‘Our developers lack capacity to do mass housing’

What’s your office currently doing that is in the interest of the public of Abuja?Currently, we’re building on 50 hectares of land Kaba in Kubwa. The first phase of what we’re building is about 600 housing units: one-bedroom, two-bedroom, three-bedroom flats and three-bedroom terraces with boys’ quarters and without boys’ quarter. We have up to […]

What’s your office currently doing that is in the interest of the public of Abuja?
Currently, we’re building on 50 hectares of land Kaba in Kubwa. The first phase of what we’re building is about 600 housing units: one-bedroom, two-bedroom, three-bedroom flats and three-bedroom terraces with boys’ quarters and without boys’ quarter. We have up to 35 blocks of various housing types most of them flats at various levels of construction.
The mode of development we have taken is we build directly, carcasses and we have a window for self-developers-construction companies can come to us, we sign agreement then we give them the building block at sub-structure level, we give them approved building plans, we supervise what they do to comply with plans approved by the department of the development control.
 We started this work about two years ago. The blocks of flats are targeting National Housing Fund contributors. As government-owned company, we support the national housing programme. We have an arrangement whereby the Federal Mortgage Bank is to give us loan facility. Some form of funding has come from the Federal Mortgage Bank but it’s not enough.
 
What has been the public’s response toward being part of this scheme? Is the public aware?
Quite a number of people are aware. We’ve been at housing show. We have advertised. We’ve been at Archibuilt. We have friends at various locations.
It’s good but it can be better. The response from the National Housing Fund contributors has not been encouraging because of the bureaucracy or what it takes before the loan can be given for them to acquire their houses. The Federal Mortgage Bank needs simplify the process of acquiring that loan. The hurdles that people go through are many.
Since salaries are deducted and the collateral to these houses is to be dociled in the Federal Mortgage Bank through the PMI [Primary Mortgage Institution], they have all it takes to hold, therefore, they should simplify the process of giving out this loan.
They’re not giving cash to the individual who’s buying the house. They’re simply going to credit the account of the developer and debit his loan account with them. So long as they give money to the developer, they recover that money through the applicant who’s taking the loan. After all, these applicants have been contributors for several years. It’s a statutory law.
The Federal Mortgage Bank should simplify the process and the time it takes to give this loan. It shouldn’t be more than three months.

Many developers have announced they have added to the housing stock. Yet, we don’t see the impact of a rising housing stock. Why is this disconnect?
The process of putting up housing development is quite lengthy. First, the acquisition of the land. Second the compensation, particularly the cashew tree-you know it’s a big phenomenon in town. You pay heavily for it to access the land. Third, the preparatory work regarding design, going to development control to get approval and business plan.
Before you hit the ground, a large percentage of the expenditure on housing is on paper work. From the money market I know, nobody gives you loan to do that unless you go to the open money. And money in the open market in Nigeria as it is now, for anybody who’s going to do a genuine property development, it’s toxic money. It can kill the project. Over 20 percent interest rate beside other conditions is definitely too high.
Going to the issue of stock. For you to implement large volume of stock, you have to have the technology. In Abuja today, I can’t count more than three companies that are doing system building.

What’s system building?
System building means you do pre-fabricated buildings. You either fabricate once and come assemble them at site after doing the substructure or you come to the site and put your moulds and then pump in concrete or whatever building materials to produce these houses. For you to produce thousands of houses within a short period of time in Nigerian situation as it is, you have to be a system builder. Conventional system whereby you use blocks takes long time because curing period of the concrete decking is about 28 days.
All these people that say, I’ll produce X thousand housing units in so so months, just listen to them but ask them how do you do it? If they don’t give you scientific and technical explanation, it’s just a story. Story! story!  Somebody is telling story.
But people in government know that what are needed to really do mass housing yet the so-called developers partner with government and government allows this to happen.
Government has stopped direct construction of houses. That’s why a company like ours was set up. Government increases mass housing through various allocations. Private developers, companies are called to come and build.
But companies have to have installed capacity. They have to have working capital. They require simple pre-fabricated plants, they require a lot of cranes, big workshops, concrete sites, tippers, a lot of plants and equipment. Anyone that says they will produce so many thousands of houses within a short time, ask them what is their installed capacity?

Some don’t even have good offices.
Companies that don’t even have offices that tell you they can produce so so houses are only going to do it cyber space-in www.somewhere.com.

