 A welcome back that was on credit fine and sin. Fuel subsidies significantly affect the cost of construction materials, transportation and machinery used in the road-estate sector. With subsidized fuel prices, the demand for fuel surges are leading to shortages and subsequent price increases. Consequently, transportation costs for construction materials rise, resulting in higher overall construction expenses. The increased cost of construction negatively impact the road-estate developers, who may either pass the additional cost to buyers or experienced reduced profit margins. I have a road-estate expert and public affairs analyst, Mostafa Iwenla joining me now to discuss further. Many thanks for joining me, Mostafa. Thank you for having me, Justin. All right, it is indeed our pleasure. Let's just talk about the road-estate sector, all that is happening with the fuel subsidy removal. In my intro, I talked about how it has impacted on transportation costs. Specifically, let's talk about the road-estate sector. How has it impacted in terms of the costs of construction? All right, thank you. Thank you very much, Justin. Thank you for having me once again. So, let's cut to the chase. This is not the first time a particular government has tried to remove fuel subsidies. President Gulagunathan tried it, but failed. The only time a Buwari also tried it, but he failed. Finally, on May 29, 2023, this year, President Bola Mehtunogu finally removed fuel subsidy. For me, I think it's a welcome development, in all honesty. What I think is the problem is the timing of implementation and also the fact that there were no proper plans in place before the implementation. I mean, according to the National Inventation Agency, some certain groups of people have benefitted from this fuel subsidy for many years. I tell you, the federal government pays well close to 400 billion monthly on fuel subsidy payments to the starting group of individuals. So, for President Bola Mehtunogu to finally say, no, enough is enough. We cannot continue to enrich certain individuals and the expense of well-meaning Nigerians is a welcome development. So, my prayer is that such monies is now put to good use in terms of, you know, to improve infrastructure, road, in terms of our health sector, education, I mean, sectors that needs to be improved. Now, down really down to real estate. The honest truth is the real estate sector is largely affected with all of fuel subsidy, no doubt. Because one of the problems that stakeholders are experiencing right now is that there's a huge increase in terms of building materials. There's a huge increase in terms of affordability of homes. Now, if you drive around, take your time to drive around Vi Equi and its environs, you will see that they've been slowed down in terms of construction work. That's due to the sudden removal of fuel subsidy. Now, so what I think should have happened before Mr. President announced or implemented the fuel subsidy regime is that there should have been consultations with relevance stakeholders. Now, when you talk about relevance stakeholders, there should have been consultations with professionals. You cannot wake up one morning and announce that you want to remove fuel subsidy without having any proper plan in place. Now, if the prices of houses go up, it will narrow down, it will trickle down to other household needs, whether you like it or not. In recent times, rental values of properties have doubled all over the places in Nigeria, not just Lagos. But it is mostly affected in Lagos because Lagos is more of a business and it's a place where a lot of Nigerians stay. Lagos house is over 22 million Nigerians. So, of course, the need for house would increase by the day. Our housing deficits increased in the year 1991. Our housing deficit was 7 million. Now, as of June 2023, our housing deficit is 28 million. The housing deficit tripled up or not even tripled, quadrupled in the past decades. And that's due to the fact that we already have a lacuna in terms of housing supplies. Now, what the removal of fuel subsidy has also done now is to add to that lacuna. There's a huge deficit, a lot of Nigerians are not homeowners. A lot of Nigerians are tenants. Meanwhile, in other climes, a lot of citizens are homeowners than people who rent houses. That's because there's access to loans, there's access to mortgage. Now, aside from the fact that construction materials will go up and has gone up, cement was 4,000 era, some few months back. Now it's close to 5,000. Transportation costs of moving your materials from one point to another has also not just doubled but tripled. That's because, I mean, 4 was 118 era, barely in May. Now it's about almost 700 era. So the impact is very, very deep. And I think that the government and relevant stakeholders needs to have a round table discussion on how to cushion this effect. Distributing 8,000 era to every family or every household is not the solution. Increasing minimum wage will not give us the long-term solution that we need. Yes, it is a step in the right direction to cushion the effect a little, but overall, there needs to be something more concrete done to cushion this effect or else it will continue to trickle down in a negative way. Let's talk about investors. Would you really say that since the removal of the failed subsidy that the investor's confidence has actually decreased? Yes, so the honest truth is one of the fallouts or the aftermath of removing from subsidy is that it has decreased, we have a decrease in investors' confidence. Whether you like it or not, investors who are bringing their money in forex and want to invest in an era economy will definitely have everything. Right now, I have investors who are supposed to kickstart projects as of June last month. But right now, we are at the point of either taking that investment to another country or looking for ways to see how we can manage to put it up as such that we can still break even. Because whether you like it or not, the budgets we had, such investors had a few months