 Welcome back, it's still Business Insight and Lost TV Africa, and we look at real estate sector vis-a-vis the housing deficit. In Nigeria, however, access to affordable housing has lastly stayed a pipe dream for the vast majority, particularly the middle and lower classes, which takes about 80% of the populace. The march of housing deficit has gotten worse over time, with successive government grappling with it. According to a publication by the CBN, Nigeria's housing deficit was at $7 million in 1991 and rose to $12 million in 2007 for $10 million in 2010, $20 million in 2019, and according to the Federal Mortgage Bank of Nigeria, it is currently at $28 million as that's January this year. I have a real estate consultant and public affairs analyst joining me right now to look more at this issue. I have Mustafa Iwela, many thanks for joining me on Business Insights on Lost TV Africa. I'll just read out some statistics, it is really alarming how over the years we have jumped through about $28 million as that's January this year. Okay, first of all, let me just start this way, how did we really get there? Is it that the population is just fast or rapidly growing and we are not building houses? Because most of the times, most governments talk about housing as a stage and they keep on building and yet we still have this deficit. What's going on? Thank you very much for having me, Justin, and thank you for bringing this very critical topic to a front burner of our discussion today. Now housing deficit has been a controversial discussion in the minds of relevant stakeholders recently and over the years it keeps increasing. So January this year we had about, as of today, it's put to $28 million, that tells us that the numbers keep going up. So now one of the major causes for that is we lack favorable government policies and government policies has done so much to us that it affects housing supply. Now if you ask me, Nigeria is not the only country that has housing deficits but our numbers are very alarming. Ghana is a population of 330 million people. The housing deficit is about 6.8 million. The UK, the United Kingdom is a population of about 67 million people. The housing deficit is about 4.3 million. So let's come back to a close by African country like Ghana. Ghana has a population of 34 million. The housing deficit is 1.8 million. But Nigeria has about 220 million people. The housing deficit is 28 million. You see that our numbers are actually the highest part of those countries I've just mentioned. So now one of the major reasons for this is that the government is not doing so much as expected. According to our Land Use Act of 1978, the government has vested all the lands in the state in the hands of the governor. So how the governor now continues to administer the distribution of those land is totally dependent on the governor. Now if you want to buy a land in Lagos State and build a housing estate, as real estate developers, a lot of dues you have to cross. A lot of developers have even taken their money elsewhere to other countries because of the rigors and the complexities involved in building properties in Nigeria. But the honest truth is in the last four years since the governor of Lagos State assumed office, I can tell you that I think fairly after the late chief Latif Jackonday, I'll tell you that Mr. Babaji is also trying to live up to that expectation in terms of providing housing. He has delivered well over 5,000 housing units in the past four years. We have about 4,000 units in Uganda. We have some scattered around like here and everything. So I think because sometimes when these people do go, let's commend them. I think the governor of Lagos State is not doing so bad when it comes to reducing that deficit. No doubt there's a deficit, 28 million, of course, in the next few months, I bet it's going to go up. So what I think the government now needs to do. Before we talk about what the solutions are, let's try and really understand what the issues are because you mentioned a lot of things. You talked about how investors are actually moving to other places because of the rigors, you know, issues when it comes to developing properties in the country. Aside from Lagos that you have mentioned that these are doing well, trying to get up to the level of the later... To reduce the... Yes, the former one, Latif Jakondek, he talked about Sao Olo. But aside from the issue of this land use act, which puts all of them, the ownership as said to the government, you know, if we were able to actually tackle the issue of them or maybe address the issue of land use act, what other factors do we need to talk about? Because I know people have complained over time, even those who want to build their own houses, they talked about the issue of inflation, cost of house and materials and all of that. Those items, what we should also be looking at? OK, now, so some of the critical things we should also look at to solve the financial menace of this deficit is, which is a critical problem in the first place is Nigerians don't have that buying capacity in terms of the finance to be able to afford houses. So the population of Nigeria, the middle income earners and the low income earners takes about 80%. So that means we are left to 20% who are the rich. So the middle income earners and the low income earners do not have the capacity to buy properties as they should because they are earning, what they earn does not really commensurate with the value of houses. Now, if you look at housing estates in areas like Ecuador and maybe fairly part of the mainland and maybe some places on the island, so you see that the prices of houses in those parts of the mainland, for example, are quite cheap. So a lot of times people can afford to buy them and they can afford to have a reasonable payment plan. And one of the major problems with housing and all that, as it is in Nigeria, it is today is people do not have access to financing. A mortgage system is not really doing so well. If you want to buy property and you want to buy through a mortgage, the processes involved can be very cumbersome. At some point you get fed up. That's one very, very key problem. And another very big problem is the cost of building materials also is not also helping, it keeps going up every day. So this continues to add up to the value of the property and makes buying property difficult for those who don't make that much. Now, if you cannot talk about housing and not talk about infrastructure, so if you want to deliver a decent housing to people, you must also consider infrastructure. So we have a housing deficit, we have infrastructure deficits. We don't have roads. There are lands in every part of Lagos, but there are no good roads to take you to those places. I've been to some parts of Lagos that we have to park my car and take, you know, cross over with the boats. Because there's no road and you know, I'm talking about leaky. You have to cross over with the boats just to get to your plot of land. And you know the risk involved in those, you know, crossing over by the water and all that. So the government needs to rise up to ensure that certain things are done. Our national housing policy needs to be fully implemented. All right. Fully implemented is not really put to use. And also credit financing has to be made very affordable for people who should be able to reassess mortgage seamless. I was going to even talk about that. Sorry, I just had to bought in. Credit financing is actually a thing that we should be looking at in terms of mortgages specifically, because over time, that's how people get land in the more saner climes. Because as it