The costs of building materials for housing projects in Nigeria has painfully reached a crescendo. This situation is very worrisome and increasingly very unsustainable in the built industry of the economy. However, the unfavourable pricing conditions and the unfortunate inflationary circumstances should neither discourage nor distract genuine investors in this subsector from their targeted focus; from the long policy agenda of reducing the housing deficit gap in the country. The country needs many more homes than ever from a casual observation. The truth about this unfortunate inflation and painful pricing threat is that the gap keeps widening as the years roll by (based on the fact that the society is experiencing population explosion, especially in urban areas).
Considering the projected world population, expected to reach 9.8 billion by 2050, the costs of construction materials therefore, should not (in any way) influence or impact negatively, the course of reducing the housing deficit gap in Nigeria. More homes should therefore be produced by encouraging real estate developers in the country, in spite of the fact that building material costs have increased significantly. Funding these projects at this critical time when construction cost factors have been driven up by exchange rate, increased transportation costs, is difficult.
However we look at it, funding requires partnerships amongst players from the financial institutions (for mortgage financing), moving forward, barring the inflationary impact on construction costs. Project funding, essentially, is the most critical aspect of achieving the targeted aims and results for the industry because, as captured in this popular quote, “without money, we are dead”. Finance is most essential in the execution of tasks and assignments; otherwise, everything stands still (no movement, no progress), no matter the magnitude of the great and wonderful ideas with proposals made at the planning stages. It is therefore pertinent to recognise that the funding of investors by financial institutions is very vital, and a very necessary aspect of actualizing the vision for the successful execution and accomplishment of the construction business and mission in the built industry.
To unlock the finance market in housing development in Nigeria, the Ministry of Finance Incorporated Real Estate Investment Fund (MREIF) is a recently established public-private initiative. It was introduced under the current administration, with a strategic direction from Wale Edun, the minister of finance and coordinating minister of the economy, to offer a feasible solution. This initiative is a package that is expected to play a critical role in the built industry at this time.
Through the MREIF home loan programme, the package has a funding arrangement that could be accessed through First Bank and Stanbic IBTC at a fixed rate of 9.75 percent.
With a repayment period of 20 years, it makes home ownership very realistic for the low income class and those in the civil service; the industry’s operational activities could then be sustainable in the light of the current high construction cost. This particular building finance could be presumed to foster a feasible way forward in actualizing affordable mortgages for Nigerians to have their personal residential homes and properties. It adds to the existing services provided by the likes of Federal Mortgage Bank.
It is in this connection that REDAN positions itself as being set, focused, and committed to ethics, innovation, affordability, and environmental consciousness in building development. Its chairman of council, Oba Akintoye Adeoye, recently at the opening of its 3rd International Conference and Fair on land and development, emphasised that REDAN is on a task to build responsibly, to expand sustainably, and preserve the value of land being developed for generations yet unborn. It is important that this task is also stressed to the government, which includes to provide adequate shelter for the general needs of humanity in the society, at affordable payment terms.
This identified task of provision of adequate number of affordable homes can be achieved, if every stakeholder in the industry contributes his/her own quota towards realizing an aspired success, by actualising the vision that accomplishes the mission towards reduction of the housing deficit gap in the society – which, indirectly, can help gradually send poverty away from in the land. Governments at all levels in Nigeria (federal, states, and local governments) are urged to responsibly support the efforts of REDAN by making land available without undue delays, for the development of smart estates and modern cities in the economy.
