Dataphyte Advisory Note titled ‘the Nigerian Post-oil Economy: Going the Housing Consumer Credit Path’ has posited that Nigeria is yet to fully tap the potentials of its housing sector. According to details in the advisory note, if maximised, the Housing Sector could bring about economic growth and improve employment opportunities in the country.
The document noted the important role housing plays in economic transformation, citing the example of Japan which continues to use public housing activities and housing loans to encourage development and mitigate issues caused by economic downturns such as the recession.
Dataphyte’s advisory also noted that countries such as Singapore, Taiwan, South Korea, Hong Kong have leveraged the same policies for their national transformation and development.
“The Singapore government recognized that an effective housing policy was needed to solve the housing shortage and to promote economic development. Public housing programmes were operated as a part of an economic development package and supported with a deep financial commitment.” The advisory document reads in part.
It was further reiterated that the country’s development plans have always included Housing as a stimulant for the economy, creating jobs and upending the cycle of poverty. However, despite the importance attached to the housing sector in plans such as the first National Development Plan, Second National Development Plan and the recent Family Homes Fund which targeted 2 million housing units, Dataphyte advisory expressed concern at the effectiveness of the interventions.
This may not be unconnected with poor budget executions, as the report revealed that in 2018, N68.5 billion was budgeted for housing construction throughout the country but only N25.8 billion was spent. In 2019, N54.02 billion was budgeted while only N16.02 billion was spent.
“Homeownership in Nigeria is lower overall than in most countries. Only 35.7 percent of Nigerians residing in urban areas own their homes down from the 2016 level of 48.1 percent” the advisory revealed.
While acknowledging the cross-regional housing challenge Nigeria faces, the advisory noted that deepening the secondary market for mortgage-backed securities will help deepen liquidity in the housing finance market.
The report also encouraged the inclusion of a system that allows those who can afford the rent to buy a decent mortgage.
Dataphyte warned that there is a need to purge the real estate sector of corruption in Nigeria, stating that consumer demands will dwindle if these issues are not addressed.
“Building a house in Nigeria is expensive. The construction costs for a simple three-bedroom house in Nigeria is about N20 million (or US$50,000); compared to US$36,000 in South Africa and US$26,000 in India ” the Dataphyte advisory note revealed. The report advised a review of the price of building materials in the country while recommending ways on achieving this in its full report.
It was further noted that an investment in the housing sector could stimulate the economy and create millions of jobs in manufacturing, logistics and mining in the short to medium term through an indirect pass-through effect. ‘15million goods-producing jobs’ could lead to the creation of additional 45million jobs within the broader economy ‘if the investment is sustained for two or more years.’