BASIRAT A. OYALOWODEPT OF ESTATE MANAGEMENT, UNIVERSITY OF LAGOS, AKOKA, LAGOS NIGERIA

Paper presented at the 2014 Annual Seminar of the Ikoyi/Victoria Island Co-operative Union on Saturday, September 20, 2014 at the Nigerian Institute of International Affairs, Victoria Island, Lagos, Nigeria

*MEETING THE HOUSING NEEDS OF CO-OPERATORS

* Nigeria’s housing need….

*Over 17 million housing deficit,

*80.2% of households in urban areas in Nigeria are poor (NBS 2013)

*Families in SW Nigeria spend a greater part of their income on rentals than in other parts of the country

*75% to 80% of Nigerians are low-income earners and 57% of urban workers operate in the informal sector

* However, market for about 69% of the population who are not owner-occupiers

* Nigeria’s housing need

*Formal housing finance providers target only a particular segment of the society.

*approximately 5 million families belong to one or more of these co-operatives (Federal Ministry of Agriculture and Rural Development FMARD, 2002)

*more than 50,000 registered co-operatives credited with contributing towards the production of export crops, minimization of exploitation by middlemen and traders and the mobilization of enormous financial resources from small savers in thrift and credit systems.

*Why not housing supply?

* Housing provision for co-operators: By whom?

*The Government

*The private sector

*The Government

*Needs to address both qualitative and quantitative housing need

*Through the three tiers of government

*Through ministries, departments and agencies

* The Government (C’ntd…)

*Pre-independence: Government Reserved Areas

*Second National Development Plan 1970-74

*National Housing Scheme, 54,000units in 2 years

*Nigerian Building Society for mortgage loans

*State housing corporations

*Targets not achieved.

* Third National Development Planning Period 1975-1980

*19% (8500 units) Lagos and 29% (National) met

* The Government (C’ntd…)

*Fourth National Development Plan

*Only 50% of 20,000 units met

*Site and services scheme

*Core housing

* The Government (C’ntd…)

*National Housing policy,

*Establishment of several PMIs

*Involvement of the private sector

*Shift of focus from direct provision by the government

*Mortgage finance and contributory schemes

*The Private SectorControls over 70% of total housing stock

*Informal housing sector:

*Finance: personal savings, informal loans, remittances from abroad.

*Long period of construction, tendency for substandard builds etc.

*The organized housing sector.

*Real estate developers (REDAN): bank loans, off-takers’ payments, PPPs.

*Corporate Builders from the Government sector

*Ready for mass housing to satisfy the needs of co-operators/

* Government + Private Sector

*As at 2008

*31% of Nigerians are owner-occupiers

*19.2% are squatters

*24.1% pay subsidized rent

*43.3% cannot afford a home

*26% can afford to pay rent

* Challenges in Mortgage financing

*The availability of mortgageable housing stock with good legal title

*A highly developed home building industry with capacities for adding to the stock and retrofitting old stock

*Strength of legal rights of lenders

*Strength of Credit information systems

*Adequate legal, tax and accounting framework,

*Macro-economic stability,

*Property registration systems,

*Urban planning policies and

*Financial market depth.

* Challenges in Mortgage financing Cnt’d

*Regular income

*Credit history

*Collateral

*Cost of Housing 20-30% mortgage finance in developed countries cf. 80% in developing countries

* Co-operative Societies: The Third Way

…The need for a revolutionary and radical strategy involving non-market and non-profit making measures and cooperative housing provides this alternative (Danmole 2004).

* Co-operative Societies: The Third Way

*Principles of co-operative societies

*Mobilization of funds

*Disbursement of funds

*Capacity to devolve into other pursuits

* Co-operative Societies: The Third Way

*Sweden

*Denmark

*Australia

*Norway

* Co-operative Societies: The Third Way

*What we can learn

*Co-operatives taking the first step

*Government Support

*Various forms of intervention

*Co-ownership

*Investor-Developer

*Site and services

* Co-operatives as Real Estate Developers

Risks associated with…

*Site Selection

*Development appraisal

*Development finance

*Building design

*Construction management

*Disposal of housing

CAN/SHOULD CO-OPERATIVE SOCIEITES PROVIDE HOUSING FOR THEIR MEMBERS?

* S.W.O.T ANALYSIS FOR CO-OPERATIVE’S

PARTICIPATION IN THE HOUSING INDUSTRY

Strengths

*Access to the credit history of members: crucial for any intervention from financial institutions

*Access to steady stream of income from member’s contribution

*Ability to enforce repayment of loans

*Large membership base, committed to the savings culture

*Organization: constitutions, leadership, governance framework, etc.

*Critical mass and voice

Weaknesses• Information gathering and sharing

between co-operatives and the potential supporting agencies

• Experience /Knowledge base about the real estate development sector

• Orientation of co-operatives towards real estate development

• Lack of definitive commitment of co-operatives in tackling the nation’s housing problems

* S.W.O.T ANALYSIS FOR CO-OPERATIVE’S PARTICIPATION IN THE HOUSING INDUSTRY

Opportunities• Vibrant rental markets in various urban

areas in Nigeria (the future is in rentals?) • Housing Provision: a national problem to

solve?• Access to professional support• Access to member’s individual

experience in the sector• Access to member’s professional

experience and skill set• Changes in banking practices, opening

up new opportunities for finance• Access to international support and

experience * S.W.O.T ANALYSIS FOR CO-OPERATIVE’S PARTICIPATION IN THE HOUSING INDUSTRY

Threats• Lack of experience in housing provision• Preparedness of the formal sector to

disburse gap financing to co-operative societies

• Administrative bottlenecks in land assembly, land registration and titling

• Performance in previous loans from the financial institutions

• Perception of co-operatives as ‘self-help’ and the stigma this brings

• Co-operation from members• Leadership-followership issues

* S.W.O.T ANALYSIS FOR CO-OPERATIVE’S PARTICIPATION

IN THE HOUSING INDUSTRY

PROVIDING SUPPORT FOR CO-OPERATIVE HOUSING: INTRODUCING THE UNILAG CENTRE FOR HOUSING STUDIES.

Thank You for Listening!