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High level of policy uncertainty, insecurity killing housing investment—Chime

The National President, Real Estate Developers Association of Nigeria (REDAN) and Managing Director, COPEN Group of Companies, Mr Ugochukwu Chime, has given insights on the major challenges frustrating private sector investments in housing supply.

In an interview, he said “The greatest problem we have in the country today is the high level of uncertainty in every area.”

“Nobody is sure of the direction of any sector in this country. The socio-cultural nature of the country presently with insecurity has made people to become less interested in investment. Investment is the engine that drives any economy and it is based on the perception of what tomorrow looks like. This is because no project gets consummated the day it was initiated.

He said “Some of the housing projects take up to two years in planning; then you have another two or three years for execution as the case may be. These things add up to about five years. Now, most of the investors are not sure what will happen in the next two years in our economy.

“That becomes a very huge challenge, apart from other factors of multiple layers of taxation by authorities; challenges in ease of doing business which government is trying to attack. Unfortunately, most of the time in trying to sort out these problems, they create more problems for themselves and create layers of challenges and in most of the solution provision obligation, they have not been able to integrate the private sector in trying to define some of the solutions that need to be put in place.

Continuing, Chime noted that even as the economy remains challenging, “Access to funds is terrible; we have the interest regime of deposit money banks at upper double digits that is between 24 per cent and 30 per cent.”

“When you add up another set of data, that is the issue of compliance cost – complying with town planning approval, complying with taxes, complying with development authority, complying with environmental issues, this adds another range of between 15 per  cent to 30 per cent.

According to him, “If you add these two costs together, you find that the cost of doing business in this country is as much as 50 per cent. No country survives such an alarming high cost of investment. The net effect of it is that the product is not affordable for the masses.

The real estate expert argued that “If we have a people-oriented and sensitive government, I’m sure we will need to sit down and have to change the way we do things in this country.”