Surv. (Rev.) Ugochukwu Obiora Chime is the National President, Real Estate Developers Association of Nigeria (REDAN) and a Fellow of the Nigerian Institution of Surveyors (NIS). Chime is also the Chairman, COPEN Group of Companies, a firm that has carved a niche in real estate development and facility management. In this interview with Edward Nnachi he bares his mind on the activities of REDAN, issues affecting the Nigerian housing sector and the way forward.
Few months ago, you were elected National President, Real Estate Developers Association of Nigeria (REDAN). What is your roadmap to chart a new course for the Association?
First and foremost, I want to thank God for the opportunity to be the president of the Real Estate Developers Association of Nigeria (REDAN). We were elected February 10, 2015. In terms of my roadmap, issues and perspectives of REDAN, I have been involved in the industry; I was a foundation member of REDAN, when the association was formed in May 2002 at Sheraton Hotel in Abuja.
It is a thing of joy for me to be part of this great association. What God wants me to do in REDAN first of all is to ensure that there is a paradigm shift of understanding among all the stakeholders of what is involved in affordable housing which is clearly the niche for which the Federal Government and the Federal Mortgage Bank of Nigeria (FMBN) initiated the formation of REDAN in 2002.
That understanding of the paradigm shift is as follows; one, housing is not about shelter alone. Housing is all about employment. Two, housing also is creation of multiplier effect in the local economy. On average, when you build one unit of housing, you create about eight jobs; you also have a multiplier effect in the local economy- the women who sell things at the site, suppliers of building materials in the market, everybody gets involved in the development of the project, not just the developer and so this creates a multiplier effect in the local economy.
This perception of housing as a clear indexes of developing our economy has not been captured at the federal, state and local government level, yet outside this country, when Obama came in as President of the United States of America in 2008 and it was a time when the economies of the world was in shambles; it was a time when the economies were having a lot of difficulties. What he did was to push billions of dollars into construction, into housing and reflected and created jobs. Now the economy is breathing again.
And it is very interesting also for our own economy that when you give money for, for instance transportation, that money flies out by way of instruments purchases and all that. But when you give money for housing the whole of the money circulates within our economy. We know that GDP depends on how fast the turnover of a unit of money injected into a system.
That is one understanding I want to inject at the national level. At the other level in terms of our people, the understanding that mortgage is available has not trickled down; the understanding that there is need to pay the mortgage when and as at when due is not there.
There are lots of issues that are militating against housing and the understanding of them across board is one clear thing I want to do. That is why within this past period at REDAN what we have tried to do was to organise an interactive workshop involving all the stakeholders, government, the participating financial institutions, the Central Bank of Nigeria, the Nigeria Labour Congress, the civil service arm of labour, the Federal Mortgage Bank of Nigeria, the Federal Ministry of Finance, the Federal Ministry of Lands, Housing and Urban Development so that we can sit down and brainstorm and see how far we have been, how far we have gone and how far we could have gone if there was an understanding across the value chain of housing delivery.
That is what is at place -people can isolate issues and treat them in isolation. You can decide to treat finance as a challenge to housing; you can treat land administration and land titling as an issue to housing; you can decide to treat paucity of skilled artisans as an issue to housing; you can also treat developers’ sincerity and insincerity as an issue to housing; you can decide to deal with the bureaucracy involved in the whole system (at FMBN and other places) as an issue to housing.
But we felt that we are not going to be selfish and begin to deal with issues that concern REDAN only and that we will look at it from a multi-disciplinary and a multi-sectoral approach to see that issues that impinge on REDAN will help us either directly or indirectly to come out of the problem we are having.
If the FMBN gets it correctly, if the state governments get it correctly, if the civil servants get it correctly, everything will okay. For example, the average Nigerian does not go for what he can afford. He goes for what he thinks he needs. The resultant effect is that we are building houses that are not affordable because that is what they say they want. If you go to South Africa, you will find out that the same houses an average civil servant there who is on level 10 is buying, is what a civil servant in Nigeria who is on level 4 wants to have.
