By Bayo Lawal

In developed countries in the world, the housing sector is a viable tool for enhancing economic growth. In a country like Nigeria however, the reverse is the case since affordable housing is a mirage for middle and lower-class citizens in society.

Despite the government’s effort to nip this anomaly, and bridge the gaping housing deficit, the growing population especially in urban areas thwarts the government’s efforts as well as that of private-owned companies.

In 1991, Nigeria’s housing deficit was at 7 million and rose to 12 million in 2007, 14 million in 2010, and 20 million units in 2018, and in 2023, Nigeria has an estimated 28 million housing deficit.

Some of the critical factors affecting the supply of housing units in Nigeria include the epileptic financial system, slow administrative procedures, high cost of land registration and land titles, housing policies, high cost of building materials, high cost of land acquisition, and a ton of other factors.

According to a study conducted by the Central Bank of Nigeria, CBN, the formal housing production is at approximately 100,000 units per year and this is highly inadequate because at least 1,000,000 units are needed yearly to bridge the 18 to 22 million housing deficits by government’s target date of 2033 (if the population continues at its annual growth rate of 3.5 per cent).

Experts posit that the real estate sector will need an investment of over N21 trillion as well as a partnership with the government to build sufficient housing for the entire population, so as to provide affordable housing units for the populace in the wake of escalating rents in megacities like Lagos.

In other to bridge the housing gap and provide sustainable housing in Nigeria, there are certain areas that the government, stakeholders, financial systems, and building and construction companies need to look into: National housing policy review and implementation.

The sole purpose that the national housing policy is meant to serve is to solve housing problems and meet the housing needs of low-income earners. A good percentage of Nigerian citizens fall into the middle and lower class category, therefore they are not financially capable of owning a home. The national housing policy should be reviewed taking into consideration the financial and cultural factors inhibiting the average Nigerian’s ability to afford a home.

Restructuring of the Mortgage system

The mortgage system in Nigeria needs to be restructured to really meet the needs of those who cannot afford a home, that is, low-income earners; many Nigerians who are low-salary earners, cannot afford the short-term financing provided by mortgage banks, hence the housing deficit in the country. According to experts, mortgage banks are not to be blamed for the chronic lapses in their financial system, because virtually every mortgage bank in Nigeria depends on funding from the Federal Mortgage Bank, and the funds they receive cannot go around to everybody, thus mortgage banks need serious funding in the mortgage market to make it more vibrant, serve its purposes adequately, and be able to reduce its high-interest rates.

Other areas that can reviewed include:

The property registration process.

Land registration in Nigeria is shackled with a myriad of challenges which has impeded the operational flow of several real estate companies, it is also a contributing factor to the housing deficit in Nigeria. The property registration process in Nigeria needs to be simplified, and digitalised, thereby reducing human participation to the barest minimum so as to eliminate corrupt practices, enhance the government’s credibility, and make it easier for realtors and property owners to do the right thing without cutting corners. The review of the property registration process and introduction of simplified means of registration would make the acquisition of land titles, deeds, and approvals less cumbersome, and contribute to the growth of the housing sector in Nigeria.

Establishment of locally manufactured building materials.

The percentage of people who are unable to build a home or stop their construction project halfway due to the high cost of building materials is on a constant increase. The production of building materials locally should be encouraged, under the supervision of expert engineers who will ensure that only high-quality materials are used alongside the latest building techniques, to ensure the safety, longevity, and quality of the finished product.

Mass production of locally manufactured building materials under expert guidance would reduce construction costs, and housing costs, and ultimately ease the operation of building and construction companies in building more homes thereby contributing to bridging the housing deficit in Nigeria.

Private Sector Participation in the provision of loans and subsidies to potential builders.

If there are multiple credit systems that are more flexible than the traditional banks, offering incentives, loans and subsidies, loans can be accessed easily with a convenient repayment structure. If multinational companies and medium-scale industries, other private enterprises in the country can make provisions for long-term loans for building and construction companies with a flexible structure and interest rate, it would bode well for improving the housing deficit.

Bayo Lawal, Co-Founder of Dukiya Limited, writes from Lagos