SECURITIZING MORTGAGES WOULD SOLVE HOUSING SHORTAGES
Apart from the recent global economic down-turn which many countries
are yet to fully recover from, as well as the growing challenge of
climate change, many parts of the developing world are groaning under
the excruciating pains of inadequate housing.
It was that perennial
vicious string used by governments, especially of developing nations
which is usually using what desperate people like to lure them or their
votes. There is no doubt that affordable housing for the masses is one
of those immediate needs of most developing countries especially in
their modern towns and cities. Indeed the National Party of Nigeria
(NPN) government that won the 1979 general election did so on a
manifesto that promised delivery of massive affordable houses and
agricultural development. The two items formed the features of the party
logo.
Even as they were leaving office in 1983, putting in place an
effective national policy was not achieved not to talk of delivery. The
hopes of the masses, as always were dashed.
If there were a
national policy such as we find in countries like Finland, Indonesia,
USA, Malaysia etc. in Nigeria succeeding governments since 1979 NPN
government, would have achieved much in that direction, especially if
the policy specifically discourages and condemns abandoned projects by
previous governments syndrome. What this means is that every year's
budget of the Housing Ministry must progressively be delivering
affordable houses irrespective of government in power. I do not see much
difficulty in making such policy an irrevocable mandate of governments
at all levels since its under concurrent list. The incoming government
has to complete housing projects commenced by outgoing government to
avoid wastages arising from several years of abandoned projects by
governments.
The necessity of affordable housing for the masses can
be appreciated on realizing that inadequacy of affordable housing
relative to its demand compel average urban dwellers to spend as much as
45% of their incomes annually on housing. The economic implication is
impoverishment of lager percentage of the populace. And inability to
save and contribute to economic growth of the nation.
It can also be
appreciated further when you consider the contribution housing makes to
the GDP of countries around the world. For a country whose population
grows at about 2.5% per annum, what this means is that in recent years
the GDP has been losing huge sums of money which should have been
yielding from housing projects annually. The reality, therefore, is that
housing is not properly developed and has the capacity to deliver
accommodation as well as huge contribution to the GDP.
Advocates of
social housing have researched the various causes of inadequate housing
in Nigeria and found among other things that the Land Use Act 1978
contributed to the government inability to deliver affordable housing
with speed. The preamble of the Act corroborates this claim:
An Act
to vest all land comprised in the territory of each state (except land
vested in the Federal Government or its agencies) solely in the Governor
of the state, who would hold such land in trust for the people and
would henceforth be responsible for allocation of land in all urban
areas to individuals resident in the state and to organizations resident
in the state and to organizations for residential, agricultural,
commercial and other purposes while similar powers with respect to
non-urban areas are conferred on Local Governments.
The
implication, they say are enormous. The fact that Government can revoke
certificate of occupancy by s.28 of the Act and s.51 which defined and
expanded the categories of reasons beyond ‘compulsory acquisition for
public purposes makes acquisition of land for development controversial.
What it means is that you own some acres of land; you may go ahead to
invest fortunes to provide houses but there is no guarantee to a holder
of certificate of occupancy, which is available to your counterpart in
Finland or USA who has freehold interest. The provision has always
depended on the rationale that it curbs the increasing difficulty in
acquiring land for development by individuals, organizations and other
public purposes.
There seem to be other unresolved questions
associated with the Act. If the mischief of the Land Use Act is to
facilitate governments acquisition of land for development and mass
housing programme by forestalling private acquisition and hoarding, why
do the succeeding governments since 1978 still find it difficult to use
the land the way they had intended? What role do estate and property
speculators play in the quest for affordable housing: is it better or
worse?
Land is a factor of production whose value appreciates
constantly; and any control of such land that involves loss of use by
occupiers attracts huge compensation under s.29 of the Act. Therefore
the control which the Act imposed on the use of land cannot be said to
have positive impact on provision of houses affordable to the masses.
The advanced countries earlier referred to above used the mortgage
system to facilitate mass housing delivery specially in urban areas.
