Since the current recession in Nigeria was officially declared in 2016, the economy has faced two particularly negative economic indicators– rising prices and low rates of employment. These will have devastating effects on many sectors of the economy for many years to come and housing will be one of the major ones affected as unemployment and high costs of home ownership are the chief reasons for homelessness worldwide. In fact, the Nigerian housing sector has been lagging behind many similar middle income economies since the 1980s and the recession is likely to have a more jarring effect on this sector compared to others unless economic planners take specific precautions to prevent this trend. In addition to the recession, Nigeria is also experiencing an increase in population growth and urban sprawl that is likely to further exacerbate the current housing problem. The current 2016 budget provision of ₦40 billion to provide 1 million units to counter an estimated 17-million-unit housing deficit is in no way adequate to face this challenge especially as the estimate is likely to increase greatly in the very short run.
Russia experienced a similar contraction in the size of its economy in its 1998 financial crisis along with a temporary increase in the population growth rate in the early 2000s and these factors directly led to a depression in the housing market during the same period. The increase in crime rates and corruption during this period was linked to instability and the poverty that a society experiences when its citizens lose the most important asset for most family units – housing. In comparison, the Nigerian is facing a similar situation. The Nigerian population has been growing by a steadily increasing rate as infant mortality continues to drop mainly due to the attainment of middle income status and global interventions such as the Millennium Development Goals and Sustainability Development Goals that continue to propel worldwide development measures.
This growth will inevitably come with increased housing needs especially as the youth age group – 18-34 – become the largest and the group that is also most likely to seek housing as individuals or to start out families. In developed countries like the U.S. and most of Europe, the 65 and older age group (also called baby boomers) are becoming the largest age group and this will lead to a contraction in the demands on the housing market as more elderly citizens opt to sell their homes and live in assisted living with other members of their age group. Nigeria’s case will be the reverse of this trend and it would be wise to consider adopting some of the policies that these countries adopted when the baby boomer generation was still in its youth and the dominant age group in those populations.
One of such policies; which will bring the finance ministry, agencies and private sector institutions to the table in the provision of increased access to finance to meet the excessive demand from Nigeria’s young population; is a shift from public housing to public-private arrangements. This was the course taken in the U.S. in the 1960s just as its first crop of the massive baby boomer generation i.e. those born in 1946 became young adults and started to join the housing market. The focus should be on providing this financing for housing through the private sector specifically for low income and middle income households. The main means of financing this would be indirectly by providing low interest loans to housing developers to construct and maintain low cost housing or directly by providing low interest mortgages to households that allow longer repayment time lines i.e. 20 or more years.
While some noteworthy schemes have started to involve public-private partnerships in provision of financing for the housing sector, this is a potentially lucrative business that has been poorly explored so far. It becomes even more important to explore these possibilities when the social benefits are considered which would include reduced homelessness and crime as well as the many indirect results stability will have on children including improvements in education and health.
