Poor Budgetary Allocations Raise Concerns in Housing Sector

By Adaobi Rhema Oguejiofor

Experts in the Nigerian Housing industry have expressed concerns that the allocation for the sector by the Federal Government in the 2024 budget might fall short of meeting the substantial housing demand from potential homeowners and subscribers.

The Executive Secretary of the Association of Housing Corporation of Nigeria (AHCN), Mr. Toye Eniola, said that the budget would not address the present shortage of housing in the country, adding that there might however, be an improvement on the last administration’s performance, which delivered less than 5,000 housing units. Eniola echoes an existing sentiment among the sector’s players, most of who have noted that the allocation would be inadequate to urgently reform, provide infrastructure and increase stock, as the skyrocketing cost of building materials will affect the performance of contractors under the National Housing Programme (NHP) and in the maintenance and operation of public buildings.

President Bola Tinubu had recently signed the N28.7 trillion 2024 budget into law, with a breakdown of the appropriation bill revealing that capital expenditure will gulp N9.99 trillion, which indicates 35 per cent of the budget, while recurrent expenditure components is N8.77 trillion, which is 30 per cent of the budget. Out of the N28.7 trillion proposed expenditure, the Federal Ministry of Housing and Urban Development got a total allocation of N99, 982,577, 351 billion, of which N96, 996,742, 132 billion is reserved for capital projects, N682, 686,111 for overhead cost and N2, 303,149,108 for personnel cost respectively.

In the breakdown, the Ministry provided N18.19 billion for the construction of 20,000 home units under the renewed Hope Agenda Housing Scheme, while N1.8 billion has been set aside for the establishment of local building material manufacturing clusters in the six geopolitical zones of the country. Also, N4.1 billion would be spent to upgrade slums in 24 locations across 18 states. The project will provide the selected slums with water, solar streetlights, rehabilitation of access roads, and construction of drainages, as well as waste management and sanitation services. Other priorities include the completion of NHPs in 35 states, and the completion of the ongoing construction of Federal Secretariats in 11 states, which are at various stages of completion.

Speaking on the Housing budget allocation, Eniola said that Nigeria seems to not be ready to address its housing deficit, particularly the needs of middle and low-income earners. In his words, “in the budget, the Ministry of Police Affairs got about N938 billion, while the Ministry of Housing and Urban Development got a meager N99.92billion. If you look at it critically, you will discover that it is only N18 billion that is going into construction of 20,000 housing units, which is a drop in the ocean in view of the deficit. “The budget is not going to have any impact. Nigeria should be talking about nothing less than 100,000 units per year. It may not even make much impact, whereas in other places like Egypt, last year, they built one million housing units in a year. What are 20,000 housing units when compared to that?”

He further stated that those feeling the effect of housing shortages are the low-income earners. “If you are not addressing their needs, you are not addressing housing, because the high-income earners do not have a problem, they have the money to put a roof over their heads. In the Ministries, civil servants who have worked 20 to 30 years, from level one to eight are retiring to their villages because they do not have anywhere to put their heads,” he explained.

According to him, the government needs to venture into rental housing scheme for the low-income group with the option that the people can own such houses at the end of the day in order to resolve housing shortages.

He lamented that, the prices of building materials are skyrocketing because the Federal Government has not come up with a positive policy that will address the situation. The issue is about foreign exchange, which is driving the economy, and the government does not have solutions to tackle it. However, without addressing the issue, it will be difficult to curb the rising cost of houses.

“As of January 2023, exchange of $1 to the naira was N400 but by January 2, 2024 the exchange of $1 to the naira is about N1, 200. The manufacturers of building materials will tell you that they depend on foreign input to bring in their materials. As long as they still depend on foreign exchange, we do not have a solution in sight,” he argued.

As a way forward, Eniola suggested that the government should start developing the nations’ local building materials for production of houses, with at least 20 per cent local inputs in the housing production process, in order to address the rising cost of building materials.

A Professor of Estate Management at the University of Lagos, Austin Otegbulu, also said that, in the face of lean resources, funding of critical sectors of the economy like housing and others will continue to be a great challenge. He said that, there was need for an appropriate housing census to determine the present housing stock, and to also determine what is needed by the low-income, middle-income groups, civil servants, petty traders and high-income cadres, as well as how to easily make the houses available to them.

According to him, “in reality, most civil servants cannot afford to buy the so-called low-cost housing even over a long period of time. The cheapest you can get now is about N20 million. The salary of a University Professor per year is about N6 million, not to mention civil servants from level one and above, who earn less. It is a popular view now that the only way a civil servant can build a house is either through corruption or if he or she does other businesses outside the regular income source.”

Otegbulu further urged the government to subsidize housing for the low-income group and adopt technologies that will allow subscribers to own partially completed houses. He advised the government to provide a site and services scheme, by providing infrastructure and allocating such sites to civil servants to build at their own pace.

According to him, there is the need to engage professionals like estate surveyors and valuers in implementing policies, particularly maintenance of public buildings, to ensure long life span and there should be a budget set aside for such a purpose.

The Former Chairman of the Nigerian Society of Engineers (NSE) Apapa Branch, Dr. Garba Ombugadu, stated that, the government over the years has not developed housing for the benefit of the citizens, which has led to homelessness among many Nigerians.

He stressed that the little money budgeted for housing is not utilized as expected, noting that the little allocation for the sector must be well utilized as approved for housing projects and for the benefit of Nigerians.

Ombugadu is of the opinion that the government must be deliberate in developing the Housing sector through a systematic master plan, which must be followed until set out goals are achieved. He added that the government must be deliberate in allocating funds for housing for the citizens, including addressing the problem of abandoned projects, as well as paying contractors to deliver projects to avoid contract variations often caused by skyrocketing prices of construction materials.

According to the United Nations, the Housing situation in Nigeria is urgent and homelessness abounds across the country as a result of poor infrastructure and lack of access to housing loans, difficulty in obtaining property titles and high cost of land. All these factors have created the need to reform the laws and adequately fund housing activities in the country.