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Encourage PPP to improve housing delivery –Okoronkwo urges FG

Encourage PPP to improve housing delivery –Okoronkwo urges FG

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Tony Udemba

An Abuja-based real estate developer and Managing Director and Chief Executive Officer, Ojim Royal Investment and Property Limited, Mr. Ukachukwu Okoronkwo, has called on governments at all levels to promote Public Private Partnership (PPP) as an alternative model to improve capacity and galvanise rapid development in the housing sector, even as he urged them to consider the model adopted by the Nigeria Police to develop better housing units for its rank and file across the country. He commended the Federal Government for its approval on local content in the building and construction sector. In this interview with Daily Sun, Okoronkwo spoke on topical issues concerning the building and construction industry in Nigeria.

Excerpts:

Developments in the nation’s housing industry

Given the many challenges facing the nation, especially the economic difficulties, which have virtually affected every sector, the teething situations facing the housing sector are becoming deplorable and frustrating. This, no doubt, calls for urgent action and proactive steps by the government in collaboration with all stakeholders in the construction industry in order to mitigate the situation. Unfortunately, various efforts made by key players in the sector to ameliorate the challenges and ensure a robust building industry are being stifled by lack of strong mortgage financing system and associated challenges. Similarly, several other programmes made for a favourable housing development are yet not yielding desired results. Our hope lies probably on the present PPP initiative, which seems to be the right alternative and a better model that would bring about the much needed solutions.

Experiences of most urban dwellers are quite pathetic, given the fact that a large population of the middle and low-income earners cannot afford decent accommodations, and are therefore compelled to live in dilapidated houses without adequate provision of basic amenities such as proper sanitary and water systems. The wear and tear of most houses in the cities and adjoining towns where majority of the labour force are concentrated are another source of great concern, as well as an eyesore to the entire nation.

Again, lack of good mortgage financing and poor maintenance culture clearly speaks volumes on the alarming situations of the nation’s housing industry. A reliable statistics on the industry recently estimated that the nation’s growing population of over 160 million people, are in dire need of about four million housing units per year in order to replenish the decaying houses and meet up with the increasing demands in the sector.

There is the need for us not to forget to differentiate public housing from affordable housing, which is the responsibility of the government at all levels, aimed at benefitting the citizens. Governments at all levels have not been so successful in providing public housing, which is the low-cost and affordable houses that should be provided to the workers. The concept of affordable housing is clearly hinged on  mass housing units, provided by both the government and the private housing developers but unfortunately, this area is facing bureaucratic bottleneck. Lands are not readily available at low-cost and there exist difficult processes in terms of getting land titles, thus making it really difficult for private developers to make at least marginal profit. In a strict sense, social housing deals with rental houses and flats to be provided to people who cannot afford to buy these properties. However, continued efforts must be made to provide affordable and cheap houses. Certainly, it is necessary for the government to consider all options possible to provide adequate housing to average Nigerians.

Challenges facing the real estate sector

High cost of construction of houses, including purchasing of building materials and land acquisition, among others, are some of the challenges being faced by Nigerians in the building sector. But despite some of these challenges, including high cost of construction, there are ways of cutting costs in building construction in order to have good and decent homes, and these could be in terms of land location, design, materials and use of inexperienced professionals who would not compromise standards.

The present downturn in the building sector is because of lack of robust economic activities that have become a big challenge with severe adverse affects in the entire construction sector to a large extent.  People no longer have money to maintain the wear and tear of houses they live in, not to talk of committing their little resources or none at all resources into new housing projects. As a matter of fact, if there are financial institutions with good lending conditions, more people will be encouraged to be engaged in building projects but we do not have strong ones.

To worsen the situation, most building materials are imported into the country at the detriment of the locally abundant construction materials. For instance, steel rod, one of the building materials that is very important in building construction, ordinarily should be available but Nigeria imports 90 per cent of the roughly six million tonnes of it annually from China, Ukraine, etc. This has effect on the price of steel, resulting to the high cost of building in Nigeria.

Other challenges include non-access to water, which is an important material in building industry. The only quick source of water at any site might be to drill borehole and the cost of drilling borehole at any construction site is high, and as an additional cost. One must have a generator and also afford the cost of petrol that is sometimes not available to pump the water since electricity is a very scarce commodity in Nigeria. Also, getting skilled workers such as artisans, labourers and engineers with needed practical know-how, could be another challenge.

Some building sites could be swampy land, thereby  creating the need for more building materials such as cement, steel rods and experienced labour force on site to come up with structurally strong buildings, which, of course, are expensive. In some areas in the country that experience heavy rainfall, to build a house you will require good roof structure and that means more money or cost. Also, the bureaucratic policies of the government affect the cost of building construction in Nigeria. Basically, this consists of the processes in obtaining building permission or approval from the government, as well as gratification and fees that are usually involved before getting approval. In some places in Nigeria, one pays so much to the indigenes in order to be allowed  access to the building construction site. The higher the type of building,  the more money they will charge, and definitely this charge will reflect on the total cost of constructing the building.

Government acceleration of development in the housing sector

Like I had said earlier, the major challenge facing the sector is simply that of inadequate supply of affordable houses.  Probably, this could be attributed to the fact that the nation has just exited recession and everyone is waiting for economic activities to pick up in full swing. The cost of accommodations in major cities such as Abuja, Port Harcourt and Lagos are becoming so high that most civil servants and middle level business persons cannot afford to pay for them. That is the reason if you go around these cities you will see many unoccupied empty buildings.

I strongly believe that the solution to improve capacity in the delivery of houses in the country is for the government at all levels to promote and institutionalise PPP as an alternative model in the housing sector, similar to the model being adopted by the Nigeria Police to develop better housing for its rank and file. Government should come up with easy ways of making land directly available for housing projects at affordable cost to eliminate the presence of intermediaries who have made the cost of land unaffordable. A template of mass housing by Ojim Royal for the police can be a model to be adopted nationally, to crash the high cost of housing in Nigeria. It is our desire, in collaboration with the Nigeria Police under the leadership of the present Inspector General of Police, to provide decent housing schemes for officers and personnel of the force. I have the strong belief that if this model could be adopted by other arms of government, the ugly issues of high costs of house ownership in Nigeria, which are mostly caused by intermediaries in the housing sector who focus on building expensive houses, will become a past tense.  I tend to believe that now is the right time for the government to take a dispassionate look at the housing sector to enable it guarantee a 2 per cent loan facilities to workers, as against the 5 per cent presently being charged by the Federal Mortgage Bank.

Police housing partnership model

The Nigeria Police housing partnership model is very commendable, I  must say. If all other organisations would key into the model set up by the police in order to develop a better and affordable housing schemes for their senior officers and personnel, there would be appreciable improvement in the provision of affordable housing in Nigeria. This would, no doubt, guarantee better living standards for Nigerian workers. Our partnership with the Nigeria Police Force in this regard is exactly what every Nigerian company should seek for.

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