Introduction
Lagos State, the commercial hub of Nigeria, is facing a significant housing deficit, estimated to be around 2.5 million units. The state’s rapid population growth, coupled with urbanization, has exacerbated the housing shortage, making it challenging for residents to access affordable housing. The government alone cannot bridge this gap, and private developers have become essential players in addressing the housing deficit. This article evaluates the contribution of private developers in bridging the housing deficit in Lagos State, highlighting the issues, solutions, and recommendations for future growth. Housing represents one of the basic human needs and has a plethora and profound impact on health, social interaction and general welfare of the individual and groups in any environment. Availability of decent and affordable housing has been inadequate in virtually all places and almost throughout history. This is more pronounced in developing countries where rapid rate of population growth and urbanization is unmatched by corresponding and commensurate change in social, economic and technological development. (Mabogunje et al., 1978). Thus, this phenomenal rise in population, spontaneous increase in the number and size of most Nigerian cities have in the past few decades led to acute shortage of decent and affordable dwelling units. The outcomes of this developmental process are diverse urban problems ranging from overcrowding, deplorable environment, poor living conditions, inadequate and poor infrastructural services, homelessness and other related problems (Federal Government of Nigeria, 2004; Olotuah and Ajenifujah, 2009; Jiboye, 2009). In many countries the private sector plays an important role in housing development. It constructs housing either for sale or rent for different income groups. The private sector should participate in the construction of housing for all categories of the population either for sale or rent, manufacturing and supply of building materials in the housing construction sector, infrastructure development for human settlements and encourage members of communities to improve their living environment through community participation in projects. In Nigeria a number of efforts have been mustered to solve the housing problem; from the most discernable and debut of the Lagos Executive Development Board (LEDB) in 1928 till now, a satisfactory respite have not been achieved. The achievement from the changing finance mechanisms, material and construction technology development, delivery mechanism etc over the years is minimal and therefore calls for deeper and wider thought towards means that is all-embracing, meets other societal needs yet accelerating the enormous task of housing the nation’s teeming population. Bayode (2008). Sustainable housing provision is the gradual, continual and replicable process of meeting the housing needs of the populace, the vast majority of who are poor and are incapable of providing adequately for themselves. It ensures housing strategies that are stable and are not subject to vagaries in the political circumstances of the country. Sustainable housing provision requires proper definition of housing needs, and the participation of the private sector.
Challenges Private Sector involvement in Housing Delivery in Nigeria
The private sector faces a number of difficulties in housing provision, which hampers it in large-scale construction. Housing provision is enormously costly and the private sector, which is essentially profit-driven, cannot be expected to produce a socially optimum output with adequacy in quantity and standards, neither can it allocate housing resources equitably. This is due to distinct peculiarities of housing such as its heterogeneous nature, high production costs relative to income, high transaction costs and low elasticity of supply. This study in the light of the various discourses made about housing matter, has attempted to critically examine the involvement/participation of private sector in urban housing provision without government direct participation. In other word, the objective of this paper is to examine private sector’s effort at filling the housing gap in Nigeria.
Three major reasons for the inadequate housing supply in Nigeria:
The shortage of qualified and experienced tradesman has made it impossible for the Nigerian building industry to meet the demand for housing;
Difficulty in acquiring land for new construction;
and Public housing has not been able to meet the housing demands of Nigerians.
The Rationale for Private Sector involvement in Housing Delivery in Nigeria Housing is a critical component in the social and economic fabric of all nations. No country is yet satisfied that adequate housing has been delivered to the various economic groups that make up its populace. Thus, most nations, in one form or another continue to claim a housing problem.
The private sector, comprising individuals and corporate organizations, plays a crucial role in housing delivery, providing houses for personal use, staff, rental, or sale. They are efficient in housing production, leading scholars to suggest the government should create an enabling environment for them to meet housing needs. The United Nation and experts like Freedman advocate for government support and private sector management of housing delivery. Private sector involvement includes construction, manufacturing building materials, labor, and capital supply. In Nigeria, the government has introduced reforms to stimulate private sector involvement, establishing associations like Real Estate Developers Association of Nigeria (REDAN) and BUMPAN, reducing interest rates, and restructuring housing finance. Globally, private sector-driven housing development is favored due to efficiency and effectiveness, with governments focusing on creating supportive environments
The point of emphasis in this presentation is that policy on private sector participation in housing delivery has to involve identifying the factors that militate against effective private sector performance. Gresham (2010). In assessing the performance of the private sector in housing provisions, it is necessary to look at the following:
Cost of labour
Accessibility to land
Cost of building materials
Accessibility to housing finance facilities
Hindrances posed by government policies, regulations and bye-laws;
Poor infrastructural provision
Inflation during the life of a project
Corruption/greed
Private Developers’ Contribution to Housing Stocks and Major Private Actors in Urban Housing Provision in Nigeria.
