By Dr Omaghomi Ofioritse
At face value, the present CBN/ FGN policy of “Zero percent “ equity contributions of housing loans of less than 5 million naira is laudable because:
*It attempts to solve the housing needs of a vast majority of Nigerians.
* It serves as a boost to the Private sector, due to increased sale of building materials.
* It tackles our unemployment problems, because artisans like plumbers, masons and carpenters will have jobs to do.
* It increases government revenue: from building permits, local govt ground rent, income tax of the workers involved, etc.
* It also increases professional earnings like architectural fees, survey plans fee etc.
* It can also be viewed , as a huge stimulus package that pervades the entire economy: It will jump start consumer spending, increase demand, and may stimulate production in the economy.
Despite the advantages above, and many other real and imagined positives of this policy, I am afraid that there are challenges one cannot ignore.
You see, Cecil Rhodes said nearly 150 years ago, that: “Man begets, but land does not beget”. This means that one of the most important and scarcest resources is land because it remains the same despite geometric increase in population. Even North Korea; a closed, hermit country, builds their skyscrapers vertically!
All developed countries build their skyscrapers vertically for a reason. But Nigeria builds its own skyscrapers horizontally. Our cities and towns are vast, and covered with ‘bungalows’ which can also be referred to as “Horizontal Land occupiers” In 1960 our population was about 45 million,. In 2019 our population was 203 million and in 2045 our population is expected to be 450millon, this is a phenomenal population explosion. In a space of just 85 years, less than three new generations, the man or woman, who is 85 years old , would have seen in his or her lifetime, the Nigerian Population increase 10 times! Meanwhile, our land mass remains the same: 923,000 km². Since 1960 our land mass has not increased.
Nigeria is the Giant of Africa only in Population
However, In size of land, Nigeria is Number 14 in Africa. There are 13 other African countries, that are larger in landmass than Nigeria. We run a government where every ministry moves to introduce a laudable policy without knowing, considering or studying how their initiative conflicts internally. What has become clear with this CBN Zero Mass Housing Scheme , is that government departments hardly take the time to crosscheck if their proposed new policies are in tandem with existing policies and programmes of other ministries or if they are at loggerhead with our national interest.
Now to the reality: the more land for these horizontal Land occupiers /bungalows, the less land for Farming and industry.
Nigeria is a very densely populated country. As I write, we are one and half times more densely populated than China. China is 10.5 times bigger than Nigeria and only 7 times Nigeria’s population. Here’s a simplification: if 100 Chinese are cramped in a football field in China, then that same area of football field in Nigeria will have 150 people.
Compared with the US, just two out of America’s 50 states have more than twice Nigeria’s land mass. Yet America is not up to twice Nigeria’s population.
If we continue this individual “bungalows housing policy”, in 20 years time; we will have buildings everywhere but no land to farm.
This covering of vast landed space by bungalows is not sustainable, largely because of the cost of providing social amenities to service huge sizes/swats of unproductive towns, with a matrix of city roads and amenities. For example, it cost a minimum of 160 million naira to build one kilometre of asphalt road with drains, if you maintain it every 5 years you will be spending like 500 million naira over a 30 year period. To break it down further, a 100ft long land is 31 metres long. By my calculations, the government spends 7.5 million naira to pave access road to each plot/ bungalow.
We haven’t talked about the cost of electricity supply, water, and all other social amenities.
What are the entire lifetime tax payment expectations from a single owner occupier bungalow resident, that the government is spending 7.5 million naira to provide road infrastructure for him? We have not added the cost of providing him with security, hospitals, water, and other public services. Clearly this is not a feasible/ sustainable way to run the government on the long run, except of course we believe that God will keep on sending us manna from the sky.
- We need the Office of the SGF to be split into two: A) SGF Economic Advisory Committee : This should comprise about five to seven economists, who will go through a shared secured internet portal to see every government file and all members deliberate on its suitability in line with the overall, short and long term policy thrust of government, so that new policies are globally reviewed and scrutinized before being passed into law.
A holistic approach that sees how the near and long term implications must be implemented. The group must respond to files in an efficient and timely fashion.
Each of these persons should have a backup advising and researching team.
- b) The second arm of the Office of the SGF should be SGF Political Advisory Committee , who will advise on political matters like exact locations of government projects and other political considerations.
2) The government should immediately put in place plans for building high rise apartment buildings; that are 10 to 20 floors high which can house about 150 to 200 families.
I implore us; we shouldn’t be skeptical about the hurdles in providing electricity to these high rise apartments and the funding logistics.
We must look at the medium and long-term savings, that accrue from the resultant much smaller land sizes of towns, which will now be more manageable. There would also , be less quantity of social infrastructure needed to put in place by governments at all levels . less resources will be required for paving and maintaining these fewer roads. Also more resources would be freed up . another huge benefit is that more land would now be available for farming and industry, rather than just ‘living in’. The CBN Zero percent housing loans can then be given to individuals, to pay for apartments in these huge buildings. The mortgage banks can finance private construction companies to build these large buildings and building investors can also create hedge funds to invest in these buildings.
This is a wise way to go to avoid the impending severe land hunger that will probably surface in 10 years time if things remain the way they are. I hope this gets to the Federal Government of Nigeria.
Sincere advice from Dr Omaghomi Ofioritse for Nigeria Wealth Advisory.
a citizens National Wealth creation initiative.