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How poor govt reforms increase housing deficit

How poor govt reforms increase housing deficit

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Maduka Nweke, 08034207864, 08118879331

Unless urgent steps are taking by the respective tiers of government to address the issue of reforms in the housing sector, the growing number of housing deficits in the country will continue to balloon.

The Managing Director, Afriprops, Mr. Francis Njoku, had at the official signing and handing over ceremony of Olive Crest Estate in Calabar, Cross Rivers State put the country’s current housing deficit at about 17 million.

Despite the huge deficit, rural – urban migration has remained high with nearly 50 per cent of the population living in urban areas today as against 10 per cent in 1952 and 38 per cent in 1993. This rapid growth of the urban population has led to extensive slums and shanty communities.

Based on estimation, Nigeria would need to construct 740,000 housing units every year for the next 20 years to bridge housing gap. Currently, the nation can only build 100,000 units yearly, a development experts described as too low from what is needed.

But, the inability of governments at all levels to harness its housing reforms policies, in order to make them people friendly has led to rising number of housing deficits across the country

Often times, government, after mapping out areas for developmental projects, initiate white papers on them , gazette same for the purpose of future development but never get to act on same for decades. The idea of government abandoning such assets for a very long time creates room for land specualators to encroach on such asset

The implication of the above is that the public is caused to lose whopping sums of money due to the lackadaisical attitude of government towards such assets. At the end of the day, many prospective buyers who are not informed to get the right stauts of such assets from the concerned government agencies are made to incur losses.

Recently, the Lagos State government started the demolition of illegal structures that encroached on the Right- of- Way (ROW)  along the Airport Road and in Oshodi to pave way for the construction of a ten lane expressway within the corridor.

The demolition,  coming few months after Nigeria wriggled out of recession, is a clear indication that no long term plan was considered for future expansion of the road.

  Governments are usually seen marking crosses and stop work on construction sites and buildings with a tag that either the construction is taking place on a government reserved area or that they detected unprofessional practices. All these they term checks and surveillance aimed at avoiding catastrophe that may happen in the future. But the same government has chosen to discomfort the citizens by demolishing structures that were supervised by government officials.

Going along the Airport Road and Oshodi now, you see how poor arrangement and lack of planning is discomforting Nigerians. Private individuals’ dysfunction and disobedience to government rules do not go unpunished. But when governments pounce on private individuals’ properties, they look for one thing to tag it. The fact that banks and other corporate citizens along the destruction areas are not spared, makes one to wonder if the government did not have an original structural plan for the state before destroying properties in the area. To be on the economy side, not less than N300 million, aside man hour loss and other inconveniences, are being recorded on the road as a result of planlessness of government. Reforms are undertaken by governments but they must have human face. What is happening in Oshodi and its environs now is a mark of short term policy that is serving long term policy or vice versa. We have examples and their impacts on the societies.

The reforms in the Soviet/Socialist system started at the end of 1980s when dysfunctions of the centrally planned economy brought the system to the brink of collapse. Despite the fact that strategies of market reforms in the former Socialist bloc differ from country to country, they all have common features: reforms on the macro- and microeconomic level in terms of redesigning the role of the government and giving more freedom and opportunities to the private sector.

The first stage in the course of reforms undertaken is macroeconomic stabilisation, the key instruments for which are monetary and fiscal policies. On this stage it was enough to reduce the scope of budget expenditures and bring them down to meet the requirements of balancing the budget. However, the seemingly successful reduction of expenditure to balance the budget on the first stage may be a misleading indicator of reforms. Usually, such reduction is accompanied with increased budget arrears. Thus, the second stage is restructuring of the economy. For this stage of reforms, radical restructuring of fiscal policy is on the agenda. The main challenge is to reduce governmental obligations and reorient government policy towards the needs of a market economy. There are a great many changes required to achieve that reorientation. Among the many key issues are redirection of public investment into investment in infrastructure and human capital and improvement in procedures for budgeting and project analysis.

These types of expenditure, which include physical infrastructure such as roads, harbours and water systems, as well as investment in human capital formation such as education and manpower training and primary health care, generate returns which are fully realised over the long run. Yet in the short run they may entail large sacrifice in terms of reduced expenditures on consumption and social policy. In transition economies, devoting scarce resources to such long-term projects is especially difficult due to high obligations of government toward the social sector, some of which are inherited from the old system and some of which are necessitated by the transition itself. Another complicating factor in the transition period is the existence of stagnating state-owned enterprises (SOE), which effectively lobby government for new subsidies and privileges (protectionism, tax exemptions, etc.)

Thus, the governments of most transition economies face a shotrun versus long run dilemma. On the one hand, transition economies are characterised by a very unstable political and economic situation. The “wrong step” in economic policy can cost the destiny of economic reforms. On the other hand, if government cares only about the short term impact, it can easily hurt long run development. In short, to design and implement prudent fiscal policy, there should be clear understanding of the outside lag of the fiscal policy and difference of short run and long run impacts of fiscal policy on economic development.

Productivity growth has slowed significantly in the Nigerian economy, beginning even before the onset of the recession. A lot of analysis conform with a large and growing body of research persuasively arguing that infrastructure investments can boost even private sector productivity growth.

An ambitious effort to increase infrastructure investment high per cent annually over seven years would likely increase productivity growth by relatively high per cent annually.

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