ago, would have doubled or even tripled. So investors' confidence right now is shaky and that's the honest truth. So if something is not done in a very short time, we will lose investors' confidence totally and it would affect a lot of sectors in our economy. That's the honest truth. Because the real estate sector is a very vital and a critical sector of this country. It contributes a lot to our gross domestic products and it's a sector that we cannot continue to shy away from and it's a sector that we cannot continue to... Because when everything happens, the real estate sector is the most affected because everybody will like it or not. Everybody has a house. It's indirectly or indirectly reduced with real estate. You're either a tenant or you're a landlord. You're either paying rent or you're collecting rent. So it's indirectly or directly affected real estate and that's a very critical sector of the country that we shouldn't joke with. Okay, I know you've talked about how the prices of supplies and building materials have increased. So in general, what do we see as per... I'm sure in my head I'm thinking that affordability has actually reduced and are people actually buying houses? The past three months since the subsidy removal, how has the effect been as per people are going to buy homes and all? Okay, so the honest truth is since the implementation of the removal of subsidy, the purchasing power of people have reduced drastically and that's the honest truth. In the past three months or thereabouts, I don't think that a lot of people have concluded transactions that have to do with sales or purchase of property because this is something that directly affects people's budget. People live on a certain budget. On a particular month, you have an expectation of your inflow. You have an expectation of your health flow. So this sudden increment in the fall price as people are yet to adjust or come to terms with even how the person... How the person to form a cab before now would cost me about 10,000 EUR maximum or 11,000 EUR and I drive a V6 car. Now to form a car is almost about 50,000 EUR. So that has also affected my own budget too because I'm trying to adjust and it's very difficult. So expenses that's tripled, inflow is the same. States like those states giving 10,000 EUR to civil servants and pensioners, it will not go a long way but it's better than nothing. Let's talk about maybe urbanization or maybe migration as it were. School of thought believes that there will be a growing preference for people moving towards the urban centers and it will reduce demand for properties in suburban and rural areas. How does that really work? So naturally people will naturally migrate from the rural areas to the urban centers in a way to search for greener pastures. And this ultimately increases a lot of things in the urban center in terms of the cost of housing is not cheap, the cost of living is not cheap for you to rent a one-room self-contained now somewhere in like if it's one or a year about you might need to have close to a million and such person might not even earn a million in three months. So that means there has to be a change in how we tend to address a lot of issues particularly from the government angle. Everything rises and falls on the government. The government needs to come up with the blueprint of what we need to do going forward. There's a price in for like it has affected the cost of living, cost of houses, the prices of good and commodities have increased. When you go to market, what you bought yesterday is double or triple of what you bought yesterday. So something has to be done in terms of a framework that will work. Nigeria is not the only country that has removed first subsidy. Angola is the second largest country, largest oil producing country in Africa. They've also removed first subsidy the same day, the same week Nigeria removed first subsidy. Nigeria is the 15th largest oil producing country in the world. So countries that have removed first subsidy, how did they survive? We need to learn what was the framework, what was the template that they use. How do we learn from them? Such that we do not put our people to abject poverty because we want to improve or remove first subsidy. Like I said, removing first subsidy is a fantastic idea. I love it. Certain people cannot be enriching themselves while other people suffer. But what plan do you want to put in place? What use do you want to put that fund? 400 billion monthly. How do you want to channel that money? Are you going to improve roads? Are you going to improve infrastructure? Are you going to improve school health? Now, you do not remove first subsidy and still increase tuition fees. So you see, the honest truth is there's a lot happening in our political space in the past two months. That's the honest truth. And I think that the president of this country, President Balaam-e-Tinobu, needs to have a solid framework on ground before this thing happens. We are completely out of time by just in 30 seconds. I'm sure there have been some positive effects on renewable energies and all that on the real estate. Can you just maybe highlight them quickly? So the honest truth is, first subsidy removal has more hand than good. But the good side of it is that, like I said, such monies can be redirected to other sectors of the country. And it will help the larger populace in the long run. Alright, thank you so much, Mostafa. Thank you for having me. Thank you for coming to this course. More specifically, what you mentioned in passing, the issue of housing deficits in the country, something that we should actually be looking towards addressing. My guest has been Mostafa Iwenda. He is a real estate expert and we've been looking at the issue of fuel subsidy removal and how it has affected Nigerians and the property and the real estate sector. Thank you so much. Alright, that's the size of the show for today. Business Insights will return same time on your screen. Many thanks for being a part of the show. I am Justin Akadoni. Bye for now.