HOUSING FINANCE IN
NIGERIA: ISSUES AND SOLUTIONS
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Housing
has been universally recognized as one of the most essential necessities of
human life and is a major economic asset in every nation. Adequate housing
provides the foundation for stable communities and social inclusion (Oladapo,
2006). Gilbertson et al. (2008) have observed that there is a significant
association between housing conditions and physical and mental health of an
individual. People’s right to shelter is thus a basic one and the provision of
decent housing to all requiring them should be the hallmark of every civilized
society and one of the criteria for gauging development. However, the provision
of adequate housing in Nigeria and other developing nations alike still remains
one of the most intractable challenges facing human and national development.
Previous attempts by all stakeholders, including government agencies, planners
and developers to provide necessary recipe for solving the housing problem have
yielded little or no success.
Teufic
and Ural (1978) Ogundele (1989) Agbola (1987) Okpala and Onibokun (1986)
recognized finance as part of housing problems but ranked land and building
materials higher. Their findings influenced government housing policies and
subsequent establishment of some relevant programmes and institutions like the
Site and Service Programme and the National Institute of Road and Building
Research. The drought of information and working knowledge of housing finance
operation is a major problem today. In a tight money market, housing is the
first area to suffer, since neither the builder nor the consumer can readily
obtain finance for housing. Actually, many builders have difficulty obtaining
capital for their projects even in normal times. Two of these problems – the
high interest rates that contribute to the high cost of housing and the
difficulty in obtaining capital for home construction. According to Onabule
(1996) 245 Primary Mortgage Institutions were established under the NHP within
1991-1996. Unfortunately, only 54 are now operating, mainly in South West part
of the country and Abuja. According to Abiodun (1999), National Housing Fund
collected about 4 billion naira from the Mandatory Saving Scheme. Out of N300
million loan approved by FMBN, only N100million was advanced.
According to Arilesere (1997), Abiodun
(2000) and Okupe et al (2000), the history of housing finance in Nigeria had
been an appalling one. The sudden leap from Agro-based to Petro-Naira based
economy did not help matters. The assertion that “money was not our problem but
how to spend it” accredited to one of our Heads of state, is a summary of a
Nation that lacked focus in the formative years. This situation together with
unprecedented population growth has remained unchecked ever since.
The
Housing Sector plays a more critical role in a country’s welfare than is always
recognized, as it directly affects not only the well-being of the citizenry,
but also the performance of other sectors of the economy. Adequate housing
provision has since the early 1970s consequently engaged the attention of most
countries, especially the developing ones, for a number of reasons. First, it
is one of the three most important basic needs of mankind– the others being
food and clothing. Second, housing is a very important durable consumer item,
which impacts positively on productivity, as decent housing significantly
increases workers’ health and well being, and consequently, growth. Third, it
is one of the indices for measuring the standard of living of people across
societies. Consequently, programmes of assistance in the areas of finance,
provision of infrastructure and research have been designed by governments to
enhance its adequate housing delivery. The focus on finance has, however, been
very prominent for obvious reasons. This is because housing provision requires
huge capital outlay, which is often beyond the capacity of the medium
income/low income groups.
A
major area of concern has been housing financing, which has often been fingered
as one of the most formidable constraints in the housing sector. It is in
recognition of the critical importance of finance in housing delivery that the
researcher is examining housing financing in Nigeria; issues and solutions.
1.2 STATEMENT OF THE PROBLEM
The
problem of housing has become an every day discussion in all quarters of the
public and private services of the developing countries of Africa especially in
Nigeria which is being focused upon in this study. It has become increasingly
glaring that most of the urban population in Nigeria live in dehumanizing
housing environment while those that have access to average housing do so at
abnormal cost. According to Onibokun (1986), Nubi (1991), rent in major cities
of Nigeria is about 60% of an average workers disposable income.
Ekweme (1979), Iyagba et al (1998)
explained that the rate of demand for new houses was in part predicated on the
rate of formation of new houses and in part on the rate of replacement of old
housing stock. With this challenges of high cost of house financing in the
building sector, the researcher will provide an overview of housing finance in
relation to the issues and challenges therein in this study.
1.3 OBJECTIVES OF THE STUDY
The
following are the objectives of this study:
1. To
examine the issues related to housing finance in Nigeria.
2. To
identify the solution to the issues of housing finance in Nigeria.
3. To
ascertain the level of housing finance by the Nigerian government.
1.4 RESEARCH
QUESTIONS
1. What
are the issues related to housing finance in Nigeria?
2. What
is the solution to the issues of housing finance in Nigeria?
3. What
is the level of Nigerian government involvement in housing finance?
1.6 SIGNIFICANCE OF THE STUDY
The
following are the significance of this study:
1. This
outcome of this study will enlighten the general public on the issues of
housing finance as it is widely known that the capital involved in housing
development is very huge, this study will educate on strategies that can be
adopted in executing housing project with minimal financial problems.
2. The
outcome of this study will also sensitize the policy makers on the need to make
good housing policies and the government of the day on the need to implement
the policies by investing massively in housing development especially in the
urban area to meet the accommodation needs of the citizens.
3. This
research will also serve as a resource base to other scholars and researchers
interested in carrying out further research in this field subsequently, if
applied will go to an extent to provide new explanation to the topic.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This
study on issues and solutions to housing finance in Nigeria will cover the
level of housing development in Nigeria with clear identification of housing
problems. It will also cover the level of government investment in housing
through the mortgage institutions.
LIMITATION OF STUDY
Financial constraint– Insufficient fund tends to impede the
efficiency of the researcher in sourcing for the relevant materials, literature
or information and in the process of data collection (internet, questionnaire
and interview).
Time constraint– The researcher will
simultaneously engage in this study with other academic work. This consequently
will cut down on the time devoted for the research work.
REFERENCES
Onibokun,
P. (1985). Housing in Nigeria. Ibadan University Press.
Abiodun A.
(1999): Housing Finance under National Housing Fund: An appraisal. Paper presented at the General
Meeting of the Nigeria Institute of Town Planning.
Agboola T.
(2000): Housing, Poverty and Environment – The Nigerian situation. A seminar Paper presented at a
workshop on Effective approach to Housing delivery In Nigeria. Organized by the
Nigerian Institute of Building, Ibadan, Nigeria
Arilesere D.
(1997): Housing Finance in Nigeria: A paper presented during NIOB Organized workshop on
Affordable Housing. Lagos.
Okupe L.
(2000): The Role of Private Sector in Housing Delivery in Nigeria; A seminar
paper on: Effective Approach to Housing Delivery in Nigeria, Organized By
Nigerian Institute of Building, Ibadan.
Onabule G.
(1996): Understanding the role of NHF and Pry. Mortgage Institution in Housing
Finance: Paper presented at the Housing
Policy Council Seminar on the Implementation of National Housing Policy.
Abeokuta.
Nubi, T.O.
(2002). Financing Low Income Housing in
Nigeria Cities: Need for Paradigm Shi. Proceeding of the Faculty of Environmental Design
Conference O.A.U. Ile Ife, 340 -345.
Iyagba R.
and Asumo O. (1997) Housing Crisis in Nigeria Urban and Rural area. A challenge
to the construction industry and technology. The Lagos Journal of Environmental
Studies
Agboola T.
(2000) Housing, Poverty and Environment – The Nigerian situation. A seminar
Paper presented at a workshop on Effective approach to Housing delivery In
Nigeria. Organized by the Nigerian Institute of Building. Ibadan, Nigeria.