By Maduka Nweke
Mr. Sampson Ogbemudje is the Principal Partner, Ogbemudje, Omezi & Co. in Lagos. A Law graduate from the University of Benin in 1986 and Law School in 1987, Ogbemudje was once in charge of the Nigerian Bar Association (NBA) National Secretariat, Ozumba Mbadiwe Street, Victoria Island, Lagos, from 1987-1988; Associate, S.J. Ofoluwa & Co., Port-Harcourt, 1988-1990; S.M. Ogbemudje & Associates, Lagos, 1990-1992 and currently, Partner, Ogbemudje, Omezi & Co., Lagos, 1992 till date.
Ogbemudje has held various positions, among which are membership and Chairman of the Human Rights Committee of the NBA, Ikeja branch, and as Vice Chairman of the branch from 1997-1998. He is also member, Chartered Institute of Arbitrators. He spoke to Daily Sun on why cost of accommodation is high for low income earners and why prices of accommodation fluctuates in some levels and stabilises in the other levels.
Excerpts:
Career in property business
It’s been very interesting because property business in Nigeria is sometimes stable and sometimes, the economic situation determines the prices and demands depending on what is happening in the economy generally not only in Nigeria. This is because the Nigerian economy is not independent of other economies. Whenever there is recession that threatens sectors like stocks market, it affects the economy and property business in Nigeria.
Property development in recession
When we talk about recession, we are talking about depression in the economy. We are talking about when the economy is depressed and when that happens, it affects everything you are doing, including property. In such situations, you will find out that property prices will begin to decline. But like, if you watch, in Nigeria, when price of any commodity goes up, it is unlikely to come down but with the recession, we can actually divide property situation into two; the high brow properties and the ones in the middle class areas. Now, if you look at the high brow areas like Lekki, Ikoyi, Victoria Island, you can notice a little decline in the prices of property in those areas, because demand is low there now. You find out that people want to bring down prices to sell or lease/let. If you study the property market properly, you will find out that on average, in what we call middle class areas, prices are not too low because people who can’t afford the high brow areas now move to the middle class areas and this helps to stabilise prices in those areas. So you see that people can afford those ones. Prices of properties in terms of lease in those areas are stable. So when it takes government estates like the one you call Jakande Estate in Amuwo-Odofin, you find out that prices of accommodation in those places where people pay like N300,000, N400,000 and so on, the average man who stays in a particular class can afford that.
In terms of economics
Property price is affected by the law of demand and supply. Wherever the demand is high, it will make the price high. Because of infrastructural challenges we have in Nigeria, we have shortage of supply of houses. But the shortage is more with the middle and low income earners. When you look at the demography, you find out that the shortage is more on the lower income earners. When there is recession, it is even worse because the bottom, which is the lower base of the economy, grows wider and the upper base of the economy grows narrower and thins out. It will take awhile for the recession to affect property price at the lower level because of the large number of people in that level and the shortage in supply of properties. Rather, the places that are largely affected once there is recession are more expensive properties in areas like Lekki and Ikoyi because there are fewer people in those areas and properties there are more than enough for them so once there is recession, immediately after the recession, it will affect the property price in those areas. It will affect price of land, which will affect the rental prices. Rent is the first thing it affects in those areas. So rentals in Ikoyi, Lekki, Victoria Island, Lagos Island and some high brow areas of Ikeja and Apapa have been coming down. So, a lot of properties like duplexes and luxury flats in places like Amuwo-Odofin and Festac are also coming down because the number of people that can afford them is reducing. So the price has to come down and the way it is going, the recession is lasting longer than people anticipated. In fact, people are now feeling the bite of recession even more now, which means that property prices are likely to come down even more in the next couple of months.
Government and housing deficits
The government is not making much money like it used to and when government does not have money, the allocation to each sector of the economy is reduced. And the government is not interested in investing in property but on infrastructure, which is good. The benefits are long term so they should develop housing schemes. They rather prefer private individuals to invest in property and generate revenue from it. The infrastructure developed by government makes road accessible. For instance, the railway line that the government is planning to construct in the Badagry axis would make people who go to work on the Island and live in Badagry have direct transportation.
Lagos State government has its own advantage but it should have tried some development schemes outside infrastructure. Although railway transportation has its own benefits, what they should have done was to put up short term provision, housing development scheme for low income earners, which they have not done. The Federal Government has not been able to do anything for the past couple of years. But of recent, the government has been trying to put up something and we are just watching. The last government that tried to do something was Jakande the administration. The Federal Government has distanced itself from the low income earners. Corruption and other things have made governments to distance themselves from the masses. They sell properties to speculators because of the gap. They are the ones directly dealing with the locals. When they sell to speculators, at the end of the day, such will not benefit those intended to benefit. This what they are not doing.
Role of mortgage banks
Mortgage banks in the present dispensation have not been very effective. There is the banks’ issue of crisis of financing and sometimes, there are policies that make it difficult for the average man to access those loans. I don’t think the mortgage banks are really playing their roles. But that is not the issue because there is a new federal housing policy in place and it made provision for certain facilities to get to individuals to enable them build their own houses. The facilities are there. People are taking advantage of them but the problem is that most people don’t know about them. There should be awareness. The people who take advantage of these are not the common man, they are not the middle class people so you find out that sometimes these loans end up in the banks; instead of getting to the real mortgage bankers, they end up with the commercial banks, which give them out as they like. People are not aware that there are such facilities.
Accessibility of the loans
People are not aware of it so people must be informed. I discuss with personnel of federal mortgage institutions often. They are available but people are not aware. What happens is this, government left federal mortgage institutions to publicise these things but they don’t want to do so because they don’t earn good income from that because of the policy provision. So they will rather you come and take their own facilities that attract higher interests. Now, if the Federal Government wants people to do that, it should put processes in place to ensure that these things are actually utilised for the meant purpose.
This is by ensuring that it is publicised, which is supposed to be the duty of the federal mortgage banks that should play supervisory roles. They are supposed to ensure that people are aware; that people are informed about these loans and can access them.
The way out for housing deficit
If there is political will by governments, not only at the Federal Government level but at the state level, these things will not constitute major issues. Governance is not rocket science. It is the Nigerian government that wants to make it look as if it is rocket science. Most of the things we struggle for in this country are easily derivable. For instance, the issue of power generation for this country is not rocket science. It is just that governance in Nigeria is protecting specific interests.
For instance, the people in government also benefit from the housing deficits and for that reason, they don’t even want the housing deficits to stop. Now, if, for instance, you as a Minister, Commissioner or Permanent Secretary or somebody in the position to do that, own like 20 properties in Abuja or in Lagos, you will desire housing deficits to continue because that is what will preserve the value of your property, protect and ensure that your children have greater inheritance. So we have these problems because people are self-centered; we don’t have selfless leadership. If the people really want, it is not rocket science. It is so simple to deal with but the question is, do they have the political will? Are they going to serve public interest or personal interest? Our people in government, with due respect, don’t want to serve public interests, rather, they want to serve personal interests. That is why we have power problems, that is why we have housing deficits; the problem of corruption. That is why we have challenges in the economy. These things can easily be dealt with. It is no rocket science.