By Abu Usman
Nigeria, Africa’s most populous nation with over 200 million people is experiencing a significant housing shortfall characterised by an overwhelming demand for homes which is largely short in supply. This crisis has far-reaching implications, affecting homes, living standards, economic growth, safety, and social stability.
One of the primary drivers of Nigeria’s housing crisis is its rapid population growth. Increasing urbanization, with more people moving to cities in search of better economic opportunities, has further intensified the demand for housing in urban areas, particularly in cities like Lagos, Abuja, and Port Harcourt which are increasingly experiencing surges in population density, putting considerable strain on already inadequate housing infrastructure.
However, not just that, desires for decent homes in the rural communities have also been high considering the extensive mobility among citizens and closing social gaps made possible by urban migration and access to technology.
Despite the growing demand, housing supply in Nigeria failed to keep pace in view of some constraints hindering the availability and access to housing among Nigeria’s over 200 million people. The starting point to all citizens is enshrined in the law that rests the provision of welfare and security as the primary responsibility of the government.
However, it has been repeatedly asserted that this burden cannot be totally pushed to the government with a pluralist system that boasts of private sector and Nigeria as robust but largely untapped human resources.
Some constraints have been attributed to deficient housing supply, among them is the expensive materials particularly worsened by the inflation rate in the country due to the inflation and unsteady forex. Some materials used for building in Nigeria are often imported, making housing construction costly and this pushes developers to target upscale, high-return projects, neglecting affordable housing where the need is most acute.
Again, obtaining land for development is fraught with procedural difficulties, legal complications, and rising costs. The Land Use Act of 1978 vests land ownership in the state government, adding layers of bureaucracy that discourage private investment in affordable housing.
In the same vein, financial institutions are hesitant to provide long-term loans for property development due to perceived risks, interest rates, and a lack of effective mortgage financing structures and this creates a significant funding gap for middle and low-income housing projects.
The housing crisis in Nigeria is detrimental not only to individual citizens but also to the broader economy. Insufficient housing affects workers’ productivity, health outcomes, and children’s education. Families often live in substandard conditions, crammed into informal settlements with poor sanitation and inadequate facilities, affecting their overall quality of life.
The lack of affordable housing is a recipe for social instability as it fosters inequality, reducing upward mobility for lower-income families. Informal settlements or slums, common in cities, become hubs of poverty, crime, and social discontent. Housing inadequacies also contribute to broader issues of urban planning, with unplanned growth overwhelming public services and infrastructure.
In addressing the housing crisis, a robust and multifaceted approach are required; while the Nigerian government has undertaken several initiatives, such as the National Housing Fund (NHF) established in the early 1990s, these efforts have not fully alleviated the crisis. Policies aimed at reforming land acquisition laws, investing in affordable housing projects, and encouraging private-public partnerships are critical.
In tackling Nigeria’s housing challenges deficits, innovation and concerted efforts from both the public and private sectors are essential as efforts must be made towards reducing dependence on imported building materials by promoting locally produced alternatives which promises to lower construction costs and boost local industries.
Similarly, developing micro-finance options and housing cooperatives can provide more accessible financing for homebuyers, particularly those in low and middle-income brackets while also employing modern construction techniques like prefabrication and 3D printing to expedite housing development and reduce costs.
Government also has a role in reforming the Land Use Act to simplify the acquisition process and providing clear, enforceable regulations to protect investors and developers to foster a more conducive environment for housing development.
However, one of the viable options available and open to be explored by policymakers is the huge pension fund which could be strategically deployed for reinvestment in the housing sector to meet the needs of the retirees and serve as the channel to reduce the housing needs of a significant population of Nigerian workers who annually exit the civil service annually.
Pension Fund Administrators manage retirement savings for workers, and they collect contributions, invest the funds, and ensure that when it’s time to retire, people have money to support themselves. But these funds can also be used in various sectors, including housing ahead of retirement and indeed be deployed to meet the housing needs of retirees ahead of their exit point from public service.
Pension funds warehouse a vast amount of money that when PFAs pool these resources, they can invest in large-scale housing projects. Think of it as a big pot of money that can be used to build new homes. By investing in construction, these funds can help boost the housing supply, making it easier for people to find affordable options.
Pension funds can drive down the cost of housing by providing financing for affordable housing projects. When PFAs offer loans or invest in projects, it can reduce reliance on high-interest bank loans, which many developers face. This could lead to more affordable home prices in the long run. Imagine if your dream home didn’t come with a hefty price tag!
By partnering with real estate developers, PFAs can create a synergy that benefits everyone involved. Developers need funds to build, while PFAs seek safe investments that yield returns. Working together, they can bring innovative housing solutions to the market. It’s a win-win!
The Nigerian government has launched initiatives aimed at reducing the housing deficit. PFAs can play a crucial role by supporting these government projects financially. When these two entities collaborate, it can lead to faster development and more homes for those in need. It’s like joining forces to achieve a common goal.
Investing in housing does not just help solve the immediate crisis; it also benefits the economy in the long term as more homes mean more jobs in construction and related sectors. Families will thrive in stable environments, leading to better education and healthcare outcomes. It’s a cycle of positive growth that begins with strategic investments.
In conclusion, Pension Fund Administrators have a vital role in ameliorating Nigeria’s housing deficit by pooling resources, financing affordable projects, partnering with developers, and supporting government initiatives, they can help change the landscape of housing in Nigeria. The potential is huge, and with smart strategies, the dream of affordable housing could soon become a reality for millions.
Esv. Abu Usman, an Estate Surveyor and member of NIESV is based in Abuja and can be reached via [email protected]