From Fred Itua, Abuja
Reverend Ugochukwu Obiora Chime is the President of Enugu Chamber of Commerce, Industry, Mines and Agriculture (ECCIMA). He is a Surveyor, Real Estate Developer, Physical Development Consultant and is the National President of Real Estate Developers Association of Nigeria (REDAN).
He is also the Group Managing Director, Copen Group of Companies. In this interview, he spoke on his new project in Enugu, the housing deficit in Nigeria and other salient issues.
What would you say generally about real estate business in Nigeria?
The real estate sector is an emerging sector in Nigeria. There has been a paradigm shift in approach to home ownership. Previously, people buy a piece of land, design their house type and get contractors, mobilise them and start to build their own houses. Sometimes, it takes two years; a year, 15 years or never gets finished because of the availability of funds may not be sustained for the project.
But currently, the global trend is coming home to Nigeria in the sense that what we have now is a move from that traditional means of home ownership to that of buying finished houses. And not only just buying them with cash but buying them on mortgage. That is the global trend and you might realise that in America, over 70 percent of their GDP is from mortgage finance. In South Africa, it is over 30 percent, in Nigeria; it is less than one percent. That means you can see it from two ways, either that we are not doing well or we see that we have a potential in the real estate industry for growth and that is the way I see it.
So the real estate sector in Nigeria is going to witness tremendous growth, some of the challenges we currently have is as a result of tilting problem of making sure that we align our operations, align our laws, align the legal infrastructure and above all, align the mindset of the people, of all the stakeholders to the changes that have taken place and the need for it to be domesticated in our minds before being domesticated in our laws, operations and policies. That for me is the current status of the real estate sector in Nigeria and I believe that as we go on, we will be in a position to advance it further.
Do you think government, both at state and federal levels are doing enough to bridge the huge housing deficit?
The challenge for them is the understanding and the understanding also goes to note that government cannot by the amount of resources that they have be able to provide those houses or bridge the housing deficit. That is what I mentioned before, the assignment of roles when properly defined, you will understand that the government is an enabler, they are supposed to provide the enabling environment whether at the state or the federal level.
Interestingly for us as a country, the land administration policy because every development is on land, the land administration policy is within the ambit of the 37 land administering entities in Nigeria, that is the 36 states and the FCT. While the fiscal policy that has to do with the finance that liberates and make the opportunity to come alive, is in the hand of the federal government – fiscal policy.
Now you have that duality playing out that sometimes you have funding for a project but because of the challenges we have at the state level, you can’t do the project properly. Either because of the challenges of transaction cost or transaction time at the land administering end, you have a problem or because of the challenges of finance, you have a problem at the financing institution. So when we have this harmony, when we have this legal infrastructure, when we have this policy infrastructure in place, we then will be able to simulate properly what should be the role to play. The Economic Recovery and Growth Plan (ERGP) of the federal government clearly states that 75 percent of the investment and the entrepreneurial energy will come from the private sector, that is the policy released in March by the Federal Government. That means that going forward, when you add this to the commercialisation and privatisation that have taken place over the past decades in Nigeria, the bridging of the housing deficit will be a multi-role event between the public sector and the private sector all defining their roles properly and government making sure that there is ease of doing business in each of the states. It is something that we are working on to make sure that each party understands their role because our people, the Nigerian masses need this shelter. And interestingly, before the shelter comes, is the employment that is generated, the multiply effect in the local economy, the inclusive economic growth that takes place within any area where a project is sited.
So that at the end of the day, we must have to get the whole process align properly so that the housing deficit will be bridged whether it is the 4.7 million national housing fund contributors at the books of Federal Mortgage Bank of Nigeria or the hypothetical 18 million housing deficit. Whichever one you want to attack, producing one million housing unit is a challenge both in terms of finance, in terms of building materials and in terms of other issues about it. I believe that the key thing to do is to have that legal and policy infrastructure put in place that defines the process with a view to getting us what is realistic.
