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Government has no plans to privatise FHA — Al-Amin

By on February 10, 2015

Prof. Mohammed Al-Amin is the Managing Director of the Federal Housing Authority. He spoke to journalists in Lagos on the plans to reform the organisation, among other issues. MAUREEN IHUA-MADUENYIwas there

As the new managing director of the FHA, what plans do you have to reform the system of housing provision in the organisation?

The government that established the FHA is still the same government and there is a mandate that established the authority and what it is expected to do, which is to make housing delivery, accessibility and affordability a reality. And this is to be done through reengineering the system that will bring about housing delivery in the country; the workforce, the mode of delivery, the resource allocation and prioritising the deliverables as well as injecting new spirit into partnerships.

Housing delivery the world over is not something that is done by one person or agency; it has been a model for a country to involve a lot of collaborations, partnerships and give and take. So, I am now on board and my first priority is to ensure that the system of operations, particularly how we relate with housing financiers, contractors, housing markets as well as housing demand and supply is reengineered such that what is required for the system to do is aided by the necessary resources, both human and financial.

My mission is to make sure that anything that is put in place to assist the system is revitalised to work so that at the end of the day, we will close the deficit and ensure that the accessibility is higher.

Some primary mortgage banks recently got their licences revoked. How will this impact on housing delivery?

It is important to know that some of the PMIs are created through the facilitation of the government though they are private sector driven to create and provide mortgages for interested parties across the country. They need to have the financial and technical strength to be able to deliver to clients. Government, as a regulator, will not allow the failed banks’ story to happen again in the system; those PMIs that were not able to meet up with their recapitalisation targets are either reduced from national to state level mortgage institutions, or even local government, or given the grace to meet up with the requirement so that the interest of the public is protected.

On the part of the FHA, we already have in place for over 20 years a mortgage firm called FHA Mortgage Homes Limited, which is specifically mandated to market our homes as well as provide mortgages for intending up-takers. So, the issue of recapitalisation of PMIs does not affect us because we have a mortgage institution that we work with. But just like the others, it was ensured that we went through the process and came out fully licensed by the Central Bank of Nigeria and other agencies that are responsible for that.

Housing finance is not like going to the ATM, withdraw some cash, go to the market and buy what you want. It is something very elaborate, highly capital intensive and that requires very key monitoring and evaluation of the system so that at the end of the day, the quality and quantity are not mortgaged in terms of availability. Essentially it is a flush out system that is necessary and healthy. It is not only being done in Nigeria, but the world over, you find regulatory agencies of housing finance doing these things at certain times, and this is what has been done in Nigeria.

It is estimated that the nation has a housing deficit of 17 million units and statistics have it that the FHA has built only 40,000 houses in 40 years. This is not a good story, how do you hope to turn it around?

As a professor of urban development, I actually question that statistics in the first place. I had course to question the former Chairman of National Population Commission because if you look at the delivery, not only from the FHA but from other actors, including individual Nigerians who built houses, you cannot come up with this statistics and convince Nigerians.

What I agree is that there is very high deficit of housing supply to Nigerians. This is not only a factor of production but also a factor of demand. The population of Nigeria in the last 40 years compared with what it is now is very large and the difference is clear.

It is obvious that when you have a high and continuous population multiplying at 3.7 per cent per annum; definitely, whatever type of housing policy you have, it is going to be in deficit. But the new FHA has put several things in place, including reach out, and embarking on campaign and advocacy for so many aspects of housing delivery starting from finance to the nature of houses and types of materials for housing construction. Even the small things like maintenance, is something that requires concerted effort from both the government and individuals to be able to close the gap between housing delivery and the development we are talking about.

Whether it is 17,000 of seven million housing deficit, it is still too much to ignore; so, we are working hard to ensure it is closed. Housing is well captured in all the policies of the government; it is contained in the Vision 2020 and the Transformation Agenda of the Federal Government; housing is something that the government is passionate about because it is a right for the citizens to have comfortable accommodation.

Certainly that statistics will soon change for the better. The FHA has certainly built more than 40,000 houses. Apart from direct construction that we do, we have partnerships and we have facilitation. Most of the houses you see in the states, the FHA is involved in one way or the other.

When people are quoting the amount of houses that FHA produced, they are just quoting the ones built through direct labour, they are not talking of the public-private partnership efforts; the facilitation, either in giving money to up-takers to purchase houses or of injecting our technical know-how; and going between to ensure that finances come down and so on.

What plans do you have to improve partnership with the private sector for better housing delivery?

The private sector is more or less into profit as you know, but partnerships with the FHA are currently being reviewed; we have a special task team comprising erudite scholars and professionals studying the partnerships to come out with templates for both commercial and social housing, because the partnership that should go with the private sector on social housing shouldn’t be the same with the one that should go for commercial housing.

