their economy is perceived to be more stable, there is better security, and there is more likelihood that the capital that is going in there will not be stuck as a result of instability.
That’s why I think this period is very important for the country because Nigeria is going through another transition. When there is a transition, there is new hope and a renewed outlook that something different will happen.
I think Nigeria has that unique opportunity this year, and I am convinced that the opportunities we have in Nigeria are enormous and attractive to bring this highly desirable foreign direct investment that will improve the capacity we have on the ground and strengthen our financial position.
Question: How else can Nigeria resolve its housing problem?
Odunayo Ojo: The way to resolve the housing problem is ‘one house at a time.’ It will reduce the housing deficit gap.
The country’s housing deficit is a structural problem that is multi-dimensional. Many men have tried to solve this problem but have failed.
So, Nigeria needs to be pragmatic; Nigeria needs to be real. It cannot be wishful thinking.
The government needs to look at what the enablers of housing delivery are and what is the work of those enablers.
One of the critical reasons why houses are not being built as quickly as they should be is finance. When you have a financial sector that gives double-digit interest rates for housing acquisition then you can see where the genesis of the problem is.
All over the world, for one to be able to acquire housing, you need single-digit interest rates; Nigeria has a peculiar problem with the cost of funds.
Question: How should Nigeria source funds internationally for its housing problem?
Odunayo Ojo: There are international funds called Development Finance Institutions (DFIs) such as Shelter Afrique that can specifically address issues of high cost of funds.
Also, there are other global and regional DFIs that can support Nigeria’s banking system by giving relatively lower interest rates at longer tenure.
If we have more of such funds coming into the system, we are going to see them filter into the housing economy and we will see more houses being built.
It is from the demand that we get supply because if there is effective demand then there will be effective supply.
Question: Can you identify the major problems of constructing houses in Nigeria?
Odunayo Ojo: One of the major problems of housing in Nigeria is land acquisition.
There are many interested parties such as the government, communities, families and individuals, which is why the proper documentation process of land acquisition may take up to 15% of the cost of the land.
The cost of construction is huge because a lot of the building materials are imported and are quoted in dollars. Hence, Nigeria’s local building industry needs to be stable and vibrant.
Then the prices will be lower and there will be jobs creation. So, by the time you fix the land, fix the cost of building, and fix the financing to the givers and the buyers, they will improve the housing deficit in Nigeria.