So, we have to on an interactive basis brainstorm and encourage one another to have a paradigm shift in understanding on our role and responsibilities in the housing delivery chain so that the economy can move ahead. In other developed climes, housing contributes up to 50 percent, but in Nigeria the contribution is 7 percent. And the decision there is for us to see how we can do this.
For a country that has over 170 million in population and with a housing deficit of 170 million, the issue is that our production rate of housing is about 100,000.
Which is poor, both formal and informal sector. The core issue is how do we have a change in what we are doing and how do we begin to do things better than we are doing it now? That is where we are and that is what I think that REDAN is positioned to do.
The APC led by President Muhammadu Buhari has said as part of its manifesto that it intends to do 1 million houses per annum. If it does 100 units per annum it is huge from the formal sector, but I believe it can do more than that. Our role is to see how we can assist them to get over some of the bottlenecks, how we can assist them to have a proper understanding of what the issues are and that is where we think the role of REDAN is firmly placed in.
Recently, there have been reports about some developers defrauding clients, thus making these clients to lose trust in even “genuine” developers. What is your take on this, sir?
I want to point out that if am here to say there are no criminals at REDAN, I will be wrong. REDAN is a microscopism of the larger society. But what we done since I came in is to create a committee on issues of membership discipline so that we can have a mechanism of feedback of errant members, who deviate from the ethos and proper governance for which we ascribe to and appropriately punished them.
Another thing we have done is to educate our members beforehand as a way of preventive measure to let them know the implications of their actions. This means we are not just there to punish our members; we are also collaborating with other agencies of government to educate our members on the dos and the don’ts.
Also in conjunction with the World Bank, we are embarking on a strategy in REDAN called standardisation of products and processes to chart a way of bringing down the National Building Code for instance and have it entrenched into our processes as developers, because we must have to concur.
We are also trying to come up with other measures like dedicating a section of our website to where you have names and estates delivered ‘processes and the products’. In this case, you are dealing with the hard and soft sides of the processes; the hard side being the physical building, and the soft side being the processes in conformity with the standards and ethos in dealing with clients.
We have recognised that over the years, it is an issue that has brought disputes to lots of developers and we are mindful of it and so we working towards addressing it head-on.
Irked by the housing shortfalls in the country, the Association of Housing Corporations of Nigeria (AHCN) recently called for the restructuring and enhancing of the Estate Development Loans (EDL), which is currently being managed by the Federal Mortgage Bank of Nigeria (FMBN) to make more funds available for mass housing delivery in the country. What is your take on this, sir?
I agree completely with their advocacy. And I make bold to bring it to your knowledge, that the FMBN has in the last three years not given also want to agree that the voices of people in the streets have pushed one of their own into the presidency of this country. APC members did not choose President Muhammadu Buhari because he is one of their own. They pushed dence of the masses. And I must say that their promise to Nigerians of 1 million housing units per annum must not be abandoned on the ‘altar’ of politicking.
If there have said in their manifesto that they would build 1 million units of housing, I see it as a contract with the people of Nigeria who pushed the president there. If the president doesn’t keep this promise, the voices of the people on the streets, whose effort is being diverted by PenCom and CBN to invest in other sectors, will be heard in the presidency.
They invest in others sectors instead of investing in the housing sector that creates employment; instead of developing a sector that has multiplier effects on the economy and put smiles on the faces of civil servants. Yesterday you saw what happened when the Governor of Enugu State decided to put smiles on the faces of Enugu civil servants by paying 30 per cent equity contribution of 100 housing units for workers of grade level 10 downward.
He knew that their salaries could not afford those houses. So he has set a precedent for other governors as a way that the political will must be shown by action that caters for the welfare of our people.
Therefore, I look forward that apart from the Federal Government, the state government must find ways of replicating it in their various states . He is not the first Governor that has done it in Nigeria.
In 2001 and 2002, we were consultants to Taraba State Government and that enabled that state to build up to 500 housing units for civil servants. And we made them to understand that housing is an investment in relation to the productivity of the people because somebody who comes time, Taraba State has Jalingo as its Capital City, but the civil servants were coming from Yola, in remote villages because they didn’t have houses in the city of Jalingo.
