Damilola Aina writes on the possibility of solving housing problems for low-income earners through cooperatives
Operators and experts in the built environment have called on the government to have a rethink of its policies on land and infrastructure.
According to them, housing challenges could be solved if the country takes the cooperative arrangement more seriously.
“Shelter as we all know is a basic human need. The challenge, however, is providing shelter for all categories of society. To solve this, we must develop innovative ways to boost the stock of affordable housing for all Nigerians,” the Special Adviser to the President for Economic Matters, Adeyemi Dipeolu, stated.
Solving the problem of housing deficit has been on the front burner of interactions between government officials, stakeholders and captains of industries.
While the residential real estate market in the upper and medium income bracket is commendable, given the purchasing power of its off-takers, less attention has been given to low-income earners, who represent the larger percentage of homeless persons.
In the National Multidimensional Poverty Index report that was unveiled recently, the National Bureau of Statistics disclosed that 133 million Nigerians were multi-dimensionally poor with 42 per cent of these people living in urban areas.
This means people who sleep in indecent houses in urban Nigeria are more than people who sleep in decent houses. Thus, there is inadequacy in housing to cope with the ever-increasing population in Nigeria.
The government’s continued stance on providing affordable homes and eradicating poverty have suffered setbacks on the basis of the free fall of the naira, poor access to state land for mass housing, high cost of building materials, high cost of finance, fiscal challenges, and shortage of options for low-income earners.
In view of its enormous cost, housing is the item of the highest expenditure of every household and it can rarely be purchased directly from one’s earnings, hence a new solution is needed to solve the challenges.
Experts, who spoke with The PUNCH, explained that government policies bordering on land allocation, lack of basic infrastructure and the unwillingness of the government to partner with housing cooperatives had limited its influence in reducing housing deficits put at over 22 million.
They said the growing population would plunge more Nigerians into poverty, making it difficult to provide housing solutions to an already impoverished citizenry that lack access to health, education and employment, among others.
Speaking on the need to solve the housing problems for low-income earners, a property developer and Managing Director of Nigeria Integrated Social Housing, Dr Yemi Adelakun, said cooperative housing was a viable business model.
He said its benefits included social capital formation, collective bargaining, financial inclusiveness, cost-effectiveness, affordability and security of tenure, adding that it was a form of self-help.
Adelakun, who spoke in an interview with our correspondent, said the concept of cooperative enabled people to aggregate their resources together and afford their housing needs.
“Affordable housing is a challenge, and that is why cooperative housing is one of the best solutions to consider,” he stated.
He added, “With cooperatives, you can get your loan for less than two per cent. And cooperatives is all about self-help. It says let’s come together, contribute our money, and we get it. We’ll be the developers because I know so many developers are interested in affordable housing.
“So, when we are talking of housing for the low-income earners, it has to be cost effective. It has to be of quality of standards, there must be sanitation, there must be water, but at the same time, the income should be able to afford it.”
Adelakun noted that solving housing issues was a serious job and one of the solutions available now was to partner with cooperative societies.
“In cooperatives, we have social capital people contributing their income, aggregating it at little or no cost. Currently, if you want to buy a house, the interest rate is 10-15 per cent which is very expensive for low-income earners, but with cooperatives, you can get a loan of less than two per cent interest.
“Cooperative housing is a special purpose vehicle for home ownership. Its strategic objective is to promote housing finance disruptions and leveraging digital, technological innovations and cooperative principles for large scale affordable housing delivery for low- and medium-income earners,” he stated.
Adelakun continued, “A cooperative society is self-help. It is basically saying let’s come together, contribute our money, aggregate it and solve our problems. Many developers are interested in affordable housing. All they want is to make profit.
“Housing for low-income earners has to be cost effective, of good standard with basic infrastructure. There must be a clean environment, water, roads but at the same time, the income should be able to afford it. An Osusu contribution with 20,000 members contributing N2,000 daily will go a long way in providing finance for land projects. In Kenya, some of these cooperatives are preferred to banks.”
Speaking further, he noted that state government policies on land allocation had been a herculean task for potential investors, as the states only sell to highest bidders.
He said, “Land is one of the challenges and if you don’t have access to it, you can’t build a home. Government controlled lands are expensive, which will increase the price paid by off-takers.
“Mortgage is a stumbling block as Nigerians are ignorant of its benefits. The funds are not available; the available ones are expensive and not accessible to low-income earners.”
Similarly, the Executive Secretary of Association of Housing Corporations of Nigeria, Toye Eniola, stated that the inability of the government to provide infrastructure had restricted the society in accessing undeveloped areas.
He said, “Cooperative housing will go a long way in solving housing deficit. Individuals are using the scheme to acquire shelter. Private bodies have cooperative societies but the challenges they are having is that some of them have gone ahead to buy land at the outskirts area, so they need infrastructure to access the place.
“Infrastructure is the responsibility of the government to every segment of the society. People are paying taxes, but help is not coming. If we have a number of cooperatives that have been able to buy land, developing the place shouldn’t be a problem.”
He enjoined the government to meet up with its primary responsibility in providing basic infrastructure as they served as catalyst for development.
Eniola said, “For the low-income earner, we need a government that is committed to meeting their responsibility of providing housing, if you consider the cost of construction.
“It will be difficult to produce houses that low-income earners can afford except the government steps in through social housing. The government will need to provide infrastructure, create a good environment for developers and the housing association in order to get houses built at subsidised rates. That is how we can have affordable housing for low-income groups.
“Low-income earners don’t have a lump sum to buy houses and how much is their income. Mortgage payment is not a solution because how will someone earning N100, 000 a month pay a mortgage of N10m. How many years will that take them to pay?
“Another solution is to provide rental housing for the people. Rental housing will help to solve this problem; everybody can’t buy houses but those who cannot buy can rent also at a subsidised rates.”
In her submission on the issue, the Managing Director, BSTAN Homes, Becky Olubukola, identified low interest loans to developers and cooperative societies, quick documentation of land titles, tax exemption and enactment of policies as solutions to the multi-faceted problem.
She said, “If the government provides the enabling environment for private developers through grant/low-interest loans, quick documentation of the land titles and tax exemption, providing affordable housing for low-income will not be an issue.
“Our current standing as a nation will require effective leadership, responsive governance and political willingness to translate the existing human capacity of our youths and women into economic gains for Nigeria and Nigerians.
“If we must secure a bright future and achieve a stable economy, it is very important that both the leaders and the led must work together to address issues bedeviling our nation.”
In an article entitled, ‘Affordable Housing in Africa’, the International Finance Corporation said, “The World Bank Group estimates that by 2030, three billion people, or 40 percent of the world’s population will need new housing units.”
The IFC said Africa’s housing market had few local developers with the technical and financial strength to construct large-scale projects, noting that the soaring demand for housing in Nigeria and other African countries such as Kenya was being met by scant new supply.
The Centre for Affordable Housing Finance in Africa said having affordable housing would mean entrenching “improved macroeconomic conditions that reduce the cost (and increase the availability) of mortgage finance, and thereby enable a wider population to access affordable housing.”
It further said, “The affordable housing challenge is also about creating the economic, policy and regulatory conditions for the supply of non-mortgage housing finance that can support incremental housing processes.”
Hence, improved economic conditions can make affordable housing a possibility in the continent. In other words, proper economic management and improved macroeconomic conditions can boost incomes and enable households to afford housing costs.
According to the United Nations, the urgent task facing Africa was to increase affordable housing supply in major cities through appropriate policies and legislation that would stimulate housing availability.