How efficient land mgt, mortgage can drive growth in housing sector—Experts | Prestige Real Estate News
Land management in Nigeria is largely inefficient as both tenure system and ownership structure remain rigid and primitive, and therefore not supportive of growth in economic activities such as industrialization, agriculture and real estate/housing.
Proper management practices can enhance land use for farming, increase crop yields, and reduce conflicts over land ownership between farmers and herders. It leads to increased construction activities and growth in the housing sector and, by extension, the economy.
Experts note that efficient land management anywhere in the world is important for sustainable development and overall stability, citing agriculture which remains a cornerstone of Nigeria’s economy, meaning that efficient land management is crucial for optimizing its productivity.
“Effective land management strategies are essential to combat issues of environmental challenges, including deforestation, soil degradation, and desertification; it is needed to protect the country’s diverse ecosystems, and ensure that natural resources are used responsibly,” Ugochukwu Chime, Group Managing Director, Copen Group, noted.
Chime, who spoke at the 2024 edition of Africa International Housing Show in Abuja, explained that, in terms of economic development, land is a vital asset that could drive growth, adding that a clear land tenure systems and robust management practices are necessary to attract investment, stimulate real estate markets, and foster economic prosperity.
“When land rights are well-defined and protected, it creates a stable environment for economic activities, leading to increased investment and development opportunities,” Chime said, pointing out that the inefficient land system is the reason for low value of land in the country.
“Less than 6 percent of the land resources are documented and registered with the various Deeds Registries; less than 10 percent of the land parcels are covered with effective and comparable cadastral origin and orientation which is why Nigeria has over $300 billion in dead capital, representing over 60 percent of the country’s Gross Domestic Product (GDP),” he said.
Chime suggested a strong legal framework and effective policy implementation as essential components of efficient land management, adding that strengthening these frameworks ensures that land is managed according to established regulations, curbing illegal land grabs and supporting equitable development. He stressed that robust policies and their diligent enforcement are necessary to achieve sustainable and orderly land use.
Earlier, in the course of the housing show, Matthew Ashimolowo, Senior Pastor at Kingsway Christian Centre, Maryland, Lagos, had underscored the importance of land as a factor of production and real estate growth enabler.
Speaking to the theme of the housing show which was, ‘Financing the Housing We Need,’ Ashimolowo noted that given the high interest rate on housing finance which means that mortgage is non-existent in the country, given the experience in other economies, land is the next destination.
“Long term funding suitable for housing sales/finance is hardly available. The rates are extremely high – sometimes up to 30-40 percent. The tenures are generally short – often shorter than the gestation period of your housing project,” he said.
He advised that with the high cost of funding in Nigeria, developers have to be intentional, innovative and pragmatic about their financing strategy, citing land banking as one strategy that has worked effectively for them in their organization.
Land banking, according to him, is a veritable strategy to create, consolidate, accumulate and unlock finance for future projects. “In simple terms, land banking is the process of purchasing land at relatively cheap prices, perfecting the title to the land, waiting for the value to rise and then sell the land at profit. The proceeds of the sale constitute a strong source of financing for current and future housing projects,” he explained.
Though there’s a popular belief among Nigerians that mortgage is non-existent due to its near-zero impact on home ownership, industry operators insist that it remains a significant enabler for home acquisition in the country.
Shehu Osidi, the managing director of federal mortgage bank (FMBN), said in his keynote speech at the housing show that the apex mortgage bank has consistently served the needs of the Nigerian populace within the limits of its resources.
“Since its re-establishment in 1993, the bank has delivered about 39,000 new homes, about 25,500 mortgages and over 120,000 micro housing loans, all within a single-digit interest rate lending regime,” he said, adding, “under the National Housing Fund (NHF) scheme, it has registered 26,350 organisations and over 5.8 million cumulative contributors with over 1 million coming from the self-employed sector.
The Bank has disbursed the cumulative of N440 billion under its various loan windows to drive affordable housing finance for the Nigerian economy. To its record, the sum of N84.8 billion has been refunded to 492,604 contributors who exited the Scheme in line with the provisions of the NHF Act.”
Osidi revealed that, over the years, FMBN has expanded its bouquet of loans from mortgage financing to housing construction, to micro housing financing and more recently, a rent-to-own product.
He added that as a result of changing landscape and growing need for affordable housing financing, FMBN’s clientele base has widened from solely primary mortgage banks to private and public real estate developers, housing cooperatives and now to individual NHF contributors for home self-construction.
“The latest additions to its loan products are the Home Improvement and Rent Assistance loans, which are micro housing loans specifically intended for the non-salaried informal sector operators,” he said.
– Businessday
