Fashola opens up on how to unlock potentials of Nigerian housing sector at NSE
The Minister of Power, Works and Housing, Mr. Babatunde Fashola, on Tuesday at the Nigerian Stock Exchange (NSE) gave an insight on how best to unlock the untapped potential of the nation’s housing industry.
In a keynote address presented at the opening of the Sub-Saharan Africa Real Estate Investment Trust (REITs), he drew analogy from the performances of former Governor of Lagos State, Alhaji lateef Jakande and former Civialn president, Alhaji Shehu Shagari in their house delivery exploits.
In his further submission, the Minister revealed that “Our plan for sustainable supply is to standardize designs and industrialize production”.
“Here is where I have news for small and medium scale businesses who are in this line of business. By standardizing fittings such as doors, windows, roofing sheets, tiles and other components, it allows us to use these standards to stimulate local mass production of fittings and finishing to meet the demands of mass housing. We have as such resolved not to use imported materials in our housing schemes, where there are local alternatives.
“In this way, we will be achieving one major objective of the President Muhammadu Buhari Adminstration’s vision and strategic goal of diversifying our economy.
For example, the smallest of houses will have at least a main door, a kitchen door, a room door and a bathroom door making a total of 4 (Four) doors.
“In order to build 250,000 units of that type of house, this market will need to produce 1,000,000 (One Million) doors. This does not include pipes, taps and sockets for electrical appliances.
I leave you to imagine what this can do for our economy if we produce all these items locally.
Our surveys indicate that electrical fittings such as sockets and door locks are still largely imported and we will use our demand capacity to stimulate local manufacturing or assembly, in order to keep the jobs in these areas at home.
“The next step toward industrial production is to reduce the time it takes to build a block. Our recent experience shows that a block of 12 flats usually takes 12 – 18 months at the quickest and we are looking at designing moulds that reduce this time to 6 (Six) months or less.
Once this is done, the next step should be ascertaining who will develop.
It is easy for the uninformed to wonder why this is important; after all, anybody can build a house.
Sadly, that is not the reality and even the developers with proven capacity accept this fact, and I will explain.
“A survey of our Public Private Partnerships (PPP) initiatives with developers over the last 10 years including site and service schemes which were supposed to deliver about 20,000 housing units has shown that the intervention has delivered less than 2,000 about 10% performance.
“The truth is that apart from financing difficulties, there are some people who have resorted to property development out of a survival necessity rather than out of any capacity or knowledge about the industry.
“We receive dozens of letters almost daily by people offering to build 10,000 housing units, (which seems to be the magical number for some of these emergency developers), without verifiable pedigree and track record of where they have built a simple 100 Housing units.
“We also have offers from road construction companies who want to build houses. The skill sets and logistics are entirely different even though they both involve construction. At the 2016 Shelter Afrique Annual General Meeting and the National Housing Summit which we hosted in Abuja, the recommendation from the Real Estate Developers Association of Nigeria, which we have adopted is that we must accredit, certify and rank developers who will be allowed to participate in our scheme.
There is the view that Government should get out of housing and leave it only to the private sector.
Earlier in his welcome address, the chief executive officer of the Exchange, Mr. Oscar Onyema said “Since 2007, when the Securities and Exchange Commission (SEC) introduced the framework for the establishment of REITs, the Nigerian investing public has been given an opportunity to invest in a diversified portfolio of choice real estate assets”.
He added that whilst the Nigerian market may not be as developed as other emerging markets such as Mexico, South Africa and Singapore, this asset class has definitely come to stay.
“Today we have about N40b in REITs market cap listed on the NSE and a total of N96b in the Construction/ Real Estate sector of our equity market.
Onyema averred that “In spite of the challenging economic headwinds in Nigeria and other commodity based economics, the capital market (including the NSE) remains one of the main vehicles to promote sustainable economic development and wealth creation”.
He stressed that the conference is in line with the Exchange’s strategic initiative to promote and create the enabling environment for sustainable development of Real Estate Investment Trusts (REITs) in Nigeria and sub-Saharan Africa.
