Affordable Housing Institute : US

[Continued from yesterday's Part 1.]

To cheer you up from the current global capital mess by focusing on the misfortunes of others, I’ve been working through a recent article from The Guardian, Nigeria tangentially enumerating all the blockages in a disabling capital environment. Yesterday’s post listed rule of law (highwaymen!), lack of political context (a barely-civil transfer of power for the first time since independence), and lack of funding (no money, no housing). 

 

Homeless orphans in Lagos

 

There’s more:

 

4. Lack of political commitment

 

Stakeholders in the sector say that it is a painful observation that there was nothing of any tangible significance attained in the year that was rolling through, not even repairs were carried out on the existing infrastructure and government owned properties.

 

To make change, elected officials have to take stands.  Do they have the political will, or are they content to fob off the populace with political vaporware?

 

Plastered with posters, promises, promises …

 

In the housing sector, the story is not quite different.

 

The last one year has not brought anything promising in terms of creating programmes that will provide affordable houses and reducing rents for the teeming Nigerians. The Federal Housing Authority could not meet the talk of initiating a social housing scheme. It was all paper work.

 

As we’ve seen, paper without money yields only architect designs, not actual housing.

 

Okolo said: “What the government said about its Seven-Point Agenda is no longer relevant as housing has been pushed to number eight. When people are displaced and have nowhere to stay, they will be angry and this will lead to other crises.”

 

“My advice is that those that took housing out of the Seven-Point Agenda should have a rethink.”

 

Translation: send money.

 

This is what we need

 

5. Blockages in construction and infrastructure

 

Like many Sub-Saharan African countries, Niger ia making due with wholly inadequate investment in infrastructure.

 

Even the howling noise made over the imminent collapse of the bridge across the River Niger at Asaba/ Onitsha axis, did not activate action beyond sporadic polemics in the National Assembly.

 

The Onitsha bridge

 

At Onitsha, the Niger is a mile wide – if the bridge were to collapse, trade throughout Nigeria would be completely disrupted.

 

Lack of infrastructure if a byproduct of the oil curse. 

 

Where the oil is

 

When a nation is rich in extractable and exportable raw materials, government tends to be dominated by those who want to steal the resource for themselves rather than build a country that generates wealth.  Such battles over wealth lead to huge bribery scandals, warlords and dictators. 

 

“General Abubakar has denied issuing oil licences irregularly”

 

Another problem that confronted the housing sector is the rising cost of building materials and the continuous collapse of buildings in different parts of the country. During the year, cement prices were beyond the average Nigerian.

 

As we work more throughout the world, I am finding that the price of simple building materials is often a barrier to self-built or self-improved housing.  And as the formal economy improves, these produced materials, even if they are as simple as cement, become pricy for the vast body of the population.

 

Then too there’s another reason: mercantilist tariffs:

 

It took the intervention of the Federal government by liberalizing imports of bagged cement to bring down the price of the commodity.

 

Nigerian housing: if you’re rich enough, you can afford it

 

An anti-poor measure, pure and simple.

 

Mr. Kunle Awobodu, the chairman of the Lagos chapter of the Nigerian Institute of Building (NIOB), said [that] the budget ought to have been directed at rescuing the ailing housing sector from the agonizing effect of high cost of cement and iron bars that seem to have defied practical solutions.

 

Think you need some rebar in this building?

 

6. Blockages in capital finance

 

As we have been learning with HERA and TARP, and are now grappling to learn with the stimulus spending proposals, even if the money is there, channeling it into effective leverage is a whole new problem.

 

The weakness of the mortgage financing structure is yet another challenge before the ministry.  

 

What follows is a litany of missing ecosystemic elements.

 

The inability of the mortgage sector to take shot at the secondary mortgage market has made the sector inactive.

 

The ’secondary mortgage market’ is where originators who have accumulated a book of performing loans sell those loans to investors for cash.  Without that step, the originator would have converted its cash into stacks of paper – good loans – that may be sound assets but leave the originator with no cash to make new loans.

 

Until I get some liquidity, that is

 

Complaints from the sector about the shortage of long term financing have lingered. It’s becoming a cash-and-carry setup in some of the mortgage bank’s offices.  

 

Lack of liquidity.

 

It takes up to three years to access the National Housing Funds (NHF) by the contributors of the scheme.  

 

So we have a delivery system that is horribly slow.

 

On commercial basis the tenure ranges from 10 to 15 years.

 

Recently, the government agency launched an ambitious programme of providing housing through a public, private partnership. How affordable the houses would be will soon be seen as such schemes are never in favour of the masses.

 

That’s an interesting statement.  Why don’t you like public-private partnership?

 

In Nigeria, only the money bags buy up houses and rent to the public.

 

Dollars accepted everywhere

 

It’s evident, therefore, that Nigeria has no Mission Entrepreneurial Entities that can act as affordable developers and long-term affordable landlords.

 

7. Blockages in efficient property rights transfer

 

Before you try to build housing, you have to own land, and that’s difficult to secure:

 

The problem of affordable housing in Nigeria is further exacerbated by the constraints imposed by the Land Use Act, a moribund and repressive Act that:

 

Hinders mortgage financing

Creates enormous obstacles to private sector involvement in the housing industry

Has constrained the transfer of titles

Makes mortgage finance extremely difficult.

 

Aside from that, it’s just ducky.

 

Think I’m too pessimistic?

 

Just as every slum has its winners, ossified and opaque procedures are fertile grounds for civil servant self enrichment, even at the country’s expense. 

 

Apart from the efforts to go to the capital market to raise fund for Federal Mortgage Bank of Nigeria bond scheme, which end result is yet to be determined, the Housing ministry is yet to achieve the amendments to the Land Use Act and other relevant Acts –

 

Probably somewhere has quietly told the Housing Ministry not to push reform, lest it disrupt the oligarchy:

 

– which would shape housing and mortgage sectors and guarantee land for private estate developers who have been facing hardship due to the problems of obtaining Governor’s Consent.

 

Someone in the governor’s office ….

 

8. Corruption and bribery

 

In any established disabling environment, there is always an invisible rhinoceros in the room:

 

That should take care of that!

Kenya’s Ministry of Lands and Housing

 

As a result of the Land Use Act, obtaining a Certificate of Occupancy (popularly known as C of O) has become a big time avenue for large scale corruption.

 

So endemic is bribery in places like this that any statistics are little more than guesses:

 

“Ask anybody in Nigeria today, and they will tell you that it is impossible to attempt to legally obtain a C of O [Certificate of Occupancy – Ed.] for a land you have just bought, without bribing several officials in the states’ ministries of Lands and Housing, often with very large amounts of money,” Awobodu said.

 

It’s gonna cost ya

 

In writing this post, I’ve shuffled the problem order several times.  Truth be told, these problems could be put in almost any configuration.  They’re all inter-related in a comprehensive disabling environment.

 

As hobbled as if physically shackled

 

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