Govt should reinvent mortgage sector to meet housing needs – Coker

Coker1

Coker1

The Federal Government recently launched the Nigerian Mortgage Refinance Company (NMRC) aimed at addressing the housing needs of Nigerians. Mr. Juwon Coker, former Secretary, Nigeria Institute of Builders in this interview with Osaze Omoragbon speaks on what the government should do to make the scheme succeed, the recurring problem of collapsed buildings and the bottom-up approach of solving the housing needs of Nigerians. Excerpts:

How would you assess the Nigerian construction industry?

The construction industry has been a bit vibrant. There are new developments in several areas especially in the major cities like Abuja, Lagos and Port Harcourt. Of course there are developments going on in other state capitals. Basically, the industry is a bit vibrant but there are still a lot to be done. I believe that despite the indices of growth mentioned by policy makers, we can still do better.

One of the ways to reflate the Nigerian economy is to have a vibrant housing market with a population of over 150 million people that portends a huge housing market. For the country to have a vibrant tourism that would attract huge investments into the sector, there is the need for standard accommodation for tourists, hotels and the hospitality industry as well as for the citizens. However, most accommodations provided are substandard. We need to get our acts right. The government is trying but its efforts are not well articulated. Housing policy and planning should be a bottom-up approach, but so far, governments’ policies are the top-down approach. They think that by throwing money around everything will work.

What can the government do to ensure a bottom-up approach towards solving housing needs of Nigerians?

First, the government should get adequate and accurate data. There should be appropriate data on migration within the country, as well as an accurate assessment of the housing needs of Nigerians. Up till now, what we have are rough estimates. There are various estimates of housing needs ranging from 17 million housing units to 14 million, 16 million and 12 million units which are really unnecessary. We need accurate data and to ensure that, government needs to set up a special bureau akin to the National Bureau of Statistics that will undertake that task.

Housing is very important in any economy and it is often used to judge the performance of the economy. Of course, the financial crisis was caused by the collapse of the housing sector in the United States. For example, in the US they know the exact number of houses under construction every month and how many are completed. They have accurate data on all these. The same applies to England, Japan and other countries in Europe.

In developed societies, government formulate policies that will aid the housing/construction sector. But in Nigeria, government is hindering housing development. Although, the present administration has tried to reduce the price of cement, everything they try to do is policy-tied to finance, cost and all that. Also to ensure that the housing sector takes its right footing, there is the need for human resource development. It means that, to have housing industry reflation, we need to look at the capacity. We need to know the number of craftsmen and artisans available as well as vocational training centres. We also need to know if there is enough builders, civil engineers and other professionals in the housing sector, and adequately  engage them rather than foreigners.

We also need to look at the availability of building materials such as cement, sand, gravel and granite. We need to ascertain the quantity as well as how to augment in case there is a housing bloom. We also need to know the minimum space required for the citizens at different levels. We must also ensure that these houses don’t take unnecessary land space but rather stack them up to a maximum of five storey building because of fire implications.

Also, the Executive and the Legislature should work on the Land Use Act. A major hindrance to housing development has been the Land Use Act. It is not favourable to the industry. The Building Code should also be stratified. Apart from the existing National Building Code, there should be state building codes as well as local government building codes. For example, it is swampy in the Niger-Delta and there are areas of that region where there are farm lands. The far North is desert-like. Therefore, the building code should be localized instead of being generic.

Is the building code responsible for the building collapses that have become rampant especially in Lagos?

It is part of it. I hold a different view on why buildings collapse in contrast to what most building professionals are saying. You cannot stop building collapse totally, it can only be minimized. As long as there is construction in this world, there will be collapses. But we must look at the source of the collapse: is it flooding or other acts of nature? Recently in China, flood caused several buildings to collapse. Fire can also cause building collapse. But the type of building collapse we are trying to minimize is the one caused by lack of professionalism, craftsmanship and inadequate supervision.

What is your take on the recent threat by the Lagos State government to prosecute owners of collapsed buildings?  