Social housing involves houses for low income earners, which a lot of Nigerians if not majority belong to. The partnership system that was in existence before my coming focused on the commercial system, but the government cannot go into social housing alone; we need to have partnerships, and we have redesigned the template and come up with new realities. We have to invite other private sector partners and social housing-driven private companies.

They are all over the world and also available in this country. We can partner with several types of organisations, trade unions and so on and see how we can bring down the interest rates to single digits and also negotiate with government at all levels to come into the provision of infrastructure, because a higher percentage of the cost that translates into the open market cost of a house is being driven by the cost of infrastructure.

The new model of partnership we are talking about is to bring the government, our agency and other organisations that are related to it, and negotiate with the different tiers of government, either federal, state or local government, on infrastructure provision. As soon as infrastructure is taken into consideration, you will see how prices will crash and how rapidly the ownership of houses will be for Nigerians.

FESTAC town and other federal estates have been abandoned for some time, do you have plans for their regeneration?

Regeneration of an estate as huge as FESTAC or Gwarimpa, you are talking of billions of naira. That was why certain priorities took the attention in those days. But now, we have designed urban renewal programmes for our existing estates; we will prioritise them based on the ages of the estates. We will first take suitably qualified new generation estates that will deserve our attention in urban renewal projects; but before coming to FESTAC, there are so many other issues to be handled before the renewal. There are issues of several squatters, non-payment of statutory fees and ground rent, issues of double allocation and multiple uses of lands that are strictly for residential purpose. While we are trying to sort these things as quickly as possible in FESTAC, we have started the urban renewal project in Gwarimpa in Abuja.

It was half the age of FESTAC but because of wear and tear, we brought a full stringed approach to the renewal of Gwarimpa and there are four native settlements that are part of the estate. We are trying to discuss with them to move, remove the shanty structures and build high rise buildings and allocate them to the native settlers. It is a new system of urban renewal where you integrate the original owners of the community. We are starting it for the first time in Nigeria.

The old markets we have in Gwarimpa will be turned into modern mini malls where you can get in and buy almost everything you want with security and parking lot. Modern estates across the world have fantastic facilities and services, which are absent in FESTAC, Gwarimpa and other estates under the FHA. We are determined to create large areas within our estates to create solar farms and take the residents off the national grid; we are determined to introduce other facilities such as security with CCTV camera, water system and so many other things, starting with Gwarimpa and coming down to FESTAC.

We also have FESTAC phase two, where the Federal Government is trying to bring a new model that is internationally practiced of conceding certain parts to private developers and provide site and services for structures under strict supervision that can compete with those in Dubai and other parts of the world.

The regeneration you talked about, how much is it going to cost?

The budget will not be handled by one single entity; we as the facilitator have our budget, while the private sector will have its cost. The allotees will also have their costs, which are normally what they owe the authority. If you have stayed 10 years without paying your ground rent, for instance, we will wave five years and ask you to pay the rest. If you have altered the planning, you are going to pay us; we will subsidise it but ensure that it is paid within a certain period. If there are other contraventions, we will enlighten you on how to go about it and you will see it practically being done.

You said one of the items on your agenda is to make the FHA address those who really need the houses. How do you reconcile that with the planned commercialisation of the authority?

I started by telling you that we live in the 21st Century were things are totally different. The models of doing business in government and the private sector have changed considerably. Some 30 years back, we had less than 400,000 telephone lines, but now, almost half of Nigerian have telecoms gadgets necessitated by the current realities. The reforms that are being talked about in the FHA are in line with that. We want to shift away from the old practice because it is not sustainable; we want a practice where citizens of this country get value for their money.

There is certainly going to be a reform in the FHA but it is such that will strengthen the system, the staff and operations. The Federal Government, under the current President, has granted approval for the restructuring and commercialisation, but there has never been a mention of privatisation. The Federal Government is not intending to privatise the FHA. Mr. President found it good and acceptable to reengineer the FHA and housing delivery by injecting reforms in our structures and operations. What commercialisation is about is to bring the private sector into operations; you can build 500 houses in two years but there is an opportunity where six developers can come and develop 30,000 houses in the same period. So why not open your arms, commercialise your system and bring in investors to do the same thing. Commercialisation does not negate the concept of social housing; social housing is a mandate that is enshrined in the constitution of this country that every citizen is entitled to.

There will be a very big component of social housing embedded in this reform we are talking about. We are not bring investors that are just interested in making money; we are introducing different products where investors can bring their own money and the government will inject its money into infrastructure. This is what is happening in Dubai. It will create a lot of employment opportunities, we can accommodate half of the unemployed youths in this country through this programme; it is not detrimental to the provision of houses for the common man; in fact, it is going to enhance it.

With the fall in oil prices, how are you re-strategizing your finances?

The issue of the fall in price will not affect the housing sector much. The reason is that the value of land is always fixed; it is determined by its proximity to other uses and demand. That critical position of land value is what is protecting the sector from any kind of recession.

 

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