is right now, most people cannot just put out so much money at once to, you know, get this housing or this houses that they need, you know, but that's another talk we'll look at a mortgage on another time. Let me, let me, if my interest is to know that Nigeria is probably one of the few countries that I know that if you want to buy property, you have to pay cash down. In advance claims, you don't pay. They don't tell you to pay the full payment. You pay, you pay in installments. They can spread it for as high as 25 years. Some as 30 years, depending on the arrangement. But in Nigeria, a lot of properties are being bought with full payment. Just recently, we've had few estate developers who are trying to say, you know, pay an initial deposit and spread the balance for 12 months. But let me tell you, 12 months is not even enough to pay off for a house of, I mean, Most of them are looking at maybe 10 years, 15 years. So a lot of them will tell you pay initial deposit of 10 percent and spread the balance for 12 months, 24 months. But it's still short. So the default rates will be high. Because how do you want to meet up with, OK, now you're buying a house in Leckie for 100 million. You're paying the 10 percent, which is 20 million. And you have to, you have 80, 12 months to pay 80 million. So you don't even have that much. So would you say that's one of the reasons why we still have deficit in the housing? Because what would I have thought that since we have all of those developers coming out with some various estate across the country that it would have actually helped in reducing the gap that we have? So yeah, to be honest, property developers have also helped to reduce this deficit, no doubt. So I've said that legacy government delivered about 5,000 last year, over 5,000. There are lots of private developers too. So the line between private sector partnership needs to be strengthened. Now these developers have their challenges too. They tell you what they're going through to put up those estates. I mean, they have to pay through their, I mean, through their, through their, through their neck. Now I have a developer in Leckie putting up some properties somewhere in Shangotedo. Now he was supposed to deliver, I think about a few, failure about, I think two months ago. But because of this recent removal of FEP subsidy, now this guy is going through serious problem. People have paid when they have removed FEP subsidy. Now they've taken FEP subsidy of inflation has come in. This developer is battling with delivery. So it's difficult for him to come back and demand for more money from people who have subscribed. So these are problems. So government policies is really, really, you know, not helping developers. And I think that government should make this environment more enabling for private investors who wants to help them with these deficits. But in your opinion, would you say government actually has any business in building houses or providing houses in the first place? I don't know, in my head, I'm thinking it should actually be left maybe to the private sector or maybe some sort of private public sector partnership. Because if you ask me over time, we've talked about or we've heard about government building low-cost housing estate and relief from houses and everything. But if you look at the prices, it's still not even low-cost as it were. And sometimes it is actually given to governments, cronies and politicians and their friends. So let me say this. I'm going to shake some tables here. So one of my biggest problem with government-owned projects is that you find out that a lot of times the people who are able to benefit from that project are not even those that needs the project. There are most times you find out that a lot of people who live in that estate are civil servants and people who have strong connections to the government, which is totally bad. So if you have a plan to build units of houses for the populace, then make it available for the populace. So it's difficult to now build those houses and the process of acquisition for a common person is difficult. So that's one of the problems from the side of the government. So another very critical thing that we must also discuss here is our process of registering title on our properties online is very difficult. If you buy a property now, the first battle you will go through is to register your title with the government. The second battle you will go through is to get the building approval. Then the third battle you will go through is to ensure that you are even able to execute a project successfully without any fear of intimidation from any agency of the government. So there needs to be total overhauling of that sector. The government needs to make this system very easy for our developers. I bought a land. I want to get my CO4. Let it be very seamless. By now, we should be moving towards the era of getting your CO4, everything done digitally. We should be moving towards the era of getting your building approval digitally on your phone without having to go from one office to another and allow us to have to start to lobby and all that. So the world is evolving and we should also evolve. We cannot remain where we are. So now, so again, there's no doubts to say that there's no deficit, there's a huge deficit and to stop that, there has to be a lot of joint effort between the government and the people. Aside from joint efforts, as we round off right now because I'm just seeing several hands in the air. My producer and director actually asking me to fly out of the studio. But as it is right now, speaking of joint effort, Lagos State, maybe government and the private sector, what other aspects should be looked at in the interim or in the immediacy so that this wide gap can actually be bridged to the barest minimum very quickly as we round off? Okay, so technically, I just feel that the government needs to, what's it called, make the environment very enabling for investors who wants to help survey this situation. There's a problem and the government obviously is overwhelmed. Let's make it easy for private investors to help you reduce this deficit. People have this money, they have this funds. They want to develop, but they are afraid of challenges that will come from the government and all that. So how about the financial sector? What else can they do on their own part? Well, so now, so I do not think we can exhaust this, but I tell you our interest rate also is not even helping. Our interest rate from the civilian now is 18.75%. If you go to the banking sector now, if you, that has a benchmark interest rate from the bank is close to 30 to 40%. They have the other rates they have as well. So it's difficult. So if you borrow money from the bank to build, for the next five years, you are servicing that money from the bank and you cannot even make any profit. So something needs to be done in terms of that interest rate also for developers to help them have a soft landing. All right. Most of it is a real estate consultant and of course a public affairs analyst. So he's actually abreast with the economics and the politics of housing. And of course, what generally affect the average Nigerian, but we'll come back again after today. We need to talk about the finances and of course, what banks can do specifically as regards and mortgages because that's a language we should be driving towards. Many thanks for being a part of the show. All right, that's as much as we can take on the show for today. Time is never really your friend when you have informed. My name is Justin, Acadonie Business Insights will return to your screen on Monday. Bye for now.