No law can stop building collapse. The Lagos State law is not even proper. It is just to instil fear. When you find the root causes of the collapse of buildings, you don’t need to instil fear. It would have been nipped in the bud. The point here is that we need to institute processes that ensure that disaster does not happen and when it does, then we need to find out its cause before prosecuting those involved. Someone can even be prosecuted and not found guilty. Prosecution is not a deterrent. So, we need to find the root causes of building collapses and prevent them. Moreover, the building code is a guide that recommends best practices for building. The building code also provides for inspectors who ensure that construction is done in compliance with the specifications of the code. However, there can be human error and corruption. So, the building code on its own does not stop the collapse of buildings. If corrupt officials ignore improper processes, such unscrupulous attitude may result in building collapse.

How can professionalism in the sector be improved?

First, government needs to work with the existing professional bodies like the Institute of Builders, Institute of Architects, Society of Engineers and Quantity/Land Surveyors among others. Moreover, these professional bodies need to work in unison and refrain from amplifying their differences. They should have a common goal; which is to make the industry work, reflating the economy especially the housing sector.

What is your take on the recently launched Nigerian Mortgage Refinance Company? Do you think it can work or is it another layer of bureaucracy?      

Yes, it can work but the problem is our environment and attitude towards things. I think the problem is not just the money received from the World Bank. How many houses can the money build? It is a drop in the ocean. What the federal government should do and in concert with the banks as well as the Central Bank of Nigeria is to have mortgage departments in the banks in addition to the existing mortgage institutions as well as insurance firms. It is a whole financial services sector. What I have not seen in Nigeria is a deep financial services industry. Financial services industry in the developed world and even in South Africa is so wide. For example, they have Venture Capitalists who take a lot of risk in their investment. Most times, ideas are sold to them by entrepreneurs, they examine them and if they are alright, they invest in them. With a large population in Nigeria, housing can be a boom.

The mortgage sub-sector of the financial services industry has not been properly developed. It is time to reinvent and repackage the mortgage sector. We need to rethink the whole mortgage sector. Nigeria has always looked at it from the point of finance. While finance is important, there is the need for a new mortgage culture in Nigeria. If there is no mortgage culture there cannot be a booming housing sector. It is an integral thing. People should know that the era of self-building is outdated. For example, people that have savings accounts in banks can be encouraged to take-out housing mortgage. The sector can now benefit from a large pool of funds such as pension fund, insurance etc. Also, the cost of constructing fences for security purpose is enormous. It is enough to build houses for others. We need to change some of these cultures. We need to look at it from the viewpoint that Nigeria has a huge population which is a ready market for housing, mortgage, insurance, food, transportation. No sector of the Nigerian economy that cannot be vibrant if we do things right.

We also need to take advantage of alternative building materials such as clay, bricks, mud etc. For instance, mud bricks can be used but we need to standardise the construction of these mud bricks. Already, Nigeria has some of these alternative building materials. For instance, at the Nigerian Building and Road Research Institute there are prototypes of machines that can be used to build mud brick houses and burnt clay houses too. We need to focus on these materials so that there is a reduction in the overconcentration of Sanskrit blocks.

Despite the availability of these alternative materials, why is it that we are yet to embrace them in our construction sector?

There is poor enlightenment. Government officials have failed to enlighten the people about alternative building materials which are available even for road construction. For example, in some areas we can use paving mud stones; they are functional. We need to have these options. The problem is that we always want everybody to have the same option.

What areas will you advice investors to go into in Nigeria; some observers say investors are overlooking certain areas that could yield high returns such as low cost housing?

There is what is called investor-risk-taking. Every investor wants to invest in what he can reap maximum return from minimum risk. Of course, there is nothing wrong with that. However, my advice to them is to invest in institutions such as mortgage companies, mortgage refinance companies, insurance, venture capital and other areas that can help reflate the housing sector and the economy. In terms of capacity building, we can also invest in the training of craftsmen.

About The Author

Related posts

Please wait, while your subscription is progressing...

Subscribe to TheEconomy Newsletters & Notifications

Want to be notified when our article and news are published? Enter your email address and name below to be the first to know.