The licensed private developers are also major providers of housing to all levels of society in the country. The private sector as broadly referred to here is the amalgam of individuals, small-scale builders, commercial estate developers/agencies, banking and non-banking financial intermediaries, and industrial and commercial organisations that invest in housing with a view to making profit. Therefore, its usage here essentially covers most other forms of housing provision that are not delivered by the government agencies. Major Private Actors in Urban Housing Provision in Nigeria are no others, but the multi-nationalists. These actors include contractors include G. Cappa, Jr Boygues, Taylor Woodrow, Julius Berger and some indigenous contracting outfits. Recently, some large-scale estate developers (among others: HFP, CITEC, Alma Beach Estate Developers, and Seagate Estate Developers) have joined these in production of residential houses in Nigeria. They also develop serviced plots in especially in Lagos, mostly for the high-income groups. There are quite a number of small scale contractors that have contributed tremendously to the housing delivery process. Their efforts have been geared towards the production of housing for the middle- and low-income groups. Other private-sector actors include commercial banks like the United Bank for Africa, the Union Bank Nigeria etc. They also include insurance companies like British American Insurance Company PLC and large-scale department stores and trading organizations like Afriland Properties, UAPDC, SCOA etc. Some oil companies have also engaged in the provision of residential houses, either for their staff or for commercial rental purposes. These actors normally cater for the middle-and high-income groups and absolutely no plans for the general masses.
Implications of Private Sector Involvement in Housing Delivery
The private sector has been responsible for the provision of over 90% of the housing stock in Nigeria (CASSAD, 1993). This is provided in the main by the popular sector (private individuals) rather than the organized private sector. The organized private sector in most cases supplies the middle and upper income groups. It has done little in meeting the housing needs of low-income earners. The popular sector (the informal private sector) provides housing for the poorest households. The greater part of housing provided by the popular sector is non-conventional. They do not comply with established procedures, and are usually constructed outside the formal institutions, and frequently contravene existing legislation.
According to Gresham (2010), the key elements that should guide the private sector in housing delivery to the public are:
Affordability: The main determinants of affordability are household income and price of housing. In the case of home ownership or rental, affordability is defined as owning a house with a value equal to slightly more than twice the household annual income or renting a house not more than 30 per cent of the household gross monthly income (Babade, 2007). The erroneous impression of the private sector is that poor/the low-income households cannot pay for accommodation, but researches have shown a high level correlation between low income earners and affordable housing (Olatubara & Agbola, 1992). What is the situation in this country with regards to low income earners and the rent they pay on their accommodation? What are the impediments constraining the private sector from providing affordable housing to the low income earners?
End-User Driven Initiatives: The private sector should encourage and support end-user driven initiatives in housing delivery through the use of cooperatives or organizations. Such organizations include the Nigerian Society of Engineers (NSE), the Nigerian Institution of Estate Surveyors and Valuers (NIESV), other professional bodies, social clubs, trade associations, etc.
Target Group: The private sector should target the low and the middle income groups in its housing provisions. These groups constitute the masses of this country and form about 90 per cent of the country’s population (FGN, 2004).
House Ownership/Rental Option: Houses should be developed on both owner-occupied and rental bases so as to promote a vibrant housing market in the country. It is erroneous and unthinkable that all households need housing in owner-occupier basis. The point is that rental housing sector has been and shall continue to be the major provider of the bulk of housing for the low-income households.
Design/Construction: A realistic and functional design that minimises cost and enhances utility should be adhered to by the private sector. Value Management. The objective of private sector involvement in housing development is to achieve value maximisation in relation to the cost. Value maximisation in projects such as housing can be achieved by: (1) completing the housing project within the estimated budget; (2) completing the housing project within the estimated timeframe; and (3) completing the housing project according to the specifications or standards required (Otegbulu, 2007). However, among other benefits of Private Sector Involvement in Housing Delivery are:
1. Increased Housing Supply: Private developers have increased the housing supply in Lagos State, delivering thousands of housing units across various neighborhoods.
2. Job Creation: The private development sector has created employment opportunities for thousands of Nigerians, contributing to the state’s economic growth.
3. Innovation and Efficiency: Private developers have introduced innovative construction technologies and management practices, improving the efficiency and quality of housing delivery.
4. Partnership with Government: Private developers have partnered with the government on housing projects, leveraging their expertise and resources to deliver affordable housing units.
Recommendations
1. Increase Government Support: The government should increase its support for private developers, including providing access to land, infrastructure, and finance.
2. Streamline Regulatory Processes: The government should streamline regulatory processes to reduce bureaucracy and corruption.
3. Encourage Innovation: The government should encourage innovation in construction technologies and management practices to improve efficiency and quality.
4. Promote Public-Private Partnerships: The government should promote public-private partnerships to deliver affordable housing units.
5. Monitor and Evaluate: The government should monitor and evaluate the performance of private developers to ensure they meet their obligations and deliver quality housing units.
Conclusion
Private developers have significantly contributed to addressing Lagos State’s housing deficit, but more efforts are needed to tackle the state’s housing challenges. To support their efforts, the government must provide a conducive environment, including access to land, infrastructure, and finance. Key to success are regulatory reforms, innovation, and public-private partnerships, which will enable the delivery of affordable housing units. This paper underscores the private sector’s vital role in bridging Nigeria’s housing gap. Despite facing challenges, they’ve made notable contributions and should focus on affordable housing, building materials, infrastructure development, and community engagement. As government efforts alone are insufficient, private sector participation is crucial. The government should incentivize this through adequate funding, acknowledging that collaboration is essential for delivering quality housing in Nigeria.
By: ESV. Oyebanji Qudus Babatunde, a Principal Partner at Babatunde Oyebanji & Company. He is an Associate Member of Nigerian Institution of Estate Surveyors and Valuers with Membership M02071.
Phone Number: +234 8033086802. Email: tqudus@yahoo.co.uk
Office Address: Office Address: 52, Ladipo Labinjo Crescent off Akinsemoyin Street off Bode Thomas Street, Surulere, Lagos State.
