The President and Council Chairman, Real Estate Developers Association of Nigeria, Aliyu Wamakko, in this interview with DAMILOLA AINA, explains the negative multiplier effect of the naira redesign policy by the Central Bank of Nigeria, reasons why mortgage is relatively high and what the next government should do for the built industry
What is your view on the naira redesign policy by the Central Bank and how it has affected the real estate industry?
Generally speaking, the naira redesign is a good policy by the government but it was not faithful to the citizens of the country and the real estate inclusive.
For us, we couldn’t go to the site and give labourers their daily pay. The workers who get their 3,000 daily don’t have bank accounts so if you say you want to make transfers, the question is to who?
They don’t understand what you mean by transfer.
I don’t think we are ready for a cashless society as a country. A good number of Nigerians don’t have an android phone nor talk of a bank account.
So actually, a cashless economy is for the elite. I believe the policy was to target politicians but they are not the ones suffering, the lower class of society bears the pain caused by that policy.
The government has to rethink ways to implement its policies. Operators in real estate suffered just like every other Nigerian. How can you hold people’s money and refuse to give it to them? We don’t want to know if it was a targeted policy but looking at all that played during the last three months, the government is not fair to us.
It is affecting us seriously in real estate because we can create employment within a short period without requiring an incubation period. But that is only when we have cash at hand. Eventually, we have all closed our sites now, so many of our projects are on hold now because there is no cash.
Also, the fact that the central bank didn’t immediately obey the supreme court judgement is a total shame.
Will the pause in the housing sector affect increased deficits?
Housing deficits will not reduce. We are no longer going to the sites for construction. We have closed down our sites and if we are not working, homes can’t be produced if they are not produced, how do you reduce housing deficits? Housing deficits will surely increase if the economy does not bounce back.
Already, Nigeria is representing 40 per cent of Africa’s 56 million housing deficits, and if nothing is done, the number of homeless people will continue to increase.
The real estate sector in 2022 contributed 28 trillion to the gross domestic product. What is your reaction to this?
The sector’s GDP contribution is to tell the government in power that the sector should not be left alone. The sector is something the country can rely on. It is something everyone should be excited about.
Real estate is a privately driven entity and we have been able to increase our contribution to the GDP on a steady basis. We have reduced unemployment and rejuvenated the country’s microeconomic sector from the grassroots. All of what we are asking from the government is to create an enabling environment If they want us to increase their revenue.
What is your definition of an enabling environment?
This is simply making land acquisition friendly, providing more funds at single-digit interest for us and we will be able to do the needful making a win-win situation for everyone. The government has no business in construction.
Will the multiplier effect of the naira redesign policy affect revenue generation?
Revenue generation is driven largely by tax payments, but when people don’t have cash, how do they pay taxes? Epileptic networks have made transferring money difficult. How do you expect the Revenue officer to record payments and you can’t transfer money into a government account, you have to go through Remita and who has that patience?
It would affect revenue for this quarter seriously.
What President Muhamadu Buhari, Attorney General, Abubakar Malami and the Central Bank governor, Godwin Emefiele did in regard to the court order is contempt and they should be punished for it. The supreme court gave an order based on an issue that is of public concern and they were still adamant.
REDAN promised to build 100 houses per local government. How far has the association gone in achieving that pledge?
What we planned is to relieve some sort of pressure from the government even though there is no enabling environment. We have to go outside the box, we are in a collaboration with Shelter Afrique, a pan-African bank and they will invest about N46bn into the housing industry.
The majority of our developers are qualified for this task and what is remaining is the little details coupled with the political will to get the monies from the banks.
The projects will mainly be for affordable houses and very soon we will invite the public to witness the flag-off.
How would you rate the current administration on solving housing deficits?
First, when the current administration came in, they promised to build one million homes every year but for the last eight years, they have been struggling to build 3,700 homes which are not completed as we speak. The GDP contribution you just mentioned is because we are doing formidably in the industry, we are tested and trusted and we can deliver.
How can you build a house of N7.2m in my village and expect people to buy it? Those outrageous prices charged by the federal government eventually led to an overall increase in the price of houses nationwide. Selling two bedrooms for N14.5m is outrageous, if it were to be in a cosmopolitan area, nobody will complain but not in a village like Sokoto or Kebbi, you build a three-bedroom house in Adamawa for N24.5m, who has the money to buy it in that area?
Surprisingly, the money used to construct these houses is a private firm selling price. So I don’t think the government is sincere in tackling housing challenges.
I repeat, the government has no business in constructing houses.
The deficiency in the mortgage industry has been a front-burner issue for years but little or no progress has been made, why is this so?
It is because there are a series of issues with mortgages in Nigeria. Still, the government is not making any effort to impact the sector.
The Federal Mortgage Bank is the apex mortgage institute in Nigeria, but its capital base is only N2.5bn while the central bank has raised primary mortgage institutions to about N8 to 10 billion.
It is so confusing that primary mortgage institutions have more capital bases than the apex bank. We have severally called on the stakeholders to recapitalise the FMBN, the bank has over N4.5m Nigerians contributing to the National Housing Fund but the funny part is not up to 5 per cent of its contributors have benefitted from the mortgages created because there is no capacity to address the country needs.
If the agencies parading themselves as housing intervention are merged together and inculcate mortgage culture for Nigerians, we will be able to move forward.
However, mortgages shouldn’t be on the amortised method of calculation, it should be a compound issue and straightforward case. If you are a government worker and in need of a house, you can take a plan for 25 to 30 years of payment without any hidden charges of interest. The interest should be compound and it should remain so because if you calculate using the amortised method, you may pay three times the price at the initial stage. That is also part of the problems.
The incoming government has plans to merge FMBN, NMRC and Family Homes. Is that a good step?
It is a fantastic idea and we welcome it. The situation is such that we don’t even know the direction some of the agencies mentioned are going.
The government provided N1.5trn for the construction of 500,000 housing units to Family homes fund limited but they have not done anything. I am sure they have provided up to 20,000 houses. We have been on the supplying side of the mortgage banks for a very long time and we have not failed in our duty even though they cancelled some loan facilities.
But now, if these three agencies are merged together, we will have a formidable approach to housing delivery for Nigerians. I welcome this idea and I hope the government will read this and see reasons to involve the private sector extensively.
…They are also planning to review the land use act
Yes, the act is so obsolete. How do you expect the law to be friendly in this computer age? But to repeal this act we have to amend the constitution and that is the problem of implementing it. State governors are not willing to let go because it is in their favour and they will only make it cumbersome but we believe this land use act is not friendly to the built environment. And if we want to move forward, it has to be repealed.
The land is wealth and the state governors are holding the land because it is wealth and they will not let it go. This is the same issue affecting local government autonomy.
What is your advice to the incoming government on pertinent real estate issues?
First, we are making a smooth ride for the incoming government with a bill to the ninth national assembly which has been passed by the Senate and is now at the house of representative for concurrence, this bill is about the Nigerian people, it is about the sharp practices like scams happening in the real estate, it is about the issue of money laundering and adherence to the national building code.
The only thing needed is to give the private sector the right and privilege to thrive and they will have a smooth ride fulfilling the housing needs of Nigerians, I assure you.
This content was originally published here.
