- It’s A Looming Catastrophe
- Says Nigeria’s Ability To Finance Its Debt Too Low… Lags Behind South Africa, Kenya
By ‘Dotun Akintomide
As Nigeria’s population races towards becoming the third largest in the world by 2050, leading industry experts have called for more concerted effort from public and private players targeted at harnessing the huge potentials and avalanche of opportunities that are evident in the real estate sector to prevent the looming demographic catastrophe in the country and elsewhere in Africa.
According to experts’ opinions at the 6th edition of Real Estate Unite Summit, 2017 entitled: “Africa’s Real Estate; What’s New?” despite the apparent potentials in the sector seen as the strategic vehicle to economic boom, Nigeria and other African economies have failed in providing solution-driven road map for the real estate ecosystem to lead major economic agenda and plan.
In his keynote address, the Chief Executive Officer, Mixta Africa SA, Deji Alli noted that by 2030 global population would have risen to 8.3bn which will make urbanization to increase to 60%, with 50% of Africa’s population living in cities. He said the projected figure should steer up any meaningful government and private player into taking action in providing the needed impetus for social solutions and economic gains.
“By 2050 Nigeria will become the third largest population in the world and the second largest at the turn of the century. Can we see any potential in that?” Alli quipped. “If we do not solve the problems that come with that, there would be serious catastrophe,” he said.
Alli who was critical of the various poverty intervention programmes by successive administrations over the years at the expense of creating opportunities along the value chain of home ownership said through consistent policy focus, “Morocco has been able to reduce its housing deficit to 850,000 houses in 7 years delivering 2 million houses.”
He lamented that if Morocco with 35 million population has been able to attain such feat, as well as a single digit interest rate, it thus offers new thinking for Nigeria with housing deficit often estimated at over 17 million which he blamed on the stifling interest on loans many have described as the clog in the wheel of property development in the country.
Rather than concentrating only on malls and other high-end developments, Alli called on government and private developers to come up with schemes that will solve housing challenges at the low-end of the property market.
“The biggest thing that will happen to Africa’s real estate market in a decade to come will be what happens at the low-end and not even at the high-end,” Alli said.
Giving a nod to Alli’s submission, a professor at the Lagos Business School and a member of the CBN’s Monetary Policy Committee, Dr. Doyin Salami observed that giving the dismissal 7.5% contribution of real estate to Nigeria’s GDP as the 6th largest contributor, “there is no doubt that the sector has been in the doldrums with its negative growth showings.”
Salami pointed out that Nigeria’s real estate poor showing stems from the inability of the country to finance its debt. “South Africa’s ability to finance its debt is as high as 430% of its economic size, even Kenya has excess of 100% in her ability to finance its debt. But for Nigeria the figure stands at 41% of its economic size domestically and 49% when foreign reserves are added.”
While identifying the dearth of adequately skilled workers in the country as the weakest link in the sector contributing to serious capital flight to other economies, Salami also want government to address the problem of data management to be able to give a proper assessment of the challenges and tackle them head-on.
“The demographic challenges confronting Nigeria are not to be underestimated, and real estate is key in providing answers to the arising issues in the ecosystem that needed to be addressed systematically and holistically through private and government driven solutions,” he added.
However, in driving solutions for affordable home ownership, mortgage financing has always been put forward, but the low number of Nigerians registering with mortgage institutions coupled with limited access to finance presents in itself a double-challenge towards the realization of an effective mortgage system in the country.
To resolve issues bordering on mortgage refinancing, the Chairman of the recently launched Mortgage Warehouse Funding Limited (MWFL), Sonnie Ayere said the activities of MWFL would complement those of NMRC, to provide short-term and interim funding to mortgage banks.
On using pension funds as an alternative source of homes’ funding, Ayere stated, that “government should look beyond the formal sector to capture more people working in the informal sector so as to further deepen contribution to the pension funds in excess of N7 trillion as it currently stands.”
Earlier, in her address the organizer of the summit and Chief Executive, 3INVEST, Ruth Obih-Obuah said the recent economic downturn has caused the real estate sector in Africa to fall below the projected 2.6% regional growth.
According to her, in spite of the economic indicators showing Nigeria is gradually coming out of recession, “balancing short-term structural change will reinstate investor confidence paramount to the success and continued growth recovery process of the sector, as driven by government reforms and policies.”
