By Ayo Alonge, [email protected]
For prominent entrepreneur and Chairman of M.I. Okoro and Associates, Meckson Okoro, the real estate business comes with a huge potential.
According to him, the prospects of the business also come with its challenges which can, however, be mitigated by both government at all levels and stakeholders in the sub-sector, with a view to growing startups and attracting investors. In this interview, he sheds more light.
Background
If you look at real estate management in Nigeria, M.I. Okoro is a very tall figure when you drop the name. To a very large extent, I consider myself and firm as having contributed immensely to the growth of real estate in Nigeria. They include budding entrepreneurs who wish to invest in real estates or are investors already. We educate people on how to invest in real estates which is capable of yielding mouth-watering returns on investment in no distant time. Look at the Lekki Trade Centre. It is readily available for investors, businessmen and budding entrepreneurs alike. Thankfully, our company is in charge of that property. As an entrepreneur and investor, the goal of the company is to be the leading real estate company in the country. We are on that track already and we still continue to push every day. While starting up this company, I had in mind to contribute to the growth of Nigeria’s economy through real estate consulting and quality service delivery. That focus has not changed only that the economic policies of successive governments have been militating against the realisation of such dreams.
Fundamentals
There is no standard measurement for a plot of land in Nigeria. Some may even tell you that if you can’t build on an acre, forget it. I can authoritatively tell you that there is nothing like an official measurement for a plot of land in Nigeria. It varies from state to state, and neighbourhood to neighbourhood, but no such thing as a standard measurement in the country.
Challenges
The major challenge is still that Nigerians are poor. There is no disposable income. People don’t have money to buy property and government policies are not helping matter. There is also the challenge of policies of house ownership in Nigeria. There is no possibility of a common man owning a property in Nigeria and this affects the growth of the profession and house delivery in Nigeria. I can call that political and financial challenges. Our job is also to advise government to build for the poor. Building for the poor is supposed to be taken care of by a deliberate policy that is called social housing infrastructure through a social housing fund which is strictly done by government. There is nobody, including you, that would do an investment in real estate and not borrow from the bank. The bank will want to see your cashflow before giving you such huge funds. Instead of the government focusing on building for the poor at a subsidised rate and empowering the local governments to do so, they neglect that. If it is a functional local government system, the local government is expected to even do the building of houses for people. If government had created a special funding for the social housing system, it would have been fine. But today, government builds to contest with private developers like us. It is not about attributing the blame to government, it is entirely the responsibility of government. Government has to bear over 120 per cent of the burden of low cost housing. Even when done, those who work in such parastatals allocate the houses to themselves and later sell at high prices, not giving to those that it was meant for. That is our experience with that. Again, on the challenges, the way it is affecting everybody is the way it is affecting me. I am only one among the subset. For example, if all the money we are making is going into buying diesel to fuel the company, it is affecting me. We can’t look at that separately. Another challenge is also the struggle to grasp with government policies that are meant to kill businesses in Nigeria. If I tell you how much my company pays on diesel, it is enough to pay staff salaries. That is a big leakage coupled with the fact that the Land Use Act created by the Obasanjo administration when he was the military Head of State, also, is a great barrier to our breakthrough in housing in this country.
Strategy
The issue is that every business operator has its own strategy to survive in the market place. Despite the hardship and competitiveness of the business, we are still on top, when you measure us alongside the big estate valuers. We have got right our selling point which is to ensure we deliver effective quality service to our clients and once the client is happy, we do more business with them. That is how you can make it in the business. For us, we are repositioning our company to take advantage of emerging opportunities.
Mortgage system in Nigeria
For a very long time till now, apart from what Babangida gave from 1992-1994, when he created primary mortgage institutions and it all crashed due to mismanagement and lack of proper regulation of industry, nothing has happened in the mortgage sector. Right now, nothing seems to be happening in the mortgage sub-sector. The Ministry of Finance has not thought it wise to know that since Nigeria’s existence, from independence, we are supposed to have been operating on an efficient mortgage system that can guarantee efficient houses delivery.
Building houses involves a lot of capital. But then, despite all the challenges, real estate can yield huge returns for any investor who knows his onions. There has to be an enabling law to fine-tune the mortgage system. There has to be a serious legal framework and the government has to deliberately create primary mortgage institutions and power them, just like we power commercial banks. We are not creating the mortgage institutions like the ones Babangida created. Yes, the idea was good but there was not an effective process to ensure they are doing the right thing. It all collapsed within two years because there was not an adequate legal framework for it.
What the CBN is doing for commercial banks is what the Federal Mortgage Bank should be doing to primary mortgage banks. Since the creation of the Federal Mortgage Bank, what can they say they have been able to achieve. As far a I am concerned, it is a waste pipe. It is either they are overhauled or they should be closed completely because they are building private interest and not national interest.
Low cost housing
The government is not interested in housing the masses. That is one thing you must know and that is why they have not done anything in order to create a social housing. Jakande was passionate during his time to get houses for the masses and he achieved it. Private sector will never go into developing houses for the poor people or the masses because it is not profit-driven. Maybe with time, when we get governments that are passionate about it, we will know. The dynamics will be there and I believe that everything will be alright.