HOUSING FINANCE IN NIGERIA: ISSUES AND SOLUTIONS

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:

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

1.4   RESEARCH QUESTIONS

1. What are the issues related to housing finance in Nigeria?
2. What is the solution to the issues of housing finance in Nigeria?
3. What is the level of Nigerian government involvement in housing finance?

1.6   SIGNIFICANCE OF THE STUDY
The following are the significance of this study:

1. 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.
2. 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.
3. 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.

1.7   SCOPE/LIMITATIONS 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.
LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
REFERENCES
Onibokun, P. (1985). Housing in Nigeria. Ibadan University Press.
Abiodun A. (1999): Housing Finance under National Housing Fund: An appraisal. Paper presented at the General Meeting of the Nigeria Institute of Town Planning.
Agboola T. (2000): Housing, Poverty and Environment – The Nigerian situation. A seminar Paper presented at a workshop on Effective approach to Housing delivery In Nigeria. Organized by the Nigerian Institute of Building, Ibadan, Nigeria
Arilesere D. (1997): Housing Finance in Nigeria: A paper presented during NIOB Organized workshop on Affordable Housing. Lagos.
Okupe L. (2000): The Role of Private Sector in Housing Delivery in Nigeria; A seminar paper on: Effective Approach to Housing Delivery in Nigeria, Organized By Nigerian Institute of Building, Ibadan.
Onabule G. (1996): Understanding the role of NHF and Pry. Mortgage Institution in Housing Finance: Paper presented at the Housing Policy Council Seminar on the Implementation of National Housing Policy. Abeokuta.
Nubi, T.O. (2002). Financing Low Income Housing in Nigeria Cities: Need for Paradigm Shi. Proceeding of the Faculty of Environmental Design Conference O.A.U. Ile Ife, 340 -345.
Iyagba R. and Asumo O. (1997) Housing Crisis in Nigeria Urban and Rural area. A challenge to the construction industry and technology. The Lagos Journal of Environmental Studies
Agboola T. (2000) Housing, Poverty and Environment – The Nigerian situation. A seminar Paper presented at a workshop on Effective approach to Housing delivery In Nigeria. Organized by the Nigerian Institute of Building. Ibadan, Nigeria.