Affordable Housing Delivery in Nigeria: No Quick Fix to It

ESV Afolabi Kabiru Kolawole,

Affordable and mass housing delivery in Nigeria will remain a challenge confronting the Nigerian populace for a long time. The reasons for this development are not farfetched. Housing delivery in Nigeria will not get fixed overnight. Over the years, successive governments have been at the forefront of confronting these challenges. The huge infrastructural gaps, and among many other challenges will not allow massive and affordable housing development in Nigeria.

Access to land is messy and slow. The Land Use Act puts all land under state governors. Getting a C of O or Governor’s Consent takes months to years in many states. In most cases, applicants wait forever. Without clean title, banks will not lend, and developers cannot use land as collateral. Addressing this will go a long way in giving access to land for massive housing development.

The high Cost of building keeps rising. Cement, iron rods, roofing sheets are mostly imported or tied to foreign exchange. Every naira devaluation hits construction cost directly because of the industry huge dependent on imported building materials.

Government tax policies are gradually compounding the challenges facing housing delivery in Nigeria. Value Added Taxes (VAT), import duty, and multiple local levies add 30-35% to project cost before a block is laid for housing delivery in Nigeria.

The Nigerian mortgage industry is lean, and lacking the capacity to deliver financing demand of the developers across the cities of Nigeria. Mortgages in Nigeria are short and expensive, making it very difficult for the developers to access finance. Developers also cannot get cheap, long-term capital for a big time and massive housing development that is affordable.
Change of government and irregular government policies over the years have also hindered housing development in Nigeria. Tax waivers, mass housing schemes, and building codes change with every administration. Developers stall projects because the rules kept changing to a direction that is not favourable to them to access credit facilities and development. This is across government at all levels as states and local governments pile on multiple taxes/fees instead of harmonizing them, even after federal reforms as currently being change by President Bola Ahmed Tinubu led- government in Nigeria today.

As emphasized earlier Infrastructure gaps remain huge for massive housing development to happen overnight. Housing development cannot take place without roads, water, power, drainage. Government at all levels rarely provides these upfront, so developers have to self-provide, which doubles cost.

Scale and skills mismatch. Available statistics shows that Nigeria needs up to 700,000 housing units per year, and the current output is1000. Thus, the industry is dominated by small contractors with low capacity. Mass housing in the 21st century is tech and skilled labour-driven.

Enforcing Urban planning is key, especially in fast developing cities like Abuja. Master plans exist on paper, but unregulated development is everywhere. This drives up cost of land in good locations, and pushes housing to areas with zero infrastructure. Perfect urban planning by the government and the real estate market forces is for our common good.

Conclusively, combating the Nigeria housing deficit will require concerted efforts by all participant/stakeholders over time. Until land titling is fast and digital, development costs stabilize, mortgages get longer/cheaper, and states actually harmonize taxes, supply will stay low and prices higher to the detriment of Nigeria and Nigerians. Statistic has it that the deficit keeps growing by 2 to 3 million units every year, and this has no signs of abating.
Afolabi, an Estate Surveyor and Valuer, Project Management Consultant, and Real Estate Consultant writes from Abuja, Nigeria.