PUBLIC PRIVATE PARTNERSHIPS PROJECTS IN NIGERIA - CURRENT PROSPECTS IN HOUSING.
AN INVITED PAPER PRESENTED BY
TPL. ODUNLAMI O. OLATUNJI (rtp, fnitp)
AT THE
NIGERIAN INFRASTRUCTURE BUILDING CONFERENCE2014
HELD AT
FOUR POINTS BY SHERATON LAGOS
26TH JUNE, 2014.
Public-Private PartnershipsProjects in Nigeria: Current Prospects in Housing.
1.0Overview of Public-Private Partnershipsin Nigeria.
Public-Private Partnerships, PPP, essentially is about the investing private sector doing business with government to provide needed public infrastructure and services that are in short supply and, which by virtue of its set up, the private sector is positioned to provide and maintain more efficiently over a predetermined length of time for profit. Critical to the success of PPP, is the provision of an enabling environment particularly that of local legislationsand theireffects in either promoting or stifling business, as well as the need for transparency in the entire process. His Excellency Babatunde Raji Fashola Governor of Lagos State aptly captured this in his foreword to the 2012 edition of Lagos State Investors Handbook when he stated thus,“We must reduce the extent of government regulation of business to essential elements that are clearly focussed on efficient and effective achievement of positive aims”.
In Nigeria, the legal framework for PPP in Infrastructural Developmentis the Infrastructure Concession Regulatory Commission (ICRC) Act of 2005. The Act empowers the ICRC to monitor and regulate PPP related projects and, also specifies the requirements for the participation of the private sector in government infrastructure projectssuch as in financing, construction, development,operation and maintenancethrough various contractual arrangements. However for foreign investors, additional requirement is compliance with the provisions of the Nigerian Investment Promotion Commission (NIPC) Act of 1998which is Nigeria’s principal investment law. This Act governs entry of foreign direct investment into Nigeria. Under it,and in order to do business in Nigeria, foreign companies are required to incorporate local subsidiaries or branches. They are also subject to the Foreign Exchange (Monitoring and Miscellaneous) Provisions Act of 1995 on the free movement of foreign exchange directly attributable to the specific investment.
Since the establishment of the ICRC and its variants in some of the States in Nigeria, various infrastructure projects have been embarked upon in power and energy, water supply, road construction and other transportation facilities, health care, housing and agriculture.
2.0Housing Housing is the aggregate of a person’s life (Minha Casa Minha Vida, which means My House, My Life launched by the Brazilian government in March 2009 with a budget of R$36 billion (US$18 billion) to build 1 million homes).That is why housing has been placed second next to food and ahead of clothing in man’s hierarchy of needs. And that is why securing a place that a person can call his/her own occupies man’s thoughts throughout life until he/she is able to own one. The irony however is that no matter how you look at it and, how dexterous a person is at juggling the mix of what goes into housing, it does not come cheap.And so while you may buy your other comfort things such as clothing, food, cars and such other stuffs once and for all,most people build their homes incrementally. Some actually are never able to build or acquire their own homes throughout their lives and remain tenants perpetually or they spend the greater part of their lives in its pursuit. This is particularly true of the low income earning group.
In Nigeria five methods of housing delivery can be identified;
- Acquisition of land by purchase from private land owning families (omoonile) or from government allocation and, incremental building by individuals largely the low and medium income groups
- Development of housing estates by government either on land belonging to it or on land acquired or revoked from private owners
- Private estate developers building estates on land acquired from private land owners or on land allocated by government under special housing programmes
- Cooperative associationsbuilding estates on land acquired from private land owners or land allocated by government
- PPPhousing projects
Although there is dearth of accurate data on the respective contribution of the different methods to the housing stock and reduction of the housing deficit, there is general acknowledgement that the individual incremental method is most prevalent and contributes more particularly with respect to housing the low and medium income groups.
3.0The Housing Challenge – The Lagos Experience
Lagos State currently has an estimated population of 22.5 million (LBS 2011), projected to grow to 24.5 million by 2015. It is the fastest growing mega city in the world. There is a daily influx of people whose purpose is to stay permanently to make a living, with the attendant need for social infrastructure, facilities and services including power, food, and transportation but especially housing. With a population of 140 million, it is estimated that Nigeria has a housing deficit of 17 million units (NPC 2013) requiring addition of 780,000 units annually (NHF 2014) to bridge the gap in the long term. Out of this deficit, Lagos State is said to account for an estimated 1 million units. Bridging this gap is indeed a serious challenge compounded by the following;
•Inadequate yearly addition both by government & private sectors.
•Inadequate easily developable land resulting in increased cost of delivery.
•Absence of a viable & sustainable construction & mortgage financing.
•High cost of building inputs.
•Slow titling & development permit processes.
•Non deployment of new technology in mass housing delivery.
•Private sector developers are not attracted to providing affordable homes.
Over the years,the Lagos State Government had made efforts to tackle the housing challenge by establishing institutions, encouraging the private sector and directly creating housing estates. It established the Lagos State Property and Development Corporation, Lagos Building Investment Corporation, Lands Bureau, Ministry of Physical Planning and Urban Development, Ministry of Housing, Office of Public-Private Partnerships and very recently the Lagos Mortgage Board. The government also introduced the Private Estates Developers Scheme, sites and services, and built housing estates in different parts of the state for sale to the public usually at subsidised costs. Between 1999 and 2011 the government built 3786 family units of medium & low income in 17 housing estates averaging 316 units annually.
3.1Current Strategies & Achievements
- Introduction of PATH in 2011 as a developmental focus (Power, Agriculture, Transportation, Housing).
- Introduction of affordable housing mortgaged based LagosHOMS project – initiative of the BRF Administration.
- Direct budgetary funding of housing construction.
- Multi-agency participation for rapid delivery.
- 1194 units currently on the block; additional 3156 units to be on the market about mid-year in 13 estates state-wide; Blocks of 1,2,3 & 2,2,3 bedroom units.
- New start of 5106 units in 11 locations (Iponri, Ijora-Badia, Ilubirin, Ajara, Olaleye, Egan-Igando, Ibeshe, Amuwo-Odofin, Oko-Oba, Randle, Obele-Oniwala).
3.2EvolvingStrategies
- Continuation of direct budgetary funding of housing construction in the medium term
- Strengthening the mortgage initiative; Currently 9.5%
- PPP – LagosHOMS for affordable housing.
3.3Current Prospects
- Large population and ready market (1 Million Housing Deficit); Huge potential for investment in the real estate development Sector
- PPP – LagosHOMS for affordable housing.
Land allocation from government or direct purchase from private owners.
Approved design and agreed cost per block/unit.
Assured off-take of housing units.
- Project financing
- Property/Facility management
- Mortgage financing
3.4Incentives
- Availability of land (New Areas, Brown Fields, Redevelopment)
- Reduced cost and time in perfecting land title
- Granting of waivers/concessions on statutory fees
- Simplified arbitration process and other legislations
- Fast‐tracking applications for statutory application approvals
- Consistent and sustainable policy
- Due process and best practices
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