Housing Finance In Nigeria; Issues And Solutions

Project and Seminar Material for Architecture

Abstract

This study is on housing financing in Nigeria: issue and solutions. The total population for the study is 200 staffof selected mortgage banks, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made of managers, customer care officers, accountants and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

Chapter One

Introduction

1.1 Background to the Study

Housing has been universally recognized as one of the most essential necessities of human life and is a major economic asset in every nation. Adequate housing provides the foundation for stable communities and social inclusion (Oladapo, 2006). Gilbertson et al. (2008) have observed that there is a significant association between housing conditions and physical and mental health of an individual. People’s right to shelter is thus a basic one and the provision of decent housing to all requiring them should be the hallmark of every civilized society and one of the criteria for gauging development. However, the provision of adequate housing in Nigeria and other developing nations alike still remains one of the most intractable challenges facing human and national development. Previous attempts by all stakeholders, including government agencies, planners and developers to provide necessary recipe for solving the housing problem have yielded little or no success.

Teufic and Ural (1978) Ogundele (1989) Agbola (1987) Okpala and Onibokun (1986) recognized finance as part of housing problems but ranked land and building materials higher. Their findings influenced government housing policies and subsequent establishment of some relevant programmes and institutions like the Site and Service Programme and the National Institute of Road and Building Research. The drought of information and working knowledge of housing finance operation is a major problem today. In a tight money market, housing is the first area to suffer, since neither the builder nor the consumer can readily obtain finance for housing. Actually, many builders have difficulty obtaining capital for their projects even in normal times.

Two of these problems – the high interest rates that contribute to the high cost of housing and the difficulty in obtaining capital for home construction. According to Onabule (1996) 245 Primary Mortgage Institutions were established under the NHP within 1991-1996. Unfortunately, only 54 are now operating, mainly in South West part of the country and Abuja. According to Abiodun (1999), National Housing Fund collected about 4 billion naira from the Mandatory Saving Scheme. Out of N300 million loan approved by FMBN, only N100million was advanced.

According to Arilesere (1997), Abiodun (2000) and Okupe et al (2000), the history of housing finance in Nigeria had been an appalling one. The sudden leap from Agro-based to Petro-Naira based economy did not help matters. The assertion that “money was not our problem but how to spend it” accredited to one of our Heads of state, is a summary of a Nation that lacked focus in the formative years. This situation together with unprecedented population growth has remained unchecked ever since.

The Housing Sector plays a more critical role in a country’s welfare than is always recognized, as it directly affects not only the well-being of the citizenry, but also the performance of other sectors of the economy. Adequate housing provision has since the early 1970s consequently engaged the attention of most countries, especially the developing ones, for a number of reasons. First, it is one of the three most important basic needs of mankind– the others being food and clothing. Second, housing is a very important durable consumer item, which impacts positively on productivity, as decent housing significantly increases workers’ health and well being, and consequently, growth.

Third, it is one of the indices for measuring the standard of living of people across societies. Consequently, programmes of assistance in the areas of finance, provision of infrastructure and research have been designed by governments to enhance its adequate housing delivery. The focus on finance has, however, been very prominent for obvious reasons. This is because housing provision requires huge capital outlay, which is often beyond the capacity of the medium income/low income groups.

A major area of concern has been housing financing, which has often been fingered as one of the most formidable constraints in the housing sector. It is in recognition of the critical importance of finance in housing delivery that the researcher is examining housing financing in Nigeria; issues and solutions.

1.2 Statement of the Problem

The problem of housing has become an every day discussion in all quarters of the public and private services of the developing countries of Africa especially in Nigeria which is being focused upon in this study. It has become increasingly glaring that most of the urban population in Nigeria live in dehumanizing housing environment while those that have access to average housing do so at abnormal cost. According to Onibokun (1986), Nubi (1991), rent in major cities of Nigeria is about 60% of an average workers disposable income.

Ekweme (1979), Iyagba et al (1998) explained that the rate of demand for new houses was in part predicated on the rate of formation of new houses and in part on the rate of replacement of old housing stock. With this challenges of high cost of house financing in the building sector, the researcher will provide an overview of housing finance in relation to the issues and challenges therein in this study.

1.3 Objectives of the Study

The following are the objectives of this study:

To examine the issues related to housing finance in Nigeria.
To identify the solution to the issues of housing finance in Nigeria.
To ascertain the level of housing finance by the Nigerian government.

1.4 Research Hypotheses

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H0: there are no issues related to housing finance in Nigeria.
H1: there are issues related to housing finance in Nigeria.
H02: there is no solution to the issues of housing finance in Nigeria.
H2: there is solution to the issues of housing finance in Nigeria.

1.5 Significance of the Study

The following are the significance of this study:

This outcome of this study will enlighten the general public on the issues of housing finance as it is widely known that the capital involved in housing development is very huge, this study will educate on strategies that can be adopted in executing housing project with minimal financial problems.
The outcome of this study will also sensitize the policy makers on the need to make good housing policies and the government of the day on the need to implement the policies by investing massively in housing development especially in the urban area to meet the accommodation needs of the citizens.
This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1.6 Scope and Limitation of the Study

This study on issues and solutions to housing finance in Nigeria will cover the level of housing development in Nigeria with clear identification of housing problems. It will also cover the level of government investment in housing through the mortgage institutions. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities

1.7 Definition of Terms

Housing Finance:

Housing finance is a broad topic, the concept of which can vary across continents, regions and countries, particularly in terms of the areas it covers.

Issue:

An important topic or problem for debate or discussion.

Solution:

A means of solving a problem or dealing with a difficult situation.

1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
Chapter three deals on the research design and methodology adopted in the study.
Chapter four concentrate on the data collection and analysis and presentation of finding.
Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain housing finance in Nigeria: issue and solutions. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenge of housing finance in Nigeria: issue and solutions

5.2 Summary

This study was on housing finance in Nigeria: issue and solutions. Three objectives were raised which included:To examine the issues related to housing finance in Nigeria, to identify the solution to the issues of housing finance in Nigeria, to ascertain the level of housing finance by the Nigerian government. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staffof selected mortgage banks, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made of managers, customer care officers, accountants and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

5.3 Conclusion

The need for housing in Nigeria is enormous. This section reviewed the theoretical issues underpinning the delivery of housing. The various public and private interventions in housing delivery strategies have been examined. This paper has identified and discussed the various problems that have bedeviled the provision of housing in Nigeria, the various policies the government has put in place to counter these problems, the short comings of these policies and suggested some possible practical solution to these problems. Therefore, in order to increase housing stock in Nigeria there is the need to incorporate affordable housing delivery scheme into the formulation and implementation of housing policies and program which should not be at the exclusive preserve of federal government at the exclusion of governments at local government level. There is a need now, to reach out and effectively involve the people and governments at grassroots levels in the formulation of housing policies. The Federal government has been directly involved in the construction of buildings for all categories in the past and even presently. It is now necessary that housing must be considered as a personal service and as such, the primary responsibility of housing should not be left with the people themselves who, however, should be assisted in some ways in order to realize their aspirations for selfactualization of owning individual houses.

5.4 Recommendation

There is a need now, to reach out and effectively involve the people and governments at grassroots levels in the formulation of housing policies. The Federal government has been directly involved in the construction of buildings for all categories in the past and even presently. It is now necessary that housing must be considered as a personal service and as such, the primary responsibility of housing should not be left with the people themselves who, however, should be assisted in some ways in order to realize their aspirations for selfactualization of owning individual houses