The then state governor decided to pay 50 per cent of the cost of those houses and 50 per cent was given as mortgage loans by the Federal Mortgage Bank of Nigeria ( FMBN). At least 500 civil servants had homes in one full swipe in Jalingo.
They shifted from where they were commuting to work from Yola to Jalingo and started living there. This saved their lives. This made them had a sense of belonging. Somebody down the line, 13 years after had done similar thing in Enugu state by way of Hon. Ifeanyi Ugwuanyi, the Executive Governor of Enugu State. He did these (3-bed room hous have to wait for another 13 years for this to be replicated across the country among the other 36 states governors. And we believe that this can be done.
Housing (shelter) forms one of the basic needs of man. What in your opinion, can government do to restructure and reform the Nigerian housing sector to keep it afloat in meeting the housing needs which experts currently put at over 20 million units?
Government must know that housing is not all about shelter. Housing is a veritable tool for employment generation. I find it very despicable that the past Minister of Finance was given You-win and SURE-P grants of up to N10 million to people, and I am aware that the aim was to provide may be a job or two by a particular beneficiary. But you find a sector (housing ) whereby , if you inject the same N10 million, this amount would create about 8 jobs. I am quoting the former Minister herself.
Here you have You-win or SURE-P that can create may be some 1 or 2 jobs; and here you have a standard (housing) sector which she herself had said, “for building 1 unit of housing, you are creating 8 jobs” across the housing value chain. And that N10 million injected there will get to you by way of mortgages by the person who buys the house.
That N5 million invested there will come back to you by way of repayment. Does it make any economic sense for government to invest those monies in other sectors, than the housing sector that will create the employment that will we need? It doesn’t make any sense. Govern understanding that housing is not just about providing shelter for the poor which they don’t want to take care of, whose hopes they have sold.
They should come out clean to let people know that housing creates employment which we need in this country currently. They have commercialised it to do whatever they want to do. And they have not taken care of the poor. The monies the poor people contribute, our governments have diverted them. They have their contributions meant for them whether at the state and at the federal level. These poor masses’ contributions are now being used to build for the reach. So, it is class struggle.
That is number one. When the political will to intervene in the housing crisis in there, then the rest of the issues will key in. There will then be a forum where we will begin to analyse what the hindrances are; then comes the issue of funding; then comes the issue of, what will those who have the funding require intervene? If government can give loans to farmers at single digit interest, why are they giving loans to developers at double digits? If they able to give loans to airliners at single digit for them to do their work, why do we give loans to the construction of houses which will create increase in our GDP, creates employment and at the same time provide homes for our people? If you are an African and you don’t have a house, you are not yet complete.
A house in a gated estate as we have here ensures security slumps where are people are living currently is a breeding ground for cultism; it’s a propagation ground for insecurity and it is a breeding ground for terrorism. We need to address these issues. And addressing them, means sorting out unemployment, boosting a sector that has multiplier effects on the economy, shelter, security and youth restiveness, and this is what I think we should. This is what I think government must do to save the country from its housing quagmire.
Taking you back on the Estate Development Loan (EDL), was it that the money was not there to be given as loans or was there iota of corruption on the part of the issuing authorities?
No! The money was not there and may I seize this opportunity to thank you for drawing me back to that question. It is part of the class struggle that I was talking about earlier. Our governments do not have the poor masses in their priority list. And I have my reasons for saying this.
The share capital of the Federal Owing to their impact on the economy, commercial banks were forced to capitalise to N25 billion. This was what led us to where we are today. Here are we, they are now forcing the primary Mortgage Banks to recapitalise to the tune of N5 billion, while the FMBN which is the secondary mortgage bank is still at N5 billion.
It is duplicity and it is shameful. When you compare the capital base of FMBN with similar institutions across the world it is shameful; some of them have capital base of up to $30 billion. And you know that this amount even you convert at N200 to 1 dollar, is N6 trillion.
The minimum capital base that the Federal Government should recapitalise the FMBN, as at today should not be less than N500 billion. If the Federal Government under ous about the 1 million housing units per annum, which if you multiply by giving N2 million per house, you will discover that you are dealing with something that is unimaginable.