The Federal Government has attracted about $125 million in private-sector investment for housing construction through its Renewed Hope Housing Public-Private Partnership (PPP) model which is designed to deliver homes without direct government financing of construction.
Director-General Infrastructure Concession Regulatory Commission (ICRC) Dr Jobson Oseodion Ewalefoh disclosed this while presenting Nigeria’s housing model at the Second Forum for Public-Private Partnership Units in Africa in Addis Ababa Ethiopia.
He said the programme was structured to enable private investors to undertake housing development while the government provides support to reduce investment risks facilitate financing and ensure that buyers are available for completed homes.
Ewalefoh explained that the government’s approach was to use policy measures and financial support to attract private capital rather than bear the entire cost of constructing houses.
‘Government does not need to finance housing capital projects. It can crowd in private capital through policy land availability and off-taker facilitation to create a replicable scalable model for housing delivery’ he told delegates.
The housing programme under President Bola Ahmed Tinubu’s Renewed Hope Agenda is expected to deliver 100000 housing units across selected cities in Nigeria through a joint venture concession with private-sector partners.
Under the arrangement the private partner owns the land designs the houses provides the construction financing and carries out the building work while the government provides measures to make the investment viable and the homes more affordable.
Explaining the structure Ewalefoh said the arrangement differed from conventional PPP projects because the private partner was responsible for the major development activities.
He said the government’s intervention was aimed at removing the obstacles that could prevent private investors from entering the housing market.
‘The beauty of this PPP structure is that it is not the conventional PPP. In this case the private party owns the land has the design is financing it and is doing the construction’ he said.
The model is designed to address the high cost of financing in Nigeria where commercial lending rates are above 23 per cent. Such rates make it difficult for many developers to obtain affordable construction loans and for prospective homeowners to secure financing.
To address the challenge the Federal Government facilitated about $39 million in concessionary financing through the Federal Mortgage Bank of Nigeria and the Family Homes Fund.
The Federal Mortgage Bank provided about $19 million in funding at single-digit interest rates while the Family Homes Fund made available a further $20 million in concessionary loans.
The funding arrangements are intended to improve the project’s financial viability and encourage private investors to commit capital to housing construction.
In addition to the concessionary loans buyers are expected to benefit from lower mortgage rates through the approximately $112 million MOFI Real Estate Investment Fund (MRIF).
The fund is part of the measures designed to improve access to housing finance and enable eligible buyers to purchase homes under the programme.
The government has also negotiated sale prices with the developer to keep the houses affordable. It has limited purchases to one unit per buyer to discourage speculation and prevent individuals from acquiring multiple houses under the scheme.
Another measure is the government’s commitment to construct access roads to the semi-urban locations where the housing projects are being developed. The government has also designated middle-income federal civil servants as off-takers providing developers with an identified market for the completed houses.
These interventions according to the ICRC director-general have reduced the effective cost of the project by about 30 per cent.
The arrangement is expected to demonstrate how government support can encourage private investment in housing while reducing the need for direct public spending on construction.
Nigeria’s presentation attracted considerable interest from delegates at the continental forum particularly over the use of guaranteed buyers and concessionary financing to reduce the risks associated with housing development.
Participants sought to understand how the measures could be adapted to their own countries as African governments explore ways to expand access to affordable housing and other essential services through public-private partnerships.
Nigeria was among five countries selected to present projects at the forum’s project clinic. The other countries were Malawi Kenya Djibouti and Côte d’Ivoire.