By Our Reporter
The Mayor of Housing, My – Ace China has become the first real estate investor to take close look at the social housing proposition floated by governor of Rivers State, Siminilayi Fubara.
The governor had on May 29 mentioned social housing as one of the highpoints of his administration’s agenda .
Speaking with newsmen in Port Harcourt, My-ACE China said Social Housing is just another name for Affordable Housing. He said it is a scheme where a government subsidizes the cost of housing to a group such as Indigenes, civil servants, or underprivileged groups.
Most times, he stated, government provides what we call long-term either rent-to-own models with low simple houses that are basic which minimum wage earners can achieve as their aspirations to own homes. “It is usually a government-controlled housing scheme.”
On what the Rivers State new administration can do to actualize the desire, China, who said he was very delighted with the new governor when he discovered that Social Housing was the priority of his administration, gave tips to the governor.
He stated: “What his administration can do to actualise this are: Decentralisation of govt/parastatals and infrastructure. For instance, for you to achieve a social housing scheme, the govt would go to upcoming areas where land is affordable, where construction would also be affordable. But you would notice apathy by Port Harcourt residents to go outside the city centre. Now, with rising cost of transportation, and where all the civil servants work at the State Secretariat in the city centre, and if a housing scheme is at Omagwa or Obiri Ikwerre, and a worker has to travel from Omagwa or Obiri Ikwere to work, the cost of transportation which has been worsened by subsidy removal would be counter-productive for the low-cost houses.
“Yes, you gave somebody house but it is not cost-effective to him because transport fare eats it up and renders the house non-affordable.
“So, the first thing the govt needs to do is to make an immediate plan to decentralize some of the parastatals so people can work and live where the affordable houses are located.”
Another thing, he mentioned, is to make basic infrastructure like schools and markets to be also available where they want the Social Housing Scheme to be located.
“The third thing the government needs to do is to subsidize and privatise the construction. The major mistake with govt owned enterprises in Nigeria is the govt initiative being run by government. When another administration comes, the project suffers. Then, corruption which leads to padding and inflation of costs in components. This hampers the implementation of the project because unlike many other ventures, housing is very sensitive to quality control. If you try to put kickbacks and padding and other forms of corruption in a govt housing scheme, the quality would be so compromised that they might not be completed or stand well. Such project should not be handled by govt bidding and vending system or persons not experienced in social housing.
“Government needs to get an experienced industry player to provide the model and discount the model and take the discount directly to the developer, and then let the off-takers be prequalified by the govt but they (Government) pay whatever payments directly to the off-taker. That way, the government only comes in to subsidize the developer and the prequalified off-takers take the houses at affordable rate.”
How it can work:
For instance, if an average two-bedroom bungalow would take N20m to procure. Then, the govt comes to two parties; a developer and a private mortgage firm. The developer builds the house for N20m, the govt decides to do a 50 per cent subsidy, so, they pay N10m as counterpart funding for a civil servant, then the mortgage firm comes in and pays the N10m. The civil servant can then service the N10m to the mortgage firm through either their national fund or their salary. That way, a civil servant actually is only able to pay the monthly repayment to own the house over about 10 years to the mortgage firm. The govt ensures the quality of the houses, and because it is private sector driven, there is no room for corruption because the scheme is quality and profit driven, the firm has his name to protect. The govt only comes in to ensure accessibility.
Minimalism Architecture:
He gave the fourth step thus: “Fish out the qualification of the housing design. There is a new trend called minimalism architecture, where bogus houses are not allowed but simple eco-friendly functional houses. That is why the Mayor of Housing is one of the first companies in Nigeria to retain a minimalist architecture, someone that ensures the houses are simple enough to avoid waste n construction.
“This is because there are too many dead spaces in a house that consume money but are not functional in return and utility to the end owners.
In summary, decentralizing public amenities (such as markets and schools) at the locus of the social housing scheme; privatization to make it private-sector driven with govt coming in for subsidy, and then, very deliberate design to eliminate bogusness to gain affordability and ecofriendly functionality. With these, am sure the dream of His Excellency to achieve social housing would be very successful.
One of the things that stood out in his speech is Social Housing. I look forward to its implementation so it can bring resurgence to the housing sector here in Rivers State.
Where social housing has worked:
He said: “Social Housing has worked in the US, London, and other places including Nigeria in the Second Republic (early 1980s) when there were low-cost estates.
“Why it has not been working in Nigeria after the 1980s is because of corruption and bureaucracy.
“It will not work if the Government handles both the construction and prequalification and allocation. The nature of Nigeria makes it foolhardy for any administration to think because the project is laudable, the system has become efficient.”
He regrets that Nigerian system delays projects due to bureaucracy and corruption. A lot of value is lost in the corruption chain.
“When Govt wants to achieve social housing, the corruption and bureaucracy in the system would stifle it. The only option is to have it driven by the private sector.
“You have to get a credible firm to construct it just as you give construction firms to construct roads for you. Government is to supervise the value chain while private sector handles the nuts in the chains. It has worked in a lot of places and it is one of the ways that govt uses to intervene in housing crisis. Nigeria is now in emergency because we are talking of 22 to 28 million housing deficit.”
Difference between social housing and normal housing schemes:
The Mayor explained: “The difference between social housing and normal housing schemes is because social housing is usually subsidized by the govt. You see, because we live in an import-dependent economy, once forex goes up, everything goes up. We are also in a logistics-dependent country. So, when fuel goes up, everything does.
“That is why the hyper-inflation that began two years ago when fuel went to N186 has remained there. It has gone to 21 per cent for two years, and with the new surge after subsidy removal, it will only go higher.
“If deliberate interventions are not made to buffer the effect, inflation will only get worse. The cost of housing will also be affected by inflation, unless the govt can buffer it through social housing.”
He explained how the subsidy works with social housing:
“Two things can be done: Subsidy or discount on social houses; consideration of minimum wage review because when the cost of housing has been subsidized, the off-taker (workers) would still need to do his own counterpart funding. If minimum wage is not enough due to high transportation cost, you will still record very high level of default in the payment regime. If that happens, the system might have problem.
“Another thing that can help is the technology deployed in building those houses. We need to look at what substitutes exist in low-cost schemes. Low-cost housing must not be low-quality housing. There is minimalism architecture where the houses would be designed to have basic facilities for basic shelter and not luxuries or bogus facilities that cost more. The tech determines the cost. If you run it as normal govt contract where contractors come and bid, it will make a mess of the whole thing.
“We know that govt vendors do a lot of padding. This is a case where the govt will need to go out of its way to invite already tested brands in the value chain that are already developing low-cost housing. Then have a public private partnership (PPP) with them to favour the off-takers.
Social Housing is all about cost. If it’s not affordable, then it is not social housing.”