Most owner occupier buildings in those countries were provided through
mortgage system which allows an occupier to pay for the houses in
installments for about 25 years or more. This method is what the Federal
Mortgage Bank was originally established to achieve but it failed. In
its stead is National Housing Fund consisting of contributors funds that
provide from N1 - N15 million.
Another cause of inadequacy has been
attributable to building materials. Nigeria has a history of
importation of almost everything even when they can be produced locally.
The dependence of imported cement has reduced drastically over the
years, since its production became sufficient for local use. But other
materials are still not available locally. The demand for increased
local contents by manufacturers is one of the ways advocates persuade
the government and stakeholders to hasten housing provision.
In
spite of these obstacles there are rising expectations on the part of
the public about government's housing delivery. Since the appointment of
the current land and housing minister some critical structural changes
have taken place. The first is the detachment of the ministry from works
ministry, which grants independence to the ministry on policy decisions
on housing. It would now be clear who makes decisions whether they lead
to success or failure. Evidently the fact that during the current
minister's tenure about 15,000 houses had been provided is a pointer
that the structural changes are yielding positive results.
Another
decision that is yielding positive result is the establishment of
Satellite Town Development Agency to enhance the speed at which houses
are delivered to ease the pressure on scanty provisions in the city of
Abuja. The minister should be encouraged to include those whose houses
were demolished whether wrongly or otherwise. That is a testimony that
the minister is passionate about social housing and should be encouraged
and sustained.
The concept of social housing was alien to
government policy until it was introduced by a former minister, now
Governor Olusegun Mimiko of Ondo state. And that brings to mind the
housing bill initiated at the senate which has reportedly gone through
second reading. What the bill intends to achieve is to say the least
laudable. The beneficiaries of the provision, if enacted were defined in
terms of income earning scale, even as Federal Mortgage Bank would
organize informal sector as cooperatives to participate. It stipulates
sanctions for anyone that rents or sublets such houses. Even mortgage
banks that flout the law would not be spared. As expected aged and
displaced individuals would be given priority in allocation of the
houses.
The minister reportedly said the newly approved housing
program me would erect one million housing units annually across
Nigeria. Even as laudable as the programme proposes to be it would be
with 17 million housing deficit.
In furtherance of social housing
policy president Goodluck Jonathan commissioned police estate named
after him, at Idimu on 19th July 2013. It was an auspicious occasion for
him to announce government proposal to establish Mortgage Refinance
Institute to be supported by the world bank to the tune of $300, a free
interest loan repayable in 40 years with a moratorium of 10 years.
The way forward in my view is certainly the fact that succeeding
governments should not be allowed to abandon projects. There should be
continuity of the present housing policy that encourages specific number
of houses annually. How to encourage this must be urgent development of
effective public funded mortgage system, perhaps that's what the
president wants to do with the proposed Mortgage Refinance Institute. In
addition dormant accounts such as pension funds, insurance deposits etc
should be deployed to provide social housing. It is also important to
increase financial literacy and intelligence of the public through
relevant financial products that encourage home ownership. Lastly
foresight should be adopted in the development of future towns and
cities so as to envisage adequate housing of the population before they
explode and abuse urban fringes.
About the Author
Iyke Ozemena Corporate Attorney/Consultant, Author:
An essay that offers solution for shortage of housing in developing countries and relevant economic and political issues.
Also author of the these books:
Land Law of Nigeria:
https://kdp.amazon.com/title-setup/AX486FHQ8OGJE
Meetings: Dynamics & Legality:
https://kdp.amazon.com/title-setup/A1EGMCCDZE1BQZ
Leadership Foundation Skill:
https://kdp.amazon.com/title-setup/A1MWESNJKEEAZE
Company Secretaries’ Handbook:
https://kdp.amazon.com/title-setup/A3H0PYK11SQL5U
Directors: Duties & Enforcement:
https://kdp.amazon.com/title-setup/A22367Y0JQ19MC
Directors: Qualification, Appointment, Proceedings & Removal:
https://kdp.amazon.com/title-setup/A1YKDE78ONI6SH
Ideaworkshop Manual:
https://kdp.amazon.com/title-setup/A15O6JPO3UEJEQ
Guide to Financial Security:
https://kdp.amazon.com/title-setup/A15O6JPO3UEJEQ
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