That is why we have, currently going on, the National Real Estate Data Collation And Management Programme (NRE-DCMP) which was initiated between Central Bank of Nigeria and Real Estate Developers Association of Nigeria with other stakeholders which include: Federal Ministry of Power, Works and Housing, Federal Mortgage Bank of Nigeria, Nigerian Mortgage Finance Company, GEM project which is an arm of World Bank project and other critical stakeholders. We are working together to have a collaborative interface with the various land administering entities – the 36 states and the FCT with a view to getting administrative data. That is, data on preconstruction, construction and post construction activities. We also get data from the public about housing conditions, housing survey because it is not only about new houses but upgrading slumps and upgrading existing houses to make them more appealing and comfortable and livable. We also have the business data, which organisations are real estate, the developers in housing delivery. What are their capacities, what are their competency levels? We have that survey as the third component.
The fourth component is the off-taker survey which we are trying to look at the people. What can they afford etc. These data are part of our efforts to make sure that we bridge the housing deficit and we bring it down to a more manageable level.
What about the business climate for real estate in Nigeria? Based on your experience, would you encourage others to venture into real estate business?
Perception is different depending on the knowledge, experience and world view of the person. There is no gain saying the fact that real estate environment is quite fraught with a lot of difficulties, it is filled with a lot of land mines, and it is filled with a lot of challenges that can discourage anybody from getting involved because the transaction dynamics is not clear.
Apart from not being clear, most of the parties and stakeholders in the value chain see money as their own aim; very few people are seeing efficient process and products as the desired goal. Some of us are seeing the reason to develop and deepen the market and make sure that we bring out the best from each other in a mutually benefiting platform. I think that from my own experience, it is challenging but it is rewarding, rewarding for me from the point of view that each time I go to the site and see a number of people working and I know that this man or this woman will put food on the table, will clothe the family, will pay school fees, will pay other bills, that for me gives sense of joy that I am contributing to the socio-economic growth of the society. At the end of the day also, the real estate sector is not a money spinner when you compare it to oil sector and other lucrative sectors. It requires a lot of arduous work, it requires a lot of shepherding, it has a lot of input and output points where things can come in either to dislodge what you are doing, community disturbances can unknown to you crop up because the government didn’t settle the issue of compensation. Also some other parties might have had some interest in the land and which is unknown to you. Also the banks may decide to increase their interest element or introduce some hiccups. There are so many things or even your workers, the level of pilfering and stealing in the site is so humongous.
In Enugu State, where you do your real estate business, how would you describe the support of the state government? Do you think it is doing enough to encourage estate developers?
We do not ply our business only in Enugu, in Abuja we have markets, and we have two estates. I have operated in Taraba, I have supervised projects across the country. In Enugu State, the government has done a lot, they have computerised their land processes number one, number two, you can get your C of O in one month or less in the state. They have also reduced transaction cost for affordable housing. If you are doing affordable housing in the state now, they waived a lot of fees for you. They waived a lot of payments. If you are getting a land, you will pay back at the end. There are a lot of things they have done in the state. They are giving land to developers and they have removed the issue of premium for developers. Since within those estates, developers are going to pay the price for the infrastructures. Premium is payment to government for the provision of infrastructures, enhancing the land by putting the infrastructures.
So since the developer is going to take care of those things, the state government has decided to remove that component from them and still bring infrastructure to the boundary of the estate. So I will say that they have done a lot, they are interested in housing the people, they are interested in the lives of the people, the state government has done a lot. Governor Ifeanyi Ugwuanyi of Enugu State has determined that the people oriented policies are carried out. Last year, he gave 100 housing units to civil servants and paid 54percent of the cost of those houses and the rest is by mortgage through the Federal Mortgage Bank of Nigeria. That is novel. The last time I heard of that being done was in 2001 in Taraba State. Maybe some other governors who I may not have known but they are putting some efforts to see that this sector can give us all the employment we need, give us the IGR we need and also give us other benefits that will spread across the populace.