NLC and Kristen Lally Nigeria signed agrreement contract for 60,000 housing units. They beckoned to the public to come put in money. They promised them houses this December. As we speak, there’s not a single DPC. These people are using government offices and popular organisatrions to deceive people and government is watching it. Why?
I don’t know the installed capacity of that company. I’ll not be able to say whether it can deliver or not. What is the installed capacity? Unless you have the installed, what it takes to deliver, you can’t deliver. Can you give what you don’t have?

What should we do to stop this trend? Fake developers promise numerous housing units every day. They even give timeline.
The first ingredient to building a house is access to land. The kind of documentation that you need towards getting access to land, we should take a closer look at. Where the capability for somebody to deliver and milestones should be conditions under which land be given for housing. That means if you say you’re going to deliver 1,000 housing units within what period, you should have milestone and then we have enforceable documents whereby if you fail at the very first point, then you lose your right to that land.
Second, you need to approach the delivery process-the housing is delivered through simplifying various components that come together to deliver the houses. If schemes can be done either SMEs or job creation scheme whereby companies that are producing pre-fabricated components in their yards are encouraged to establish. One way is subsidized loans towards purchase of land and equipment such that one can design a house then go to them and orders…pays some deposit, the company comes to the site and assemble the house.
Industries that are producing various components of building materials, government has to come in and see how to subsidise their production costs. One of the most important is the cost of energy and the cost of bureaucracy, cost of documentation.
Then simplifying access to funds. How people can easily get loans. I heard the shareholders association say there are billions of money, unclaimed dividends. This is to whom it may concern money. It is there lying somewhere in the financial system. Why don’t that money be brought out and given out at interest rate below five percent? Give it to developers to develop houses. It could be used for plants, equipment, for one form of material or service or process towards delivering houses.
Infrastructure. They’re very expensive. Primary infrastructure is the responsibility  of government. But in all honesty, all over the world, even a number of aspects of secondary and tertiary is either done directly by government or in a way government subsidises it through a long time loan. How do you recover the cost of infrastructure? Infrastructure tax, vehicle tax, ground rent, tenement rate and various taxation systems.
The cost of providing infrastructure in a housing estate, if you go to the business plan is very high. Take a look at a typical business plan, look at the cost of producing and delivering the house a lone, take all the other costs, paper costs and the cost of infrastructure, when you add up, are higher than the cost of delivering the actual house. These are areas government can come in with schemes. But the key thing, there should be long term funds.
If you go to the Raw Material Research and Development Council, they have a lot of researches and materials there that long term funds or direct grant from government should go there to roll out those projects. Government will after some years go back and collect tax and revenue. There could be other areas.
Housing isn’t only a product. It’s a process. Housing delivery has had so many modes of delivery. There’s traditional mode of delivery. If you go local communities, there’re ways they produce houses. The problem there is quality. Why can’t research put in there?
Go to Sabon Garis, go to Tudun Wadas, there’re room and parlour kind of accommodation. Take any urban setting, the amount of accommodation stock provided by room and parlour in Sabon Gari and Tudun Wada is a large percentage. Look at the policies? They’re addressing bungalows, duplexes, houses for the medium and high income. But houses for the low income and informal sector, where are the schemes, where are the programmes.?
There are quite a number of business communities that move into Abuja. What kind of housing do they require? Short term housing. A number of these houses you rent for one or two or three or six months and move are very few in the city.
What’s your reaction to Dangote Group’s reduction in cement price?
This could help. But if you hear a marketer talking about something, until you see it on ground. The controversy that went on months ago regarding quality of cement is nothing but a move towards cartel. That’s why professionals stood against it.
We said the issue of Grade X, Grade Y, Grade Z of cement is matter of proper design, proper specification, proper supervision and placement. Then you must get the correct professionals to supervise the work. You can use any grade of cement once you get the proper design done, proper process of placing it then the correct professionals to supervise it.
It’s a good thing if cement can come down to a little bit above N1,000. But scientifically speaking the percentage of cement in any single housing unit, the cost for cement will not be anything above 10 percent. What about other cost elements? How I wish people selling other building materials can do the same.
Can it really be sustained?
I think the general public should be on the watch out. Sustainability of a certain price is a factor of production cost, a factor of type, a factor prevailing economic indices. The price can come even lower. Now a barrel of oil is now for less than $80.
But just go into the internet. Find out what is the cost of cement in neighbouring countries, in Asia and other places. Compare with what it is in Nigeria. You can ask a financial expert, he can tell you. My personal opinion is cement is too expensive in Nigeria. It shouldn’t cost above N1,000.