Nigeria has a huge housing crisis that has left some millions of its citizens without a quality and affordable home to live in.
Recent statistical data shows Nigeria has 20 million housing deficits, with the numbers estimated to increase more with the country’s increasing population.
Nigeria’s housing problems ranges from a variety of factors including a weak disposable income among consumers which continues to undermine the demand for housing, high-interest rates which makes mortgage financing unattractive, and the dearth of incentives for wide-scale housing supply by the private sector.
These structural issues have continued to bedevil investors and real estate players from providing housing services, and despite billions of investment and funding’s going into the sector, the industry has remained largely untapped.
However, while investors and real-estate developers are being sceptical of investing in the sector due to the huge structural issues faced in the sector, some have taken a bold step in innovating various products and services that would provide affordable housing for the homeless Nigerian which would, in turn, boost economic growth.
One of such investors is Oladipo Idowu- Agida, chief executive officer of Dradrock Real Estate, a relatively young property investment, development and advisory firm with core operations in Lagos.
With over a decade years of experience in the real estate sector value chain, Idowu- Agida has overtime advocated an all-inclusive innovation in tackling the housing deficits in the country.
According to him, the deployment of cutting edge innovation and technology would go a long an in accelerating quality service delivery through end- to- end seamless customer experience solutions in a way to achieve robust real estate sector.
In a paper titled: ‘Future of the Nigerian Real Estate Sector, Harnessing New Innovations,’ Idowu–agida outlined several challenges in the sector and recommended ways by which the country can solve its housing deficit and attract investment into the sector.
What Nigeria should be looking out is to have a system where, if you can have a regular source of income, you should have access to good accommodation that you will be paying for gradually and for this to happen, we will have to inject funds both locally and internationally into housing.
The Pension fund administrators are there to invest in real estate, but there are a lot of policies by the government that can be made and this will assist the developers in creating solutions.
To do this, he said the country will need some regulations in the industry, have a structure where there are some level of accountability and a good mortgage system. A good interest rate for people who work, who can have access to owning their own houses and pay within a specific period of time, is also a positive way forward according to Idowu.
There have been various initiatives by the Federal Government to bridge Nigeria’s huge housing deficit however, unfortunately, most of these initiatives have not yielded their desired results.
In 1956, the Federal government established the Federal Mortgage Bank of Nigeria (FMBN), (originally known as the Nigerian Building Society), with the strategic intent of supplying the mortgage and housing markets with sustainable liquidity in order to support the advancement of homeownership amongst Nigerians.
More so, over 60 years down the line, the FMBN is yet to deliver affordable and modern houses to majority of Nigerians, despite the obvious untapped opportunities in the housing market.
Within a four year period, 2015 through 2019, the Federal government has spent over N124 billion to provide mass and affordable housing in a bid to reduce the deficits, however, this has not been enough to move the needle.
In order to fulfil the mandate of FMBN, the bank was restructured into a Federal Government-sponsored Enterprise under the reform of the housing sector based on 2002/2006 National Policy on Housing and
Urban Development. This exercise birthed National Housing Fund (NHF)-A fund established with the objective of mobilising long-term funds from Nigerian workers, banks, insurance companies and the Federal Government to advance loans at soft interest rates to its contributors.
Under the NHF, all workers are to contribute 2.5 percent of their monthly salaries and loans are advanced to eligible workers at an interest rate of 6 percent per annum.
The FMBN has the primary responsibility of managing and administering the Fund.
According to the FMBN, Nigeria’s housing gap is estimated to be in the region of 17 million units while homeownership is estimated at a low 25 percent.
According to Idowu–agida, “the challenges working against the development of the housing sector can be attributed to a plethora of factors ranging from low access to mortgage financing amid high cost of finance (22 percent -25 percent), rising costs of constructing houses attributable not only to the cost of factors of production but also regulatory costs of building or owning houses (Surveying fees,
Certificate of occupancy, land settlement costs), shrinking disposable income particularly among the middle-income earners.” He said.
Given that private sector participation in the low-end of the housing construction market has been limited, “I believe that a more aggressive intervention by the government in subsiding mortgage financing and increased investment in housing development will go a long way in bridging the housing deficit and help realise the improvement in homeownership that it desires,” Said Idowu.
He further explained that many of the commercial banks have a low appetite to lend to the sector because they do not understand how the sector works.
Another reason for the low appetite from bank is because of the buying power since the banks know that there is no mortgage facility that is readily acceptable to people hence when they support, you have to pay them through the purchasers.
Oladipo Idowu–Agida had his MBA at the prestigious Lagos Business School, Pan-Atlantic University Nigeria and IESE Business School, Barcelona, Spain. He also holds a Masters in Managerial Psychology (MMP) from the University of Lagos and a BED. Guidance and Counselling/political science from the University of Ibadan, Nigeria.
Prior to joining Dradrock in April 2017, Oladipo Idowu– Agida was a sales manager at Grenadines Homes Limited, Lagos (a member of the Paltonmorgarn Holdings), where he leads a team responsible for the business development and prelaunch sales of the $300million Atlantic Resort project.
Before his coming into Grenadines Homes, he had worked for other subsidiary of Paltonmorgarn Holdings, such as Paltonloitte & Associates, Propertymart Real Estate Investment Ltd, and PM Oil Marketing & Sales Solutions respectively.
Over the course of his career, he acquired over 10 years of diverse expertise in various aspects of Real Estate including business development, sales & marketing, strategy operations, client relationship management, construction and project management, across Lagos and Abuja Nigeria.